Read Texas Health and Human Services Commission text version

Texas Health and Human Services Commission

Vendor Drug Program

Pharmacy Provider Procedures Manual

for Texas Medicaid Children's Health Insurance Program (CHIP) DSHS Children with Special Health Care Needs (CSHCN) Services Program DSHS Kidney Health Care (KHC)

December 2011

Table of Contents

Mission Statement.........................................................................................................................................................3 Revision History .............................................................................................................................................................3 HIPAA Privacy Rules.......................................................................................................................................................3 1. Introduction .............................................................................................................................................4 1.1. Contact Information for Pharmacy Providers ..........................................................................................4 2. Contracting with Vendor Drug .................................................................................................................8 3. Program Setup .........................................................................................................................................9 3.1. Claim Format............................................................................................................................................9 3.2. Transaction Types ....................................................................................................................................9 3.3. System Maintenance................................................................................................................................9 3.4. Version D.Ø Transactions .......................................................................................................................10 3.5. Version D.Ø Segments............................................................................................................................10 3.6. Required Data Elements.........................................................................................................................11 3.7. Timely Filing Limits .................................................................................................................................12 4. Program Operations...............................................................................................................................12 4.1. Client Identification Numbers ................................................................................................................12 4.2. Prescriber Identification Numbers .........................................................................................................14 4.3. Dispensing Limits....................................................................................................................................14 4.4. Mandatory Generic Requirements.........................................................................................................16 4.5. Drug Coverage........................................................................................................................................16 4.6. Client Payment Information...................................................................................................................19 4.7. Coordination of Benefits (COB) ..............................................................................................................19 4.7.1. Medicaid.................................................................................................................................................19 4.7.2. CSHCN ....................................................................................................................................................21 4.7.3. KHC.........................................................................................................................................................21 4.8. Long Term Care (LTC) .............................................................................................................................21 4.9. Hospice...................................................................................................................................................21 4.10. Spenddown ...........................................................................................................................................21 4.11. Compounds ............................................................................................................................................22 4.12. STAR Health Program for Foster Care Children......................................................................................22 5. Drug Use Review (DUR)..........................................................................................................................23 6. Claim Edits..............................................................................................................................................25 7. Provider Reimbursement .......................................................................................................................26 8. Eligibility Verification .............................................................................................................................28 9. Drug Rebates..........................................................................................................................................29 10. Pharmacy Provider Desk Reviews ..........................................................................................................29 Attachment A: Standard Format Reject Codes ............................................................................................31 Attachment B: OBRA 90 Requirements for Contracted Pharmacies...........................................................36 Attachment C: Pharmacy Claims Billing Request (Form 3700)....................................................................38 Attachment D: Payer Specification Information..........................................................................................41

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Mission Statement

To provide statewide access to prescription medications for Medicaid, State's Children's Health Insurance Program (CHIP), Children with Special Health Care Needs (CSHCN) services program, and Kidney Health Care (KHC) program eligible clients.

Revision History

Date 12/31/2005 05/24/2007 04/01/2008 01/20/2009 11/22/2010 02/01/2011 12/01/2011 Documentation Conversion to FHSC as claims processor Expanded Eligibility Verification (E1) Transaction STAR Health (Foster Care) Coordination of Benefits Conversion to ACSPharmacy as claims processor Update pricing calculation (Provider Reimbursement) Update for NCPDP version D.Ø. Update remittance advice information with HIPAA version 5010

HIPAA Privacy Rules

The Health Insurance Portability and Accountability Act of 1996 (HIPAA ­ Public Law 104191) provides, among other things, strong protection for personal health information. It gives individuals certain rights concerning their health information, sets boundaries on how it is used, establishes formal safeguards, and holds violators accountable. The HIPAA Privacy regulations went into effect on April 14, 2003. Personal health information includes any health information whether verbal, written, or electronic, that is created, received, or maintained by First Health on behalf of Texas HHSC Vendor Drug Program. It relates to the past, present, and future physical or mental health of any individual or client. Protected Health Information (PHI) is available to you on a daily basis. You use it when you carry out your assigned tasks. PHI is health care data plus identifying information that allows someone using the data to tie the medical information to a particular person. Claims data, prior authorization information, and attachments such as medical records and consent forms, are all PHI. Never release any Protected Health Information to anyone who does not have a need to know that information. If you are asked about the PHI of a client and you do not feel the person asking has a need to know, immediately refer the individual to your supervisor, who will forward the request to the proper person. Questions about PHI should be directed toward your management.

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1. Introduction

In 2009 the Texas Health and Human Services Commission (HHSC) announced a contract award of the Vendor Drug Program (VDP) Pharmacy Claim and Rebate Administration systems to ACS State Healthcare, LCC, (operating as ACSPharmacy). Beginning Monday, November 22, 2010 all outpatient prescription drug claims for Medicaid, the Children's Health Insurance Program (CHIP), the Children with Special Health Care Needs (CSHCN) Services Program, and the Kidney Health Care (KHC) program are processed by ACSPharmacy through the VDP's point of sale (POS) claim system. HIPAA version 5010 will be federally mandated on January 1, 2012. Starting this date, the POS system will require pharmacies to submit claims electronically in the National Council for Prescription Drug Programs (NCPDP) standardized Version D.Ø; lower versions, including Version 5.1, will not be accepted. All arrangements with switching companies should be handled directly by the provider. After submission, the claim system will respond to the pharmacy provider with information regarding recipient eligibility, VDP's allowed amount, applicable Prospective Drug Utilization Review (ProDUR) messages, and applicable rejection messages. ProDUR messages will be returned in the Drug Utilization Review (DUR) response fields; other important related information will be displayed in the free form message area. It is of utmost importance that all providers see the appropriate messages exactly as the claim system returns them. Provider submitted paper claims are only allowed for cases where a Medicaid eligibility number is unavailable for a newborn, or special circumstances as defined by the State. In situations where a paper claim is needed, a Pharmacy Claims Billing Request (Form 3700, see Attachment C) must be submitted to VDP.

1.1. Contact Information for Pharmacy Providers 1.1.1. Vendor Drug Pharmacy Resolution Help Desk

The Pharmacy Resolution Help Desk can be reached between 8:30 a.m. and 5:15 p.m. (CST) Monday through Friday at 8004354165. Use this number for all of your Medicaid, CHIP, CSHCN, and KHC billing, payment, and reimbursement questions and problems. In order to expedite your call for assistance, please be ready to give your 10digit National Provider Identifier (NPI) number and the appropriate cardholder ID number(s). If you have a rejected claim, please be sure the correct information has already been transmitted and a rejection received. The Vendor Drug Pharmacy Resolution Help Desk phone number is for pharmacy providers only. To prevent lengthy waittimes, please do not share this number with Medicaid, CHIP, CSHCN, or KHC clients either verbally or on a prescription label. We are limited to the amount of information that can be given to a client because of the Health Insurance Portability and Accountability Act (HIPAA). Contact information is available at txvendordrug.com.

1.1.2. Vendor Drug Field Administration

Vendor Drug maintains regional offices across Texas to provide pharmacy education, technical support, and training, as well as review claim processing activity to ensure compliance with contracts and program policy. The regional organization is managed by the regional pharmacist manager. A regional coordinator serves as statewide administrative team lead for the group. Each office is staffed with a regional consultant pharmacist and regional administrative assistant. Contact information is available at txvendordrug.com. Clients should call one of the numbers listed below (see Contact Information for Clients).

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1.1.3. Medicaid/CHIP Contract Management

Medicaid/CHIP Contract Management is responsible for managing over 4,000 pharmacy contracts including reviewing applications, assigning fees, recommending and imposing sanctions, and resolving compliance issues. To enroll in the Texas Title XIX Vendor Drug Program or to update key information (e.g. billing and/or physical addresses, phone/fax numbers; personnel, such as pharmacists; or store closure) contact the Vendor Drug Pharmacy Resolution Help Desk and ask to speak with Contract Management.

1.1.4. Texas Prior Authorization Call Center

To obtain prior authorization for nonpreferred drugs and clinical edit failures, prescribing providers or their representatives should call the Texas Prior Authorization Hotline at 1877PATEXAS (18777283927). The hotline is available Monday through Friday, 7:30 a.m. to 6:30 p.m. (CST). Pharmacists cannot obtain prior authorization for medications. If the client arrives at the pharmacy without a prior authorization for a nonpreferred drug, the pharmacist should alert the doctor's office and ask the doctor to get the prior authorization. Pharmacies should not contact Vendor Drug to verify the prior authorization rejection (error code 75 and message, "Prescriber call PA Texas...").

1.1.5. Texas Third Party Call Center

To verify a Medicaid client's third party insurance (non Medicare) either the client or the pharmacy staff should call the Texas Third Party Call Center at 18663895594. Staff will re verify the other insurance within 72 hours and update the claim processing system as necessary. Providers can also complete the "TPL Verification Request form" and fax to 8663896342. The form is available to download from txvendordrug.com. Pharmacy providers should contact the client's primary insurance if they receive a rejection response from that insurance. VDP does not have the ability to assist with the correction of a nonMedicaid rejection. Providers that do not know how to enter and submit a NCPDP standard Coordination of Benefits (COB) segment should contact their software help desk or corporate office.

1.1.6. Waste, Abuse, and Fraud

The HHSC Office of Inspector General (OIG) investigates waste, abuse, and fraud in all Health and Human Services agencies in the State of Texas. To report waste, abuse or fraud please call 800 4366184 or visit the HHSC OIG website at https://oig.hhsc.state.tx.us/. Federal law requires all providers and other entities that receive or make annual Medicaid payments of $5 million or more to educate their employees, contractors, and agents about fraud and false claims laws and the whistleblower protections available under those laws. Further details are available at www.hhsc.state.tx.us/medicaid/index.html

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1.2. Contact Information for Clients 1.2.1. Medicaid Client Information

The toll free number Medicaid clients should call for assistance is published on their Monthly Identification Letter (Form 3087). The HHSC Helpline number is 8003358957.

1.2.2. CHIP Client Information

The CHIP Member Services Number for individual CHIP health plans is published on each client's Health Plan Card. Clients should call that number for all other eligibility and program information. CHIP clients with questions about prescriptions should contact the CHIP Pharmacy Hotline at 1 8662749154. Questions about eligibility, renewal, payments, change of address, or copay amounts should be directed to 18006476558. Website: www.chipmedicaid.org

1.2.3. CSHCN Client Information

CSHCN clients should call 8002528023 (or 5127767355, Austin local) for eligibility and program information. Website: www.dshs.state.tx.us/cshcn/default.shtm

1.2.4. KHC Client Information

KHC clients should call 8002223986 for eligibility and program information. Website: www.dshs.state.tx.us/kidney/default.shtm

1.2.5. STAR Health Program (Foster Care) Information

STAR Health (Foster Care) clients and caregivers needing assistance should call the HHSC Helpline at 8003358957. Websites at the Texas Department of Family and Protective Services: http://www.dfps.state.tx.us/Child_Protection/Foster_Care/ http://www.dfps.state.tx.us/About/Renewal/CPS/medical.asp

1.2.6. Medicare

Federal law prohibits states from drawing federal Medicaid funds for drugs covered by Medicare Part D for individuals who are both Medicare eligible and also eligible for some level of Medicaid prescription coverage ("dual eligible"). Under the Medicare Modernization Act that created pharmacy coverage under Part D, certain drugs can be excluded from coverage by the private drug plans. Texas Medicaid will continue to pay for a few categories of the drugs not covered by Medicare (i.e. the wraparound benefit), Medicaid does not pay for prescriptions for Part D covered drugs. Clients eligible for both Medicare and Medicaid will need to choose a Medicare Part D plan in order for their prescription benefits to continue as Medicaid will only be responsible for the Part D excluded drugs. Vendor Drug has more about Medicare Part D processing at txvendordrug.com. Clients should contact 1800MEDICARE (18006334227).

