A Primer on J Codes

High-cost prescription drugs have been wreaking havoc on pharmacy plan budgets for over a decade. However, did you know that drugs costs also affect medical plan costs?

Drugs are billed in either the medical or pharmacy channel of a plan. Medications that the patient cannot administer are billed through the health plan using J Codes. Some examples include chemotherapy treatments such as Doxorubicin (Adriamyin®). However, even common pain killers can be billed as J Code drugs if administered in hospitals, clinics, or transfusion centers.

Dr. David Merritt PharmD, RPh, Chief Pharmacist at Prescription Care Management, explains, “Billing a prescription through the pharmacy benefits manager costs less. Claims are approved or denied instantaneously, and payment is usually received within 14 days. Reimbursement is much higher when billed on the medical side, but it can take weeks or months to see if a claim is approved or denied.

“Additionally, administrative fees on the medical side can raise the cost of the base medication resulting in higher overall costs for plans and participants.”

Understanding J Code drugs and their costs can save plans and participants thousands on prescription drugs.

Cost of J Code Drugs

J Code drugs are significantly more expensive than the medication billed via the pharmacy plan. This price difference can be attributed to less cost regulation in the medical channel than the pharmacy channel—additionally, providers markup drugs after acquiring them for dispensing in the office. Facility costs also contribute to higher J Code drug costs.

Managing J Code Costs

Visibility is the key to managing J Code costs. Identifying J Codes provides the ability to compare prescription drug coverage on the medical and pharmacy plans, identify miscellaneous J Codes, and start conversations into your contract coverage.

Contract changes and bolt-on solutions may provide plan sponsors and brokers with options to better control J Code Costs. Moving drugs from the medical to pharmacy plan, requirement additional prior auth requirements, or introducing pharmacy importation and shared savings programs can all affect J Codes and how much the plan and participants spend.

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PCM’s J Code Crosswalk feature provides unparalleled transparency into J Code drug costs for brokers and plan sponsors. On our interactive platform, users get visibility into allowed amounts, miscellaneous J Codes, NDC equivalents, and total plan spend on medical pharmacy. To see how PCM is helping stakeholders simplify plan management, click here.

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