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National Drug Code (NDC) Requirements for Physician-Administered Medications

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The Deficit Reduction Act of 2005 (DRA) requires states to collect rebates for physician-administered drugs. As a result, states must now collect the 11-digit NDC on all outpatient claims for drugs administered during the course of a patient's clinic visit. Providers are required to submit their claims with the exact NDC that appears on the product administered. The NDC is found on the medication's packaging and must be submitted in the 5digit-4digit-2digit format. MassHealth's coverage and pricing procedures have not changed with regard to medications administered in the clinical setting.

Please see the following section for answers to the most common questions. If you have further questions or concerns about this information, please contact MassHealth Customer Service at 1-800-841-2900 or e-mail your inquiry to providersupport@mahealth.net.

NDC and HCPCS Frequently Asked Questions

  1. Why do I have to bill with national drug codes (NDCs) in addition to Healthcare Common Procedure Coding System (HCPCS) codes?
  2. What is the Drug Rebate Program?
  3. What is an NDC?
  4. Do I need to include units for both the HCPCS code and the NDC?
  5. Are the HCPCS code units different from the NDC units?
  6. If the physician administered a vial of medication to a patient, do I bill the NDC units in grams, milliliters, or units?
  7. How will NDC information be billed on electronic and paper claims forms?
  8. If I am not sure which NDC was used, can I pick another NDC under the J Code and bill with it?
  9. Do drugs that are billed through a hospital outpatient department require an NDC?
  10. Do radiopharmaceuticals or contrast media require an NDC?
  11. Do vaccines/immunizations require an NDC?
  12. Are Medicare claims included in the NDC requirement?
  13. Do dentists need to bill with both HCPCS codes and NDC numbers?
  14. Do I bill the HCPCS code and NDC of a drug if I did not provide the drug, but just administered it?
  15. How should I bill for a drug when only a partial vial was administered?
  16. My clinic participates in the 340B program. Do I need to submit NDC codes for drug claims?
  17. I have heard that only single-source drugs and 20 multiple source drugs will require rebates. Can I just submit NDCs for just those drugs?

1. Why do I have to bill with national drug codes (NDCs) in addition to Healthcare Common Procedure Coding System (HCPCS) codes?

The Deficit Reduction Act of 2005 (DRA) includes provisions about the state collection of data for the purpose of collecting Medicaid drug rebates from drug manufacturers for physician-administered drugs. Since there are often several NDCs linked to a single HCPCS code, the Centers for Medicare & Medicaid Services (CMS) deems that the use of NDC numbers is critical to correctly identify the drug and manufacturer in order to invoice and collect the rebates.

 2. What is the Drug Rebate Program?

The Medicaid Drug Rebate Program was created by the Omnibus Budget Reconciliation Act of 1990 (OBRA '90) and became effective 1/1/1991. The law requires that drug manufacturers enter into an agreement with CMS to provide rebates for their drug products that are paid for by Medicaid. Outpatient Medicaid pharmacy providers have billed with NDCs and requested rebates since 1991. The DRA has now expanded the rebate requirement to physician-administered drugs.

3. What is an NDC?

The NDC is a universal number that identifies a drug. The NDC number consists of 11 digits in a 5-4-2 format. The first five digits identify the manufacturer of the drug and are assigned by the Food and Drug Administration. The remaining digits are assigned by the manufacturer and identify the specific product and package size.
Some packages will display less than 11 digits, but leading zeroes can be assumed and need to be used when billing. For example:
XXXX-XXXX-XX = 0XXXX-XXXX-XX
XXXXX-XXX-XX = XXXXX-0XXX-XX
XXXXX-XXXX-X = XXXXX-XXXX-0X
The NDC is found on the drug container (that is vial, bottle, tube). The NDC submitted to MassHealth must be the actual NDC number on the package or container from which the medication was administered. Do not bill for one manufacturer's product and dispense another.

4. Do I need to include units for both the HCPCS code and the NDC?

Yes. Provider reimbursement is based on the HCPCS description and units of service. The state's federally mandated rebate program is based on the NDC and those units.

