Local Coverage Article Billing and Coding

Billing and Coding: Compounded Drugs Used in an Implantable Infusion Pump


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Article ID
Article Title
Billing and Coding: Compounded Drugs Used in an Implantable Infusion Pump
Article Type
Billing and Coding
Original Effective Date
Revision Effective Date
Revision Ending Date
Retirement Date
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CMS National Coverage Policy


Article Guidance

Article Text

Effective May 7, 2015, Novitas Solutions will reimburse compounded drugs used in an implantable infusion pump based on a fee schedule. This change will be for any claim submitted as of May 7, 2015 irrespective of the date of service.

Compounded drugs are drugs not reconstituted as labeled in order to create a combination of drugs or vary the concentration/volume. As such, compounded medications do not have a National Drug Code (NDC) number, an average sales price (ASP) or an average wholesale price (AWP).

Compounded drugs are contractor priced.

The use of compounded drugs has been especially prevalent in the filling of implantable infusion pumps. The following methods are appropriate when billing for drugs used in implantable infusion pumps:

  1. When submitting a claim for compounded drug(s) for a single agent or a combination of agents, providers must use HCPCS code J7999KD. Even though the compound is similar to or includes a drug with a specific HCPCS code, providers must use HCPCS code J7999, Compounded drug, not otherwise classified, for reimbursement of the compounded drug. The KD modifier must be appended to indicate the drug will be administered through a DME.
  2. When a non-compounded drug is used (a true ‘off –the –shelf’ product without compounding), the specific HCPCS code for the drug may be used (see examples below). Payment for these drugs is reimbursed differently and is not subject to the fee schedule below.

Note: Any drug, compounded or non-compounded, that is administered through an infusion pump must be reported with the KD modifier.

Medicare will consider implantable infusion pumps and associated services (such as the drugs discussed here) medically reasonable and necessary for the conditions listed in the Medicare National Coverage Determination Manual Pub.100-03, Chapter 1, Section, 280.14.

This article does not define the medical necessity for use of these drugs but directs the proper billing. Refer to the Local Coverage Determination (LCD), L35112, Implantable Infusion Pump, for coverage indications and medical necessity information.

Please Note: HCPCS code J7999 has a status indicator of N in Part A, bundled no separate payment.

The billing guidance in this Article is specific to Part B.

Coding Guidelines:

  1. When billing for compounded drugs, report HCPCS code J7999 with the KD modifier on a single claim line.
  2. Place quantity = ‘1’ on the line billed for J7999KD.
  3. Enter the name and total dose (in mg or mcg) of each drug of the refill in Box 19 of the CMS 1500 or the appropriate comment loop of electronic claims (see examples below).
  4. Covered compounded single or combination drugs should be billed on a single detail line with the exceptions noted below in the examples.
  5. The ICD-10-CM code used on each detailed line must represent the condition treated by the drug(s) billed on that detail line.
  6. Drug doses used in narrative description must be in mgs or mcgs only. Do not report µgs.

Billing examples of drugs for implanted infusion pumps:

      Non-compounded Baclofen

  • Non-compounded Baclofen (J0475KD) is routinely used as a single drug therapy for spasticity. It is not routinely used with other intrathecal combinations for pain management. Medicare does not provide reimbursement for non-compounded baclofen combined with any other intrathecal drugs.

Compounded Baclofen

  • Baclofen (J7999KD) and pain management drugs do not have the same coverage requirements. Baclofen is indicated for use in the treatment of spasticity. Pain management drugs and baclofen may have different diagnoses based on the LCD coverage.
  • The compounded Baclofen is reported on a separate line item from the pain management drug in the compounded mixture. Report separately, as indicated in the examples below.
  • Example of compounded mixture: Morphine 20mg/ Bupivacaine 6mg/ Baclofen 4000mcg:
    • Report Baclofen 4000mcg (J7999KD) on one claim line, and report Morphine20mg/Bupivacaine 6 mg (J7999KD) on a second claim line.
    • If compounded Baclofen (J7999KD), when used as part of compounded drug combination in an implantable infusion pump, is not listed on a separate claim line and the claim does not meet the requirements per the LCD; the total compounded drug line will be denied.

Compounded drug reporting

  • Do not list the drug separately from the dosage, such as morphine bupivacaine baclofen sufentanil 20mg 6mg 4mcg 5mcg. This format will be denied.
  • List each drug with the applicable dosing amount, for example morphine 20mg, bupivacaine 6 mg, baclofen 4 mcg, sufentanil 5 mcg.

