PR-90: Ingredient Cost Adjustment
The patient owes the drug cost differential — usually for a non-formulary or brand-name drug. Bill the patient and discuss lower-cost alternatives for future prescriptions.
What Does PR-90 Mean?
PR-90 assigns the ingredient cost differential to the patient. This typically occurs when a non-formulary or brand-name drug was dispensed and the patient is responsible for the cost difference between the dispensed drug and the lower-cost formulary alternative. The patient's copay tier may also drive a PR-90 adjustment.
CARC 90 appears on remittances when the payer adjusts the ingredient cost of a pharmaceutical claim. This means the payer recalculated what it will pay for the drug itself — separate from dispensing fees or administration charges — and the adjusted amount differs from what the provider billed.
Drug ingredient cost adjustments are driven by the payer's contracted pricing methodology. Medicare and many commercial payers reimburse drugs based on Average Sales Price (ASP) plus a margin, Average Wholesale Price (AWP) minus a discount, or Maximum Allowable Cost (MAC) for generics. When the provider bills at acquisition cost or usual and customary pricing and that amount exceeds the payer's contracted rate, CARC 90 captures the difference.
The code most commonly appears with Group Code CO, making the ingredient cost gap a contractual write-off for the provider. However, PR-90 is also significant — it appears when a patient is responsible for the cost differential between a dispensed drug and a lower-cost formulary alternative. A patient who receives a brand-name drug when a generic is available may see PR-90 for the cost difference.
OA-90 surfaces in coordination of benefits situations. Regardless of group code, the first step in resolving CARC 90 is verifying that the correct HCPCS code and NDC were submitted, since a wrong drug code can trigger an incorrect ingredient cost calculation. After confirming coding accuracy, compare the billed amount against the payer's known pricing methodology to determine if the adjustment is correct.
Common Causes
| Cause | Frequency |
|---|---|
| Non-formulary drug cost differential The patient requested or the provider prescribed a brand-name or non-formulary drug, and the patient is responsible for the cost difference between the dispensed drug and the formulary alternative | Most Common |
| Drug copay tier differential The drug falls into a higher copay tier on the patient's formulary, and the ingredient cost adjustment reflects the patient's increased cost-sharing for that tier | Common |
How to Resolve
Verify drug coding (HCPCS/NDC) and pricing against the payer's contracted ingredient cost methodology, then correct errors and resubmit or post the adjustment.
- Verify the formulary cost differential Confirm the patient's formulary tier structure and the cost difference between the dispensed drug and the formulary alternative.
- Post to patient ledger Transfer the ingredient cost differential to the patient's balance. Generate a statement that explains the drug, the formulary alternative, and the cost difference.
- Notify the patient Contact the patient to explain the cost differential and discuss whether a formulary-preferred drug could be prescribed for future refills or treatments.
This adjustment is correct per the patient's benefit plan. The amount is the patient's financial responsibility. Collect from the patient rather than appealing.
How to Prevent PR-90
- Check the patient's formulary before prescribing to identify covered alternatives at lower copay tiers
- Notify patients in advance when a prescribed drug is non-formulary and explain the potential out-of-pocket cost difference
- Obtain formulary exception approvals proactively for clinically necessary non-formulary drugs
General Prevention
- Check the patient's formulary before prescribing to identify lower-cost alternatives that achieve the same therapeutic outcome
- Notify patients in advance when a prescribed drug is non-formulary and explain the potential cost differential
- Obtain formulary exception approvals before administering non-formulary drugs when clinically appropriate
Also Filed As
The same CARC 90 may appear with different Group Codes: