A Comparison of HCPCS vs NDC Usage in Pricing Claims

Are you weighing the decision to enforce an NDC mandate on ALL Medical Pharmacy Claims? RJ Health’s Analytics team shares the pro’s & con’s of NDC mandates across Pricing, Formulary, and Network Quality Considerations. Here are some practical examples to help illustrate how, at the end-of-the-day, RJ Health believes the answer to the NDC vs. HCPCS reimbursement option is of course, BOTH – you need policies that reimburse at both HCPCS and NDC levels.


Comparison of HCPCS and NDC codes


 

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Comparison of HCPCS vc NDC Usage in Pricing Claims
There are benefits and challenges with utilizing one methodology over the other. Either approach could result in over or under reimbursement under specific conditions. Examples include:

1. Remicade’s current ASP rate is significantly below the AWP per NDC ($808 vs. $1,401 per vial), resulting in potential under-reimbursement to the provider, but overall lower spend to the plan.

2. Epoprostenol (J1325) currently has HCPCS price of $19.44 (Range of $15.69 to $27.07) due to the availability of both brand and generic products in the code. Flolan is currently priced at $22.43 and Veletri at $27.07. This situation promotes usage of the generic due to lower reimbursement.

Pricing

Based on the mix of products that are mapped to a specific HCPCS code Based on drug data sources (i.e. First Data Bank, MediSpan, etc.) and may be automatically updated if pricing is based on NDC level data.
Pricing based on the mix usually leads to improved pricing when products with various pricing ranges are represented. Allows for pricing reimbursement that is specific to submitted NDC
Pricing has to be updated within the medical claim system If NDC level data has to be converted to HCPCS, will require updates within the medical clam system.
Pricing updates are conducted in consistent cycles (i.e. monthly or quarterly) Price applied requires validation of HCPCS Units to NDC Units billed or conversion of NDC Unit price to HCPCS Unit Price.
Price applied based on unites of HCPCS Code submitted. NDC pricing is updated based on manufacturer reporting and not consistent.

Fomulary-Product Preferencing

If multiple branded and generic products exist in a specific HCPCS code, cannot establish a preferencing for generic first or specific brand. Allows for establishment of a formulary on covered products with differential reimbursement.
Alternatively, the pricing utilized should be set at the lowest cost product. Allows for ensuring coverage of preferred products where a medical rebate exists.
Difficult to facilitate rebate billing with codes that include multiple products when NDC units are required in reporting. Facilitates the billing for rebates.

Provider Contracting

Reimbursement rates established based at HCPCS level. Pricing based on drug pricing standards on weekly basis.
Pricing Updates may be delayed at code level due to system updates required or notification requirements. Contracts need to reflect the usage of pricing standards and potential update frequency.