The Rx for good business: an insider provides best practices for working with your pharmacy.

Working with ancillary providers has always been an important issue to nursing homes. Thanks to Part D, it's become even more crucial to partner effectively with your pharmacy provider.

January 2006 brought the transition of most of your residents' drug coverage from Medicaid to the Medicare Part D program. With that transition, nursing homes entered a new kind of relationship with their pharmacy providers--one that includes working with them more closely than ever before.

It was a huge undertaking by the government to implement the change in a short time period, and, naturally, the transition has caused some difficulties.

The biggest Medicare Part D issue that nursing homes face is identifying which prescription drug plan (PDP) to bill for their dual-eligible residents. Because CMS officials took it upon themselves to autoenroll these individuals, identifying PDPs was the first problem pharmacies and nursing homes had to overcome.

The silver lining in all of this was the beginning of a new, more robust partnership between nursing homes and their pharmacy providers. Those facilities and pharmacies that plunged into this program together and worked as a team with residents and family members are the success stories.

The symbiotic team

When the facility and pharmacy work as a team, it's easier to review a resident's drug regimen and ensure that he or she is placed into the proper PDP with a drug formulary that best matches the person's needs.

Another important component to success is the involvement of the physician. Whether it is changing a drug to one that is covered on the PDP drug formulary, filing appeals with the PDP for noncovered drugs, or getting prior authorization, the interaction between the pharmacy, the nursing home, and the resident's physician is essential.

Meet with your consultant pharmacist to understand his or her approach to these issues and eke out your facility's role in the process. There is no way to get around the interaction between the pharmacy and the facility when it comes to prior authorizations.

Your facility also should be aware of all billing procedures that your pharmacy may have. These include the following:

* The return of unused medications

* Credits that will be issued for returned medications

* Mail-order medications

* Community discharge with medications

* Cut-off procedures for nonpayment

* Late day/night admissions

The nursing home is the only entity that has the information necessary for the PDP to make the proper decision. Whether it is a diagnosis code or lab result, the pharmacy does not have this information, so the facility's role in gathering it is vital.

Be sure you understand your pharmacy's prior-authorization process. One of the biggest problems pharmacies face with this process is that, often, the information is sent to either the doctor's office or the nursing home, and the requested information form is not processed in a timely manner. Setting up a standard procedure between you and your pharmacy to process this paperwork will be greatly appreciated by your pharmacy billing staff.

The trouble with E-1

Most nursing homes and their pharmacy providers continuously struggle to figure out how to get medications paid so the facility or family is not stuck with the charges. It's as simple as looking up the coverage in the Medicare D Eligibility Verification file, known as the E-1 query file, right?

Wrong. The problem with the E-1 query file is that the information it provides is only for what's in the system on the date you make the query. If the resident has switched PDPs, the prior information is not available because the E-1 query records have not been updated. That's where things can get messy.

Pharmacy billing staff spend a lot of time on the phone with CMS and insurance companies to determine where to bill for medications that have been dispensed. The biggest problem with working with CMS is that its records are only as good as the E-1 query information. Some pharmacy providers have left this task up to the nursing home.

In any event, the nursing home plays a key role in this process. Keeping the pharmacy up to date with changes made to PDP enrollment and copies of Medicare Part D correspondence that identify the current PDP enrollment information will be appreciated by your pharmacy billing staff.

Copays for dual eligibles

Dual-eligible copayments are another issue that keeps pharmacy billing staff busy. Discuss this issue with your pharmacy so you have an understanding of how this affects facility billing.

Each pharmacy handles this situation differently. One method is to hold the copayment charges until the pharmacy provider can review the amount for accuracy, because the copayment charge is often incorrect and should be paid by the insurance company, not the resident.

One problem is that CMS does not know that your residents are in a long-term care setting, which results in inappropriate copayment amounts due from the resident. Once your pharmacy determines the correct copayment, it will then bill the resident for the amount due.

Who pays the copayment amount varies from state to state. Consult a Medicaid expert to determine how the copayment amount should be billed and reimbursed in your state.

You're not alone in thinking that this dual-eligible copayment requirement is a hassle: It is a major frustration for us in the pharmacy industry, too.

Tying it all together

A complete understanding of the pharmacy's policies and procedures will allow your facility to be sure that it provides all of the necessary information to the pharmacy. That will likely eliminate errors such as the facility receiving bills for medications and items wrongly.

