The pharmacy industry is facing various changes in 2024, and therefore pharmacy professionals need to understand billing and claim submission. Given the progress in technology, changing regulations, and new requirements set out by payers, it has become increasingly critical to understand the nuances of pharmacy billing. 

This blog offers pharmacy billing fundamentals such as CPT and ICD codes, the typical billing issues, and potential trends in the industry. Understanding these fields will help pharmacies optimize billing procedures, decrease claim rejection rates, and boost operational effectiveness overall.

Understanding Pharmacy Medical Billing

Pharmacy medical billing is defined as the process by which the pharmacies submit their claims to insurance companies or government programs in order to recover the cost of the drugs, medical equipment, and other medical services that are rendered to patients. Unlike regular retail pharmacy transactions, medical billing requires work with codes such as NDC (National Drug Code), CPT (Current Procedural Terminology), and HCPCS (Healthcare Common Procedure Coding System). Each code pertains to a specific drug or service that the pharmacy provides; therefore, it has to be recorded correctly to receive the right amount of payment. 

Steps for Pharmacy Billing and Claim Submission

Pharmacy billing and claim submission is a complex process that calls for several significant steps on the way towards proper reimbursement for the medications and services offered by the pharmacies. Here’s a breakdown of the process:

Patient Information Collection

The process starts with the collection of complete patient data, such as personal data, insurance data, and prescription data. At this step, it is essential to confirm the insurance status and pre-authorization of the particular medicine for the patient.

Prescription Review and Coding

After receiving the prescription, the pharmacy comes up with the right billing codes to be relevant to the medication or the services offered.This typically includes:

• NDC (National Drug Code): Identifies the medication.
• CPT (Current Procedural Terminology): If pharmacy services, such as medication therapy management, are provided.
• HCPCS (Healthcare Common Procedure Coding System): For medical supplies or certain medications not covered by NDC.

Insurance Verification

Even before the drug is dispensed, the pharmacy checks on the insurance plan of the patient to ascertain whether the plan will cover the drug, and if so, the co-payment or prior authorization from the insurance company is sought. Some drugs may need prior authorization from the insurer, especially specialty drugs.

Claims Submission

The insurance details of the prescription are entered into the system, and the claim is sent electronically after the prescription has been processed and reviewed by the clearinghouse. This claim will comprise of the patient information, prescription details, code given, whether is NDC, CPT, or HCPCS, and any documentation or records of authorization made earlier.

Claim Adjudication

Adjudication is a process by which the insurance company considers the claim and arrives at a decision. In this stage, the insurer verifies the accuracy of the bill, the policy coverage, and whether the bill conforms to the particular insurance plan of the patient. They decide how much of the claim will be paid to the medical provider, which portion the patient shall pay in terms of a co-pay or meeting the deductible, and which component of the claim shall be rejected.

Reimbursement

After the claim is paid, the insurance company makes payment to the pharmacy in regard to the amount approved by the insurance company for the claim. If the patient has a balance, this balance is forwarded to the pharmacy, and the patient is charged accordingly.

Denial Management and Re-submission

In case the claim is denied, the pharmacy is informed by a denial notice with common causes like improper coding, lack of support data, or missing preauthorization. The pharmacy is required to appeal the denial, correct the mistake on the claim, and resubmit the claim. Rejected claims may be additionally accompanied by other proofs of the service or medication that has been offered.

Payment Posting and Reconciliation

When payment is received, the pharmacy books the reimbursement in its system and clears any balance. If the pharmacy finds a difference between the amount received and the amount expected, it may be necessary for the pharmacy to contact the insurer for clarification.

