CurrentCareSourcePolicy PAD-0898-AR-PASSE

Pharmacy Multi-ingredient Compound Policy

Defines medical necessity, prior authorization, and reauthorization requirements for multi-ingredient compounded medications (including topical pain compounds) for CareSource members in Arkansas PASSE.

Policy Summary

PayerCareSource

PolicyPharmacy Multi-ingredient Compound Policy

Policy CodePolicy PAD-0898-AR-PASSE

Change TypeNo material change

Effective Date10/01/2025

Next Review Date

Key ActionSubmit prior authorization with trial dates and required chart notes when the compound differs from a commercially available product.

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

3 monthsInitial approval

12 monthsReauthorization

≥3Step trials required

2Supporting studies

Coverage Criteria for Multi-Ingredient Compounds

Initial multi-ingredient compound coverage criteria

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Main criteria

Evidence for non‑FDA ingredients: If any active ingredient in the compound is not FDA‑approved for the requested indication, age, or route of administration, there must be evidence from TWO published studies from major peer‑reviewed journals supporting safe and effective use.
Therapeutic class and PA considerations
- The compound contains only one active ingredient per specific therapeutic/drug class as defined by First Data Bank.
- If any ingredient in the compound (active or inactive) requires prior authorization, the member must meet the established medical necessity criteria for that ingredient.
If the compound is similar to a commercially available product but differs in dosage, dosage form, or an inert ingredient (e.g., flavoring, dye, preservative), prescriber chart notes documenting the medical need (for example, difficulty swallowing or allergy to an inactive ingredient) are required; trial dates must be included with the prior authorization request.
The compound is being used to treat the member's condition and is not for an excluded benefit (for example: cosmetic, obesity, sexual dysfunction, infertility); compounds containing ingredients withdrawn for safety reasons, created for convenience only, or that are commercially available will not be covered.

Topical pain compound criteria

Topical pain compounds will be considered medically necessary when ALL of the following are met:

Topical pain criteria: Member has a diagnosis of chronic moderate to severe pain (neuropathic or nociceptive).

Step therapy: Member must have tried at least 3 drugs from different drug groups for at least 30 days each (examples include diclofenac sodium gel 1%/OTC Voltaren gel, topical lidocaine preparations, topical capsaicin, or trial of non‑opioid oral medications unless there is a documented contraindication).

Active ingredient limits: The compound contains no more than one active ingredient per specific drug class (First Data Bank) and no more than three drug classes for active ingredients overall.

Ingredient approvals: Active ingredients must be FDA‑approved or supported by recognized compendia for topical use and for the indication of pain.

Controlled substances: The compound does NOT contain any controlled substances.

Compounded products will not be covered when they are used to treat excluded benefits such as cosmetic purposes, obesity, sexual dysfunction, or infertility. Coverage is also denied if the compound contains ingredients withdrawn or removed from the market for safety reasons, if it is provided merely for convenience (i.e., not clinically necessary), or if the requested preparation duplicates a commercially available product without adequate justification.

When a compound differs from a commercially available product because of an inert ingredient (for example, flavoring, dye, or preservative), the prescriber must document medical necessity in the chart notes (for example, inability to swallow or allergies to inactive ingredients) to support coverage. Regardless, reimbursement will not be provided for additives such as flavorings, dyes, or preservatives themselves.

Coding and Billing

Conditions of Coverage - Code types listedmixed

HCPCS
CPT

inv-06: Drug trial duration — Topical pain compounds

Required trial duration>= 30 days each for at least 3 different drug groups (member must have tried at least 3 drugs from different groups)

Example agents to trialDiclofenac sodium gel 1% or OTC Voltaren gel; topical lidocaine (cream or patch); topical capsaicin; non-opioid oral medications (or documented contraindication)

Per-agent documentationTrial dates for each agent must be included with the prior authorization request

Drug-class limit for compoundsCompound may contain no more than 1 active ingredient per therapeutic/drug class (as defined by First Data Bank)

Provider Actions, Prior Authorization & Documentation

Prior Authorization

Prior Authorization Required

All multi-ingredient compounded medications (except topical pain compounds) require prior authorization. Prior authorization requests must include trial dates for any required trials and documentation supporting the medical need when the compound differs from a commercially available product (e.g., documented difficulty swallowing, allergy to an inactive ingredient).

