5. System Requirements

P-5.1. Pharmacy Claims System

The Vendor Drug Program real-time point-of-sale claim system processes outpatient pharmacy claims, verifies state assistance program eligibility, and sends weekly payment file to the Texas Comptroller of Public Accounts to process payment.

  • Outpatient pharmacy claims are processed for fee-for-service Medicaid, the Children with Special Health Care Needs (CSHCN) Services program, the Kidney Health Care (KHC) program, and Healthy Texas Women (HTW) program.
  • The system performs over 100 separate edits, including validation of the submission format; pharmacy, prescriber, and product; identifying prior authorization requirements or other known insurances; and calculating reimbursement.
  • The system responds with information regarding the person’s eligibility, the program’s allowed payable amount, applicable prospective drug utilization review messages, and applicable error codes and messages.  
  • The system allows pharmacy staff to query program eligibility, prescription benefits, and managed care enrollment status when applicable.  Refer to the Eligibility chapter to learn more about real-time eligibility verification.

P-5.1.1. Maintenance

The system undergoes regularly scheduled weekly maintenance between 11 p.m. Saturdays and 1 a.m. Sundays (central time). The system will not accept or process claims during this time.

HHS will announce extended maintenance hours will via the VDP website and email notification service.

P-5.2. Switch Companies

Network switch companies offer a centralized telecommunication link between the pharmacy and VDP.  All arrangements with switching companies should be handled directly by the pharmacy provider. VDP accepts transactions from the following switch companies:

  • Change Healthcare (formerly Emdeon)
  • QS/1 Data Systems
  • Relay

P-5.3. Claim Format

The current telecommunications standard for pharmacy claim transactions is the National Council for Prescription Drug Programs (NCPDP) version D.Ø. Claim transactions submitted in any other version will reject.

Refer to the payer sheets for specific transaction, segment, and field requirements and, for the E1 transaction, detailed messaging returned in the “Additional Message Information” field (526-FQ). Refer to the VDP website Pharmacy Payer Sheets page for more information.

5.3.1. NCPDP Transactions

The transaction codes below are defined according to the standards established by NCPDP.  Ability to use these transaction codes will depend on the pharmacy’s software.  At a minimum all pharmacy software should have the capability to submit original claims (transaction code B1) and reversals (transaction code B2).

Code Name Support Requirements

B1

Billing

Required

B2

Reversal

Required

B3

Re-bill

Not Supported

C1

Controlled Substance Reporting

Not Supported

C2

Controlled Substance Reporting

Reversal

Not Supported

C3

Controlled Substance Reporting

Rebill

Not Supported

D1

Predetermination of Benefits

Not Supported

E1

Eligibility Verification

Supported

N1

Informational Reporting

N1 from pharmacies not supported

N2

Informational Reversal

N2 from pharmacies not supported

N3

Informational Re-bill

Not Supported

P1

Prior Authorization Request and

Billing

Not Supported

P2

Prior Authorization Reversal

Not Supported

P3

Prior Authorization Inquiry

Not Supported

P4

Prior Authorization Request Only

Not Supported

S1

Service Billing

Not Supported

S2

Service Reversal

Not Supported

S3

Service Rebill

Not Supported

5.3.1.1. Claims Billing (B1) Transaction

This transaction captures and processes the claim in real time. On payable claims, the system notifies the pharmacy of the dollar amount allowed under the Medicaid reimbursement formula.  If the claim is not payable, the system returns an NCPDP reject code.  In some cases, a message is included in "Addition Message Information" (field 526-FQ).

B1 transactions submitted to VDP for people enrolled in Medicaid managed care or CHIP will reject with NCPDP code "AF" (“Patient Enrolled Under Managed Care") and identify the name of the MCO the person is enrolled with.  Refer to the Pharmacy MCO Assistance Chart on the VDP website "Downloads" page for the MCO-specific pharmacy claim billing values.

