Physician-Administered Drugs (PAD) Billing Manual

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Physician Administered Drug Requirements and Benefits

This Physician Administered Drug (PAD) billing manual explains many of the Colorado Department of Health Care Policy & Financing’s (the Department) policies regarding billing, reimbursement, and program benefits.

PADs are medications that require administration in an office or clinic under medical supervision such as injectable, intravenous, and implantable medications and are billed as professional medical claims. Providers that render PADs must be enrolled as a provider with Health First Colorado. PAD claims are billed to and paid by the Department’s fiscal agent. For additional information on billing PADs and requirements, please refer to the Health First Colorado General Provider Information Manual.

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1990 OBRA Rebate Program

Federal regulation requires that drug manufacturers sign a national rebate agreement with the Centers for Medicaid and Medicare Services (CMS) to participate in Health First Colorado. Drugs produced by companies that have signed a rebate agreement (participating companies) are generally a Health First Colorado benefit but may be subject to restrictions. Health First Colorado does not provide reimbursement for products by manufacturers that have not signed a rebate agreement.

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Timely Filing

Refer to the Health First Colorado General Provider Information Manual.

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Retention of Records

Source documents and source records used to create PAD claims shall be maintained in such a way that all electronic media claims can be readily associated and identified. These source documents, in addition to any work papers and records used to create electronic media claims, shall be retained by the provider for six years and shall be made readily available and produced upon request of the Secretary of the Department of Health and Human Services, the Department, and the Medicaid Fraud Control Unit and their authorized agents.

HCPCS/NDC Crosswalk

An updated Healthcare Common Procedure Coding System (HCPCS)/ National Drug Code number (NDC) Crosswalk is provided twice per month to provide billing guidance on PADs and posted under Appendix X. Appendix X is generally updated on the first and 15th of each month excluding holidays and weekends, when it is updated on the subsequent workday. The Crosswalk is utilized to process PAD claims. The Crosswalk provides information as to valid HCPCS/NDC combinations and date spans for when each combination is valid. The drug must be listed accordingly on the Crosswalk to be a covered benefit.

Not all HCPCS/NDC combinations listed on the Crosswalk are a part of the PAD Benefit. Any combination not within the PAD Benefit is noted as such. Please refer to the appropriate billing manual for more information on non-PAD Crosswalk combinations.

Contact hcpf_Colorado.SMAC@state.co.us with Crosswalk questions. Note that if a claim is submitted without a valid HCPCS/NDC combination listed on the Crosswalk, the claim will be denied.

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New Drugs

Coverage for new drugs will be determined by the Department. New drugs without an assigned HCPCS code require billing with the appropriate miscellaneous HCPCS code. Drugs which have been assigned a temporary C code must be billed with the assigned temporary code when administered in the outpatient hospital setting. The Crosswalk and the PAD Fee Schedule should be referenced prior to administration of a new drug to ensure that the PAD is a covered benefit. If a drug is administered to a member but is not listed on the Crosswalk and PAD Fee Schedule:

  1. The claim line may not be reimbursed until a coverage determination is made.
  2. The claim line will not be reimbursed if it is determined that the PAD is not a covered benefit.
  3. The claim line will deny if there is no listed rate on the PAD Fee Schedule. PAD rates are not usually retro-active, as they are set quarterly and in conjunction with ASP rates (See Payment Methodology).

Once a permanent HCPCS has been assigned to the drug, the provider must submit claims with the permanent HCPCS code. Any claims submitted with a temporary C code or miscellaneous J code after a drug has been assigned a permanent HCPCS code will be denied.

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Acceptable Use

Providers must ensure a PAD is being used for a U.S. Food and Drug Administration (FDA) approved indication or an indication that is supported by certain compendia identified in section 1927(g)(1)(B)(i) of the Social Security Act.

