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Understanding basic concepts and strategies for obtaining pharmaceutical reimbursement.

PURPOSE: The rules that govern pharmaceutical reimbursement and strategies for obtaining reimbursement for hospital inpatients and outpatients and patients treated at physician-owned clinics are discussed. SUMMARY: The use of certain claim forms and provision of information about the patient location, drug, Healthcare Common Procedure Coding System (HCPCS) code, status indicator, billing unit, revenue code, and International Classification of Diseases, 9th Revision (ICD-9) code are required to obtain reimbursement for pharmaceuticals from the Centers for Medicare & Medicaid Services. Requirements for hospital inpatients and outpatients differ. Claims for patients treated at physician-owned clinics are handled differently from claims for those treated at hospital outpatient clinics, but pharmaceutical reimbursement rates are the same in the two settings. CONCLUSION: Frequent changes in the rules for obtaining pharmaceutical reimbursement present a challenge. A knowledge of the rules and requirements for different patient treatment settings is needed to obtain reimbursement.

Ambulatory Care Facilities↗

Effect of the Medicare Prescription Drug Improvement and Modernization Act on the bottom line.

PURPOSE: An historical perspective on the impact of the Medicare Prescription Drug Improvement and Modernization Act (MMA) on pharmaceutical reimbursement, and the financial bottom line at health systems and various strategies to use in the inpatient and outpatient setting to improve the bottom line are described. SUMMARY: Implementation of MMA has affected the entire healthcare continuum by reducing pharmaceutical reimbursement rates and health system revenues and increasing prescription drug copayments, emergency department visits, and hospital admissions. Physician-owned clinics are less profitable than in the past because of MMA, which may prompt clinic closures and shift the patient care burden to clinics at public hospitals. Negotiating carve-outs for costly drugs and evaluating the feasibility of obtaining outlier payments can improve the bottom line in the hospital inpatient setting. Ensuring that billing codes are accurate and verifying that reimbursement was received can help minimize the impact of MMA on the financial bottom line in the outpatient setting. Negotiating favorable purchasing contracts and ensuring that drugs are used appropriately by following evidence-based guidelines can improve the financial bottom line in both the inpatient and outpatient settings. CONCLUSION: Strategies to decrease drug acquisition costs and increase reimbursement rates can help minimize the adverse impact of MMA on the financial bottom line at health systems.

Ambulatory Care Facilities↗

Optimizing pharmaceutical reimbursement: one institution's approach.

PURPOSE: The importance of understanding the revenue cycle, reviewing the billing system for errors, and collaborating with other health system departments in maximizing pharmaceutical reimbursement, and the approach used at a large academic medical center to justify a reimbursement specialist and achieve this goal are discussed. SUMMARY: Understanding the revenue cycle may enable pharmacy departments to make wise decisions about programs and services that maximize revenue recovery and meet patient needs. Parts of the revenue cycle that pharmacists can have a favorable effect on include claim denials/payment variances, regulatory changes, compliance, contracting, and price setting. Pharmaceutical reimbursement was increased substantially at one institution through a collaborative effort involving multiple departments and a reimbursement specialist who analyzed the revenue cycle, reviewed billing systems, and took steps to avoid or correct billing errors. CONCLUSION: Collaborating with members of key health system departments can help identify and resolve billing system errors that diminish revenue. Documenting efforts to increase revenue recovery can help justify adding personnel dedicated to reimbursement matters. Analyzing the revenue cycle can contribute to wise decision-making that optimizes pharmaceutical reimbursement.

Academic Medical Centers↗

Bias due to false-positive diagnoses in an automated health insurance claims database.

