Recently, pharmacists have expanded the scope of their practice and services by incorporating additional clinical aspects into their routines. The pharmacy billing process now also caters to specific aspects of patient care, including:

  • Chronic disease management
  • Care transitions interventions
  • Medication therapy management

For medical billing and pharmacy billing services to remain sustainable – pharmacists must be able to receive payment for resources and time given to improving patient care services and treatment outcomes. All in all, this becomes challenging for pharmacists as there are many differences between medical billing and pharmacy billing.

Key Differences of Medical Billing and Pharmacy Billing

Let’s explore the key differences between medical billing and pharmacy billing processes:

1. Differences in Billing Formats

If you happen to be a pharmacist who is looking to expand your pharmacy offerings by trying to bill with medical benefits – then you must explore and understand the differences in billing formats. Only the NDC and prescription numbers are used to bill the third-party prescription payers. On the other hand, the medical billing process uses different sets of codes, including CPT and HCPCS. Thus, pharmacists must know medical billing codes to bill the medical benefit of a patient’s insurance plans.

2. Differences in Medical and Pharmacy Claims Processing

In healthcare financial management, pharmacy billing stands out with its swift reimbursement process. Claims submitted through a pharmacy benefits manager (PBM) receive near-instant approval or denial, ensuring quick decisions on the prescription bills. On the contrary, medical billing has a longer timeline, with responses to medical benefit claims taking up to 14 days.

The complexity of dealing with denied claims can extend this period further, causing potential delays of weeks or even months. Understanding the importance of clean claims, outsourcing to professionals like us, and boasting a 95% clean claim submission rate ensures a smoother reimbursement process.

3. Complex Claim Submission

Inside healthcare finances, the disparity between medical billing and pharmacy billing becomes apparent in the complexity of claim submissions. Pharmacy benefit managers (PBMs) quickly approve or deny prescription claims, ensuring quick decisions based on physician prescriptions and insurance formulary.

On the contrary, medical billing comes with a different challenge. Managing diverse medical billing and pharmacy billing policies is important. Furthermore, medical billing demands thorough documentation of provided services. Seeking assistance from a medical billing services provider like MedICD is advisable to understand these complexities and facilitate error-free claim submissions, minimizing the risk of rejection.

For instance, consider a specialized medical procedure where comprehensive documentation is essential. A reliable billing solution streamlines the process for medical billing and pharmacy billing, improving the likelihood of successful claim submission and subsequent reimbursement.

When should you use pharmacy billing?

Pharmacy billing involves providing patients with a prescription for medication, which they can take to a pharmacy for fulfillment. It’s administered in the provider’s office after paying any applicable copays and receiving the medication.

When opting for pharmacy billing, choose a specialty pharmacy with URAC accreditation. This accreditation showcases the pharmacy’s competence in handling the intricacies of these medications. Two pharmacy billing approaches are commonplace: brown bagging and white bagging.

1. Brown Bagging

Brown bagging involves the pharmacy billing for the medicine, collecting payment, and the patient picking it up or receiving it by mail. Subsequently, the patient takes the medication to the provider’s office for administration.

2. White Bagging

White bagging involves the provider sending a prescription to the pharmacy. The pharmacy bills the medication and collects payment, and instead of sending the medicine to the patient, it’s directly dispatched to the provider’s office or another site of administration.

For example, consider a patient receiving specialty medication. With brown bagging, they pay and receive the medication themselves, while white bagging involves the provider directly accepting and administering the medication. Both methods offer distinct advantages depending on the healthcare scenario.

When should you use medical billing?

Medical billing involves the provider billing medication under the patient’s medical insurance. The medication is purchased directly through a wholesaler or pharmacy and then administered in the office.

1. Direct Purchase

Medication is acquired directly through a wholesaler or pharmacy.

2. Insurance Coverage

The provider bills the medication under the patient’s medical insurance.

3. In-Office Administration

Medication is administered within the provider’s office.

State laws vary for medical billing and pharmacy billing; in some instances, clinics can order medicine through a pharmacy for office use. Here, the pharmacy serves as a distributor, providing medicine without a patient-specific label.

For instance, consider a patient requiring an injectable medication. With medical billing, the clinic:

  • Purchases the medicine through a pharmacy
  • Bills it to the patient’s insurance
  • Administers it in the office, following state regulations.

Medical Benefit vs Pharmacy Benefit

Pharmacies see significant differences in drug types, billing processes, and cost and reimbursement benefits. The below-mentioned differences in medical vs pharmacy benefit are essential:

Drug Dispensing

  • Pharmacy Benefit – Primarily for outpatient drugs distributed via retail, mail order, and specialty pharmacies.
  • Medical Benefit – Reserved for infusion drugs (IV, intrathecal, etc.) due to supplies needed for infusion not typically dispensed by pharmacies.

