TennCare & CoverKids Diaper Benefit: FAQs for Pharmacies

When did the program begin?

• The diaper benefit began August 7, 2024.

Who is eligible for the benefit?

• TennCare and CoverKids members under age 2 are eligible for the benefit.
• Optum Rx member ID cards will indicate: RxBIN: 001553 and PCN: TNM (TennCare) or CKDS (CoverKids).
• For TennCare & CoverKids members over 3 years of age, diapers and incontinence products for medical conditions that prohibit someone from controlling their bowels or bladder can be billed through DME providers on the member’s medical benefits.

Are caregivers able to pick up diapers before the birth of the baby?

• No, the baby (member) becomes eligible for diapers after birth. However, please refer to the Newborn Override section of the Billing Guide for instructions to process claims using the parent’s Optum Rx ID prior to the baby receiving their own Optum Rx ID/SSN.

What is covered?

• Disposable diapers in a variety of brands and sizes are included.
• The covered UPC list is posted on the website and will be updated with new UPCs as they are added
• Claims for non-covered UPCs will Reject 70—Product Not Covered.
  • Prior authorizations for non-covered UPCs will not be allowed.
• Pharmacies may process claims utilizing the Generic Diaper UPCs as described in the Generic Diaper UPC FAQs posted on the website.

What brands of diapers will be included?

• Upon initial launch diapers from multiple brands including Huggies, First Quality (Cuties), and Pampers will be included. Not all sizes or product lines/styles will be covered.
• During the early phases of the program, the list will be updated frequently. Please check back often for updates to the list posted on the website for pharmacists.

How many diapers are covered?

• Members can receive up to 100 diapers per 30 days with a maximum of 200 diapers per 60 days, to allow for package sizes over 100 diapers.
  • Because of the quantity/days supply limits on the program, once the member has reached their benefit limit for the month, additional claims will not process until 85% of the last fill’s days supply has passed.
• The member’s caregiver may choose to pick up smaller packages when trying a new brand or style, or they can choose to pick up the maximum allowed by the benefit. Caregivers should consider how soon the child may need to move to the next size.

Can more than one kind of diaper be picked up at the same time?

• No. Only one UPC of diapers will be covered at a time for members, but they can choose a different product/size for the next fill.

What is the cost for the member?

• Diapers will have $0 copay and will not count against monthly prescription limits.

What happens if the parent/guardian decides the diapers they’ve picked up do not work for their child?

• Diapers obtained through the program are not eligible for return to the pharmacy or to any other retailer.
• The parent/guardian may request a different product, brand, or size when the next fill is due. Pharmacies should consider offering smaller quantities to caregivers who are unsure if a diaper product is suitable for the child.

What are the requirements for participation?

• Pharmacies will need to have an active TN Medicaid ID, be enrolled in the Optum Rx/TennCare Pharmacy Network, and are responsible for purchasing and stocking diapers that are covered under the program.
• Pharmacies located in Tennessee will need to work with their software vendor to ensure they are able to submit pharmacy claims with sales tax. Please refer to the Diaper Billing Guide for guidance on sales tax fields.

Are pharmacies required to participate in the program?

• No, participation in the program is not mandatory for TennCare pharmacy Network pharmacies.

Is a prescription required?

• No, a prescription will not be required.
• Diaper claims should be processed using a pharmacy generated order with the pharmacy or pharmacist’s NPI in the Prescriber field. In the case where the pharmacy or pharmacist’s NPI is used, Submission Clarification Code (SCC) 42 must be submitted to receive a paid claim.
• A child’s prescriber (e.g., pediatrician, neonatologist, nurse practitioner, physician’s assistant, other prescriber) may choose to send a prescription to the pharmacy for diapers, but this is not required for the child to receive diapers through the program. Claims for diapers should not be processed under a prescriber’s NPI unless they have provided a patient specific order for diapers to the pharmacy.
• While claims for diapers DO NOT require a prescription from a licensed prescriber, the claims will still process through the pharmacy’s pharmacy management system/point-of-sale system like other pharmacy claims. The claims will likely be assigned a “prescription number” once entered into the pharmacy’s system for processing.
• Pharmacy generated orders may be documented on the optional Diaper Request Form posted on the website or the pharmacy may choose to document the order using another method.