BACKGROUND AND OBJECTIVE: Automated database studies have become a cornerstone of drug safety assessment. To assess the reliability of automated data, we compared the hospitalisation and mortality rates among three similar studies of automated healthcare databases in North America. METHODS: Similar protocols were used to identify patients diagnosed with chronic obstructive pulmonary disease (COPD) who were treated with inhaled bronchodilators or inhaled corticosteroids in the Saskatchewan Health Database (SHD), the Kaiser Permanente Medical Care Program (KPMCP) of Northern California, and a proprietary automated insurance claims database available from i3 (formerly Ingenix). Automated data were used to compute incidence rates of total hospitalisation, cardiovascular (CV) hospitalisation and hospitalisation due to several specific types of CV outcomes. Record linkage with registries of vital statistics was used to identify deaths, obtain death certificates, and compute rates of total mortality, CV mortality and deaths due to certain CV outcomes. We compared rates in the i3 population with rates in the other two populations using age-adjusted rate ratio estimates and 95% CIs. RESULTS: The i3 cohort had approximately one-half the rates of total mortality, CV mortality and total hospitalisations, but twice the rate of CV hospitalisations, compared with each of the other two database cohorts. DISCUSSION: The unexpectedly higher rates of CV hospitalisations in the i3 population are inconsistent with its lower CV mortality, total mortality and total hospitalisation rates. This discrepancy is not readily explained by a higher prevalence of CV disease or procedures, random variation or confounding. Instead, high CV hospitalisation rates in the i3 population are consistent with a high rate of false-positive diagnoses recorded on insurance billing claims. CONCLUSION: These results underscore the importance of ensuring valid endpoints in automated claims databases.

Bias↗

Adverse selection and the challenges to stand-alone prescription drug insurance.

This paper investigates a possible predictor of adverse selection problems in unsubsidized stand-alone prescription drug insurance: the persistence of an individual's high spending over multiple years. Using Medstat claims data and data from the Medicare Survey of Current Beneficiaries, we find that persistence is much higher for outpatient drug expenses than for other categories of medical expenses. We then use these estimates to develop a simple and intuitive model of adverse selection in competitive insurance markets and show that this high relative persistence makes it unlikely that unsubsidized drug insurance can be offered for sale, even with premiums partially risk adjusted, without a probable adverse selection death spiral. We show that this outcome can be avoided if drug coverage is bundled with other coverage, and we briefly discuss the need either for comprehensive coverage or generous subsidies if adverse selection is to be avoided in private and Medicare insurance markets.

Drug Prescriptions↗

Benefit plan design and prescription drug utilization among asthmatics: do patient copayments matter?

The ratio of controller-to-reliever medication use has been proposed as a measure of treatment quality for asthma patients. In this study we examine the effects of plan-level mean out-of-pocket asthma medication patient copayments and other features of benefit plan design on the use of controller medications alone, controller and reliever medications (combination therapy), and reliever medications alone. The 1995--2000 MarketScan claims data were used to construct plan-level out-of-pocket copayment and physician/practice prescriber preference variables for asthma medications. Separate multinomial logit models were estimated for patients in fee-for-service (FFS) and non-FFS plans relating benefit plan design features, physician/practice prescribing preferences, patient demographics, patient comorbidities, and county-level income variables to patient-level asthma treatment patterns. We find that the controller-to-reliever ratio rose steadily over 1995--2000, along with out-of-pocket payments for asthma medications, which rose more for controllers than for relievers. After controlling for other variables, however, plan-level mean out-of-pocket copayments were not found to have a statistically significant influence on patient-level asthma treatment patterns. On the other hand, physician/practice prescribing patterns strongly influenced patient-level treatment patterns. There is no strong statistical evidence that higher levels of out-of-pocket copayments for prescription drugs influence asthma treatment patterns. However, physician/practice prescribing preferences influence patient treatment.

Adult↗

Determining an episode of care using claims data. Diabetic foot ulcer.

OBJECTIVE: Amid changes in the organization and financing of health care, health care decision makers are increasingly interested in episodes of care. We sought to determine an episode of care for diabetic foot ulcer using an administrative claims database. RESEARCH DESIGN AND METHODS: We used 1993-1995 claims data to assess resource utilization for privately insured patients with diabetic foot ulcers. Over a 26-week period, we determined the episode length by comparing differences in average daily charges and proportion of patients with charges before and after foot ulcer diagnosis. All 13 weeks before diagnosis were used to calculate baseline values. Significance was determined by CIs, which were calculated by a nonparametric bootstrap technique. Costs associated with the episode were also calculated. A sensitivity analysis using weeks with highest and lowest values as baseline was also conducted. RESULTS: Based on average daily charges, the episode of care for diabetic foot ulcer was 5 weeks. Using proportion of patients with charges, the episode was longer than 13 weeks. The cost for an episode of care ranged from $900 to $2,600. In the sensitivity analyses, episodes of care ranged from 1 to 13 weeks. CONCLUSIONS: Episodes of care can be defined by the period beginning with increased resource consumption and ending when resource consumption returns to baseline levels. With the growth of managed care and disease management programs, episode-of-care analysis may have an increasingly important role in health care provision and delivery.

