Third Party Payers
 Direct Payment is when the patient pays for pharmacy
services and drug directly out of pocket; very common
before 1970’s
 Today most pharmacy reimbursement comes from
Third Party Payers
 Patients hold insurance for medical expenses
 As a part of the insured’s coverage the third party payer
contracts with a PBM (Pharmacy Benefits Manager) to
provide pharmacy coverage
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Express Scripts is an example
 Medicare
 Government insurance for those over 65
 Patients young that 65 with certain disabilities
 Any age patient with end stage renal disease
 Part A=hospital (nursing home, skilled nursing care, hospice)
 Part B= MD office and physical therapy (also covers DMEPOS
durable medical equipment, prosthetics, orthotics and supplies).
For this patient pay a premium deducted from the social security
check
 Part C= Medicare advantage
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Offered by private companies who work with the government
Part A and Part B is required
Offers extra coverage like dental, vision
Larger Premiums but more coverage
 Part D= Rx drug coverage
 Part D was signed into law in 2003
 Provide Rx coverage to seniors
 Premium depends on plan
 Most drug classes are covered except, most notably, the BDZ’s
 All plans have coverage up to about $2,700/year after which
the patient covers all the cost of the drug
 After the patients reaches about $4,500 in cost, Plan D kicks
in as catastrophic Rx coverage where it pays 100% of the cost
 This gap in coverage is called the “donuthole”
 Open enrollment for any given year is October 15-December 7
 Affordable Care Act of 2010 (Obamacare)
 Provides financial relief to needy patients that fall into the “donuthole”
 One time $250 rebate in 2010
 50% reduction in cost of some drugs. The savings are counted towards
the donuthole
 7% discount on other drugs in the Part D
 Medigap Insurance
 Medicare is always the primary insurance, always bill medicare first for
any pharmacy related service; if medicare does not pick up all the cost
then charge the balance to the secondary insurance
 Most states offer secondary medigap insurance
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NY EPIC (Elderly Pharmaceutical Insurance Coverage)is an example
EPIC covers some of balance of the copay on all Part D drugs
May cover Part D excluded drugs (some)
Pharmacy technician should always bill Part D first, then perform a “split Bill” to
EPIC to cover the balance of the copay. The patient pays what remains
Medicaid
 Government health insurance for needy people, pregnant
women, teenagers, individuals who are legally blind
 State splits the cost with the federal government
 When a pharmacy submits a claim, we are paid at the MAC
(maximum allowable cost) which is based on U&C’s (usual
and customary costs publish by the drug companies and
approved by the state)
 Often patients are allowed to combine a managed care plan
with their Medicaid. Common managed care plan are
Fedelis, Metroplus. Managed care pays for legend drugs
and Medicaid picks up OTC and generic drugs
Other government programs
 Worker’s Compensation
 A worker injured on the job and that requires
prescription medications will have no copay for drugs
 Pharmacy files paperwork with employer to the state
and federal governments
 TRICARE is the health insurance plan that services
uniformed armed services men and women
 CHAMPVA (civilian health and medical program of
the veteran administration) is insurance for
permanently disabled veterans and their family
members
Private Third Party Payers
 Health Maintenance Organization (HMO)
 Insurance provider that contracts with medical providers,
hospitals, and other institutions to provide services under an
agreed upon fee called a capitation fee. Once agreed upon,
the provider is now a “network provider”
 The insured person is to select a PCP (primary care provider)
who controls access to specialist via referrals; specialist must
also be in network
 Coverage is not provided for out of network providers
 Lowest premiums and no deductables
 Blue Cross/Blue Shield is an example of an HMO
 Point of Services Plans (POS)
 Similar to HMO
 In network doctor called a Primary Care Provider (PCP)
acts as a “point of service”
 PCP can make a referral for specialists out of the
network
 Out of network providers can be seen
 Slightly higher premium and deductibles (not with
HMO) but more freedom
 CIGNA health is an example
 Preferred Provider Organization (PPO)
 Similar to a POS
 Main advantage is that referral are not needed to see
specialists
 Provides most freedom but costs more
 Adjudication formulas and Reimbursement
 Reimbursement varies depending on pharmacy and plan guidelines
 AWP- Average Wholesale Price is published by the wholesalers across the
country for the drug
 U&C – usual and customary is published by the manufacturer, wholesalers and
government
 MAC – maximum allowable cost is based on the U&C and is used in calculating
the reimbursement for generic drugs
 Actual Acquisition cost=AAC
 Reimbursement (R)= AWP*(1-P%) + dispensing fee + copay (which patient
pays)
 R- AAC= Profit
 Capitation Fee
 Insurance company agrees to pay a flat fee per every covered patient that is
client of the pharmacy. Patient only goes to that pharmacy.