5. Are the HCPCS code units different from the NDC units?

Yes. Use the HCPCS code and service units as you have in the past; this is the basis for your reimbursement.
NDC units are based upon the numeric quantity administered to the patient and the unit of measurement. The unit of measurement (UOM) codes are:
F2 = International Unit
GR=Gram
ML = Milliliter
UN = Unit (each)
The actual metric decimal quantity administered and the unit of measurement are required for billing. If reporting a fraction, use a decimal point. For example: If three 0.5-ml vials are dispensed, the correct quantity to bill is 1.5 ml.

6. If the physician administered a vial of medication to a patient, do I bill the NDC units in grams, milliliters, or units?

It depends on how the manufacturer and CMS have determined the rebate unit amount. Use the following rule of thumb.

  • If a drug comes in a vial in powder form and has to be reconstituted before administration, then bill each vial (unit/each) used (UN).
  • If a drug comes in a vial in a liquid form, bill in milliliters (ML).
  • Grams are usually used when an ointment, cream, inhaler, or bulk powder in a jar are dispensed. This unit of measure will primarily be used in the retail pharmacy setting and not for physician-administered drug billing (GR).
  • International Units will mainly be used when billing for Factor VIII-Antihemophilic Factors (F2).

Examples:

  1. A patient received 4 mg Zofran IV in the physician's office. The NDC you used was 00173-0442-02, which is Zofran 2 mg/ml in solution form. There are 2 milliliters per vial. You would bill J2405 (ondansetron hydrochloride, per 1 mg) with 4 HCPCS units, and since this drug comes in a liquid form, you would bill the NDC units as 2 milliliters (ML2).
  2. A patient received 1 gram of Rocephin IM in the physician's office. The NDC of the product used was 00004-1963-02, which is Rocephin 500 mg vial in a powder form that you needed to reconstitute before the injection. You would bill J0696 (ceftriaxone sodium, per 250 mg) with 4 HCPCS units, and since this drug comes in powder form, you would bill the NDC units as 2 units (also called 2 each) (UN2).

Please note: NDCs listed above have hyphens between the segments for easier visualization. When submitting NDCs on claims, submit as a digit number with no hyphens or spaces between segments.

7. How will NDC information be billed on electronic and paper claim forms?

Please submit HCPCS codes as usual and add NDC and quantity information as identified below. These claims must be submitted on paper claims or billed electronically using the 837 transaction. These claims cannot be billed via direct data entry (DDE) on the Provider Online Service Center at this time.

Billing Using the Electronic Claim Format

If you bill electronically using the 837 transaction, complete the Drug Identification and Drug Pricing segments in Loop 2410 following the instructions below.

Loop

Segment

Element Name

Information

2410

LIN

02

Product or Service ID Qualifier

If billing for a national drug code (NDC), enter the product or service ID qualifier.

2410

LIN

03

Product or Service ID

If billing for drugs, include the NDC.

An NDC is not required for vaccines.

2410

CTP

03

Unit Price

If an NDC was entered in LIN03, include the unit price for the NDC billed.

2410

CTP

04

Quantity

If an NDC was submitted in LIN03, include the quantity for the NDC billed.

2410

CTP

05-1

Unit or Basis for Measurement Code

If an NDC was submitted in LIN03, include the unit or basis for measurement code for the NDC billed using the appropriate code qualifier:

F2 — International unit

GR — Gram

ML — Milliliter

UN — Unit

Billing Using the Paper Claim Form

CMS-1500

If you bill on paper using the CMS-1500 form, use the shaded area of Fields 24A-24G to report codes, NDC units, and descriptors.

UB-04

Use the Revenue Description Field (Form Locator 43) on the UB-04 as follows.