Be sure your facility sends copies of the "signed" resident authorization forms for pharmacy services. Submit the authorization form along with your demographic information and copies of prescription plan cards or PDP correspondence. Making sure your orders and prescriptions are legible goes without saying!

Also, find out what kind of education your pharmacy can provide to your staff, residents, and family members. Ask whether your pharmacy representative can attend family meetings to answer questions regarding the Medicare Part D program and work proactively with your facility.

Understanding the process is where it all begins, so give your pharmacy a call and set up an appointment to go over all necessary issues. It's likely you will find that the pharmacists are eager to meet with you to ensure that your mutual partnership is a success.

RELATED ARTICLE: Three tips to dodge billing errors.

Most incorrect charges on the pharmacy invoice can be avoided if the nursing home provides the proper information to its pharmacy from the outset. Here are three tips to avoid common trouble spots:

1. Choose the correct payer.

The number-one mistake on pharmacy bills is the wrong payer type, which can easily be avoided if your facility provides a copy of its census records to the pharmacy in a timely fashion. The change in payer type from Medicare Part A to another type is the worst culprit for causing improper billing to the facility.

2. Verify that private payer addresses are accurate on the invoice.

Facility staff often overlook the address on the private payer invoice. In many cases, when a resident is admitted to the facility from the community, the nursing home staff use the community address as the billing address. That indication results in mail returned to the pharmacy as undeliverable and another phone call to the facility to pester an already overworked bookkeeper to obtain the proper billing address.

3. Ensure that you provide the proper insurance card.

Although most residents elect Medicare Part D coverage, there are some who will remain with other insurance coverage. It is important to provide copies of these residents' proper insurance cards to the pharmacy so residents are not billed privately by mistake.--Lee Heinbaugh

RELATED ARTICLE: Read the fine print.

Selecting a pharmacy provider is a complicated decision. And, in some cases, the level of service you receive after signing up with a new provider may not be up to the level that was promised.

Whether it is customer service issues or delivery times, dissatisfaction with your pharmacy can cause a lot of unnecessary headaches for your staff. Therefore, be sure you don't get locked into a contract that virtually precludes you from changing pharmacy providers.

Being a facility's pharmacy provider should be a privilege. Therefore, you--the provider--should maintain control.

You should have the right to cancel services "with no cause" if you find that you are not receiving the type of service you desire. Hopefully you won't just dump your pharmacy provider without first trying to fix the problems, but you should maintain control of that final decision.

Insist upon a reasonable amount of time for giving notice if you or the pharmacy provider wish to part ways. This will give your facility time to switch to the new provider and not rush the conversion process.

Many nursing homes enter into bad contracts with pharmacy providers and suffer because they can't get out of the contractual agreement without the threat of a lawsuit, which would cause undo financial hardship to the facility. Don't get caught in this situation. The pharmacy you select should be willing to work with you as a team member, not an adversary.--Lee Heinbaugh

RELATED ARTICLE: Pharmacy relations under the new unnecessary drugs F-Tags.

The continued partnership between the nursing home and its pharmacy has never been more important in light of the revisions to F-Tags #329, #425, #428, and #431 that took effect December 18, 2006.

The main focus on the new regulations is determining whether the facility meets the needs of its residents. The interaction between the nursing home and its pharmacy is essential to meet the necessary guidelines set forth by these new F-Tags.

During the normal course of business, your pharmacy should review residents' new medication orders against all medications currently being dispensed to that person to be certain that there are no adverse drug interactions, it is also the pharmacy's responsibility to verify that the medication ordered is the medication dispensed. Good pharmacy practice includes verification of medication orders prior to delivery. This process includes comparing the order to the medication dispensed to ensure that the medication, dosage, and labeling directions are accurate.

One of the pharmacy's key roles is helping the nursing home review prescribed medications to determine which, if any, of the items being dispensed fall under the category of unnecessary medications or medications without indications for use. Without a pharmacist's knowledge, this review will not be successful.

--Lee Heinbaugh

Lee A. Heinbaugh, controller with Pharmacy Management Group, began her healthcare career in 1980. Her experience includes working on Medicaid, Medicare, and other third-party payment and reimbursement issues, including business office operational reviews and traditional accounting and bookkeeping services. Contact her at [e-mail].