From Prescription to
Payment:
Becoming a Pharmacy
Technician Insurance
Specialist Chapter 1
1
© 2010 The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms
• Accounts receivable
(A/R)
• Adjudication
• Benefits
• Billing cycle
• Coinsurance
• EDI (electronic data
interchange)
• Electronic
prescribing (eRx)
• Explanation of
benefits (EOB)
• Formulary
• Health plan
• Insurance payers
• Copayment
• Deductible
Chapter 1
2
Key Terms (Continued)
• Managed care
• Managed care
organization (MCO)
• Maximum benefit
limit
• Medical insurance
• Medically necessary
• Noncovered
(excluded) services
• Pharmacy benefit
• Pharmacy claim
• Pharmacy
management (PM)
system
• Pharmacy technician
insurance specialist
• Point of sale (POS)
• Policyholder
Chapter 1
3
Key Terms (Continued)
• Preferred drug list
• Premium
• Prescription drug
list (PDL)
• Providers
• Remittance advice
(RA)
Chapter 1
4
The Importance of Pharmacy
Benefits
•
In an average year Americans spend
around $180 billion on outpatient
prescription medications
• Pharmacy insurance technician specialists
fill many vital roles in the field:
• Collecting payment for prescriptions
• Interacting with patients, physicians,
and health insurance companies
• Processing prescriptions
Chapter 1
5
Medical Insurance Basics
•
•
Medical insurance is an agreement
between a person, known as a
policyholder , and health plan (or
insurance payer)
People purchase medical insurance to be
able to afford the expenses of medical care,
such as preventative care and medications
and treatments for sicknesses, accidents,
and injuries
Chapter 1
6
Medical Insurance Basics (Cont.)
•
The Insurance Contract
• The policyholder pays a premium to the
health plan
• In exchange, the health plan provides
benefits for medical services
• These services include care provided by
hospitals, physicians, etc.
• Benefits usually start once the
policyholder has met their deductible
Chapter 1
7
Medical Insurance Basics (Cont.)
•
Medically Necessary
• Described by The Health Association of
America as “medical treatment that is
appropriate and rendered in
accordance with generally accepted
standards of medical practice”
• Consists of medical procedures and
medications that are considered
necessary
Chapter 1
8
Medical Insurance Basics (Cont.)
•
Covered Services
• Pharmacy benefits usually cover a
selection of prescription medications
• A plan’s prescription drug list (or
preferred drug list) contains a
formulary, listing the covered drugs
• Noncovered (excluded) Services
• Medical services not covered as part of
a health plan
Chapter 1
9
Medical Insurance Basics (Cont.)
•
Health Plan Limitations
• A maximum benefit limit places a
monetary coverage limit on particular
services for the duration of the plan
• Beneficiaries may be required to choose
from a list of physicians and hospitals
• Various specialists’ services and
hospital benefits may not be covered
Chapter 1
10
Medical Insurance Plans
•
Indemnity Plans
• The type of most medical insurance
policies in the United States in the past
• The plan policy lists the covered
services and amounts that will be paid
• Coinsurance, a payment by the
beneficiary for a percentage of the
medical costs, is often required
Chapter 1
11
Medical Insurance Plans (Cont.)
•
Managed Care Plans
• Designed to supervise medical care to
provide needed services in the most
appropriate, cost-effective setting
• Managed care organizations establish
links among providers, patients, and
payers
• Patients are often required to make a
copayment, usually a small fixed fee
Chapter 1
12
Sources of Medical Insurance
•
Private Plans
• Offer a variety of types of medical
insurance coverage
• Most enrollees are part of a group
contract, which are bought by
employers or other organizations
• Private insurance can be purchased for
people not belonging to any groups
Chapter 1
13
Sources of Medical Insurance
(Cont.)
•
Government Programs
• Medicare – federal health plan for most
citizens aged sixty-five and over, people
with disabilities, end-stage renal disease
(ESRD), and dependent widows
• Medicaid – designed for low-income
people; cosponsored by federal and
state governments
Chapter 1
14
The Pharmacy Billing Cycle
•
•
•
•
•
•
•
Step 1: Receipt of Prescription
Step 2: Patient Interview
Step 3: Filling of Prescription
Step 4: Pharmacy Claim Transmittal
Step 5: Payer Adjudication
Step 6: Point-of-Sale Patient Payment
Step 7: Calculation of Payer Claim
Balance
Chapter 1
15
The Pharmacy Billing Cycle
(Cont.)
•
•
•
Step 8: Accounts Receivable Follow-Up
Step 9: Payment Processing
Step 10: Collections and Problem
Resolution
Chapter 1
16
The Pharmacy Billing Cycle
(Cont.)