Where can pharmacies purchase diapers?

• Pharmacies may purchase diapers from their pharmaceutical wholesaler or from other retailers (e.g., big box stores, wholesale clubs, online retailers).
• Cases ordered from a retailer or warehouse may list their own product ID number instead of the UPC.
• Please verify the package UPC when sourcing diapers.
• Pharmacies may work with their vendors to increase access to products and for pricing questions.
• Pharmacies purchasing diapers from other retailers can pursue obtaining a resale certificate to buy diapers from other retailers without paying sales tax, since tax will be paid by TennCare on the claims.
• Pharmacies should maintain proof-of-purchase for diapers (receipts and/or invoices) for the length of time indicated in their Network Agreement.

How do we know which diapers to order for members?

• Pharmacies should purchase diapers listed on the covered UPC list posted on the website for pharmacists. Pharmacies may also utilize non-covered diaper UPCs to fulfill diaper orders as explained in the Generic Diaper UPC FAQ document.
• The list will be subject to change at any time. The pharmacy is responsible for checking for updates to the covered UPC list.
• Retail Packages have a 12-digit UPC code that is then converted into 11-digits for pharmacy processing. We follow the Product Service Identifier Implementation Standard for down converting 12-digit UPC barcodes to 11-digits. Please reference Covered UPC list for more information on UPC conversions.

Does my pharmacy have to carry all the products on the Covered UPC list?

• No. Pharmacies may choose to order some or all the products available on the covered UPC list. For example, you may choose to only stock one brand’s products for ease of selection and inventory management.

My pharmacy can’t buy diapers in boxes of 100. How do we process claims?

• Pharmacies should submit full package quantities of diaper UPCs up to the maximum of 200 diapers/60-day supply. This allows for pharmacies to submit packages > 100 diapers.
• The minimum dispensable quantity for each UPC is listed on the UPC list under the “package size” column for your reference.
• Diaper claims should be processed like OTC products on TennCare/CoverKids, where multiples of the full package quantity are used.
• Pharmacies should not break packages of diapers unless the product is a case with multiple packages inside, and they are labeled for individual sale by the manufacturer.
• Diapers must be dispensed in unopened multiples of the “Package Size” listed for the covered UPC. When reviewing the covered UPC list, if the package size and the case size are the same, then you MUST dispense the entire case. However, if the package size is a lower quantity (e.g., 42) than the case quantity (e.g., 168), then the pharmacy may dispense unopened packages of 42 from the case.
  • Please review the next section for more information about barcodes/UPCs and packaging.

My pharmacy has been unable to find Cuties diapers that are on the Covered UPC list. What can we do?

• The outer package for Cuties diapers may include the UCC (warehouse unit, 14 digits), and the inner package includes the UPC (sellable unit, 12 digits), depending on the case/package purchased.
• The UCC is based on the UPC. The core numbers are the same; however, the beginning and ending numbers are different.
• The additional “10” at the start of a UCC identifies it as the case or warehousing unit. The last number in both the UCC and UPC is the check digit, an algorithm calculated based on the rest of the number.
• For the core numbers, the first five indicate the manufacturer ID. The second five numbers indicate the product code, similar to how an NDC number tells you manufacturer, product, and package size.
• The UPC used for processing diaper claims is 11 digits long. This number is created by using the 12-digit UPC, removing the first and last digits, and adding a zero (0) to the 6th digit.
• Example:

How should caregivers request diapers for a member?

• Pharmacies can choose to utilize the Diaper Request Form posted on the website to collect member demographics, parent/guardian information, product requests, and signature of request. The use of the Diaper Request Form is optional. Each pharmacy should develop their own process and procedure for obtaining requests for diapers.
• Pharmacies may choose to utilize the Diaper Request Form as their “hardcopy.”
• Pharmacies must obtain proof of receipt by the member/caregiver upon pickup or delivery of diapers.

How are claims for diapers processed?

