COST, INSURANCE, AND RETURNS Flashcards
What is the difference between self payment and third party payers?
Self-pay: individuals pay for meds at time of service.
Third party pay: insurance plans or programs that pay part or all of medication bill.
Name the 2 ways the pharmacy calculates a selling price and their abbreviations.
Cost Plus Markup
Average Wholesale Price (AWP)
30 capsules of a drug cost $5.00. What is our cost if we sell 15 capsules in a prescription?
$5.00 / 30 caps = 0.1666 x 15 caps = $2.499
$2.499 rounded up is $2.50
Cost = $2.50
Define markup.
The amount we wish to make for our return on investment.
What is our markup if we pay $2.50 for 15 capsules and want to make a 30% return on investment?
$2.50 x 30% = 2.5 x 0.30 = 0.75
Markup cost = $0.75
What is the our total selling price if:
Cost = $2.50
Markup = $0.75
Dispensing Fee = $2.00
2.50 + 0.75 + 2.00 = 5.25
Total selling cost = $5.25
What is the our selling price if:
Cost = $2.50
Markup = $0.75
Dispensing Fee = $2.00
2.50 + 0.75 + 2.00 = 5.25
Selling Price = $5.25
Cost Plus Markup formula.
Cost + (Cost x Markup) + Dispensing Fee = Selling Price
Calculate selling price for 60 tablets.
Cost: $200.00/1000 tabs
Markup: 34%
Dispensing fee: $4.50
$200.00 / 1000 tabs = $0.20 per tab
$0.20 x 60 tabs = $12.00 = cost
$12.00 x 0.34 = $4.08 = markup
$12.00 + $4.08 + $4.50 = $20.58 selling price 60 tabs
Calculate selling price for 30 tablets.
Cost = $138.50/100 tabs
Markup = 28%
Dispensing fee = $3.75
$138.50 / 100 tabs = $1.385 per tab
$1.385 x 30 tabs = $41.55 = cost
$41.55 x 0.28 = $11.63 = markup
$41.55 + $11.63 + $3.75 = $56.93 selling price 30 tabs
Calculate selling price for 240 ml.
Cost = $48.99/300 ml
Markup = 40%
Dispensing fee = $5.50
$48.99 / 300 ml = $0.1633 per ml
- 1633 x 240 = $39.19 cost
- 19 x 0.40 = $15.68 markup
- 19 + 15.68 + 5.50 = $60.37 selling price 240ml
Calculate selling price for 100 caps.
Cost = $19.99/50 caps
Markup = 38%
Dispensing fee = $4.75
$19.99 / 50 caps = $0.3998 per cap
$0.3998 X 100 caps = $39.98 cost
$39.98 x 0.38 = $15.19 markup
$39.98 + $15.19 + $4.75 =$59.92 selling price 100 caps
Calculate selling price for 100 tabs.
Cost = $158.57/1000 tabs
Markup = 47%
Dispensing fee = $3.00
$158.57 / 1000 tabs = $0.15857 per tab
.015857 x 100 = $15.86 cost
15.86 x 0.47 = $7.45 markup
15.86 + 7.45 + 3.00 = $26.31 selling price 100 tabs
Calculate selling price for 3 inhalers.
Cost = $45.34/inhaler
Markup = 30%
Dispensing fee = $4.89
$45.34 per inhaler = cost
- 34 x 3 = $136.02
- 02 x .30 = $40.81 markup
- 02 + 40.81 + 4.89 = $181.72 selling price 3 inhalers
Calculate selling price for 250 tabs.
Cost = $35.90/100 tabs
Markup = 35%
Dispensing fee = $7.00
$35.90 / 100 tabs = $0.359 per tab
- 359 x 250 = $89.75 cost
- 75 x .35 = $31.41 markup
- 75 + 31.41 + 7.00 =$128.16 selling price 250 tabs
What is AWP?
Average Wholesale Price
AWP formula.
