From Registration to Accounts Receivable – The Whole Can of Worms 2007 UBO/UBU Conference 1 Briefing:Unraveling the Mystery of Pharmacy Claims Date:21 March 2007 Time:

2007 UBO/UBU Conference From Registration to Accounts Receivable 2 Objectives Findings of pharmacy claims study What is a clean pharmacy claim? Minimum requirements What are drug utilization reviews/ Why pre-authorization Over-the-counters/National drug codes Valid and invalid payments – Current payer issues – 30 vs. 90 day claims – Refills Recent legal initiatives

2007 UBO/UBU Conference From Registration to Accounts Receivable 3 Findings of Study of Pharmacy Claims Results of study – Large percentage of claims would never be paid Obsolete NDCs (National Drug Code) – LOCAL ISSUE OTCs (Over-the-counter drugs) – TMA scrubbed drug list Non-standard claims – Missing basic claim information – Including required script information Payer Issues

2007 UBO/UBU Conference From Registration to Accounts Receivable 4 Basic Requirements Required Minimum Information Patient Demographics MTF Tax ID Number & NCPDP (National Council for Prescription Drug Programs) Number Future - Pharmacy NPI (National Provider Identifier) Plan Information – Name, group ID, member ID / enrollment codes, etc. (E-billing – BIN # (found on card)) Script information – Date of service Script number, drug name, day supply, NDC (National Drug Code), Quantity Dispensed Plan specific requirements – (MEDCO – DOD ID - AN ) UB-92/UB-04 – Diagnosis code / revenue code Future – Electronic Claims

2007 UBO/UBU Conference From Registration to Accounts Receivable 5 Civilian Sector vs. DOD Claims Civilian sector – Electronic billing – POS (Point of Service / Sale) – Immediate reject or payment – Checks for variety of information Formulary vs. non-formulary Pre-authorization requirement DUR (Drug Utilization Review) checks DAW (Dispense As Written) codes (brand dispensed as ordered) Refill information (DOD does not capture this information on claim form) – Application of plan deductible / co-pay DOD Current - Paper – None of the above DOD Future – Electronic Claims

2007 UBO/UBU Conference From Registration to Accounts Receivable 6 Plan Cost Containment Measures DUR – Drug Utilization Review – Drug refills too soon (prior to use of 75% of script) Refill too early may signal misuse or abuse – Interaction with other meds – Appropriate usage (possible off label; e.g., Elidel prescribed for a 2-year old with eczema) – Possible dispensing error Valid override – Patient lost medication – Vacation (unable to fill at vacation location) – Doctor increased dosage after initial fill DOD system – does not capture this information Pre-authorization – Plan specific – Drugs likely to be misused / controlled substances Ritalin / some painkillers (narcotics) – High cost drugs (Nexium) – Drugs used for illness that may need management (Procrit)

2007 UBO/UBU Conference From Registration to Accounts Receivable 7 Plan Cost Containment Measures 30- vs. 90-day claims – Plan pays 30 to 34-day supply for initial fill of new script – Adverse reaction – Drug allergy – Change by physician due to poor results = loss Some plans pay 90 days at pharmacy (no mail order) usually patient share is % of charge, not flat co-pay Mail order benefits (cost containment) – Plan pays 30 to 32-day supply at pharmacy for initial fill – Only pays 90 day supply thru mail order (usually maintenance meds) Plan should pay 30 days of the 90-day script MTFs must bill as dispensed

2007 UBO/UBU Conference From Registration to Accounts Receivable 8 Deal or No Deal VALID – Plan co-pays &/or deductible reductions (non-PPO after 1 Oct 04) Vary by plan – tiered co-pays – 3 to 4 different co-pays $10.00 to $45.00), depending on type of drugs Brand vs. generic / Formulary vs. non-formulary – Patient not covered / terminated coverage – Pre–authorization requirement – Paid 30 days of a 90-day script (plan with mail order benefit) INVALID – Non-PPO co-pay &/or deductibles prior to 1 Oct 04 – Dispensing fee reductions – Denial of entire 90-day claim – Early payment discount

2007 UBO/UBU Conference From Registration to Accounts Receivable 9 Maybe / Maybe Not Questionable Denials: – Refill too soon (DUR – Drug Utilization Review) Prior to 75% of drug used – Appeal if valid reason – lost med / vacation – OTCs – Over-the-Counter Non-Prescription Drugs – Generally non-prescription drugs are not covered Plan specific – some OTCs are payable – Obsolete NDC (National Drug Code) Check with Chief, Pharmacy – appeal if corrected – Non-Formulary Drug May be appealed – Off label use – appeal / physician’s reason Example: Elidel for child

2007 UBO/UBU Conference From Registration to Accounts Receivable 10 Legal Initiatives Medco – 2 reprocessing; 2+ million recovered (claims – Jan 03 to Sep 06) 1 st Health – Paid Patient Caremark issues Misc.

2007 UBO/UBU Conference From Registration to Accounts Receivable 11 Quiz What is a DUR? Should a denial of the full 90-day script be appealed? What do you do with an obsolete NDC denial? Whom to call?