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Minnesota Department of Human Services Provider Manual
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Pharmacy Services

Revised: 05-06-2014

  • Overview
  • Key Points
  • Eligible Providers
  • Dispensing Providers
  • Prescribing Providers
  • Eligible Recipients
  • Covered Services
  • Compound Drugs
  • Covered Drugs
  • Home Infusion Therapy
  • LTC Facilities
  • Medicare Coverage
  • Minnesota Family Planning Program (MFPP)
  • Pharmacist Administered Immunizations and Vaccines
  • Physician Administered Drugs
  • Pharmacist Prescribing - OTC Medications
  • Pharmacy Service Limitations
  • Point of Sale Diabetic Testing Supply Program
  • Specialty Pharmaceutical Reimbursement
  • Unit Dose Dispensing
  • Noncovered Services
  • Drugs and Costs
  • Automatic Refills
  • Authorization/Limitation Requirements
  • Dispense as Written — Brand Necessary
  • "Refill-Too-Soon" Override and Authorization Requests
  • Billing
  • Accepting Cash Payments
  • POS
  • Usual and Customary
  • Billing Coordination of Benefits (COB)
  • Online Claims Screening (ProDUR)
  • MN–ITS
  • Paper Claims
  • Clozapine Case Management Services
  • Billing for Clozapine Case Management
  • Copays and Spenddowns
  • Drugs Requiring a Diagnosis
  • Medical Supplies and Equipment
  • National Drug Codes (NDC)
  • Patient Monitoring of Clozaril
  • Prescribing Provider NPI Numbers
  • Reversal of Claims
  • Definitions
  • Drug Formulary Committee
  • Drug Utilization Review Board
  • Legal References
  • Overview

    Information in this chapter applies to all of Minnesota's Health Care Programs (MHCP). Providers must contact the appropriate health plan for pharmacy information related to recipients in Managed Care Organizations (MCO).

    Key Points

    Federal Anti-Fraud Statutes
    Pharmacies cannot use Pharmaceutical manufacturers’ coupons, discounts or similar promotions in order to attract prescription business from Medical Assistance recipients. Federal anti-fraud and abuse provisions prohibit certain types of business transactions or arrangements, per Section 231(h) of HIPAA and the Office of Inspector General Special Fraud Alert, 59 Fed. Reg. 242; 1994. See Providers Requirements section for details.

    How to Determine Drug Coverage
    Use the NDC Search site ( to determine MHCP coverage of individual drug products.

    Labeler Codes
    Each listed drug product is assigned a unique 11-digit, 3-segment number, known as the National Drug Code (NDC). The first segment (5-digits) identifies the manufacturer or labeler of the drug, the second segment (4-digits) identifies the drug, and the third segment (2-digits) the package size. MHCP requires the 11-digit 5-4-2- format for billing or reporting a NDC. Use the NDC Format Conversion (PDF) chart to convert a 10-digit NDC to an 11 digit NDC.

    If a manufacturer is not listed as a participant in the federal Medicaid Drug Rebate Program (PDF), products from that manufacturer will not be covered by that MHCP program.

    Payment for Prescribed Drugs
    The maximum payment for any prescribed drug is the lower of the following:

  • • The pharmacy's usual and customary charge
  • • The estimated actual acquisition cost of the drug or maximum allowable cost (PDF) for a drug established by DHS, plus a fixed dispensing fee
  • Specialty Pharmaceutical Reimbursement rate (PDF), plus a dispensing fee
  • Effective August 1, 2011 Goold Health Systems (GHS) will be the MHCP contracted vendor to maintain the state maximum allowable cost (SMAC) list for generic drugs. Direct questions about the SMAC program or specific SMAC prices to GHS. To initiate a SMAC price review complete the MHCP SMAC Research Request Form (DHS-6406) and fax it to the GHS Minnesota SMAC Helpdesk at:

    Phone: 1-855-389-9503

    Tamper-Resistant Prescription Blanks
    The Appropriations Act of 2007-H. R. 2206—76 (PDF) states that payment will not be made for prescriptions in non-electronic form for Medical Assistance (MA) covered outpatient drugs in unless the prescription was executed on a tamper resistant prescription blank. This law does not affect E-prescribed, faxed or prescriptions phoned in to the pharmacy by the prescriber.

    Effective October 01, 2008, hand-written prescriptions must be executed on a tamper resistant prescription blank with at least one characteristics from all three categories as outlined in the July 2008 NCPDP letter to Medicaid (PDF).

    Eligible Providers

    Dispensing Providers

    To dispense prescription drugs, an enrolled provider must meet at least one of the following criteria:

  • • A pharmacy that is licensed by the Minnesota Board of Pharmacy
  • • An out-of-state pharmacy, licensed by a state board of pharmacy, that applies for retroactive enrollment
  • • A physician located in a local trade area where there is no MHCP enrolled pharmacy. The physician, to be eligible for payment, must personally dispense the prescribed drug according to applicable Minnesota statutes, and must adhere to the labeling requirements of the Minnesota Board of Pharmacy
  • • A physician or nurse practitioner employed by/under contract with a community health board for communicable disease control
  • Prescribing Providers

    To be eligible for coverage, prescriptions must be written by an enrolled prescriber. Prescriptions written by non-enrolled providers are not covered under fee-for-service MHCP.

