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Member Alert: Tricare Expands Restrictions on Compound Prescription Claims
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Member Alert


Tricare has released an update, today, May 11th, which expands restrictions on compound prescription claims.


•    The average cost for a compound drug has risen from $192 per claim in Dec. 2012 to $2,595 per claim in Dec. 2014, an increase of 1,252%.
•    Compound prescriptions account for 0.5% of all DoD prescription volume – compound prescriptions account for over 20% of the total DoD pharmacy costs.
•    Compound medications are prescribed for approximately 40,000 of our 9.5 million beneficiaries (0.4% of our total population).

Recent Actions

•    On 01 May 2015, the Department implemented an automated screening and Prior Authorization process through Express Scripts, Inc. (ESI), the TRICARE pharmacy contractor.
•    The new measures temporarily decreased compound prescriptions related costs by approximately 74% based on the previous month. However, even at that reduced level, the Department’s compound prescription expenditures will still average approximately $145 M per month ($1.7B annually).
•    Some compound pharmacies appear to be adjusting their activities and claims to elude the newly implemented controls, and work around the screening process. The initial evidence based on five days of data strongly suggests compounds with   dubious clinical evidence and excessive cost continue to impact the system and warrants the implementation of additional administrative controls at the point of service (i.e., interaction with the pharmacy).

Effective Immediately

•    DoD is adopting the ESI “commercial reject list” -- the standard list of ingredients for compound medication that ESI automatically denies for its commercial customers.
•    If claim is rejected, the pharmacy can talk with ESI about substitute ingredients, or prescribers can request an individualized Prior Authorization review.
•    Based on ESI’s historical experience, adopting this screening process resulted in a 95% decrease in compound costs for their commercial clients. The Department expects to realize comparable cost savings.

Additional Action

•    The Program Integrity office, in consultation with the Office of General Counsel, will refer all cases of providers and pharmacies where we have suspended the payment of claims to the relevant state licensing boards for their awareness and action.  
•    The Defense Health Agency is initiating an audit of all compounding claims in the last 12 months to determine if recoupment is justified in cases where violations of state or federal law resulted in inappropriate reimbursement. 

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