CurrentBlue Cross Blue Shield - MassachusettsPolicy 579

Compounded Medications Coverage

Rules for prior authorization, coverage, and limits for compounded outpatient retail pharmacy prescriptions for commercial members of Blue Cross Blue Shield of Massachusetts.

Policy Summary

PayerBlue Cross Blue Shield - Massachusetts

PolicyCompounded Medications Coverage

Policy CodePolicy 579

Change TypeNo material changes

Effective Date

Next Review Date

Key ActionObtain prior authorization for outpatient retail compounded pharmacy requests by submitting the PA form or contacting Pharmacy Operations.

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

$300per-claim cost limit

up to 6 monthsmax approval duration

2required prior failures

2peer-reviewed studies

Commercialmember types

Coverage Criteria

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Initial approval criteria

Covered when ALL of the following are met

Primary coverage criteria

Diagnosis and documentation: A diagnosis with ICD-9 or ICD-10 code is provided and accompanied by relevant portions of the patient’s medical records and confirmatory laboratory or other tests.
Treatment history: History of treatment failures to two (2) prescription alternatives documented by prescription claims history OR documented contraindication to alternatives.
Evidence support: Submission of two (2) peer-reviewed published studies, reviewed by an independent panel of experts, demonstrating safety, efficacy, and outcomes comparable or superior to existing therapy for the intended indication, route, dose, frequency, and age group.
Prescription and ingredients: Copy of the prescription including a complete list of ingredients and attestation that the compounded product is not a copy or similar to a commercially available product or a withdrawn formulation.
Active pharmacologic agents: Requested compounded prescription active pharmacologic agent(s) are approved to treat or affect the structure/function consistent with the provided diagnosis.
Cost limit: Total cost per compounded claim does not exceed $300 per claim unless exception criteria are met and prior authorization is granted.$300

Pediatric PPI exception

Special-case coverage

Proton Pump Inhibitor for children: Compounded proton pump inhibitor prescriptions for patients under 18 years of age may be approved for up to six (6) months if they meet the policy criteria and Policy 030.

Pharmaceutical aids and bulk powders are excluded from payment for compounded medications. In addition, the policy states that bulk chemicals will not be paid except as an exception when a specific medical need for a bulk ingredient is demonstrated and a prior authorization is obtained.

Requests based exclusively on the use of samples do not meet the policy's coverage criteria and will be considered not medically necessary for exception purposes. If a prescriber relies on samples, they must instead submit additional clinical information demonstrating medical necessity for the compounded product for review.

Provider Actions and Requirements

Prior Authorization

Prior Authorization Required

Prior authorization is required for outpatient retail compounded pharmacy requests. Requests for coverage that include bulk chemical ingredients will generally be excluded unless a prior authorization is obtained showing medical necessity. To request prior authorization, providers may call or fax Blue Cross Blue Shield of Massachusetts Pharmacy Operations (Tel: 1-800-366-7778; Fax: 1-800-583-6289) or submit the Formulary Exception/Prior Authorization form to Pharmacy Operations, 25 Technology Place, Hingham, MA 02043.

Step Therapy

Step Therapy / Alternative Therapy Requirement

Document treatment failures to two prescription alternatives (by prescription claims history) or provide a documented contraindication to the alternative medications. For many compounded requests, coverage is contingent on meeting step-therapy requirements and demonstrating prior trials or contraindications to standard therapies.

Documentation Required

Required Documentation

Submit the following with the prior authorization or coverage request: a diagnosis with ICD-9 or ICD-10 code; history of treatment failures to two prescription alternatives or documented contraindications; two peer‑reviewed published studies supporting the compounded regimen (route, dose, frequency, population, safety and efficacy); relevant portions of the patient’s medical record including confirmatory labs or tests; a copy of the prescription listing all ingredients; and an attestation that the compounded product is not a copy or similar formulation of a commercially available product or a product withdrawn for safety/efficacy concerns.

Documentation Required

Samples Not Acceptable

Requests based exclusively on samples will not meet coverage criteria. If a prescriber relies on samples to justify the compounded prescription, additional clinical information demonstrating medical necessity must be submitted for review.

Denial Risk

Denial Triggers

Claims may be denied if medical necessity criteria are not met. Bulk chemicals in compounded medications are generally excluded; coverage for a bulk ingredient will require prior authorization and demonstration of medical necessity. Compounded products that duplicate commercially available products or contain ingredients withdrawn for safety/efficacy concerns will not meet coverage criteria. There is a $300 total cost limit per claim for compound medications effective 1/1/2021; compounds exceeding this limit must meet the policy criteria to be considered for approval. Individual consideration may be requested by submitting supporting clinical information to Pharmacy Operations for review.

Initial Therapy

Initial therapy

Initial coverage requirements for compounded prescriptions

Initial therapy nodes: See Initial approval criteria: diagnosis with ICD-9/ICD-10 code; history of treatment failures to two prescription alternatives or documented contraindication; two peer-reviewed studies supporting the compounded prescription; portions of medical records confirming diagnosis and tests; copy of the prescription with complete ingredient list and attestation of non-duplication; active pharmacologic agents appropriate for the diagnosis; cost limit of $300 per claim.

Approvals may be for up to six (6) months when criteria are met.

Step	Requirement	Provider note
1
Must document treatment failures to two prescription alternatives (by prescription claims history) OR provide documented contraindication to alternative medications.
This requirement must be included with the prior authorization request; submit supporting prescription claims history or clinical documentation.

Background

Compounded medications are custom-prepared prescriptions that combine multiple ingredients to meet a specific patient's needs. The policy emphasizes that regulatory authorization to compound does not by itself establish clinical safety or effectiveness for a compounded product. Coverage for compounded prescriptions is granted only when detailed documentation demonstrating medical necessity and supporting evidence are provided, including diagnosis with ICD-9/ICD-10 code, treatment history, supporting peer-reviewed literature, complete prescription ingredient list, and attestations regarding non-duplication of commercially available products. The policy also notes a $300 per-claim total cost limit for compounded medications and that certain compounded drugs (for example, bulk chemicals) require prior authorization when a medical need is demonstrated.

Definitions

Bulk chemicals (definition)

DefinitionBulk chemicals in compounded medications are generally excluded from payment unless a specific medical need for the bulk ingredient is demonstrated and prior authorization is granted.

Coverage stanceBulk chemicals will not be paid except by prior authorization when a medical need is demonstrated

Exception requirementWhen a medical need exists for a bulk ingredient, prior authorization must be obtained per policy

Regulatory noteRegulatory authorization to compound does not substitute for evidence of clinical safety or effectiveness for a compounded product

Exclusion listPolicy exclusion list for bulk chemicals is subject to change

OpenPayer

Compounded Medications Coverage

Coverage Criteria

Coding and Limits

Provider Actions and Requirements

Initial Therapy

Step Therapy Requirements

Site of Care

Background

Definitions