    The following enrolled providers may prescribe drugs within the scope of their profession:

  • Dentists
  • Certified nurse practitioners
  • Mental health certified clinical nurse specialists
  • Optometrists
  • Osteopaths
  • Physician Assistants
  • Physicians
  • Podiatrists
  • • Other health care professionals licensed to prescribe drugs under Minnesota statutes, the laws of another state or Canada
  • Pharmacists may prescribe over-the-counter (OTC) medications to Fee-for-Service (FFS) or Managed Care (MCO) and MA recipients.

    Eligible Recipients

    All MHCP recipients are eligible for a certain level of pharmacy and medical supply benefits. See Health Care Programs and Services for specific program coverage. Use MN–ITS Eligibility Request (270) to verify recipient eligibility and other insurance coverage. Programs with limited prescription drug coverage include:

  • • Emergency Medical Assistance (EMA) recipients: EMA Service Limitations for services not available
  • • Program HH ADAP Drug Formulary
  • Recipients eligible for both MHCP and Medicare Part D (dual eligibles) must select a Medicare Part D plan and receive most of their medications through their selected Medicare Part D plan. MHCP will only cover drugs excluded by law from Medicare Part D coverage.

    When a recipient elects Hospice coverage, bill outpatient drugs and medical supplies directly related to the terminal illness to the Hospice Provider. If prescription drugs or medical supplies are needed to treat a preexisting condition outside the scope or purpose of treating the terminal illness, follow the standard billing guidelines to bill for MA or MinnesotaCare recipients.

    Covered Services

    Covered Drugs

    Most decisions regarding MHCP drug coverage are made at the federal level in accordance with Federal OBRA Laws of 1990. Those areas left to Minnesota's discretion are described in this chapter in the Pharmacy Service Limitations section. Please consult these documents for more information on drug coverage:

  • All drugs requiring prior authorization
  • Drug Categories with Limited Coverage
  • Drugs requiring a diagnosis code
  • PA Criteria Sheets
  • Preferred Drug List (PDL) (PDF)
  • Responsibilities of the Drug Formulary Committee and Drug Utilization Review Board are outlined under the definitions section of this chapter.

    Minnesota Family Planning Program (MFPP)

    The Minnesota Family Planning Program (MFPP) implemented July 1, 2006, provides family planning services and supplies for women and men ages 15 years to 50 years. See Pharmacy Services, Confidentiality and billing instructions in Minnesota Family Planning Program section of the MHCP Provider Manual.

    Pharmacist Administered Immunizations and Vaccines

    State law allows a pharmacist to administer flu vaccines to individuals ten years of age and older and all other vaccines to individuals who are 18 years of age and older under standing orders from a licensed physician or by written protocol with a physician provided that:

  • 1. The pharmacist is trained in a program approved by the American Council of Pharmaceutical Education for the administration of vaccinations or graduated from a college of pharmacy in 2001 or after, and
  • 2. The pharmacist reports the administration of the vaccination to the patients primary physician or clinic
  • State law also requires that providers who administer flu vaccines to children ages 10-18 obtain the flu vaccine from the Minnesota Vaccines for Children Program (MNVFC)

    For individuals age 19 and older, providers must obtain immunizations and vaccines that are available from the Minnesota Department of Health (MDH) adult immunization and vaccine program.

    MHCP does not pay for immunizations or vaccines that are available through the Minnesota Department of Health (MDH) at no cost to the provider.

    The affiliated pharmacy would be responsible for billing MHCP for the pharmacist administered vaccine and administration fee using the correct CPT codes through their billing intermediary, on MN–ITS Interactive 837 Professional.

    Physician Administered Drugs

    Drugs which are administered to a patient as part of a clinic or other outpatient visit should be billed to MHCP using the appropriate HCPCS code(s). See Physician and Professional Services Chapter. Do not bill drugs administered during an outpatient visit through the pharmacy POS system. MHCP does not allow “brown-bagging” or “white-bagging” of prescription drugs administered in an office setting.

    Pharmacies, including mail order pharmacies, who are providing the drugs for a clinic visit, should bill the clinic and not MHCP for the drugs dispensed. MHCP will make an exception only if a recipient has third-party liability and the third-party payer requires that the drugs be billed through the pharmacy benefit.

    Pharmacies should not dispense drugs directly to a patient if the drugs are intended for use during a clinic or other outpatient visit.

