Note that all Audit Advisors are by H. Edward Heckman, R.Ph., president of PAAS National, the Pharmacy Audit Assistance Service. For information, call toll free at 888-870-7227.
| |
Audits and Glaucoma
Drops |
| Q: |
Have you heard anything about third parties auditing glaucoma
drops for days supply?
|
| A: |
Many third parties are now auditing and
scrutinizing glaucoma drops for possible days supply conflicts.
If you fill prescriptions for any package size of a glaucoma
eye drop that a doctor prescribes without questioning the
days supply …you had better start thinking twice. Medco,
Caremark (PCS), Express Scripts, and others are now recouping
money in audits for excessive quantities and incorrect days
supply on the various ophthalmic glaucoma drops.
We have seen third parties employ different measures to
calculate days supplies on drops, from 15 or 20 drops per
milliliter to a reference chart from the American Journal
of Ophthalmology. In any event, the package size for a 30-day
plan rarely calculates to be more than the smallest package
size manufactured. Watch packages sizes and avoid audit
recoupments.
|
Surviving an Audit |
| Q: |
I have heard horror stores about audits. What should I expect
if my pharmacy is audited?
|
| A: |
A third-party audit might cost much more
than you think. According to tabulations put together by
PAAS National, the average audit in 2004 resulted in an
average recoupment order of $52,014. This is the initial
amount that third parties attempt to extract from pharmacies
as a charge-back. Your chance of a recoupment of more than
$10,000 is one in four, while 4 percent of pharmacies ran
into audits over $100,000. In 2004 there were 36 audits
for every 100 community pharmacies.
PAAS works with member pharmacies to defend themselves
against these sizable audit challenges. Each third party
has their own set of discrepancies they search for in audits.
PAAS is skilled in assisting pharmacies with documentation
requirements and in helping members to exercise their rights
to due process. PAAS conservatively estimates average reductions
of at least half in audit situations. Results vary by each
individual situation.
|
Properly Documenting
DAW2 |
| Q: |
When a patient requests the brand drug over the generic
should I document patient requests as DAW 2 prescriptions?
|
| A: |
Auditors are becoming more interested than
ever for patient requested brand drugs, DAW 2. It is a wise
move to document prescriptions transmitted as DAW 2. Third
parties will scrutinize this dispensing category and are
looking for problems. Several third parties are penalizing
pharmacies in audits when they cannot supply documentation
for patient requested brand named dispensing when lower
cost multi-source products are available.
It may be prudent to ask the patient to initial and date
the word "DAW 2" on the original prescription. Some pharmacies
use a rubber stamp and then collect the patient's initials
to document DAW 2 dispensing.
Patients often try to convince pharmacists to transmit
these types of prescriptions as DAW 1. This is a sure path
to problems. A DAW 1 indicates that the doctor has ordered
brand, not the patient. A patient requested brand drug (when
generic is available) should always be transmitted as DAW
2.
|
Filling and
Billing Audit Flags |
| Q: |
What types of filling and billing activities can flag a
pharmacy for a third-party audit?
|
| A: |
Keep in mind, your pharmacy will be selected
for an audit because it falls outside of a third-party norm.
With online adjudication, third parties create subterranean
audit networks, constantly monitoring your filling behavior
and dispensing patterns. Third parties constantly create
new algorithms to harvest claims data. The following are
a few (but certainly not all) of the activities that can
flag a pharmacy to be selected for an audit:
- DAW 1: percentage of use of DAW 1 on multi-source prescriptions
where brand products are dispensed. This is very easy
to audit for large recoupment amounts.
- Refill patterns: by day of the week (i.e., Sunday),
classes of drugs (antibiotics), etc.
- 100 tabs/caps billed as 30-day supply: If you typically
transmit 100 quantities as a 30-day supply (instead of
TID=33 days), this is an easy flag indicating a lax attitude
toward third-party policies and a possible target for
large recoupments.