• Step 1: Receipt of Prescription
– First step for a new prescription or a refill
– The pharmacy receives a prescription through
a patient or caregiver in person or by phone,
by a physician or physician representative via
phone or fax, or sometimes through electronic
prescribing
Chapter 1
17
The Pharmacy Billing Cycle
(Cont.)
• Step 2: Patient Interview
– The patient (or caregiver) is interviewed to
determine if the patient is a returning or new
customer, and if the patient is covered by a
prescription drug plan
– If prescription benefits are applicable, the
patient’s answers to the appropriate
demographic and health questions is inputted
into a pharmacy management system
Chapter 1
18
The Pharmacy Billing Cycle
(Cont.)
• Step 3: Filling of Prescription
– The assigned pharmacy staff member fills the
prescription order after drug utilization and
drug interactions are reviewed by the
pharmacist
– Medication is filled properly utilizing NDC
numbers
Chapter 1
19
The Pharmacy Billing Cycle
(Cont.)
• Step 4: Pharmacy Claim Transmittal
– A pharmacy claim is sent to the payer to
identify the policyholder, prescriber,
pharmacy, and prescription information for a
payment decision
– Most claims are sent electronically by
electronic data interchange (EDI), although
paper forms are an option too
Chapter 1
20
The Pharmacy Billing Cycle
(Cont.)
• Step 5: Payer Adjudication
– The payer processes the claim to decide if the
drug is covered and being used properly
– The payer uses the benefit plan to calculate
what the patient owes and what the insurance
plan will pay
– Real-time claim adjudication allows the
pharmacy to receive the decision in seconds
Chapter 1
21
The Pharmacy Billing Cycle
(Cont.)
• Step 6: Point-of-Sale Patient Payment
– The pharmacy gives the patient the
prescription and collects the payment via
cash, check, credit card, or debit card
– Pharmacist consultation is offered on drug
administration and the patient signs an
insurance log verifying the prescription was
received
Chapter 1
22
The Pharmacy Billing Cycle
(Cont.)
• Step 7: Calculation of Payer Claim
Balance
– The payer begins internal processing of the
claim for payment to the pharmacy
– The patient’s payment is subtracted from the
total payer-specified payment, and the payer
then owes the pharmacy this amount
– The remaining balance is recorded by the
pharmacy as accounts receivable
Chapter 1
23
The Pharmacy Billing Cycle
(Cont.)
• Step 8: Accounts Receivable Follow-Up
– Most balances due are paid thirty to sixty days
after the date of service
– Pharmacy technician insurance specialists
follow up on the balances due from payers
– Accounts receivable is collected as rapidly as
possible to provide funds for the continued
operation of the pharmacy practice
Chapter 1
24
The Pharmacy Billing Cycle
(Cont.)
• Step 9: Payment Processing
– Most payments are made electronically into
the pharmacy’s bank account, or by check in
a single transaction
– A remittance advice (or explanation of
benefits) is sent to the pharmacy showing the
claim details, which is checked to verify it is
correct through the process of reconciliation
Chapter 1
25
The Pharmacy Billing Cycle
(Cont.)
• Step 10: Collections and Problem
Resolution
– In some cases there will be payment problems,
potentially from the payer or patient
– Pharmacy technician insurance specialists
follow up uncollected sums, track down and
solve problems, and work to ensure maximum
appropriate payment for the pharmacy
practice
Chapter 1
26
Procedures, Communication, and
Information Technology in the
Pharmacy Billing Cycle
•
Each step of the pharmacy billing cycle
has three parts:
1. Following procedures
2. Communicating effectively
3. Using information technology
Chapter 1
27
Following Procedures
•
Administrative Duties
• Entering data and updating patients’
records
• Compliance
• Securing computer files from
unauthorized viewers
• In most pharmacies, policy and procedure
manuals are available that describe how to
perform major duties
Chapter 1
28
Using Information Technology
•
•
Computer hardware and software
information systems are in use in the
pharmacy every day, making pharmacies
more efficient and productive
Information must be inputted carefully
and correctly in order for programs to
function properly
Chapter 1
29
Communicating Effectively
•
•
•
Good communication is as important as
knowing specific codes and regulations
A pleasant tone, friendly attitude, and
helpful manner increases customer
satisfaction
Conversations between pharmacy staff
must be brief and effective
Chapter 1
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Effects of Pharmacy Claim Errors
•
Errors Result in Problems
• Lower Payment or Denied/Delayed
Claims – incorrect coding causes claim
denials and payment delays
• Disruption of Other Work – time spent
correcting errors can effect all
pharmacy staff and slow operations
• Problematic Customer Relations –
pharmacy staff may have to spend time
handling complaints and inquiries
Chapter 1
31