PSTAC: Frequently Asked Questions

General Information

CPT Codes (CPT)

Coding for Services

Place of Service (POS)

Provider Status

National Provider Identifier (NPI)

Billing and Reimbursement

ASC X12N 837 Health Care Claim: Pharmacy Professional Services Companion Guide

General Information

Q: What is PSTAC?

A: The Mission and Objectives Statement for PSTAC describe the goals of the organization and further information can be found at the About Us location on our website.

Q: What organizations are members of PSTAC?

A: Please review the PSTAC member organizations to determine the current members.

Q: Can our organization join PSTAC and what is the process??

A: Yes. PSTAC is an open organization. Please e-mail a request to for more details on joining.

Q: Does PSTAC have a newsletter or listserv?

A: No. PSTAC does not have ‘Newsletters’ or a listserv, but please check out our website at for updates. We do maintain links to news and press releases posted on the website’s home page.

Q: How do I keep current with respect to the current changes in the Medicare Modernization Act (MMA), MTM and Medicare Part D?

A: PSTAC maintains a website for updates related to these issues. Additionally all of the participating organizations in PSTAC are developing sections on their websites to keep their members informed. We encourage you to check these sites often for updates and changes. Additional sites of interest include the American Medical Association website for CPT Code updates, the Workgroup for Electronic Data Interchange (WEDI),,Q: Are there any computer applications available for the implementation of a medication therapy management services (MTM)?

A: There are many computer applications that document patient care and provide billing services. Choices will depend on practice site and payer requirements. Please review the websites of our member organizations for options or systems that they suggest to meet your specific needs.

CPT Codes (CPT)

Q: I understand PSTAC was successful in obtaining CPT codes to allow pharmacists to bill third party payers for medication therapy management services (MTMS). What are CPT codes?

A: CPT (Current Procedural Terminology) codes were created by the American Medical Association in 1966 to be a listing of descriptive terms and identifying codes for reporting medical services and procedures performed by physicians. Historically, many pharmacists who billed for their patient care services did so using codes in the Evaluation and Management or so-called “E&M” section of the CPT coding structure. CPT codes are now used by all health care disciplines to convey their health care encounter information to health plans. Importantly, the new MTM codes are intended to be used exclusively by pharmacists (“Professional Service Billing Codes Approved for Pharmacists” press release of 7/7/2005 on PSTAC website). In January 2008, these codes that were initially approved as Category III (“emerging technology” or “tracking” codes) became available for use as Category I codes.

Q: Will medication therapy management services (MTM) or professional services be billed manually or electronically?
A: It depends. If your store has less than 10 full time employees you may bill for services manually. If you have more than 10 full time employees you must bill electronically.

The current HIPAA guidelines mandate the use of CPT codes for billing of professional services. The insurance company or payer will be the decision maker as to how these codes are used. Before providing professional services, we encourage you to contact the patient’s insurance company to determine how and if they will accept claims for these services. It is anticipated that the CMS1500 claim for will be the standard claim form for manual invoices and the ASC X12 format will be used for electronic billing. Again, this is consistent with HIPAA guidelines for billing of these services. Additional documentation may be required as this concept matures.

Q: Are the new CPT codes only for Part D MTM billing?

A: No. The MTM codes may be used by pharmacists in any situation where the described service is provided.  Other CPT codes may be accepted by payers and depending on which CPT code being used, there may be restrictions with respect to how these specific codes may be used.

It is advisable to contact a payer before using the code for the first time to make sure that they are configured to process the MTM codes.  You should also inquire about any special handling requirements by the payer such as prior approval or submission to a particular person or department.  PSTAC is extremely interested in hearing about your successful and unsuccessful experience with using the codes in various situations.  Please forward any additional information via e-mail to PSTAC.

Q: Are the MTM CPT codes exclusive for pharmacists and pharmacy services?

A: Yes. While physicians and other non-pharmacist providers may perform MTM services, the recently approved MTM codes can ONLY be used by pharmacists when submitting a claim for MTM. This has been specified by the AMA. (See MTM rationale)

Q: How is the fee payment being determined for the MTM billing codes 99605, 99606, and 99607?

A: Payers will be establishing their own fee schedules for the codes. It has yet to be determined how these rates will be set.

Q: What is the difference between a HCPC code and a CPT code?

A. CPT Codes are a subcategory of HCPCS codes. An excellent explanation of the difference can be found on the CMS website at HCPCS General Information.

Coding for Services

Q: My health care practice/facility is currently using “incident-to” CPT ® evaluation & management (E&M) codes to report the services that I am providing to patients.   How should we use the new medication therapy management service (MTM) CPT ® billing codes?

A: There are numerous aspects to this question.   Succinct responses to some of the most important aspects of this question are provided below.   If you have additional questions related to this issue you may contact PSTAC at and your question will be routed to the appropriate individual.