- Claims paid at U&C: percentage of time the submitted
U&C price is below contract price.
- Physician ID: lookout for "cheater" Dr. DEA numbers
or a very high percentage of prescriptions billed on a
limited number of IDs.
- Generic substitution: rates total generics dispensed
over all multi-source opportunities.
- Average Rx cost: pharmacies with high average costs
send up flags.
- Average number of prescriptions: per patient or family.
- Compounded prescriptions: in large numbers, these will
trigger audits. Remember, they aren't coming to give money
back!
|
Document Override
Codes,
Especially for Medco Health |
| Q: |
When I dispense an early refill do I really have to document
the override code I use?
|
| A: |
From time to time nearly all third parties
have audited the documentation of override codes for appropriate
use in a situation. This is especially true with Medco Health.
Medco continues to get tougher and tougher on pharmacies,
auditing their use of override codes. Pharmacies are cautioned
to follow Medco Health's documentation requirements when
using one of these codes to obtain an adjudicated claim.
These codes include 03 for Vacation Supply Early Refill,
04 for Lost or Spilled Medication Early Refill, 05 for Dosage
or Therapy Change, and 02 for Maximum Daily Dosage Exceeded.
For audit purposes document the reason for any override
on the hard copy prescription, and if applicable, include
any Authorization Override Number given by the third party.
Additionally, double-check your pharmacy dispensing software
to ascertain how it handles override codes. Several pharmacies
have reported software glitches. Some systems apparently
hold the override code and continue to transmit it on subsequent
fills, even though the prescription isn't being refilled
early. This is a big audit flag that could cost your pharmacy
a lot of money.
|
Days Supply: Insulin
and Syringes |
| Q: |
When insulin and syringes are prescribed with "as directed"
instructions, I bill them as a "30 days" supply.
Am I running any risks with my third party billings?
|
| A: |
Yes, you may be leaving yourself wide open
for significant audit recoupments. Several third parties
are becoming sticklers on the correct days supply and quantities
dispensed for insulin and insulin syringes. Particularly,
PAID Prescriptions has asked pharmacies to take large repayment
penalties for discrepancies over the correct days supply.
Pharmacies can protect themselves by taking the following
steps to save audit headaches:
- Always submit the correct days supply when transmitting
claims.
- If the prescriber indicates "as directed," talk with
the patient or call the physician to determine the dosing
schedule and the appropriate quantities to dispense. Document
these discussions for future reference and to justify
your actions.
- Take extra care if a patient requires more than one
vial of insulin in a month. Third parties hone in on multiple
vials of insulin.
|
Excessive DAW 1 Triggers
Audits |
| Q: |
What triggers an audit more often than anything else?
|
| A: |
Excessively high Dispense As Written
(DAW) 1 rates are the leading item to flag a pharmacy for
an audit. Discrepant DAW 1's are one of the largest dollar
sources of recoupments in audits. You can limit the number
of DAW 1 transmissions by implementing the following steps:
- DAW 1 should only be used for the brand drug when multi-source
options are available, and the physician indicates (per
applicable laws) that the brand product is to be dispensed
without substitution.
- Check your computer's default DAW code; it should not
default and it should force you to select a DAW code or
be set to DAW 0.
- Patients who demand branded products over generics
must be transmitted as DAW 2 - Patient DAW. Don't allow
patients to bully you into transmitting their requests
as physician DAW 1. In an audit situation, you may have
to repay at least the copay and cost difference to the
third party.
- Use DAW 5 for brand drugs dispensed as generics (example,
if your pharmacy uses Amoxil for amoxicillin).
- Use DAW 7 on prescriptions for drugs that your state
does not allow substitution.
- Encourage physicians to allow substitution whenever
possible.
- Auditors consider patient-induced callbacks to the
doctor by the pharmacist to prescribe brand only as DAW
2.
- If the DAW is written on the hard copy prescription
in a different color ink or writing style than the body
of the prescription, expect a difficult time from the
third party in an audit.