    Pharmacist Prescribing - OTC Medications

    The following policies apply to pharmacists prescribing OTC medications:

  • • OTC medication must be medically necessary and the recipient must not need a referral to another health care professional.
  • • Drug therapy must be reviewed for potential adverse interactions.
  • • Drug counseling must be consistent with Minnesota Rules 6800.0910.
  • • The pharmacy must keep a prescription on file as defined in MS 151.01, subd. 16. As with all other MHCP prescriptions, the prescription must be kept on file for five years. For the purposes of providing OTC drugs to recipients, the pharmacist is the prescriber who must sign the prescription. Prescriptions may be refilled for up to 12 months as specified in Minnesota Rules 6800.3510.
  • • Prescriptions must be dispensed in accordance with all relevant sections of MS 151 and Minnesota Rules 6800.
  • • The MHCP pharmacy's NPI number should be used as the prescriber number. Individual pharmacists will not be enrolled as providers.
  • • For the original fill, document on the prescription information regarding medical necessity, drug therapy reviews and drug counseling. For refills document in the patient's profile any updated information regarding medical necessity, drug therapy reviews and drug counseling.
  • • As with all MHCP prescriptions the pharmacist is strongly encouraged to have the recipient sign for receipt of the prescription whenever possible.
  • • The entire package of all OTC medications used on a maintenance or as needed basis must be dispensed at each fill. Do not dispense a partial package of an OTC drug unless the drug is being used on a one-time basis and it is not anticipated that the patient will need a refill. All vitamin and mineral supplements should always be dispensed in the entire package quantity. Medications used on an as-needed basis such as acetaminophen, ibuprofen, and allergy-relief medication should also be dispensed in the entire package quantity.
  • • Pharmacies may repackage OTCs, but the entire package quantity must still be dispensed for all OTC medications used on a maintenance or as needed basis. No additional or enhanced dispensing fee is available for the repackaging of OTC medications.
  • • OTC drug products must be billed at the shelf price of the pharmacy. If a pharmacy is not accessible to or frequented by the general public, if the OTC drug is not on display for sale to the general public, or if a partial package of the OTC is being dispensed for an acute condition, then the usual and customary charge for the OTC drug will be the actual acquisition cost of the product plus a 50% mark-up based on the actual acquisition cost.
  • • If an OTC is being used on a one-time basis and a partial package is dispensed, the pharmacist should submit the following price for Usual and Customary:
  • • If the shelf price of the entire package is less than $3.65, the pharmacist should submit the shelf price of the entire package as the shelf price of the partial package
  • • Example: If a pharmacist is dispensing two bisacodyl tablets for a one-time bowel preparation and the shelf price of the 12-count box of bisacodyl tablets is $3.00, the pharmacist should submit $3.00 as the usual and customary price for the two tablets
  • • If the shelf price of the entire package is greater than $3.65, the pharmacist should submit as usual and customary a pro-rated shelf price or $3.65, whichever is greater.
  • • Example: A pharmacist is dispensing 20 tablets of loperamide for an acute diarrhea episode. The tablets come in a package of 40 tablets and the shelf price for the package is $12.00. The pharmacist should submit $6.00 (the pro-rated shelf price) as usual and customary. Alternatively, the pharmacist could dispense a smaller package size.
  • To verify if an over the counter (OTC) product is covered by MHCP use our NDC Search or call the MHCP Provider Call Center with the NDC on the container or reference the MHCP OTC Drugs/Excludable Drugs list: MS Excel or PDF format.

    Pharmacy Service Limitations

  • • A prescribed drug must be dispensed in the quantity specified on the prescription unless the pharmacy is using unit dose dispensing or the specified quantity is not available in the pharmacy when the prescription is dispensed. Only one dispensing fee is allowed for dispensing the quantity specified on the prescription.
  • • The dispensed quantity of a prescribed drug must not exceed a 34-day supply. Exceptions are as follows:
  • • Contraceptive drugs can be dispensed in up to 90-day supplies;
  • • If a recipient’s TPL coverage requires 90-day supply, MHCP will issue an override for the copay portion.
  • • The entire package of OTC drugs used on a maintenance or as needed basis must be dispensed at each fill and can be dispensed in greater than 34-day supplies if necessary to meet that requirement;
  • • Two rescue inhalers such as albuterol and pirbuterol can be dispensed for recipients who need one for home and one for school or work even if the days’ supply is greater than 34.
  • • Except as noted above, an initial or refill prescription for a maintenance drug must be dispensed in not less than a 30-day supply, but no more than a 34-day supply, unless the pharmacy is using unit dose dispensing or the drug is clozapine. No additional dispensing fee will be paid until that quantity is used by the recipient.
  • • Except as described below or unless the drug is clozapine, the dispensing fee billed by or paid to a particular pharmacy or dispensing physician for a maintenance drug is limited to one fee per 34-day supply:
  • • More than one dispensing fee per calendar month for a maintenance drug for a recipient is allowed if the record kept by the pharmacist or dispensing physician documents that there is a significant chance of over dosage by the recipient if a larger quantity of drug is dispensed, and if the pharmacist or dispensing physician writes of this reason on the prescription.
  • • Pharmacies may repackage OTCs, but the entire package quantity must still be dispensed at each fill for all OTC medications used on a maintenance or an as needed basis. No additional or enhanced dispensing fee is available for the repackaging of OTC medications.
  • Specialty Pharmaceutical Reimbursement

    Specialty pharmaceuticals are defined as those used by a small number of recipients with complex and chronic diseases that require expensive and challenging drug regimens. The Minnesota Department of Human Services was granted legislative authority to negotiate Specialty Pharmacy Reimbursement Rates lower than the standard WAC plus 2%. Refer to the Specialty Drug List for current Specialty Pharmacy Reimbursement Rates (SMAC pricing).