Exclusions

The following are not benefits of the Health First Colorado program:

  • DESI drugs and any drug if by its generic makeup and route of administration, it is identical, related, or similar to a less than effective drug identified by the FDA
  • Drugs classified by the U.S.D.H.H.S. FDA as "investigational" or "experimental"
  • Drugs manufactured by pharmaceutical companies not participating in the Colorado Medicaid Drug Rebate Program
  • Fertility drugs
  • IV equipment (for example, Venopaks dispensed without the IV solutions)
  • Personal care items such as mouth wash, deodorants, talcum powder, bath powder, soap (of any kind), dentifrices, etc.
  • Spirituous liquors of any kind
  • Drugs used for erectile or sexual dysfunction

The following are not PAD benefits of the Health First Colorado program:

Payment Methodology

Rates for PADs are updated on a quarterly basis and published on the PAD Fee Schedule. PADs listed as manually priced (MP) on the PAD Fee Schedule require the drug invoice to be attached to the claim; manually priced PADs are reviewed and priced by the fiscal agent.

Effective July 1, 2017, PADs with a CMS published Average Sales Price (ASP) are paid at the lower of the published ASP minus 3.3 percent or submitted cost. Any PAD for which a published ASP does not exist are paid at either the lower of the submitted cost or the wholesale acquisition cost (WAC) multiplied by the number of NDC units. As of November 26, 2019, reimbursement for an injectable opioid antagonist was modified to pay at the lower of the published ASP plus 2.2 percent or the submitted cost.

PAD claims for Inpatient Hospital (IP) services are reimbursed by Health First Colorado on a prospective basis using a Diagnosis Related Group (DRG) method. Claims with a discharge date on or after January 1, 2014 are reimbursed using the All-Patient Refined DRG (APR-DRG). PAD claims for Outpatient Hospital (OP) services are reimbursed by Health First Colorado using the Enhanced Ambulatory Patient Grouping (EAPG) methodology. For additional information, refer to the Inpatient/Outpatient (IP/OP) Billing Manual.

Certain PADs administered in the OP Hospital setting may be subject to reimbursement outside of the EAPG methodology and require prior authorization. For an updated list, refer to the Inpatient/Outpatient (IP/OP) Billing Manual and Appendix Z.

Professional Medicare Crossover claims billed with a miscellaneous J code are reimbursed with the following methodology: if (Medicare paid amount plus Co-pay) is less than or equal to (WAC multiplied by the number of NDC units), then claim pays at the Co-pay amount. If (Medicare paid amount plus Co-pay) is greater than (WAC multiplied by the number of NDC units), then the claim pays at [(WAC multiplied by the number of NDC units) minus Medicare paid amount]. Any negative calculation amounts pay at zero.

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Wasted Drug

For Health First Colorado-only members, the Department does not pay for wasted drug from single or multi-use vials; a provider must bill only for the amount of drug administered to the member. For members having both Health First Colorado and Medicare (dual-eligible), a provider may bill for wasted drug on a second line with the JW modifier on Medicare Part B Crossover claims.

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Pharmacy Billing Requirements

In some instances, a pharmacy may need to dispense PADs. For any PAD which will be administered by a health care professional in the home or at a long-term care facility, the pharmacy must bill the pharmacy benefit manager (PBM). This process may require the appropriate place of service billing code and/or a prior authorization. Refer to the Pharmacy Resources web page for all pharmacy billing policies and guidance.

Medicare Part B Crossover claims for PADs within specific drug classes not dispensed "incident to" a physician service may be billed by the pharmacy to the medical benefit. The dispensing pharmacy must be enrolled as a Health First Colorado provider under the Pharmacy (provider type 09) with Durable Medical Equipment (DME) (provider specialty 462) and bill the medical benefit Supply contract. Such drug classes include immunosuppressive drugs, oral anti-emetic drugs, oral anti-cancer drugs, and drugs self-administered through any piece of durable medical equipment. In such cases, the pharmacy must bill Medicare Part B as primary coverage and then Health First Colorado as secondary.

