Briefing: Unraveling the Mystery of Pharmacy Claims Date: 21 March 2007 Time: 1400 - 1450

1. Briefing: Unraveling the Mystery of Pharmacy Claims Date: 21 March 2007 Time: 1400 - 1450

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

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

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 - AN2598588) • UB-92/UB-04 – Diagnosis code / revenue code • Future – Electronic Claims

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

6. Plan Cost Containment Measures • DUR – Drug Utilization Review • Drug refills too soon (prior to use of 75% of script) • Refilltoo 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)

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

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

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

10. Legal Initiatives • Medco – 2 reprocessing; 2+ million recovered (claims – Jan 03 to Sep 06) • 1st Health – Paid Patient • Caremark issues • Misc.

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?