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1.3. Addresses

Address Provider Paper Claims Billing address: Texas Health and Human Services Commission Medicaid/CHIP Vendor Drug Program (H630) P.O. Box 85200 Austin, TX 787085200 Vendor Drug Regional Offices Consult txvendordrug.com for specific contact Pharmacy Provider Contracts address: Texas Health and Human Services Commission Medicaid/CHIP Contract Management (H330) P.O. Box 85200 Austin, TX 787085200 Pharmacy Resolution Desk 8004354165 Format Form 3700 (e.g. special circumstances as defined by the State)

Pharmacy responses to monthly desk reviews. Application for Participation in Texas Title XIX Vendor Drug Program

NCPDP version D.Ø

1.4. Website

The Vendor Drug Program website (www.txvendordrug.com) is an important resource for pharmacies: visitors can search our online formulary; find out which pharmacies are enrolled as Medicaid providers; download the latest edition of the Preferred Drug List; and become familiar with the Vendor Drug regional office in your area. These tools are lost to providers if they cannot properly access our website through their store's intranet sites. We encourage all corporate offices to provide the proper education on how to access and utilize our website so that pharmacists and other pharmacy staff may take full advantage of the services provided. Specific links: Preferred Drug List (PDL) txvendordrug.com/pdl/ Manuals/Payer sheets txvendordrug.com/downloads/index.asp Formulary search http://www.txvendordrug.com/formulary/formularysearch.asp Pharmacy search txvendordrug.com/providers/medicaidpharmsearch.shtml Prescriber search txvendordrug.com/providers/provsearch.asp Texas Medicaid hhsc.state.tx.us/Medicaid/ HHSC hhsc.state.tx.us DSHS CSHCN dshs.state.tx.us/cshcn/ DSHS KHC dshs.state.tx.us/kidney/

1.5. News and Information

Vendor Drug publishes the RxUpdate, a quarterly newsletter that focuses on changes to program policy and procedures and information to assist in claim processing. The newsletter is mailed to all contracted pharmacies at the address Vendor Drug has on file. Pharmacy providers that do not receive a copy should check to ensure their address with Vendor Drug is correct, and report changes to the Medicaid/CHIP Contract Management unit in accordance with the Terms and Conditions of the Medicaid contract. Vendor Drug also utilizes the Texas Health and Human Services subscription email service to broadcast announcements and reminders. Users can select items of interest from a menu of categories covering all five Texas Health and Human Services agencies. Those who opt to receive Vendor Drug notices will receive an email message when information is published that impacts pharmacy providers. To signup for this free service visit txvendordrug.com.

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2. Contracting with Vendor Drug

Medicaid/CHIP Contract Management is responsible for managing the over 4,000 Vendor Drug Program pharmacy contracts as well as reviewing applications, assigning fees, recommending and imposing sanctions, and resolving compliance issues. Texas Pharmacies that want to participate in the Medicaid Vendor Drug Program must be contracted prior to providing outpatient prescription services. Applications will be effective the date the contract is fully executed by both parties and contracts will not be backdated. Pharmacies can only submit claims for prescriptions filled on or after the effective date of the contract. Texas Pharmacies that want to participate in the Children's Health Insurance Program (CHIP), Kidney Health Care (KHC) program, or Children with Special Health Care Needs (CSHCN) Services Program must first have a Medicaid contract. An additional agreement(s) must be signed and returned to Medicaid/CHIP Contract Management unit in order to participate in each of the other programs. Any active Texas Medicaid or CHIP client maintaining state residence is eligible for services provided outside the state. For the Vendor Drug Program to consider payment, the service must have been prescribed by an approved practitioner, dispensed by an approved pharmacy provider, and the medication must be a reimbursable product on our drug formulary. Please visit txvendordrug.com for outofstate pharmacy requirements. Contracts will be terminated for pharmacies that have been inactive (had no claim payment) within a continuous sixmonth period. If a contract is terminated because of inactivity, the provider must reapply to the Vendor Drug Program by submitting a new contract application for reinstatement.

2.1.

Nonpharmacy contracts

Any providers performing medical services that wish to be eligible for reimbursement for Title XIX (Medicaid) benefits must contact the Texas Medicaid & Healthcare Partnership (TMHP). To enroll, complete an application from the TMHP "Provider Enrollment" website. For further assistance about completing the application contact the TMHP Contact Center at 1800925 9126, or visit the TMHP "Regional Support" website to find contact information for the local TMHP provider relations representative in your area.

2.2.

Maintaining your contract

In accordance with the terms and conditions of your contract with HHSC, all contracted pharmacies must notify the state in writing of any changes, such as billing and/or physical addresses, phone and fax numbers, key personnel (such as pharmacists), a change of financial information (e.g., direct deposit), or store closure. Please refer to your contract for all requirements of contract update submissions. Failure to update your contract information could result in your claims being placed on vendor hold or the termination of your contract. Please submit corrections on your pharmacy letterhead by fax to Medicaid/CHIP Contract Management at 5124911974

2.3.

Software vendors

Software vendors must support NCPDP version D.Ø and register with the Vendor Drug Program to obtain a Software Vendor/Certification ID. Pharmacies should ensure their software vendor supports "Additional Message Information" (Field 526FQ) in the NCPDP D.Ø response.

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3. Program Setup 3.1. Claim Format

Beginning November 30, 2011, pharmacies can submit pointofsale claims in either NCPDP version D.Ø or 5.1. Beginning February 1, 2012, the HIPAA 5010 federal mandated compliance date, pointofSale claims must be submitted in the NCPDP version D.Ø format Claims submitted in NCPDP v5.1 or lower versions will be rejected. Paper submissions will only be accepted using the Pharmacy Claims Billing Request (Form 3700, see Attachment C), for the following: o Newborns when a Medicaid Cardholder ID number has yet to be issued o Special circumstances as defined by the State (e.g. natural disasters)

3.2. Transaction Types

The following transaction codes are defined according to the standards established by NCPDP. Ability to use these transaction codes will depend on the pharmacy's software. At a minimum all providers should have the capability to submit original claims (Transaction Code B1) and reversals (Transaction Code B2). Claims Billing (Transaction Code B1) This transaction captures and processes the claim and returns to the pharmacy the dollar amount allowed under the Texas Medicaid reimbursement formula. The value submitted in "Transaction Code" (Field 1Ø3A3) is "B1". Claims Reversal (Transaction Code B2) This transaction is used by the pharmacy to cancel a claim that was previously processed. To submit a reversal, the provider must void a claim that has received a Paid status. To reverse a claim, the provider selects the Reversal (Void) option in the pharmacy's computer system. The value submitted in "Transaction Code" (Field 1Ø3A3) is "B2". The following fields must match on the original paid claim and on the void request for a successful claim reversal: Service Provider ID Prescription number Date of service (date filled) National Drug Code (NDC) Eligibility Verification (Transaction Code E1) This transaction is used by the pharmacy to determine a Medicaid, CHIP, CSHCN, or KHC client's eligibility and prescription benefits. Refer to Attachment D for specific field requirements and detailed messaging returned in "Additional Message Information" (Field 526FQ). The value submitted in "Transaction Code" (Field 1Ø3A3) is "E1". (See Section 8 "Eligibility Verification" for an alternate method of verification.)

3.3. System Maintenance

The VDP POS system will undergo regularly scheduled weekly maintenance between 11 p.m. Saturdays and 1 a.m. Sundays (all times Central). Pharmacies will be unable to submit claims for adjudication during this time.

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3.4. Version D.Ø Transactions

Please review the following for program requirements; some transactions may be required at a future date to be determined: Code E1 B1 B2 N1 N2 N3 B3 P1 P3 P2 P4 Name Eligibility Verification Billing Reversal Informational Reporting Informational Reversal Informational Rebill Rebill Prior Authorization Request and Billing Prior Authorization Inquiry Prior Authorization Reversal Prior Authorization Request Only Support Requirements Supported Required Required N1 from pharmacies not supported N2 from pharmacies not supported Not Supported Not Supported Not Supported Not Supported Not Supported Not Supported

3.5. Version D.Ø Segments

Data in NCPDP version D.Ø is grouped together in segments. Please review the following for program requirements; some segments may be required at a future date to be determined. NCPDP designations: M Mandatory O Optional N Not Used R Required RW Required when NCPDP Request Segment Matrix Segment Support Requirements E1 B1 B2 Header M M M Required for all transactions Patient R R N Required for B1 and E1. Not used for B2. Insurance M M N Required for B1 and E1. Not used for B2. Claim N M M Required for B1 and B2. Not used for E1. Pharmacy Provider N N N No planned requirements at this time; may be required at a future date. Prescriber N R N Required for B1 only. COB/Other Payments N O N Required for B1 when other payer exists. Worker's Comp N N N Not Required DUR/PPS N O O Optional Pricing N M N Required for B1 only. Coupon N N N Not Required Compound N O N Required for B1 when claim is for a compound drug. PA N N N Not Required Clinical N N N Not Required

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3.6. Required Data Elements

The VDP POS claims system has programspecific "mandatory/required," "optional" and "not used" data elements for each transaction. The pharmacy provider's software vendor will need the Payer Specifications before setting up the plan in the pharmacy's computer system. This will allow the provider access to the required fields. Please note the following descriptions regarding data elements: Code Description M Designated as MANDATORY in accordance with the NCPDP Telecommunication Implementation Guide Version D.Ø. These fields must be sent if the segment is required for the transaction. Designated as REQUIRED for this program. Designated as OPTIONAL in accordance with the NCPDP Telecommunication Implementation Guide Version D.Ø. It is necessary to send these fields in noted situations where they are conditional based on data content. Designated as NOT USED in accordance with the NCPDP Telecommunication Implementation Guide Version D.Ø. The "R***" indicates that the field is repeating.

R O

N

***R*** Vendor Drug Program claims will not be processed without all the required data elements. Required fields may or may not be used in the adjudication process. The complete Texas Payer Specifications, including NCPDP field number references, are in Attachment D. Fields "not required for this program" at this time may be required at a future date. The following list provides important identification numbers for this program: Field Description ANSI BIN # Processor Control # Group # Provider ID # Cardholder ID # Prescriber ID # Product Code 61ØØ84 DRTXPROD for Medicaid/STAR Health, CHIP, CSHCN. DRTXPRODKH for KHC. TXVDP 10digit Pharmacy National Provider Identifier (NPI) Texas Client Program ID Number 10digit Prescriber National Provider Identifier (NPI) National Drug Code (NDC)

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3.7. Timely Filing Limits

Pointofsale (POS) claims are generally submitted at the time of dispensing. However, there may be mitigating reasons that require a claim to be submitted after being dispensed. Pharmacy software should allow the transmission of claims with past service dates. Transmission of claims using the current date for a past service date is a violation of program policy and could result in an audit exception. The inability of a pharmacy's software to submit past service dates will not be an acceptable reason for the submission of paper claims. The timely filing limit from the date of service is 90 days for all original claims. The timely filing limit from the date of service is 720 days for all reversals. Exceptions: Claims that exceed the prescribed timely filing limit will deny with NCPDP Error 81, "Claim Too Old by x days". The exception to this is claims for clients that have been certified with retroactive Medicaid eligibility. These claims will process online for 90 days after the certification date of retroactive eligibility regardless of the date of service. Special circumstances as defined by the State.

