October/November 2007 Federal Deficit Reduction Act (DRA) October/November 2007

2October/November 2007 Federal Deficit Reduction Act (DRA) Agenda Background Covered labelers NDC configuration Billing principles NDC quantity Claim filing Codes requiring manual review Adjustments Remittance advice Electronic rejections Explanation of Benefits (EOB) DESI drugs Record retention Billing tips Q & A

3October/November 2007 Federal Deficit Reduction Act (DRA) Background The Federal Deficit Reduction Act of 2005 mandates that Medicaid require the submission of National Drug Codes (NDCs) on claims submitted with procedure codes for drugs administered. The purpose of this requirement is to assure that the states obtain a rebate from those manufacturers who have signed a rebate agreement with the Centers for Medicare and Medicaid Services (CMS).

4October/November 2007 Federal Deficit Reduction Act (DRA) Background This requirement is applicable to claims with a date of service on or after January 1, 2008, and applies to professional and outpatient institutional claims. This will apply to the following claim transactions: – Electronic claims (837P and 837I Outpatient) – DDE (837P and 837I Outpatient) – Paper CMS-1500 claims – Paper CMS-1450 (UB-04) claims (Outpatient)

5October/November 2007 Federal Deficit Reduction Act (DRA) Covered labelers

6October/November 2007 Federal Deficit Reduction Act (DRA) A pharmaceutical manufacturer that has entered into a federal rebate agreement with the Centers for Medicare and Medicaid Services (CMS) First segment of NDC Covered labelers

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11October/November 2007 Federal Deficit Reduction Act (DRA) Effective date: The date a manufacturer entered into a rebate agreement with CMS Termination date: This date indicates that the manufacturer no longer participates in the federal rebate program and therefore the products cannot be reimbursed by Arkansas Medicaid for dates of service outside the rebate participation date.

12October/November 2007 Federal Deficit Reduction Act (DRA) NDC configuration

13October/November 2007 Federal Deficit Reduction Act (DRA) Definitions National Drug Code (NDC): National Drug Code (NDC) is a unique 10-digit, three-segment number assigned by the Food and Drug Administration (FDA) NDC Termination Date: The shelf-life expiration date of the last batch produced, as supplied on the Centers for Medicare and Medicaid Services (CMS) quarterly update. This date is supplied to CMS by the drug manufacturer/distributor.

14October/November 2007 Federal Deficit Reduction Act (DRA) NDC configuration First segment: Labeler code (5-digits) – Labeler: Any firm that manufactures, repacks, or distributes a drug product Second segment: Product code (4-digits) – Identifies a specific drug, strength, and dosage form of drug Third segment: Package code (2-digits) – Identifies the package size format

15October/November 2007 Federal Deficit Reduction Act (DRA) NDC configuration PACKAGE CODE (2 digits) PRODUCT CODE (4 digits) LABELER CODE (5 digits)

16October/November 2007 Federal Deficit Reduction Act (DRA) NDCs submitted must use 11-digit format No dashes or spaces Required 11-digit NDC (5-4-2) Billing Format 10-digit FDA NDC on PACKAGE NDC configuration

17October/November 2007 Federal Deficit Reduction Act (DRA) NDC configuration example Providers must bill the NDC on the label of the drug that is administered

18October/November 2007 Federal Deficit Reduction Act (DRA) Billing principles

19October/November 2007 Federal Deficit Reduction Act (DRA) NDC billing principles Enlist the cooperation of all staff to assure collection or notation of NDC from actual package used Billing of NDCs should not be based on a reference list due to varying NDC: – Labelers – Package sizes – Time periods There is not a requirement for an NDC when billing vaccines

20October/November 2007 Federal Deficit Reduction Act (DRA) The HCPCS/CPT code billing units and NDC quantity do not always have a one-to-one relationship. The NDC quantity is based on the strength of the drug administered per unit, and the designated strength of the HCPCS/CPT code. About the NDC quantity

21October/November 2007 Federal Deficit Reduction Act (DRA) NDC and HCPCS/CPT code quantity Example

22October/November 2007 Federal Deficit Reduction Act (DRA) HCPCS/CPT Code Unit = 1 (one 25 mg unit of Drug B) NDC Quantity = 5 for the 5 ml administered Waste = 5 ml or 25 mg (for the 5 ml or 25 mg not administered) Example NDC and HCPCS/CPT code quantity

23October/November 2007 Federal Deficit Reduction Act (DRA) Claim filing

24October/November 2007 Federal Deficit Reduction Act (DRA) PES version 2.08

25October/November 2007 Federal Deficit Reduction Act (DRA) 837 Professional Service 2 tab Billing instructions – PES

26October/November 2007 Federal Deficit Reduction Act (DRA) 837 Professional RX tab Billing instructions – PES

27October/November 2007 Federal Deficit Reduction Act (DRA) Billing instructions – PES 837 Institutional Outpatient Service tab

28October/November 2007 Federal Deficit Reduction Act (DRA) 837 Institutional Outpatient RX tab Billing instructions – PES

