The Pharmacy The Pharmacy Technician 4ETechnician 4E

Chapter 14Chapter 14Financial IssuesFinancial Issues

Chapter OutlineChapter Outline

Financial IssuesFinancial Issues Third Party ProgramsThird Party Programs Online AdjudicationOnline Adjudication Rejected ClaimsRejected Claims Other Billing ProceduresOther Billing Procedures

Financial IssuesFinancial Issues

Third party program Third party program Another party (Insurance company or government) Another party (Insurance company or government)

besides the patient that pays for some or all of the besides the patient that pays for some or all of the cost of the medication.cost of the medication.

Pharmacy benefit managersPharmacy benefit managers Companies that administer drug benefit programs. Companies that administer drug benefit programs.

E.g. Advance PCS, Caremax, Medco Health.E.g. Advance PCS, Caremax, Medco Health. Online adjudication Online adjudication

Processing of prescription coverage through the Processing of prescription coverage through the communication of the pharmacy computer with communication of the pharmacy computer with the third party computer.the third party computer.

Financial IssuesFinancial Issues Co-insuranceCo-insurance

An agreement for cost sharing between the An agreement for cost sharing between the insurer and the patient. One aspect of insurer and the patient. One aspect of coinsurance is co-pay. coinsurance is co-pay.

Co-pay Co-pay The portion of the price of medication that the The portion of the price of medication that the

patient is required to pay. patient is required to pay. The amount determined by the insurer is The amount determined by the insurer is NOT NOT

equal to the retail priceequal to the retail price normally charged. It is normally charged. It is determined by a formula described in a determined by a formula described in a contract between the insurer and the contract between the insurer and the pharmacypharmacy. .

Financial IssuesFinancial Issues

Dual Co-pay Dual Co-pay Copy that have two prices: one for generic and Copy that have two prices: one for generic and

one for brand medications. one for brand medications. DeductableDeductable

A set amount that must be paid by the patient for A set amount that must be paid by the patient for each benefit period before the insurer will cover each benefit period before the insurer will cover additional expenses. additional expenses.

Maximum allowable cost (MAC) Maximum allowable cost (MAC) The maximum price per tablet an insurance The maximum price per tablet an insurance

company will pay for a given product. company will pay for a given product.

Financial IssuesFinancial Issues

Usual and Customary (U&C) Usual and Customary (U&C) The maximum amount of payment for a given The maximum amount of payment for a given

prescription as determined by the insurer as a prescription as determined by the insurer as a reasonable price. reasonable price.

Also referred as usual, customary and reasonable Also referred as usual, customary and reasonable (UCR)(UCR)

Participating pharmacieParticipating pharmacie A Pharmacy that signs a contract with PBM before A Pharmacy that signs a contract with PBM before

patients can get their prescription filled at that patients can get their prescription filled at that particular pharmacy.particular pharmacy.

Third Party Programs OverviewThird Party Programs Overview

I.I. Private Health InsurancePrivate Health Insurance

II.II. Managed Care ProgramsManaged Care Programs

III.III. Public Health InsurancePublic Health Insurance

IV.IV. Other ProgramsOther Programs

Private Health InsurancePrivate Health Insurance A health plan provided through an employer or union A health plan provided through an employer or union

or purchased by an individual from a private health or purchased by an individual from a private health insurance company.insurance company.

DeductibleDeductible A set amount that must be paid by the patient for A set amount that must be paid by the patient for

each benefit period before the insurer will cover each benefit period before the insurer will cover additional expenses. additional expenses.

Prescription drug benefit cards Prescription drug benefit cards Cards that contain third party billing informant for Cards that contain third party billing informant for

prescription drug purchases.prescription drug purchases.

Managed Care ProgramsManaged Care Programs Health Maintenance Organizations (HMOs) Health Maintenance Organizations (HMOs)

Made of a network of providers who are either Made of a network of providers who are either employers or have a signed contracts to abide by employers or have a signed contracts to abide by the polices of the HMO. the polices of the HMO.

Usually Usually WILL WILL NOTNOT PAY PAY expenses incurred expenses incurred outside outside their participating network. their participating network.

Preferred Provider Organizations (PPOs)Preferred Provider Organizations (PPOs) A network of providers contracted by the insurer. A network of providers contracted by the insurer. PPOs are the most flexible for members in choosing PPOs are the most flexible for members in choosing

their healthcare providers outside the network but their healthcare providers outside the network but cost more in premiums.cost more in premiums.

Managed Care ProgramsManaged Care Programs

Point-of-Service Programs (POS) Point-of-Service Programs (POS) A network of providers contracted by the insurer.A network of providers contracted by the insurer. Patients enrolled in a POS choose a primary care Patients enrolled in a POS choose a primary care

physician (PCP).physician (PCP). If the patients need care outside the network, the If the patients need care outside the network, the

PCP has to PCP has to submit a REFERRAL submit a REFERRAL for such care. for such care. POS usually pay partial expenses.POS usually pay partial expenses.