By limiting your DAW 1 transmissions, you are taking proactive
steps to avert an audit.
|
Signature Logs |
| Q: |
I recently had an audit and the auditor was a real stickler
with my signature logs. Why are signature logs so important?
|
| A: |
Money lost due to incomplete signature
logs ranks number two (behind undocumented DAW 1s) in third
party audit discrepancies. Signature logs should be handled
and treated with the same care and respect as original hard-copy
prescriptions; using an approved form, filed chronologically;
checked for completeness, and stored in a safe area. The
primary function of a signature log is to verify the delivery
and receipt of services to patients. The log form should
contain the appropriate patient release of information and
the NCPDP-approved disclaimer. If your log contains these
clauses and space for appropriate patient and prescriptions
information, it should be acceptable to all major third
parties. Additionally, a well-designed log can incorporate
an area to document patient consultation, thus serving a
dual purpose. While a signature on a log is not the only
method to document the delivery of services, well-kept signature
logs make life much easier during any audit situation. Put
these practices into play and you will be one step ahead
of the audit game.
A word of caution for those pharmacists that are interested
in electronic signature logs: Make sure that your electronic
log contains all the same information (such as patient release,
NCPDP disclaimer, etc.) as in paper logs.
|
Trading Inventory
Between Pharmacies
From the July issue of America's Pharmacist, page 10 |
| Q: |
Are there third-party pitfalls when trading inventory with
other pharmacies?
|
| A: |
Many pharmacies have cooperative relationships
with other pharmacies located in their trade area, selling
and exchanging pharmaceuticals on an emergency basis. The
professional courtesy extended by one pharmacy to another
can help save business and improve the quality of patient
care. However, I caution pharmacists to keep accurate records
and invoices of all such trades. In audits when third parties
require pharmacies to prove their inventory purchases, the
swapping activities between pharmacies can cause problems.
Many pharmacies have no record of the item, date and quantity
of what was procured from another pharmacy. In as much that
many third parties frown upon after-the-fact record keeping,
I highly recommend that accurate transfer logbooks with
invoice slips be kept. A little extra time and effort to
maintain these records can save big money in an audit situation.
|
Audit Flag: Insulin
From the June issue of America's Pharmacist, page 6 |
| Q: |
Can insulin present audit issues?
|
| A: |
Patients receiving more than two vials
of insulin per month may create an audit flag that will
result in an onsite audit of your pharmacy. While it is
possible for a patient to use large amounts of insulin,
third parties view two or more vials as unusual. They believe
that pharmacies allow patients to stockpile insulin. Take
extra care whenever a patient is using three or more vials
of insulin in a month.
If the insulin amounts being dispensed by your pharmacy
are justified by the documentation on the hardcopy prescription,
you should not have a problem. If all of your insulin prescriptions
state "As Directed," expect aggressive challenges from the
third party.
|
Identification Numbers
From the May issue of America's Pharmacist, page 8 |
| Q: |
Is it important to transmit correct Drug Enforcement Administration
or physician identification numbers with every prescription?
|
| A: |
Third parties require the correct
physician identification number on claims. In most cases
this is the doctor's DEA number. Auditors are making deductions
from pharmacies that use "cheater" numbers to transmit claims.
During a field audit, the auditor will review the actual
prescription and compare data submitted by the pharmacy
to data on the actual prescription. This is particularly
true and a growing problem for pharmacies close to teaching
hospitals and clinics with residents and interns who do
not have their own DEA number and do not have their own
preprinted prescription blanks to write prescriptions. Beware;
the third parties are serious about this. The problematic
use of DEA numbers will be converted to National Provider
Identifiers.
For the most part, penalties have been enforced only when
the correct information was readily available-for instance,
when a prescription is written on a doctor’s preprinted
prescription blank that includes a DEA number. During a
field audit, the auditor will review the actual prescription
and compare data submitted by the pharmacy to data on the
actual prescription.
