PAAS National Articles
On-Line Billing for Custom Compounds: The Third-Party Payor
H. Edward
Heckman, R.Ph.
Does it take a $30,000 audit recoupment to convince
yourself that billing compounded prescriptions at your usual and
customary price
on-line is a bad idea? Nearly
every week one or two compounding pharmacists come to me for assistance with
just such a dilemma. Think again if you don’t believe that this
can happen to you. Because you “trip” the compound indicator
when you transmit a compound prescription you stick out like a sore thumb. You
are a sitting duck!
The NCPDP (National Council for Prescription Drug Programs)
protocol you use to transmit claims is not well suited to compounding. While
there are changes on the horizon you are faced with submitting a claim
with little or no information
about the actual custom compounded prescription you just dispensed. At
most, you only inform the third party that the patient received a compounded
prescription and in some instances the identity of one of the ingredients. The
third party doesn’t know the true contents, dosage form or the elaborate
protocol you closely followed to put together this prescription. And,
they have absolutely no idea at how you arrived at the price transmitted. They
are faced with either rejecting or approving your claim. The third
party will initially approve the compounded prescription until they have
a chance to
audit your pharmacy. Then the trouble begins.
Compounding pharmacists
must be alert and prepared for the latent liability they create by transmitting
compounded prescription claims on-line at usual
and customary
prices. In an audit situation, third parties invariably revert
back to the reimbursement language in the contract, undervaluing your
ingredients
and
valuing your professional time at a paltry $2.00 or $3.00 fee.
Third
parties typically devote sections of their provider plan manuals to
describe their policies on compounded prescriptions. Some Pharmacists
view the information in plan manuals as only suggestions or recommendations. A
few pharmacists choose to ignore plan manuals completely. Keep
in mind that in many instances plan manual paragraphs bear the same
weight as the contract itself. Most
third party contracts reference their plan manual, which in effect
gives the plan manual the same weight as the contract.
Let us study
a national contract and plan manual in the context of
compounding. This
is a nationally recognized pharmacy benefits manager (PBM). Their
Pharmacy Agreement (provider contract) states, “Pharmacy Services
Manual (“Manual”)
is incorporated herein by reference as if fully set forth herein. Pharmacy’s
nonadherence to any of the provisions of the Manual will be a breach
of Pharmacy’s
Agreement.” The Manual then goes on to offer the following
instructions. “Compounded
Prescriptions with a total cost of less than $1,000 are required
to be submitted via” on-line adjudication “in accordance
with the following:
- Set the 'Compound Flag' to positive in accordance
with the Pharmacy
Software.
- Submit the NDC number for the highest priced Federal Legend
Drug.
- Enter the metric quantity as the total amount of the finished
product.
- Enter the total cost of all ingredients, the professional
fee and your ‘usual
and customary’ price.
- Enter patient and group information
as you would any other ‘PBM’ claim.
- Collect from
the ‘PBM’cardholder only the applicable
Copayment/Coinsurance as indicated through the” on-line adjudication “System.”
What
are your options in billing compounds to this third party? The
contract references and incorporates the plan manual. The
plan manual states that you will transmit compounds to the PBM
on-line and identify the claim as a compound. It
also requires you to enter costing information as well as
your usual and customary charge. And last but not least,
you are instructed to collect only the copay/coinsurance amount
from the patient. You may be breaching this contract
if you were to refuse to transmit the claim on-line. You
may be breaching this contract if you were to charge the
patient the full usual and customary
amount of the prescription. Additionally, you are not
guaranteed that the PBM will find it acceptable to reimburse
your usual & customary price. The
language in item 4 is somewhat ambiguous and might be interpreted
in different ways. From very frequent audit experiences
with clients, I know that this PBM carries a big stick when
it comes to pricing compounds at your usual and
customary price.
Do you really have any options? You
have alternatives.
- Negotiate an exclusion from the contract
for compounds and bill the patient directly.
- Negotiate a fee schedule
specific to your compounding practice.
- Terminate your provider agreement
contract.
First, you might attempt to carve out or exclude compounded
prescriptions from this contract. If successful,
you would then be able to directly charge the patient
your usual and customary price. It becomes the
patient’s
responsibility to file and collect a claim under their
major medical insurance coverage.
This task could be
accomplished by negotiating an amendment to the contract
stating, “A
Compounded Prescription is that which contains two
or more ingredients that are weighed or measured and
prepared according to the pharmacists art. All
references contained in the Pharmacy Agreement, Plan
Manual, other attachments, amendments and any other
alterations in effect now or in the future other than
this amendment are null and void as they apply to Compounded
Prescriptions. It
is further recognized that ‘Ajax Compounding
Pharmacy’ may bill and
collect from patients the full amount of their calculated
usual and customary charge for such Compounded Prescriptions.” This
type of amending language would place the third party’s
blessings on your avoidance of on-line adjudication
for compounded prescriptions.
