The World of Pharmacy Edits: Helping The Bottom Line

by Will Lockwood

ComputerTalk January/February 2019 The World of Pharmacy Edits

Smart pharmacies have been working hard to manage their submitted claims and track reimbursements for some time now, with a wide variety of claims edits available within pharmacy management systems and from specialist providers. But what we’ll see is that the logic of ensuring that a process is followed properly is extending beyond claims and reimbursement to help pharmacies address their need to implement consistent workflows in a range of situations.

Building on the Basics

director of network solutions for RelayHealth
Cathy Romanick

Cathy Romanick is director of network solutions for RelayHealth. Romanick’s team of product managers is responsible for a variety of claims, reimbursement, and audit protection services for chain, independent, and outpatient pharmacies, beginning with a base package of pre- and post-editing (PPE) services. This is a set of services that pharmacies should already be familiar with, including edits for AWP (average wholesale price) comparison, DAW (dispense as written), quantity/days’ supply, NDC validation, and more.

Romanick highlights two examples of the practical value of a PPE suite. First, she explains that there’s the opportunity to ensure that the quantity dispensed used during data entry is a logical quantity. “A common example is epinephrine injectors,” says Romanick. “These come in a package of two, but sometimes at data entry pharmacy staff will enter a quantity of one, because they’re thinking that they’re going to dispense one package to the patient. The payer will reimburse based on the quantity that was sent on the claim.”

A pharmacy using a claims-editing program that checks for quantity/days’ supply, as does RelayHealth’s, will get that claim for an injector bounced back before it reaches the payer, with a message about the quantity not being in increments of the package size.

Another commonly used edit, according to Romanick, is for pricing updates. This is especially important so that the pharmacy can receive appropriate reimbursement for brand drugs. “The payer typically reimburses the pharmacy for a brand drug based off the AWP price minus a certain percentage,” says Romanick. “If the pharmacy is sending in a low, out-of-date AWP, the payer will likely only reimburse based on that lower price. RelayHealth will update the submitted AWP to the most current AWP when needed.” In this case RelayHealth does not message back to the pharmacy, according to Romanick.

Look for Flexibility

A basic claims-editing suite is, without doubt, a tool box that no pharmacy should be without. But you should also be on the lookout for opportunities within your pharmacy software to deploy customizable edits to address your pharmacy’s specific needs. This is the advice Erica Mahn, Pharm.D., offers. Mahn is director of community pharmacy at Alps Pharmacy in Springfield, Mo., which comprises two community pharmacies, a specialty pharmacy, and a long-term care pharmacy.

Erica Mahn, Pharm.D., director of community pharmacy at Alps Pharmacy in Springfield, Mo.
Erica Mahn, Pharm.D.

In this role, Mahn has come to rely on the highly customizable nature of the Rx Edits module in the pharmacy’s PioneerRx software. This includes as standard a long list of edits for prescription claims and immunization reporting, but it also allows Alps Pharmacy to set edits specific to its needs. “We can turn on an edit based on a specific drug or drug class,” says Mahn. “For example, we are an accredited diabetes education center, and we have several edits set up in PioneerRx for our diabetic patients based on drug class.” This edit generates an on-screen prompt for the pharmacist whenever a new drug for this class is added to a patient’s profile. “We make sure that our pharmacists are going over all the right counseling points,” says Mahn, “and we can quickly sort and categorize these patients just based off of the drug class.”

Mahn offers another great example of a customized edit, this time for a specific drug. The SHINGRIX vaccine requires two doses two months apart, and Mahn saw the need for an automated reminder within the system. “We were able to set this up based off the NDC number for the vaccine,” she explains. “When we fill a prescription for SHINGRIX we automatically apply a care action edit to that patient’s profile so that we are reminded to follow up with them when they’re due for the second dose.”

Read More ⇒ Reducing Claim Rejects with Electronic Prior Authorization by Caitlin Graham, VP and General Manager, Pharmacy Business, CoverMyMeds

Mahn has also found that the edit process is useful for supporting Alps Pharmacy’s patient adherence initiatives. “You may think you’re filling everything a patient needs,” says Mahn. “But it’s easy to miss something when a patient isn’t enrolled in your med sync program or auto refill, for instance. We have an edit set up in PioneerRx that’s looking for any patient who falls below a certain percentage rate on their filling. So even if they’re not enrolled in any other program, we’re catching that it’s been 94 days since they’ve filled their metformin prescription, and it was due at day 90. We know we need to give them a call to find out what’s going on.”

Enforcing Rules for DME

Alps Pharmacy has set up edits within PioneerRx to create protocols for its DME (durable medical equipment) business. “We have several edits established to ensure that our DME claims are handled correctly and by the staff we’ve designated as responsible for them,” says Mahn. These edits will lock a DME claim until it can be reviewed by an appropriate staff member. For a good example of this edit in action, Mahn points to the need for Alps Pharmacy to have chart notes on file when processing a claim for test strips through Medicare Part B.

