Key Points about Pharmacy Billing and Reimbursement

From the pharmacy to the side of the patients, the prescription has multiple phases of reimbursement for patients as well as pharmacies. Distributing medication from your own hospital could be one of the efficient as well as an effective way for revenue generation. The health care industry has transformed unconventionally over the past few years and engagement with distributing medication may be critical.

In order to chase the distribution of medication as part of your job, it is required to have knowledge about the different processes involved in dispensing medication. Nevertheless, there are other specific features that should be implemented properly, which may impact reimbursement and therefore the Revenue Cycle Management (RCM) process.

Here are some of the key points to remember about pharmacy billing and reimbursement:

Drug Price

Drug prices depend on market dynamics like any other product. Nevertheless, there are some corridors through which drugs can be procured at lesser prices. For instance, hospitals may purchase drugs at a greater price than they are being paid by fixed-fee payers. There are options like low-cost generic medicines which are not even considered. In order to achieve economies of scale, you can conduct price research on a day to day basis and match drugs expending to reimbursement.


Procurement is the step where information travels from referring to bought quantities and pricing to designating inventory costs and units of measure (UoM). In most of the scenarios, data is entered manually. Moreover, figures that are uploaded from a wholesale distributor to the system of a pharmacy are too monitored manually in order to avoid mistakes. Transferring data can generate errors which can impact on the revenue cycle management negatively.


One of the key points about pharmacy billing and reimbursement to prevent costly mistakes is coding. Drugs require to possess correct HCPCS coding and showcased accurately in the chargemaster. Failure in doing so result in the pharmacy not getting proper reimbursement.

Data Workflow

Identifying how the revenue cycle runs in pharmacy is very important. Understanding about pharmacy billing and process management about revenue and expenses of pharmacies is essential. Furthermore, it is vital for sustainable dispensing programs and growth.

Initiating from procurement to inventory and then billing and reimbursement includes buying medications, their storage, and type of distribution, how they are managed, a technique they are billed and coded, and finally reimbursed. All information should be entered accurately to escape costly and time-consuming errors that ultimately impact the revenue cycle.

Rules, Regulations, and Compliances

Maintaining a record of continuous changes to drug-related CMS regulations is a current challenge, which leads to compliance as well as reimbursement risk. According to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) pharmacists will get compensation for medication therapy management (MTM) services from Medicare Part D prescription drug plans.

Alternatives for continuous reimbursement and billing were restricted for the pharmacist before MMA. As a result of MMA, the Current Procedural Terminology (CPT) codes allocated especially for pharmacists playing MTM were designed. Pharmacies should incorporate both the NPI as well as the NPI of the prescriber on all claims.

Linkages between Purchases and Billing

Many hospitals have dedicated processes for ordering and supervising of drugs followed by reimbursement. Without a connection between pharmacy expenses for medication and the chargemaster, confirming appropriate charge capture and minimum reimbursement is a challenge. Apart from this, hospitals should possess automated tools for specifically recognizing charge capture, so as to identify where and when their occurrence to lowering revenue loss.