Any PAD dispensed "incident to" a physician service cannot be billed by a pharmacy. The drug must be purchased by the physician’s office or clinic and billed through the standard buy and bill process. Guidelines for how PADs are to be billed have been established in 10 CCR 2505-10, Section 8.800.5.

Processes known as "white-bagging" and "brown-bagging" where PADs are billed to the pharmacy benefit are not allowed by the Department. "White-bagging" is defined as the distribution of patient-specific drug from a pharmacy to a medical provider’s office, clinic or hospital for administration. "Brown-bagging" is when a pharmacy dispenses a medication directly to the member, who then transports the drug to the provider’s office, clinic or hospital for administration.

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Exceptions

There may be some instances where a pharmacist can administer a PAD or specific vaccines to a Health First Colorado member in the pharmacy. For these instances (Vivitrol, flu vaccines, etc.), the pharmacy must bill the medical benefit utilizing the appropriate billing information, including provider type/provider specialty and place of service. The same information listed under "Claim Submission Requirements" is also required. Additional information can be found on the Pharmacist Enrollment: Over-the-Counter and Immunizations web page.

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Claim Submission Requirements

Claims for PADs should be submitted electronically and in accordance with timely filing requirements. All member and provider information must be included, along with a valid HCPCS/NDC combination. This policy applies to all Professional, Outpatient, Early Periodic Screening, Diagnosis and Treatment (EPSDT), and Medicare Crossover claims for PADs.

The NDC of the PAD which was administered to the member must be included with the claim. If no NDC is received or if the NDC received is invalid, the claim will be denied. Claims for all PADs must be billed with the following information.

  1. Procedure code (HCPCS)
    1. May include miscellaneous or unlisted J codes, temporary or permanent drug related Q, C, and J codes
  2. NDC of the drug administered
    1. NDC must be in 11-digit format with no spaces, hyphens or other characters
      1. If the NDC on the PAD does not include an 11-digit NDC, provider must add zeros to maintain 5-4-2 formatting
        1. XXXX-XXXX-XX = 0XXXX-XXXX-XX = XXXXXXXXXXX
        2. XXXXX-XXX-XX = XXXXX-0XXX-XX = XXXXXXXXXXX
        3. XXXXX-XXXX-X = XXXXX-XXXX-0X = XXXXXXXXXXX
  3. HCPCS units
    1. For miscellaneous J codes, use HCPCS unit of 1
      1. J3535, J3490, J3590, J7599, J7699, J7799, J7999, J8498, J8499, J8999 or J9999
    2. For all other PADs, refer to Appendix X - HCPCS/NDC Crosswalk for appropriate HCPCS unit billing
  4. NDC units
    1. Calculate the number of units administered according to the NDC labeling
  5. NDC unit of measure qualifier
    1. Only the following are acceptable
      1. GR (gram): ointments, creams, inhalers or bulk powders
        1. This unit of measure will primarily be used in the retail pharmacy setting and not usually for physician-administered drug billing
      2. ML (milliliter): bill for liquid injectable products in vials/ampules/prefilled syringes, or for certain approved liquid non-injectable products
      3. EA (each): bill when a drug comes in a vial in powder form and must be reconstituted before administration or with certain, approved tablets, capsules or suppositories
  6. For all manually priced PADs, an invoice for the drug must be attached to the claim
    • Refer to the PAD Fee Schedule for additional information on which PADs are manually priced

