Criteria for Prior Authorization — High‑Cost Compounded Outpatient Medications
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Defines prior authorization requirements for outpatient compounded medications (high-cost compounds) for providers seeking coverage under the Kansas Medicaid program. Applies to compounded drugs billed for outpatient use and outlines initial and renewal criteria and approval length.
No material clinical or coverage changes in this revision.
Coverage Criteria for Compounded Medications
Initial Therapy
General criteria for initial prior authorization (must meet ALL of the following)
All conditions must be satisfied for initial approval
Renewal Therapy
Criteria for renewal prior authorization (must meet ALL of the following)
Renewals are approved for the same length as initial approvals
Compounded medications are not covered when they are intended for cosmetic purposes or for any other FDA-approved indications that are excluded from Medicaid coverage under section 1927 of the Social Security Act [42 USC § 1396r-8(d)(2)], as amended. Requests for prior authorization that are for these excluded indications will be denied.
The policy requires that providers prefer commercially available FDA‑approved products unless there is documented medical justification demonstrating that a commercially available product is not appropriate for the patient. Medical justification must explain the specific reason compounding is necessary (for example: a required unique dosage form for age/weight/swallowing issues, an allergy/intolerance to an inactive ingredient in the commercial product, or a documented shortage of the commercial product).
Initial Prior Authorization Requirements
Initial prior authorization
Initial authorization requirements for compounded medications
Renewal / Continuation Requirements
Renewal prior authorization
Renewal/continuation requirements
Billing and Coding
| No codes listed |
Provider Responsibilities and Documentation
Request prior authorization for all outpatient compounded medications
Prior authorization is required for all outpatient compounded medications. Initial requests must meet the general criteria including: containing covered API(s); FDA-approval for the requested route or acceptable compendium support; medical justification for compounding; allowable dosing; and compliance with any component-level prior authorization/step therapy/non-preferred criteria.
- Applies to all outpatient compounded medications
- Initial requests must satisfy all general criteria listed in the policy
Meet component-level PA / step therapy / non‑preferred requirements
If any drug included in the compound requires prior authorization, step therapy, or is designated non‑preferred, the compound request must also meet those component‑specific prior authorization, step therapy, and/or non‑preferred criteria before approval.
- All applicable component-level PA, step therapy, and non‑preferred requirements must be satisfied
Provide documented medical justification for compounding
Document medical justification that the patient cannot use commercially available FDA‑approved products. Acceptable reasons include need for a unique dosage form (age, weight, inability to swallow), allergy or intolerance to an inactive ingredient in the commercial product, or an FDA/ASHP‑listed shortage of the commercial product.
- Unique dosage form required for patient's age, weight, or inability to take a solid dosage form
- Unique formulation required due to allergy/intolerance to an inactive ingredient
- Documented shortage per FDA Drug Shortage database or ASHP Current Drug Shortages log
Denial possible for unsupported compounds or indications
A request may be denied if the compound does not contain an active pharmaceutical ingredient covered by policy, is not FDA‑approved for the requested route or lacks acceptable compendium support, is for cosmetic or other non‑covered FDA‑approved indications, or the prescribed dose exceeds FDA‑approved maximums.
- Compounds used for cosmetic or other non‑covered FDA‑approved indications are excluded
- Dose exceeding FDA‑approved maximum recommended dose may lead to denial
- Lack of covered API or required FDA/compendium support can be grounds for denial
Key Definitions
Step Therapy Requirements
| Step | Requirement |
|---|---|
| 1 | |
| If a drug component in the compound requires prior authorization, step therapy, and/or is non-preferred, all applicable prior authorization, step therapy, and/or non-preferred requirements for that component must be met before the compound will be approved. |
Background
Compounded medications are customized formulations prepared for individual patients when commercially available products are unsuitable. Typical justifications include the need for a unique dosage form (patient age, weight, or inability to swallow solids), a unique formulation because of allergy or intolerance to inactive ingredients, or a documented shortage of the commercially available product. Compounds must contain covered active pharmaceutical ingredient(s) and meet FDA route‑approval or acceptable compendium support to qualify for prior authorization.
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