4. Program Operations 4.1. Client Identification Numbers

The number entered in "Cardholder ID" (Field 3Ø2C2) identifies the program to which the claim is submitted for payment. For clients eligible for more than one program the adjudication process will refer submitted claims to the appropriate payer based on the following hierarchy: 1) Medicaid/CHIP 2) Kidney Health Care Program 3) Children with Special Health Care Needs Program For example, when a claim for a Medicaid/CSHCN dual eligible client is submitted using the CSHCN recipient number, and the claim is Medicaid payable, the claim will reject with a reject code of "41". One of the following two messages will be returned "Client has Medicaid ID. Resubmit using the Medicaid ID# nnnnnnnnn(ID Number)", which means this claim needs to be resubmitted using the Medicaid number provided. "Correct and Resubmit using Med #nnnnnnnnn" which means this claim has additional errors that must be corrected prior to Medicaid resubmission. These errors are considered correctable and "nonfatal" and apply to the referred program (in this example, Medicaid) and not to the submitted program (in this case, CSHCN). Refer to Section 8 "Eligibility Verification" for online tools to check eligibility.

4.1.1. Medicaid

Beginning January 1, 2012, Medicaid claims must be submitted with "MEDICAID" as the "Group ID" (Field 3Ø1C1). Medicaid client ID numbers begin with "1", "2", "3", "4", "5", "6", or "7". The Your Texas Benefits Medicaid card is used to confirm the identification number. Claims for newborns should not be submitted with the Mother's ID number. These claims may be submitted on the Pharmacy Claims Billing Request (Form 3700), leaving the Cardholder ID field blank. Page 12

Vendor Drug Program Pharmacy Provider Procedure Manual Effective: December 1, 2011

Medicaid clients may present the Temporary Medicaid Eligibility Verification form (Form 1027A) as evidence of Medicaid eligibility. While Form 1027A might not have a Medicaid number, it is an official state eligibility document and can be relied upon as proof of Medicaid eligibility until the family receives the Medicaid Identification Form (Form H3087). Medicaid numbers should be assigned within one month of the original presentation of Form 1027A. Vendor Drug strongly encourages pharmacies to fill the prescription immediately and then bill as soon as the Medicaid number is assigned. They can also submit the Pharmacy Claims Billing request (Form 3700) and the claim will be paid when the Medicaid number is posted. Providers should also consult the Vendor Drug online formulary to ensure the drug is a covered Medicaid product.

4.1.2. CHIP

Beginning January 1, 2012, CHIP claims must be submitted with "CHIP" as the "Group ID" (Field 3Ø1C1). CHIP ID numbers begin with "A", "D", "G", "J", "M", or "P". The Health Plan Member Identification card is used to confirm CHIP client identification numbers. While the CHIP Health Plan card shows the correct ninecharacter cardholder ID, some communication to CHIP clients may show a ninedigit number with no alpha character. This is called the CHIP Client Identification Number (CIN). The eligibility is valid, but the ID needs to be modified for claim submission to Vendor Drug. If the cardholder number does not include an alpha character, the pharmacy should convert the lead digit to one of the corresponding letters: Ø=A; 1=D; 2=G; 3=J; 4=M; or 5=P. Using this method, the CIN 4ØØØØØØØØ1 converts to Cardholder ID MØØØØØØØ1. Additional characters displayed before the nine characters should not be transmitted. By using this conversion, pharmacies can resolve issues with nonmatched CHIP ID numbers. Failure to correct the cardholder ID prior to transmission will result in a claim rejection (Code 52 "Nonmatched Cardholder ID").

4.1.3. KHC

Beginning January 1, 2012, KHC claims must be submitted with "KHC" as the "Group ID" (Field 3Ø1C1). KHC ID numbers begin with "8". KHC eligible clients are provided a notice of eligibility only upon initial eligibility determination. Medicaid eligible clients are not eligible for KHC drug benefits.

4.1.4. CSHCN

Beginning January 1, 2012, CSHCN claims must be submitted with "CSHCN" as the "Group ID" (Field 3Ø1C1). CSHCN ID numbers begin with "9". Eligible clients are sent medical identification cards semiannually with a coverage period of six months each. All eligible CSHCN clients are assigned a unique sixdigit program ID. These program ID numbers are generated sequentially by the CSHCN eligibility system, and appear on the eligibility forms CSHCN clients take to the pharmacy. This sixdigit number must be converted to a ninedigit number to be processed properly. To convert for claim submission, the pharmacy should add the number "9" to the beginning of the core sixdigit program ID number, followed by "ØØ" after the core program ID number. For example: Client ID "123456" must be submitted as Cardholder ID "9123456ØØ". Failure to correct the cardholder ID prior to transmission will result in a claim rejection (Code 52 "Nonmatched Cardholder ID").

4.1.5. STAR Health/Foster Care

Beginning January 1, 2012, STAR Health/Foster Care claims must be submitted with "MEDICAID" as the "Group ID" (Field 3Ø1C1). STAR Health numbers are 6 to 8 digits with leading zeros to total 16 digits.

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4.2. Prescriber Identification Numbers

The 10digit National Provider Identifier (NPI) is the preferred value to be submitted on each claim in "Prescriber ID" (Field 411DB) along with the proper "Provider ID Qualifier" (Field 466EZ). Pharmacies that submit the NPI but receive error code 71 or 56 should attempt to resubmit with the 5character state license number and appropriate ID qualifier. Vendor Drug will continue to accept the state license number on billing requests until further notice. A listing of the prescriber file with both state license and NPI numbers is available online at txvendordrug.com. Pharmacy providers may call the Pharmacy Resolution Help Desk for assistance regarding any prescriber number not listed on this file. It is essential that the correct prescriber identification be submitted on all prescription claims. Providing accurate information allows VDP to followup with prescribers about their prescribing practices, when needed. Inaccurate information runs the risk of an audit exception and causes erroneous data on reports. Prescriptions written by nurse practitioners, physician assistants, interns and residents must be submitted using the identifying number of the supervising physician. Note: Vendor Drug began accepting the Prescriber NPI on claim submission in October 2011. If you have difficulties submitting the state license number, please contact your software provider.

4.3. Dispensing Limits

4.3.1. Days Supply

The "Days Supply" field (4Ø5D5) is one of the key fields in Drug Use Review (DUR) edits as well as the early refill edit. Incorrect days supply can result in inaccurate DUR alerts and can cause claims to reject for early refill. Please use the correct method of determination of days supply (quantity divided by total dosage units per day). Medicaid per Rx maximum = 185 days CHIP per Rx maximum = 34 days KHC per Rx maximum = 34 days CSHCN per Rx maximum = 185 days

4.3.2. Quantity

Pharmacies must bill the Vendor Drug Program for the amount actually dispensed at the point of sale in the "Quantity Dispensed" field (442E7). The Pharmacy Resolution Help Desk cannot override quantities that are more than the prescriber designated on the prescription. Providers must dispense the quantity prescribed or ordered by the prescriber except as limited by the policies and procedures described in the Pharmacy Provider Handbook. Where actual quantity dispensed deviates from the prescribed quantity, the provider must bill for the amount actually dispensed. Many National Drug Code (NDC) numbers are packaged in a size that is not a whole number. When entering a claim for a drug that is packaged in a metric decimal sized package (i.e. 1Ø.2; 2.5; 6.8; etc.), be sure to include the decimals on your claims and do not round up. For example, if you dispense one 1Ø.2 gm inhaler, you should be entering "1Ø.2" in the "Quantity Dispensed" field. The same goes for inhalers where the package quantity is 12.9 gm for 1 inhaler. When dispensing ophthalmic drops be sure to include the decimal quantity and do not round up. Many of these issues are resolved by having the pharmacy update their drug file with the rounded/whole number units on the "Package Size" and the true decimal units on the "Metric Decimal Size" fields. The majority of these products that are affected by this error are ear drops,

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eye drops/ointments, inhalers, and injectables. Please verify the units that are being submitted are accurate for the claim and product being submitted. If the pharmacy cannot correct the drug file and is continuing to have issues with billing invalid units, then the pharmacy must follow up with their software vendor for further assistance with the issue. Incorrect quantities may prompt drug manufacturers to dispute the claim and cause the drug rebate auditors provided by Vendor Drug's rebate administrator to review the claim level data.

4.3.3. Dispensing Limitations

Anorexics Weight management diagnoses will be denied. Prior Approval required for age 21 years and over. AntiFungal AntiFungal limitation is 180 day supply per calendar year. Days Supply limitation will deny with NCPDP Error Code 76 and message: "Days Supply Limited per Year by Program." Biosynthetic Growth Hormone Prior Approval and documentation of appropriate diagnosis required. Enzymes Vendor Drug reimburses the following products: Tyvaso Kit, Naglazyme, Fabrazyne, Ceprotin, Cerezyme, Adagen, Myozyme, Elaprase, and Aldurazyme. Approvals are valid for a maximum of one year. Erectile Dysfunction drugs Erectile Dysfunction drugs are no longer covered effective January 1, 2006. Family Planning Family planning drugs prescribed for contraception are not covered by CHIP. Claims for family planning drugs for a noncontraceptive diagnosis should be submitted online with a Vendor Drug acceptable value contained in "Prior Authorization Type Code" (461EU) and "Prior Authorization Number Submitted" (462EV). Migraine Migraine medications limitations are across strengths per calendar month for each drug. Limitation denies for NCPDP Error Code 76 with message: "Exceeds Max Product Quantity/Month ­ MI". Pediculosis treatment Doctors can write one prescription for the whole family if a child is diagnosed with lice or scabies. Prenatal Vitamins Prenatal Vitamins Limitation is for females under the age of 50 only: Age limitation denies for NCPDP Error Code 6Ø with message: "Product Not Covered for Patient Age ­ PN". Gender limitation denies for NCPDP Error Code 61 with message: "Product Not Covered for Patient Gender ­ PN". Pulmozyme, Tobramycin (Tobi), and Cayston Documentation of appropriate diagnosis required for CSHCN only. Stadol Stadol limitation is 10 ml per calendar month (4 bottles). Limitation denies for NCPDP Error Code 76 with message: "Exceeds Max Product Quantity/Month ­ ST". Xenical Obesity management diagnoses will be denied. Prior Approval and documentation of hyperlipidemia required.

Appropriate prior authorization forms, when required, are available at txvendordrug.com.

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4.3.4. Prescription Limits

The Medicaid drug benefit is limited to 3 prescriptions per month with the exception of: Family Planning is not counted toward the script limits. Diabetic supplies are not counted toward the script limit. Smoking Cessation Products are not counted toward the script limit. KHC clients are limited to 4 prescriptions per month. CHIP and CSHCN clients have unlimited prescriptions. Most nursing facility residents (e.g. those in a nonMedicare Bed) Children under the age of 21 Most managed care clients Certain STAR+Plus clients Waiver clients

4.3.5. Refills

Refills may only be submitted when requested by the client. Providers must not bill Medicaid unless the client has requested the refill ­ this includes pharmacies that use automated refill systems/programs. DEA = Ø Original + 11 refills within 365 days from original Date Rx Written DEA = 2 No refills DEA = 3, 4, 5 Original + 5 refills within 185 days from original Date Rx Written

4.3.6. Partial Fills

No partial fill processing is allowed.

4.3.7. Dollar Limit

Claims are limited to $9,999.99. For claims $10,000.00 and greater, providers should contact the Pharmacy Resolution Help Desk.

4.4. Mandatory Generic Requirements

Multisource brand drugs will pay but will be subject to Texas Federal/State Maximum Allowable Cost (MAC) Pricing. Submit "1" in "Dispense as Written" (DAW) (Field 4Ø8D8) to override MAC pricing when a physician wants a brand name dispensed and hand writes the phrase "Brand Necessary," "Brand Medically Necessary," "Brand Name Necessary," or "Brand Name Medically Necessary" across the face of the prescription. DAW "1" will reimburse at normal calculated cost including comparison to Usual & Customary, and Gross Amount Due.

