1

From Prescription to Payment: Becoming a Pharmacy Technician Insurance Specialist Chapter 1

© 2010 The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 1 2

Key Terms

• Accounts receivable (A/R)• Adjudication• Benefits • Billing cycle• Coinsurance

• Copayment

• Deductible

• EDI (electronic data interchange)• Electronic prescribing (eRx)• Explanation of benefits (EOB)• Formulary• Health plan• Insurance payers

Chapter 1 3

Key Terms (Continued)

• Managed care• Managed care organization (MCO)• Maximum benefit limit• Medical insurance• Medically necessary• Noncovered (excluded) services

• Pharmacy benefit• Pharmacy claim• Pharmacy management (PM) system• Pharmacy technician insurance specialist• Point of sale (POS)• Policyholder

Chapter 1 4

Key Terms (Continued)

• Preferred drug list• Premium• Prescription drug list (PDL)• Providers• Remittance advice (RA)

Chapter 1 5

The Importance of Pharmacy Benefits

• In an average year Americans spend around $180 billion on outpatient prescription medications

• Pharmacy insurance technician specialists fill many vital roles in the field:

• Collecting payment for prescriptions• Interacting with patients, physicians,

and health insurance companies• Processing prescriptions

Chapter 1 6

Medical Insurance Basics

• Medical insurance is an agreement between a person, known as a policyholder , and health plan (or insurance payer)

• People purchase medical insurance to be able to afford the expenses of medical care, such as preventative care and medications and treatments for sicknesses, accidents, and injuries

Chapter 1 7

Medical Insurance Basics (Cont.)

• The Insurance Contract• The policyholder pays a premium to the

health plan• In exchange, the health plan provides

benefits for medical services• These services include care provided by

hospitals, physicians, etc.• Benefits usually start once the

policyholder has met their deductible

Chapter 1 8

Medical Insurance Basics (Cont.)

• Medically Necessary• Described by The Health Association of

America as “medical treatment that is appropriate and rendered in accordance with generally accepted standards of medical practice”

• Consists of medical procedures and medications that are considered necessary

Chapter 1 9

Medical Insurance Basics (Cont.)

• Covered Services• Pharmacy benefits usually cover a

selection of prescription medications• A plan’s prescription drug list (or

preferred drug list) contains a formulary, listing the covered drugs

• Noncovered (excluded) Services• Medical services not covered as part of

a health plan

Chapter 1 10

Medical Insurance Basics (Cont.)

• Health Plan Limitations• A maximum benefit limit places a

monetary coverage limit on particular services for the duration of the plan

• Beneficiaries may be required to choose from a list of physicians and hospitals

• Various specialists’ services and hospital benefits may not be covered

Chapter 1 11

Medical Insurance Plans

• Indemnity Plans• The type of most medical insurance

policies in the United States in the past• The plan policy lists the covered

services and amounts that will be paid• Coinsurance, a payment by the

beneficiary for a percentage of the medical costs, is often required

Chapter 1 12

Medical Insurance Plans (Cont.)

• Managed Care Plans• Designed to supervise medical care to

provide needed services in the most appropriate, cost-effective setting

• Managed care organizations establish links among providers, patients, and payers

• Patients are often required to make a copayment, usually a small fixed fee

Chapter 1 13

Sources of Medical Insurance

• Private Plans• Offer a variety of types of medical

insurance coverage• Most enrollees are part of a group

contract, which are bought by employers or other organizations

• Private insurance can be purchased for people not belonging to any groups

Chapter 1 14

Sources of Medical Insurance (Cont.)

• Government Programs• Medicare – federal health plan for most

citizens aged sixty-five and over, people with disabilities, end-stage renal disease (ESRD), and dependent widows

• Medicaid – designed for low-income people; cosponsored by federal and state governments

Chapter 1 15

The Pharmacy Billing Cycle

• Step 1: Receipt of Prescription• Step 2: Patient Interview• Step 3: Filling of Prescription• Step 4: Pharmacy Claim Transmittal• Step 5: Payer Adjudication• Step 6: Point-of-Sale Patient Payment• Step 7: Calculation of Payer Claim

Balance

Chapter 1 16

The Pharmacy Billing Cycle (Cont.)

• Step 8: Accounts Receivable Follow-Up• Step 9: Payment Processing• Step 10: Collections and Problem

Resolution

Chapter 1 17

The Pharmacy Billing Cycle (Cont.)

