Third Party Payers

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. Affordable Care Act of 2010 (Obamacare) • Provides financial relief to needy patients that fall into the “donuthole” • One time $250 rebate in 2010 • 50% reduction in cost of some drugs. The savings are counted towards the donuthole • 7% discount on other drugs in the Part D • Medigap Insurance • Medicare is always the primary insurance, always bill medicare first for any pharmacy related service; if medicare does not pick up all the cost then charge the balance to the secondary insurance • Most states offer secondary medigap insurance • NY EPIC (Elderly Pharmaceutical Insurance Coverage)is an example • EPIC covers some of balance of the copay on all Part D drugs • May cover Part D excluded drugs (some) • Pharmacy technician should always bill Part D first, then perform a “split Bill” to EPIC to cover the balance of the copay. The patient pays what remains

5. 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) which is based on U&C’s (usual and customary costs publish by the drug companies and approved by the state) • Often patients are allowed to combine a managed care plan with their Medicaid. Common managed care plan are Fedelis, Metroplus. Managed care pays for legend drugs and Medicaid picks up OTC and generic drugs

6. 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

7. 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

8. 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

9. 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

10. Adjudication formulas and Reimbursement • Reimbursement varies depending on pharmacy and plan guidelines • AWP- Average Wholesale Price is published by the wholesalers across the country for the drug • U&C – usual and customary is published by the manufacturer, wholesalers and government • MAC – maximum allowable cost is based on the U&C and is used in calculating the reimbursement for generic drugs • Actual Acquisition cost=AAC • Reimbursement (R)= AWP*(1-P%) + dispensing fee + copay (which patient pays) • R- AAC= Profit • 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. • Great deal >> if patient does not need medications • Terrible >>if patient suddenly needs expensive drug therapy

11. 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 9 codes for other procedures

12. Adjudication Process • Online Claim Submittal • For electronically claims under federal law, pharmacy must have an NPI number

13. 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 • United healthcare • MetroPlus • Pharmacy Benefits Manager • Express Scripts • CVS Caremark • Medco • Bioscript • MaxorPlus • RX BIN (bank Identification number) identifies the PBM and the payor

14. 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 00 • Spouse is 01 • Sequential dependents are 02,03, etc

15. 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

16. 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

17. 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

18. 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

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