Common NDC, CPT, and ICD Codes in Pharmacy Medical Billing

Pharmacy billing mainly depends on the NDC  for medicines, but CPT  and ICD codes are used where the pharmacies are involved in other clinical services or for sales of medical equipment. Below are common NDC, CPT and ICD codes used in pharmacy billing:

Common NDC Codes in Pharmacy Billing 

Pain Management

• Acetaminophen 500 mg Tablets
  • NDC: 0904-2636-01 – Tylenol Extra Strength (100 tablets bottle)
• Ibuprofen 400 mg Tablets
  • NDC: 0085-4108-01 – Advil (100 tablets bottle)
• Oxycodone 10 mg Tablets
  • NDC: 60505-303-30 – OxyContin (30 tablets bottle)

Antibiotics

• Amoxicillin 500 mg Capsules
  • NDC: 0013-0642-01 – Amoxil (100 capsules bottle)
• Azithromycin 250 mg Tablets
  • NDC: 0065-0503-01 – Zithromax (6 tablets package)
• Doxycycline 100 mg Capsules
  • NDC: 0071-1168-10 – Vibramycin (30 capsules bottle)

Hypertension

• Lisinopril 10 mg Tablets
  • NDC: 60505-320-30 – Prinivil (30 tablets bottle)
• Amlodipine 5 mg Tablets
  • NDC: 0065-3001-00 – Norvasc (90 tablets bottle)
• Losartan 50 mg Tablets
  • NDC: 0781-2400-01 – Cozaar (30 tablets bottle)

Diabetes

• Metformin 500 mg Tablets
  • NDC: 0002-0770-01 – Glucophage (100 tablets bottle)
• Insulin Glargine 100 units/mL (10 mL)
  • NDC: 0002-4680-03 – Lantus (10 mL vial)
• Glyburide 5 mg Tablets
  • NDC: 0078-0457-01 – Micronase (100 tablets bottle)

Respiratory

• Albuterol 90 mcg Inhaler
  • NDC: 0173-0712-00 – ProAir HFA (200 metered inhalations)
• Fluticasone Propionate 50 mcg Inhaler
  • NDC: 0173-0583-01 – Flovent HFA (120 metered inhalations)
• Montelukast 10 mg Tablets
  • NDC: 57866-217-02 – Singulair (30 tablets bottle)

Cardiovascular

• Atorvastatin 20 mg Tablets
  • NDC: 0065-0288-01 – Lipitor (30 tablets bottle)
• Clopidogrel 75 mg Tablets
  • NDC: 0002-0520-01 – Plavix (30 tablets bottle)
• Hydrochlorothiazide 25 mg Tablets
  • NDC: 0002-0283-01 – Hydrodiuril (100 tablets bottle)

Dermatological

• Hydrocodone/Acetaminophen 5 mg/325 mg Tablets
  • NDC: 0045-2135-01 – Vicodin (100 tablets bottle)
• Clobetasol Propionate 0.05% Cream
  • NDC: 0037-0030-01 – Temovate (60 grams tube)
• Tretinoin 0.025% Cream
  • NDC: 0024-2062-60 – Retin-A (30 grams tube)

Hormonal

• Estradiol 1 mg Tablets
  • NDC: 0037-0633-01 – Estrace (30 tablets bottle)
• Testosterone Enanthate 200 mg/mL (10 mL)
  • NDC: 0037-0610-10 – Delatestryl (10 mL vial)
• Levothyroxine 50 mcg Tablets
  • NDC: 0002-5975-01 – Synthroid (30 tablets bottle)

What are Pharmacy Billing CPT Codes?

Even though CPT codes are generally not related to drugs but to procedures and services, the Pharmacy Billing CPT codes are vital for the pharmacies that provide clinical services such as immunization, counseling, or medication therapy management (MTM). Here are some frequently used CPT codes in pharmacy billing:

Immunization Services

• 90471 – Immunization administration (single vaccine/toxoid)
• 90472 – Immunization administration (each additional vaccine/toxoid)
• 90460 – Immunization through 18 years of age via any route of administration, with counseling

Medication Therapy Management (MTM) Services

• 99605 – Medication therapy management service(s) provided by a pharmacist, initial 15 minutes, face-to-face with a new patient
• 99606 – Medication therapy management service(s), initial 15 minutes, established patient
• 99607 – Each additional 15 minutes of MTM services

Smoking Cessation Counseling

• 99406 – Smoking and tobacco cessation counseling, intermediate (3-10 minutes)
• 99407 – Smoking and tobacco cessation counseling, intensive (greater than 10 minutes)

