The following are required reading for this chapter:
- 🔗 Healthcare Policy (🔗 Link To)
Health insurance is a financial agreement where a person or employer pays a monthly premium to an insurance company. In exchange, the insurer helps cover medical and prescription costs when care is needed.
Once enrolled in a managed care plan, patients are typically responsible for:
- An annual deductible (initial out-of-pocket spending)
- Then copayments and/or coinsurance (depending on plan design) after the deductible is met
- Until they reach the out-of-pocket maximum (OOP Max), after which covered services are paid 100% by the plan for the rest of the benefit year.
| Term | Meaning | Key Info |
|---|---|---|
| 📅 Enrollment | The period when a patient can sign up for or change a plan. | Typically during open enrollment (fall) or due to a qualifying life event (e.g., marriage, birth, job change). |
| 💵 Premium | The monthly payment for health insurance, paid regardless of use. | Higher premium plans usually have lower deductibles or copays. |
| 💳 Deductible | The amount a patient pays out of pocket before coverage begins. | May be waived for preventive services or some generic drugs. |
| 🏥 Managed Care Plan | A structured healthcare plan that limits costs by controlling how patients receive care. | Includes HMOs, PPOs, POS, and EPOs. Emphasizes coordination and efficiency. |
| 💸 Copayment (Copay) | A fixed amount (e.g., $10 or $50) paid for a service or medication when received. | Typically varies by drug tier or service level. |
| 📊 Coinsurance | A percentage of the cost paid by the patient after deductible is met (e.g., 20%). | Common for expensive procedures or specialty medications. |
| ⛔ Out-of-Pocket Maximum (OOP Max) | The maximum total a patient will pay in a year (including deductible, copays, coinsurance but not including premiums). | After this, insurance pays 100% for covered services. |
Under these Managed Care Plans, drug benefits are managed by PBMs. These are distinct entities; meaning that they are third-party companies contracted to service plans on behalf of payers (e.g.insurers, employers, Medicare).
| Function | Description |
|---|---|
| 🛍️ Claims Processing | Handle real-time claim adjudication. |
| 💲 Reimbursement Rates | Set copays and pharmacy payouts. |
| 📋 Formulary Management | Create and manage drug tiers. |
| 🔐 Prior Authorizations | Require clinical justification for certain drugs. |
| 🤝 Manufacturer Rebates | Negotiate discounts for formulary placement. |
| 📦 Mail-Order Pharmacy | Operate/contract mail pharmacies for long-term meds. |
🤯 CVS Caremark, Express Scripts, & OptumRx manage drug benefits for millions of patients nationwide.
A formulary is an official list of prescription medications that are approved for use and covered by an insurer, pharmacy benefit manager (PBM), or healthcare institution. Formularies guide drug selection by identifying which medications are preferred, reimbursable, or substitutable, and are designed to balance clinical efficacy, patient safety, and cost control.
Formularies are maintained by a Pharmacy and Therapeutics (P&T) Committee, a multidisciplinary panel that includes physicians, pharmacists, nurses, and other healthcare professionals. The committee's primary role is to ensure that the formulary supports safe, effective, and cost-conscious medication use.
P&T Committees are responsible for:
- Evaluating drugs for inclusion based on clinical evidence, therapeutic value, comparative effectiveness, and financial impact
- Reviewing new drug approvals, updated guidelines, and post-market safety data
- Developing or endorsing institution-wide medication use policies, clinical guidelines, and treatment protocols
- Monitoring formulary compliance and drug utilization trends
In managed care and PBM settings, P&T Committees also exist, but the focus includes tier placement, rebate structures, and coverage restrictions for broader patient populations. These committees must include independent voting members to comply with federal regulations.
In institutional settings (e.g., hospitals, integrated health systems), P&T Committees guide the standardization of therapy within the facility.