    Noncovered Services

    Drugs and Costs

  • • Drugs when indicated or used for erectile dysfunction
  • • Drugs determined to be less-than-effective (DESI) by the FDA and drugs identified as identical, related or similar to DESI drugs
  • • Drugs which are made by manufacturers that do not have a rebate agreement with CMS
  • • Drugs which are limited or excluded by the state as allowed by federal law (OBRA 90)
  • • Drugs dispensed after their expiration date
  • • The cost of shipping or delivering a drug
  • • Drugs lost in shipping or delivery
  • • Drugs, both legend and OTC, that are not prescribed by practitioners licensed to prescribe or that are not prescribed within their scope of practice
  • • Herbal or homeopathic products
  • • Nutritional supplements except as specifically allowed in this provider manual or in DHS provider updates
  • • Compounded drugs, except as allowed in this chapter
  • Automatic Refills

    MHCP does not allow automatic refills. Prescription refills are not eligible for payment without an explicit request from a recipient or authorized caregiver. The pharmacy provider may not contact the recipient in an effort to initiate a refill unless it is part of a good faith clinical effort to assess the recipient’s medication regimen.

    A nurse or other authorized agent of the facility may initiate a request for refill for a recipient residing in a skilled nursing facility, group home or assisted living arrangement.

    Cycle fills are only allowed for enrolled unit dose dispensing pharmacies for recipients residing in skilled nursing facilities.

    Authorization/Limitation Requirements

    Do not submit prior authorization (PA) requests for the above-listed MHCP non-covered drugs. Authorization cannot be granted.

    Updated lists of all drugs requiring prior authorization are posted on the MHCP Pharmacy web page. Authorization requests with incomplete information cannot be processed.

    Effective January 1, 2011, pharmacies and prescribing providers must submit all drug PA requests for outpatient prescription drugs and physician administered drug that require authorization to Health Information Designs (HID) the MHCP Prescription Drug PA Review Agent, by phone at 1-866-205-2818 or by fax at 1-866-648-4574.

    When the prescriber initiates the PA request by phone or by fax supply the:

  • • Name of the drug
  • • Dosage form, the days supply and number of refills
  • • NPI of the prescribing provider
  • • Name and phone number of the selected pharmacy
  • • Supporting documentation of medical necessity, including diagnosis, history of other medications tried, the dates and outcome of the other trials for this condition.
  • The MHCP Prescription Drug PA Review Agent will make outbound calls to the pharmacy to determine the NDC and pharmacy NPI as needed.

    When the pharmacy initiates the PA request by phone or fax, the pharmacist may have to obtain some information from the prescriber, as listed above consistent with Minnesota Rules 6800.3110, subp. 2a: "Minimum information required; Medicaid patients."

    The MHCP Prescription Drug PA Review Agent call center hours will be 8 AM to 7 PM, Monday through Friday

    Pharmacists may dispense up to a 72-hour supply of a covered medication outside the regular business hours of the MHCP Prescription Drug PA Review Agents. Contact the MHCP Prescription Drug PA review agent during regular business hours for a retroactive authorization for the 72-hour supply.

    The MHCP Prescription Drug PA Review Agent will not authorize the 72 hour supply if the drug dispensed is never covered. Additional supplies will not be approved unless criteria are met.

    DHS has the authority to require authorization for new drugs for 180 days post-market introduction without formulary review.

    For drugs dispensed and billed by a pharmacy, the pharmacist is responsible for obtaining the prior authorization number from the MHCP prescription drug PA review agent or from a prescriber who has received it from the MHCP prescription drug PA review agent. The pharmacist may have to obtain some information from the prescriber, such as diagnosis, consistent with Minnesota Rules 6800.3110, subp. 2a: "Minimum information required; Medicaid patients."

    For Medicaid patients, a reasonable effort must be made by the pharmacy to obtain, record, and maintain at least:

  • • Name, address, telephone number, date of birth or age, and gender
  • • Individual history where significant, including disease state or states, known allergies and drug reactions, and a comprehensive list of medications and relevant devices being used, showing the prescription number, the name and strength of the drug or device, the quantity and date received by the patient, and the name of the prescriber. If this information is obtained by someone other than the pharmacist, the pharmacist must review the information with the patient
  • • Pharmacist comments relevant to the individual's drug therapy, including, where appropriate, documentation of the following for each prescription:
  • • Pharmaceutical care needs of the patient
  • • Services rendered by the pharmacist
  • • Pharmacist's impression of the patient's drug therapy
  • This documentation is not required for residents of a licensed nursing home when a consultant pharmacist is performing regular drug regimen reviews.”

    Refill prescriptions must be authorized and approved by the prescriber as consistent with accepted pharmacy practice. Refills must be documented in the prescription file and initialed by the pharmacist who refills the prescription.

