Submission Clarification Codes (SCCs) in Pharmacy Billing: A Guide to Claims Accuracy and Reimbursement

Understanding what Submission Clarification Codes (SCCs) are and how they should be utilized by the pharmacy within pharmacy revenue cycle management and prescription claims processing will help you accurately bill for prescription claims in order to receive maximum reimbursement and avoid costly audit triggers. This knowledge is important so that third-party payers understand the reason for the claims submission (or resubmission), improving claims adjudication accuracy.

But first, let’s understand what an SCC is, then we’ll explain its impact on your pharmacy.

What is an SCC?
SCCs are used by the pharmacy to clarify claim processing details and pertain to all classes of trade. These numeric codes are added to claims before submission (or resubmission) in order to, among other things:

• Communicate complete dispensing event details to the third-party payer, which facilitates more accurate third-party reimbursement that is aligned with payer contracts
• Help avoid negative outcomes from payer and regulatory audits through stronger pharmacy billing compliance and audit risk mitigation
• Limit claim rejections and reduce resubmission cycles through accurate, clean claim submission and strong pharmacy billing compliance practices
• Support a more efficient pharmacy workflow and overall operational efficiency by minimizing manual intervention and administrative rework in the claims process

When Should SCCs Be Used?
Below are the most common circumstances when SCCs should be used:

• To resolve refill-too-soon rejections and limit unnecessary claim denials in daily pharmacy billing workflows
• To explain to the payer why claims are being filled early:
  • Vacation/travel supply overrides — patient needs medication ahead of the normal refill window due to travel
  • Lost or stolen medication — patient can’t wait for the standard fill cycle
  • Starter dose dispensed — partial fill situations where the full quantity wasn’t dispensed at once
  • Long-term care (LTC) scenarios — where split billing or partial fills are routine and need clarification
  • Compound drug billing — where additional clarification is needed around what was dispensed

SCCs and Short-Cycle Billing
In long-term care settings, federal regulations require SCCs for short-cycle billing. SCCs are necessary to explain the strict drug inclusion or exclusion rules and day supply requirements involved with this type of billing within long-term care (LTC) pharmacy billing and compliance-driven reimbursement processes. To learn more about short-cycle rules and common codes and definitions, read Are Short-Cycle Rules Giving You A Headache?

Top 4 SCC Codes Long Term Care Pharmacies utilize:

1. Short Cycle Dispensing Codes
   • Among the most frequently used SCCs in LTC, these codes communicate to the PBM the specific dispensing cycle methodology the pharmacy is using — whether that’s a 7-day, 4-day, 2-day, or other shortened supply cycle. Accurate use of these codes is critical for clean adjudication and audit compliance under CMS short cycle dispensing requirements.
2. LTC Emergency Box (Kit) or Automated Dispensing Machine
   • Used when medication is dispensed from a facility emergency box or automated dispensing machine. It tells the PBM the dispense was urgency-driven and facility-coordinated, not a standard cycle fill.
3. LTC Emergency Supply Remainder
   • The follow-up to SCC 16 — used when billing for the remaining supply after an emergency box dispense has already occurred.
4. Split Billing
   • Used when a patient transitions between payers mid-cycle — most commonly when Medicare Part A expires and the remainder is billed to a subsequent payer. Incorrect or missing use of SCC 19 is one of the leading causes of LTC claim denials.
     

Where is the SCC populated?
The SCC should be entered in field 420-DK (a universal field within all pharmacy dispensing software systems) under the individual claim transaction. This field is transmitted to the third-party payer during electronic claim submission and adjudication workflows for claim submission (or resubmission).

What if I have more than one SCC on an individual claim?
If more than one SCC is necessary, a maximum of three may be submitted. Any time field 420-DK is populated by the pharmacy, field 354-NX (SCC Count) must also be populated, to inform the third-party payer as to the exact number of SCCs being utilized.

How many SCCs are there?
There are over 50 SCCs, defined and published by the National Council for Prescription Drug Programs (NCPDP). A complete list can be found on the External Codes List on the NCPDP member-only web portal.

Gain exclusive access to a list of the most common codes utilized in pharmacy billing along with their definitions here.

Reimbursement
When a prescription claim is billed incorrectly, it can result in reimbursement that is lower than the contracted amount and can create reduced third-party reimbursement and revenue leakage. Contracts with payers hold both the payer and the pharmacy accountable for the obligations defined within them. The pharmacy must follow pharmacy billing compliance standards, coding protocols, and claim submission rules to receive the reimbursement outlined in those contracts, and the payer must reimburse at the contracted rate when claim submission rules are followed accurately.

Dispensing a prescription may seem straightforward, but pharmacy billing and reimbursement workflows can be complex and the pharmacy must ensure it codes the claim accurately in order to receive the correct reimbursement. For example, if the pharmacy physically dispenses a prescription multiple times but bills the payer one time for all dispenses of that prescription, the pharmacy may be eligible to receive multiple dispensing fees from the payer. However, the pharmacy must utilize the correct SCC to communicate this to the payer in order to receive the appropriate payment. Download the SCC Reference Chart to see the correct code to use for this example.