There are two primary types of formularies:
-
Open Formulary
- Provides broad drug coverage with minimal restrictions
- Includes most available medications, even non-preferred ones
- Allows prescribers greater flexibility in treatment decisions
- Can result in higher overall costs due to fewer limitations on expensive therapies
-
Closed Formulary
- Covers only a specific, limited list of medications
- Non-formulary drugs require prior authorization or are not reimbursed
- Encourages use of preferred or cost-effective alternatives
- Helps reduce expenditures and promote standardized care protocols
In retail, formularies are managed by PBMs and can be open or closed. These drugs are divided into tiers that affect patient cost:
| Tier | Description |
|---|---|
| Tier 1 | Preferred generics (lowest cost) |
| Tier 2 | Preferred brand-name drugs |
| Tier 3 | Non-preferred brands |
| Tier 4+ | High-cost or specialty medications |
📌 Be familiar with the formulary tiers for each PBM your pharmacy contracts with. This helps explain patient copays, process prior authorizations, and suggest alternatives.
Hospitals maintain closed formularies due to cost, storage, and formulary oversight. Only drugs on the approved list are routinely stocked and dispensed.
Because most hospital formularies include only a limited number of medications within each therapeutic class, it is common for an admitted patient to be using an outpatient medication that is not on the hospital's formulary.
In such cases, a therapeutically equivalent medication that is on the formulary may be substituted. This process is known as therapeutic interchange, and it is guided by protocols developed and approved by the facility’s P&T Committee. These are documented in the hospital’s medication policy manual.
There are two types of therapeutic interchange processes:
- Prescriber-Initiated Substitution
- A pharmacist may recommend a formulary alternative.
- The substitution requires the provider’s approval and a new order.
- Protocol-Driven Interchange (Automatic Substitution)
- Some hospitals have pre-approved therapeutic interchange protocols that allow the pharmacist to substitute specific medications without prior approval from the physician.
- These protocols apply only under clearly defined conditions (e.g., specific drug pairs, dose equivalency tables, patient population restrictions).
- The pharmacist must document the substitution and notify the provider, usually within a designated time frame.
📍 Pharmacy technicians do not make interchange decisions, but they should:
- Be aware of common formulary substitutions (e.g., pantoprazole for omeprazole)
- Recognize therapeutic interchange orders
- Ensure that the correct product and dose are selected and labeled appropriately
Non-formulary medications may still be ordered, but only under specific circumstances:
- A Non-Formulary Exception Request must be submitted, often including clinical justification
- Approval is typically required from a pharmacist or P&T designee
- If approved, the inventory technician must order the medication from a wholesaler or manufacturer
Because these drugs are not stocked, there may be significant delays in delivery (i.e. days). Pharmacy technicians should:
- Notify the pharmacist immediately once the delivery schedule is available
- Track the shipment and ensure it arrives in time for the patient’s therapy
- Label and store appropriately upon receipt
🛡️ Always document communication and approval steps when handling non-formulary requests. Delays in treatment can result in safety risks or regulatory flags.
Managed care plans are offered by insurers (public and private); structured to control healthcare costs and improve care coordination.
| Plan Type | Description | Referrals Needed? | Out-of-Network Coverage? |
|---|---|---|---|
| 🟦 HMO (Health Maintenance Organization) | Most restrictive. Requires you to choose a Primary Care Provider (PCP) who coordinates all care. | ✅ Yes, for specialists | ❌ No (life-threatening emergencies only) |
| 🟧 PPO (Preferred Provider Organization) | Flexible. No need for referrals. Higher cost for out-of-network care. | ❌ No | ✅ Yes (higher cost) |
| 🟨 POS (Point of Service) | Hybrid of HMO & PPO. Requires in-network PCP and referrals, but offers some out-of-network coverage. | ✅ Yes | ✅ Yes (with extra cost) |
| 🟪 EPO (Exclusive Provider Organization) | Like an HMO, but no referrals required, still no out-of-network coverage (except life-threatening emergencies). | ❌ No | ❌ No |
🛡️ Check insurance cards or PBM portals for plan types. Copays are often tiered based on drug cost.
Public health insurance refers to a system of healthcare coverage provided by government agencies, such as federal, state, or local governments. It aims to make healthcare accessible and affordable for individuals who may not be able to obtain private health insurance.
🔗 See Public Healthcare for more details.
Understanding how prescriptions are priced and reimbursed is essential for pharmacy technicians, especially when dealing with insurance billing, patient copays, or third-party rejections.