5.3.1.2. Claims Billing Reversal (B2) Transaction

This transaction is used by the pharmacy to cancel a claim previously processed as paid.  The following fields must match on the original paid claim and on the void request for a successful claim reversal:

  • "Service Provider ID" (2Ø1-B1)
  • "Prescription/Service Reference Number" (4Ø2-D2)
  • "Product/Service ID" (4Ø7-D7)
  • "Date of Service" (4Ø1-D1)

5.3.1.3. Eligibility Verification (E1) Transaction

This transaction is used by the pharmacy to determine a person’s program-specific eligibility, prescription benefits, and managed care enrollment status when applicable.  Refer to the Eligibility chapter of this manual for information about the Pharmacy Eligibility Verification Portal, an alternate method of verification.

E1 transactions submitted to VDP for people enrolled in CHIP will reject with NCPDP code "AF" (“Patient Enrolled Under Managed Care") and identify the name of the MCO the person is enrolled with.  Refer to the Pharmacy MCO Assistance Chart on the VDP website "Downloads" page for the MCO-specific pharmacy claim billing values.

5.3.2. NCPDP Transaction Segments

Data in the NCPDP standard is grouped together in segments.  The table below identifies current program segment requirements.

NCPDP Segment B1 B2 E1 Segment Support Requirements

Header

Mandatory

Mandatory

Mandatory

Required for all transactions

Patient

Required Not Used Required

Required for B1 and E1, not used for B2

Insurance

Mandatory

Not Used Mandatory Required for B1 and E1, not used for B2

Claim

Mandatory Mandatory Not Used Required for B1 and B2, not used for E1

Pharmacy Provider

Not Used Not Used Not Used

Not used

Prescriber

Required Not Used Not Used

Required for B1 only

COB/Other Payments

Optional Not Used Not Used

Required for B1 when other payer exists

Worker’s Comp

Not Used Not Used Not Used

Not Used

DUR/PPS

Optional Optional Not Used

Optional

Pricing

Mandatory Not Used Not Used

Required for B1 only

Coupon

Not Used Not Used Not Used

Not Used

Compound

Optional Not Used Not Used

Required for B1 when claim is for a compound

Prior Authorization

Not Used Not Used Not Used

Not Used

Clinical

Not Used Not Used Not Used

Not Used

Additional Documentation

Not Used Not Used Not Used

Not Used

Facility

Not Used Not Used Not Used

Not Used

Narrative Not Used Not Used Not Used Not Used

5.3.3. NCPDP Transaction Segment Data Elements

The system uses program-specific data elements for each transaction as outlined in the table below.  The pharmacy’s software vendor must review the VDP Pharmacy Provider Payer Sheets before setting up the plan in the pharmacy’s computer system.  This will allow the provider access to the required fields.  Please note the descriptions regarding data elements in the table below.  The system will not process claims without all the required data elements for the transaction submitted.  Required fields may or may not be used in the adjudication process for all transactions.

Code Description

M

Designated as MANDATORY in accordance with the NCPDP

Telecommunication Implementation Guide Version D.Ø.  These fields must be sent if the segment is required for the transaction.

R

Designated as REQUIRED for this program.

O

Designated as OPTIONAL in accordance with the NCPDP

Telecommunication Implementation Guide Version D.Ø.  It is necessary to send these fields in noted situations where they are conditional based on data content.

N

Designated as NOT USED in accordance with the NCPDP Telecommunication Implementation Guide Version D.Ø.

***R*** The “***R***” indicates the field is repeating.  

P-5.4.Claim Submission

Pharmacy staff must submit correct information on all prescription claims, including National Provider Identification (NPI) numbers for pharmacy and prescriber, National Drug Code (NDC), drug quantity, and days supply.  Inaccurate information runs the risk of an audit exception and causes erroneous data on reports.  Noncompliant pharmacies may be referred to the Texas HHS Inspector General (IG).  The table below contains identification numbers and values used for VDP claims processing.

