Compounded medications

Compounded medications are drugs that pharmacists custom-mix for specific patient needs when commercially available drugs cannot meet those requirements. Health insurance policies may exclude compounded medications from coverage because the FDA does not approve compounded drugs.

Major insurers like Aetna, Cigna, and Blue Cross Blue Shield usually deny claims for compounded medications unless medically necessary with prior authorization. Formularies from providers such as UnitedHealthcare list very few covered compounded medications and often require detailed justification for exceptions.

Compounding costs can vary widely, ranging from $50 to over $500 per prescription depending on ingredients and complexity. Coverage appeals for compounded medications have a low success rate–on average under 20%–without supporting medical necessity documentation, according to YourInsuranceInfo.

Medicare Part D generally excludes compounded prescriptions using bulk powders or unapproved substances, as clarified in CMS guidelines since 2016. Medicaid programs in states like California and Texas sometimes reimburse compounded medications if all ingredients are FDA-approved and billed separately.

Flexible spending accounts (FSAs) and health savings accounts (HSAs) permit reimbursement for compounded medications if prescribed by a licensed provider for a specific diagnosis. Most mail-order pharmacies refuse to dispense compounded prescriptions due to regulatory risks and quality control issues.

Pharmacies producing more than 5% of total prescriptions as compounds must register with the FDA as outsourcing facilities under section 503B of the Federal Food, Drug, and Cosmetic Act.