    Dispense as Written — Brand Necessary

    The Drug Formulary Committee reviewed and accepted the following prior authorization criteria for payment of brand name medications when a generic is available and a State Maximum Allowable Cost (SMAC) applies:

  • • Prescribers must obtain authorization for any brand name multiple source drug that has an FDA "AB" rated generic equivalent Providers must continue to write, in their own handwriting, "DAW - brand medically necessary" on the prescription (a checked DAW box or a typed DAW is not acceptable) and obtain authorization from the MHCP prescription drug PA review agent.
  • • For prescriptions transmitted electronically, the prescriber may indicate the DAW 1 box using the e-prescribing software. However, the prescriber must enter “Brand Medically Necessary” in the “Prescriber note to Pharmacy” field. The pharmacy may not make any changes to the “Prescriber note to Pharmacy” field. If a DAW “1” appears and there is no brand necessary notation, the pharmacist must contact the prescriber for a new prescription.
  • • List the specific drug being requested, including dosage form, strength, and directions
  • • Document when the generic was tried and the length of the trial period
  • • Specify the medical problem caused by the generic product. Describe the problem in detail. Examples: hives, rash,
  • • Provide chart documentation of generic failure whenever possible
  • Include the name and NPI number of the MHCP prescribing physician, the NDC number, and the NPI number of the dispensing MHCP pharmacy.

    When submitting claims dispensing providers must use code 01: Substitution Not Allowed by Provider and authorization number when submitting claim.

    An exception to this policy is when a generic drug has a higher net cost to the State than the brand name drug. When this occurs, MHCP may prefer the brand name drug over the generic until the generic product is available at a reduced cost. When DHS prefers the brand over the generic, the prescriber is not required to write “DAW-brand medically necessary” on the prescription or enter “Brand Medically Necessary” in the “Prescriber note to Pharmacy” field. When a new generic drug becomes available, use our NDC Search or call the MHCP Provider Call Center to determine if the generic drug is under authorization requirements.

    Maximum Allowable Cost (MAC) price limitations do not apply if the prescriber has certified that a particular brand is medically necessary and has met the prior authorization criteria. If a prescription is "DAW - brand necessary," but the prescribed drug manufacturer is not a participant in the Federal Drug Rebate Program, the drug is not covered.

    "Refill-Too-Soon" Override and Authorization Requests

    Contact the MHCP Provider Call Center at 651-431-2700 or 1-800-366-5411 for a refill-too-soon override in the situations listed below:

  • • A prior authorization may be granted for recipients living in a long term care facility who receive a pass to leave the facility for a weekend or other short stay away from the facility. Authorization will not be granted for regularly schedule absences such as for work and school supplies.
  • • Situations listed in the Non-Controlled Substances Chart (PDF): and Controlled Substances Chart (PDF) indicating the circumstances where overrides/authorizations from the MHCP Provider Call Center are granted.
  • The MHCP Provider Call Center cannot issue a prior authorization or an override for drugs requiring an authorization due to preferred drug list status or clinical criteria.


    Pharmacies must use their NCPDP D.0 POS (Point of Sale) to bill for prescription drugs. Pharmacies should not bill for drugs administered in a clinic.

    Review MHCP general Third Party Liability (TPL) policy in the Billing Policy section of the Provider Manual.

    Bill primary health insurance plans and receive payment to the fullest extent possible before billing MHCP. Private health care coverage is primary to MHCP and must be used first and according to the rules of the specific plan. You are responsible for the following:

  • • Obtain prior authorization for services as required by the primary plan
  • • Follow the protocols established by the primary plan (demonstrated use of generic vs. brand name)
  • • Follow rules of the primary health plan
  • Accepting Cash Payments

    Do not accept cash payment from a recipient, or from someone paying on behalf of the recipient, for any MHCP covered prescription drug.

    A pharmacy may accept, cash payment for a non-covered prescription drug provided that:

  • • The patient is not enrolled in the restricted recipient program
  • • All available covered alternatives have been reviewed with the recipient
  • • The pharmacy obtains a patient signature on the MHCP Recipient Acknowledgement Form
  • • The prescription is not for a controlled substance, tramadol, or gabapentin
  • A pharmacy may only accept cash payment for a controlled substance, tramadol, or gabapentin prescription only if the pharmacy has received authorization from MHCP to do so on the date of service. To be considered for cash payment authorization, the prescriber must contact the MHCP help desk and provide rationale as to why covered alternatives are not viable options for the recipient.

    If a recipient’s MHCP eligibility status is in question and the recipient offers cash payment for prescriptions, the pharmacy must verify eligibility through MN–ITS or EVS. If the person does not have coverage through MHCP you may charge that person and accept cash as payment. If the recipient is covered by MHCP, do not accept cash payment from the recipient for the prescription if the patient is enrolled in the restricted recipient program or the product requested is a controlled substance, tramadol, or gabapentin.


    All required fields must be completed for the claim to process. Some fields are mandatory while other fields are optional. Optional fields may become required only when reporting situational information, such as coordination of benefits/other payments or adjustments made on a claim.

    Usual and Customary

    In the Usual and Customary Charge field, enter the amount you would charge cash customers less any sales tax and other discounts, coupons, insurance write offs or price reduction adjustment.

    Example: The pharmacy bills the TPL (other insurance) their usual and customary amount of $100. The TPL indicates there is a provider write off adjustment of $20.00 on this claim. The TPL pays $60.00 with a $20.00 subscriber copay amount due. The pharmacy would bill MHCP $80.00 ($100.00 usual and customary less the $20.00 provider write off adjustment), report the $60.00 TPL payment in other payer amount paid field and enter the $20.00 copay amount in the gross amount due field.