Field Description

NCPDP Processor ID (BIN)

61ØØ84

Processor Control Number (PCN)

  • DRTXPROD: For Medicaid, CSHCN, and HTW (and CHIP*)
  • DRTXPRODKH: For KHC

Group Number

  • MEDICAID
  • CHIP *
  • KHC
  • CSHCN

Cardholder ID

Program-specific Texas Cardholder ID Number

Provider ID

10-digit Pharmacy NPI

Prescriber ID

10-digit Prescriber NPI

Product Code     11-digit NDC

* See transaction-specific notes in NCPDP Transactions section.

5.4.1. Cardholder ID

The number entered in “Cardholder ID” (Field 3Ø2-C2), in combination with "Group ID" (Field 3Ø1-C1), identifies the program to which the claim is submitted for payment. For people eligible for more than one program the adjudication process will refer submitted claims to the appropriate payer based on the following hierarchy:

  1. Medicaid
  2. Kidney Health Care (KHC) program
  3. Children with Special Health Care Needs (CSHCN) Services Program

For example, when a claim for a Medicaid/CSHCN dual-eligible person is submitted using the CSHCN cardholder number, and the claim is payable by Medicaid, the claim will reject with code “41" ("Submit Bill To Other Processor or Primary Payer"). One of the two messages in the table below will be returned.

Message Meaning
Client has Medicaid ID. Resubmit using the using the Medicaid ID# nnnnnnnnn
(ID Number)
This claim needs to be re-submitted using the Medicaid number provided.
Correct and Resubmit using Med #nnnnnnnnn

Additional errors on the claim must be corrected prior to Medicaid resubmission.  These errors are considered correctable and “non-fatal” and apply to the referred program (in this example, Medicaid) and not to the submitted program (in this case, CSHCN).

5.4.2. Prescriber Provider Identifier

Claims for the payment of items and services ordered, referred or prescribed must be enrolled as a participating provider and contain the National Provider Identifier (NPI) of the physician or other professional who ordered, referred or prescribed the items or services will be denied. These requirements only impact programs for traditional Medicaid, CSHCN Services Program, and HTW Program. Out-of-network providers ordering, referring, or prescribing only for people enrolled in managed care are not subject to these requirements.  

Pharmacies cannot substitute a missing prescriber NPI with the facility NPI or NPI of another provider who did not directly treat the person. This includes claims processed for a 72-hour emergency supply.

Field Name Field Number Values Usage

Prescriber ID

411-DB

10 - digit Prescriber NPI

R

Prescriber ID Qualifier

466-EZ

Ø1 - National Provider Identifier

R

Prescriber Last Name 427-DR Last Name O

Prescribing physicians do not enroll with the VDP but demographic data about each prescriber is received from various state licensing agencies and loaded into the system for use in the claim adjudication process. The most current information loaded into the system is accessible through the Prescriber Search.  Pharmacy claims submitted to VDP without a valid NPI will reject. If the NPI is not on file with VDP then the prescriber's NPI can be found by accessing the Nation Plan & Provider Enumeration System (NPPES) NPI Registry. 

5.4.3. Coordination of Benefits

The system receives daily pharmacy/drug insurance eligibility and insurer information verified by the Texas Medicaid third-party recovery vendor. The system then checks each pharmacy claim at point of sale for other insurance.

Field Name Field Number Usage

Coordination of Benefits/Other Payments Count

337-4C Required.
Other Payer Coverage Type 338-5C Required.

Other Payer ID Qualifier

339-6C

Required if the Other Payer ID is submitted.
Other Payer ID 34Ø-7C Required if the Other Payer ID Qualifier is submitted.
Other Payer Date 443-E8 Required.
Other Payer Amount Paid Count 341-HB Required when submitting payment from Other Payer.
Other Payer Amount Paid Qualifier 342-HC Required when submitting Other Payer Amount Paid Count.
Other Payer Amount Paid  431-DV Required when submitting Other Payer Amount Paid Qualifier.
Other Payer Reject Count  471-5E Required when not submitting Other Payer payment.
Other Payer Reject Code 472-6E Required when submitting Other Payer Reject Count.
Benefit Stage Count 392-MU Required when submitting Benefit Stage Qualifier.
Benefit Stage Amount 393-MV Required when submitting Benefit Stage Qualifier