29October/November 2007 Federal Deficit Reduction Act (DRA) Billing instructions – DDE Professional

30October/November 2007 Federal Deficit Reduction Act (DRA) Billing instructions – DDE Institutional Outpatient

31October/November 2007 Federal Deficit Reduction Act (DRA) Billing instructions – Vendor If billing electronic claims using vendor software, check with your vendor to ensure your software will be able to capture criteria necessary to submit claims Vendor companion guides:

32October/November 2007 Federal Deficit Reduction Act (DRA) To report the NDC on the CMS-1500 claim form, providers must enter the following information into the shaded portion of fields 24A to 24H 1.Enter the NDC qualifier of N4 2.Enter the NDC 11-digit numeric code 3.Enter the NDC Unit qualifier F2 – International Unit GR – Gram ML – Milliliter UN – Unit 4.Enter the NDC Quantity (Administered/Billed Amount) in the format Billing instructions – CMS-1500

33October/November 2007 Federal Deficit Reduction Act (DRA) Outpatient Billing instructions – CMS-1450 (UB-04)

34October/November 2007 Federal Deficit Reduction Act (DRA) Codes requiring manual review Sent on paper for review DMS-664

35October/November 2007 Federal Deficit Reduction Act (DRA) Adjustments Paper adjustments for paid claims filed with NDC numbers will not be accepted The entire claim will have to be voided and a replacement claim will need to be filed Providers can adjust a paper claim with NDC numbers or an electronic claim with NDC numbers electronically

36October/November 2007 Federal Deficit Reduction Act (DRA) Remittance advice Reimbursement will not change Only the first sequence in a detail will be displayed reflecting the total paid amount or denial EOB

37October/November 2007 Federal Deficit Reduction Act (DRA) Electronic rejections

38October/November 2007 Federal Deficit Reduction Act (DRA) Bill specific procedure code for administered drugs This claim has rejected because the provider has not included an NDC for a HCPCS/CPT code that requires one Procedure codes and NDC do not match Claim has rejected because the NDC submitted on the claim is not associated to the HCPCS/CPT code billed Electronic rejections

39October/November 2007 Federal Deficit Reduction Act (DRA) Claim has rejected because there is no active rebate agreement in place on the DOS for the NDC on the claim Arkansas Medicaid will not reimburse for HCPCS/CPT codes with non-payable NDCs Providers are responsible for ensuring that the NDC of the drug that they are administering is from a covered labeler Electronic rejections NDC &/or labeler is not qualified for a rebate or is outside rebate dates

40October/November 2007 Federal Deficit Reduction Act (DRA) Discontinued drug Claim has rejected because the NDCs CMS termination date is on or before the date of service DESI drug not payable Arkansas Medicaid does not pay for drugs that are less than effective, also known as DESI drugs Electronic rejections

41October/November 2007 Federal Deficit Reduction Act (DRA) Explanation of Benefits (EOBs)

42October/November 2007 Federal Deficit Reduction Act (DRA) Explanation of Benefits (EOBs) EOB Drug not covered, check NDC, may be obsolete EOB DESI drug not payable by Medicaid EOB Procedure code requires NDC(s) for administered drugs

43October/November 2007 Federal Deficit Reduction Act (DRA) Explanation of Benefits (EOBs) EOB Procedure code and NDC do not match EOB NDC &/or labeler is not qualified for rebate or is outside rebate dates EOB Bill specific procedure code for administered drugs

44October/November 2007 Federal Deficit Reduction Act (DRA) Drug Efficacy Study Implementation (DESI)

45October/November 2007 Federal Deficit Reduction Act (DRA) Drug Efficacy Study Implementation Program administered by the FDA to review the effectiveness of drugs approved between 1938 and 1962 If the drug indicates a lack of substantial evidence of effectiveness, the FDA will publish its proposal to withdraw approval of the drug for marketing HCPCS/CPT codes will not be payable when linked to any NDC with a DESI indicator (DESI)

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48October/November 2007 Federal Deficit Reduction Act (DRA) Drug Efficacy Study Implementation (DESI)

49October/November 2007 Federal Deficit Reduction Act (DRA) Record retention

50October/November 2007 Federal Deficit Reduction Act (DRA) Record retention Records must be retained for five years Manufacturer may dispute drug rebate Requested records may include: – NDC invoices showing purchase of drugs – Documentation showing what drug was administered, dosage, route of administration, and waste

51October/November 2007 Federal Deficit Reduction Act (DRA) Billing tips

52October/November 2007 Federal Deficit Reduction Act (DRA) Billing tips Bill HCPCS/CPT codes the same as always Make sure your NDC is an 11-digit number without dashes or spaces, using the format Include all NDCs associated with the HCPCS/CPT code Determine if the manufacturer is a covered labeler When billing electronic claims, each NDC sequence must have a dollar amount Providers billing paper claims with multiple NDCs will require a zero amount after the first NDC sequence There is not a requirement for NDC billing of vaccines When billing a HCPCS/CPT procedure code that requires review by the state, you must include the DMS -664

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