Processing Speed

  • Pharmacy Benefit – Real-time processing for specialty drugs.
  • Medical Benefit  Involves a lag between administration and payment due to the lengthier third-party insurance billing process.

Access to Rebates

  • Pharmacy Benefit – Enjoys better rebate access, with higher returns typically passed on to plan sponsors (the beneficiary’s insurer, often the patient’s employer).

Consider a patient needing a specialty drug. When billed under pharmacy benefits, real-time processing ensures efficient reimbursement, while the medical benefit might involve a delay due to the extended insurance billing process. This represents the substantial impact of benefit choice on access, speed, and financial returns.

Steps Involved in the Pharmacy Billing Process

The pharmacy billing process includes the following: 

1. Tracing

Prescription tracing involves using codes in pharmacy management software, such as POC codes ranging from 0-4, indicating e-prescribe, fax, verbal, or written prescriptions.

2. Collecting Data

Gather insurance details, including BIN number, member ID, group number, and coverage type (primary or secondary), for patient records.

3. Data Entry Steps

Enter vital billing information, including prescriber details, NPI number (national provider identifier), and DEA.

4. DAW Codes

Use DAW codes to indicate medication substitution if necessary during the dispensing process.

5. Drug Information

Review drug information, ensuring accuracy with the medication name and National Drug Code (NDC).

For instance, in the pharmacy billing process, if a patient’s insurance details are not accurately collected (step 2), it could lead to claim denials or delays in reimbursement. Each step contributes to a smooth pharmacy billing process, avoiding potential issues and ensuring accurate prescription handling.

Pharmacy Claims Processing

A pharmacy claim is transmitted through a switch vendor that ensures the information follows National Council for Prescription Drug Programs (NCPDP) standards before reaching the pharmacy benefit manager (PBM).

Rejected Submissions

Communication with the PBM or third-party payer is essential to gain approval for rejected submissions.

Basic Reasons for Declined Claims

  • Improper insurance information: Incorrect details can lead to claim rejections.
  • Untrue quantity: Inaccuracies in reporting medication quantity may result in declined claims.
  • Non-covered medication requiring Prior Authorization: Medications needing approval may face rejection without proper authorization.
  • Inappropriate days supply: Providing the wrong number of days’ supply can lead to claim denials.
  • Refill too early: Attempting a refill before the allowed time frame can result in declined claims.

Moreover, a pharmacy failing to communicate with the PBM for approval after a claim rejection may lead to delayed patient medication access. Each step in the process is vital to ensure accurate claims processing and timely patient care.

Process of Adjudicating

The adjudication process is rapid and electronic. Once a prescription is confirmed, the payer adjudicates the claim, cross-referencing patient insurance benefits for coverage and specifying prescription benefits.

  • Speedy Adjudication – The process ensures a swift determination of claim approval or denial.
  • Electronic Efficiency – Electronic adjudication streamlines the verification of patient insurance benefits.
  • Coverage Confirmation – Cross-referencing guarantees accurate identification of patient insurance coverage.

For instance, consider a patient needing a prescription refill. In medical billing and pharmacy billing, the adjudication process efficiently determines whether the patient’s insurance covers the medication, facilitating quick access to necessary medicines. This demonstrates the speed and efficiency of the adjudication process in pharmacy billing.

Challenges in the Pharmacy Billing Process

Pharmacists venturing into expanded medical care services face fresh hurdles in medical billing.

Regulatory Changes

Regular updates in the healthcare industry necessitate ongoing training for medical billing and coding staff. Staying informed about evolving practices, policies, and pharmacy and medical billing compliance is essential.

Claim Denials

Denials pose a significant challenge, resulting in revenue loss and diminished pharmacy cash flow. With the right expertise, many denials can be avoided, emphasizing the importance of a well-trained team.

Insurance Coverage

Awareness gaps in insurance coverage for various services, treatments, drugs, and injections can be a hurdle. Experts must assess these items to determine their inclusion in medical billing, highlighting the role of patient eligibility verification in the pharmacy billing process.

Final Word

In the evolving healthcare landscape, adopting medical billing solutions is a winning strategy for enhancing operational efficiency and accuracy. The intricate manual processes of medical billing, prone to errors and claim denials, are mitigated through automated solutions, fostering precision and optimizing the revenue cycle. As pharmacists venture into clinical care services among challenges like declining reimbursements and rising DIR fees, a clear understanding of the differences between medical billing and pharmacy billing becomes essential. Medical billing services, represented by our extensive industry experience, offer a reliable approach for navigating complexities and ensuring sustained success in healthcare. These solutions streamline billing tasks and contribute to financial stability, aligning seamlessly with the industry’s demand for precision, efficiency, and compliance.

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