Pharmacy Billing Services

Developing Fee Structure for Pharmacists

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In the absence of any outside contracts with MCOs, all payers for service must be charged the same fee. This means that cash-paying customers must be charged the same fee that is billed to third-party payers. To charge the insurance companies a rate higher than the cash-paying customer may be considered fraud. It is important, therefore, to ensure that the fee structure is well defined and designed to cover direct and indirect costs associated with providing clinical services.

Fee structures may be developed that set the fees based on the type of service provided. Initial visits may be billed at one rate, follow-up visits at another rate. These rates might be determined on the time spent in each type of visit and at a set amount/minute. Alternatively, the fees may be determined by the type of visit, for example, $30 for an education or consultation visit, or $35 for a bone density screening. Several examples can be found in the literature of fees charged for clinical services in community pharmacies; sample fees for a fasting lipid profile plus glucose test in community pharmacy screening programs have ranged from $25–30 in a fee-for-service structure to $300/year in a capitation program. National Medicare reimbursement schedules are published annually in the Federal Register and may be helpful in determining a fee schedule.

Some providers use a capitation fee structure in which the patient might enroll in a service for a predetermined fee in exchange for a bundled package of services provided for a given period of time, such as enrolling in a lipid program for 12 months, which entitles the patient to monthly counseling sessions and five lipid profiles for a one-time fee of $300.

Clinical services that involve laboratory services and interpretation of laboratory results may incur higher start-up costs than those of other clinical services owing to the costs involved in purchasing the instruments and laboratory kits. Although providers may bill any fee they desire, if this fee is higher than the usual and customary charge typically paid by the health plan, the health plan will compensate at the usual rate paid to other providers of the same service. Any difference between what the provider submits and the plan compensates is to be paid by the patient. Medicare requires that the provider accept the assignment. This means that the patient may not be charged any difference between what is billed and what is paid. Medicare has established a physician payment schedule for outpatient care under Part B. This schedule is based on a formula that calculates a fee by using various determinants: Fee = RVU * GPCI * CF * 80%

  • where RVU is resource-based relative value unit, which is an adjusted figure to account for work provided, practice expense, malpractice expense, and geographic location, and these values are specific to Current Procedural Terminology (CPT) codes;
  • GPCI is a geographic adjustment factor, termed Geographic Practice Cost Indices, that allows for different costs of practice in various parts of the country (e.g., the GPCI is greater in New York City than in Little Rock, Arkansas);
  • CF is a conversion factor determined by CMS each year; and
  • 80% is the percentage Medicare will pay toward the amount billed.

Thus, fees for various services are based on factors such as physician specialty, geographic location of the practice, determination of a relative value unit for the practice, the International Classification of Disease, Ninth Revision, Clinical Modification (ICD-10-CM) diagnosis code, and the particular CPT code for the patient service. Most insurance companies use either the Medicare formula for payment, a modification of the Medicare formula, or a similar formula of their own. Reference tables for these factors are provided by CMS; however, these values and the current Medicare (and other pertinent third-party payers) schedules may be available through the institution’s computerized billing office.

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