Chronic Care Management (CCM) Services

• 99490 – Chronic care management services, at least 20 minutes of clinical staff time directed by a physician or qualified healthcare professional, per calendar month
• 99439 – Non-complex chronic care management, with at least 30 minutes of care management services, per calendar month

Diabetes Self-Management Training

• G0108 – Diabetes outpatient self-management training, individual session, per 30 minutes
• G0109 – Diabetes outpatient self-management training, group session (2 or more), per 30 minutes

COVID-19 Testing and Vaccination

• 87426 – Infectious agent antigen detection by immunoassay technique for SARS-CoV-2
• 91300 – COVID-19 vaccine administration (Pfizer)

What are Pharmacy Billing ICD Codes?

Pharmacy Billing ICD codes are primarily used to identify the diagnoses, diseases, or treatment indications where the pharmacy is offering a service in response to a particular disease or illness. Some common ICD-10 codes used in pharmacy billing include:

General Medical Conditions

• E11.9 – Type 2 diabetes mellitus without complications
• I10 – Essential (primary) hypertension
• J44.9 – Chronic obstructive pulmonary disease (COPD), unspecified

Vaccination ICD-10 Codes

• Z23 – Encounter for immunization (used when billing for vaccinations such as flu shots or COVID-19 vaccines)

Tobacco Use/Dependence

• F17.200 – Nicotine dependence, unspecified, uncomplicated
• Z72.0 – Tobacco use (used when providing smoking cessation counseling)

Chronic Disease Management

• E78.5 – Hyperlipidemia, unspecified (commonly used for statin therapy)
• E66.9 – Obesity, unspecified (used for weight management services)
• R73.03 – Prediabetes (used in diabetes prevention programs)

Respiratory Conditions

• J45.909 – Unspecified asthma, uncomplicated
• J06.9 – Acute upper respiratory infection, unspecified (often used for common cold or flu-related services)

Medication Therapy Management (MTM)

• Z79.899 – Other long term (current) drug therapy (used when patients are receiving long-term medication therapy, such as for diabetes or hypertension)

Pharmacy-Specific Supplies and Equipment (HCPCS Codes)

When billing, pharmacies also apply HCPCS (Healthcare Common Procedure Coding System) codes for certain medical supplies, especially DME or supplies related to medications.

• A4223 – Supplies for maintenance of drug infusion catheter, per week
• A9276 – Sensor; invasive (e.g., subcutaneous), disposable, for use with interstitial continuous glucose monitoring system, one unit
• A9277 – Transmitter; external, for use with interstitial continuous glucose monitoring system

Pharmacy Billing Claim Denial Reasons and Solutions

One of the issues that pharmacy managers can encounter when it comes to payments is billing denials, which result in long payment durations and workloads. 

Invalid or Inaccurate National Drug Code (NDC)

Reason: Having wrong or obsolete NDC codes for the medication is a reason for denial of the claims. This occurs especially when the specific code used by the pharmacy is not identified by the payer or when the drug has been coded incorrectly. Solution: Utilize new billing software that includes the latest NDC codes for every drug. Employees should be periodically taught about the most recent coding standards. Ensure that NDC codes are entered correctly before processing insurance claims.

Prior Authorization Not Obtained

Reason: Most expensive or complex drugs may be prescribed to require the approval of the relevant authorities before they can be dispensed. If the pharmacy does not receive this approval from the insurer, the claim can be rejected. Solution: Adopt a standard prior approval mechanism. Make sure medications that require prior authorization are appropriately coded in the system and contacting prescribers and insurance providers where approval has not been obtained in the shortest time possible.

Non-Covered Medication

Reason: Petitions can be refused if the supposed treatment involves a type of medication that is not recognized by the insurance plan of the patient or if it is not on the formulary list. Solution: Ensure patients undergo an insurance check before administering prescribed medication. Offer options that are in the plan of the patient to avoid incurring costs that the patient has to cater for. Consult with the prescribing physician regarding preferable medication brands that are within the patient’s insurance coverage or discuss the appeal process if the coverage is unsatisfactory.