- Average Wholesale Price (AWP) is a published "sticker" price used as a pricing reference. It is not the actual price pharmacies pay, but is used to calculate reimbursements in many contracts.
- Wholesale Acquisition Cost (WAC) is the manufacturer’s list price to wholesalers. It is typically lower than AWP but still does not reflect discounts or rebates. It is also used more in pricing negotiations than in routine claims reimbursement.
- National Average Drug Acquisition Cost (NADAC) is a federal pricing benchmark based on actual invoice data collected from retail community pharmacies. It represents what pharmacies typically pay for a drug and is used by Medicaid for fair reimbursement. NADAC is published weekly by CMS and reflects real-world costs more accurately than AWP or WAC.
- Dispensing Fee is a fixed amount paid to the pharmacy by the insurer to cover the professional services involved in preparing and dispensing a prescription. This includes tasks such as verifying the prescription, reviewing drug interactions, labeling, and patient counseling. This is added to the drug cost in most reimbursement formulas. Medicaid programs and PBMs each have different dispensing fee rates. These are fixed by contract and may differ between generics, brands, and 340B drugs.
As a cost-containment strategy, insurers will pay the lowest of:
- Maximum Allowable Cost (MAC) is the maximum reimbursable amount that a PBM will set for a generic drug or group of equivalent drugs. If a pharmacy’s acquisition cost exceeds the MAC, it may lose money on the transaction unless it charges the patient the difference.
- Usual and Customary (U&C / UCR) Price is the "cash" or "retail" price that a pharmacy would charge a cash-paying customer for a given prescription. Insurers compare this price to their negotiated rates.
- Contracted Reimbursement Formula refers to the specific pricing agreement between the pharmacy and the PBM or third-party payer. These terms vary by payer and are confidential, but typically includes a base rate such as [ingredient cost + dispensing fee] or [average wholesale price (AWP) minus a percentage + fee].
- 🦅 Medicare Part D plans negotiate their own contracted rates with pharmacies. They do not use MAC pricing but rely on plan-specific reimbursement formulas.
- 🐻 Medi-Cal uses NADAC + $10.05 dispensing fee for most outpatient drugs dispensed at retail pharmacies. This is subject to change based on the state budget and CMS rules.
- 🦅 340B Drug Pricing Program allows eligible entities (e.g., certain clinics and hospitals) to purchase outpatient drugs at significant discounts. When a 340B drug is billed to Medicaid, special carve-out rules apply to avoid duplicate discounts.
- 🛡️ Pharmacy technicians must identify if a prescription is 340B-eligible and follow proper billing procedures. Billing a 340B drug through Medicaid without correct flags can violate federal law.
Understanding the different ways a pharmacy submits and processes claims helps clarify why certain prescriptions require different workflows, systems, or documentation. Billing models vary by payer type, drug classification, and healthcare setting.
This is the most common billing model for retail, chain, and outpatient pharmacies. Claims are submitted electronically through a Pharmacy Benefit Manager (PBM).
- Uses the NCPDP Telecommunication Standard (real-time claim format)
- Requires BIN / PCN / Group / ID numbers from the patient’s insurance card
- Adjudication happens in real-time
- Determines:
- Coverage and formulary status
- Patient copay or coinsurance
- Reimbursement to the pharmacy
📌 Rejections are issued instantly with reject codes (e.g., PA required, refill too soon, NDC not covered).
Some pharmacies (especially compounding, specialty, or hospital outpatient pharmacies) bill medical insurance directly, bypassing PBMs. This is known as in-house billing or medical claims billing.
Uses:
- CMS-1500 (for professional services)
- UB-04 (for institutional billing)
Common for:
- Injectables
- Durable Medical Equipment (DME)
- Immunizations
- Physician-administered medications
Requires:
- HCPCS / CPT procedure codes
- ICD-10 diagnosis codes
- Rendering provider and facility NPI numbers
📌 Medical claims adjudication is slower and often requires documentation (e.g., physician orders, treatment plans).
Some prescriptions bypass standard PBMs and are routed through special billing networks tied to employer-based or injury-related claims.