4.5. Drug Coverage

Separate formularies are maintained for each program (Medicaid, CHIP, CSHCN, and KHC). Further information regarding coverage is available online at txvendordrug.com. NCPDP format requires 11 digits in the NDC field. Texas Medicaid requires the standard 542 format, meaning 5 digits in the labeler code, 4 digits in the product code, and 2 digits in the package size. A leading zero is placed in the labeler code, product code, or package size code to make the NDC conform to the 542 format.

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Excluded: DESI drugs are not covered. Vendor Drug does not cover durable Medical Equipment (DME) and medical supplies. For reimbursement information of DME and medical supplies please refer to the Texas Medicaid and Healthcare Partnership (TMHP) website.

4.5.1. Unit of Measure

Quantity for milliliters and grams must be divisible by package size. Some products (such as Risperdal Consta, Humira, Enbrel, Lovenox, Neupogen, Pegasys, and Procrit) may have varying units depending on the NDC number. Pharmacies should be aware of the correct billing units for these medications to alleviate billing discrepancies and eventual audits. EA = Each GM = Grams ML = Milliliters

4.5.2. Over the Counter (OTC)

Formulary OTC drugs are covered for Medicaid, KHC and CSHCN. OTC drugs are not covered for clients in a Nursing Facility Insulin and diabetic supplies are the only OTC items covered for CHIP clients.

4.5.3. Compound Ingredients

Certain drugs are only covered in compounds. Please refer to the Vendor Drug online formulary to determine if specific drugs have this limitation.

4.5.4. Preferred Drug List

Texas Medicaid maintains a Preferred Drug List comprised of various therapeutic classes. Prescriptions written for preferred drugs will be available without prior authorization, while non preferred drugs will require prior authorization. This will involve the prescriber or one of his/her designated agents calling the Texas Prior Authorization Call Center to obtain approval before the drug can be dispensed. More information about the Preferred Drug List program is online at txvendordrug.com. A 72hour emergency supply should be dispensed any time a prior authorization is not available and a prescription must be filled for any medication or medical condition (see below).

4.5.5. Clinical Prior Authorization Edits

Clinical Prior Authorization edits check a client's Medicaid medical and drug claims histories to help determine whether the information on file indicates that the patient's medical condition matches the edit criteria for dispensing the requested drug without need of additional prior authorization. The edits are based on evidencebased clinical criteria and nationally recognized peerreviewed information. More information about and a listing of clinical edit criteria is online at txvendordrug.com. A 72hour emergency supply should be dispensed any time a clinical edit prior authorization is not available and a prescription must be filled for any medication or medical condition (see below).

4.5.6. 72Hour Emergency Override

Federal and Texas law required that a 72hour emergency supply of a prescribed drug be provided when a medication is needed without delay and prior authorization is not available.

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This rule applies to nonpreferred drugs on the Preferred Drug list and any drug that is affected by a clinical PA edit and would need the prescriber prior approval. The 72hour emergency supply should be dispensed any time a prior authorization is not available and a prescription must be filled, for any medication or medical condition. If the prescribing provider cannot be reached or is unable to request a prior authorization, the pharmacy should submit an emergency 72hour prescription. This procedure should not be used for routine and continuous overrides. A 72hour emergency prescription will be paid in full, and it does not count toward the threeprescription limit for adults who have not already received their maximum prescriptions for the month (there is no prescription limit for children under 21). For a 72hr emergency prescription, pharmacies should submit the following information: "8" in "Prior Authorization Type Code" (Field 461EU). "8Ø1" in "Prior Authorization Number Submitted" (Field 462EV). "3" in "Days Supply" (Field 4Ø5D5, in the Claim segment of the billing transaction). The quantity submitted in "Quantity Dispensed" (Field 442E7) should not exceed the quantity necessary for a threeday supply according to the directions for administration given by the prescriber. If the medication is a dosage form that prevents a threeday supply from being dispensed, e.g. an inhaler, it is still permissible to indicate that the emergency prescription is a threeday supply, and enter the full quantity dispensed. These instructions are available at txvendordrug.com for downloading and displaying in your pharmacy for reference. Please reproduce this information for staff education.

4.5.7. Premium Preferred Generic (PPG)

Providers are reimbursed an additional $0.50 incentive fee for dispensing Premium Preferred Generic (PPG) drugs for Medicaid clients. Please refer to the Vendor Drug online formulary at txvendordrug.com to identify PPG drugs. The PPG is returned in the pharmacy paid claim response, "Incentive Amount Paid" (Field 521FL).

4.5.8. HIV Drugs

CSHCN Clients are allowed 60 days of drug coverage with PA. Pharmacies must contact CSHCN at 18002223986 for prior approval.

4.5.9. Insulin and syringes Medicaid

Vendor Drug pays for insulin syringes only when the syringes are for insulin use. If insulin syringes are prescribed for other injectable drugs then they should be billed through the Texas Medicaid & Healthcare Partnership (TMHP). Only the Insulin counts toward a limited client's three prescriptions limit, not the syringes. For insulin claims, it is acceptable to submit a day supply based on stability rather than the actual dose.

KHC

Prescriptions for syringes will count toward the KHC prescription limit.

4.5.10. Prescription Splitting

HHSC policy requires that the same drug in the same strength be dispensed no more than once per month, per client. An exception to this policy is only for medications that may be considered too unstable to be dispensed as a onemonth supply.

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4.6. Client Payment Information

There are no prescription drug copayments for Medicaid clients. There is a copay amount required for the majority of CHIP clients. The copay amount due is returned in the pharmacy paid claim response, "Patient Pay Amount" (Field 5Ø5F5). There are no prescription drug copayments for CSHCN clients. Contact KHC (8002223986) for current copay information. The copay amount due is returned in the pharmacy paid claim response, "Patient Pay Amount" (Field 5Ø5F5).

4.7.

Coordination of Benefits (COB)

Online coordination of benefits is supported: "Coordination of Benefits/Other Payments Count" (Field 3374C) required. "Other Payer Coverage Type" (Field 3385C) required. "Other Payer ID Qualifier" (Field 3396C) required if the Other Payer ID is submitted. "Other Payer ID" (Field 34Ø7C) required if the Other Payer ID Qualifier is submitted. "Other Payer Date" (Field 443E8) required. "Other Payer Amount Paid Count" (Field 341HB) required when submitting payment from Other Payer. "Other Payer Amount Paid Qualifier" (Field 342HC) required when submitting Other Payer Amount Paid Count. "Other Payer Amount Paid" (Field 431DV) required when submitting Other Payer Amount Paid Qualifier. "Other Payer Reject Count" (Field 4715E) required when not submitting payment. "Other Payer Reject Code" (Field 4726E) required when submitting Other Payer Reject Count. Benefit Stage Count (Field 392MU) required when submitting Benefit Stage Qualifier. This field will be accepted on April 1, 2012. Benefit Stage Qualifier (Field 393MV) required for KHC claims when the client is dual eligible for KHC and Medicare Part D, or CSHCN claims when the client has Medicare Part D. This field will be accepted on April 1, 2012. Benefit Stage Amount (Field 393MV) required when submitting Benefit Stage Qualifier. This field will be accepted on April 1, 2012.

4.7.1. Medicaid 4.7.1.1. Third Party Billing

When a Medicaid client has coverage for prescription drugs through another third party payer, pharmacy providers must bill all other third party payers and insurance before billing Medicaid. Prescriptions reimbursable by Medicare Part D (Medicare Rx) are not eligible for additional reimbursement through Medicaid. If other insurance exists in the VDP POS and Medicaid is billed as the primary insurer, then the claim will reject at point of sale with error code 41 ("Submit Bill To Other Processor or Primary Payer"). The pharmacy will be provided with the thirdparty billing information needed for claims submission to the other payer. The message will be returned in "Additional Message Information" (Field 526FQ) and read "BIN:x, PCN:x, Group:x, Cardholder ID:x". Contact your software provider if your system does not display the Additional Message Information field. If the pharmacy submits the claim to the primary payer and it is denied, the pharmacy should contact the primary payer and/or prescriber to address the denial reason. If the claim is not

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payable by the other insurer, Medicaid may pay the claim depending on the reason for denial (including expired coverage). Providers should submit the claim to Medicaid and include the other payer's rejection code in the "Other Payer Reject Code" field (4726E). Medicaid will continue to reject the claim until billing to all other known payers has been attempted. If the client is assessed a deductible or copayment, the pharmacy should submit the claim to Medicaid (as secondary payer) and include the amount paid by the primary insurer. The VDP POS will pay deductibles and copayments, up to the amount Medicaid would have reimbursed, for eligible clients and covered drugs. The client should always walk out of the pharmacy with their prescribed medications and no out ofpocket expense.

4.7.1.2.

Medicare Part B

Medicare Part B immunosuppressant drugs are not covered by Medicaid as the primary payer for clients who have Medicare Part B coverage. If submitted, these claims will deny with NCPDP Error Code 41 and the supplemental message "Drug covered by Medicare". Crossover billing is not part of the VDP POS system (i.e. the pharmacy must bill Medicare first and then submit a followup transaction to Medicaid). Medicaid will accept COB claims as the secondary/tertiary etc. payer submitted from the pharmacy.

4.7.1.3.

Medicare Part D

Medicare Part D is a prescription drug benefit that began January 1, 2006. Part D offers optional drug coverage to all Medicare beneficiaries through private drug plans (PDPs) or Medicare Health Maintenance Organizations (HMOs). Federal law prohibits states from drawing federal Medicaid funds for drugs covered by Medicare Part D for dual eligible clients (individuals who are both Medicare eligible and also eligible for some level of Medicaid prescription coverage). Under the Medicare Modernization Act that created pharmacy coverage under Part D, certain drugs can be excluded from coverage by the PDP. Texas Medicaid will continue to pay for a few categories of the drugs not covered by Medicare (wraparound benefit), including: Nonprescription drugs (overthecounter medications). Barbiturates (sedatives). Benzodiazepines (antianxiety agents). Some products used in symptomatic relief of cough and colds. Some prescription vitamins and mineral products. Medicare Part D excluded drugs that are on the Texas formulary will be covered by Medicaid. These claims, if submitted, will deny with NCPDP Error Code 41 and the supplemental message "MedicareRx covered drug class".

4.7.1.3.1. Opting Out of Medicare Part D

Individuals who are eligible for both Medicare and Medicaid ("dual eligible") are automatically enrolled in a Medicare Part D prescription drug plan. Some dual eligible individuals may choose to disenroll, or "opt out," from Medicare Part D. This means the individual has disenrolled from Medicare Part D, not just the Part D plan. Medicaid is not liable for the client's prescription drug coverage if the individual opts out of enrolling in a Part D Plan. Vendor Drug returns a message on paid claims for clients who will soon become eligible for Medicare Part D. This message will be returned several months prior to the client's Medicare coverage effective date to alert the pharmacy that Medicare will become liable for the client's

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prescription drug coverage. The message will be returned in "Additional Message Information" (Field 526FQ) and read "Part D liable for this client's Rxs no later than XX/XX/XXXX". Please advise the client that Medicaid will no longer pay for prescriptions for Part D covered drugs as of the date included in the message. The client will need to choose a Medicare Part D plan by that date in order for their prescription benefits to continue as Medicaid will only be responsible for the Part D excluded drugs.