Prior authorization required for all multi-ingredient compounds except topical pain compounds
Include trial dates with the prior authorization request
Chart notes required when compound differs from a commercially available product (dose, dosage form, or inert ingredient)

Step Therapy

Topical Pain Step Requirement

Topical pain compounds have a step requirement before coverage: the member must have tried at least three drugs from different groups for at least 30 days each (or have documented contraindications). Examples include diclofenac sodium gel 1% (or OTC Voltaren gel), topical lidocaine formulations (e.g., 3% cream or 4% patch), topical capsaicin, or appropriate non-opioid oral medications. The compound must be used for chronic moderate to severe neuropathic or nociceptive pain, contain no more than one active ingredient per drug class, contain no more than three drug classes total, and must not include controlled substances. Active ingredients must be FDA-approved or compendia-supported for topical use and the indication of pain.

Member must have tried ≥3 drugs from different groups for ≥30 days each (or have documented contraindication)
Examples: diclofenac sodium gel 1% (OTC Voltaren), topical lidocaine (cream 3% or patch 4%), topical capsaicin, non-opioid oral medications
No more than 1 active ingredient per drug class; no more than 3 drug classes total
Active ingredients must be FDA-approved or compendia-supported for topical pain use
Compound must not contain controlled substances

Documentation Required

Documentation Required for Prior Authorization

When a compound differs from a commercially available product, the prescriber must provide chart notes supporting the specific medical necessity for the compound formulation (for example, inability to swallow oral dosage forms or documented allergy to an inactive ingredient). For any ingredient that itself requires prior authorization, the member must meet the medical necessity criteria for that ingredient in addition to criteria for the compound.

Chart notes required when compound differs from commercially available product (dose, form, inert ingredient)
If any ingredient requires prior authorization, criteria for that ingredient must also be met

Denial Risk

Triggers for Denial

Compounds will be denied when any of the following apply: the compound contains ingredients withdrawn from the market for safety reasons; the compound is prescribed for convenience only; the product is commercially available (i.e., a suitable commercially available product exists and no documented need for a compound is provided); or the compound contains controlled substances when prohibited (e.g., topical pain compounds must not contain controlled substances).

Ingredient withdrawn/removed from market for safety reasons — deny
Compound prescribed for convenience only — deny
Clinically appropriate commercially available alternative exists and no prescriber chart notes justify the compound — deny
Compound contains prohibited controlled substances — deny

Definitions

inv-12: Definition of Multi-ingredient Compound

DefinitionMulti-ingredient Compound: a product containing two or more ingredients that is not FDA approved and is prepared upon the order of a physician for a patient.

FDA approval statusApplies to products that are not FDA approved as formulated (compounded preparations)

Ordering requirementMust be prepared based on an individual practitioner (physician) order for a specific patient

Initial Therapy Criteria

Initial therapy criteria

Initial coverage criteria for compounds

Initial compound therapy: Coverage is approved when all criteria for the applicable compound type (multi‑ingredient non‑topical or topical pain) are met, including: FDA approval of primary active ingredients OR therapeutic dosing per FDA indications; for any active ingredient not FDA‑approved for the requested use, two published peer‑reviewed studies supporting safe and effective use; one active ingredient per therapeutic class as defined by First Data Bank; chart notes when the compound differs from a commercially available product; and inclusion of trial dates with the prior authorization request.

Reauthorization / Continuation Criteria

Reauthorization requirements

Reauthorization/continuation criteria

Pain compound reauthorization: Member must have documented improvement of pain supported by chart notes, defined as at least a 3‑point improvement on a 0–10 pain scale.>=3 point improvement

Other compound reauthorization: For all other compounds, chart notes must document evidence of continued effectiveness and safety to support continuation of approval.

Step Therapy Requirements for Topical Pain Compounds

Requirement	Details
Number of prior agents tried
Member must have tried at least 3 drugs from different groups
Duration per agent
>= 30 days each
Examples of required agents
Diclofenac sodium gel (1%) or OTC Voltaren gel; topical lidocaine (e.g., 3% cream, lidocaine patch); topical capsaicin; non-opioid oral medications or documented contraindication
Limit on active ingredients per class
No more than 1 active ingredient per therapeutic/drug class (as defined by First Data Bank)
Limit on number of drug classes
Compound may contain no more than 3 drug classes for active ingredients
FDA/compendia support requirement
Active ingredients must be FDA approved or compendia supported for topical use and the indication (pain)
Controlled substances
Compound must NOT contain any controlled substances

Background

Pharmacy compounding creates a customized medication by combining two or more ingredients per a prescriber's order. These multi-ingredient compounds are not FDA-approved products prepared for a specific patient; therefore the policy requires that the compound's primary active ingredients be FDA-approved for the indication, age, or route or, if not FDA-approved for the requested use, be supported by two published peer‑reviewed studies. The compound must also contain no more than one active ingredient per therapeutic drug class (as defined by First Data Bank) and, when a component otherwise requires prior authorization, the member must meet the established medical necessity criteria for that ingredient. Chart documentation and trial dates must accompany a prior authorization request when the compound differs from an available commercial product.