Prescription drug claims are the financial lifeblood of any community pharmacy. To ensure a steady and accurate flow of revenue, community pharmacies should use technology to improve their pharmacy claims management processes.
Among the many processes that could be optimized through technology are pricing verification, reimbursement accuracy, prescriber and patient dispensing verification, and prior authorization. In addition to improving pharmacy claims reimbursement, pharmacies will reap operational and clinical benefits.
Key factors driving complexity in the prescription drug claims process
There are three reasons why community pharmacies need to improve pharmacy claims management:
- Reimbursement. Health plans continue to lower payment rates for prescription medications. That downward pressure threatens pharmacy margins on drugs. One way pharmacies can protect margins is to ensure they are billing for and receiving all revenue to which they are entitled.
- Regulatory compliance. State and federal regulations governing who can prescribe medications, who can dispense them and when the medications can be dispensed grow more complex each year. Add to that regulatory oversight of drug manufacturers and distributors, and pharmacies face a mounting compliance challenge.
- Drug benefits. The prescription drug benefits that health plans offer are growing in complexity. Community pharmacies have to navigate benefit tiers, different co-payment and co-insurance levels, direct and indirect remuneration (DIR) fees, prior authorization requirements, changing drug formularies and more.
One of these reasons would be enough to spur a community pharmacy to consider improving its pharmacy claims management processes. All three make overhauling those processes a business imperative.
Core pharmacy claims management functions that should be automated
Community pharmacies must optimize their pharmacy claims reimbursement systems, and given the accelerating complexities I just described, doing that manually is highly challenging. A more efficient and faster path is through technology. Pharmacies should pursue a technology platform that gives them the following core pharmacy claims editing capabilities:
- Pricing. Checks the average wholesale price (AWP) submitted by the pharmacy for a drug against the up-to-date AWP for the same drug. If the pharmacy-submitted AWP is lower, the application will raise the AWP to the right level to increase reimbursement.
- Dispensing. Confirms the dispense-as-written (DAW) codes on claims from the pharmacy. The DAW code tells the health plan that the prescriber or the patient requested the specific brand-name drug. If the DAW code is entered as a default code, the pharmacy may be paid a lower generic drug rate for the actual brand-name drug it dispensed.
- Managing inventory. Validates the national drug code (NDC) assigned to drugs for which claims were submitted. Drug manufacturers recycle NDCs, meaning a code could become obsolete for a discontinued drug and reassigned to a new drug. The edit notifies users of an obsolete NDC, creating the opportunity to change the NDC and potentially increase reimbursement.
- Dosing and packaging. Checks a pharmacy claim for a specific drug, its dosage and the drug’s unit-packaging against the maximum allowable daily dose (MADD) for the drug and its recommended unit-packaging. Claims for drugs dispensed with the right MADD and in the right unit-packaging will be reimbursed appropriately.
- Prior authorization. Automates and streamlines key portions of the prior authorization process. That’s when the prescriber and/or dispenser need prior approval from a health plan to give a specific medication to a patient. This helps avoid treatment delays and improve customer satisfaction.
By automating these capabilities through technology, community pharmacies can put themselves in a much stronger position to address the main factors—reimbursement, regulations and benefits—that are making pharmacy claims reimbursement more complicated and are challenging margins. Collectively, the capabilities maximize revenue, improve cash flow and generate operating efficiencies by replacing many error-prone manual pharmacy claims management functions.
Automating other pharmacy claims functions to improve medication adherence and safety
Business challenges like long wait times or medication dispensing issues can negatively affect customer satisfaction and reduce pharmacy foot traffic. The capabilities above, such as automating key portions of the prior authorization process, along with additional ones below, can mitigate these risks to their business, increase customer loyalty and improve medication safety.
For example, reducing the number of steps in the prior authorization process can shorten the time between prescribing and dispensing, improve adherence and enhance customer satisfaction. By checking drug claims against the MADD, lookalike/sound-alike potential and unit-packaging, patients not only are avoiding delays at the counter but are being dispensed the right drug in the right dosage in the right amount—all cornerstones of medication safety.
Community pharmacies should consider automating other pharmacy claims management capabilities through technology to improve medication safety and adherence:
- Safety notifications. An application that immediately informs pharmacies that a drug for which a claim is being submitted at the point of dispense is the subject of a safety notification from a manufacturer.
- Dispensing errors. An application that alerts pharmacies to potential risks of dispensing errors related to look-alike or sound-alike drugs, age-dependent dosages and maximum and minimum safe dosing level.
- Patient assistance. An application that notifies pharmacies at the point of dispense when patient assistance is available from a drug manufacturer to reduce the out-of-pocket cost for a specific medication based on the patient’s prescription drug benefits. Assistance can come in the form of an electronic coupon that’s automatically applied at the point of purchase without additional steps by the pharmacy staff or customer.
Tips for community pharmacies to choose the right pharmacy claims management platform
Community pharmacies could perform some of these functions manually or by themselves, but it would be very time-consuming and error-prone. By automating pharmacy claims management functions, community pharmacies benefit from the accuracy and efficiency of technology.
When choosing a pharmacy claims management platform, pharmacies should consider the following key criteria:
- Compatibility with pharmacy management systems. The platform should be PMS agnostic and integrate with any system.
- Completeness of the application package. It should offer all the pharmacy claims editing capabilities I’ve described, if not more.
- Range of the applications. The applications should cover pre- and post-edits, or PPE, meaning the platform can review claims before and after they are submitted.
- Reporting capabilities. The platform should generate standardized reports on the financial impact of any and all pharmacy claims that the applications reviewed and revised.
Community pharmacies that pursue this technology-driven approach to pharmacy claims management will not only accrue financial, clinical and operational benefits but will also give their pharmacists and staff more time to spend on patient care.
Related: Learn more about McKesson’s pharmacy claims reimbursement solutions for independent pharmacies