1:   It is important to review and understand the description of the MTM codes approved by the CPT ® Editorial Panel posted on the PSTAC website.   This service description should be consistent with the care you are providing to patients.

2:   The availability of MTM CPT ® codes creates the opportunity for pharmacists to contact payers to describe the value of services being provided to patients. Pharmacists have not previously had access to CPT ® codes to accurately describe a MTM service encounter. The MTM codes were initially approved by the CPT ® Editorial Panel as Category III CPT ® codes or “tracking codes.” If a payer claims that the MTM code is for “experimental” or “investigational” use remind them that as of January 1, 2008, these codes are now classified as Category I. Though the use of Evaluation & Management (E&M) CPT ® codes have been utilized to submit claims for pharmacists’ services, E&M CPT ® codes fail to accurately track and report a MTM and often results in an undervaluation of pharmacists’ services. Medicare regulations include provisions for physicians to bill for non-physician services though the “incident to” services. The “Incident to” services may be restricted to certain physical locations and there are strict criteria for use. (Please review the “Incident to” questions below for additional information.)

3. To avoid perceptions of potential impropriety and fraud, do not use both the “incident-to” E&M CPT ® codes and the MTM CPT ® codes for the patient on the same date of service. The use of both codes on the same date of service is not advised, including the use of a “zero” dollar amount entered for the MTM CPT ® code concurrently reported with an “incident-to” E&M CPT ® code.

Place of Service (POS)

Q: What is a Place of Service (POS) code?

A: A POS code is used on medical claims explains the physical location that services are performed by medical professionals. Examples include a physician office, a hospital, and a skilled nursing facility. Effective Oct 1, 2005 there is a designated POS code for the location of Pharmacy. Use code ’01’ when services are performed in a pharmacy setting.

Q. How are POS codes used and when?

A: Place of service (POS) codes should be used on professional claims to specify the location where services are rendered. Check with your individual payer (Medicare, Medicaid, or other private insurance) to determine whether a particular code will be recognized for payment purposes. (See POS codes)

Provider Status

Q: Can other (i.e., non-pharmacist) providers perform MTM Services?

A: Yes. Physicians and other non-pharmacist providers may perform medication therapy management services; however those services will be billed using Evaluation and Management CPT Codes. Note that the E&M codes are different from the MTM CPT Codes referenced here.

National Provider Identifier (NPI)

Q. What is the National Provider Identifier (NPI)?

A. NPI stands for National Provider Identifier. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandated that the Secretary of Health and Human Services adopt a standard unique health identifier for health care providers. On January 23, 2004 , the Secretary published a Final Rules that adopted the National Provider Identifier (NPI) as this identifier.

Q. What is the NPI compliance date?

A. HIPAA-covered entities, such as providers completing electronic transactions, healthcare clearinghouses, and large health plans, must use only the NPI to identify covered healthcare providers in standard transactions by May 23, 2007 . Small health plans have a one-year extension before complying with the NPI rule so small health plans do not have to comply until May 23, 2008. Small health plans are defined as plans with $4,000,000 or less in revenue.

Q: Are all pharmacists and pharmacies required to obtain a NPI?

A. All healthcare providers that are covered entities under HIPAA are required to obtain an NPI. If a pharmacy sends or receives HIPAA-covered transactions, the pharmacy must obtain an NPI. The same is true for a pharmacist. If the healthcare provider does not conduct HIPAA-covered transactions, but is a healthcare provider under HIPAA’s definition (as are pharmacies and pharmacists), then the provider may, but is not required to obtain an NPI.

The NPI consists of 10 numeric digits. The NPI does not have embedded intelligence. There is no method of determining whether an NPI belongs to an individual or an organization by looking at the number. Only organizations can have multiple NPIs. Individuals can obtain only one NPI throughout their lifetime, except in unusual circumstances such as replacing an NPI due to fraudulent activity associated with the NPI.

Q. Why is it important for a pharmacist to obtain a NPI?

A. PSTAC encourages individual pharmacists to obtain an NPI. Using an individual NPI traces delivery of a professional service to the rendering pharmacist, thereby allowing the pharmacist to be recognized as a service provider.

Q. Will a pharmacy’s and a pharmacist’s NPI be required on all claims?

  A. NPIs are required of HIPAA covered entities on HIPAA covered or standard transactions. In most cases, the pharmacy as the billing entity will be required to submit an NPI as the identifier. Whether a pharmacist NPI is required on a HIPAA transaction depends upon the trading partner (i.e., payer). If the pharmacist NPI is requested, then the pharmacist NPI would be on the HIPAA transaction. When a pharmacist NPI is requested it is usually to identify the Rendering Provider and the pharmacy NPI would also be supplied on the same claim transaction to identify to whom the claim should be paid, i.e., the Billing Provider. Both NPIs would be on the claim transaction. This situation may occur when using the X12N 837 claims format or the paper version of the X12N 837 – the CMS Form 1500. Only one NPI will be required on the NCPDP format – the NPI for the Billing Provider.

