Are You Utilizing DAW Codes Correctly? Updated Tool Available!

In the September Newsline article, NCPDP Updates DAW Code Definitions to Encompass Interchangeable Biosimilars, you can find updated guidance for the utilization of Dispense As Written (DAW) codes with biologic drug products based on the August 2022 version of NCPDP Telecommunications Version D and Above Questions, Answers and Editorial Updates, set to go into effect October 15, 2023. Though the definitions were revised to include biologic drug products, the guidance holds true for all legend drugs. Now is the time to refamiliarize yourself with the best-practices for using DAW codes and to review DAW code audit pitfalls most seen by PAAS National® analysts. Additionally, the DAW Codes Explained tool has undergone a major overhaul to now include helpful tables, expanded DAW code definitions, PAAS tips, billing examples, and additional resources all in one place.

DAW Code Best Practices

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  • Single-source drug products (a brand or reference product with no available equivalent in the marketplace) should always be billed with DAW 0.
  • Prescriptions written for a brand or reference product (which has a generic, authorized generic, interchangeable biosimilar, or “unbranded biologic” available in the marketplace) with Dispense as Written or Brand Necessary indicated in a manner compliant with state regulation should be billed with DAW 1.
  • According to NCPDP guidance, when the prescriber allows for generic substitution, but the brand or reference product is billed for a multi-source drug, DAW 0 would be inappropriate. Most payers have historically accepted DAW 0, but it may have affected reimbursement rates. Instead, the brand or reference product would be more accurately billed utilizing DAW 2 through 9:
    • DAW 2 if the patient prefers the brand or reference product.
    • DAW 3 if the pharmacist believes the brand or reference product should be dispensed (this is rarely used).
    • DAW 4 if the generic or interchangeable biosimilar is not stocked in the pharmacy.
    • DAW 5 if the pharmacist is utilizing the brand or reference product as the generic or interchangeable biosimilar entity (e.g., using a brand name such as Amoxil® as your generic amoxicillin).
    • DAW 6 if indicated by plan adjudication logic.
    • DAW 7 if state law or regulation prohibits substitution of a brand or reference product despite an equivalent being available in the marketplace.
    • DAW 8 when the generic or interchangeable biosimilar is not available in the marketplace.
    • DAW 9 when the plan prefers the brand or reference product.

DAW Code Audit Pitfalls to Avoid

  • Be sure substitutions are made between appropriate drug products. If you are unsure if two products are equivalent, utilize the FDA Orange Book (non-biologic drug products) or FDA Purple Book (biologic drug products) to verify.
  • Check your state regulations or with your state Board of Pharmacy if you are unsure of the proper DAW 1 documentation requirements. Auditors will utilize state regulations to recoup when possible and law violations are difficult to appeal.
  • Watch for electronic prescriptions submitted with erroneous DAW 1 codes. Billing a single-source product with a DAW other than zero is a red flag. It is best to avoid this pitfall because it could be just what the PBM needs to open an audit at your location. For more details, refer to the August 2022 Newsline, Erroneous DAW-1 Electronic Prescriptions.
  • Prescriptions billed with a DAW 2 require documentation that the patient requested brand name. These notes should include the date of the request to meet certain PBM requirements.
  • Be sure to keep documentation when DAW 6 is required per the plan.
  • When billing DAW 8, keep proof that the generic, “unbranded biologic”, or interchangeable biosimilar was unavailable in the marketplace. This could be an invoice or a screen print of your wholesaler’s website. Additional guidance is in the January 2022 Newsline article, Be Proactive on DAW 8 Claims and Prevent Recoupments.

PAAS Tips:

  • Review the newly updated DAW Codes Explained tool found on the PAAS Member Portal
  • Regularly perform a self-audit of any DAW code other than zero to check for appropriate documentation as per the guidance in the May 2021 Newsline article, Self-Audit Series #4: DAW Codes
  • DAW codes 3, 4, 7, and 8 should be monitored specifically to watch for below cost reimbursement
  • Consider transitioning claims for multisource drug products from DAW 0 to DAW 9 when the plan prefers brand name

If you are billing the brand name or reference drug product when equivalent products are available in the marketplace, think about why you are doing so, utilize the correct DAW code, and ensure appropriate documentation exists to support the code utilized.

Sara Hathaway, PharmD