If Medicaid is billed as primary insurer, and other third-party insurance (other than Medicare) exists in the system, then the claim will reject with NCPDP code 41 ("Submit Bill To Other Processor or Primary Payer").  The pharmacy will be provided with the third-party billing information needed for claim submission to the other payer.  The message will be returned in the “Additional Message Information” field (526-FQ) as follows: “Bill Other Payer (Payer ID:x, Policy No: x, Bin:x, PCN:x, Group:x, Cardholder ID:x)”.

Pharmacy staff should contact their software provider if the “Additional Message Information” field is not displayed.

Refer to the Coordination of Benefits chapter for more information on Medicaid, Medicare, and third-party insurances.

5.4.4. Multi-ingredient Compounds

The system accepts multi-ingredient compounds in the compound segment of the B1 transaction.  Only one compound claim is allowed per transmission and cannot be included as part of a multiple claim transaction.  All ingredients of each compound must be submitted, and the system will only reimburse for products on the program-specific formulary.  The order of the ingredients does not matter. 

Pharmacy staff may submit up to 25 ingredients online using the fields below.

Field Name Field Number Usage

Compound Code

4Ø6-D6

Enter "2" (Compound).

Product/Service ID Qualifier

436-E1

Enter “ØØ”

Product/Service ID

4Ø7-D7

Enter "Ø"

Compound Type

996-G1

Required.

Compound Dosage Form Description Code

45Ø-EF

Required.

Compound Dispensing Unit Form Indicator

451-EG

Required.

Compound Ingredient Component Count

447-EC

Required.

Compound Product ID Qualifier

488-RE

Required.

Compound Product ID

489-TE

Required.

Compound Ingredient Quantity

448-ED

Required.

To receive payment for non-covered products pharmacy staff should use the following fields

Field Name Field Number Usage

Submission Clarification Code Count

354-NX

Enter the number of repetitions (1-3) of "Submission Clarification Code"

Submission Clarification

42Ø-DK

Enter "8" (Process Claim for Approved Compound Ingredients)

Notes:

  • Over the counter (OTC) products in compound claims for eligible people residing in a nursing home will be considered for payment only if a payable legend drug is included as part of the claims.
  • Certain drugs are only payable when submitted as part of a multi-ingredient compounds claim.  Refer to the VDP website Formulary Search to find drugs with this limitation, or refer to the "Compound-only Products" section of the Drug Policy chapter.
  • Compound claims submitted with home health supply products will reject.
  • Vitamin/Mineral products as part of a compound claim will not be paid. 
  • Enter the gross amount due of the total compounded product in the "Gross Amount Due" (GAD) field (430-DU).

5.4.5. Medication Synchronization

Medication synchronization establishes processes for early refills to align the filling or refilling of multiple medications for a person with chronic illnesses.  In accordance with the Texas Insurance Code (Chapter 1369, Subchapter J) the person, their prescribing physician, or the dispensing pharmacist may initiate the medication synchronization request.   

4.5.1 Eligible Medications

A drug is eligible for medication synchronization if:

  • It is listed in the Texas Drug Code Index (formulary) for Medicaid, CHIP, KHC or CSHCN Services Program
  • It is used for treatment and management of chronic illnesses
  • It is a formulation or dosage form able to be effectively dispensed in a medication synchronization protocol
  • It must meet all prior authorization criteria applicable to the medication on the date the synchronization request is made, including clinical prior authorizations, non-preferred prior authorizations, and drug utilization review edits
  • It must be within the same Generic Code Number (GCN) class as the previously dispensed prescription (the GCN class includes NDCs form different manufacturers with the same drug strength and formulation)  

4.5.2 Medication Exceptions

A drug is not eligible for medication synchronization if it is one of the following:

  • Schedule II controlled substance
  • Schedule III controlled substance containing hydrocodone

4.5.3 Eligibility

Medications eligible for synchronization must be used to treat chronic illnesses.  A chronic illness is defined as an illness or physical condition:

  • Reasonably expected to continue for an uninterrupted period of at least three months, and
  • Controlled, but not cured by medical treatment. This includes drugs used to treat mental health conditions and substance abuse.

