Navigating J7799KD: An Expert Guide to Billing Compounded Drugs in Implantable Infusion Pumps

Compounded drugs are medications prepared by a pharmacist that combine or alter the concentration/volume of ingredients, unlike commercially available products. As such, compounded medications do not have a National Drug Code (NDC) number, an average sales price (ASP), or an average wholesale price (AWP).

Understanding “Contractor Priced” for Compounded Drugs (J7799KD)

Compounded drugs are contractor priced. This means their reimbursement is determined by your local Medicare Administrative Contractor (MAC) rather than a national fee schedule. MACs evaluate various factors, including acquisition costs and regional pricing, to establish appropriate payment rates. Providers should consult their specific MAC’s website or fee schedules for local pricing information and claim submission requirements. For general MAC information, refer to the CMS Medicare Administrative Contractors page.

The use of compounded drugs has been especially prevalent in filling implantable infusion pumps. The following methods are appropriate when billing for drugs used in implantable infusion pumps:

1. When submitting a claim for compounded drug(s) for a single agent or a combination of agents, providers must use NOC HCPCS code J7799KD. Even though the compound is similar to or includes a drug with a specific HCPCS code (e.g., HCPCS code J2275 for preservative-free morphine), providers must use HCPCS code J7799KD (unclassified drug) for reimbursement of the compounded drug. The KD modifier must be appended to indicate the drug will be administered through Durable Medical Equipment (DME).
2. When a non-compounded drug is used (a true ‘off-the-shelf’ product without compounding), the specific HCPCS code for the drug may be used (see examples below). Payment for these drugs is reimbursed differently and is not subject to the fee schedule below.

Note: Any drug, compounded or non-compounded, that is administered through an infusion pump must be reported with the KD modifier.

Understanding the KD Modifier for DME Administration

The KD modifier is specifically designed to indicate that a drug is being administered through Durable Medical Equipment (DME), such as an implantable infusion pump. When appended to HCPCS code J7799, it signals to Medicare that the unclassified compounded drug is being delivered via this specific method. This distinction is critical because DME administration often has unique coverage and reimbursement rules compared to other drug administration routes. Unlike some modifiers that might impact payment percentages or indicate special circumstances (e.g., professional components), KD primarily serves to classify the service within the DME framework, ensuring appropriate processing under Medicare Part B guidelines for DME-related drug services.

Medicare will consider implantable infusion pumps and associated services (such as the drugs discussed here) medically reasonable and necessary for the conditions listed in the Medicare National Coverage Determination Manual Pub.100-03, Chapter 1, Section, 280.14.

This article does not define the medical necessity for use of these drugs but directs the proper billing. Providers must refer to the applicable **Local Coverage Determinations (LCDs)** for Implantable Infusion Pumps for specific coverage indications and medical necessity information pertinent to their region. LCDs are published by individual Medicare Administrative Contractors (MACs) and outline which services are covered and under what circumstances for their specific jurisdiction. You can find your relevant LCDs by visiting your MAC’s website or searching the CMS Medicare Coverage Database for “Implantable Infusion Pump” or related terms.

Please Note: HCPCS code J7799 has a status indicator of N in Part A, indicating bundled no separate payment. The billing guidance in this Article is specific to Part B.

Coding Guidelines for J7799KD

1. When billing for compounded drugs, report HCPCS code J7799 with the KD modifier on a single claim line.
2. Place quantity = ‘1’ on the line billed for J7799KD.
3. Enter the name and total dose (in mg or mcg) of each drug of the refill in Box 19 of the CMS 1500 or the appropriate comment loop of electronic claims (see examples below).
4. Covered compounded single or combination drugs should be billed on a single detail line with the exceptions noted below in the examples.
5. The ICD-10-CM code used on each detailed line must represent the condition treated by the drug(s) billed on that detail line.
6. Drug doses used in narrative description must be in mgs or mcgs only. Do not report ugs.