• Covered diaper UPCs will be available in Medi-Span to sync or add to the pharmacy’s system.
• Pharmacies may need to manually load Generic Diaper UPCs into their pharmacy software before processing claims utilizing the Generic Diaper UPCs. Please reference the Generic Diaper UPC FAQ for the list of UPCs.
• The pharmacy should bill the claim using the pharmacy or pharmacist’s NPI number in the prescriber field. A prescriber NPI from a MD, DO, NP, or PA may be used only if the prescriber has provided a patient specific order.
  • If the pharmacy or pharmacist’s NPI number is used in the prescriber field, the pharmacy must also submit Submission Clarification Code = 42 for the claim to pay. The claim may reject with “Reject 71—Prescriber is Not Covered” if the SCC code is not submitted.
• Pharmacies should enter Origin Code = 5 for pharmacy generated orders.
• Claims should be processed for full package quantities. Claims may be processed in multiples of the package quantity for that UPC. Packages of diapers should not be broken.
• Claims will process when the days supply is calculated using 3.3333 diapers per day. If the quantity divided by days supply is not a full number, round up to the nearest whole number to receive a paid claim.
• For pharmacies located in Tennessee, sales tax should be submitted on diaper claims following instructions on the Diaper Billing Guide. The sales tax amount will show in the paid claim response.
• The number of refills added for pharmacy generated diaper orders is up to the pharmacy. Some pharmacy systems may not allow changing diaper sizes or package quantities between fills, so this will need to be considered when entering refills.
  • For example, the pharmacy may choose to enter “0” so that a new order is entered for each fill of diapers, or the pharmacy may add “99” or “PRN” refills to allow the same order to be used multiple times.
• Please reference the Diaper Billing Guide for additional details on claims processing.
• The Diaper Webinar for Pharmacies Presentation slides posted on the website have examples of diaper claims.
• Information on billing Generic Diaper UPCs was presented during the webinar on February 11, 2025.

How are claims processed for diapers when a newborn does not have their own Optum Rx ID or Social Security number yet?

• The claim can be processed using the mother or father’s Optum Rx ID or Social Security Number until the newborn receives their own ID if the parent has TennCare or CoverKids coverage.
• Please follow the normal procedure outlined in the Provider Manual for newborns without Optum Rx IDs/Social Security Numbers. Diapers will not count towards the parent’s monthly prescription limit.
• Pharmacies can enter a newborn override without having to call Optum Rx Customer Service by entering: PA Type Code = 8 and PA Number = 55555555555 (eleven fives).
• The override entered by the pharmacy can be used twice. If it is needed again, pharmacies should call Optum Rx Customer Service. When a set of multiples (e.g., twins, triplets, etc.) needs to utilize the newborn override, the pharmacy can use the override above for one member’s diapers and then call Optum Rx Customer Service for additional members.
  • For example, for Baby A—pharmacy uses PA Type Code = 8, PA number = 55555555555. For Baby B (and beyond), pharmacy calls Optum Rx Customer Service for additional override.
    • If the member(s) need diapers again before receiving their Optum Rx ID number, follow the procedure above a second time.
• Pharmacies should not use the Newborn Override to process diaper claims for children ages 2 years and older. These claims will be subject to audit and recoupment

How much will my pharmacy be reimbursed for diaper claims?

• Each brand of diapers will be assigned a brand and diaper size specific MAC rate that will be calculated per diaper unit.
• Each claim will have sales tax calculated based on that brand and diaper size specific MAC rate and quantity dispensed.
• The pharmacy will be paid an Admin Fee equal to $3 per 100 diapers ($0.03/diaper).
• The pharmacy will not receive their assigned Professional Dispensing Fee (PDF) on diaper claims.
• Ingredient Cost Paid = MAC Rate per diaper x # of diapers
• Total Reimbursement = (Ingredient Cost Paid) + (% sales tax x total ingredient cost paid) + (admin fee x # of diapers)
• The MAC rates can be found in the billing guide posted on the website.

Why is there no dispensing fee paid on diaper claims?

• The professional dispensing fee (PDF) compensates pharmacists for the clinical expertise needed to dispense prescriptions. Since dispensing diapers does not require this level of clinical knowledge, an admin fee is provided instead.
• The Admin Fee will be provided in place of the pharmacy’s set Professional Dispensing Fee (PDF).
• The Admin Fee will be paid per diaper and will be set to $3 (per 100 diapers) ($0.03/per diaper) with a max of $6 for 200 diapers.

