PHSI has published information about D.0 in 2009 and 2011.  As a follow-up, PHSI was asked about D.0 and compounds.  There are several items compounding pharmacies should be thinking about with the implementation of D.0 becoming mandatory.  There should be concern regarding the use of products as compound bases that are available over the counter (e.g., Vanicream).  One compound using 4 oz. of Vanicream (NDC 45334-0300-16 AWP $2.80/4 oz, WAC $2.33/4 oz) could mean the pharmacy is not reimbursed some amount between AWP and WAC for that ingredient.  Some may say that is a small amount that can be made up elsewhere.  However, a compounding pharmacy making 100 of these preparations a day is now looking at a loss of between $233 and $280 during that day.  The prescriber and pharmacy may be able to find a different base that is covered by the PBM/Plan because it a legend product.

PHSI is not sure if contracts are being renegotiated due to the implementation of D.0.  It is up to the business partners (i.e., pharmacies and PBMs/Plans) to determine if that is required.  With the required change to compound billing, it might be wise for pharmacies to re-evaluate their contracts with PBMs/Plans to see if the reimbursement adequately covers the overall cost of compounding.  Questions to think about while re-evaluating this would include:

1)     Are OTC products covered?  Are OTC products covered when included in a prescription claim for a compound?  (Noted on claims submitted with the Compound Code = 2 indicating the prescription is a compound)

2)     Are ingredient costs for compounds calculated differently compared to non-compounded prescriptions (e.g., tablets and capsules)?   If not, consider requesting and negotiating a rate that accounts for the cost of compounding.

3)     Are dispensing fees for compounds greater than dispensing fees for non-compounded prescriptions.  Does the contract include an additional fee for compounding?  Again, consider requesting and negotiating fees that accounts for the cost of compounding.

D.0 by itself does not necessitate a change in reimbursement structure for non-compounded prescriptions (e.g., tablets and capsules).  However,  D.0 will change reimbursement for pharmacies submitting claims to plans that used one of the old methods for billing compounds, such as billing:

• the NDC number of the most expensive legend drug in the compound
• a NDC number like 99999-9999-95 used for compound processing

The method of billing compounds using the NDC of each ingredient in a separate “compound segment” of the claim is not new.  The compound segment was introduced in NCPDP version 5.1 – the version used to submit claims before D.0.  However, it was not mandatory in 5.1 for all PBMs and plans to use the compound segment.  Texas Medicaid was the most notable plan that required the compound segment in 5.1.

These are a few questions that were brought up by the industry and you may have more.  What other questions about D.0 do you have, which have not been answered?  How have you accounted for these scenarios above?