On January 23 the Department of Health and Human Services
published the Final Rule in the Federal Register establishing
the National Provider Identifier (NPI) as the standard unique
health identifier for health care providers. While it will
be quite some time until the NPI will be the standard in
health care transactions, there are some things you should
be aware of at this time.
- The NPI Rule becomes effective May 23, 2005.
- The compliance date is May 23, 2007.
- All entities who meet the government definition of "health
care provider" or "covered entities" are required to obtain
NPIs.
- The NPI is a 10 digit number (9 plus a check-digit).
- Entities may apply for their NPI on May 23, 2005.
|
Auditor Computer Access
From the February issue of America's Pharmacist, page
10 |
| Q: |
An auditor asked to use one of my pharmacy computer terminals
to access information. Should I allow the auditor to operate
my pharmacy system?
|
| A: |
Absolutely not! Some third parties
and auditors may insist on accessing information from your
pharmacy computer system. Only an employee of the pharmacy
should access any information viewed.
Additionally, only the records of patients covered by the
third-party administrator conducting the audit should be
viewed. An auditor is not authorized to view other patient
prescriptions and computer records. HIPAA (the Health Insurance
Portability and Accountability Act) holds you civilly and
criminally liable for such activities. You must maintain
patient confidentiality and cannot reveal information. Auditors
should not be allowed to operate your computer system.
|
"As
Directed" Rxs |
| Q: |
Do prescription written "as directed"
increase a pharmacy’s risk in billing third-party prescriptions?
|
| A: |
Yes! Prescriptions written "as directed,"
can increase a pharmacy’s risk in billing third-party
prescriptions. Third parties are interested in controlling
plan maximums in terms of days supply and quantity of medication
dispensed. "As directed" prescriptions create
problems for third parties in policing those parameters.
The safest procedure for the patient and TPA billings is
to contact the prescribing physician for clearer definition.
If it isn’t convenient to contract the physician, ask
the patient how often he or she takes the medication. Remember
to document this information on the hard-copy prescription.
Make sure dispensing quantities stay well within therapeutic
guidelines. Never use "as directed" to skirt TPA
plan limitations. PBMs are becoming savvier at flagging
excessive and illogical quantities and contacting physicians
to verify dosages. Pharmacists must resist patients who
place unfair pressure upon them to boost dispensing limits.
The U.D. designation may be translated by the PBM into much
lower quantities than you are dispensing. Pay particular
care on expensive brand-name medications. PBMs are also
going after insulin and syringe quantities on "as directed"
prescriptions.
PAID Prescriptions has asked pharmacies to take large repayment
penalties for discrepancies over the correct days supply.
Pharmacies can protect themselves by taking the following
steps to save audit headaches:
1.
2. |
Always submit the correct days supply
when transmitting claims.
If the prescriber indicates "As Directed,"
talk with the patient or call the physician to determine
the dosing schedule and the appropriate quantities to
dispense. Document these discussions for future reference
and the justification of your actions. |
The moral is to use common sense: protect your patients and
your practice.
|
Audits |
| Q: |
My pharmacy is scheduled for a third-party audit.
What records is the auditor entitled to review?
|
| A: |
In most cases, third-party auditors are entitled
to review hard-copy prescription records and usually signature
logs for the services your pharmacy billed to them. The records
of the patients from other plans and coverages are confidential,
and the auditor should be restricted from accessing them.
In fact, the Health Insurance Portability and Accountability
Act (HIPAA) restrictions placed upon personally identifiable
health information will make such a practice a federal offense.
A more in-depth answer to which records must be made available
to the third party is found in your provider agreement and
plan manual. Review these documents carefully to read what
you contractually agreed to allow a third-party to review.