Expired or Invalid Insurance Coverage

Reason: As mentioned earlier, in a case where an insurance policy is no longer valid or held by the patient at times of service delivery, the claim is rejected. Solution: One should always confirm with the patient about the insurance they have before attending to the patient. Check the status of the insurance using real-time insurance verification tools to confirm that the patient’s insurance policy is valid and bill the right payer.

Duplicate Claim Submission

Reason: Claiming several times the same medication or service necessitates automatic denial of the respective claim. Solution: Introduce tracking of the claims to ensure that the same claims are not submitted severally. Pay close attention to the communication between the billing and the pharmacy sections with a view to avoiding resubmission of already processed or pending ones.

 Quantity Limits Exceeded

Reason: There are insurance policies that prescribe the maximum amount of drugs that can be administered within a given time frame. All claims beyond these amounts are usually rejected. Solution: Ensure that you check through the patient’s plan limits before dispensing the medications. Notify the prescriber if the amount prescribed is more than the allowable quantity and ask for an override or change to meet the payer’s regulations.

Steps to Master Pharmacy Billing and Claims Submission

1. Stay Updated on Coding Systems: The NDC code, CPT code, and HCPCS code change frequently. Prescription coding is a common practice, and pharmacies should ensure that they subscribe to coding updates and brief their billing staff concerning the same.
2. Implement Pharmacy Management Software: Pharmacy management software that controls the bill, code, and claims can eliminate the chances of human error in the reimbursement process.
3. Regularly Review Denied Claims: This would involve periodically reviewing the denied claims to determine if there is a pattern that may require intervention. Review these assertions to grasp the mistakes and explicate them to avoid them in the future.
4. Develop a Prior Authorization Protocol:It is important to confirm that there is a team, a receptionist, or a computerized system ready to handle the prior authorization request. It may also be useful to avoid delays in the delivery of medication and billing through the automation of these processes.
5. Create Comprehensive Patient Records: All patients’s information has to be current and contain insurance status, eligibility, and prescription information. Faulty or flawed patient records are largely blamed for billing mistakes.

Trends Impacting Pharmacy Billing in 2024

Pharmacy billing is constantly progressing due to the changes in technology, healthcare policies, and patient management systems. The following trends are likely to influence the changes in pharmacy billing in the year 2024:

Increased Adoption of Automation and AI in Billing

Trend: Automated billing and biopharmaceuticals are the most common trends with advanced technologies such as artificial intelligence (AI) among the pharmacies. The use of artificial intelligence means that processes such as insurance verification, coding, and claim submission can be done by the systems, and this saves time besides eliminating human errors. Impact: Automation reduces the human factor, hence increasing the rate of approvals and decreasing the rate of denials. The use of AI solutions enables pharmacies to enhance billing capabilities, enhance accuracy, and their general financial performance.

Expansion of Value-Based Pharmacy Services

Trend: Due to the widespread adoption of value-based care in the current health-care systems, pharmacies have shifted from the classical roles of drug distribution to other valuable services like MTM, immunization, and chronic care. Impact: Charging for such services demands the development of new coding systems (for example, CPT codes for MTM services), along with reimbursement knowledge under value-based health care systems. Pharmacies require the adoption of outcome and quality care billing strategies that do not focus on the number of services offered.

Telepharmacy Growth

Trend: Telepharmacy has become prevalent in recent years, especially after the COVID pandemic, to extend various types of pharmacy services, including consultative, refill, and educational services. Impact: With the expansion of telepharmacy services, billing issues will be relevant to remote consultations and managing medications remotely. New billing codes for telehealth services are being developed, and pharmacies will need to adapt to these new changes to ensure adequate compensation for telepharmacy services.

Wrap Up

To sum up, pharmacy billing and claims submission in 2024 require thorough knowledge of code sets as well as regulations that apply to a specific industry and trends of the process. Since there are so many factors that can influence claim reimbursement, such as claim denial, complicated coding, and evolving payer rules and guidelines, it is very important for pharmacies to stay ahead.

By outsourcing your pharmacy billing to MedHeave Medical Billing Services, you are in a position to benefit from our specialized experience in handling the numerous billing issues in a sensitive and effective manner, compliance, and reimbursements.

Let us help you streamline your operations and enhance your financial performance. Contact us today for further details.