Billing Units

Calculating NDC Units, HCPCS units, and converting HCPCS units to NDC units

  • For miscellaneous PAD codes
    • HCPCS units
      • Bill for a HCPCS unit of 1 when billing J3535, J3490, J3590, J7599, J7699, J7799, J7999, J8498, J8499, J8999 or J9999
    • NDC units
      • Example:
        Date of service 12/14/2018
        Drug and dose administered Cinvanti IV 130 MG
        Amount of drug to be billed 130 MG
        Procedure code (HCPCS) J3490
        HCPCS units 1
        NDC (11-digit format) 47426020101
        NDC description Cinvanti 130 MG/18 ML vial
        NDC units 18
        NDC unit of measure ML
        • For dates of service prior to 01/01/2019, Cinvanti is to be billed with the miscellaneous code J3490
        • HCPCS unit is billed as 1 due to the use of the miscellaneous J code for the date of service
        • The NDC unit of measure for a liquid, solution or suspension is ML; therefore, the amount billed must be in MLs
        • In this example, the quantity administered was the total amount in the vial; therefore, the quantity for NDC units is 18
          • If the dose administered is 100 mg, then the NDC units will be billed as 14 and the NDC unit of measure will remain ML
  • For permanent PAD codes
    • Example:
      Drug and dose administered Ciprofloxacin IV 1200 MG
      Amount of drug to be billed 1200 MG
      Procedure code (HCPCS) J0744
      HCPCS description Ciprofloxacin for intravenous infusion, 200 MG
      HCPCS units 6 (see explanation below)
      NDC (11-digit format) 00409476586
      NDC description Ciprofloxacin 200 MG/20 ML vial
      NDC units 120 (see explanation below)
      NDC unit of measure ML
  • Converting HCPCS units to NDC units
    • Example (from above): Drug and amount administered- Ciprofloxacin IV 1200 mg; HCPCS code- J0744; NDC description- Ciprofloxacin 200 mg/20 mL vl
      • The amount of the drug to be billed is 1200 MG, which is equal to 6 HCPCS units: (1200 MG ÷ 200 MG = 6)
      • The NDC unit of measure for a liquid, solution or suspension is ML; therefore, the amount billed must be converted from MG to ML
      • According to the NDC description for NDC 00409-4765-86, there are 200 MG of ciprofloxacin in 20 ML of solution (200 MG/20 ML)
      • Take the amount to be billed (1200 MG) divided by the number of MG in the NDC description (200 MG): 1200 ÷ 200 = 6
      • Multiply the result (6) by the number of ML in the NDC description (20 ML) to arrive at the correct number of NDC units to be billed on the claim (120): 6 x 20 ML = 120
  • Additional Examples
    Drug and dose administered Zaltrap 400 MG
    Amount of drug to be billed 400 MG
    Procedure code (HCPCS) J9400
    HCPCS description Injection, ziv-aflibercept, 1 MG
    HCPCS units 400
    NDC (11-digit format) 00024584101
    NDC description Zaltrap 200 MG/8 ML vial
    NDC units 16
    NDC unit of measure ML
     
    Drug and dose administered Cefepime 500 MG
    Amount of drug to be billed 500 MG
    Procedure code (HCPCS) J0692
    HCPCS description Injection, Cefepime hydrochloride, 500 MG
    HCPCS units 1
    NDC (11-digit format) 60505083404
    NDC description Cefepime HCL 1 GM vial
    NDC units 0.5
    NDC unit of measure EA
     
    Drug and dose administered Cefotetan 6 GM
    Amount of drug to be billed 6 GM
    Procedure code (HCPCS) J3490
    HCPCS description Unclassified Drugs
    HCPCS units 1
    NDC (11-digit format) 63323038620
    NDC description Cefotetan 2 GM vial
    NDC units 3
    NDC unit of measure EA

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PAD Prior Authorization Requirements

The PADs requiring prior authorization and all associated information can be found on the PAD resources page. Some PADs associated with the Outpatient Hospital Specialty Drug carve-out require prior authorization.

