Pharmacy and Drug Formulary - Coverage Criteria
Customize your policy alerts
Sign up for all blue cross blue shield - arizona policy alerts
Know when blue cross blue shield - arizona releases new policies or updates existing guidance.
Monitor payer policy activity
Governs prescription drug formulary, coverage rules, prior authorization, and pharmacy benefit procedures for Blue Cross Blue Shield - Arizona members; affects prescribing clinicians, pharmacies, and members enrolled in AZ Blue plans.
No material clinical or coverage changes in this revision.
Pharmacy Coverage Criteria
General pharmacy coverage criteria
Covered when ALL of the following are met:
See drug wastage rules for injectable medications and quantity limits noted in the formulary.
Coverage of non‑formulary medications requires prior authorization under the closed formulary rules.
AZ Blue may reimburse for drug wastage only when the discarded amount originates from a single-use vial or single-dose prefilled package and the required documentation and billing procedures are followed. Required documentation includes: drug name; time and date administered; route; amount administered; total amount in the single-use vial or prefilled package; amount wasted and reason for wastage; and claim information verifying units administered and units discarded. When submitting claims for discarded amounts, use the JW modifier on a separate claim line to detail the discarded amount.
Drug wastage is explicitly not eligible for reimbursement when the vial is labeled as multi-dose or multi-use. Additionally, some large employer groups may have pharmacy benefits that are carved out of AZ Blue (i.e., managed by a different PBM), and those carved-out groups are excluded from AZ Blue pharmacy reimbursement rules.
Common formulary exclusions that frequently generate provider questions include medications intended for weight gain or weight loss, and medications for sexual dysfunction. Also commonly excluded are products that are packaged with other prescription or over-the-counter items (for example, bundled supplies, medical foods, or vitamins).
Other typical exclusions include medications to improve or achieve fertility, products used for cosmetic purposes, drugs whose principal therapeutic ingredients are available over the counter in any form or strength, unit-dose packaged prescriptions (unless it is the only available form), and refill requests for medications that were lost, stolen, spilled, spoiled, or damaged.
For the specialty medication benefit, additional exclusions apply: the specialty benefit is in-network only, and medications obtained from a pharmacy not contracted as a specialty pharmacy with AZ Blue are generally not covered except in emergency situations.
AZ Blue and the contracted PBM may exclude medications when the drug's principal ingredient is already available in other strengths or combinations, or when the product simply modifies the dosage form (for example, extended-release, tamper-resistant, or alternate formulation) of an existing drug available in a common dosage form. These dispensing limitations and excluded-product details are published on the AZ Blue Excluded Drugs List available at azblue.com/pharmacy and in the member's benefit book.
Coverage is subject to AZ Blue and PBM limitations including, but not limited to, prior authorization, quantity, age, and refill restrictions. Members or providers may request an exception by faxing supporting documentation to 602-864-5810, but approval is not guaranteed.
Billing Modifiers & Injectable Billing
| JW | Modifier for discarded drug amount (used on a separate claim line when submitting wasted single-use vial amounts) |
Prior Authorization, Step Therapy, and Submission Instructions
Prior authorization required for non‑formulary drugs and designated programs
Prior authorization is required for coverage of many non-formulary drugs, some self‑administered injectables, and for participation or approval in the Designated Prescription Network Program; prior authorization approval letters notify members/providers of program participation and eligible dispensing providers.
- Coverage of non-formulary medications requires approval by AZ Blue through the prior authorization process.
- Designated Prescription Network Program participation and eligible providers/pharmacies are communicated via prior authorization approval letters.
Check the prior authorization medication lists for the member's benefit
Prior authorization is required for certain medications; lists of medications that require prior authorization (retail/mail-order, specialty, home health) are available online at azblue.com/pharmacy and may vary by benefit.
- Separate prior authorization requirement lists exist for retail/mail-order, specialty medication, and home health benefits.
- The list of specific medications that require prior authorization can change at any time without prior notice.
Step and biosimilar step‑therapy requirements
Step therapy requires use of preferred drug(s) or preferred biosimilars before a non‑preferred option will be covered unless medical necessity is documented via prior authorization.
- Use preferred biosimilars(s) before coverage of a non‑preferred biologic; see Biosimilar Step Therapy guidelines at azblue.com/pharmacy.
- Medical necessity must be documented in the prior authorization to override step therapy requirements.
Step therapy indicated by 'ST' on formulary; document trials/ failures for exceptions
Medications with step‑therapy requirements are indicated by the 'ST' acronym in the drug list or formulary; exceptions may be made when the recommended alternative medications have been tried and failed.
- Providers are encouraged to prescribe generics or preferred alternatives; exceptions to ST require documentation that recommended alternatives were tried and failed.
- Confirm whether an exception is appropriate before prescribing non‑preferred agents.
Document and bill drug wastage with JW modifier and retained records
When submitting claims for discarded injectable drug amounts, use JW modifier on a separate claim line and retain documentation of drug name, date/time administered, route, amount administered, vial amount, amount wasted and reason, and claim information verifying units administered and discarded.
