Pharmacy Revenue Integrity Solutions

Updated on October 12, 2013

During budget season, the C-suite is often challenged with the X factor.  How significant and accurate will the increases be in drug costs for the Pharmacy?

The dialogue regarding the growing influence of consumer-driven utilization of health care services and pricing transparency has taken on a life of its own as we enter this new era of healthcare delivery.  Coupled with that challenge, is the reality that Pharmacy has become an increasingly important aspect of the overall revenue cycle on numerous levels, three of which are described below.

First, the recent media scrutiny of hospital pricing practices, together with the heightened importance of defensible and accurate pricing and charging practices for drugs, has resulted in increased demand for compliance and revenue integrity reviews focused on sorting through the complexities of these issues.

The TIME magazine article by Steven Brill, “The Bitter Pill,” which was a comprehensive outsider’s analysis of The Charge Description Master (CDM), pinpointed pharmacy charging practices, which has  increased interest by the C-suite and hospital boards.

Second, the Governmental Accountability Office (GAO) issued a report in September 2011 asserting that 340B covered entities were generating revenue through the 340B program and using the additional revenue to support or expand services for patients.  They also found that the HRSA’s oversight was “inadequate to provide reasonable assurance that covered entities and drug manufacturers are in compliance” especially critical of HRSA’s failure to monitor hospital-based entities.

As a result, HRSA 2013 goal is perform over 200 audits of 340B providers.  HRSA also issued changes on February 7, 2013 not allowing GPO purchasing for 340B drugs effective August 7, 2013.  The GPO limitation for 340B drug purchasing, in addition to ensuring each 340B drug claim can be accounted for during a HRSA audit, adds additional pressure to Pharmacy operations.

Finally, ensuring proper use of HCPCS and modifiers is essential to avoid compliance risks and obtain accurate and appropriate reimbursement for services rendered.  Medicare Claim Processing Manual Chapter 17, Drugs and Biologicals, emphasizes  the importance of assigning HCPCS and appropriate units for drug dosages.  SunStone Consulting has found that in addition to ensuring appropriate charge capture for drugs administered, hospitals must dedicate time to compliance issues to include proper documentation for drug waste.  Being compliant mitigates risk and assists with recovering costs related to services rendered.

Because of the intricacies relating to  the National Drug Codes (NDC), Wholesale Acquisition Costs (WACs) (formerly average wholesale prices (AWP)), HCPCS, revenue codes, units, and complex pricing mechanisms within Pharmacy information systems, there are typically significant opportunities for improvement.  Due to  the complexities surrounding  the pharmacy revenue process from acquisition to payment, including billing compliance and minimization of lost revenue; professional assistance and consultation is often required.   

SunStone Consulting has a solution geared specifically to addressing all of these issues and synthesizing the Pharmacy information system and Charge Description Master thus ultimately improving the accuracy of Pharmacy pricing and billing.  

While many firms offer advice in these areas, it is important to work with a firm with proven experience and expertise.  Literally dozens of hospitals would be willing to  endorse the work of one Pennsylvania d firm, SunStone Consulting.  For more information, please contact Vonda Moon (717) 676-6133 or [email protected] with questions or comments regarding this topic.

Throughout the year, our writers feature fresh, in-depth, and relevant information for our audience of 40,000+ healthcare leaders and professionals. As a healthcare business publication, we cover and cherish our relationship with the entire health care industry including administrators, nurses, physicians, physical therapists, pharmacists, and more. We cover a broad spectrum from hospitals to medical offices to outpatient services to eye surgery centers to university settings. We focus on rehabilitation, nursing homes, home care, hospice as well as men’s health, women’s heath, and pediatrics.