Community

how to do pharmacy billing

Receiving the prescription
When a community pharmacy receives a prescription, it is a requirement to note the source of the prescription if it is for a Medicare or Medicaid patient. As many individual insurance companies also require this information, it has become a common practice for community pharmacies to track where all prescriptions come from. These prescriptions are tracked using prescription origin codes (POC), which are commonly entered into the pharmacy management software. The prescription origin codes are as follows:

0 = Unknown is used when the manner in which the original prescription was received is not known, which may be the case in a transferred prescription.
1 = Written prescription via paper, which includes computer printed prescriptions that a physician signs as well as tradition prescription forms
2 = Telephone prescription obtained via oral instruction or interactive voice response
3 = E-prescriptions securely transferred from a computer to the pharmacy
4 = Facsimile prescription obtained via fax transmission, including an e-Fax where a scanned image is sent to the pharmacy, and either printed or displayed on a monitor/screen

Gathering patient data
When a patient first arrives at a community pharmacy, the pharmacy team will need to gather/verify various important pieces of patient data including:

gather drug and disease information,
ensure that the pharmacy has the correct name, address, date of birth, contact information, and any other pertinent data,
document/update allergy information,
verify/update medication insurance information, which includes coverage type (primary, secondary, etc.), insurance name and bank identification number (BIN), group number, and member number.

Data entry
Pharmacy staff will need to enter information into the pharmacy software management system in order to process the prescription. Common information to require includes:

Prescriber information -This typically includes the prescriber’s name, address of practice, contact information, medical license number, DEA number, and National Provider Identifier (NPI).
Third-party payor - This includes coverage type (primary, secondary, etc.), insurance name and bank identification number (BIN), group number, and member number. If a patient has multiple insurance plans, be sure to enter them correctly as primary, secondary, etc.
Patient information - The patient information should at least include name, date of birth, address, contact information, allergies, and payment type (cash vs. insurance). Often, pharmacies will request information on concurrent use of other medications and dietary supplements, preferences with respect to safety lids, and verification that the patient has received notification of the pharmacy’s privacy policy.
Prescription information - While many items on a prescription are important, the system should record as a minimum the date the prescription was written, superscription, inscription, subscription, signatura, refills, prescription origin code, and it should generate a unique prescription number that should appear on the prescription label as well.
DAW codes - Dispense as written (DAW) codes need to be entered into the computer as well. Most prescriptions allow for generic substitution, and patients are glad to receive the more affordable version; therefore, the default DAW code is typically set to ‘0’. If a physician requires a specific medication to be dispensed, they will typically note this on the prescription. This is considered a DAW code of ‘1’. Sometimes a patient may request that they receive a brand name product even if a prescriber allowed for generic substitution. This would be classified as a DAW code of ‘2’. Other DAW codes are less frequently used. The following is a succinct list of the other DAW codes; 3 = substitution allowed - pharmacist selected product dispensed, 4 = substitution allowed - generic drug not in stock, 5 = substitution allowed - brand drug dispensed as generic, 6 = override, 7 = substitution not allowed - brand drug mandated by law, 8 = substitution allowed - generic drug not available in marketplace, and 9 = Other.
Drug information - At a minimum, drug information should include the drug name, the medication’s National Drug Code (NDC), the manufacturer, and an ability to check for interactions and contraindications. Often this drug information will include information on auxiliary labels, specific lot numbers and expiration dates, stock availability, pricing, and medication guides.
Pharmacy claim transmittal

This is a conceptualization of the third party claim pathway.
At this point, the pharmacy is ready to transmit the prescription. This process is diagrammed on the right. When the prescription transmits, it goes through the switch vendor, and is either accepted (approved) or sent on to the PBM. If declined, the pharmacy, the prescriber, and/or the patient will need to contact either the PBM, or the third-party payor to attempt to obtain approval. If a patient has multiple insurance plans, most pharmacy management software systems are capable of performing split-billing. Determining which insurance should be considered primary, secondary, tertiary, etc. is sometimes referred to as coordination of benefits; although, that term is more commonly used if one of the insurance plans involve Medicare.
Common reasons for rejections include:

a noncovered medication, or a medication requiring prior authorization,
incorrect days’ supply of medication, refill too soon, or invalid quantity of medication being dispensed,
the patient’s insurance on file is not currently active, or has been incorrectly entered, and
the prescriber’s information is either incomplete or entered incorrectly.
To assist in the resolution of declined prescriptions, the NCPDP has established a standardized set of reject codes. Some common examples include:

01 = Missing/Invalid BIN
09 = Missing/Invalid Birth Date
11 = Missing/Invalid Relationship Code
19 = Missing/Invalid Days Supply
25 = Missing/Invalid Prescriber ID
66 = Patient Age Exceeds Maximum Age
70 = Product/Service Not Covered
75 = Prior Authorization Required
79 = Refill Too Soon

Third-party payor adjudication
Once the prescription is accepted, the claim is adjudicated by the payor. The payor compares the charges with the terms of the patient’s benefit plan, and determines what the patient owes, as well as what the insurance plan is financially responsible for. This information is then returned to the pharmacy electronically. Because this transaction process occurs in a matter of seconds, it is sometimes referred to as real-time claim adjudication (RTCA).

Point-of-sale
Once the medication has been filled and checked, it is ready for the patient to pick it up, which usually involves any additional payments (copays, deductibles, or if a particular medication is not covered, then the usual and customary price), the offering of medication counseling, and the proper recording and filing of dispensed prescriptions. Common payment options include coupons from the manufacturers, cash, checks, credit cards, and debit cards. Often, the pharmacy management system can handle this portion of the prescription filling process as well.

Payment processing
The insurance companies will send out payments (electronically or by paper check) to the pharmacies every thirty to sixty days for all prescriptions processed within a particular time frame. This payment is typically accompanied by a remittance advice (RA), also known as an explanation of benefits, providing details about the paid claims.