1. 1 Processing Claims and Appealing Decisions Chapter 7 © 2010 The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter 72 Learning Outcomes After studying this chapter, you should be able to: 7-1 Explain the process of payer adjudication of claims, including the criteria for reimbursement. 7-2 Discuss common administrative and safety edits. 7-3 Understand the actions taken at the pharmacy to ensure good patient point-of-sale payment collections.

3. Chapter 73 Learning Outcomes (Continued) 7-4 Describe the electronic remittance advice used for pharmacy claims. 7-5 Describe the types of codes used to report adjustments on an electronic remittance advice. 7-6 Discuss the need for account reconciliation.

4. Chapter 74 Learning Outcomes (Continued) 7-8 Explain the importance of payment follow-up and collections. 7-9 Explain the types of audits conducted to detect fraud.

5. Chapter 75 Key Terms Account reconciliation Administrative edits Aging reports ASC X12N 835 Pharmacy Remittance Advice Template Claim Adjustment Group Codes Claim Adjustment Reason Codes (CARC) Desk audits Edits Field audits Remittance Advice Remark Codes (RARC) Safety edits Step therapy

6. Chapter 76 Payer Processing of Claims A number of criteria must be met for a payer to provide reimbursement for a prescription The process that a payer follows to examine claims and determine the correct payments is known as adjudication If a claim is approved for payment, the computer displays the price of the medication, the patient’s copayment or coinsurance, among other information

7. Chapter 77 Payer Processing of Claims (Cont.) If the claim is not approved, the response contains information about the reason(s) for the denial. Edits are performed to evaluate prescription claims for errors and missing information, and ensure compliance with the benefit plan and industry standards Before a prescription can be dispensed, edits must be resolved and the claim must be resubmitted

8. Chapter 78 Administrative and Safety Edits Edits can be sorted into two categories: administrative and safety Administrative edits typically indicate that additional information is required to process the claim, or that some information has been entered incorrectly Safety checks are required when there are concerns in regards to the prescription and health risks

9. Chapter 79 Administrative Edits Common administrative edits include: Eligibility Dosage checks Duplicate claim Refill-too-soon Coordination of benefits issues High dollar Non-formulary products Step therapy

10. Chapter 710 Safety Edits Examples of safety edits include: Drug-drug interactions Age/gender contraindications Days’ supply/maximum quantity Therapeutic duplication Time interval

11. Chapter 711 Remittance Advice The document sent from the payer to the pharmacy explaining the actions taken and status of a claim The RA provides the pharmacy with the results of claim adjudication and indicates the amount of the claim reimbursement that will be paid Both electronic and paper remittances provide similar information, but look different

12. Chapter 712 Adjustments Occur when the amount charged on a claim is not equal to the amount paid Several sets of codes are used to report payment adjustments in electronic remittance advice transactions, including: Claim Adjustment Group Code Claim Adjustment Reason Code Remittance Advice Remark Code

13. Chapter 713 Adjustments (Cont.) Claim Adjustment Group Codes describes the type of adjustment Claim Adjustment Reason Codes (CARC) are mandatory codes used to specify a reason for an adjustment to a claim Remittance Advice Remark Codes (RARC) can be used to provide further explanation of the basic information provided by the other codes, but are not mandatory

14. Chapter 714 Collecting Point-of-Sale Payment For the convenience of the patient, most pharmacies offer various payment methods including cash, checks, and major credit cards Pharmacies must have good patient point- of-sale collections practices in order to have a steady cash flow and a smoothly- operating business

15. Chapter 715 Customer Relations The ability to provide sound customer relations begins by developing a firm understanding of the processes involved with payer adjudication, and the steps that follow The pharmacy technician must be patient and communicative with the patients

16. Chapter 716 Account Reconciliation The act of comparing the total charges and amount owed with the reimbursement received from the insurer and from the patient Also referred to as balancing the account In some pharmacies, reconciliation is performed automatically

17. Chapter 717 Resubmitting and Appealing Claims Pharmacies can resubmit claims after adjustments are made, and the payer will review it and make a decision about whether to pay or deny the claim Not all claims that are resubmitted to the payer are accepted on the second attempt The pharmacy may appeal the decision if it reviews the denied and still believe it is valid

18. Chapter 718 Payment Follow-up and Collections Sometimes the pharmacy, or a contracted agency, must contact patients about bills or prescriptions that have not been paid Aging reports are used to identify patient accounts with outstanding balances that are overdue An aging report groups unpaid claims by time

19. Chapter 719 Payment Follow-up and Collections (Cont.) Patients may decide not to pay some or all of a bill for many reasons Regardless of the reason for the lack of payment, the pharmacy attempts to collect the funds it is owed When contacting patients about overdue bills, the pharmacy must be professional and respectful, and obey relevant laws At times a collection agency or skip tracing may be necessary

20. Chapter 720 Audits Rising prescription drug costs and the complexity of prescription benefit plans have led to an increased focus on pharmacy fraud To detect possible fraud, payers conduct audits Audits evaluate a pharmacy’s compliance with payer contracts, plan guidelines, as well as applicable federal and state laws

21. Chapter 721 Audits (Cont.) Desk audits are computerized audits performed off-site Field audits are performed on-site at the pharmacy After the audit is complete, the pharmacy is given a report of the findings Negative findings must be resolved within a timeframe, and various penalizing actions could be taken