- Use modifier JW on a separate line detailing the discarded amount when submitting the claim.
- Maintain supporting records (drug name, administration details, amount wasted and reason) as AZ Blue may request them to determine reimbursement eligibility.
Request exceptions by fax to 602‑864‑5810 with supporting documentation
To request an exception to prescription medication limitations, fax a request letter with supporting documentation to 602‑864‑5810; there is no guarantee the review will result in approval.
- Exceptions are available when proposed use exceeds AZ Blue prescription medication limitations, but approval is not guaranteed.
- Include clinical supporting documentation with the faxed request to facilitate review.
Accepted channels for prior authorization submission (Cover My Meds, Surescripts, portal, phone; eviCore for some services)
Submit prior authorization requests electronically via Cover My Meds or Surescripts, via the AZ Blue provider portal (Prior Authorization in Practice Management), or by phone; eviCore is used for certain medical‑administered oncology and specialty drugs covered under medical benefits.
- Use Cover My Meds® or Surescripts® for electronic prior authorization for pharmacy benefits when supported by the benefit plan.
- Use eviCore's online tool to request or view prior authorization status for certain medical‑administered specialty drugs.
Point‑of‑sale rejections for non‑formulary drugs — obtain prior authorization
Claims for non‑preferred or non‑formulary drugs will reject at point‑of‑sale and require prior authorization; coverage of non‑formulary medications requires prior authorization for this closed formulary.
- Because this is a closed formulary, only drugs listed in the formulary are covered except when prior authorization is given.
- Point‑of‑sale rejections for non‑formulary drugs necessitate prior authorization to secure coverage.
Denial risk — no coverage without required prior authorization
There is no coverage if required prior authorization is not obtained; unsolicited dispensing may result in denial of coverage.
- If prior authorization is required but not obtained, the medication is not covered.
- Members dispensing outside prior authorization business hours may pay and file for reimbursement, but lack of prior authorization still risks noncoverage of other exclusions/limitations.
Exceptions to limitations are discretionary — fax supporting documentation to 602‑864‑5810
Exceptions to prescription medication limitations are not guaranteed to be approved; fax requests with supporting documentation to 602‑864‑5810 for review.
- Include clinical documentation with the faxed exception request to support medical necessity.
- AZ Blue or the PBM will review but may deny the requested coverage or quantity change.
Formulary Purpose & Scope
The AZ Blue formulary is structured to encourage safe, effective, clinically appropriate, and cost-effective use of medications. Coverage and member cost share are determined by the member's plan terms, the drug tier, the dispensing site, and whether the medication is self-administered or requires professional administration.
Prescription medication coverage is governed by plan-specific benefit rules, formulary listings, and PBM adjudication. These rules include formulary tiers, prior authorization and step therapy requirements, quantity limits, dispensing/site-of-care distinctions, and excluded-drug lists; providers and members should verify plan-specific coverage at azblue.com/pharmacy or by calling the listed customer service number.
Key Definitions
Step Therapy Rules
| Step therapy requirement | Description |
|---|---|
| Use preferred drug(s) or preferred biosimilars before coverage of non-preferred options | |
| Coverage of a non-preferred drug is allowed when prior authorization documents medical necessity |
| Formulary indicator | Notes / Exception process |
|---|---|
| 'ST' appears on the drug list or formulary to indicate a step therapy requirement | |
| Exceptions can be made when the recommended alternative medications have been tried and failed |
Quantity Limits and Restrictions
Site of Care and Billing Implications
Confirm billing by site of administration
Coverage and billing vary by site of administration: self‑administered injectables are billed under pharmacy benefits, while clinician‑administered injectables may be billed under medical benefits; member cost share depends on site and plan.
- Confirm member's specific coverage and billing (pharmacy vs medical) prior to administration.
Use preferred non‑hospital sites for specialty infusions
Preferred sites of service for specialty infusion drugs are non‑hospital outpatient alternatives (patient's home, free‑standing infusion center, or physician's office); outpatient hospital setting is covered only when a higher level of care is medically necessary.
- Use non‑hospital outpatient sites when clinically appropriate to align with preferred site‑of‑service requirements.
Biosimilar Use and Requirements
Require preferred biosimilar use before non‑preferred biologic coverage
Use of preferred biosimilar(s) is required before coverage of a non‑preferred biologic; see the Biosimilar Step Therapy guidelines at azblue.com/pharmacy (select plan type > Additional Resources > Pharmacy Coverage Guidelines).
- If prescribing a non‑preferred biologic, document prior use of preferred biosimilar(s) or submit a PA documenting medical necessity.
OpenPayer is powered by Trek Health's payer performance platform. Trek continuously ingests, validates, and normalizes Transparency in Coverage data alongside payer policies and other commercial payer data to create a structured payer intelligence foundation. OpenPayer uses this foundation to deliver personalized search results, dynamically generated policy pages, and tailored policy monitoring based on each user's payers, specialties, billing codes, and areas of interest. The same intelligence powers broader payer performance workflows, including reimbursement benchmarking, contract evaluation, payer negotiations, and financial decision-making.