    Use the following criteria when submitting your usual and customary charge:

  • • Providers must bill their usual and customary charge. This applies whether the drug is purchased by prescription or OTC, in bulk or unit-dose packaging
  • • OTC drug products must be billed at the shelf price of the pharmacy
  • • If a pharmacy is not accessible to, or frequented by the general public, if the OTC drug is not on display for sale to the general public, or a partial package of an OTC is being dispensed for one-time acute use, then the usual and customary charge for the OTC drug will be the actual acquisition cost of the product plus a 50% mark-up based on the actual acquisition cost
  • • Amounts paid in full or in part by third party payers must be included in the calculation of the usual and customary charge only if a third party payer constitutes 51% or more of the pharmacy's business, based on the number of prescriptions filled by the pharmacy on a quarterly basis
  • • For recipients with private health insurance, the provider may not bill MHCP more than the client-liable amount (e.g., co-payment). Examples of correct billing include:
  • • Submitted charge: Amount allowed by the third party payer
  • • Prior payments: Amount paid by the third party payer
  • • Co-payment: The difference between the submitted charge and the prior payment
  • Providers may need to manually override their system's usual and customary charge to prevent over-billing.

    Billing Coordination of Benefits (COB)

    Pharmacies must follow the NCPDP Implementation Guide when submitting claims with coordination of benefits from more than one health plan/provider. Correctly and appropriately complete all applicable fields. Failure to do so will cause denial of claims or recovery of payments.

    Refer to the Minnesota Medicaid Version D.0 NCPDP Payer Sheet for specific billing instructions.

    Online Claims Screening (ProDUR)

    POS claims are screened by DHS online edits that check recipient data and alert pharmacists to potential drug conflicts. This screening process occurs at the time of POS transmission and is referred to as ProDUR. Claims in conflict with ProDUR edits are identified by a series of DUR conflict, intervention and outcome codes and may be overridden by the pharmacist. The only POS edits that a pharmacist can override are those relating to DUR. A pharmacist may override a ProDUR edit only if there is a valid reason for doing so. Refer to the Non-Controlled and Controlled Substances linked charts in the "Policies for Handling "Refill-Too-Soon" Override and Authorization Requests" section to determine if an override request is appropriate.

    Paid Claim: Some DUR conflict codes are posted for informational purposes only and allow claims to be paid.

    If it is in the recipient's best medical interest to fill the prescription, the denial may be overridden. Enter the appropriate intervention and outcome codes in the corresponding field and resubmit the claim using POS. To override a denial code:

  • • Select a corrective action and enter the related intervention code in the corresponding field
  • • Record the result of the corrective action using the appropriate outcome code in the corresponding field
  • • Resubmit the claim via POS
  • MN–ITS

    MN–ITS is a no cost online DHS web-based HIPAA compliant billing, inquiry and communication tool. Computer and internet access are required.

  • • Refer to the MN–ITS User Guide for Pharmacy (NCPDP) electronic submission of pharmacy claims
  • • Refer to this MN–ITS User Guide to bill individual claims for durable medical equipment, medical supplies and services requiring the use of a HCPCS code
  • • Refer to this MN–ITS User Guide to submit a new 837P MTMS Claim
  • Paper Claims

  • • The 2007 Minnesota Legislation passed new regulations requiring all health care providers and payers to submit transactions electronically by 2009. As of July 15, 2009, MHCP no longer accepts paper claims.
  • Clozapine Case Management Services

    Use HCPCS code G9012 for case management service for the specialized care management service required to ensure the safety of the recipients receiving clozapine. Clozapine management services consist of:

  • • Ensuring the required white blood cell (WBC) and absolute neutrophil count (ANC) testing for clozapine occurs at a frequency in accordance with the rules set forth in the “black box” warning of the manufacturer’s package insert.(Food and Drug Administration labeling requirements)
  • • Providing and documenting coordination of care with the recipient’s provider(s) for the purposes of:
  • • Obtaining blood test results in a timely fashion
  • • Ensuring the recipient receives medications as scheduled or stops therapy when required (and is subsequently and appropriately monitored)
  • • Assisting in the transition and coordination of the use of the clozapine formulations and clozapine management services between different care locations
  • • Meeting the requirements of the drug manufacturers’ clozapine registries as well as additional record keeping requirements that include maintaining:
  • • Copies of the physician’s prescription for clozapine and clozapine management
  • • Copies of laboratory results of WBC counts and ANC’s
  • • Signed and dated notes documenting all clozapine management services
  • Billing for Clozapine Case Management

  • • Providers may submit claims for clozapine management only as often as a recipient’s WBC count and ANC are tested, even if clozapine is more frequently dispensed. Frequency of WBC and ANC tests is determined by the prescriber.
  • • A single fee is allowed for clozapine management services per one date of service (DOS).
  • • For recipients who have weekly WC count and ANC’s, providers may submit claims for one DOS per calendar week.
  • • For recipients who have biweekly or monthly WBC and ANC’s, providers may submit claims for one DOS per two weeks or one DOS per month.
  • Note: The blood test is separately reimbursable for a Medicaid–certified laboratory.

