National Government Services, Inc. Medicare Monthly Review Part A and B
A Combined Part A and Part B Newsletter

Compounded Drugs (J3490)

Combinations of drugs that are prepared or mixed prior to purchase are considered “compounded” drugs. The normal pricing methods do not apply. The following information provides clarification to the billing methods for compounded drugs.

Compounded drugs should be coded using HCPCS code J3490. Drugs that are not prepared in the same manner as those preparations of the same drug listed in the HCPCS codes, or that require special preparation, should also be coded using J3490. These drugs should be billed at invoice price, which might include a compounding fee, but may not contain fees for shipping and handling. When compounded drugs are used, the following information must be reported on the claim:

• A unit of service of one (enter on the claim line)
• Name and dosage of each drug included (enter in Item 19 or the electronic equivalent)
• Total invoice price (enter in Item 19 or the electronic equivalent)

A copy of the invoice must be retained in the beneficiary’s medical record and available for review by the carrier, if requested.

Individual codes should not be billed for the drugs used to make the mixture. Only compounded medications that are not self-administered are reimbursable by Medicare.