What is “NDC” in Medical Billing?

November 1, 2022

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Drug establishments operating directly on the supply chain are legally obligated to provide the FDA with a list of all drugs prepared, manufactured, marketed, or processed for sale at their facilities. These drugs are reported and identified utilizing a unique, three-part number called the National Drug Code (NDC).

The number serves as the FDA’s identifier and is listed and published in the NDC Directory, which updates daily. This directory comprises product listing information for all finished drugs, including prescription and drugs sold over the counter, whether prepackaged or relabeled. In short, the NDC directory lists every drug sold in the country.

How the NDC is Used in Identifying

For example, the NDC for 20 mg Prozac in a 100-capsule bottle is 0777-3105-02. This numeric code is organized and identified in the following manner:

  • The first segment specifies the drug’s labeler. In this case, “0777” is assigned to the labeler for Prozac, Dista Products Co.
  • The second segment is the product code. This identifies the strength of the drug, along with its dosage and in what form (i.e., capsule, liquid, tablet). In this example, “3105” identifies the dosage as capsule form.
  • The third segment is called the package code, which identifies the type of container the drug is in and its size. In this example, “02” indicates that 100 capsules are in a bottle.

What Are the Benefits of Using NDCs?

Using NDCs on medical claims facilitates more accurate payments, and drug costs are better managed based on what was billed and administered. In addition, using NDCs can help reduce errors by ensuring that medications are being dispensed in hospitals correctly.

The use of NDCs also helps to ensure that patients receive the correct dosage of their prescription drugs. This is especially important for elderly or chronically ill patients who may be taking multiple medications.

NDC pricing is typically updated monthly to reflect the most recent changes in drug costs.

The combination of the above benefits expedites the medical billing process.

NDC Number Formats

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Each NDC number is a 10-digit number that is unique and divided into three parts: the labeler, the product, and the package size.

  • The labeler code is assigned by the FDA and may refer to any company that distributes or manufactures the drug.
  • The product code identifies a drug’s strength, formulation, and dosage form for a particular company.
  • The package code identifies package types and sizes. The drug company typically assigns the product and package codes.

However, it is important to point out that as per the FDA, an NDC number may also adhere to any one of these other layouts:

  • 4-4-2 denotes a labeler code of 4 digits, a product code of 4 digits, and a package code of 2 digits.
  • 5-3-2 denotes a labeler code of 5 digits, a product code of 3 digits, and a package code of 2 digits.
  • 5-4-1 denotes a labeler code of 5 digits, a product code of 4 digits, and a package code with 1 digit.

Here are the NDC units of measure that are preferred along and their descriptions:

  • UN (Unit) – Measure for injection, pellet, tablet, kit, or patch
  • ML (Milliliter) – Liquid, suspension, or solution
  • GR (Gram) – Creams, ointments, inhalers, or bulk powder stored in a jar
  • F2 (International Unit) – Products that are described as IU/vial or micrograms

Why do some NDC numbers contain 11 digits?

To properly bill drug products for specific purposes, an 11-digit NDC may be necessary. There are government entities that use an 11-digit format with no hyphens, spaces, or other characters. Then you have government agencies like HIPAA that use an 11-digit format starting with zeros. Additionally, some private payers require an 11-digit code with rules varying greatly.

To maintain FDA and HIPAA compliance, many outlets will pad leading zeros after the hyphens for the NDC. Since zero is also a valid NDC digit, this can lead to confusion when entering an 11-digit NDC into data systems that only recognize the ten-digit standard layout described above. This is why medical billing professionals are used to navigating through these idiosyncrasies.

Other Necessary Information When Submitting NDC Claims

  • The relevant CPT or HCPCS code
  • Number of CPT/HCPCS units
  • NDC qualifier (N4)
  • The measure for the NDC unit (UN, GR, ML, F2)
  • Quantity of NDC units (using up to three decimal places)
  • Your billable charges for the codes.

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About the author 

Gene Hooks

Gene Hooks is a content marketer who's a writer during the day and a reader at night with a passion for researching and finding the best medical companies that lead to patients having a better experience and doctors achieving better results.

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