They all require generic substitutions except PPOsThey all require generic substitutions except PPOs

Public Health InsurancePublic Health Insurance MediMedicare care

A federal program providing health care to people A federal program providing health care to people with certain disabilities or who are over age 65.with certain disabilities or who are over age 65.

Includes basic hospital insurance, voluntary medical Includes basic hospital insurance, voluntary medical insurance, and voluntary prescription drug insurance.insurance, and voluntary prescription drug insurance.

Medicare Medicare Part A Part A Covers inpatient hospital expenses and some hospice Covers inpatient hospital expenses and some hospice

(end of life care) expenses. (end of life care) expenses. Medicare Medicare Part BPart B

Covers doctor’s services as well as some other Covers doctor’s services as well as some other medical services not covered by Part A.medical services not covered by Part A.

Patients who Patients who pay monthly premiums pay monthly premiums for this medical for this medical coverage are covered by Part B.coverage are covered by Part B.

MedicaidMedicaid MedicMedicaidaid

A federal-state program .A federal-state program . Usually run by Usually run by State welfare department.State welfare department. Provides health careProvides health care for the needy for the needy (or low income (or low income

individuals).individuals). Each state decides who is eligible for benefits. Each state decides who is eligible for benefits.

A prescription drug formulary A prescription drug formulary A list of drugs that are covered by Medicaid. A list of drugs that are covered by Medicaid.

ADC (Aid to Dependent Children) ADC (Aid to Dependent Children) One type of Medicaid program.One type of Medicaid program.

Prior authorization Prior authorization Required for drugs that are not on Medicaid Required for drugs that are not on Medicaid

formulary.formulary.

Other ProgramOther Program

Workers CompensationWorkers Compensation An employer compensation program for employees An employer compensation program for employees

accidentally injured on the job.accidentally injured on the job.

Patient Assistance ProgramPatient Assistance Program Manufacturer sponsored prescription drug programs for Manufacturer sponsored prescription drug programs for

the needy.the needy.

Online AdjudicationOnline Adjudication A process to determine the exact A process to determine the exact coveragecoverage for a prescription for a prescription

with the appropriate third party using the with the appropriate third party using the pharmacy computer pharmacy computer system.system.

Generally the pharmacy technician's responsibility is to obtain Generally the pharmacy technician's responsibility is to obtain the patient, prescription, and billing information. the patient, prescription, and billing information.

Steps in Online Adjudication.Steps in Online Adjudication. A patient presents a prescription and a A patient presents a prescription and a prescription drug cardprescription drug card It is entered It is entered into the pharmacy computerinto the pharmacy computer. . Billing information for the prescription is then Billing information for the prescription is then transmitted transmitted to to

a processing computer for the insurer or PBM. a processing computer for the insurer or PBM. An An online responseonline response is received in less than one minute in the is received in less than one minute in the

pharmacy.pharmacy. The claim-processing computer instantly determines the The claim-processing computer instantly determines the

dollar amount of the drug benefit and the appropriate co-pay.dollar amount of the drug benefit and the appropriate co-pay.

Online Claim InformationOnline Claim Information

Dispense As Written (DAW)Dispense As Written (DAW) referrers to dispense the referrers to dispense the medication (brand drug name) without substation with medication (brand drug name) without substation with generic drug. generic drug.

DAW IndicatorsDAW Indicators0 = No DAW.0 = No DAW.1 = DAW handwritten on the prescription by the prescriber.1 = DAW handwritten on the prescription by the prescriber.2 = Patient requested brand.2 = Patient requested brand.3 = Pharmacist selected brand.3 = Pharmacist selected brand.4 = Generic not in stock.4 = Generic not in stock.5 = Brand name dispensed but priced as generic.5 = Brand name dispensed but priced as generic.6 = N/A6 = N/A7 = Substitution not allowed; brand mandated by law.7 = Substitution not allowed; brand mandated by law.8 = Generic not available .8 = Generic not available .

Common Rejection CodeCommon Rejection Code NDC not coveredNDC not covered

Common with closed formularies. Common with closed formularies. This message comes if the drug is not paid by the insurer. This message comes if the drug is not paid by the insurer.

Refill too soonRefill too soon Most third party plans pay for a limited number days. Most third party plans pay for a limited number days.

Invalid personal codeInvalid personal code Code 01 (card holder), 02 (spouse); 03, 04, 05 etc. (each Code 01 (card holder), 02 (spouse); 03, 04, 05 etc. (each

additional dependent). additional dependent). If the spouse is given Code 01 or 03, the invalid personal If the spouse is given Code 01 or 03, the invalid personal

code will show up.code will show up.