The strategy for arguing
such an amendment is that your pharmacy is unique and
far from the mainstream
of typical
community
pharmacy practice. While in
a typical community pharmacy basic compounding is only
an infrequent disruption, compounding is the heart
and soul of your operation. Along with this argument
you would want to include a description of the specialized
compounding equipment and facility housed within your
operation. Additionally, list the credentials
of your staff as it pertains to compounding.
In opposition
to your proposal, this third party might argue that
the reimbursement language in the contract
should apply
to all
prescriptions. They may emphasize
that even though you may loose from a time perspective
on a compounded prescription, you make it up when you
dispense prescriptions for generic drugs. Your
counter is to reemphasize that your practice is oriented
and devoted to compounding. While
things might leverage out for a pharmacy that bills
one compound a month to the third party, it won’t
work for a specialized compounding pharmacy like yours.
The second avenue focuses upon negotiating fair and
equitable compensation for your compounding up front,
prior to
actually billing prescriptions
to the third
party. If successful, you would have the permission
of the third party to bill certain compounds on-line
at negotiated rates. Accomplishing this
task is actually much more work than simply getting
the third party to exclude compounds from their contract. You
will need to develop written protocols for each of
your major compounds. You will also have to provide
justification for the price you wish to charge.
You
can be successful. Included with this article
is a copy of a Fentanyl Troche protocol (click here)
I helped Bruce Roberts draft at Leesburg Pharmacy,
Leesburg, Virginia. This protocol begins with
an overview of the Leesburg compounding practice. By
focusing upon the facility, equipment and people involved,
credibility is created. Then the medical necessity
is established by comparing the compounded prescription
to what comes close commercially. The
unique advantage of this compound is that it is dye-free
and preservative-free. The
economic necessity is then highlighted. Then
the ingredients and disposable equipment are listed
and valued at AWP (average wholesale price). Note
that NDC numbers are excluded because the active ingredients
may be procured from a variety of sources over time. A
rental or space fee is added for the use of the clean
room. And finally, the compound preparation level
is categorized and valued. Leesburg was successful
in obtaining approval for this protocol at their price.
As you can see, this can represent a lot of energy
and effort up front but once you have the third party’s
approval you gain peace of mind.
The last alternative
is to terminate your provider agreement with the PBM. If
you reach an impasse in attempting one of the first
two options, you should give serious consideration
to terminating the agreement. Weigh that which
you might loose in not being able to bill manufactured
products versus billing compounds
at the huge discounts required by the contract. It
might be more favorable to terminate. Or, when
you weigh the risk created by billing the third party
at your usual and customary price, it might be more
favorable to terminate.
The bottom line is to select
the option that is best for your business and your
practice. None of these choices are clean-cut
or easy decisions. By
devoting some intellectual energy into the safe billing
of compounds you may put more profit on your bottom
line and avoid large audit repercussions.
FENTANYL TROCHE
PROTOCOL
LEESBURG PHARMACY
LEESBURG, VIRGINIA
Fentanyl 200mcg Troche
Preservative-Free/Dye-Free Protocol
24 troches/tray
LEESBURG PHARMACY COMPOUNDING SPECIALTIES OVERVIEW
At Leesburg Pharmacy we operate a compounding
specialty practice to address specific patient disease management, medication
management and lifestyle enhancements
not available commercially. Compounding pharmacists Bruce Roberts, R.Ph.
and Jeff Jackson, R.Ph. have invested time and money in obtaining compounding
certifications from the renowned Pharmacy Compounding Centers of America. Both
are fellows and active participants in the International Association of Compounding
Pharmacists. The 30,000 member National Community Pharmacists Association
named Bruce Roberts the 1998 Pharmacist of the Year.
In 1998 a $60,000 Clean
Room facility was added to the Leesburg operation to improve the quality
and efficacy of all compounded products. Our Clean
Room includes a state of the art Contamination Hood, Analytical Balance and
Printer, and Mill. Pharmacists, not technicians, or other uncertified
personnel prepare all compounded prescriptions. The results of these
high standards are products that are immunologically safe, precise, elegant
and expertly compounded.
FENTANYL TROCHES
MEDICAL NECESSITY:
The commercial product, Fentanyl Oralet (Abbott) contains preservatives
and dyes that can irritate the mucosal lining of sensitive patients. Our
preparation, which is free of preservatives and dyes, neutralizes
this negative drawback thereby
improving compliance.
ECONOMICAL NECESSITY
The commercial alternative product is 240% more expensive than
our compounded prescription preparation. For 24 Oralet troches the cost is $705.00 compared
to our compounded price of $295.00; or $2,820.00 for 96 Oralet troches compared
to our charge of $880.00 for 96 troches |