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complete guide for pharmacy billing services

Complete Guide For Pharmacy Billing

Corners You Should Never Cut When Stuck At Pharmacy Billing And Reimbursement

One of the most critical aspects of healthcare is pharmacy billing services. Working in dispensing can be problematic in the modern, and fast-paced health care industry. Understanding the processes involved in prescribing medications as part of your practice is critical. It’s also a great idea to become familiar with any possibilities that will make the whole process go more smoothly. Pharmacists play an essential role in offering healthcare services to patients. And these services are not novel to any of us. 

Specific billing challenges are obvious to pharmaceutical companies, just as they are to other disciplines of healthcare billing. The fact that some drugs and injections are not covered by insurance keeps adding to the complication of pharmacy billing. As a result, expert knowledge is required to understand the effectiveness of including or excluding drugs during pharmacy billing. As a result, pharmacy billing services are critical to providing effective patient care.

Pharmacists have been providing services apart from prescription filling for decades, returning to the profession’s beginnings. On the other hand, receiving reimbursement for delivered services is one of the key developments in the pharmacy profession. Furthermore, pharmacies must use medical billing services to be compensated for providing specific care.

Important Takeaways:

  • Pharmacy billing refers to sending a prescription to a pharmacy, which then bills the patient’s drug insurance and dispenses the medication straight to the patient or to the provider’s office.
  • Medical billing is when a provider’s office bills a patient’s medical insurance for a drug before purchasing it from a drug distribution company or pharmacy.
  • Medical billing can be financially more viable for a provider’s office, but it also requires more administrative time with the expense of buying and storing costly medications.

Pharmacy Billing Process 

Following are the steps associated with pharmacy billing:


The pharmacy management software enters POC codes ranging from 0 to 4, denoting e-prescribe, fax, verbal, and documentation to trace the prescription using codes.

Data Collection

Accumulating patient insurance information such as BIN number, member ID, group number, and type of coverage (primary or secondary).

Data Entry Procedures 

Entering essential billing information such as prescriber information with NPI (national provider identifier number) and DEA.

DAW codes

If medication substitution is required, DAW codes are entered.

Drugs Information

Drug information, including the name of the medication and its National Drug Code (NDC), is reviewed.

Pros & Cons of Pharmacy Billing

Pharmacy billing streamlines the clinic’s workflow, but it has some drawbacks.


  • It allows patients to minimize out-of-pocket costs using copay or free trial cards. These investments can be significant at times.
  • It helps clinic staff save significant amounts of time dealing with medication billing. Most specialty pharmacies have personnel who will accomplish prior authorizations on behalf of the provider. If there are formulary limitations or required step therapy, they will look for a solution before contacting the prescriber to request a change in treatment.
  • The pharmacist can double-check drug interactions, dosages, and therapy correctness. It also allows them to guide patients on the medication effectively.


  • This increases the chance of temperature excursions because most medicines require suitable space, such as refrigeration, and the patient receives and has to store the medication at home.
  • It also increases the likelihood of waste because medicine must be disposed of if it has already been administered and the patient demands a therapy or dose change.

Pharmacy Reimbursement- How Pharmacies Are Paid

Pharmacy reimbursement is an essential component of patient prescription processing. Pharmacies are compensated based on the medications distributed and the strategies used to obtain the medicines.


Part D sponsors, also known as health plans, negotiate pharmacy payment and price discounts with pharmacies and producers individually.


Medicaid is supervised by state Medicaid agencies, which compensate pharmacies for drugs. Under broad Federal guidelines, states and the federal government collaborate to determine pharmacy reimbursement. States receive federally authorized Medicaid drug rebates and may bargain with manufacturers for additional funds.


In general, the reimbursement formula is based on the average wholesale cost. PMB independently mediates compensation and dispensing fees with pharmacies, typically 40% lower than the available dispensing fees.

6 Sureshot Steps To Know About Pharmacy Billing And Reimbursements 

Prescriptions go through several stages of reimbursement before reaching the patient’s hand. Filling and adjudicating a prescription may appear complex, but it is the only way of understanding pharmacy billing. The healthcare industry is complex and ever-changing. That is why it is critical to understand all the necessities and coding required by a medication department to implement it correctly in your practice.