Audit Impact
Claim audits can negatively impact the pharmacy financially and increase operational costs, audit risk exposure, and administrative burden. Reimbursement is dependent on accurate claim submission and clean claims processing. If a claim is reimbursed at the contracted rate, but later determined by an audit to have included errors, the reimbursement the pharmacy already received can be recouped or taken back by the payer. For example, if a pharmacy uses SCC 05 (therapy change) to override a refill-too-soon rejection but does not include documentation to support the therapy change, the payer can recoup the amount already reimbursed to the pharmacy.

In addition to payer audits, pharmacies can be audited by government agencies to ensure they are abiding by federal regulations pertaining to skilled nursing facility and other LTC billing practices. An example would be using short-cycle exclusion codes such as SCC 21 or SCC 36 on claims that should have been short-cycled. If errors are discovered by these agencies, the pharmacy is subject to take backs, fines and potential closures.

Workflow Impact and Rejections
Understanding SCC usage requirements and properly implementing SCCs ensure claims are processed accurately the first time. Rejections caused by billing errors or incorrect or blank SCCs cause re-work and significant disruptions to a pharmacy’s workflow and also can delay the delivery of patients’ medications. Using SCCs help to streamline the workflow and save time and money by reducing labor and transaction fees that are accrued each time a claim is submitted. Claim submission accuracy also allows the pharmacy to focus on providing the best patient care and support.

SCCs and pharmacy billing are complex, but it is possible to manage them efficiently.

At Net-Rx ^TM , there are several solutions that help pharmacies identify the appropriate SCCs to use and support better billing outcomes:

• Analyst Support: Guidance from pharmacy reimbursement-trained analysts can help ensure the pharmacy is following best practices related to SCC usage.
• Script-IQ: A pre-edit solution including a configurable rule to alert the pharmacy to SCC discrepancies within short-cycle related claims before they are submitted to the third-party payer, improving claims accuracy and reducing adjudication errors.
• EditRx: The SCC report provides visibility into all claims submitted with SCCs. This supports pharmacy data management and reimbursement optimization by helping confirm that SCCs, quantities, and day supply values are being used correctly. With claim details readily available, corrections can be made where appropriate, documentation can be confirmed, and follow-up can be performed on refills as necessary.
• Metric-Rx: Within the business analysis tool, additional ad hoc reports allow users to search adjudicated claims data using specific criteria, such as SCC, through advanced pharmacy business intelligence and analytics tools. The goal is to support accurate billing, proper reimbursement, and efficient pharmacy workflow.

SCCs are an integral part of pharmacy billing, revenue cycle management, and workflow optimization. Knowing what they are, when to use them, and how to use them accurately may have a positive impact on a pharmacy’s bottom line and on financial performance, reimbursement outcomes, and profitability. With automated solutions from Net-Rx, pharmacies can work toward maximum reimbursement, workflow efficiency, and reduced audit risk. Be sure to download our SCC Reference Chart and contact Net-Rx for a demo on our solutions today.

Reference

1. https://ncpdp.org

Authors

Jennifer Gordon  Product Lead Joined Net-Rx in December 2013

Jennifer Gordon is intimately involved with bringing new technology products and services to the marketplace to provide solutions for pharmacies’ business needs. Her philosophy is to learn as much as she can to improve pharmacies’ business journey and better the industry’s health. Jennifer’s career in pharmacy began 2009 as a CPhT technician. Her love of pharmacy operations drove her to work hard to ensure the pharmacy ran smoothly and patient care was held to the highest quality standard. To further her education, Jennifer earned her Associates of Science degree in 2012 and thrived on the knowledge and experience she gathered throughout the healthcare industry. She then acquired her billing and reimbursement certification from the Pharmacy Technician Certification Board. Jennifer began her career at MHA as an Account Analyst responsible for managing accounts across the nation by providing guidance, education, and training to ensure pharmacies were operating efficiently to receive maximum reimbursement. Her abilities and successes were recognized and rewarded in her promotions to Team Lead and then to Product Lead, where she currently manages all Net-Rx portfolio products.

Wanda Lund  Product Lead Joined Net-Rx in 2009

With over 20 years of pharmacy experience, Wanda’s extensive industry knowledge includes retail and long-term care pharmacy pricing, contracting, billing, reimbursement, analytics, and structuring technology platforms. As Product Lead, her skills play an essential role in her daily responsibilities to enhance and grow the Net-Rx portfolio of services and solutions. Wanda is passionate about helping pharmacies maximize their business growth, allowing the pharmacy to focus on patient care. She supports various positions from dedicated analysts, developers, product owners, and operations managers to ensure customer satisfaction and build trusting relationships with our customers, partners, and associates. Wanda lives in Central Washington and enjoys the region’s snow in the winter and heat in the summer. She is an avid animal lover, and enjoys watching football, camping, and spending time with family.