(AWP) ± (AWP x Percent) + (Dispensing Fee) = Selling Price
Dispense fee: $3.00
AWP%: -4%
$358.90/100 caps
Order for 14 caps
AWP: 358.90/100 = x/14 50.25 = x = AWP
(AWP) ± (AWP x Percent)+(Dispensing Fee) = Selling Price
(50.25) - (50.25 x 0.04) + 3.00
(50.25) - (2.01) + 3.00 = $51.24
Dispense fee: $2.00
AWP %: -3%
$199.75/100 caps
Order for 60 caps
AWP: 199.75/100 = x/60 119.85 = x = AWP
AWP ± (AWP x %) + Dispensing Fee = Selling Price
(119.85) - (119.95 x 0.03) + 2.00
119.85 - 3.60 + 2.00 = $118.25
Dispense fee: $4.00 AWP %: -3% $49.50/60 g Copay: $5.00 Order for 15 g
AWP: 49.50/60 = x/15 12.38 = x = AWP
AWP ± (AWP x %) + Dispensing Fee = Selling Price
(12.38) - (12.38 x 0.03) + 4.00
12.38 - 0.37 + 4.00 - 5.00 = $11.01
Dispense fee: $4.75
AWP %: -15%
$29.99/10 caps
Order for 50 caps
AWP: 29.99/10 = x/50 149.95 = x = AWP
AWP ± (AWP x %) + Dispensing Fee = Selling Price
(149.95) - (149.95 x 0.15) + 4.75
149.95 - 22.49 + 4.75 = $132.21
Approximately, what percentage of all total health expenditures are now paid by third party insurance?
85%
Approximately, what percentage of all total pharmacy services are now paid by third party insurance?
70%
What two types of third party payers are there?
Private insurers and Government.
Define Private insurance.
Employer or Patient paid.
Define Government insurance.
Local, state, or federal insurance.
Medicare covers patients who are elderly and disabled. What does Part A include?
a) Institutional care
b) Physician/outpatient services and durable medical equipment
c) Medicare advantage plans
d) Prescription drugs
a) Institutional care
Medicare covers patients who are elderly and disabled. What does Part B include?
a) Institutional care
b) Physician/outpatient services and durable medical equipment
c) Medicare advantage plans
d) Prescription drugs
b) Physician/outpatient services and durable medical equipment
Medicare covers patients who are elderly and disabled. What does Part C include?
a) Institutional care
b) Physician/outpatient services and durable medical equipment
c) Medicare advantage plans
d) Prescription drugs
c) Medicare advantage plans
Medicare covers patients who are elderly and disabled. What does Part D include?
a) Institutional care
b) Physician/outpatient services and durable medical equipment
c) Medicare advantage plans
d) Prescription drugs
d) Prescription drugs
By law, which of the following is covered by Medicaid and which is optional?
a) Hospital
b) Medical
c) Long Term Care
d) Prescription drugs
a, b, and c are all covered.
d is optional.
Describe a Managed Care plan.
A plan that has a set payment level for each member prior to receiving patient care.
What network of providers formed to deliver care to individuals using contracts with providers?
Managed Care Organization
Under a Managed Care plan, payment to the practitioner is based on what?
a) The # of members being served in their practice.
b) The # of services being performed in their practice.
a) The # of members being served in their practice.
Name 3 different Managed Care Organizations.
Preferred Provider Organizations (PPO)
Point of Service (POS)
Health Maintenance Organization (HMO)
Healthcare plans are contracted through a _______ _______ ________ to process the reimbursement of claims.
Pharmacy Benefit Manager (PBM)
What are some methods a PBM can utilize to help reduce health care costs?
Negotiate price discounts.
Mail order pharmacies.
PA’s and DUR’s.
Name an example of how a Multi-Tiered Pharmacy Benefit Structure can help a PBM efficiently manage drug costs.
Ranks drugs by tiers on factors such as costs, generic/brand availability, or if their in plan’s formulary.
Describe the difference of each tier in a 3 tier medication structure.
1st Tier: Generic drugs, within formulary, cheapest cost
2nd Tier: Brand drugs, within formulary, increased cost
3rd Tier: Brand drugs, outside formulary, most expensive
Name the 2 claims forms that are used for rebilling pharmacy claims.
The CMS 1500 and the NCPDP Universal Claim forms.
What is the Universal Claim form used to rebill?
Prescription drugs
What is the CMS 1500 form used to rebill?
Durable medical equipment to Medicare and Medicaid.
Which of the following best describes the Cardholder Name:
a) Cardholder Plan
b) Relationship to Cardholder
c) Unique ID # provided
d) Policy holder
d) Policy holder
Which of the following best describes the Cardholder Identification Number:
a) Cardholder Plan
b) Relationship to Cardholder
c) Unique ID # provided
d) Policy holder
c) Unique ID # provided
Which of the following best describes the Dependent Number:
a) Cardholder Plan
b) Relationship to Cardholder
c) Unique ID # provided
d) Policy holder
b) Relationship to Cardholder
Which of the following best describes the Rx Group Number:
a) Cardholder Plan
b) Relationship to Cardholder
c) Unique ID # provided
d) Policy holder
a) Cardholder Plan
What additional information is required when billing third party prescriptions?
