ModifiedCentenePolicy CP PMN.280

Compounded Medications

Policy governing medical necessity and authorization criteria for compounded medication requests for Centene lines of business (Commercial, HIM, Medicaid). Applies to providers submitting requests for compounded products.

Policy Summary

PayerCentene

PolicyCompounded Medications

Policy CodePolicy CP PMN.280

Change TypeMaterial changes — added shortage routing and Medicaid grid checkclarified FDA‑approved ingredient requirement

Effective DateSep 1, 2022

Next Review Date

Key ActionSubmit documentation showing the member meets all approval criteria (e.g., chart notes, labs) when requesting prior authorization for a compounded medication.

SourceLink

POLICY UPDATE CHANGES

Added criterion allowing compounded drug when prescribed in place of an FDA‑approved product that is in shortage per the FDA or ASHP Shortages list.

Clarified that active ingredient(s) in the compound must be FDA‑approved.

Added requirement to check Medicaid Benefit Master Grid to ensure coverability for Medicaid members.

3approval duration options

3lines of business listed

5+key FDA criteria items

Appendices D & Ecompendia/shortage refs

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inv-01: Initial therapy — FDA‑approved indications

Covered when ALL of the following are met (initial therapy for FDA‑approved indications):

FDA‑approved indication criteria: 1) Active ingredient(s) in the compound are FDA‑approved; 2) Medical justification supports inability to use commercially available FDA‑approved products (e.g., allergy to a dye, inability to swallow a tablet/capsule) or other clinical rationale for compounding; 3) Acceptable compendium supports efficacy and safety for the indicated treatment and route of administration (see Appendix D); 4) Prescribed for pediatric dosing in the absence of commercially available products OR prescribed in place of an FDA‑approved product that is in shortage per the FDA or ASHP Shortages list; 5) Prescribed dose does not exceed the FDA‑approved maximum recommended dose for the relevant indication.

Applies to initial therapy; Medicaid requests must also ensure compounded product is coverable per the Medicaid Benefit Master Grid.

inv-02: Continuation therapy

Covered when ALL of the following are met (continued therapy):

Continuation criteria: 1) Member is currently receiving the medication or previously met initial approval criteria (including applicable continuity-of-care provisions for state/product); 2) Member is responding positively to therapy; 3) If the request is for a dose increase, the new dose does not exceed the FDA‑approved maximum recommended dose for the relevant indication; 4) For compounded drug originally approved due to shortage, the FDA‑approved product must still be listed as in shortage per the FDA or ASHP Shortages list.

Approval durations differ for shortage-related approvals versus other uses.

inv-03: Other diagnoses/indications

Other diagnoses/indications (alternative routing):

Other indications routing: 1) If the drug is on the formulary/PDL for the relevant line of business, follow the no coverage criteria policy for that line (CP.CPA.190 — commercial; HIM.PA.33 — health insurance marketplace; CP PMN.255 — Medicaid); OR 2) If the drug is NOT on the formulary/PDL, follow the non‑formulary policy for the relevant line of business (CP.CPA.190 — commercial; HIM.PA.103 — health insurance marketplace; CP PMN.16 — Medicaid); OR 3) If the requested use is not listed under exclusions and criterion 1/2 do not apply, refer to the off‑label use policy for the relevant line of business (CP.CPA.09 — commercial; HIM.PA.154 — health insurance marketplace; CP.PMN.53 — Medicaid).

Refer to the specified policy numbers for routing by line of business; consider recent label changes within 6 months per guidance.

Non‑FDA approved indications that are not specifically addressed elsewhere in this policy are not authorized for coverage unless the provider submits sufficient documentation of efficacy and safety in accordance with the applicable off‑label use policy. For Commercial lines, reference CP.CPA.09; for Health Insurance Marketplace, reference HIM.PA.154; for Medicaid, reference CP.PMN.53. Coverage may also be conditioned by the member’s evidence of coverage documents.

Coverage of compounded medications is subject to the limitations, exclusions, and conditions set forth in the member’s benefit documents (for example, the evidence of coverage, certificate of coverage, policy, or contract of insurance) and to applicable state and federal requirements. The Health Plan may change, amend, or withdraw this clinical policy and providers should verify plan‑specific terms and contract requirements when submitting requests.

Compounded medications requested for non‑FDA approved indications that lack adequate support from accepted compendia or the applicable off‑label use policy are considered not medically necessary and will not be authorized. Providers should cite acceptable compendia or the specific off‑label policy when requesting coverage for such uses.

This clinical policy provides guidance on medical necessity and authorization criteria but does not guarantee payment. Coverage decisions remain subject to the plan’s terms, conditions, exclusions, contractual limits, and applicable laws and regulations; requests that do not meet plan or contract requirements may be denied even if they otherwise meet clinical criteria.

Initial Therapy Requirements

inv-19: Initial therapy

Initial therapy covered when compound meets multiple conditions including FDA‑approved active ingredients and compounding justification.

Initial: Active ingredients in the compound must be FDA‑approved; medical justification for compounded product is required (examples: excipient allergy, inability to swallow standardized dosage forms); acceptable compendia must support efficacy and safety for the intended indication and route; compounded product may be used for pediatric dosing when no commercial product is available or when substituting for an FDA‑approved product in shortage; prescribed dose must not exceed FDA‑approved maximum for the indication.