4.5.4 Claims

4.5.4.1 VDP Processed

A synchronized claim will count as one of the three prescriptions Medicaid will pay if a person is limited. A fourth claim will reject with NCPDP error code 76 ("Plan limitations exceeded").

Pharmacy staff attest the medication is used to treat a chronic illness by submitting these values:

  • “9Ø1” in the “Prior Authorization Number Submitted” field (462-EV)
  • “Ø8” in the “Prior Authorization Type Code” field (461-EU)

Pharmacy staff may call the Pharmacy Benefits Access Help Desk at 1-800-4354165 for assistance.

4.5.4.2 Medicaid Managed Care and CHIP 

Each MCO has an HHSC-approved process for medication synchronization for people eligible for Medicaid or CHIP.  In CHIP, cost sharing or copayment amounts will be prorated. Dispensing fees will not be prorated. Pharmacy staff should contact each MCO for its medication synchronization requirements. Refer to the Pharmacy MCO Assistance Chart on the VDP website "Downloads" page for the pharmacy call center phone number for each MCO.

5.4.5. Dispensing Fees

Dispensing fees for synchronized refills claims will not be reduced or prorated.

P-5.5. Edits

Following an online claim transmission by a pharmacy, the system will return a response to indicate the outcome of processing.  If the claim passes all edits, a “paid” response will be returned with VDP's allowed amount for the paid claim.  A “rejected” response will be returned when a claim fails one or more edits.  Pharmacy staff should consult with their software provider for a list of NCPDP standard reject codes.

5.1. Timely Filing Limits

While most claims are generally submitted at the time of dispensing, there may be mitigating reasons requiring a claim be submitted after being dispensed.  The pharmacy’s software should allow the transmission of claims with past service dates.

  • The timely filing limit from the date of service is 90 days for all original claims. 

  • The timely filing limit from the date of service is 720 days for all reversals.

  • Transmission of claims using the current date for a past service date is a violation of program policy and could result in an audit exception.

  • The inability of a pharmacy's software to submit past service dates is not an acceptable reason for the submission of paper claims.

Claims exceeding the timely filing limit will reject with NCPDP code "81" (“Claim Too Old”).  Claims for people certified with retroactive Medicaid eligibility will process online for 90 days after the certification date of retroactive eligibility regardless of the date of service.  

P-5.6. E-prescribing

Electronic prescribing (e-prescribing, or eRx) allows a prescriber to electronically send an accurate, error-free, and understandable prescription directly to a pharmacy. It also provides the ability to verify eligibility and formulary data for people, prior to and during the prescribing process, and view medication history for the previous 12-month period. This is enabled with the authorized exchange of data between the payer and the prescriber. Full support of e-prescribing is available for Medicaid fee-for-service, CSHCN, KHC, and HTW claims (via SureScripts) and for Medicaid managed care pharmacy claims.

5.6.1. Brand Medically Necessary

If an e-prescription is received by a pharmacy with “dispense as written” (DAW) indicated but without the free text message ("Brand Medically Necessary") or additional note, pharmacy staff must contact the prescriber for a new prescription. Once the pharmacy receives the e-prescription with both data elements, the prescription may be transmitted with the values in the table below.

Field Name Field Number Usage
Dispense as Written 4Ø8-D8 Enter "1" (Substitution Not Allowed by Prescriber)
Prescription Origin Code 419-DJ Enter "3" (Electronic)

Failure of the pharmacy to produce electronic records indicating the proper DAW and “Brand Medically Necessary” in the free text message for the prescription will result in the claim subject to recoupment. All non-electronic “Brand Medically Prescriptions” (for controlled and non-controlled substances), must continue to comply with current policy and Texas State Board of Pharmacy rules.