Change is NOT retrospective thus pharmacy claims submitted after effective date and before change date are usually underpaid 7 - 8% less than expected ingredient cost amounts.
Q: Why am I reimbursed at a previous (old) ingredient cost when the effective date is prior to date filled?
- PBMs use claim processors to calculate reimbursement paid to pharmacy for drug dispensed to its members (reimbursement paid = ingredient cost plus dispense fee) based on negotiated contract terms. Ingredient cost for Single Source branded drug items is typically based on AWP price list. The manufacturer increases the price which is maintained by one of the electronic drug database vendors (FDB, MediSpan, MicroMedix and Gold Standard). The master drug files and change records are maintained by the drug database vendors and as changes are made to the drug databases, updates are aggregated and used by pharmacies, PBMs, processors, etc as a common reference source for classification, coding and billing. Unfortunately, the majority of databases and systems used are de-centralized, proprietary, and disparate causing the content to be irregular and inconsistent between providers and payers. Additionally, the drug file updates that are generated and applied by the drug database companies and payer/provider billing systems are misaligned. The file maintenance which is licensed from the drug database source companies by the payers and providers is very random and can vary from daily, weekly or monthly and could be applied on different days (first day, last day of the month or everyday M-F or only Thursday of each week, etc.
- A common practice which PBMs put into practice is to update their drug pricing every two weeks or monthly, thus creating payment issues.
- The drug database assigns a fixed price effective date, however the date applied which the drug database vendor has no control over depends on the update schedule of the PBM/Processor. Commonly, the PBM updates are typically applied two weeks after the effective date and the updates are not retroactive(price went up before applied to PBMs billing systems and claims submitted prior to date applied are not recalculated by the PBM). The net result on a pharmacy is a potential loss of 7-8%/Branded Rx affected (in 2008 the average branded drug price increase was 7-8% TOTAL) of total ingredient cost billed (2008 Branded Rx total ingredient cost was approximately $101.00, so 7%-8% = $7 to $8 loss/rx).
- Example: The drug manufacturer changed the price on the first of the month, and the PBM's Processor changed the AWP on the 15th of the month. Furthermore, the pharmacy submitted the claim on the 4th of the month, the pharmacy may reverse the claim and re-bill claims, as long as all other rules and guidelines are followed to recoup price increase.
Possible solution to implement
Example of the logic used in Health Intelligence System's Solution: In our reimbursement verification solution we Compare the "actual" ingredient cost paid vs. "expected" ingredient cost**, if not equal then continue to calculate expected ingredient cost based on historical AWP's until a match is found. The same logic is used in our solution for any ingredient cost reference price or multiple prices used to determine reimbursement amount (MAC, ASP, AMP, WAC, etc.) Our solution can identify these claims overnight and perform compliancy tracking to ensure claims are resubmitted during the allowable time allocated and proper ingredient cost is paid by the plan’s claim processor.
**to calculate (1)use the contracted branded price discount factor * (2) unit awp * (3) qty dispensed