MedicaidReimbursementHigh impact
Newsletter Vol. 15, No. 11
New Jersey Medicaid·NJ·Provider Notice
Effective date
Jul 1, 2005
We identified it
Jun 20, 2026
Summary
New Jersey Medicaid is reducing reimbursement for practitioner-administered drugs (Level II HCPCS codes) effective July 1, 2005. Instead of reimbursing the lower of AWP or acquisition cost, Medicaid will now reimburse the lower of AWP minus 12.5% or acquisition cost. Vaccine administration reimbursement is unaffected. Billing teams must adjust claim submission logic and fee schedules for affected drug codes.
Action Required
By July 1, 2005: Billing team must update reimbursement calculation logic in billing software for all Level II HCPCS codes (practitioner-administered drugs). Modify fee schedule tables to apply 12.5% reduction to AWP calculations. Notify providers that drug reimbursement will be recalculated as lower of (AWP - 12.5%) or practitioner acquisition cost. Verify that vaccine administration codes (J-series vaccine codes) are excluded from this reduction. Claims submitted before July 1, 2005 use old AWP/acquisition cost methodology; claims on or after July 1, 2005 use new reduced formula. Failure to implement this change will result in claim underpayment or potential audit findings for improper reimbursement amounts.