Medicaid requests must confirm coverability per the Medicaid Benefit Master Grid; approval duration: 1 month for non‑shortage initial uses, up to anticipated shortage resolution or 3 months when resolution unknown for shortage-related initial use.

Provider Actions and Prior Authorization

Prior Authorization

Prior Authorization Required

Prior authorization is required for compounded medications. Providers must obtain prior authorization and submit documentation demonstrating that the compounded product meets the policy's approval criteria (e.g., contains FDA‑approved active ingredient(s), medical justification for use of a compounded product instead of a commercially available product, dosing within FDA‑approved maximums, acceptable compendia support, or use as a substitute during an FDA/ASHP‑listed shortage). For Medicaid requests, verify that the compounded product is coverable per the Medicaid Benefit Master Grid.

Prior authorization required before dispensing compounded medications.
Medicaid: check Benefit Master Grid for coverability.

Denial Risk

Denial Triggers

Requests will be denied if the submission lacks sufficient clinical documentation showing the member meets ALL approval criteria (for example: no office notes, missing lab results, or absent justification for using a compounded product). Requests for non‑FDA approved indications will be denied unless there is sufficient off‑label support per the applicable off‑label use policy or acceptable compendia.

Denial if documentation does not show member meets all approval criteria.
Denial for non‑FDA indications without sufficient compendia/off‑label justification per applicable line‑of‑business off‑label policy.

Documentation Required

Provider Documentation Responsibilities

Providers must follow Health Plan‑level administrative policies and applicable evidence of coverage/certificate of coverage/contract requirements. Submit supporting documentation with the prior authorization request such as office/office chart notes, recent lab results, medication history, allergy information, and any compendia or literature supporting off‑label use. For continuation requests related to products previously authorized due to shortage, include evidence that the product remains on an FDA or ASHP shortage list or documentation of anticipated resolution date.

Include office notes, labs, medication history, allergy information, and compendia citations when applicable.
For shortage substitutions, include documentation that product is still in shortage and anticipated resolution date (or approval limited to 6 months if unknown).
Providers remain responsible for medical judgment and must comply with plan contracts and state/federal requirements.

Billing Rule

Formulary and Non‑Formulary Routing

Routing depends on formulary/PDL status and line of business. If the compound contains a drug that is on the formulary/PDL, follow the applicable no‑coverage criteria policy for that line of business. If the drug is NOT on the formulary/PDL, follow the non‑formulary routing for the relevant line of business. Refer to specific policies: CP.CPA.190 (commercial), HIM.PA.33 or HIM.PA.103 (health insurance marketplace), CP PMN.255 or CP PMN.16 (Medicaid), and off‑label policies (CP CPA.09, HIM.PA.154, CP.PMN.53) as applicable.

Formulary/PDL agents: follow no‑coverage criteria policy for relevant line of business.
Non‑formulary agents: follow non‑formulary policy for relevant line of business.
Refer to listed policy numbers for commercial, marketplace, and Medicaid routing.

Step Therapy

Step Therapy / Administrative Notes

Step therapy and other administrative controls apply as established by prior review and P&T committee decisions. Recent updates require checking the Benefit Master for Medicaid coverability and may impose time‑limited approvals for shortage‑related substitutions (e.g., approvals tied to anticipated resolution date or up to 6 months if unknown). For drugs with recent label changes (within 6 months) or newly added routes of administration, follow instructions in the policy and any referenced line‑of‑business step therapy rules.

Check Benefit Master for Medicaid coverability.
Shortage substitutions: approval durations tied to shortage resolution (or up to 6 months if unknown).
Follow line‑of‑business step therapy policies and P&T committee determinations.

Definitions and Reference Sources

Acceptable compendia

Micromedex DrugDEX (Truven Health Analytics)Listed as an acceptable compendium (Appendix D) with strength of recommendation guidance.

American Hospital Formulary Service - Drug Information (AHFS-DI)Listed as an acceptable compendium (Appendix D).

NCCN Drugs and Biologics CompendiumListed as an acceptable compendium (Appendix D); acceptable levels of evidence: 1, 2A, or 2B.

Elsevier/Gold Standard Clinical PharmacologyListed as an acceptable compendium (Appendix D).

FDA Shortages Index (FDA/ASHP Shortages list)Referenced as the source for shortage status used when approving compounds prescribed in place of an FDA‑approved product in shortage (see Appendix D/E).

Health Plan — definition and scope

Definition of Health Plan'Health Plan' means a health plan that has adopted this clinical policy and that is operated or administered, in whole or in part, by the referenced entity.

Policy purposeProvides guidance on medical necessity to assist coverage decisions and benefit administration; does not constitute a contract or guarantee of payment.

Operational scopeCoverage decisions and administration are subject to terms, conditions, exclusions, limitations in evidence of coverage, policies, contracts, and applicable state and federal requirements.

Administrative control and ownershipThe clinical policy is the property of the Health Plan; the Health Plan may change, amend, or withdraw the policy and enforces applicable administrative procedures.

OpenPayer

Compounded Medications

Coverage Criteria for Compounded Medications

Initial Therapy Requirements

Continuation Therapy Requirements

Provider Actions and Prior Authorization

Definitions and Reference Sources

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