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National Drug Code Billing Requirement

Affected Providers

  • Hospitals
  • Other providers billing for services under the Inpatient Prospective Payment System (IPPS) and/or Outpatient Prospective Payment System (OPPS).
  • Professional claims with physician-administered drugs.

Action Needed

  • Make sure your reimbursement staff knows about the NDC billing requirement and any documentation requirements starting January 1, 2023.
  • Claim lines will begin to deny effective date of service on or after January 1, 2023, if the HCPCS code is not present when an NDC is not billed.


  • PEHP requires the use of NDCs and related information when drugs are billed for professional, ancillary and facility electronic (ANSI 837P). PEHP requires inclusion of the NDC along with applicable Healthcare Common Procedure Coding System (HCPCS) or Current Procedure Terminology (CPT) code(s) on claim submissions for unlisted or “Not otherwise Classified” (NOC) or “Not Otherwise Specified” (NOS) physician administered and physician supplied drugs.
  • “NDC” stands for National Drug Code. It is a unique, 3-segment numeric identifier assigned to each medication listed under Section 510 of the U.S. Federal Food, Drug and Cosmetic Act.  The first segment of the NDC identifies the labeler (i.e., the company that manufactures or distributes the drug).  The second segment of the NDC identifies the product (i.e., specific strength, dosage form, and formulation of a drug).  The third segment identifies the package size and type.  For billing purposes, the Centers of Medicare and Medicaid Services (CMS) created an 11-digit NDC derivative, which necessitates padding of the labeler (5 positions), product (4 positions) or package (2 positions) segment of the NDC with a leading zero, thus resulting in a fixed-length, 5-4-2 configuration.
  • NDC is usually found on the drug label or outer packaging. The number on the packaging may be less than 11 digits.  The label also displays information about the NDC unit of measurement drug.
  • If the medication comes in a box with multiple vials, use the NDC number on the box (outer packaging).


Units of measure NDC descriptions:

UN (Unit) – Powder for injection (needs to be reconstituted), pellet, kit, patch, tablet, device

ML (Milliliter) – Liquid, solution, or suspension

GR (Gram) – Ointments, creams, inhalers, or bulk powder in jar

F2 (International Unit) – Products described as IU/vial or micrograms