Q. Will a pharmacy continue to use its NCPDP Provider ID?

  A. Yes, a pharmacy may use its NCPDP Provider ID for non-HIPAA covered transactions such as Worker’s Compensation Claims. The choice of which identifier to use in this case will be specified by the trading partner (i.e., payer). A pharmacy must use its NPI for all HIPAA-covered transactions.

NCPDP will continue to issue NCPDP ID numbers, even if they are not used on the HIPAA standard transaction. It is expected that many processors will crosswalk the NPI to the NCPDP Provider ID and will continue to use the NCPDP ID for processing in the near to intermediate term. The relationship and demographic information found on the NCPDP Database files will always be needed by the industry. NCPDP will continue issuing NCPDP Provider ID numbers even if the only future use is internal to NCPDP and users of the NCPDP Pharmacy NPI Database. There are no plans to phase out the numbers.

A legacy identifier is any identifier that has been used by providers that is being replaced by the NPI on HIPAA transactions. For a pharmacy, this includes the NCPDP Provider ID, Medicaid ID, Medicare Supplier ID, State License numbers and other identifiers used to identify the pharmacy on a HIPAA standard transaction.

Q: What is the process for obtaining a NPI?

A. You will be able to apply for your NPI in one of three ways:

·  You may apply through an easy web-based application process. The web address is

Specific guidance on what information you will need to apply for an NPI may be found at:

·  You may prepare a paper application and send it to the entity that will be assigning the NPI on behalf of the Secretary. A copy of the application is also available at , or call 1-800-455-3602 for a copy.

·  With your permission, an organization may submit your application in an electronic file. This could mean that a professional association or perhaps a health care provider who is your employer could submit an electronic file containing your information and that of other health care providers.

Q. Where can pharmacies and pharmacists obtain additional information about NPIs and updates?

A. Go to   and your pharmacy professional association’s website for additional information and updates.

Billing and Reimbursement

Q: Is MTM reimbursement different than Medicare Part B reimbursement. Are pharmacists directly paid for services or does payment go to physicians?

A: For Medicare Part D patients, reimbursement for medication therapy management services is paid through Medicare Part D Prescription Drug Plans (PDP) or Medicare Advantage (MA) plans. The mechanisms for payment of MTM services have been left up to the discretion of the PDP and MA plans. It is possible that payers will pay pharmacists directly, while some may decide to pay a corporation, pharmacy, or service provider organization depending on specific contractual agreements.

Q: Who is the payer for Medicare related MTM services. Is it Medicare Part D or the PDP contracted plans?

A: The payment for MTM within Medicare Part D has been left up to the discretion of the Prescription Drug Plans (PDP) and Medicare Advantage (MA) Plans. It is possible that that PDP and MA Plans may elect to utilize the new MTM CPT Codes to compensate pharmacists for MTM services.

Q: How do you establish contracts with PDPs via Medicare Part D?

A: Contracts should be established directly with the PDP once the name of the PDPs are released for the respective areas. A current listing of the approved PDPs can be found at A list of contacts for MTM services is available from CMS.

Q: Can payers deny payment for pharmacy services (MTM) provided to patients enrolled in Medicare Part D?

A: Payment for professional pharmacy services will be determined by the individual health plans. We encourage you to contact the plan before providing services to determine if they will recognize claims for these services. If a health plan were to deny payment for services, this does not mean that you should not submit invoices. The next year is one of change as the concept of billing for professional pharmacy services develops. By having the invoices ‘on the books ‘ will allow payers the opportunity to see the volume of professional pharmacy services that they can anticipate.

Q: What is the billing process for incident to services that are billed to Medicare Part B?

A: The “Incident to” physician services that are covered by Medicare Part B would continue to be billed by the physician using an Evaluation and Management (E/M) service code. Before considering utilizing the “Incident to” billing strategy, consult with the Medicare Manual to make sure that the criteria for use are correctly followed.

Q: How are pharmacists reimbursed for services that are provided “incident to” physician services?

A: “Incident to” physician services is a reimbursement strategy in which a physician bills for a non-physician service. There are strict criteria for using the “Incident to” strategy. The Medicare Manual and the CMS web page will have the most up to date criteria for utilizing this billing strategy or by searching the CMS site. Since pharmacists are not recognized as providers by CMS, Medicare patients are normally billed for a level 1 (99211) visit. Other payers may reimburse at higher levels. A number of services are provided in this manner by pharmacists and include anticoagulation monitoring, diabetes management, lipid management, smoking cessation, polypharmacy consults, etc. A comprehensive discussion of billing is beyond the scope of these FAQs, but many resources are available to pharmacists who may be considering such an arrangement.