4.7.2. CSHCN 4.7.2.1. Third Party Billing

For CSHCN clients that have coverage for prescription drugs through another primary payer, the pharmacy must bill the primary payer first and bill CSHCN as secondary payer. CSHCN will pay drug copays, deductibles and coinsurance.

4.7.2.2.

Medicare Part B and Part D

CSHCN will pay the Medicare Part B coinsurance for immunosuppressant drugs for clients without supplemental drug coverage. CSHCN will coordinate benefits with Medicare Part D deductibles, coinsurance, and gap coverage. Beginning April 1, 2012, all eligible CSHCN clients who are also eligible for Medicare Part D coverage must submit "Benefit Stage Qualifier" (Field 393MV) and "Benefit Stage Amount" (Field 394MW) on the CSHCN claims.

4.7.3. KHC 4.7.3.1.

Medicare Part B and Part D

KHC will pay the Part B coinsurance for immunosuppressant drugs for clients without supplemental drug coverage. KHC will also cover Medicare Part D excluded drugs that are on the KHC formulary. The KHC copay will be applied to those prescriptions. KHC will coordinate benefits with Medicare Part D for deductible, coinsurance, and gap coverage for KHC formulary products only. If the drug is a Part D included drug, but not covered by the PDP, it will not be covered by KHC. KHC will only provide assistance with four (4) prescriptions per month. KHC will waive day supply limitations for Medicare Part D drugs when paying secondary claims. KHC may apply a copayment for coordinated claims. Because KHC is a State Pharmacy Assistance Program (SPAP), any payments made by KHC for Medicare allowable drugs will count toward the beneficiaries out of pocket expenses. Beginning April 1, 2012, all eligible KHC clients who are also eligible for Medicare Part D coverage must submit "Benefit Stage Qualifier" (Field 393MV) and "Benefit Stage Amount" (Field 394 MW) on the KHC claims.

4.8. 4.9. 4.10.

Long Term Care (LTC) Hospice Spenddown

Nonlegend drugs, with the exception of Insulin, are not covered for nursing facility clients. Medicaid hospice clients in a nursing facility have unlimited prescriptions. Medicaid claims will reject if date of service of the claim matches Spenddown begin date. Pharmacies should contact the Vendor Drug Pharmacy Resolution Help Desk to determine if the claim is used to meet spenddown.

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4.11.

Compounds

Vendor Drug accepts multiingredient compounds via the compound segment: Only one compound claim is allowed per transmission and it cannot be included in a multiple claim transaction. All ingredients for each compound must be submitted. The system will only reimburse for products on the specific program formularies. Over the counter (OTC) products in compound claims for CHIP and Nursing Home clients will be considered for payment only if a payable legend drug is included. Compound Process (see Payer Specification, Attachment D): o Enter "2" (Compound) in "Compound Code" (Field 4Ø6D6). o Enter "ØØ" in "Product/Service ID Qualifier (436E1). o Enter "Ø" in "Product/Service ID" (Field 4Ø7D7). o Always enter "Compound Type" (Field 996G1). o Always use the Compound Segment to detail NDC ingredient level information: "Compound Dosage Form Description Code" (Field 45ØEF). "Compound Dispensing Unit Form Indicator" (Field 451EG). "Compound Ingredient Component Count" (Field 447EC). "Compound Product ID Qualifier" (Field 488RE). "Compound Product ID" (Field 489TE). "Compound Ingredient Quantity" (Field 448ED). "Compound Ingredient Basis of Cost Determination" (Field 49ØUE). If "Blank" or "Ø", will default to "Direct" o For noncovered products, enter "8" (Process Claim for Approved Compound Ingredients) in "Submission Clarification" (Field 42ØDK) and also enter Submission Clarification Code Count (Field 354NX). o Enter the GAD of the total compounded product in the "Gross Amount Due" (Field 426DQ). o The order of the ingredients does not matter. Providers may submit up to 25 ingredients on line.

4.12.

STAR Health Program for Foster Care Children

When children are taken into state conservatorship they will be issued one or more of the following forms: Temporary Medicaid Eligibility Verification ID card (Form 1027A) Designation of Medical Consenter for nonDFPS Employee (Form 2085B) Designation of Medical Consenter for DFPS Employee (Form 2085C) These forms will include either a Medicaid ID number or the 16digit Texas Department of Family and Protective Services (DFPS) number. Pharmacies will be allowed to submit prescription claims with the DFPS number immediately, without having to wait for a Medicaid ID to be assigned. After the child receives a Medicaid number, pharmacies must submit subsequent claims using the Medicaid ID and not the DFPS number. When transmitting claims using the DFPS number, the following values must be submitted to indicate that the DFPS number is used. Enter "MEDICAID" in "Group ID" (Field 3Ø1C1). Enter the 16digit DFPS number in "Cardholder ID" (Field 3Ø2C2). Enter "8" in "Prior Authorization Type Code" (Field 461EU). Enter "1Ø27" in "Prior Authorization Number Submitted" (Field 462EV). Failure to submit those values will result in a rejection. Standard claim submission procedures should be followed when submitting a claim with the Medicaid ID.

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5. Drug Use Review (DUR)

Prospective Drug Use Review (ProDUR) encompasses the detection, evaluation, and counseling components of predispensing drug therapy screening. The Texas Medicaid ProDUR system assists the pharmacist by addressing situations in which potential drug problems may exist. ProDUR performed prior to dispensing helps pharmacists ensure that their patients receive appropriate medications. This is accomplished by providing information to the dispensing pharmacist that may not have been previously available particularly if the client is using more than one pharmacy. Because Texas' ProDUR system examines claims from all participating pharmacies, drugs that interact or are affected by previously dispensed medications can be detected. Texas Medicaid recognizes that the pharmacist uses his/her education and professional judgment in all aspects of dispensing. ProDUR is offered as an informational tool to aid the pharmacist in performing his/her professional duties. Most DUR edits are driven by day supply; therefore, it is very important that the days supply be reported correctly. See DUR requirements for contracted pharmacies under OBRA 90 (Attachment C).

5.1. Therapeutic Problems

Prospective (concurrent) Drug Use Review edits apply to all claims unless otherwise identified.

5.2. ProDUR Alert/Error Messages

Advisory messages concerning clinically significant DrugDrug Interactions, Therapeutic Duplications, Ingredient Duplications, and Maximum Dosage are part of the claim adjudication process. These DUR advisory messages do not cause claims to reject but are intended to provide information to assist the pharmacist in working with the physician to provide appropriate pharmaceutical therapy. DUR messages are contained in the `Response DUR/PPS Segment'. All ProDUR alert messages appear at the end of the claims adjudication transmission. Alerts will appear in the following format: Format Reason for Service (Field 439E4) Field Description (2 characters) Code identifying the type of utilization conflict detected. DD = DrugDrug Interaction ID = Ingredient Duplication TD = Therapeutic Duplication HD = High Dose (1 character) Code indicating the significance or severity level of a clinical event. Blank = Not Specified 1 = Major 2 = Moderate 3 = Minor

Clinical Significance (Field 528FS)

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Format Field Description Other Pharmacy Indicator (Field (1 character) Indicates if the dispensing provider also 529FT) dispensed the first drug in question. Ø = Not Specified 1 = Your pharmacy 2 = Other Pharmacy in Same Chain 3 = Other pharmacy Previous Date of Fill (Field 53ØFU) (8 characters) Indicates previous fill date of conflicting drug in CCYYMMDD format. Quantity of Previous Fill (Field 531 (5 characters) Indicates quantity of conflicting drug FV) previously dispensed. Database Indicator (Field 532FW) (1 character) Indicates source of ProDUR message. 1 = First DataBank Other Prescriber (Field 533FX) (1 character) Indicates the prescriber of conflicting prescription. Ø = Not Specified 1 = Same Prescriber 2 = Other Prescriber

5.3. Online DUR Rejects

Selected claims with the greatest potential for adverse therapeutic outcomes will reject with code 88 ("DUR Reject Error"). The "Response DUR/PPS Segment" of the Reject Response contains the DUR reject information. The pharmacist will have the ability to override the DUR rejection utilizing the NCPDP Standard "DUR Reason for Service Code", "DUR Professional Service Code", and "DUR Result of Service Code" on the claim if he/she determines that the physician understands the risk to be acceptable, and appropriate monitoring measures are undertaken. The override can also be submitted on the initial claim submittal, if appropriate, thus bypassing the rejection. The override capability will allow payment of the rejected claims when appropriate without Pharmacy Resolution Help Desk intervention. DUR Reason for Service Code (Field 439E4) o DD DrugDrug Interaction o HD High Dose o ID Ingredient Duplication o TD Therapeutic Duplication DUR Professional Services Code (Field 44ØE5) o ØØ No Intervention o MØ Prescriber Consulted o PØ Patient Consulted o RØ Pharmacist consulted other source DUR Result of Service Code (Field 441E6) o 1A Filled As Is, False Positive o 1B Filled Prescription As Is o 1C Filled, With Different Dose o 1D Filled, With Different Directions o 1F Filled, With Different Quantity Page 24

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o o

1G Filled, With Prescriber Approval 4A Prescribed with acknowledgement

Only claims paid through the VDP POS system will be screened for Interactions, Duplication, and Maximum Dosage online. It is necessary that the required Patient Medication Record (PMR) be reviewed for additional drugs not paid by Medicaid, CHIP, CSHSN, or KHC. This is especially important for those clients limited to three prescriptions per month. The PMR must also be reviewed to evaluate Drug Disease Contraindications, Drug Allergy Interactions, and Duration of Drug Treatment since this information is not in the Vendor Drug database at this time.

5.4. `Result of Service Codes' Required on Reversals Resulting from DUR Messages

Claims that are reversed due to a DUR advisory message must have an accompanying NCPDP Standard DUR Result of Service Code attached. These codes allow DUR staff to measure the effectiveness of advisories and document action taken by the pharmacist. In "DUR Result of Service Code" (Field 441E6), the following values corresponding to DUR Outcome codes should be used as appropriate: 1C Filled with a different dose 1D Filled with different directions 1E Filled with a different drug 1F Filled with a different quantity 2A Prescription not filled 2B Not filled, directions clarified It is very important that these codes be submitted on reversals caused by a DUR message, since the Health Care Financing Administration requires the Medical Program to demonstrate positive results from online prospective DUR. Please contact your software vendor for questions relating to the appropriate area of your screen to submit these codes on reversals.

6. Claim Edits

Following an online claim transmission by a pharmacy, the VDP POS system will return a response to indicate the outcome of processing. If the claim passes all edits, a "Paid" response will be returned with VDP's allowed amount for the paid claim. A "Rejected" response will be returned when a claim fails one or more edits. Please refer to the list of NCPDP rejects and descriptions in Attachment A. Where applicable, the NCPDP field that should be checked is referenced. Refer to the Solutions if you are experiencing difficulties.

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7. Provider Reimbursement

7.1. Provider Payment Algorithms 7.1.1. Usual and Customary (U&C) (Field 426DQ)

Texas Medicaid uses this field to capture the amount requested for reimbursement. Providers subject to requirements for actual acquisition cost of the drug should submit for payment the lower of usual & customary or cost plus fee. If Usual and Customary is submitted it should be in this field and, correspondingly, cost plus fee should be submitted in the Gross Amount Due field.

7.1.2. Gross Amount Due (GAD) (Field 43ØDU)

The Gross Amount Due Field should be used to reflect a pharmacy's Usual & Customary price less discount or special price. It should also be used by pharmacy providers who are required to bill actual invoice cost plus fee such as Government institutions and hospitals with outpatient pharmacies.

7.1.3. Large Dollar Amount

For claims $10,000.00 and over, contact the Pharmacy Resolution Help Desk.