Used in:
- Workers’ compensation claims
- Auto insurance or liability claims
- TPAs (Third Party Administrators) for employer drug programs
Processed through:
- Designated billing networks (e.g., Coventry, One Call, Mitchell)
- Manual fax or EDI processes
- Employer or state-specific guidelines
🐻 California has unique workers’ comp rules and drug formularies. Claims must follow Division of Workers' Compensation (DWC) guidelines. . 🛡️ Never submit these claims to the patient’s regular insurance unless explicitly directed.
When patients are unable to afford their prescriptions due to lack of insurance coverage, high out-of-pocket costs, or formulary exclusions, pharmacies can support access through a variety of public assistance resources and non-standard funding channels. These programs operate outside the typical billing and adjudication system and can provide significant financial relief.
Eligibility varies by program but generally includes:
- Uninsured or underinsured patients
- Patients who cannot afford copays, coinsurance, or deductibles
- Patients who meet income-based financial criteria, often aligned with federal poverty levels
- Patients prescribed high-cost or specialty medications
PAPs are typically funded by drug manufacturers, nonprofits, or charitable foundations. They provide free or low-cost medication to eligible patients.
- May provide free medication shipped directly to the patient or pharmacy
- Some offer temporary coverage while insurance is pending or under appeal
- Most require application with prescriber signature, proof of income, and insurance status
📌 PAPs bypass insurance billing. Approved drugs often come through separate distribution channels. Follow all handling and documentation instructions carefully.
These are savings cards issued by drug manufacturers to reduce the patient’s out-of-pocket cost at the point of sale.
- Only available to patients with commercial insurance
- Cannot be used with Medicare, Medi-Cal, or other federal health programs
- Automatically apply at point of sale if card info is entered correctly
🛡️ These programs are marketing tools. Always check for restrictions or expirations. Pharmacies may need to enroll through manufacturer portals.
Charitable foundations provide grants or free access to medications for patients with specific chronic or high-cost diseases, such as:
- Cancer (e.g., Leukemia & Lymphoma Society)
- HIV/AIDS (e.g., Patient Advocate Foundation)
- Multiple Sclerosis (e.g., MSAA)
Assistance may include:
- Full medication coverage
- Help with copays, premiums, or transportation
- Reimbursement for already purchased meds (in some cases)
📌 These programs may be used by Medicare or Medi-Cal patients when manufacturer copay cards are not allowed.
Some pharmacies, especially independent or clinic-affiliated, offer cash discounts or sliding scale pricing based on income.
- Price is reduced based on verified income level
- Often used when no other assistance is available or during insurance gaps
- Requires internal authorization or enrollment in discount program
📌 Always document when a patient receives discounted pricing. It may affect future eligibility for other assistance programs.
Pharmacy staff should screen for assistance when insurance billing fails, a claim is rejected for cost-related reasons, or the patient expresses inability to pay.
Technicians can help by:
- Identifying patients who may benefit from assistance
- Explaining options clearly and without judgment
- Gathering required documentation, including prescriptions, income proof, and insurance info
- Coordinating with pharmacists, case managers, or social workers
- Tracking application status and following up with patients and programs
- Claims refer to the electronic submissions that a pharmacy sends to an insurance company or PBM (Pharmacy Benefit Manager) to request payment for a dispensed prescription.
- Adjudication is the real-time process where insurance (via the PBM) evaluates a prescription claim. It determines coverage, patient cost, and whether the prescription is accepted or rejected.
- Billing is the step that follows adjudication. If the claim is accepted, billing finalizes the transaction: the PBM pays the pharmacy a contracted reimbursement amount, and the patient is charged their portion.
- Coordination of benefits (COB) is the process of determining which plan is billed first when patients have more than one plan. It prevents duplicate payments for the same service or prescription, ensures the correct insurer is billed first to avoid claim denials or delays, and helps the pharmacy calculate the patient’s true out-of-pocket cost.
- Third Party Rejections (TPR) are claim denials from the insurance due to eligibility or processing errors that may be resolved with corrections.
