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Provider Notice issued 08/10/11
To: Participating Pharmacies
Date: August 10, 2011
Re: Compound Drug Billing
During routine data analysis, the department has discovered that pharmacies are inappropriately billing non-compound drugs as compound drugs. The purpose of this notice is to inform pharmacies that billing non-compound drugs as compound drugs is prohibited. Compound drug billing is limited to pharmaceutical products that meet the definition of a compound drug.
A compounded drug is defined as a pharmaceutical product that results from the combining, mixing, or altering of two or more ingredients, excluding flavorings, to create a customized medication for an individual patient in response to a licensed practitioner’s prescription.
The dispensing of a drug product accompanied by a separate diluent, to be prepared and mixed after being dispensed, is not properly billed as a compound drug. For a pharmacy to bill a drug product and a diluent as a compound drug, the drug product and the diluent must be compounded, prior to being dispensed. The dispensing of two separate strengths of the same drug to get the prescribed dose should not be billed as a compounded drug unless they are mixed prior to dispensing.
Any products billed as compound drugs which do not meet the definition of compound drug may be subject to audit findings.
If you have questions, please contact the Bureau of Pharmacy Services at 1-877-782-5565, option 7.
Theresa A. Eagleson, Administrator
Division of Medical Programs