Article - Improving Pharmacy Claims Reimbursement for Community Pharmacies

Community drugstores continue the good fight for market share in an increasingly competitive pharmacy marketplace, according to a new report. The 2019 NCPA Digest notes that the estimated number of independent community pharmacies dropped to 22,041 from last year’s total of 22,160. The annual benchmarking survey sponsored by Cardinal Health and presented at the National Community Pharmacists Association’s annual convention in Orlando also reveals that community pharmacies represent 36% of the retail pharmacy marketplace.

Independent community pharmacies remain indispensable for patients, especially in underserved communities. This occurs because of the quality of services, which are growing as pharmacists find new ways to drive better health outcomes for their patients, and through civic engagement in their communities. Community pharmacies are finding a way to survive, which is especially important to smaller communities. The digest states that 81% of community pharmacies serve population areas of 50,000 or less and that the businesses are important to the economies of those areas, employing more than 200,000 full-time equivalent (FTE) staffers.

Improving Reimbursement

Prescription drug claims are the financial lifeblood of any community pharmacy. To ensure a steady and accurate flow of revenue, community pharmacies should use technology to improve their pharmacy claims management processes. Among the many processes that could be optimized through technology are pricing verification, reimbursement accuracy, prescriber and patient dispensing verification, and prior authorization. In addition to improving pharmacy claims reimbursement, pharmacies will reap operational and clinical benefits.

There are three reasons why community pharmacies need to improve pharmacy claims management:


Health plans continue to lower payment rates for prescription medications. That downward pressure threatens pharmacy margins on drugs. One way pharmacies can protect margins is to ensure they are billing for and receiving all revenue to which they are entitled.

Regulatory compliance:

State and federal regulations governing who can prescribe medications, who can dispense them and when the medications can be dispensed grow more complex each year. Add to that regulatory oversight of drug manufacturers and distributors, and pharmacies face a mounting compliance challenge.

Drug benefits:

The prescription drug benefits that health plans offer are growing in complexity. Community pharmacies have to navigate benefit tiers, different co-payment and co-insurance levels, direct and indirect remuneration (DIR) fees, prior authorization requirements, changing drug formularies and more.

One of these reasons would be enough to spur a community pharmacy to consider improving its pharmacy claims management processes. All three make overhauling those processes a business imperative. Community pharmacies must optimize their pharmacy claims reimbursement systems, and given the accelerating complexities I just described, doing that manually is highly challenging. A more efficient and faster path is through technology.

Pharmacies should pursue a technology platform that gives them the following core pharmacy claims editing capabilities:


Checks the average wholesale price (AWP) submitted by the pharmacy for a drug against the up-to-date AWP for the same drug. If the pharmacy-submitted AWP is lower, the application will raise the AWP to the right level to increase reimbursement.


Confirms the dispense-as-written (DAW) codes on claims from the pharmacy. The DAW code tells the health plan that the prescriber or the patient requested the specific brand-name drug. If the DAW code is entered as a default code, the pharmacy may be paid a lower generic drug rate for the actual brand-name drug it dispensed.

Managing inventory:

Validates the national drug code (NDC) assigned to drugs for which claims were submitted. Drug manufacturers recycle NDCs, meaning a code could become obsolete for a discontinued drug and reassigned to a new drug. The edit notifies users of an obsolete NDC, creating the opportunity to change the NDC and potentially increase reimbursement.

Dosing and packaging:

Checks a pharmacy claim for a specific drug, its dosage and the drug’s unit-packaging against the maximum allowable daily dose (MADD) for the drug and its recommended unit-packaging. Claims for drugs dispensed with the right MADD and in the right unit-packaging will be reimbursed appropriately.

Prior authorization:

Automates and streamlines key portions of the prior authorization process. That’s when the prescriber and/or dispenser need prior approval from a health plan to give a specific medication to a patient. This helps avoid treatment delays and improve customer satisfaction.

By automating these capabilities through technology, community pharmacies can put themselves in a much stronger position to address the main factors—reimbursement, regulations and benefits—that are making pharmacy claims reimbursement more complicated and are challenging margins. Collectively, the capabilities maximize revenue, improve cash flow and generate operating efficiencies by replacing many error-prone manual pharmacy claims management functions.

Published By - Medical Billers and Coders
Published Date - Jan-29-2020 Back

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