Novitas Solutions will reimburse compounded drugs for use in implanted infusion pumps by multiplying the price per mcg or mg in the table below by the total number of mcg or mg of each drug used to refill the pump. In addition to the combined allowable amount calculated by the dosage detailed, a pharmacy compounding fee of $60 per refill will be included in the total allowable for the refill of covered compounded drugs:

MEDICATION PRICE per mg or mcg
Morphine Sulfate $0.050/mg
Hydromorphone $0.130/mg
Bupivacaine $0.040/mg
Tetracaine $0.04/mg
Fentanyl PF $0.0072/mcg
Droperidol $0.0013/mcg
Ketamine $0.0048/mcg
Baclofen $0.003/mcg
Clonidine $0.001/mcg
Sufentanil $0.090/mcg
Prialt* $7.900/mcg

*Prialt is a drug only available from its pharmaceutical manufacturer. If given as a single drug as an ‘off-the-shelf’ product, use HCPCS code J2278KD. If mixed with other drugs in the pump, consider the mixture a compounded drug and use the HCPCS code J7999KD. Wastage of portion of a vial that is not used is reported by appending the JW modifier. Prialt is the only drug from the list above where the JW modifier would be applicable.

Coding Information


Group 1

(1 Code)
Group 1 Paragraph


Group 1 Codes
J7999 Compounded drug, noc

CPT/HCPCS Modifiers


ICD-10-CM Codes that Support Medical Necessity

Group 1

(1 Code)
Group 1 Paragraph

Refer to LCD, L35112, Implantable Infusion Pump

Group 1 Codes
XX000 Not Applicable

ICD-10-CM Codes that DO NOT Support Medical Necessity

Group 1

(1 Code)
Group 1 Paragraph


Group 1 Codes
XX000 Not Applicable

Additional ICD-10 Information


Bill Type Codes

Contractors may specify Bill Types to help providers identify those Bill Types typically used to report this service. Absence of a Bill Type does not guarantee that the article does not apply to that Bill Type. Complete absence of all Bill Types indicates that coverage is not influenced by Bill Type and the article should be assumed to apply equally to all claims.

999x Not Applicable

Revenue Codes

Contractors may specify Revenue Codes to help providers identify those Revenue Codes typically used to report this service. In most instances Revenue Codes are purely advisory. Unless specified in the article, services reported under other Revenue Codes are equally subject to this coverage determination. Complete absence of all Revenue Codes indicates that coverage is not influenced by Revenue Code and the article should be assumed to apply equally to all Revenue Codes.

99999 Not Applicable

Other Coding Information


Revision History Information

Revision History DateRevision History NumberRevision History Explanation
11/21/2019 R8

Article revised and published on 11/21/2019 consistent with CMS Change Request 10901. Due to system changes, the order of the Coding Section has been revised and new sections for CPT/HCPCS Modifiers and Other Coding Information have been added.

01/01/2016 R7 Article revised and published on 01/28/2016 effective for dates of service on and after 01/01/2016 to reflect the annual CPT/HCPCS code updates. The CPT/HCPCS code J7999 has been added to replace Q9977. Removed reference to invalid HCPCS code J2275.
10/01/2015 R6 Article revised and published on 11/13/2015. References to covered diagnosis codes removed due to diagnosis limitations removed from L35112, Implantable Infusion Pump LCD.
10/01/2015 R5 Article revised and published on 08/13/2015. HCPCS code Q9977 moved from Group 1 Paragraph section of CPT/HCPCS Codes to Group 1 Codes section due to Quarter 3 HCPCS updates. Code description changed from long descriptor to short descriptor.
10/01/2015 R4 Article revised and published on 7/9/2015 to change HCPCS J7799 to Q9977 consistent with CR9167. Added L number for the Implantable Infusion Pump LCD throughout the Article.
10/01/2015 R3 Article revised and published on 05/07/2015 to correct typographical error in the Medication list for Clonidine. Price information corrected to read per mcg.

Please note Revision History Number 2 should reflect a Revision History Date of 10/01/2015.
05/07/2015 R2 Article revised and published on 04/23/15 to add a compounding fee of $60 to the total reimbursement for covered compounded drugs.
10/01/2015 R1 Article revised and published on 03/26/2015 to correct typographical error.

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