Prescriber Validation

For one final example, Alps Pharmacy is also using an edit that alerts staff if the claim is using an out-of-date DEA number or the DEA number is for the hospital rather than for the individual prescriber. “We’re able to correct this ahead of dispensing to make sure that we’re billing under the right provider information,” says Mahn.

RelayHealth’s Cathy Romanick agrees that validating prescriber data is critical for pharmacies. There are two important areas here, Romanick notes: the Office of Inspector General (OIG) prescriber exclusion list, which a prescriber can land on for a variety of reasons; and prescriber DEA schedule authority, which reflects the fact that prescribers have different licenses that give them the authority to write for specific schedules of controlled substances.

The risks for pharmacies in making mistakes here are substantial. For example, explains Romanick, if a pharmacy adjudicates a claim from an excluded or sanctioned provider, it may lose its ability to process Medicare and Medicaid claims and may be subject to substantial fines.

The fines can add up quickly, since a claim can go through with an excluded provider on it and then be refilled repeatedly using the same information before being flagged in an audit. “ There can be instances where it may only be on the eighth or ninth refill that it comes to light that that prescriber was on the OIG list from the very beginning,” says Romanick.

In the case of the prescriber schedule authority service, Romanick explains that RelayHealth is looking at both the drug and the prescriber’s license information. If the prescriber gets flagged by the switch either for being on the exclusion list or for lacking the appropriate schedule license, the claim is stopped right there and messaging goes back to the pharmacy.

Addressing Rejects

Not all potential rejects are going to get caught before reaching the payer, though. And reject levels can reach a point where they’re a real burden on a pharmacy’s efficiency. That, unfortunately, was the case at Gayco Healthcare, a long-term care pharmacy currently serving over 5,000 beds out of locations in Dublin and Alpharetta, Ga. These range across skilled nursing, assisted living, personal care homes, group homes, behavioral health homes, and correctional facilities. The pharmacy has been on a growth path in recent years, with CEO Bent Gay as the visionary and COO Jon Martin working to execute the plan.

Jon Martin COO Gayco Health
Jon Martin

“As you bring on more business, you have to be sure you are still focusing on the fundamentals,” Jon Martin says. “We have to maintain our focus on our key performance indicators.” For example, Gayco Healthcare has daily order entry targets that the staff needs to hit in order to get the last order of the day filled by 6 p.m. and delivery drivers on the road by 6:30 p.m. every day.

But another key metric is the percentage of the claims for those orders that is rejected by the payer. “We were seeing 8% rejection rates,” says Martin, “spiking to as high as 12% sometimes.” Billing staff were frustrated and stressed, and Gayco Healthcare, which Martin reports had moved to shorter fill cycles and a post-consumption billing model, was really struggling to get billing statements out on time to facilities at the end of the month. Gayco first tried a preadjudication service, but that did not reduce rejects, while adding cost.

But another part of the growth plan had brought in the FrameworkLTC pharmacy management system from SoftWriters, which also ended up bringing with it the company’s expertise in long-term care pharmacy workflows and the expertise Gayco Healthcare needed to really address its claim rejects problem.

After seeing no impact from preadjudication, Martin decided to take a step back and sit down with an expert from SoftWriters. “There were some basics that needed attention, and for that we really needed to be looking to our partners at FrameworkLTC software,” says Martin. “We came away from that conversation with an actionable handful of ways within our workflows and utilizing FrameworkLTC more effectively to move the needle on claim rejects.” Among the areas Martin reports addressing were how unit-dose composites are managed and establishing edits to ensure that patient codes are correct and stay correct. “We felt like we were doing things right,” says Martin, “but when we really looked at our process with SoftWriters and looked at the logic within the system that we can use, we realized that there are edits and other tools available to ensure we are taking the right steps each and every time.”

Getting back to basics led to success. “We laid out a structure for how to leverage the tools within our pharmacy system, and we started moving things very slowly,” explains Martin. “And now we’re averaging rejection rates below 2%, and some months we’ve even been just under 1%. We have cleaner claims, we have better statements that we’re producing for our customers, and we also have been able to reassign an FTE [full-time equivalent] in the billing department over to another department, which has improved our overall operations as well. All this while our volume is higher today than it was a year ago.”

Battling Retroactive Fees

Direct and indirect remuneration (DIR) fees are another area getting a lot of well-deserved attention when it comes to managing claims. Erica Mahn at Alps Pharmacy puts it this way: “You can know the cost of your prescription, but retroactive fees such as DIR mean that you really don’t know what your reimbursement is until what’s often months later.”

Read More ⇒ 3 Steps to Buying Smart, advice from PharmSaver President Michael Sosnowik

“This is the biggest place that we’ve had to rely on our PioneerRx system to help us get a real handle on reimbursement,” says Mahn. “We need to be able to track in a consistent way what a given payer is likely going to be taking off the top of our reimbursement with those DIR fees.”

