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National Drug Code (NDC) Billing Information

To comply with the Centers for Medicare and Medicaid Services (CMS) requirements pursuant to the Federal Deficit Reduction Act (DRA) of 2005, the Iowa Medicaid Enterprise (IME) requires providers to submit the NDC for each Healthcare Common Procedure Coding System (HCPCS) code drug.

States must collect certain data for the purpose of submitting and collecting Medicaid drug rebates from drug manufacturers for certain physician-administered drugs in order for Federal Financial Participation (FFP) to be available for payment of these drugs. Reimbursement is based on the HCPCS code while the NDC is used for drug rebate processing.

This is your resource for information about these revisions and what you need to do as a provider.

What is or is not included?

The NDC reporting requirement applies to:

  • Drug products administered in an office/clinic or other outpatient setting billed with the following types of HCPCS Level II procedure codes, which must also include the corresponding NDC number.
    • “A” codes (for radiopharmaceuticals only), “C” codes, “J” codes, and “Q” codes.
    • HCPCS Level II codes specified as “not otherwise classified” (NOC) and “not otherwise specified” (NOS) (e.g., J3490, and C9399).
  • Paper claim forms CMS-1500 and UB-04 as well as Electronic Data Interchange (EDI) transactions 837P and 837I.
  • Medicare crossover claims.
  • Hospitals billing drugs with HCPCS Level II codes which are billed separately, and the cost is not reflected in a corresponding Ambulatory Patient Classification (APC) payment.

Claims billed with revenue codes 251-259 and 634-636 will also require a corresponding CPT/HCPCS Level II procedure code and NDC reporting.

340B Claims: NDCs must be submitted. While 340B purchased claims are not eligible for drug rebates, NDCs are required to receive federal funding for the payment of the claim and must follow the billing requirements in IME Informational Letter No.1638-MC.

The NDC reporting requirement does not apply to:

  • Physician-administered drugs rendered in an outpatient hospital setting and as billed with the appropriate HCPCS Level II code, where the physician-administered drug being rendered, is reflected/included in the APC being billed for the total services being rendered. Per CMS guidance, such drugs included in the APC “bundled payment” methodology are exempt.
  • Devices - items considered by the Food and Drug Administration (FDA) to be “devices” and not “drugs.”

How do I bill?

All claims for outpatient medications must include the National Drug Code (NDC), NDC unit qualifier, and NDC units in addition to the HCPCS codes and HCPCS quantity. This information is required to be collected on all outpatient drug claims in order for the Department of Human Services to bill manufacturers for federal rebates as permitted by the Patient Protection and Affordable Care Act (PPACA).

All claims for outpatient drugs will be validated for the presence of a(n):

  1. Valid NDC.
  2. NDC that corresponds to the billed HCPCS.
  3. Accurate unit of measure for the NDC billed (F2, GR, ML, UN).
  4. NDC quantity.

Claims not passing all of these validation criteria will be denied.

How can I determine which drugs are included in the Medicaid Rebate Program?

Rebatable NDC List Website: Iowa Medicaid posts the following lists quarterly and the posting date of the list will be the effective date of any coverage change: 1) rebatable drugs; and 2) all multi-source drugs not in the top 20. See the Rebatable Drug List for J-Code Billing on the DHS website. If a drug is not included in either of these lists, then it is not payable.

What is the 5-4-2 format for NDC numbers?

All drug products have an 11-digit NDC. Some of the drug manufacturers do not follow the 5-4-2 format. Regardless, if there is a missing digit in the 5-4-2 format, a zero must be added to the beginning of one of the three number sections, whichever section is deficient, in order to bring the number into 5-4-2 claim-submitting compliance. For example:

Examples of 5-4-2 format

What are the differences between medical and pharmacy billing?

Below are the primary differences between medical and pharmacy billing.

Medical claims

  • *Usually billed in mg.
  • 1 J-code represents multiple NDCs.

Pharmacy claims

  • *Usually billed in ml.
  • The NDC is highly specific and should match the vial administered to the member.
  • The NDC must be in the appropriate 5-4-2 format to match our validation file. Refer to the 5-4-2 format explanation above.

* Therefore, the quantity billed and unit of measure qualifier will rarely match between the HCPC (J-code) and NDC.
See the commonly billed J-codes (PDF) to NDC billing cross-reference guide for more information.

I need help converting J-code units to NDC. Do you have a resource?

We have created a commonly billed J-codes user guide (PDF).

Once you have identified the number of J-code units you will bill, simply take these units, divide by the conversion factor—denoted as "CF"—and this will provide the appropriate number of NDC units to bill. The proper NDC unit qualifier has also been listed to ensure that this is properly selected as well.  Let's look at a few examples below:

Examples of NDC qualifiers

Have more questions?