Pricing Systems and Structures

Question 1

Define National Provider Identifier (NPI)

Answer 1

Replacement of the social security number as the provider’s identity who do electronic submissions

Question 2

Who needs an NPI?

Answer 2

Pharmacists who engage in MTM activities or bill electronically for any Medicare or Medicaid services

Question 3

Medicare Part B recognizes pharmacist to bill for what services?

Answer 3

Immunizations
Durable medical equipment
Certified diabetic educators can bill for self management training
Lab tests

Question 4

Define Billing code 99605

Answer 4

Initial encounter
Face-to-face
~15 minutes
Includes assessment and intervention

Question 5

Define Billing code 99606

Answer 5

Established patient

~15 minutes

Question 6

Define Billing code 99607

Answer 6

Each additional 15 minutes

Question 7

3 components of costs

Answer 7

Fixed costs
Indirect cost
Variable cost

Question 8

Define Fixed costs

Answer 8

Cost are incurred regardless of the volume of services provided
Aka equipment cost

Question 9

Define Indirect costs

Answer 9

Cost are incurred even if you have no patients

aka utilities or rent

Question 10

Define Variable costs

Answer 10

Costs increase as the volume of service increases

aka salary, materials, benefits

Question 11

Define Direct Billing

Answer 11

Pharmacists submits a bill directly to the patient, insurance company or payer for services
Medicare B/D, nursing home consults or diabetes management

Question 12

So how does direct billing start/work?

Answer 12

Starts with a contract
Set fee
Types of documentation required to be provided
Usually online

Question 13

Define Indirect Billing

Answer 13

Requires submitting a bill in the name of provider and is most used for patient care for Medicare Part B
Incident-to-physician billing

Question 14

What code is used for indirect billing?

Answer 14

Evaluation and management (E&M) code 99211

Question 15

What must occur in order to bill this way?

Answer 15

• Collaborative practice agreement
• Patient has to be established under the physician
• Physician must be on premises
• Must be medically necessary
• Physician must still be involved with the patient
• 99211 only if physician did not see the pt
• Non-hospital based clinic
• Pharmacists must document the reason for the visit

Question 16

Define Upcoding

Answer 16

99212-99215
Require some type of physical evaluation by the physician
Pharmacist do all the documentation by physician must see and eval the pt

Question 17

Who sets the rules for E&M codes?

Answer 17

Center of Medicare/Medicaid Services but sometimes regional administrators will interpret and reject

Question 18

What barriers to pharmacists have to overcome?

Answer 18

Lack of provider status limits reimbursement to cash in most cases
Unresolved issues with Stark which prohibits self-referral

Question 19

Define Patient Centered Medical Homes

Answer 19

Moves away from fee for service to outcome based reimbursement
Mandates a team approach to care including pharmacy services

Question 20

What does ACA mandate with pharmacists?

Answer 20

Medicare patients have a yearly review of medication that is compensated

Question 21

Define Accountable Care Organizations

Answer 21

Led by primary care providers, and MTM services are integrated into the care model

Question 22

What does a medical Home Model rely on?

Answer 22

A team effort to coordinate all care and payment for those services based on the quality of care
They share the amount of money provided to the responsible group

Question 23

Define DRGs

Answer 23

Diagnosis Related Groups

Fixed rate reimbursement to the hospital for the diagnosis

Question 24

The role of a clinical pharmacists is?

Answer 24

To lower costs to keep the hospital under the DRG max NOT drive more revenue

Question 25

Define AWP

Answer 25

Average Wholesale Price

Not a real price but a regional average

Question 26

Define WAC

Answer 26

Wholesale Acquisition Cost
Manufacturers published list price to the wholesaler but don’t normally pay this bc of contracts
Sometimes what pharmacies will pay for brand name drugs

Question 27

Define AMP

Answer 27

Average Manufacturer’s Price
Average price paid by wholesalers to manufacturers for drugs sold to retail pharmacies
- Basis for Medicaid generic meds

Question 28

Define AAC

Answer 28

Actual Acquisition Cost
Actual amount paid by a pharmacy to a supplier
- States move to use this for reimbursements

Question 29

Define EAC

Answer 29

Estimated Acquisition Cost
Estimate what pharmacies actually pay for brand products
- Used to calculate reimbursement levels for PBMs

Question 30

Define MAC

Answer 30

Maximum Allowable Cost

When you have a multi-source generic products; max dollar that will be paid per unit

Question 31

Define FUL

Answer 31

Federal Upper Limit

Max dollar amounts for multi-source generic product

Question 32

A professional fee is composed of?

Answer 32

An amount that recovers a portion of the overhead
+
Measure of desired profit per prescription

Question 33

Retail Price Formula =

Answer 33

Acquisition Cost + Cost-to-dispense + Profit

Question 34

What part of the retail price formula includes the professional fee?

Answer 34

Cost-to-dispense + Profit

Question 35

Define Supply Channel

Answer 35

How we get the drugs from the original sourc eof ingredients to the patient

Question 36

Define Pedigree or chain of custody

Answer 36

The ability to track from the source to the patient

Question 37

Define PBM

Answer 37

Prescription Benefit Managers

Process claims and handle the disbursement of money back to the pharmacy

Question 38

PBM’s manage?

Answer 38

The prescription benefit for employers and their interest is to show the employer that they can control the cost of dispensed prescriptions
Negotiators to determine prices between the drug manufacturers and the insurers

Question 39

Define CTD

Answer 39

Cost-To-Dispense
Cost to produce one unit of service
Average of what is costs in terms of salaries and overhead to dispense on prescription

Question 40

What is the amount needed to break-even?

Answer 40

Sum of the acquisition cost and the cost-to-dispense

Question 41

Two functions of PBMs?

Answer 41

• Benefit design, administrative management, provider relations
• Control of drug utilization through efforts with physicians, pharmacists, formulary, mail-order, MTM and rebate

Question 42

Define rebates

Answer 42

PBM gets a kickback from the manufacturer for selling their drug
- Seems illegal but are consider “legal kickbacks”