Third-party provider agreements are more complex, detailed,
and demanding than ever before. It is essential to read and
understand all contracts in their entirety before signing
them.
|
| Q: |
When I dispense and early refill, do I really
have to document the override code I use?
|
| A: |
From time to time nearly all third parties have
audited the documentation of override codes for appropriate
use. This is especially true with PAID Prescription. PAID
Prescriptions continues to get tougher and tougher on pharmacies,
auditing their use of override codes. Pharmacies are cautioned
to follow PAID’s documentation requirements when using
one of these codes to obtain an adjudicated claim. These codes
include 03 for Vacation Supply Early Refill, 04 for Lost or
Spilled Medication Early Refill, 05 for Dosage or Therapy
Change and 02 for Maximum Daily Dosage Exceeded. For audit
purchases document the reason for any override on the hard
copy prescription and if applicable include any Authorization
Code Number. Additionally, double check your pharmacy dispensing
software to ascertain how it handles override codes. Several
pharmacies have reported software glitches. Some systems apparently
hold the override and continue to transmit it on subsequent
fills, even though the prescription isn’t being refilled
early. This is a big audit flag.
|
Billing |
| Q: |
What is the safest method for billing third-party
prescriptions?
|
| A: |
One money saving tip to community pharmacists
is to "FILL AND BILL PRESCRIPTIONS AS THE DOCTOR WRITES
THEM WITH THE CORRECT DAYS SUPPLY." Many pharmacies are
needlessly penalized during audits for cutting or increasing
prescribed quantities without the appropriate documentation.
These errors coupled with submitting the incorrect day’s
supply can lead to major headaches and large recoupment payments
to third parties. Transmit prescriptions exactly as written
by the physician, with the correct quantity and number of
day’s supply. Most TPA adjudication programs offer on-line
edits to assist you in bringing claims within plan guidelines.
If the quantity or day’s supply exceeds plan limitations,
the claim will reject with instructions detailing clues to
resubmit the claim correctly. If a physician authorizes a
change in quantity, directions or refills; PAAS strongly recommends
that a new prescription be created (per your state’s
laws) rather than amending the old order. Every month dollars
are needlessly returned to third parties due to complacency
with this issue. Remember that extra effort today may save
big money in the future.
|
DAW |
| Q: |
Should I document patient requests for brand
name drugs, DAW 2 prescriptions?
|
| A: |
Auditors are becoming more interested than ever
for patient-requested brand drugs: DAW2. It is a wise move
to begin documenting prescription transmitted as DAW 2. Third
parties are beginning to scrutinize this dispensing category
and are looking for problems. Several third parties are penalizing
pharmacies in audits when they cannot supply documentation
for patient-requested brand named dispensing when lower cost
multisource products are available. It may be prudent to ask
the patient to initial and date the word "DAW 2"
on the original prescription. Some pharmacies use a rubber
stamp and then collect the patient’s initials to document
DAW 2 dispensing. Remember that a little effort now can limit
your risks in an audit situation down the road.
|
| Q: |
When do I select DAW 5 to transmit a third party
prescription?
|
| A: |
In instances where branded items are purchased
at generic prices and used as your pharmacy’s generic,
select DAW 5. One typical example of a branded drug often
bought and used a generic is Amoxil for amoxicillin. There
are several other examples that may apply to your practice.
When a third party receives a DAW 5 transmission, they understand
your use of branded item as your generic. You will receive
more favorable reimbursements than using DAW 0 or DAW 1. As
an example, when PCS calculates bonus payments for their Generic
Performance Incentive Program (GPI) they count the BRANDED
version of multisource drugs filled as DAW 0 or DAW 1 against
the pharmacy. When the drug is keyed as DAW 5, PCS credits
the pharmacy as substituting and dispensing a generic in a
multisource situation. Keep in mind that reimbursement on
DAW 5 transmissions may be MAC’d. Remember, for branded
items used as your generic, select DAW 5.
|
| Q: |
If a physician writes a prescription for a single
source brand drug and indicates "DAW 1," should
I go ahead and bill the prescription as "DAW 1?"
