1. 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
Express Scripts is an example

2. 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
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

3. 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

4. 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) or the EAC
Often patients are allowed to combine a managed care plan with their Medicaid. Common managed care plan are Fedelis card, Metroplus. Managed care pays for legend drugs and Medicaid picks up OTC and generic drugs

5. 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

6. 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

7. 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

8. 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

9. Adjudication formulas and Reimbursement
Pharmacy Pricing Benchmarks
AWP- Average Wholesale Price is published by the wholesalers across the country for the drug. The data is compiled by First Databank, a data collection company
U&C – usual and customary is published by the manufacturer, wholesalers and government. Often your pharmacy software creates it own U&C based on your actual acquisition cost. This is often the cash price a customer with no insurance pays
MAC – maximum allowable cost : used in calculating the reimbursement for older generic drugs by PBM’s
A PBM will pay either
MAC (for generics)
AWP – a certain percentage
U&C
Which ever is smaller
Actual Acquisition cost=AAC
Estimated Acquisition cost (EAC)= what medicaid pays the pharmacy for drugs
Profit, or the spread= what pharmacy is reimbursed- AAC + dispensing fee
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

10. Paper Claims
Some claims are still paid after submission of a paper claim form
Standard form is the CMS1500
Billing codes include
CPT for medications and the newly created MTM
HCPCS for durable medical equipment and supplies (walkers)
ICD 10 codes for other procedures

11. 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)
Affinity Health
Fidelis Care
HIP
MetroPlus
Pharmacy Benefits Manager
Express Scripts
CVS Caremark (CVS health)
Medco (acquired by Express Scripts)
Prime Therapeutics (BCBS)
United Health/OptumRx
RX BIN (bank Identification number) identifies the PBM and the payor

12. 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 01
Spouse is 02
Sequential dependents are 03,04, etc

13. 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
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

14. Common Rejections Invalid DOB, or person code
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

15. 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

16. 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

17. Intervention codes (most common)
M0 (zero)= MD consulted
P0 (Zero)= patient consulted
R0 (zero)= Pharmacist consulted other reference
Outcome code
1B= filled as is