7.1.4. Basis of Cost Determination (Field 423DN)

Accepted values: ØØ = Default Ø1 = AWP (Average Wholesale Price) Ø3 = Direct Ø8 = 34ØB / Disproportionate Share Pricing/Public Health Service (for Public Health Service pharmacies only) Ø9 = Other (submit to indicate warehouse). Claims for drugs purchased from a Central Purchasing Entity or a Warehouse must be submitted using the value of "Ø9". "ØØ" will default to Direct. Other values will reject with code DN ("M/I Basis Of Cost Determination").

7.2. Pricing

Providers use the current Texas Drug Code Index (TDCI) as the reference for allowable package sizes of reimbursable drugs. This TDCI is available at website at txvendordrug.com. The provider's purchasing pattern should be consistent with economical and prudent purchasing practices. The agency conducts periodic drug surveys to determine the provider's quantity purchasing pattern. If the purchase is current (within 60 days before the service date), the agency permits variation from an established pattern. A copy of an invoice may be necessary to justify or allow the variation. Acquisition cost for drugs not listed in the Redbook or unavailable through a fullservice drug wholesaler is the cost shown on the pharmacy provider invoice. Mental Health Mental Retardation (MHMR) Pharmacies Family Planning drugs are reimbursed at 90% of reimbursement calculation. All other MHMR claims will pay at federal match rate of reimbursement calculation. Public Health Service (PHS) Pharmacies Pharmacies are to submit their lower acquisition cost amounts in the U&C field for reimbursement.

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Beginning January 1, 2012, PHS pharmacies dispensing drugs from the 340B Drug Pricing Program (sometimes referred to as "PHS Pricing" or "602 Pricing") from the Public Health Service Act, must enter "Ø8" in Basis of Cost Determination (Field 423DN) and the acquisition cost in Usual and Customary Charge (Field 426DQ).

7.3. Provider Dispensing Fees

Payment for a legend drug prescription is determined by adding $6.50 to the estimated acquisition cost (EAC) of the drug and dividing the sum by 0.9804. An additional 0.15 will be added to that amount if your pharmacy has been certified as providing free delivery service to Medicaid recipients. Another 0.50 will be added to that amount if your pharmacy dispenses a premium preferred generic. $6.50 = Dispensing fee. $0.15 = Delivery Incentive (based on provider file). This incentive is applied to all legend claims after all calculations are complete. $0.50 = Premium Preferred Generic (PPG). This incentive is applied to PPG drugs (Medicaid Program only) after all calculations are complete. PPG Incentive does not apply to $0.00 total payment amount claims. For example, if the EAC cost of a drug is $10.00, your payment will be calculated in the following way: $10.00 plus $6.50 equals $16.50. $16.50 divided by 0.9804 equals $16.83. If you have a delivery agreement, add $0.15 to $16.98. If you used a premium preferred generic, add another $0.50 for a total reimbursement of $17.48. If your true usual and customary (U & C) price for this item is less than the amount calculated above, you will be paid your U & C price. Nonlegend drugs (OTC) will be reimbursed using the calculated price, your true U & C price, or one and onehalf times the product cost, whichever is lowest. Please remember to submit your true U & C price for all claims. Note: providers who are currently required to submit the actual acquisition cost of the drug product must continue to do so.

7.4. Claims Payment & Remittance Advices

All payable claims submitted electronically online or on Form 3700 will be processed and paid weekly. The weekly payment cycle begins at 12:00:00 a.m. on Friday and ends at 11:59:59 p.m. the following Thursday. Pharmacy payments are generally issued to providers' financial institutions Monday night, and are posted to providers' accounts according to their financial institution's schedule (usually within 72 hours). Federal and State holidays may impact payment date. Payments for CHIP, KHC and/or CSHCN claims will follow the same schedule as Medicaid, but will appear on separate payment remittance advices (RA). A separate warrant or direct deposit will be made for each program area (Medicaid, CHIP, KHC, and CSHCN). Pharmacies receive both a weekly payment register in the Portable Document Format (PDF) and the standard ASC X12N 835 Health Care Payment/Advice. These files are accessible through ACSPharmacy's secure Pharmacy MoveIt website. To register for access to the MoveIt website and to learn more about other payment issues, please visit txvendordrug.com. Beginning January 1, 2012, the ASC X12N 835 Health Care Payment/Advice will be upgraded to HIPAA 5010 compliant layout. Pharmacies can use their 11digit Texas Identification Number (TIN) to access the State Comptroller's website (https://fmx.cpa.state.tx.us/fm/payment/index.php) to obtain their StatetoVendor payment

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information. Refer to the website's "Instructions for Accessing Payment Information" section to learn about your 11digit TIN. Pharmacies should use agency code 529 (for HHSC) to search for Medicaid and CHIP payments, or agency code 537 (for DSHS) to search for CSHCN and KHC payments.

7.5. Pharmacy refunds

Claims that are billed incorrectly, resulting in the provider owing VDP a refund, should be adjusted or recouped within 90 days of the original date of service. If it is necessary to issue a refund to Vendor Drug, the pharmacy provider should first attempt to reverse the claim themselves or contact the Pharmacy Resolution Help Desk to determine if the claim(s) can be adjusted electronically. Pharmacies have 720 days from the date of service to reverse the claim online. The Pharmacy Resolution Help Desk can reverse claim(s) online through the current triennium (current fiscal year plus two previous fiscal years). Claims that are outside the current triennium cannot be adjusted electronically and must be refunded to the state by check or money order. A cover letter including individual claimlevel detail is required with the refund. The pharmacy's sixdigit Vendor Drug contract ID number must be displayed on both the documentation and the check/money order to expedite the refund. Overnight Mail: Regular Mail: HHSC HHSC Attn: ARTS, BH1470 Attn: ARTS, BH1470 P. O. Box 149055 4900 N. Lamar Blvd. Austin, Texas 78714 Austin, Texas 78751 Please do not send refund checks to ACSPharmacy as they are the claims processor for the Vendor Drug Program, not the fiscal agent.

8. Eligibility Verification

Vendor Drug has developed two electronic client eligibility verification methods for use by pharmacy staff. These tools will allow pharmacy providers to avoid excess calls to the Pharmacy Resolution Help Desk for eligibility identification issues and are available after hours and on weekends. Eligibility should be verified with the same processor used to eventually process the claim. Users of these tools will query the Vendor Drug system using the client's 9digit Medicaid, CHIP, KHC, or CSHCN cardholder ID number and receive expanded messaging pertaining to eligibility coverage and pharmacy benefits (such as the most current or last effective eligibility period, prescription limitations, and Medicare Part B/D. Please refer to the Vendor Drug payer specification sheets for the full list and explanation of the expanded messages. NCPDP Eligibility Verification (E1) Transaction: The E1 is submitted from your pointofsale system. Pharmacy providers should contact their software company to discuss E1 submission issues, and to ensure "Additional Message Information" (Field 526FQ) is returned for all responses. Eligibility Verification Portal (EVP): The EVP is an online, webbased portal that is free for all contracted pharmacy providers, and available from any computer with Internet access. Pharmacies must complete the Pharmacy Enrollment Form to register. Information about both tools is available at txvendordrug.com/claims/eligibilityverification.shtml.

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9. Drug Rebates

Approximately 36% of the Vendor Drug Program budget is funded by rebates paid by pharmaceutical manufacturers. In order for VDP to receive federal funds for prescription claims, the drug must be made by a drug manufacturer that participates in the Centers for Medicare & Medicaid Services (CMS) drug rebate program. In return for having their drugs covered by state Medicaid programs, the manufacturer agrees to pay rebates according to their state and federal contracts. In order for Vendor Drug to receive federal funds for prescription claims, the drug must be made by a drug manufacturer that participates in the CMS drug rebate program. In return for having their drugs covered by state Medicaid programs, the manufacturer agrees to pay rebates according to their state and federal contracts. Manufacturers wishing to participate in the CHIP, KHC, CSHCN or supplemental rebate programs must complete and submit the appropriate enrollment form. Form and submission instructions are available at txvendordrug.com.

9.1. Adjustment of Claims

Each calendar quarter, Vendor Drug summarizes all of the paid claims data by NDC number and bills the drug companies for their products. The drug company pays the invoice but may have questions about Texas' reported utilization. If this occurs, the rebate auditors provided by Vendor Drug's rebate administrator will review the claim level data for that specific NDC. When the decimal is omitted, or the quantity rounded up to the next whole number, the drug manufacturer disputes the claim. If a manufacturer disputes a claim, the rebate auditors will contact the dispensing pharmacy for clarification. If the pharmacy has made an error, and the service date of the claim is within the 90 day filing period, the pharmacy can reverse the original claim and resubmit the corrected claim. If the claim is over 90 days, the rebate auditors will ask Vendor Drug to reverse the claim and resubmit it with the correct information. Some of the common reasons claims are disputed include: The quantity claimed does not match the package size (14.5grams claimed and the NDC is for a 17 gram inhaler); Excess quantity: this can be valid, a key punch error, or the pharmacy was billing using the wrong unit of measure (entered 300 in the quantity and the price is for 30); Low reimbursement: this can be because of Maximum Allowable Cost (MAC) pricing, key punch errors, or billing in the wrong unit of measure. Please verify the units that are being submitted to Vendor Drug are accurate for the claim and product being submitted.

10. Pharmacy Provider Desk Reviews

The Vendor Drug Field Administration unit conducts monthly desk reviews for the purpose of monitoring compliance of three types of paid outpatient pharmacy claims: High Dollar claims (total paid is equal to or greater than $1500.00); Maximum Allowable Cost (MAC) claims (physician override reported, and total paid is greater than $30); Compound drug claims. Claims are selected for review at the discretion of Vendor Drug Program regional pharmacists. The monthly desk review mailing consists of a standard letter and a report listing prescription copies requested. A check mark in the left margin of the report indicates that a copy of the prescription is requested. Copies of prescriptions are requested only once, at the time of the original fill. If a valid copy of an original fill prescription is not received, all subsequent fills (refills) are automatically debited.

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Pharmacies have 25 calendar days from the date of the letter to reply. If requested copies of high dollar claims are not returned, or the copies do not meet the criteria by the deadline, pharmacies will be notified by phone, fax, or email. Due to overall desk review volume, Vendor Drug staff is unable to notify pharmacies of MAC and compound claims that do not meet desk review criteria. Pharmacies are given until the close of business the following day to return the requested information. If the copies are not provided, or the criteria are not met, the claims will be adjusted or debited.

10.1.

Adjustment of Claims

All prescription copies must be valid prescriptions as defined by the Texas State Board of Pharmacy. The prescriber id number, prescription written date, date of service, drug name, drug quantity, and day supply must match the claim. Nurse Practitioner or Physician Assistants signatures are acceptable provided the supervising doctor's demographic information, including license number is on the prescription. Registered Nurse signatures or initials are not acceptable as they do not have prescriptive authority in the state of Texas. Electronic prescriptions are acceptable as long as they comply with Texas State Board of Pharmacy law. High dollar prescription copies must be of an original prescription signed by the prescriber. Compound prescription copies must show both the quantity and National Drug Code (NDC) number for each ingredient on the claim. Copies of MAC prescriptions for which a "dispense as written" override was used require one of the following phrases written across the face of the prescription in the prescriber's handwriting: "Brand Necessary," "Brand Medically Necessary," "Brand Name Necessary," or "Brand Name Medically Necessary". This is a Federal and State law that applies to all MAC claims, including electronic prescriptions. A typed or printed "brand" statement is not acceptable, nor is a statement obviously not written in the prescriber's own handwriting.