Dispense as Written Code (DAW)
Day Supply
Actual Package Size Used
DAW code 0:
Generic/brand not specified, generic dispensed if available
DAW code 1:
Prescriber wants brand drug
DAW code 2:
Patient wants brand drug
DAW code 3:
Pharmacist wants brand drug
DAW code 4:
Generic not in stock
DAW code 5:
Brand drug dispensed as generic
DAW code 6:
Special override
DAW code 7:
Brand drug mandated by law
DAW code 8:
Generic drug not available in marketplace
What is a requirement for Medicare Part B prescriptions?
ICD codes
Name the 3 most common rejection codes in pharmacy.
RTS, Day supply, PA needed
The BIN number is a 6 digit number used to:
a) identify the insurance cardholder
b) identify the dependent number
c) identify the prescribing physician
d) identify the PBM to bill a script to
d) identify the PBM to bill a script to
What is the process of comparing the amount paid for a claim and the adjudication amount?
Third Party Reconciliation
Which class recalls products which are unlikely to cause a health problem but still violate FDA regulations?
a) CLASS I
b) CLASS II
c) CLASS III
c) CLASS III
Which class recalls products that can cause serious health problems or death?
a) CLASS I
b) CLASS II
c) CLASS III
a) CLASS I
Which class recalls products which can cause temporary health problems or slight risk of a serious nature?
a) CLASS I
b) CLASS II
c) CLASS III
b) CLASS II
A bottle labeled Dilantin caps contained Dyazide. Which CLASS Recall would be issued?
CLASS I
A bottle labeled Detrol 2 mg tabs contained Detrol 1.25 mg tabs. Which CLASS Recall would be issued?
CLASS II
A Lanoxin 0.25 mg bottle of #100 tabs only contained #90 tabs. Which CLASS Recall would be issued?
CLASS III
What is the biggest concern with returns from Outpatients (retail)?
The loss of control over the medication.
True or False
Always keep your own record of what was returned for credit.
True
What are the reasons for destroying returned meds?
Expired, recalled, or can’t be reused.
Companies who handle all returns at a central location are known as _______ ____________.
return distributors
What is the benefit of return distributors?
Make obtaining credits easier and stop diversion of expired drugs.
True or False
It is ok to return controlled substances to reverse distributors or pharmacies for destruction if the proper procedures are followed.
True
How often may retail pharmacies request DEA approval to destroy controlled substances?
Once per year
What DEA form must be completed when a pharmacy requests to destroy controlled substances?
DEA form 41 (Registrant Record of Controlled Substances Destroyed)
How long must a pharmacy maintain their copy of DEA form 41?
2 years minimum.
Which of the following is true regarding required information listed on DEA form 41? If false, correct.
a) Pharmacy name, address, DEA #
b) Destruction date
c) Method of destruction
d) At least 1 person witnessing
a) , b) and c) are correct.
d) At least 2 witnesses must be listed
What form must be completed and sent if the pharmacy requests to send schedule 2 meds to the DEA for destruction?
a) Form 24, completed by the DEA
b) Form 42, completed by the DEA
c) Form 222, completed by the DEA
d) Form 106, completed by the DEA
c) Form 222, completed by the DEA
Which of the following may request a “blanket approval” to conduct regular and periodic destructions?
a) Distributors
b) Reverse Distributors
c) Retail Pharmacies
d) Hospital Pharmacies
e) Manufacturers
a) Distributors
b) Reverse Distributors
d) Hospital Pharmacies
e) Manufacturers
What is required for a blanket approval to be authorized?
DEA approval in writing and Form 41 for each destruction.
What are the advantages of using a reverse distributor for returning controlled substances?
May obtain some credit through manufacturers and simplify the return process.
True or False
Schedule 3-5 controlled substance returns to a reverse distributor may not be processed the same way as non-controlled drugs.
False
They may be processed the same way as non-controlled drugs.
What form must be completed if any discrepancies develop during the process or returning a scheduled drug?
DEA form 106
When sending controlled drugs out for destruction, remember:
a) It is ok to send an in-date drug back not listed in the return
b) File completed returns/credit memos for 2 years minimum
c) Verify each drug and quantity
d) Always keep a copy of all paperwork generated
e) Never send out a Schedule 2 drug
b, c, d, e
b) File completed returns/credit memos for 2 years minimum
c) Verify each drug and quantity
d) Always keep a copy of all paperwork generated
e) Never send out a Schedule 2 drug
a) Never send a drug back not listed in return
Returns of unit dose medications from inpatient nursing units are:
returnable and reusable
Returns of bulk drug medications from inpatient nursing units are:
set aside for destruction