 Great deal >> if patient does not need medications
 Terrible >>if patient suddenly needs expensive drug therapy
Paper Claims
 Some claims are still paid after submission of a paper
claim form
 Standard form is the CMS1500
 Billing codes include
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CPT for medications and the newly created MTM
HCPCS for durable medical equipment and supplies (walkers)
ICD 9 codes for other procedures
Adjudication Process
 Online Claim Submittal
 For electronically claims under federal law, pharmacy
must have an NPI number
Prescription Drug Card
 When patients receive medical coverage cards they usually receive two cards
 One card provide office visit information
 Second card provide pharmacy coverage information
 Information on the Rx card
 Managed care plan (insurance company)
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Affinity Health
Fidelis Care
HIP
United healthcare
MetroPlus
 Pharmacy Benefits Manager
 Express Scripts
 CVS Caremark
 Medco
 Bioscript
 MaxorPlus
 RX BIN (bank Identification number) identifies the PBM and the payor
 RX BIN for express scripts 003858 for example
 PCN (processor control number) may or may not be
needed
 Group Code: identifies the group that contracted with the
managed care plan, may be a large group of employers
 i.e. RX1199 identify 1199 union members
 Cardholder: name of the primary beneficiary
 Person code: relationship to cardholder
 primary beneficiary is 00
 Spouse is 01
 Sequential dependents are 02,03, etc
Rejection Codes
 National Council for Prescription Drug Program
(NCPDP) rejection codes
 Claims that are rejected have at least one or more
rejection codes
 Rejection codes are standardized across the country
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Code 1= missing BIN
Code 8= invalid person code
Code 19 = invalid day supply
Code 71= Prescriber not covered
 Knowledge of the actual code is not required on the
PCTE but the meaning should be understood
 Common Rejections
 Invalid DOB, or person code
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Enter corrected information and resubmit claim
 Filled after coverage terminated
 Ask for new insurance card; patient may have changed insurance or
insurance may have new PBM or patient may have new ID#
 Quantity exceeds plan limitation
 Try to enter prescription with a reduced quantity with more refills
and resubmit. i.e. 90 tablets with 2 refills = 30 tablets with 8 refills
 Refill too soon
 Patient must come back for refill
 75 % time allotment on regular RX
 If vacation supply is needed, may obtain override code from PBM
and resubmit
 Prescriber is not covered
 Prescriber is out of the network for the plan; patient must pay full
price
Prospective Drug Utilization Review
ProDUR Rejections
 DUR errors and rejections results from a proDUR that
flags a problem from the prescription and the patient’s
current patient profile information as required by
OBRA90
 Normally these rejections can be overridden by the
pharmacist or pharmacy technician with special
NCPDP codes called conflict codes, intervention codes
and outcome codes
 Conflict Codes (Common ones)
 TD= Therapeutic duplication
 ER= Early Refill
 DD= Drug Drug Interaction
 HD= high dose
 LD= low dose
 DC= drug contraindicated with patient’s disease states
 Intervention codes (most common)
 M0 (zero)= MD consulted
 P0 (Zero)= patient consulted
 R0 (zero)= Pharmacist consulted other reference
 Outcome code
 1B= filled as is