Rejected CodeRejected Code Other Rejected claimsOther Rejected claims

Dependent exceeds Dependent exceeds age limit.age limit. Invalid Invalid birth dates.birth dates. Invalid Invalid gender.gender. PrescriberPrescriber is not a network provider. is not a network provider. Unable to connect with insurer's computer.Unable to connect with insurer's computer. Patient Patient not covered (coverage terminated).not covered (coverage terminated). RefillsRefills not covered (need to be filled by mail order not covered (need to be filled by mail order

pharmacies).pharmacies).• Most rejected claims can be Most rejected claims can be resolved over the phoneresolved over the phone by talking by talking

to a representative from the insurer company.to a representative from the insurer company.• Pharmacy techniciansPharmacy technicians usually resolve claim rejection problems. usually resolve claim rejection problems.

Billing FormsBilling Forms

A Universal claim form (UCF) A Universal claim form (UCF) A standardized form accepted by many insurer.A standardized form accepted by many insurer. Before electronic forms were available, pharmacies were Before electronic forms were available, pharmacies were

submitting UCF to claim charges. submitting UCF to claim charges. CMS-1500 (formerly HCFA 1500) CMS-1500 (formerly HCFA 1500)

The standard form used by health care providers, such as The standard form used by health care providers, such as physicians, to bill for services. physicians, to bill for services.

Used by pharmacists to bill for disease state managed Used by pharmacists to bill for disease state managed services. services.

Disease State Management ServicesDisease State Management Services In-house billingIn-house billing

Medication Therapy Management Medication Therapy Management Services (MTMS)Services (MTMS)

Approved via Medicare Part D and provides service to some Approved via Medicare Part D and provides service to some Medicare beneficiaries Medicare beneficiaries that are taking that are taking multiple medications multiple medications or or have certain diseases. have certain diseases.

Pharmacy technicians Pharmacy technicians have an important responsibility for billing have an important responsibility for billing these services and maintaining necessary documentation.these services and maintaining necessary documentation.

The CMS-1500 form The CMS-1500 form Used for billing through Used for billing through Prescription Drug Plans (PDPs).Prescription Drug Plans (PDPs). Pharmacist or pharmacy offering the services must be Pharmacist or pharmacy offering the services must be

enrolled as a provider for the patient’s PDP and have a enrolled as a provider for the patient’s PDP and have a National Provider Identifier (NPI). National Provider Identifier (NPI).

Current Procedural Terminology Codes (CPT Codes) Current Procedural Terminology Codes (CPT Codes) provide a provide a systematic way to bill for the services provided.systematic way to bill for the services provided.

Billing Third PartyBilling Third Party Medication Therapy Management Services ( MTMS)Medication Therapy Management Services ( MTMS)

Services provided to some Medicare beneficiaries who are Services provided to some Medicare beneficiaries who are enrolled in Medicare Part D and who are taking multiple enrolled in Medicare Part D and who are taking multiple medications or have certain diseases.medications or have certain diseases.

Prescription Drug Plans (PDPs) Prescription Drug Plans (PDPs) Third party programs for Medicare Part D.Third party programs for Medicare Part D.

National Provider Identifier (NPI) National Provider Identifier (NPI) The code assigned to recognized health care providers; The code assigned to recognized health care providers;

needed to bill MTMS.needed to bill MTMS. Current Procedural Terminology Codes (CPT Codes)Current Procedural Terminology Codes (CPT Codes)

Identifiers used for billing pharmacist-provided MTM Identifiers used for billing pharmacist-provided MTM Services.Services.

MTMS CPT CodesMTMS CPT Codes 99605 99605 (first-time patient),(first-time patient), 99606, 99606, (follow-up) (follow-up) and 99607 and 99607

(add-on). (add-on).

Business Math Used In Pharmacy Business Math Used In Pharmacy PracticePractice

Mark-upMark-up Prescription pricing is subject to governmental laws and Prescription pricing is subject to governmental laws and

regulations, as well as competition within the marketplace. regulations, as well as competition within the marketplace. Markup plays an important part in the pricing systemMarkup plays an important part in the pricing system

DiscountDiscount A pharmacy may offer a consumer a discount, or a deduction A pharmacy may offer a consumer a discount, or a deduction

from what is normally charged, as an incentive to purchase an from what is normally charged, as an incentive to purchase an item.item.

Average Wholesale Price Application (AWPA)Average Wholesale Price Application (AWPA) Usually a third parties reimburse a pharmacy based on the Usually a third parties reimburse a pharmacy based on the

AWP less an agreed on discount. The pharmacy has an AWP less an agreed on discount. The pharmacy has an incentive to purchase a drug as far below its AWP as possible.incentive to purchase a drug as far below its AWP as possible.

Capitation FeeCapitation Fee This pharmacy without adequate controls in place to control This pharmacy without adequate controls in place to control

prescribing.prescribing.

Terms to RememberTerms to Remember

1. Patient assistance programs 1. Patient assistance programs 2. Pharmacy benefit managers2. Pharmacy benefit managers3. POSS3. POSS4. PPOS4. PPOS5. Prescription drug benefit cards5. Prescription drug benefit cards6. Prescription drug plans (pdps)6. Prescription drug plans (pdps)7. Tier7. Tier8. U&C or UCR8. U&C or UCR9. Universal claim form9. Universal claim form10. Worker’s compensation10. Worker’s compensation