|
| A: |
No. On occasion, a physician will indicate "DAW"
on a single source brand drug, even though there is not a
generic substitute available. Such situations should be billed
online to the third party as "DAW 0." Billing single
source drugs as "DAW 1" may flag you for an audit
and may also count against you in tabulating PBM generic utilization
incentives. Remember, bill single source brand products as
"DAW 0." |
NDC
Numbers |
| Q: |
Why do third parties accept claims filed on
obsolete or old NDC numbers?
|
| A: |
Once a NDC number has been superseded or replaced
with a new number, a third party cannot project how long product
with the old number will remain in pharmacies. Also, the old
number probably has an old (lower) price that isn’t updated,
which means lower reimbursements. PAID Prescriptions has used
a different twist. Occasionally, you may notice an online
response with a strange level of reimbursement. This may be
a situation where you are reimbursed only the professional
fee and paid a "zero dollar" value for the ingredient
cost. When this occurs, check carefully to see if a newer
NDC number supersedes the one you billed. PAID responded to
us regarding this problem by reporting that a "zero dollar"
value is returned after an NDC has been discontinued for 18
months. All pharmacists are cautioned to make sure they are
using current NDC numbers on their transmissions to PAID and
all third parties. When in doubt you should check for a newer
NDC replacement. Remember your safest practice is to fill
and bill the NDC from the container you dispense.
|
| Q: |
How important are correct National Drug Code
(NDC) numbers with third-party billing?
|
| A: |
Third parties across the country are toughening
standards for the transmission of correct manufacturer and
NDCs on prescriptions. It is important to bill the correct
manufacturer NDC number. Contested manufacturer rebates are
now costing state Medicaid programs millions of dollars annually.
As a result of these challenges, the states must verify provider
purchases of contested manufacturer’s products through
NDC mail audits. Private-pay third parties also are jumping
on the NDC bandwagon AdvancePCS continues to conduct aggressive
mail audits across the country focused upon verifying inventory
purchases to NDC numbers. Expect a much tougher approach than
in the past.
|
Oral/Telephone
Rxs |
| Q: |
Are there special precautions to take on oral
or telephone prescriptions that are billed to third parties?
|
| A: |
Taking oral prescription orders can present
special audit problems and challenges. All verbal prescription
orders must contain at least the minimum information as is
legally required on any prescription including:
| • |
Patient’s first and last name
|
| • |
Drug name, strength, dosage unit, and
quantity
|
| • |
Dosing directions (avoid U.D.) and refill
authorizations
|
| • |
Prescriber’s name and DEA number
(when applicable)
|
| • |
Prescriber’s substitution preference
(DAW or BMN mandate), if applicable
|
If someone other than the doctor phones in the prescription,
it is a good idea to note the name and title of the person
calling. Third parties, in an audit situation, are penalizing
pharmacies for oral prescription orders falling to contain
the requisite information. For instance, many pharmacies neglect
to properly indicate or check DAW/BMN on verbal prescriptions
that physicians specify brand product only. When a telephone
prescription does not contain the correct dispense-as-written
information auditors view such prescriptions as eligible for
generic substitution. May third parties will not allow any
subsequent documentation after the fact to reverse their findings.
Please avoid problems by making sure procedures are in place
to sufficiently document all required information and actions
concerning any verbal prescription orders.
|
Refills |
| Q: |
My state’s pharmacy laws allow a prescription
to be refilled up to two years. Why do third-party prescription
have to updated annually?
|
| A: |
Many third parties require prescriptions to
be updated annually. The safest practice is to update all
prescriptions at least annually, regardless of your state’s
pharmacy laws. Many third parties have language in their contracts
and plan manuals that stipulate they will not pay for prescriptions
where the date of service is more than one year from the date
the prescription was originally written. When the prescription’s
original date reaches one year, a new prescription order should
lawfully be generated. Any refills remaining on the original
prescription should be voided. This is a safe filling and
billing tip that can save headaches in the event of an audit.
|