Before a prescription can be processed or billed, a patient profile must be created in the pharmacy management system. This includes entering key information that ensures accuracy during claim adjudication and compliance with regulations.
| Term | Meaning |
|---|---|
| Primary Insurance | Pays first up to its coverage limits. |
| Secondary Insurance | Pays some or all of what the primary didn’t cover. |
| Tertiary Insurance | Rare third plan that covers remaining costs. |
🛡️ Incorrect COB setup leads to claim denials or full patient cost. Watch for Third Party Rejections like “other coverage primary”. Verify COB at patient intake and refer unclear COB issues to pharmacist or billing staff.
🔗 See: New Patient Intake & Coordination of Benefits SOP
Workers’ compensation is a specialized form of legally-mandated, private insurance that pays for medical expenses, including prescription drugs, when an employee is injured on the job or develops a work-related illness. Workers’ comp claims are standalone and bypass commercial or government payers entirely. They are processed through a separate billing system, not the patient's standard PBM or insurance. Most plans use a dedicated claims processor or pharmacy network (e.g., Coventry, One Call, Mitchell ScriptAdvisor).
🔑 When Handling these Claims:
- Verify and enter claim information:
- Employer’s name
- Date of injury
- Workers’ comp claim number
- Insurance carrier or TPA (Third Party Administrator)
- Follow billing instructions provided by the workers’ comp network or adjuster.
- Do not bill the patient’s regular insurance.
- 📌 Incorrect billing to a PBM can delay medication access and violate payer agreements.
- Do not collect copays unless specifically instructed by the workers’ comp payer.
- 📌 Patients typically pay $0 out of pocket, but only for medications authorized by the claims adjuster.
- If a medication is denied or not listed, refer to the pharmacist or contact the claims adjuster.
In California, workers’ comp prescriptions are regulated by the Division of Workers’ Compensation (DWC) and must comply with the Medical Treatment Utilization Schedule (MTUS) and Drug Formulary.
🦅x🐻 Drug Formulary Rules:
- California requires use of the DWC Drug Formulary, which classifies drugs as:
- Exempt (Ex): No prior authorization needed.
- Non-Exempt (Non-Ex): Requires Prior Authorization (PA).
- The MTUS determines which drugs are medically necessary based on evidence-based treatment guidelines.
🐻 Mandatory Pharmacy Network Participation:
- Employers or claims administrators may require injured workers to use a specific Medical Provider Network (MPN) and contracted pharmacy network.
- Out-of-network pharmacies may not be reimbursed, even if the medication is appropriate and covered under MTUS.
🐻 Electronic Billing & Documentation
Claims must be billed using California DWC electronic billing formats (837P or NCPDP for pharmacy).
Proper documentation includes:
- Original date of injury
- DWC claim number
- National Provider Identifier (NPI)
- State license number
- Prescriber’s information
🛡️ Pharmacy technicians must confirm that the prescriber is in the MPN and that the drug matches DWC formulary coverage. Always escalate unclear coverage or PA issues to the pharmacist.
🐻 Emergency Fill Rule
A 7-day supply of a drug may be dispensed without prior authorization if:
- The drug is listed as Exempt, and
- The provider documents medical necessity,
- The prescription is for a new work-related injury.
📌 Always check for California-specific reject messages or override codes when submitting workers’ comp claims.
Claims for prescription drugs are typically filed during the process of prescription intake. Steps for claim submission are detailed within, but reading this document is not recommended at this time as it will be reintroduced later in the Core Pharmacy Operations chapter. Proceed at your own discretion.
🔗 Prescription Intake & Order Entry SOP
Medication Therapy Management (MTM) is a clinical service provided by pharmacists under Medicare Part D Prescription Drug Plans (PDPs) to optimize drug therapy, reduce risk, and improve therapeutic outcomes. Services may include Comprehensive Medication Reviews (CMRs), Targeted Medication Reviews (TMRs), & Disease-state management (e.g., diabetes, hypertension, hyperlipidemia).
