Thought Leadership

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Payers Are Using NDC Mandates, but Are They Doing Enough?

By Marty Mattei

The drug development pipeline is dominated by specialty therapies, more and more of which are being managed under the medical benefit. Therefore, payers will increasingly need to manage those drugs themselves, given that the PBMs they’d normally rely on don’t process these sorts of claims.

As a result, payers are looking to better manage medical drugs, and one way of doing that is by implementing an NDC mandate—a trend that has been on the rise over the last five years. According to RJ Health’s recent NDC Mandate Survey, payers requiring the NDC mandate went from 62% in 2016 to 68% in 2021.

What’s the reason behind the increasing use of NDC mandates? Without them, payers lack the specificity needed to optimally manage medical drug spend and accurately report on and collect rebates. The more specific payers can get when it comes to coding, the more they can understand where their dollars are going. For example, recombinant human growth hormone (somatropin 1mg), a common specialty therapy, has one HCPCS J code (J2941) and more than 50 applicable NDCs. This one-to-many relationship can lead to a lack of clarity in understanding which medications are being used and billed for by providers.

However, while NDCs have the ability to provide much more granular—and much more valuable—information, implementing them is complex. In fact, our survey shows that of those who require an NDC, only 54% actually validate and pend or deny the claim if the NDC is inaccurate. What’s more, only 36% of respondents who require NDCs actually validate that the submitted HCPC units are converted accurately for submission. So, while payers are increasingly turning to NDC mandates to help manage the medical drug spend, they’re only partially mitigating the risk of over or underpayment, potentially leaving money on the table as a result.

Navigating the NDC

While challenges with the NDC mandate abound, overcoming them is a feasible—and worthwhile—undertaking. Payers who see success understand that accuracy is key, and that systemizing your coding processes will ensure that you’re getting the most out of implementing an NDC mandate. This includes making sure that you’re able to crosswalk J codes to NDC codes, that way your organization can glean more specific data to better understand your medical drug spend, make more informed reimbursement decisions, and accurately adjudicate claims.

While having the correct J code to NDC crosswalk information is important, the ability to convert HCPCS units to NDC units is also critical. Drugs adjudicated under the pharmacy benefit have a defined NDC unit metric quantity, like 60 tablets. However, therapies such as injections and infusions that fall under the medical benefit are not as easily quantifiable. Having the correct unit conversion is key for ensuring that a given therapy is billed and adjudicated accurately and in the right quantity, which also helps ensure that payers aren’t over or underpaying.

For those who are keeping abreast of industry trends by leveraging NDC mandates, understanding the importance of unit conversion and crosswalking will result in increased efficiency and cost effectiveness. However, those who aren’t leveraging NDCs appropriately—or who avoid them altogether—are likely to find themselves behind the pack as specialty therapies continue to gain steam in the market.

For help overcoming the challenges of the NDC mandate—and to stay current with payer and reimbursement trends—check out RJ Health’s ReimbursementCodes solution.

© 2024 MMIT
Marty Mattei

Marty Mattei

In his role he is responsible for providing oversight and direction to guide clinical and product strategy for the organization. He has previously served in senior level and executive positions over the past 25 years for several leading health plans, PBMs, and IT organizations, managing all aspects of pharmacy benefits administration, pharmacy product management and development, and clinical strategy.

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