Billing Examples of Drugs for Implanted Infusion Pumps:

Non-compounded Baclofen
Non-compounded Baclofen (J0475KD) is routinely used as a single drug therapy for spasticity. It is not routinely used with other intrathecal combinations for pain management. Medicare does not provide reimbursement for non-compounded baclofen combined with any other intrathecal drugs. As baclofen is indicated for use in the treatment of spasticity, refer to the list of covered diagnoses in the associated LCD, Implantable Infusion Pumps.

Compounded Baclofen
Baclofen (J7799KD) and pain management drugs do not have the same coverage requirements. Baclofen is indicated for use in the treatment of spasticity. The list of covered diagnoses is part of the associated LCD as noted above. Pain management drugs and baclofen may have different diagnoses based on the LCD coverage.

The compounded Baclofen is reported on a separate line item from the pain management drug in the compounded mixture. Report separately, as indicated in the examples below.

• Example 1: Compounded mixture for pain and spasticity
  Morphine 20mg/ Bupivacaine 6mg/ Baclofen 4000mcg:
  Report Baclofen 4000mcg (J7799KD) on one claim line, and report Morphine 20mg/Bupivacaine 6 mg (J7799KD) on a second claim line.
• Example 2: Compounded mixture for chronic pain
  Hydromorphone 10mg / Clonidine 100mcg:
  Report Hydromorphone 10mg / Clonidine 100mcg (J7799KD) on a single claim line.

If compounded Baclofen (J7799KD), when used as part of a compounded drug combination in an implantable infusion pump, is not listed on a separate claim line and the claim does not meet the diagnosis requirements per the LCD, the total compounded drug line will be denied.

Compounded Drug Reporting Nuances

Do not list the drug separately from the dosage, such as morphine bupivacaine baclofen sufentanil 20mg 6mg 4mcg 5mcg. This format will be denied.

Key Takeaways for Billing Compounded Drugs with J7799KD

• Always use HCPCS code J7799KD for compounded drugs administered via DME (implantable infusion pumps).
• Report a quantity of ‘1’ for J7799KD on the claim line.
• Provide complete details of each drug name and total dose (in mg or mcg) in Box 19 of the CMS 1500 form or the electronic equivalent.
• Bill compounded Baclofen on a separate claim line from other pain management compounded drugs if part of the same mixture, adhering strictly to LCD diagnosis requirements.
• Ensure all dosages are accurately reported in milligrams (mg) or micrograms (mcg); avoid ‘ugs’.
• Consult your MAC’s website for specific contractor pricing policies and relevant **Local Coverage Determinations (LCDs)** for implantable infusion pumps and associated drug therapies to confirm medical necessity and coverage.
• Use the correct **ICD-10-CM code** that supports the medical necessity for each drug billed.

Frequently Asked Questions (FAQ)

Q: What distinguishes a compounded drug from a non-compounded drug for billing purposes?

A: Compounded drugs are custom-prepared combinations or altered concentrations of medications, lacking a specific NDC, ASP, or AWP. Non-compounded drugs are ‘off-the-shelf’ products with specific HCPCS codes and standard pricing.

Q: Why is J7799KD used instead of specific HCPCS codes for compounded drugs?

A: J7799 is an unclassified drug code used for compounded medications because they do not have a unique, dedicated HCPCS code. The KD modifier specifically indicates administration via Durable Medical Equipment (DME), like an implantable infusion pump, which is crucial for correct processing under Medicare Part B.

Q: How do I find the correct pricing for J7799KD?

A: Since J7799KD is “contractor priced,” you must contact your specific Medicare Administrative Contractor (MAC) or check their official website for local pricing policies, fee schedules, or reimbursement guidelines. Pricing can vary by region.

Q: When should compounded Baclofen be billed on a separate line?

A: Compounded Baclofen must be reported on a separate claim line from other pain management drugs when used as part of a compounded mixture in an implantable infusion pump. This is due to different coverage requirements and diagnosis indications typically outlined in the applicable LCDs.

Q: What information should be included in Box 19 of the CMS 1500 form?

A: For compounded drugs billed with J7799KD, Box 19 (or the appropriate comment loop for electronic claims) must clearly state the name and total dose (in mg or mcg) of each individual drug included in the compounded refill. For example: “Morphine 20mg, Bupivacaine 6mg, Baclofen 4000mcg.”