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Attachment A: Standard Format Reject Codes

Point Of Sale Reject Codes Please refer to Vendor Drug payer specification sheets for valid values. Explanation Field Number(s) "M/I" means Missing/Invalid Possibly in Error M/I BIN 1Ø1 M/I Version Number 1Ø2 M/I Transaction Code 1Ø3 M/I Processor Control Number 1Ø4 M/I Pharmacy Number 2Ø1 M/I Group Number 3Ø1 M/I Cardholder ID Number 3Ø2 M/I Birth Date 3Ø4 Version/Release Not Supported 1Ø2 Transaction Code/Type Not Supported 1Ø3 PCN Must Contain Processor/Payer Assigned Value 1Ø4 Transaction Count Does Not Match Number of Transactions 1Ø9 Multiple Transactions Not Supported 1Ø9 MultiIngredient Compound Must Be A Single Transaction 1Ø9 M/I Patient Gender Code 3Ø5 M/I Patient Location 3Ø7 M/I Other Coverage Code 3Ø8 M/I Date of Service 4Ø1 M/I Prescription/Service Reference Number 4Ø2 M/I Fill Number 4Ø3 M/I Days Supply 4Ø5 M/I Compound Code 4Ø6 M/I Product/Service ID 4Ø7 M/I Dispense As Written (DAW)/Product Selection Code 4Ø8 M/I Ingredient Cost Submitted 4Ø9 M/I Prescriber ID 411 M/I Unit Of Measure 6ØØ M/I Date Prescription Written 414 M/I Number Refills Authorized 415 M/I Level Of Service 418 M/I Prescription Origin Code 419 M/I Submission Clarification Code 42Ø M/I Coordination Of Benefits/Other Payments Count 337 Pharmacy Not Contracted With Plan On Date Of Service None Submit Bill To Other Processor Or Primary Payer None M/I Other Payer Coverage Type 338 M/I Other Payer Reject Count 471 NonMatched Pharmacy Number 2Ø1 NonMatched Group ID 3Ø1 NonMatched Cardholder ID 3Ø2 NonMatched Product/Service ID Number 4Ø7 NonMatched Prescriber ID 411 M/I Other Payer ID Qualifier 422

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Reject Code Ø1 Ø2 Ø3 Ø4 Ø5 Ø6 Ø7 Ø9 1R 1S 1T 1U 1V 1W 1Ø 12 13 15 16 17 19 2Ø 21 22 23 25 26 28 29 32 33 34 4C 4Ø 41 5C 5E 5Ø 51 52 54 56 6C

Vendor Drug Program Pharmacy Provider Procedure Manual Effective: December 1, 2011

Reject Code 6E 6Ø 61 62 65 67 68 7B 7D 7C 7E 7H 7Q 7V 7W 7X 7Z 7Ø 71 72 73 75 76 77 79 8A 8B 8D 8E 8G 8H 8N 8P 8Q 8R 8S 8T 8U 8V 8X 8Y 8Z 81 82 83

Point Of Sale Reject Codes Please refer to Vendor Drug payer specification sheets for valid values. Explanation Field Number(s) "M/I" means Missing/Invalid Possibly in Error M/I Other Payer Reject Code 472 Product/Service Not Covered For Patient Age 3Ø2, 3Ø4, 4Ø1, 4Ø7 Product/Service Not Covered For Patient Gender 3Ø2, 3Ø5, 4Ø7 Patient/Card Holder ID Name Mismatch 31Ø, 311, 312, 313, 32Ø Patient Is Not Covered 3Ø3, 3Ø6 Filled Before Coverage Effective 4Ø1 Filled After Coverage Expired 4Ø1 Service Provider ID Qualifier Value Not Supported For Processor/Payer 2Ø2 NonMatched Date Of Birth 3Ø4 M/I Other Payer ID 34Ø M/I DUR/PPS Code Counter 473 NonMatched Gender Code 3Ø5 Other Payer ID Qualifier Not Supported 339 Duplicate Refills 4Ø3 Refills Exceed allowable Refills 4Ø3 Days Supply Exceeds Plan Limitation 4Ø5 Compound Requires Two Or More Ingredients 4Ø6 Product/Service Not Covered 4Ø7 Prescriber Is Not Covered 411 Primary Prescriber Is Not Covered 421 Refills Are Not Covered 4Ø2, 4Ø3 Prior Authorization Required 462 Plan Limitations Exceeded 4Ø5, 442 Discontinued Product/Service ID Number 4Ø7 Refill Too Soon 4Ø1, 4Ø3, 4Ø5 Compound Requires At Least One Covered Ingredient 4Ø6 Compound Segment Missing On A Compound Claim 4Ø6 Compound Segment Present On A NonCompound Claim 4Ø6 M/I DUR/PPS Level Of Effort 474 Product/Service ID (4Ø7D7) Must Be A Single Zero "Ø" For Compounds 4Ø7 Product/Service Only Covered On Compound Claim 4Ø7 Future Date Prescription Written Not Allowed, 414 Date Written Different On Previous Filling 414 Excessive Refills Authorized 415 Submission Clarification Code Not Supported 42Ø Basis Of Cost Not Supported 423 Usual & Customary Charge Must Be Greater Than Zero 426 Gross Amount Due Must Be Greater Than Zero 43Ø Negative Dollar Amount Is Not Supported In The Other Payer Amount Paid 431 Field Collection From Cardholder Not Allowed 433 Excessive Amount Collected 433 Product/Service ID Qualifier Value Not Supported 436 Claim Too Old 4Ø1 Claim Is PostDated 4Ø1 Duplicate Paid/Captured Claim 2Ø1, 4Ø1, 4Ø2, 4Ø3, 4Ø7

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Vendor Drug Program Pharmacy Provider Procedure Manual Effective: December 1, 2011

Reject Code 85 87 88 9Ø 91 92 95 96 97 98 99 9B 9C 9D 9E 9G 9H 9M 9N 9R 9T 9V 9Y 9Z AA AB AF AK AM A2 BA BE B2 CB CN DC DN DQ DR DT DU DV DX EC ED EE

Point Of Sale Reject Codes Please refer to Vendor Drug payer specification sheets for valid values. Explanation Field Number(s) "M/I" means Missing/Invalid Possibly in Error Claim Not Processed None Reversal Not Processed None DUR Reject Error Host Hung Up Host Response Error System Unavailable/Host Unavailable Time Out Scheduled Downtime Payer Unavailable Connection To Payer Is Down Host Processing Error Reason For Service Code Value Not Supported 439 Professional Service Code Value Not Supported 44Ø Result Of Service Code Value Not Supported 441 Quantity Does Not Match Dispensing Unit 442 Quantity Dispensed Exceeds Maximum Allowed 442 Quantity Not Valid For Product/Service ID Submitted 442 Minimum Of Two Ingredients Required 447 Compound Ingredient Quantity Exceeds Maximum Allowed 448 Prescription/Service Reference Number Qualifier Submitted Not Covered 455 Prior Authorization Type Code Submitted Not Covered 461 Prescriber ID Qualifier Submitted Not Covered 466 Compound Product ID Qualifier Submitted Not Covered 488 Duplicate Product ID In Compound 489 Patient Spend down Not Met Date Written Is After Date Filled 4Ø1, 414 Patient Enrolled Under Managed Care M/I Software Vendor/Certification ID 11Ø M/I Segment Identification 111 ID submitted is associated to a Deceased prescriber 411 Compound Basis of Cost Determination Submitted Not Covered 49Ø M/I Professional Service Fee Submitted 477 M/I Service Provider ID Qualifier 2Ø2 M/I Patient Last Name 311 M/I Patient City Address 323 M/I Dispensing Fee Submitted 412 M/I Basis Of Cost Determination 423 M/I Usual And Customary Charge 426 M/I Prescriber Last Name 427 M/I Unit Dose Indicator 429 M/I Gross Amount Due 43Ø M/I Other Payer Amount Paid 431 M/I Patient Paid Amount Submitted 433 M/I Compound Ingredient Component Count 447 M/I Compound Ingredient Quantity 448 M/I Compound Ingredient Drug Cost 449

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Vendor Drug Program Pharmacy Provider Procedure Manual Effective: December 1, 2011

Reject Code EF EG EM EU EV EY EZ E1 E4 E5 E6 E7 E8 E9 G1 HB HC HD HF HG M2 M4 M5 MU MV MX MZ NX PB PC PE PF PH PJ PK PN PP PS PZ P3 P4 P6 P8 P9 RK

Point Of Sale Reject Codes Please refer to Vendor Drug payer specification sheets for valid values. Explanation Field Number(s) "M/I" means Missing/Invalid Possibly in Error M/I Compound Dosage Form Description Code 45Ø M/I Compound Dispensing Unit Form Indicator 451 M/I Prescription/Service Reference Number Qualifier 455 M/I Prior Authorization Type Code 461 M/I Prior Authorization Number Submitted 462 M/I Provider ID Qualifier 465 M/I Prescriber ID Qualifier 466 M/I Product/Service ID Qualifier 436 M/I Reason For Service Code 439 M/I Professional Service Code 44Ø M/I Result Of Service Code 441 M/I Quantity Dispensed 442 M/I Other Payer Date 443 M/I Provider ID 444 M/I Compound Type 996 M/I Other Payer Amount Paid Count 341 M/I Other Payer Amount Paid Qualifier 342 M/I Dispensing Status 343 M/I Quantity Intended To Be Dispensed 344 M/I Days Supply Intended To Be Dispensed 345 Recipient Locked In Prescription/Service Reference Number/Time Limit Exceeded Requires Manual Claim M/I Benefit Stage Count 392 M/I Benefit Stage Qualifier 393 Benefit Stage Count Does Not Match Number of Repetitions 392 Error Overflow M/I Submission Clarification Code Count 354 Invalid Transaction Count For This Transaction Code 1Ø3, 1Ø9 M/I Claim Segment 111 M/I COB/Other Payments Segment 111 M/I Compound Segment 111 M/I DUR/PPS Segment 111 M/I Insurance Segment 111 M/I Patient Segment 111 M/I Prescriber Segment 111 M/I Pricing Segment 111 M/I Transaction Header Segment 111 NonMatched Unit Of Measure To Product/Service ID 4Ø7, 6ØØ Compound Ingredient Component Count Does Not Match Number Of 447 Repetitions Coordination Of Benefits/Other Payments Count Does Not Match Number Of 337 Repetitions Date Of Service Prior To Date Of Birth 3Ø4, 4Ø1 DUR/PPS Code Counter Out Of Sequence 473 Field Is NonRepeatable Partial Fill Transaction Not Supported

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Vendor Drug Program Pharmacy Provider Procedure Manual Effective: December 1, 2011

Reject Code RU R2 SF SG YC ZZ 2Ø3 2Ø5 2Ø6 2Ø8 2Ø9 211

Point Of Sale Reject Codes Please refer to Vendor Drug payer specification sheets for valid values. Explanation Field Number(s) "M/I" means Missing/Invalid Possibly in Error Mandatory Data Elements Must Occur Before Optional Data Elements In A Segment Other Payer Reject Count Does Not Match Number Of Repetitions 471, 472 Other Payer Amount Paid Count Does Not Match Number Of Repetitions 341 Submission Clarification Code Count Does Not Match Number of Repetitions 354 Other Payer Reject Count Exceeds Number Of Occurrences Supported 471 Cardholder ID submitted is inactive. New Cardholder ID on file. 3Ø2 Claim Segment is not used for this Transaction Code 111 Prescriber Segment is not used for this Transaction Code 111 Coordination of Benefits/Other Payments Segment is not used for this 111 Transaction Code DUR/PPS Segment is not used for this Transaction Code 111 Pricing Segment is not used for this Transaction Code 111 Compound Segment is not used for this Transaction Code 111