  • Report the N4 qualifier in the first two positions, left-justified, followed immediately by the 11-character NDC in the 5-4-2 format (no hyphens).
  • Immediately following the last digit of the NDC (no delimiter) is the Unit of Measurement Qualifier. The Unit of Measurement Qualifier codes are as follows.
    • F2-International Unit
    • GR-Gram
    • ML-Milliliter
    • UN-Unit
  • Immediately following the Unit of Measurement Qualifier, you will find the unit quantity with a floating decimal for fractional units limited to three digits (to the right of the decimal).
  • Any spaces unused for the quantity should be left blank.

Note that the decision to make all data elements left-justified was made to accommodate the largest quantity possible. The Description Field on the UB-04 is 24 characters long. An example of the methodology is illustrated below.

N

4

1

2

3

4

5

6

7

8

9

0

1

U

N

1

2

3

4

.

5

6

7

 

When billing Medicare for a dual-eligible individual, providers should enter the NDC and units on their claim (paper or electronic) in the appropriate fields mentioned above. This is applicable to claims submitted directly to MassHealth and to claims that will cross over from the Medicare coordination-of-benefits contractor to MassHealth.

8. If I am not sure which NDC was used, can I pick another NDC under the J Code and bill with it?

No. The NDC submitted to MassHealth must be the actual NDC number on the package or container from which the medication was administered.

9. Do drugs that are billed through a hospital outpatient department require an NDC?

It depends.

This requirement does not apply to hospital claims that are paid as part of a bundled rate, such as the claims paid through the bundled hospital Payment Amount Per Episode (PAPE). The requirement applies to professional claims, including Medicare crossover claims.

Effective September 15, 2008, MassHealth requires outpatient hospital departments to submit national drug codes with NDC units and appropriate descriptors to accompany claims for those drugs that are billed separately on institutional claim forms that are identified on the claim with a Level II HCPCS code. This requirement includes claims from acute hospitals from other states, chronic disease and rehabilitation hospitals, and some Medicare crossover claims for renal dialysis clinics.

10. Do radiopharmaceuticals or contrast media require an NDC?

Not at this time

11. Do vaccines/immunizations require an NDC? 

No. Vaccines are not included in the rebate requirements.

12. Are Medicare claims included in the NDC requirement? 

Yes. Claims for MassHealth members who are dually eligible for Medicare require NDCs with the HCPCS codes.

13. Do dentists need to bill with both HCPCS codes and NDC numbers?

No. Use of NDCs with HCPCS codes is not applicable to dentists.

14. Should I bill the HCPCS code and NDC of a drug if I did not provide the drug, but just administered it? 

No. For example, if a patient brings an allergy extract from his allergist to have the family physician administer it, the family physician may not bill for the drug. The family physician should bill only for the administration of the drug. The allergist should bill for the drug.

15. How should I bill for a drug when only a partial vial was administered? 

Bill using the HCPCS  code with the corresponding units administered. When calculating the NDC units, the HCPCS code units should be converted to the NDC units, using the proper decimal units.
For example:
If the previously mentioned patient (see Question 10) received only 2 mg of Zofran and you used the same NDC, which is Zofran 2 mg/ml in a 2-ml vial, the billing would look like this:
HCPCS J2405 (ondansetron hydrochloride, per 1 mg) 2 units
NDC 00173044202 ML1

16. My clinic participates in the 340B program. Do I need to submit NDC codes for drug claims? 

CMS has stated that this provision of the DRA does not apply to 340B drugs billed to Medicaid programs at the acquisition cost of the drug.

17. I have heard that only single-source drugs and 20 multiple source drugs will require rebates. Can I just submit NDCs for just those drugs? 

No. At this time, states are mandated to submit rebates on 20 drugs, but they are encouraged to expand their rebate program beyond that and MassHealth intends to do so.

The "mandatory 20" will change yearly to simplify billing for providers and processing for MassHealth claims. All physician-administered medications will require submission of NDCs.
Please Note: Some products not traditionally considered drugs are included in those mandated for rebate (for example, J7050 Infusion, normal saline, 250 cc), so don't overlook these products when submitting NDCs.

 

This information is provided by MassHealth.