Why is there sales tax paid on diaper claims?

• Diapers are not considered a prescription or OTC drug and are taxable in the State of Tennessee.
• For pharmacies in Tennessee:
  • Pharmacies must populate the appropriate sales tax fields, as described in the Diaper Billing Guide, on their claim submission for tax to be paid correctly.
  • Pharmacies will then follow their normal procedures for collecting/submitting sales tax to the state.
  • Sales tax paid will show on the pharmacy’s remittance from Optum Rx.
  • Pharmacies should submit claims with these fields populated:
    • Percentage Sales Tax Amount Submitted (NCPDP field 482-GE)
    • Percentage Sales Tax Rate Submitted (NCPDP field 483-HE) = 10% (or their local rate)
    • Percentage Sales Tax Basis Submitted (NCPDP field 484-JE)
  • Due to the varying sales tax rates across the state, by submitting 10% the claim will adjudicate with the appropriate local amount. Submitting less than the pharmacy’s local tax rate will result in under collection of sales tax. The pharmacy will be asked to resubmit the claim using the proper tax rate.
  • Pharmacies will then follow their normal procedures for collecting/submitting sales tax to the state.
  • Sales tax paid will show on the pharmacy’s remittance from Optum Rx.

What do pharmacies outside of Tennessee do about sales tax on diaper claims?

• Pharmacies located outside of Tennessee should follow their state’s laws regarding sales tax on pharmacy claims.

When will my pharmacy be paid for the diapers dispensed?

• Diaper claims will be reimbursed on the same schedule as other pharmacy claims.

Can MAC rates for diapers be appealed? How?

• Yes, pharmacies can submit rate review requests to TennCare’s pricing vendor, Mercer.
  • Mercer’s website
  • Mercer’s contact information:
    • Phone: 844-294-9982
    • Fax: 612-642-8931
    • Email: mercerrxpassage@mercer.com
• There are two options for submitting diaper MAC inquires:
  • Pharmacies can download the rate inquiry paper form and email it to Mercer with a copy of their invoice attached.
  • Pharmacies can submit through the website by selecting “Submit an Inquiry” and choosing “General Inquiry” under the drop-down menu.
  • MAC rate inquiries are only considered for Covered UPCs and Non-Covered (Generic) UPCs from the manufacturers from the list below. MAC rate inquiries for products outside of the Covered UPC list and the manufacturer list below will not be considered for rate adjustment at this time.
    • Comforts (Kroger)
    • Kirkland Signature (Costco)
    • Little Journey (Aldi)
    • Member’s Mark (Sam’s Club)
    • Parent’s Choice (Walmart)
  • Examples of when pharmacies’ inquiries are reviewable by Mercer can be found in the table:

How can fraud, waste, and abuse be prevented?

• TennCare has provided an OPTIONAL diaper request forms that pharmacies can use to collect patient demographics, product requests, parent/guardian attestation of understanding of program rules, and parent/guardian signature of request. A PDF version of the form is available on the website.
• Signature upon receipt/delivery of diapers is required at point-of-sale and should be maintained by the pharmacy in case of audit.
• Documentation of receipt of diapers is required for each order dispensed to a TennCare or CoverKids Member. Documentation must include, at a minimum, the order or prescription number, member name, date billed, date received, and a signature of the person receiving the diaper order (i.e., the member, member’s representative, or a representative of the facility in which the patient resides). When diapers have been mailed, shipped, or delivered, the pharmacy shall require a signature confirmation documenting proof of receipt. The signature logs are required to be provided for the auditor to review if requested.
• Pharmacies should maintain copies of invoices and receipts for purchase of diapers according to their Network Agreement with Optum Rx.
• Diapers obtained through the program are not eligible for resale, return, or exchange for cash or store credit.
• Pharmacies should take steps to prevent fraud, waste, and abuse. It is recommended for pharmacies to place their pharmacy label over the barcode on the package and/or mark through the barcode with a permanent marker to disallow scanning of the barcode for product returns for cash/gift cards.