So, here are six relevant points about pharmacy billing and reimbursement that you should understand before implementing medication services in your practice.

Stay Updated On Drug Prices

Drug prices fluctuate, just like any other product. When compared to fixed-fee payers, hospitals pay more for drugs. There are possibilities to purchase drugs at lower prices, but alternative solutions are not thoroughly investigated. It is critical to have a thorough procedure to determine the cost and compare spending to reimbursements accurately. You can conduct daily price research and match drug expenditures to refund for gaining economies of scale.

Recognize Coding

Drugs must be correctly coded to receive the reimbursement without any difficulty. Drugs must have correct HCPCS coding and be accurately displayed in the chargemaster. Failure to do so results in inadequate reimbursement. The chargemaster knows the billing of medicines. A pharmacist must ensure that the correct quantity is entered into the system. Furthermore, miscoding and omitting medication can result in issues such as late or low reimbursements and denied claims.

Data Workflow Management 

It is critical to understand the working of the revenue cycle in a pharmacy. Recognizing pharmacy billing and managing pharmacy revenue and expenses is vital. Furthermore, it is crucial for long-term dispensing programs and growth.

Starting with procurement, moving on to inventory, billing, and finally, reimbursement includes purchasing medications, storing and distributing, managing, billing, coding them, and ultimately being reimbursed. Data should be entered accurately to avoid costly and time-consuming errors that impact the revenue cycle. However, this process is more complicated than it appears; all data must be entered correctly to properly bill the patient and avert denials from healthcare insurance providers. You must have a plan in place to properly manage the workflow. Everything must be planned, from purchasing the wholesaler to providing the claim to the patient or healthcare insurance company.

Pharmacy Rules And Regulations

It is essential to be informed about pharmacy rules, compliances, and regulations. For pharmacists who practice Medication Therapy Management, it is suggested that you code correctly using Current Procedural Terminology (CPT) codes. Pharmacists will be compensated for medication therapy management (MTM) services provided by Medicare Part D prescription drug plans under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).

Following these rules and regulations is critical to receive proper reimbursement and avert becoming involved because everyone in the healthcare sector strictly enforces them. Similarly, laws and regulations will differ depending on the healthcare field. It is best to get familiar with all the rules and procedures to prevent pharmacy billing and reimbursement issues.

Procurement Stage 

The drugs are transmitted to inventory and unit of measure (UOM) at the procurement stage from the retail prices and quantities. Data is entered into the system when the medicines are supplied from the wholesale provider to the pharmacy. Information is checked thoroughly to avoid errors or mistakes. This is just the beginning; any mistake in procurement can lead to more significant problems later. It is critical to have a professional and knowledgeable staff to obtain medicines accurately.

Expenditure And Charge Master Connection

Hospitals and healthcare clinics have their own protocols for purchasing and administering drugs. As a result, it is critical to have a great strategy and scheme to prevent improper reimbursements, which may result in loss. You can improve revenue cycle management and increase profits by selecting the best and most viable pharmacy billing and reimbursement practices. Furthermore, hospitals should have automated systems to accurately identify charge capture errors to determine when and where they occur, thereby reducing revenue loss.

Still Confused About Your Pharmacy Billing?

The main objective of pharmacy billing is obtaining the correct reimbursement. It is essential to ensure that the paid amounts in the final claims adjustment are accurate. The insurance company’s payment and the copay must equal the amount charged. I-Med Claims can handle pharmacy billing and reimbursement. Our experts have worked for many healthcare providers who now have an accurate billing system, face fewer denials, and receive reimbursements on time. Outsourcing your pharmacy billing responsibilities can assist you in avoiding today’s auditing headaches while ensuring your financial success. We are experts in providing medical billing services throughout the country. We can help you if you are ready to reduce your denial rate, improve revenue performance, and want to get reimbursed for pharmacy billing. Contact us to learn more about how we can help you with pharmacy billing services. Our pharmacy billing solutions assist in removing the guesswork and uncertainty associated with billing the medical benefit of your patients’ insurance plans.

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