Billed using CPT codes on medical claim forms submitted via:
- CMS-1500 (direct medical billing)
- CMS-10114 form (MTM reporting to CMS)
CMS-10114 Form are required for PDPs offering MTM services and require the following supporting documents:
- MTM program elements
- Target populations
- Intervention frequency
- Reporting metrics to CMS
| CPT Code | Description | Use Case | Billing Notes |
|---|---|---|---|
| 99605 | MTM initial consult, new patient, up to 15 minutes | First encounter with new MTM patient | Billed once per patient per year |
| 99606 | MTM follow-up visit, established patient, up to 15 minutes | Ongoing MTM care (same year) | Use after 99605 has been billed |
| 99607 | Add-on for MTM services, each additional 15 minutes | For longer sessions (attach to 99605/99606) | Can be billed multiple times for extended visits |
💡 All MTM billing requires time documentation, clinical notes, and often a signed patient consent. These services are generally not billable through PBMs. They go through medical insurance or Medicare Part D PDPs.
- Under California Business & Professions Code § 4052.2, pharmacists may provide MTM services independently if they meet the requirements for advanced practice pharmacist (APh) licensure.
- Pharmacists may initiate or adjust drug therapy in collaboration with physicians through a Collaborative Practice Agreement (CPA).
- Medi-Cal (California Medicaid) does not reimburse for MTM using CPT codes 99605–99607. MTM under Medi-Cal is typically embedded within comprehensive care management services delivered in clinical settings.
- California pharmacists may perform CMRs and TMRs as part of health plan performance measures, including those tied to CMS Star Ratings.
- 🛡️ Technicians may assist with MTM program documentation, scheduling, and follow-up tasks, but may not perform clinical reviews, counsel patients, or document clinical interventions.
🐻 MTM services must comply with California Confidentiality of Medical Information Act (CMIA) as well as HIPAA. Document storage and communication platforms must meet both state and federal privacy standards.
The Universal Claim Form (UCF) is a standardized paper form created by the National Council for Prescription Drug Programs (NCPDP). It is used when electronic adjudication is unavailable, fails, or is not supported by the plan.
Common scenarios:
- Long-term care or correctional facilities
- Retroactive insurance billing
- Workers’ comp or third-party administrator (TPA) claims
- Coordination of Benefits (COB) adjustments
- Out-of-network pharmacy claims
📄 UCFs must be completed accurately and legibly. Incomplete or illegible forms will result in claim rejections or delays. Many payers require original signatures or supporting documents as well as the reason for paper submission.
- Medi-Cal does not accept handwritten UCFs. Claims must be typed or submitted electronically unless an exception is granted.
- For Medi-Cal Rx, electronic claim submission through the Magellan portal is required for standard prescriptions. UCFs may be used in rare override or disaster scenarios.
- Medical billing through Medi-Cal FFS requires coordination with the Local Education Agency (LEA) or county health department for covered services.
🐻 CA pharmacies must retain UCF copies and supporting documentation for 3 years, per audit standards.
The billing cycle is a real-time loop that occurs every time a prescription is submitted for insurance billing. It ensures the pharmacy receives reimbursement and the patient is charged correctly.
- Prescription Entry
- A valid prescription is entered into the pharmacy management system.
- Key data: prescriber NPI, patient demographics, drug NDC, quantity, days' supply, and DAW code.
- Insurance Claim Submission
- The system electronically submits the claim to the patient’s primary insurer via the PBM.
- Format: Uses NCPDP Telecommunication Standard (e.g., D.0).
- Includes BIN, PCN, Group ID, Member ID, relationship code, and coordination of benefits if needed.
- Real-Time Adjudication
- The PBM processes the claim in seconds.
- It checks:
- Eligibility
- Drug coverage and formulary status
- Quantity limits
- Copay tiers
- Prior authorization requirements
- Coordination of benefits (COB)
- Response Returned to Pharmacy
- If accepted or
paid:- The PBM returns the approved reimbursement amount for the pharmacy and the patient’s copay.
- If rejected:
- A
rejectcode is returned (e.g., "70 = Product/Service Not Covered", "75 = Prior Authorization Required"). - The technician must troubleshoot or refer to pharmacist.
Other Coverage Primaryindicates that COB is incorrect and technicians must confirm plan billing order.Pending PAindicates that the plan requires prior authorization and technicians must notify pharmacist to initiate.Plan Not Foundindicates possible data entry error (e.g. Insurance ID or BIN) and technicians must reverify the card or contact the PBM helpdesk.
