Currentpriority healthPolicy 092

Reimbursement Requirements for Outpatient Medical Drugs

Defines Priority Health's reimbursement and site-of-service requirements for selected outpatient infusions, injectables, and specialty drugs and the exceptions/processes for Commercial, Medicare, and Medicaid members.

Policy Summary

Payerpriority health

PolicyReimbursement Requirements for Outpatient Medical Drugs

Policy CodePolicy 092

Change TypeName revisedscope expanded

Effective DateJun 19, 2025

Next Review DateFeb 1, 2026

Key ActionSubmit prior authorization requests to the Pharmacy Department (fax 877.974.4411) including medical necessity rationale and indicate 'Specialty Pharmacy' in billing when applicable.

SourceLink

POLICY UPDATE CHANGES

Changed policy name to Reimbursement Requirements for Outpatient Medical Drugs and expanded application to in-network providers (previously only out-of-network).

Expanded definition to clarify when this policy applies and when it may not.

2example drugs listed (Keytruda, Soliris)

3payer lines addressed

10/27/2025contracted specialty pharmacy as-of

Jan. 1, 2026recent revision effective

Trek Health ingests and normalizes Transparency in Coverage data and payer policy updates to give provider organizations a clear view of how commercial reimbursement behaves across markets, payers, and services. Our platform transforms raw payer disclosures into structured intelligence that supports contract evaluation, payer negotiations, and service line strategy. By combining market benchmarks with ongoing policy visibility, Trek helps teams identify variability, risk, and opportunity in commercial reimbursement. The result is faster insight, stronger negotiating positions, and more informed financial decisions.

Place-of-Service & Coverage Requirements

Place-of-service and specialty pharmacy coverage criteria

Covered when ALL of the following apply:

The requested therapy is included on Priority Health's Medical Drug List with a Site of Service (SOS) restriction denoted.

The medical injectable drug would be administered in an outpatient hospital setting that is not on Priority Health's Standard Fee Schedule.

For Fully and Self‑Funded Commercial Products: when both of the above are met, Priority Health requires the member to receive therapy in the home, office, or an alternative Priority Health‑approved site of care (site‑of‑service requirement).

For Medicaid and Healthy Michigan Plan: members receiving select provider‑administered drugs must have the drug administered at a Priority Health‑approved site of service; exceptions may apply for infusion reactions, severe adverse events, medically unstable situations, or unreasonable distance to an approved site.

When a site‑of‑service restriction requires specialty pharmacy: the drug must be obtained from an in‑network specialty pharmacy for the member to continue receiving therapy at a non‑covered site; the specialty pharmacy must dispense the drug and the provider may bill only for administration.

If the drug has coverage/prior authorization requirements: the provider or member must submit a prior authorization request and receive a favorable coverage decision before a specialty pharmacy can bill and dispense the requested drug; the prior authorization must indicate 'Specialty Pharmacy' in the 'Billing' section.

Example Drugs and Billing Requirements

Example medical injectable drugs referencedHCPCS

J9271	Injection, pembrolizumab, 1 mg
J1299	Injection, eculizumab, 2 mg

Billing/coding accuracy — required standards and enforcement

Required coding systemsClaims must use CPT, HCPCS, and revenue codes; submit codes only when service performed and fully documented to highest specificity.

Regulatory and payer guidanceFollow CMS and MDHHS coding guidelines and Priority Health billing policies for claim submissions and coding accuracy.

Modifier useApply modifiers per CMS NCCI guidance when supported by documentation.

Documentation requirementServices and items billed must be fully documented in the medical record; failure to document may result in denial.

Enforcement actionsPriority Health may reject/deny claims or recover payments if government regulations, policy, or contractual requirements aren't followed.

Prior Authorization, Exceptions, and Medicare PSOD

Prior Authorization

Prior Authorization Required

Providers must submit prior authorization requests to Priority Health's Pharmacy Department when seeking exceptions or when medical drug coverage criteria apply. If a requested drug has coverage requirements, a member or provider must submit a prior authorization request and receive a favorable coverage decision before a specialty pharmacy can bill and dispense the drug. The prior authorization form must indicate 'Specialty Pharmacy' in the Billing section when applicable.

Fax completed Medical drug prior authorization form to 877.974.4411
Phone support: 800.942.0954
Prior authorization required when drug coverage criteria apply or an exception is requested

Note

Medicare PSOD Requirement

For Medicare indications that are not addressed by a National Coverage Determination (NCD), local LCD, or a specific medical policy, a Pre-Service Organization Determination (PSOD) is required. See the Priority Health Provider Manual for PSOD instructions and submission details.

PSOD required when NCD/LCD/specific medical policy do not cover the indication
Refer to Provider Manual for PSOD process and forms

Documentation Required

Exception Criteria (examples)

Exceptions to the site-of-service requirement may be considered when member-specific medical necessity rationale is provided. Exceptions must be requested via prior authorization to the Pharmacy Department and will be evaluated case-by-case. Note: exceptions for gene and cell therapy are excluded and assessed separately.

Starting dose(s) only when multiple administrations are required and the medication is not limited distribution (subsequent doses subject to policy)
Complex infusion needs requiring specialty skilled nursing personnel
History of infusion reactions causing serious adverse events despite premedication and infusion rate control
History of severe adverse events after infusion (e.g., anaphylaxis, seizure, thromboembolism, myocardial infarction, renal failure)
Medically unstable situations (e.g., unstable renal function, unstable vascular access)
Distance from nearest approved site of service
Members receiving immune checkpoint inhibitors combined with provider-administered chemotherapy on the same day

Site-of-Service Restrictions

Site-of-Service (SOS) restriction — Medical Drug List

Definition of SOS restrictionDrugs on the Medical Drug List with a Site of Service (SOS) restriction must be administered in the home, office, or a Priority Health-approved alternative site rather than outpatient hospital settings not on Priority Health's Standard Fee Schedule.

Trigger for applicationPolicy applies when the requested therapy is listed on the Medical Drug List with SOS restriction or when a medical injectable is administered in an outpatient hospital not on Priority Health's Standard Fee Schedule.

Example drugsExamples include Keytruda (J9271; Injection, pembrolizumab, 1 mg) and Soliris (J1299; Injection, eculizumab, 2 mg).

Policy intentEnsure administration at most cost-effective, site-neutral settings to reduce facility drug markups and make care more affordable for members.