    Copays and Spenddowns

    Some MHCP recipients may have a copay or spenddown responsibility for products and service.

    Drugs Requiring a Diagnosis

    An ICD diagnosis code must be included on claims for certain drugs. The pharmacist must verify the diagnosis with the prescriber before submitting a claim. Review: Drugs requiring a diagnosis code.

    Enter the ICD diagnosis code in the Diagnosis Code field on POS or on MN–ITS Interactive Pharmacy (NCPDP) electronic format.

    Medical Supplies and Equipment

    Pharmacies that dispense medically necessary medical supplies and equipment such as, enteral nutritional products, incontinence products, gauze pads, walkers, etc., must submit the claim to MHCP using the Healthcare Common Procedure Code System (HCPCS) code set and, in some cases, a modifier. A modifier further defines the product or service by indicating for example: if the item is new, a rental or being repaired, if the product or service warrants additional pricing, etc.

    For diabetic supplies see Point of sale Diabetic Testing Supply Program.

    Contact your software vendor or billing intermediary for their specific billing instructions for medical supplies and equipment. In many cases the billing intermediary will convert a NDC to a HCPCS code for their billing clients.

    Use MN–ITS 837P to bill for medical supplies and equipment. Refer to the MN–ITS User Guide for DME, Medical Supplies, Prosthetic and Orthotic Service for billing instructions.

    Submit authorization requests with the required documentation to the authorization medical review agent. Submit authorization requests via MN–ITS, fax or mail.

    Refer to the Equipment & Supplies section of this manual for coverage criteria and billing instructions. Find links to Medical Supply Related Lists and Prior Authorization Forms on the MHCP Enrolled Providers - Equipment and Supplies homepage.

    National Drug Codes (NDC)

    All pharmacy claims submitted to DHS must identify the 11-digit NDC printed on the stock container in which the drug was purchased.

    A pharmacy may not dispense a repackager's drug and then bill DHS using the original manufacturer's NDC.

    Most drugs distributed by repackagers are not covered by Medicaid because the repackager has not signed a rebate agreement with CMS.

    Patient Monitoring of Clozaril

    Use HCPCS code G9012 as a case management service for patient monitoring associated with the administration of Clozaril (clozapine). Submit claims using MN–ITS Professional (837P).

    Prescribing Provider NPI Numbers

    All pharmacy claims must include the National Provider Identifier (NPI) of the prescribing provider, or in certain rare situations an alternate NPI may be used as outlined below:

  • • Use the NPI of the MHCP enrolled prescribing provider
  • • Use the NPI of an MHCP enrolled supervising physician if the NPI of the prescribing provider is not available because they are an intern or resident.
  • • Use the NPI of the dispensing pharmacy as the prescribing provider when the pharmacist has prescribed OTC medications.
  • Enter the prescribing provider NPI or the appropriate alternate NPI in the corresponding POS field or on MN–ITS Interactive Pharmacy (NCPDP) electronic format.

    MHCP enrolled prescribing provider NPIs are in the NPI/UPMI list published on the secure MN–ITS Interactive Welcome page. (MN–ITS login is required)

    Reversal of Claims

    Pharmacy providers should not reverse claims on POS for recipients who have had a change in their spenddown amount, program coverage or eligibility. DHS will make the adjustment automatically.

    If a replacement claim does not appear on your next RA within two weeks of the spenddown or eligibility change, contact the Provider Call Center at 651-431-2700 or 1-800-366-5411.


    Actual Acquisition Cost: The net cost of a drug to the dispenser; this includes quantity, volume, and special discounts but does not include cash or time discounts. The acquisition cost of a drug is estimated by the commissioner at Wholesale Acquisition Cost (WAC) plus two percent.

    Cash Discount: A reduction in price that occurs when cash accompanies the order for merchandise.

    Compounded Prescription: A prescription prepared in accordance with Minnesota Rules 6800.3100.

    Dispensing Date: The actual date the entire quantity was dispensed. For drugs dispensed in unit dose containers, the last dispensing date of the calendar month must be used as the dispensing date on the claim form.

    Dispensing Fee: The amount allowed for the pharmacy service in dispensing the prescribed drug.

    Drug Efficacy Study Implementation (DESI) Drugs: Federal Food and Drug Administration (FDA) designations related to "substantial evidence" of effectiveness. DESI drugs were introduced to the market between 1937 and 1962, during which time manufacturers did not have to show that their products were effective. Federal Medicaid statutes prohibit state Medicaid agencies from paying for these drugs. Examples include Midrin and Anusol HC suppositories.

    Dual Eligibility: Individuals entitled to Medicare Part A/Part B and eligible for some form of Medicaid benefit.

    Federal Drug Rebate Program: Established by the federal statute referred to as OBRA 90, requires manufacturers to sign a rebate agreement with the federal Center for Medicare and Medicaid Services (CMS) in order to have their products covered for Medicaid recipients. State Medicaid agencies administer the program and collect rebates from the manufacturers.

    Generically Equivalent Drug: A drug product that, in the pharmacist's professional judgment, is safely interchangeable with the prescribed drug.