Q: What professional pharmacist services are currently reimbursable, either with the MTM CPT codes or other available coding systems?

A: There are many types of services that pharmacists are being paid for and several avenues of reimbursement that can be pursued. For instance, enterprising pharmacists have set up practices where patients will pay directly for services (self-pay). These include, but are not limited to services as simple as blood pressure checks or lab screening tests or as extensive as smoking cessation, weight loss or bioidentical hormone replacement.

Some pharmacists or pharmacist networks are currently contracting with health plans and self-insured employers to provide services related to chronic diseases such as diabetes, lipids, asthma or hypertension. In this scenario, the pharmacist negotiates reimbursement rates with the employer, then bills directly for patient visits. Additional information on similar programs can be found on PSTAC member organization websites.

Q: How can pharmacists providing cognitive or consultation services or MTM services get reimbursed (while not dispensing drugs) by Medicare Part B or their state Medicaid Programs?

A: MTM is not a covered (reimbursable) Medicare Part B benefit may be a reimbursable Medicare Part D benefit. Pharmacists will need to check with their individual state Medicaid program to find out if MTM services are a covered benefit.

It is NOT a requirement that pharmacists dispense prescription drugs in order to bill for MTM services. For additional information on billing for MTM services, you may consult PSTAC member organization websites.

Q: Are there any standard or published payment schedules for use with the CPT codes?

A: No. Payers will be establishing their own fee schedules for the services provided with the CPT codes.

ASC X12N 837 Health Care Claim: Pharmacy Professional Services Companion Guide

Q: What is a companion guide?

A: The primary purpose of the companion guide is to serve as a technical document to help pharmacy software vendors and payers program their health care claims systems for billing and transacting pharmacy services claims. The HIPAA final rule contains provisions on transaction sets that require pharmacists to bill professional services using the X12N 837 transaction. This X12N 837 transaction was divided into three implementation guides–one for hospitals, one for dentists, and one for all other health care professionals. Implementation guides define all the electronic data segments, data elements, and loops for transacting a particular type of health care claim or health care encounter information between all users within the health care industry.   The guides help health plans, clearinghouses, and software vendors ready their systems to send and receive a HIPAA-compliant transaction for pharmacy service billing,

Because the implementation guide for all other health care professionals, referred to as the “Professional IG (implementation guide),” contains claim billing information that is not pertinent to pharmacy, the pharmacy companion guide was developed to reflect just the loops, segments, and data elements needed for pharmacy billing. The pharmacy companion guide is therefore a carve-out of the X12N 837 Professional IG. More than 80 transaction segments were removed. For example, segments such as vision care, spinal manipulation information and ambulance transport service information, X-rays, mammography, hearing and vision, and property & casualty claims were eliminated. Also, those loops dealing with DME billing were removed from version 4010A1 in order to tailor the companion guide to service billing only. It was felt that limiting the scope to professional services would facilitate programming. The loops and segments not used in the companion guide are shaded to show what was eliminated.

The official name of the companion guide is ASC X12N 837 Health Care Claim: Pharmacy Professional Services Companion Guide. The official name of the “parent” implementation guide from which it was developed is called the ASC X12N 837 Health Care Claim: Professional IG.

Q: What else has been done with the companion guide to facilitate programming?

A: Because not all pharmacy service claims will require coordination of benefits (COB) billing, it was decided to separate those loops and segments that would be required for billing a single payer. Should a software vendor decide to incorporate COB billing, the segments that would be needed are also shown. Again, the intent is to facilitate programming.

Q: Are there any examples of how to bill a claim?

A: In chapter 4 of the companion guide there are business cases based on three clinical vignettes that are mapped to the CMS Form 1500. The actual loops and segments needed to address the vignettes are shown as well as the syntax of the electronic transmission of the claim.

The first business case is an example of “incident to” billing using the following loops: referring provider, rendering provider, supervising provider, and ordering provider.

The second business case is based on a vignette showing use of MTM codes.

The third business case is based on a vignette using codes for diabetes self-management training with a certificate of medical necessity using the claims supplemental information segment and coordination of benefits.

Q: Is the current edition of the companion guide HIPAA compliant?

A: Yes, no definitions or codes were changed or added. Also, the second edition of the companion guide is in full compliance with the addenda issued by HHS to address corrections to the original version 4010. The A1 after 4010 designates compliance with the addenda. This is the version programmers should be using.

Q: How can I order the companion guide and what is the cost?

A: The pharmacy companion guide can be ordered from the Washington Publishing Company’s web site. Washington Publishing is the official publisher of all X12N transactions.

The cost is $225 for a bound document, $205 for a portable document (PDF) on a CD-ROM, and $190 for a downloadable PDF.