• Step 1: Receipt of Prescription– First step for a new prescription or a refill– The pharmacy receives a prescription through

a patient or caregiver in person or by phone, by a physician or physician representative via phone or fax, or sometimes through electronic prescribing

Chapter 1 18

The Pharmacy Billing Cycle (Cont.)

• Step 2: Patient Interview– The patient (or caregiver) is interviewed to

determine if the patient is a returning or new customer, and if the patient is covered by a prescription drug plan

– If prescription benefits are applicable, the patient’s answers to the appropriate demographic and health questions is inputted into a pharmacy management system

Chapter 1 19

The Pharmacy Billing Cycle (Cont.)

• Step 3: Filling of Prescription– The assigned pharmacy staff member fills the

prescription order after drug utilization and drug interactions are reviewed by the pharmacist

– Medication is filled properly utilizing NDC numbers

Chapter 1 20

The Pharmacy Billing Cycle (Cont.)

• Step 4: Pharmacy Claim Transmittal– A pharmacy claim is sent to the payer to

identify the policyholder, prescriber, pharmacy, and prescription information for a payment decision

– Most claims are sent electronically by electronic data interchange (EDI), although paper forms are an option too

Chapter 1 21

The Pharmacy Billing Cycle (Cont.)

• Step 5: Payer Adjudication– The payer processes the claim to decide if the

drug is covered and being used properly– The payer uses the benefit plan to calculate

what the patient owes and what the insurance plan will pay

– Real-time claim adjudication allows the pharmacy to receive the decision in seconds

Chapter 1 22

The Pharmacy Billing Cycle (Cont.)

• Step 6: Point-of-Sale Patient Payment– The pharmacy gives the patient the

prescription and collects the payment via cash, check, credit card, or debit card

– Pharmacist consultation is offered on drug administration and the patient signs an insurance log verifying the prescription was received

Chapter 1 23

The Pharmacy Billing Cycle (Cont.)

• Step 7: Calculation of Payer Claim Balance– The payer begins internal processing of the

claim for payment to the pharmacy– The patient’s payment is subtracted from the

total payer-specified payment, and the payer then owes the pharmacy this amount

– The remaining balance is recorded by the pharmacy as accounts receivable

Chapter 1 24

The Pharmacy Billing Cycle (Cont.)

• Step 8: Accounts Receivable Follow-Up– Most balances due are paid thirty to sixty

days after the date of service– Pharmacy technician insurance specialists

follow up on the balances due from payers– Accounts receivable is collected as rapidly as

possible to provide funds for the continued operation of the pharmacy practice

Chapter 1 25

The Pharmacy Billing Cycle (Cont.)

• Step 9: Payment Processing– Most payments are made electronically into

the pharmacy’s bank account, or by check in a single transaction

– A remittance advice (or explanation of benefits) is sent to the pharmacy showing the claim details, which is checked to verify it is correct through the process of reconciliation

Chapter 1 26

The Pharmacy Billing Cycle (Cont.)

• Step 10: Collections and Problem Resolution– In some cases there will be payment problems,

potentially from the payer or patient– Pharmacy technician insurance specialists

follow up uncollected sums, track down and solve problems, and work to ensure maximum appropriate payment for the pharmacy practice

Chapter 1 27

Procedures, Communication, and Information Technology in the

Pharmacy Billing Cycle

• Each step of the pharmacy billing cycle has three parts:

1. Following procedures2. Communicating effectively3. Using information technology

Chapter 1 28

Following Procedures

• Administrative Duties• Entering data and updating patients’

records• Compliance

• Securing computer files from unauthorized viewers

• In most pharmacies, policy and procedure manuals are available that describe how to perform major duties

Chapter 1 29

Using Information Technology

• Computer hardware and software information systems are in use in the pharmacy every day, making pharmacies more efficient and productive

• Information must be inputted carefully and correctly in order for programs to function properly

Chapter 1 30

Communicating Effectively

• Good communication is as important as knowing specific codes and regulations

• A pleasant tone, friendly attitude, and helpful manner increases customer satisfaction

• Conversations between pharmacy staff must be brief and effective

Chapter 1 31

Effects of Pharmacy Claim Errors

• Errors Result in Problems• Lower Payment or Denied/Delayed

Claims – incorrect coding causes claim denials and payment delays

• Disruption of Other Work – time spent correcting errors can effect all pharmacy staff and slow operations

• Problematic Customer Relations – pharmacy staff may have to spend time handling complaints and inquiries