The Deficit Reduction Act includes a request that providers begin reporting by Jan. 1, 2008, the National Drug Code for certain drugs and biologicals provided to patients in an outpatient setting for claims paid by Medicaid. The purpose of the NDC reporting is to enable Medicaid to obtain rebates from the pharmaceutical companies that manufacture those drugs.
Although the provider community generally agrees that Medicaid is entitled to the rebates, there is much concern regarding the reporting of the NDC on institutional claims. For one thing, obtaining the NDC and then applying it to an institutional claim is currently a labor-intensive and manual process. However, the primary concern is that the NDC is issued by the drug manufacturer and does not always correspond with how the drugs were dispensed in the hospital setting; it is not a one-for-one match. Also, many pharmacy systems monitor their inventory through internal codes typically assigned through a chargemaster; these codes are not aligned with the NDC.
One option, identified in the DRA, is to report the J codes in place of the NDCs. (J codes, which consist of five alpha-numeric characters, were developed by CMS and identify certain drugs and biologicals.) The final rule is expected to be issued in July.