- A
- If accepted or
- Patient Pickup & Payment
- If accepted, the patient pays their portion (copay, coinsurance, deductible).
- If issues persist, patient may be asked to contact insurer or provider.
- Secondary/Tertiary Claims (if applicable)
- If a secondary or tertiary insurance exists, the remaining balance is submitted to the next payer.
- Claim uses coordination of benefits fields (e.g., Amount Paid by Primary Plan).
- Adjudication repeats for the next plan.
- Reconciliation & Rebilling
- Pharmacies later receive remittance advice and reconcile claims against actual payments.
- Underpaid, reversed, or clawed-back claims may require reversal and resubmission.
🛡️ Always verify that the correct insurance plan and COB are set up before submission. Even minor data errors can cause denials or underpayments.
A Third-Party Rejection (TPR) occurs when a prescription claim is denied by the PBM or insurance. These denials are flagged with a reject code and message explaining the issue.
| Reject Code | Reason | Resolution |
|---|---|---|
| 70 | NDC Not Covered | Use formulary drug or request PA |
| 75 | Prior Authorization Required | Start PA process |
| 76 | Plan Limitations Exceeded | Check days’ supply, quantity |
| 79 | Refill Too Soon | Check last fill date |
| 25 | Invalid Birth Date | Verify with patient |
| 26 | Invalid Person Code | Confirm patient relationship |
| 41 | Invalid Cardholder ID | Correct insurance info |
📌 Always confirm the BIN/PCN/ID from the most recent insurance card. These fields determine where the claim is sent.
A Prior Authorization (PA) is a formal approval process required by insurance companies or PBMs before they will pay for certain prescriptions. A PA TPR is triggered when the insurer needs clinical justification for covering a drug that falls outside standard coverage rules.
📌 Some prescription drugs can still be purchased without insurance if the patient pays out-of-pocket.
🔑 Common Reasons a PA Is Required:
- Non-formulary drugs
- Brand-name drugs when generics are available
- High-cost or specialty medications
- Drugs with step therapy requirements
- Medications flagged for safety concerns (e.g., opioids, biologics)
🚨 These rules are set by PBMs and insurers—not by the pharmacy.
Pharmacy technicians may assist the pharmacist with the following PA tasks:
- Identify the rejection
- Look for
reject code 75orPA Requiredmessages. - Verify that the patient has no alternative coverage.
- Look for
- Notify the pharmacist
- Pharmacist must confirm if a PA is appropriate or if a formulary alternative is preferred.
- Assist with documentation
- Gather relevant prescription data, insurance info, and rejection messages.
- Help collect clinical data (e.g., diagnosis, trial history) from prescriber’s office.
- Submit PA request
- May use electronic PA (ePA) tools, insurer web portals, or fax forms (under pharmacist supervision).
- Track submission and document status in the patient’s profile.
- Inform the patient
- Set clear expectations: PA approval typically takes 1–3 business days.
- Encourage follow-up with the prescriber for urgent requests.
- 🛡️ Always inform the pharmacist immediately if the medication is urgently needed or if the patient is in distress.
- Resolving Denials
- The pharmacist may:
- Notify the prescriber to review insurer notes and appeal if appropriate.
- File an appeal or exception request, often requiring updated clinical documentation.
- The technician may:
- Assist in identifying the reason for denial.
- Recheck documentation and ensure nothing was missed.
- Track appeal submissions and timelines, but pharmacists handle clinical portions.
- 🛡️ Appeals are time-sensitive. Always escalate denials immediately to the pharmacist or billing specialist.
- The pharmacist may:
🛡️ Note date/time of PA submission, patient notification, and any escalation. . 🚨 PAs are not required for emergency/life-threatening prescriptions under federal rules, but this must be determined by the pharmacist.
Pharmacy technicians commonly access PBM portals to:
- Check real-time claim status
- Review drug coverage, formulary tier, and PA requirements
- Confirm patient eligibility and copays
- View or download PA forms and status updates
- Troubleshoot error messages or incomplete PA submissions
📌 Portals may vary by PBM. Examples include CoverMyMeds, SureScripts, OptumRx, Express Scripts, CVS Caremark, and Medi-Cal Rx.