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FAQs

  1. Does the drug administered by the physician and billed to Health First Colorado with an NDC have to be a "rebatable" drug?
    1. Yes. Manufacturers who wish their drug to be eligible for coverage by Health First Colorado must enter into a rebate agreement with Centers for Medicare and Medicaid Services (CMS).
  2. How do I know if a drug is rebatable?
    1. Please refer to the CMS website or the Appendix X - HCPCS/NDC Crosswalk.
  3. The NDC is not rebatable or I am not sure which NDC was used, can I pick another NDC under the J-Code and bill with it?
    1. No. The NDC submitted to Health First Colorado must be the actual NDC number on the package or container from which the medication was administered. It is considered a fraudulent billing practice to bill using an NDC other than the one administered.
  4. Which NDC do we use, the one from the package or the vial?
    1. The NDC is found on the drug container (i.e. vial, bottle, or tube). The NDC submitted to Health First Colorado must be the actual NDC number on the package or vial from which the medication was administered. If the vial is removed from a carton of similar vials, use the NDC on the individual bottle (inner package NDC) and not the NDC from the carton (outer package NDC). The only exception to this is if the vial is part of a kit that contains multiple products. In this case use the NDC on the kit.
  5. Can you confirm the NDC requirement is for outpatient claims only?
    1. Yes, this requirement applies to all drug products administered by a clinician in outpatient settings, including physician's office, clinic, hospital and any other outpatient setting. The only exceptions to the NDC requirement are institutional inpatient claims.
  6. Do radiopharmaceuticals, contrast media, devices or vaccines/immunizations require an NDC?
    1. Yes, some radiopharmaceuticals, contrast media, devices, and vaccines/immunizations may require a valid HCPCS/NDC combinations, even though they are not considered PADs. Please refer to the Appendix X - HCPCS/NDC Crosswalk for a list of these products.
  7. Who do I contact if I have questions about billing with an NDC?
    1. Refer to the Appendix X - HCPCS/NDC Crosswalk or call the Provider Services Call Center.
  8. I want to administer a PAD but cannot find the HCPCS and/or the NDC on the HCPCS/NDC Crosswalk provided by Health First Colorado. Who do I contact to request a review?
    1. Email your request for review to HCPF_Colorado.SMAC@state.co.us with the HCPCS codes and all associated NDCs that are believed to be missing from the HCPCS/NDC Crosswalk.
  9. Are Medicare primary claims excluded from the NDC requirement?
    1. No. Medicare Part B Crossover claims require NDCs to be billed with the HCPCS codes.
  10. I am a 340B participating hospital. Do I need to submit NDC codes for drug claims?
    1. Yes. Although 340B purchased claims are not eligible for drug rebates, Health First Colorado requires the submission of this data.
  11. Can my office receive the medication from a specialty pharmacy or can the member bring the PAD to the office and I just administer the medication?
    1. No. In this scenario, the pharmacy would bill the pharmacy benefit and the medical provider would administer the PAD. These processes are referred to as "white" and "brown-bagging", respectively and are not allowed under the Health First Colorado PAD policy.
    2. Some PADs can be considered a pharmacy benefit in certain situations, but cannot be sent to the provider’s office for administration.
      1. For additional information, please refer to the Pharmacy Resources web page and the most current version of Appendix P.
  12. I need help enrolling as a Health First Colorado provider, billing medical claims or need to speak with customer service, who do I contact?
    1. Please call the Provider Services Call Center for any issues or questions on enrollment, billing PADs, training or the provider portal.
  13. Where can I access additional PAD specific information?
    1. The Department has made available the PAD resources page, which includes frequently asked questions, prior authorization information, and links to additional resources.

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Physician-Assisted Drugs Revision Manual

Revision Date Additions/Changes Made by
5/4/2020 Manual created HCPF
5/8/2020 Converted to HTML HCPF
6/1/2020 PAD resource page link and FAQs # 13 added. HCPF
8/03/2020 Table of contents, New Drugs, and Wasted Drug updated; Retention of Records, Acceptable Use, and Exclusions added; Pharmacy Billing Requirement-Exceptions section updated; EAPG carve-out changed to Outpatient Hospital Specialty Drug carve-out; FAQ #4 updated. HCPF
8/12/2020 Inpatient/Outpatient Billing Manual added; Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Billing Manual added; HCPF_Colorado.SMAC@state.co.us updated. HCPF
8/21/2020 Updated email address HCPF

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