    Legend drug: A drug that is required by federal law to bear one of the following statements: “Caution: Federal law prohibits dispensing without prescription” or “Rx only.”

    Maintenance Drug: A prescribed drug that is used by a recipient for a period greater than two consecutive months.

    Maximum Allowable Cost (MAC): The highest drug ingredient reimbursement that will be allowed for drugs designated by CMS or by DHS as multisource. Federally designated reimbursement values are referred to as federal upper limits (FUL). These reimbursement values are updated on an intermittent basis and are available on the DHS Web site in either a PDF or Excel format.

    Pharmacist: An individual with a currently valid license issued by a state board of pharmacy to practice pharmacy.

    Pharmacy: An established place of business, licensed by a state board of pharmacy, in which prescriptions, drugs, medicines, chemicals, and poisons are prepared, compounded, dispensed, vended, or sold to or for the use of patients and from which related clinical pharmacy services are delivered.

    Pharmacy Service: The dispensing of drugs, counseling, concurrent DUR and other activities as described in MS 151.01, subd. 27, or as performed by a dispensing physician.

    Point of Sale (POS): Software used to submit a pharmacy claim

    Prescribed Drug: A drug as defined in MS 151.01, subd. 5. Ordered by a practitioner who is licensed to prescribe.

    Presumptive Eligibility: A short-term period of eligibility that is determined at the point of service by the participating provider. The presumptive eligibility period begins the first day of the month that the participating provider makes the presumptive eligibility determination and continues through a minimum of 30 days after the date of application. Individuals found presumptively eligible may receive services immediately.

    Quantity Discount: A price reduction that is dependent on the size or number of items ordered (e.g., a discount to the purchaser for buying drugs packaged in thousands rather than hundreds, or a discount for buying "x" units when either no discount or a lesser discount will apply if fewer than "x" units are ordered).

    Reimbursement rates: The DHS reimbursement rate for most drugs without a generic equivalent is the lower of usual and customary or wholesale acquisition cost (WAC) plus two percent. For independent rural pharmacies in Minnesota, the reimbursement rate is the lower of usual and customary or WAC plus four percent.

    Shelf Price: The price charged by a provider for a product when that product is sold to the public in the original, unopened manufacturer's container. Temporary sale prices or advertised markdowns with time limitations do not apply to shelf price.

    Time Discount: A reduction in price that occurs when payment is made within a short period of time (not to exceed 10 days) after receipt of the merchandise; this definition will not apply to large volumes or quantities of drugs that are ordered and then received in small increments over a specified time period with payment made for each increment after it is needed.

    Usual and Customary: Refers to an amount billed by a provider, meaning provider's charge to the type of payer that constitutes the largest share of their business. For this definition, payer means a third party or persons who pay for health services by cash, check or charge account. See Minnesota Rules 9505.0175, subp.49

    Volume Discount: Sometimes synonymous with quantity discount but it may also be a reduction in price based on the monetary volume of an invoice (e.g., 10% reduction for an order of $500 or more).

    Drug Formulary Committee

    The Drug Formulary Committee (DFC) is charged with reviewing and recommending which drugs require authorization. The DFC also reviews over the counter (OTC) drugs for which coverage is optional under federal and state law (for possible inclusion in the Medicaid fee-for-service formulary.)

    The DFC is comprised of four physicians, four pharmacists, and a consumer representative. DFC meetings must hold a public forum and public comments are taken for an additional 15 days following a DFC recommendation to require prior authorization for a drug. The Department of Human Services (DHS) provides the DFC with information regarding the impact of placing a drug on required prior authorization status will have on the quality and cost of patient care.

    Drug Utilization Review Board

    The Drug Utilization Review (DUR) Board selects specific drug entities or therapeutic classes to be targeted for provider and recipient educational interventions, and provides guidelines for their use.

    The nine-member DUR Board is comprised of at least three, but not more than four, licensed physicians, at least three licensed pharmacists and one consumer representative, with the remaining members licensed health care professionals with clinically appropriate knowledge in prescribing, dispensing, and monitoring outpatient drugs. DUR Board meetings are open to the public.

    Legal References

    MS 151 (chapter – Pharmacy)
    MS 151.01
    , subd. 5, 27 and 49 (Definitions)
    MS 256B.0625
    , subd.13a-13g (Covered Services – Drugs)
    Minnesota Rules 6800
    (Chapter-Pharmacies and Pharmacists)
    Minnesota Rules 6800.2700
    (Return of drugs and devices)
    Minnesota Rules 6800.3100
    (Compound and Dispensing)
    Minnesota Rules 6800.3110
    , subp. 2a (Patient Medication Profiles)
    Minnesota Rules 9505.0175
    , subp. 49 (Usual and Customary)
    Minnesota Rules 9505.0340
    (Pharmacy Services)
    Minnesota Rules 9505.5000 to 9505.5105
    (Prior Authorization Applicability)
    42 CFR 440.120(a)
    Title XIX, Section 1927
    of the Social Security Act (Payment for Covered Outpatient Drugs)
    Title,XII, Section 483.10
    (Resident rights)

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    Updated: 3/13/15 2:33 PM | Accessibility | Terms/Policy | Contact DHS | Top of Page | Updated: 3/13/15 2:33 PM