Are diaper claims subject to audit?

• Yes. Pharmacies should maintain proof of receipt of diapers and proof of purchase of the diapers. Pharmacies should keep records of their purchases on file for audit purposes.

When a pharmacy purchases diapers from another retailer, the pharmacy should consider using a sales tax resale certificate to avoid paying sales tax.

• Diaper orders processed and covered under the TennCare Diaper Program are not considered a drug or device and are not intended to be billed for medical use.

What constitutes a “proof of purchase”?

• Pharmacies should maintain invoices or receipts from wholesalers or other retailers from where diapers were acquired.

How should pharmacy generated orders for diapers be maintained?

• While diaper orders are not considered a drug or device for medical use, pharmacies may follow their standard procedures for OTC products processed as pharmacy claims. For example, pharmacy generated diaper orders can be filed with other hardcopy prescription files.

How long must diaper orders be kept for record purposes?

• Pharmacies should follow their standard operating procedures for maintaining records. Pharmacies should maintain records for TennCare according to their Network Agreement.

What format must the diaper order be kept in?

• Pharmacies may choose which format to house their house pharmacy generated orders.
  • Examples may include pharmacy prescription order blanks, scanned or electronic requests for diapers from members, and the optional diaper request form (paper copy or electronic)

What are some options for keeping records of diaper orders?

• Pharmacies may maintain electronic or paper copies of pharmacy generated diaper orders used to bill diaper claims.

Are automatic refills allowed on diaper claims?

• Automatic refills are not allowed. All diaper refills shall be initiated by a request from the physician, member, or other person acting as an agent of the member, i.e., family member.

What is required for proof of receipt?

• Documentation of receipt of diapers is required for each order dispensed to a TennCare or CoverKids Member. Documentation must include, at a minimum, the order or prescription number, member name, date billed, date received, and a signature of the person receiving the diaper order (i.e., the member, member’s representative, or a representative of the facility in which the patient resides). When diapers have been mailed, shipped, or delivered, the pharmacy shall require a signature confirmation documenting proof of receipt. The signature logs are required to be provided for the auditor to review if requested.

Is there anything else required when the pharmacy uses the Generic Diaper UPC?

• Yes. The pharmacy shall document the UPC of the actual product dispensed. This may be done electronically (e.g., in the member’s pharmacy profile, or on an electronic hard copy) or on paper hardcopies maintained by the pharmacy. This information should be retrievable by the pharmacy to document the actual product received by the member and to match purchasing records in case of audit.

What other resources are available for pharmacies interested in the program?

• The TennCare diaper website houses resources for pharmacies including:
  • FAQs for Pharmacies
  • Diaper Benefit Flyer
  • Flyer for Pharmacies (Pharmacies may add their logo to this flyer for display in their store.)
  • Optional Diaper Request Form
  • Diaper Billing Guide
  • UPC List
  • Generic Diaper UPC FAQs
  • Slides from webinars presented about the Diaper Benefit program

How can we let members know that our pharmacy is participating in the program?

• Pharmacies may have their store added to the Diaper Pharmacy Locator list by completing the survey.
• Corporate pharmacies wishing to add multiple locations to the list may email the Provider Liaison Pharmacists team at TNRxEducation@optum.com with a list of store names and NPI numbers.

My pharmacy has decided to remove our location from the Diaper Pharmacy Locator. Who do we contact?

• Visit the survey link and indicate “Please remove my pharmacy from the highlighted diaper provider list on the Optum Rx/TennCare website.”

Are there any resources our pharmacy can use for marketing the program?

• There is a pharmacy flyer posted on the website that can be modified to include the pharmacy’s logo.
• A communications toolkit with images available for pharmacy use will be available after August 7th. The communications toolkit will have sample messages for social media, visuals, content for newsletters/emails, and a flyer for members. Please feel free to use any of these tools to share information about the diaper benefit.

Who should the pharmacy contact with questions?

• Pharmacies may call the Optum Rx/TennCare Customer Service line at 866-434-5520.
• Pharmacies may also email the Optum Rx Provider Liaison Pharmacists at TNRxEducation@optum.com