As the healthcare industry continually evolves, home infusion pharmacies face distinct challenges in navigating the complex payor and reimbursement landscape. Understanding the nuances of billing to both the medical benefit and pharmacy benefit, along with strategies to overcome common obstacles, is crucial for success in this dynamic environment.
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Landscape for Home Infusion Billing
a. Billing to the Medical Benefit
Home infusion pharmacies typically bill to the medical benefit through entities such as Medicare Part B for Medicare claims and major medical insurers for commercial claims. Reimbursement is processed by health insurance companies under the “medical” side, often offering more open networks compared to Pharmacy Benefit Managers (PBMs). This landscape is characterized by:
- Drug Billing: Drugs are billed using J-Codes or Q-Codes, rather than NDC Numbers, and are reimbursed based on average sales price (ASP) or wholesale acquisition cost (WAC).
- Procedure Codes: Drugs are billed ancillary to specific procedures, using corresponding CPT codes. For instance, CPT code 99601 is used for home infusion/specialty drug administration.
- Per Diem Charges: A per diem charge is applied for each infusion day, billed using HCPCS codes.
- Infusion Suite Modifiers: A modifier of “SS” is used for claims administered in infusion suites.
The medical benefits typically have more open networks, with less likelihood for claims to be rerouted to a PBM-owned pharmacy. These networks often include reimbursement for ancillary services. Much attention needs to be paid under the contracts for the specific services and drugs/therapy types that are covered under the contract.
b. Billing to the Pharmacy Benefit
Alternatively, pharmacies may bill to the pharmacy benefit by submitting claims through PBMs. These are billed through Medicare Part D for Medicare claims and PBMs for commercial claims. This involves real-time adjudication at the point of sale using the drug’s NDC number. Key aspects include:
- Drug Billing: Claims are submitted using the drug’s NDC number and reimbursed based on average wholesale price (AWP).
- Home Infusion Codes: With different codes denoting home infusion services.
The PBM networks are more likely to have “restricted” networks, with more incentive for PBMs to direct business to wholly-owned specialty pharmacies. These networks also have less likelihood to include reimbursement for ancillary services.
Over the past few years, in the wake of recent waves of vertical integration and consolidation, there has been a growing trend among insurance companies and PBMs to shift as much claims processing from medical side to pharmacy side, and requiring patients to “white bag” or “brown bag” medications to be used in infusions or during procedures. Some insurers have even created “medical pharmacy benefits managers” to keep claims under the “medical” benefit but to require adjudication similar to how pharmacy claims are managed.
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Challenges Encountered by Providers and Strategies to Overcome Them
Home infusion pharmacies face several challenges in their reimbursement journey. The challenges can differ depending on whether it is a medical benefits network versus a pharmacy benefits network, and the means of addressing them can vary as well.
a. Network Exclusion
Providers may encounter difficulties due to exclusion from preferred networks, limiting patient access and revenue opportunities. Payors may put up artificial barriers to entry (such as accreditation or capacity requirements), or can outright deny participation, suggesting that a network is “closed.” This impacts providers seeking participation in medical and pharmacy networks, alike. Strategies to overcome this challenge include:
- Negotiation Tactics: Providers should engage in proactive negotiations with payors and PBMs to secure inclusion in preferred networks, emphasizing the value they bring to patient care and cost-effectiveness, while demonstrating that they meet application conditions for participation.
- Legal Protections: Leveraging any willing provider laws can help ensure fair access to networks, protecting against discriminatory exclusion practices.
- Patient Support: Providers should also garner and present support from patients (and others, such as prescribers and third party organizations) to support efforts to become admitted into payor networks.
b. Non-Payment Issues
A common tactic by payors – especially medical benefits payors who do not utilize real-time claims adjudication – is to improperly delay, underpay or deny altogether claims submitted by home infusion providers. Delays or denials in reimbursement can significantly impact cash flow and operational viability. To mitigate non-payment issues, providers can:
- Establish Clear Billing Protocols: Implementing robust billing processes and ensuring accurate documentation can minimize the risk of claim denials and delays.
- Appeal Procedures: Providers should familiarize themselves with payor appeal processes and exercise their right to challenge unfair denials or underpayments.
- Legal Protections: Providers can also utilize various laws, including prompt pay laws, and contractual rights to ensure timely and proper payment.
c. “Prescription Trolling”
Prescription trolling is common in the pharmacy benefits space, where PBMs access details on claims submitted by independent providers and provide that claims information to their wholly-owned specialty pharmacies. Those wholly-owned pharmacies, in turn, seek to reroute the prescription to themselves, using a variety of tactics, including directly contacting the patient, the prescriber or both. Strategies to combat this include:
- Patient Education: Educating patients about their rights to choose their preferred pharmacy can help counter prescription trolling tactics and maintain patient loyalty.
- Advocacy and Regulatory Engagement: Engaging in advocacy efforts and initiating regulatory complaints for violations of State Board of Pharmacy Rules and privacy laws.
- Legal Protections: Various state and federal laws also provide direct recourse over efforts by PBMs to steer patients to wholly-owned pharmacies.
d. DIR Fees and Below-Water Reimbursement
While DIR fees “sunsetted” effective January 1, 2024, pharmacy providers still face retrospective recoupment for past claims, and are now faced with greater challenges, including receiving reimbursement below the cost of providing services. These phenomena can threaten the financial sustainability of home infusion pharmacies. To address this issue:
- Reimbursement and Cost Analysis: Conducting thorough analyses of reimbursement rates is often the first step to gain insights into the actual amounts received, especially in light of complex reimbursement frameworks and methodologies. Providers should equally conduct a detailed cost analyses to be able to demonstrate to payers the impact of such reimbursement rates across their entire book of business.
- Contract Review and Negotiation: Providers should carefully review payer contracts, understanding nonrenewal and termination rights, and seek to renegotiate terms that fail to adequately compensate for the cost of the medications provided and the value of their services.
- Legal Protection: In addition to any willing provider laws (which require terms and conditions to be “reasonable” and “relevant”), many states have passed laws setting forth minimum reimbursement levels.
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Tools Available to Providers
Home infusion providers can utilize various tools to strengthen their negotiation position, as well as their overall management of payor and PBM relationships. These include:
- Any Willing Provider Laws: Ensuring fair access to networks, while mandating reasonable and relevant reimbursement.
- Minimum Reimbursement Laws: Establishing baseline reimbursement rates.
- Fair Pharmacy Audit Laws: Protecting against unfair audit practices.
- Prompt Pay Laws: Requiring timely and full payment of claims.
- ERISA and Assignment of Patient Rights: Allowing providers to step into the shoes of patients to assert their rights under the law and under their subscriber agreements with the insurance companies.
In conclusion, home infusion pharmacies must navigate a multifaceted payor and reimbursement landscape, understanding the intricacies of billing to both medical and pharmacy benefits. By proactively addressing challenges and leveraging available tools, providers can optimize their operations and enhance their relationships with payors and PBMs.
How Frier Levitt Can Help
If you are facing network exclusion, improper reimbursement or other issues with a major medical insurance carrier or PBM, Frier Levitt can help. Laws exist that provide legal protection, while providers may also have rights under applicable contractual agreements. Frier Levitt routinely assists pharmacy providers in resolving issues with payors of all kinds. Contact us today.