Mahn reports that Alps Pharmacy is using a feature within PioneerRx to log known retroactive fees for a given payer and automatically apply them to new claims in order to generate an estimate of what reimbursement will be in the end. “These are estimates based on the data,” notes Mahn, “but we’ve found that they’ve been very helpful in allowing us to predict at dispensing what our profit should be.”

Preventing Audits and Clawbacks

Then there are audits and the resulting clawbacks, an area in which a less-than-rigorous claims-editing process can be a real problem. Addressing this audit risk is a significant area in which RelayHealth’s Cathy Romanick sees pharmacies searching for help.

As she reports, RelayHealth has done research that found that between a third and one-half of all the audits are based off actions that a pharmacy is taking that could be prevented through more-effective use of edits. One scenario Romanick offers is when a pharmacy submits a claim for 90 tablets covering 90 days, which is then rejected because the payer only covers 30 days. It’s not uncommon for pharmacy staff to simply resubmit the claim as a 30-day supply of 90, which is going to cause trouble. “The patient walks out the door with 90 tablets that were supposed to be a three-month supply,” says Romanick, “but the insurance pays for it as a one-month supply. This is then an audit trigger for the payer.” The payer may request documentation to support the change in daily dose. If no documentation is found, it typically results in a clawback of the original reimbursement.

This is a prime example of a case where an edit can help mitigate the audit risk. “We see that original claim,” says Romanick. “We see the reject. We then monitor claim activity to confirm subsequent submissions of that claim contain a daily dose that matches the original daily dose.”

Edits for Opioids

Prescriptions for opioids are a new area where pharmacies are finding a need to apply edits during the dispensing process, with new requirements for Medicare Part D opioid claims now in effect. Alps Pharmacy is stepping up here and has established an edit that automatically alerts the pharmacy if someone is paying cash for an opioid prescription or someone with a new prescription has no record of taking an opioid. “We need to be able to identify these patients immediately,” says Erica Mahn, “so that the pharmacist can assess the appropriateness of dispensing the opioid and, if needed, have the right conversation with the patient.”

Read More ⇒ More on Opioid Edits and Focus on Medicare and Medicaid Claims, an interview with The National Community Pharmacists Association’s (NCPA) Vice President of Pharmacy Policy and Regulatory Affairs Ronna Hauser, Pharm.D.

Keeping an Eye on AR

Crystal Reed is the controller at ReCept Pharmacy, a multiple-location operation that owns or operates pharmacies with retail, specialty, and compounding services in 13 states.

Crystal Reed, controller at ReCept Pharmacy
Crystal Reed

As controller, Reed is tasked with monitoring claims reconciliation across the group’s pharmacies, an impossible task without the right tools and the right partner. In ReCept Pharmacy’s case, Reed is using ScriptPro’s Third Party Management System (TPMS) and the supporting staff there to reconcile payments at the claim level, with the detail broken out by store. ReCept Pharmacy’s X12 835 healthcare claim payment EDI (electronic data interchange) transactions flow into TPMS, where ScriptPro’s staff can match them up against the claims data while working closely with ReCept Pharmacy’s accounts receivable (AR) supervisor. “There’s no way we’d be able to manage reconciling these 835s in-house,” says Reed. “It’s just a huge amount of data in the 835, and it all needs to be broken out and matched to claims effectively.”

TPMS is actually housing all of ReCept Pharmacy’s accounts receivable data, which allows Reed to leverage the platform for a variety of other AR tasks, such as tracking and aging AR, identifying payers that are not providing timely reimbursements, and tracking any DIR fees or adjudication costs associated with claims. Reed reports using the data on prescription DIR fees and adjudication costs to create appropriate entries in ReCept Pharmacy’s general ledger, so that the group has a handle of what these costs are.

Pharmacy Process Evolving

The processes and tools around pharmacy claims and reimbursement management have certainly developed beyond the familiar set of edits and reports. As we’ve seen from the example of Alps Pharmacy, edits have become customizable to the point where their use can extend to any pharmacy process that needs software-based checks and assurances. “We’ve just been very happy with how much we can customize each part of our process using the edits within our PioneerRx software,” says Erica Mahn. “We are able to make what we need out of the system, which is important because we have a lot of different situations at different stores in different types of pharmacies.”

There are multiple ways to make an impact on your pharmacy operations with edits and reconciliation services. There are benefits from having an eye in the sky, as described by Cathy Romanick, that applies edits at the switch level to help ensure that only clean, properly priced claims are making it to the payer. And you may well want to get deeper into the nuts and bolts of your pharmacy system to figure out how to use what you’ve got to reduce claim rejects, as was the case for Gayco Healthcare. Or it may involve getting smart and looking for support to manage the huge amount of data flowing through your pharmacy, as ReCept Pharmacy has done for its AR and claims reconciliation. Choose the right set of tools, and you can bring order to what would otherwise be some messy areas of pharmacy operations. CT

Will can be reached at