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Attachment B: OBRA 90 Requirements for Contracted Pharmacies

The Omnibus Budget Reconciliation Act of 1990 (OBRA 90) mandates that, effective January 1, 1993, state Medicaid programs require contracted pharmacies to do the following: Perform Prospective Drug User View (DUR) Maintain patient medication records (profiles) Counsel patients on each new prescription The Texas State Board of Pharmacy has incorporated the OBRA 90 requirements into the pharmacy rules adopted December 1992. Thus, pharmacies in compliance with the Texas State Board of Pharmacy rules will be in compliance with the OBRA 90 Medicaid requirements listed above. Perform Prospective Drug User View (DUR) At the time of dispensing a prescription drug order, the pharmacist must review the patient medication record to identify: Clinically significant drugdrug interactions. Therapeutic duplication. Drugdisease contraindication. Drug allergy interactions. Incorrect drug dosage or duration of drug treatment. Clinical abuse/misuse. Upon identifying any clinically significant conditions, situations, or items listed above, the pharmacist shall take appropriate steps to avoid or resolve the problem including consultation with the prescribing physician. The Vendor Drug Program Point of Sale system provides information regarding therapeutic duplication, ingredient duplication, maximum dosage, and significance level 1 and 2 (First Data Bank) drugdrug interactions for those prescriptions paid by Medicaid, KHC, or CSHCN. Since some patients are limited to a specific number of prescription drug claims per month, the patient medication record at the dispensing pharmacy must be reviewed to ensure the inclusion of a complete drug history in the prospective DUR process. Drug allergy and disease state information will not be available online, and will also have to be reviewed from the patient medication record. Patient medication records (profiles) The pharmacist must make a reasonable effort to obtain and record, in the patient medication record, the following information on a patient presenting a prescription: Full name of the patient for whom the drug is prescribed. Address and telephone number of the patient. Patient's age or date of birth. Patient's gender. Any known allergies, drug reactions, idiosyncrasies, and chronic conditions or disease states of the patient and the identity of any other drugs currently being used by the patient which may relate to prospective drug review. Pharmacist's comments relevant to the individual's drug therapy, including any other information unique to the specific patient or drug. A list of all prescription drug orders dispensed (new and refill) to the patient by the pharmacy during the last two years. Such list shall contain the following information: o Date dispensed.

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o Name, strength, and quantity of the drug dispensed. o Prescribing practitioner's name. o Unique identification number of the prescription. o Name or initials of the dispensing pharmacists. Patient medication records (profiles) must comply with and be maintained in compliance with Texas State Board of Pharmacy regulations. The pharmacist may delegate the collection of the patient medication record to a technician. The pharmacist or designee is not required to obtain and record patient information in a profile (medication record) if the patient or patient's agent refuses to provide the necessary information for such patient medication records (profiles). Patient counseling The pharmacist is required to communicate to the patient or patient's agent, information concerning the dispensed prescription drug or device, including at a minimum the following: The name and description of the drug. Dosage form, dosage, route of administration, and duration of drug therapy. Special directions and precautions for preparation, administration, and use by the patient. Common severe side or adverse effects or interactions and therapeutic contraindications that may be encountered, including their avoidance, and the action required if they occur. Techniques for selfmonitoring of drug therapy. Proper storage. Refill information. Action to be taken in the event of a missed dose. The pharmacist is not required to provide consultation when a patient or patient's agent refuses such consultation. The pharmacist shall document such refusal for consultation. The Texas State Board of Pharmacy rules require that written information accompany prescription drug orders delivered to the patient or patient's agent. Provision of written information must be in compliance with Texas State Board of Pharmacy rules. Patient counseling requirements are to be in compliance with the Texas State Board of Pharmacy regulations. The counseling function must be performed by the pharmacist and cannot be delegated to a technician.

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Attachment C: Pharmacy Claims Billing Request (Form 3700)

Purpose: Newborns when a Cardholder ID number has yet to be issued Special circumstances as defined by the State (e.g. natural disasters) When to Prepare: The provider prepares Form 3700 for the following special claims: Newborns when a Cardholder ID number has yet to be issued. o If a client identification number is not available, submit claims on Form 3700. The child's name and date of birth should be entered on the explanation line as well as the mother's name and recipient identification number. The Cardholder ID field should be blank. These claims should not be submitted online using the mother's recipient identification number. The Pharmacy Resolution Help Desk may be called to assist with information on eligibility and claim submission. Special circumstances as defined by the State (e.g. natural disasters) The provider uses a separate Form 3700 for each of the above type of claim. Copies of the form are available online at txvendordrug.com/downloads/. Transmittal: The provider mails the completed form to the following address: HHSC Vendor Drug Program (H630) Health & Human Services Commission PO Box 85200 Austin, Texas 787085200 Retention: Form 3700 is kept for five years after the end of the federal fiscal year in which the provider sends the form. Required fields: Complete the pharmacy identification information, including the pharmacy name and physical address, 10digit National Provider Identifier (NPI), 6digit Pharmacy Vendor number, and the telephone/fax number. The pharmacy should sign and date the form prior to submission.

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Form 3700 Required Fields Cardholder ID

Date of Birth Patient Location Gender Pregnancy Indicator Date of Service Date RX Written Product ID Quantity Dispensed Units

Days Supply

Quantity Prescribed RX Number

Refill Authorization Refill Number Dispense as Written

Prescriber ID Prescriber Name Prior Authorization Type

Description Client identification number. If claim is for a Newborn and no ID# is available, this field should be left blank. DO NOT enter the Mother's ID number. Patient's date of birth. Optional 1 = Male 2 = Female 1 = Not pregnant 2 = Pregnant Date the prescription was filled. Date prescription was written. 11digit National Drug Code Quantity dispensed expressed in metric decimal units. EA = Each GM = Grams ML = milliliters Estimated duration of the prescription supply in days. This field may not exceed 185 for Medicaid and CSHCN. Days supply for CHIP and KHC is limited to 34. Quantity prescribed expressed in metric decimal units. Prescription/service reference number. If the number is less than 12 digits, right justify the number and zero fill to the left (example: RX "123456" should be entered as "ØØØØØØ123456"). Enter ØØ through 11. A value of ØØ is used to indicate an original prescription. Any other value of 11Ø indicates a refill prescription. Enter "1" to override the MAC when a physician wants a brand name dispensed and hand writes the phrase "Brand Necessary," "Brand Medically Necessary," "Brand Name Necessary," or "Brand Name Medically Necessary" across the face of the prescription. 10digit Prescriber National Provider Identifier (NPI). Individual last name. Enter first two letters of Prescriber's last name. Required if Prior Authorization Number Submitted is transmitted. Values: CHIP: 2 = Medical Certification Medicaid: 8 = Payer Defined Exemption STAR Health Program: 8 = Payer Defined Exemption

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Form 3700 Required Fields Prior Authorization Number

Usual and Customary Charge Gross Amount Due

Patient Paid Amount Submitted Basis of Cost Determination

Explanation Process Code Amount Paid Other Coverage Code Coverage Type ID Qualifier Other Payer ID Other Payer Date Amount Paid Qualifier Amount Paid Reject Code Signature

Description Required if Prior Authorization Type Code is transmitted. Values: CHIP only: 31 = Dysmenorrhea 32 = Acne Treatment 33 = Miscellaneous, other than contraception. Medicaid only: 8Ø1 = 72hour emergency override STAR Health Program only: 1Ø27 = Submission of DFPS ID Usual and customary (amount claimed for reimbursement). Used to reflect Usual & Customary price less discount or special price. Pharmacy providers who are required to bill actual invoice cost plus fee also can use it. For future use. ØØ = Default Ø1 = Wholesale acquisition Ø3 = Direct Ø8 = 34ØB / Disproportionate Share Pricing/Public Health Service Ø9 = Warehouse The type of claim submittal or adjustment and reason must be stated in the explanation line before the claim can be processed. HHSC use only HHSC use only Required if Coordination of Benefits (COB) segment is submitted. Follow NCPDP Standard (see Procedure Manual). Code identifying the type of Other Payer ID Code qualifying the Other Payer ID. ID assigned to the payer. Payment or denial date of the claim submitted to the other payer. Code qualifying the Other Payer Amount Paid. Amount of any payment known by the pharmacy from other sources. The error encountered by the previous Other Payer in Reject Code. The provider or authorized representative signs in ink after completing the form.

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Attachment D: Payer Specification Information

PAYER Texas Medicaid Children's Health Insurance Program (CHIP) Children with Special Health Care Needs (CSHCN) Services Program Kidney Health Care (KHC) Processor: ACSPharmacy Information Source: HHSC Vendor Drug Program Effective as of: December 1, 2011 Document Date: August 1, 2011 Provider Help Desk Number: 8004354165 Certification Help Number: 8004354165 Version supported: NCPDP D.Ø Other versions supported: None Web Site: txvendordrug.com NCPDP V.D.Ø NCPDP V.D.Ø Transaction Support Transaction Code Transaction Name Requirements E1 Eligibility Verification Supported B1 Billing Required B2 Reversal Required N1 Informational Reporting N1 from pharmacies not supported N2 Informational Reversal N2 from pharmacies not supported N3 Informational Rebill Not Supported B3 Rebill Not Supported P1 Prior Authorization Request and Billing Not Supported P3 Prior Authorization Inquiry Not Supported P2 Prior Authorization Reversal Not Supported P4 Prior Authorization Request Only Not Supported NCPDP Request Segment Matrix Segment Support Requirements E1 B1 B2 Header M M M Required Patient R R O Required Insurance M M O Required Claim N M M Required Pharmacy Provider N N N No planned requirements at this time; may be required at a future date. Prescriber N R N Required COB/ Other Payments N O N Required Worker's Comp N N N Not Required DUR/PPS N O O Required Pricing N M O Required Coupon N N N Required Compound N O N Required PA N N N Not Required Clinical N N N Not Required

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Program Specifics Compounds will be processed online using the Compound Segment. Coordination of Benefits will be supported via the COB segment only. In cases where multiple iterations of a field ("repeating fields") are allowed, the maximum number of iterations has been indicated. Partial fills will not be supported. Reversals will match on Provider Number, RX Number, Product/Service ID and Date Of Service. Any/ all submitted data elements will be edited for valid format and values. Provider software should support any/ all data elements on the required segments. Code Description M Designated as MANDATORY in accordance with the NCPDP Telecommunication Implementation Guide Version D.Ø. These fields must be sent if the segment is required for the transaction. R Designated as REQUIRED for this program. O Designated as OPTIONAL in accordance with the NCPDP Telecommunication Implementation Guide Version D.Ø. It is necessary to send these fields in noted situations where they are conditional based on data content. N Designated as NOT SENT in accordance with the NCPDP Telecommunication Implementation Guide Version D.Ø. ***R*** The "R***" indicates that the field is repeating. Notes: 1. Specific field values that are required for the program are identified as "TEXAS MEDICAID VALUES SUPPORTED". 2. All mandatory fields are required.

Download all payer sheets from txvendordrug.com/downloads: Claims Billing (Transaction Code B1)

Request (for Medicaid, CHIP, and CSHCN programs) Request (for KHC program) Accepted (Paid) Response (for all programs) Rejected Response (for all programs)

Claims Reversal (Transaction Code B2) (for all programs)

Request Accepted Response Rejected Response

Eligibility Verification (Transaction Code E1) (for all programs)

Request Accepted Response Rejected Response

Vendor Drug Program Pharmacy Provider Procedure Manual Effective: December 1, 2011

Page 42

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Texas Health and Human Services Commission

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