Costs and Cost Analysis↗

Quality of care provided to patients with diabetes mellitus in Puerto Rico; managed care versus fee-for-service experience.

OBJECTIVE: To evaluate and compare the quality of diabetes care in a large managed care system and fee-for-service payment system in Puerto Rico. METHODS: This retrospective cross-sectional study assessed the adherence to standards of diabetes care in 1,687,202 subjects--226,210 from a fee-for-service population and 1,460,992 from a managed care group. Patients with diabetes mellitus were identified from insurance claims reports. Type of health-care provider, service location, number of visits, and laboratory utilization were also assessed. RESULTS: From the analysis, we identified 90,616 patients with diabetes (5.4% of the overall study group). Of these, 66,587 (73.5%) were found to have at least one encounter with a physician in a medical visit. Of the 66,586 patients with diabetes who visited a physician, only 4% were treated by an endocrinologist. General laboratory utilization was 34% for the entire population of patients with diabetes studied. In the group of patients with documented laboratory tests, 93% had a documented fasting blood glucose test; in contrast, hemoglobin A lc testing was performed in only 9% of the patients. The fee-for-service group had a higher rate of visits to medical specialists and general laboratory utilization, whereas the managed care group had a higher rate of hospital admissions and emergency department visits. CONCLUSION: The quality of diabetes management and the subsequent outcomes are related to patient and health-care provider adherence to standards of care. In this analysis, we found that patients and physicians are responsible for low compliance with recognized standards of diabetes care in Puerto Rico. The lack of adequate management will lead to increased mortality, development and severity of chronic complications, and increased emergency department utilization. Therefore, health-care providers and payers should find ways to achieve more effective promotion of adherence to accepted standards of care for patients with diabetes.

Aged↗

Diagnosis and procedure coding for bone mass measurement.

OBJECTIVE: To provide background information and practical advice about coding for submission of claims for reimbursement for performing bone mass measurement studies. METHODS: The current procedural terminology (CPT) codes for diagnoses and procedures related to reduced bone mass and osteoporosis are reviewed, and Medicare and other payer policies are discussed. RESULTS: Although considerable differences exist in payer policies relative to bone mass measurement, notable consistency is developing for Medicare patients. The CPT codes for pertinent outpatient and inpatient services, and applicable CPT modifiers, are outlined. In addition, examples are provided of criteria imposed for qualification for coverage. If a carrier or payer is not expected to provide coverage for the performance of a bone mass measurement study, an advance beneficiary notice (waiver statement) should be processed and the patient should be informed about the potential responsibility for payment before the test is done. CONCLUSION: Osteoporosis is an important and costly disorder that is rapidly increasing in prevalence in our society. Clinical endocrinologists have a critical role in the management of patients with this condition and an opportunity to contribute to high-quality care. Proper selection of patients for assessment and treatment and an understanding of certain restrictions and necessary documentation for insurance coverage may help obtain reimbursement for their care.

Bone Density↗

The case for health promotion programs containing health care costs: a review of the literature.

A review is conducted of major studies dealing with the impact of work site health promotion programs on health care costs. Inconsistent results were produced due to measurement, design, and sampling problems. A study of Blue Cross-Blue Shield of Indiana employees provided the best evidence of program-related health care cost reductions. Suggestions are made which, if implemented, should enable researchers to more confidently attribute cost reductions to health promotion program activities.

Adult↗

Risk selection among SSI enrollees in TennCare.

The issue of risk selection is especially important for states that enroll blind and disabled beneficiaries of Supplemental Security Income (SSI) in Medicaid managed care. SSI beneficiaries have persistent needs for care, have a wide variety of chronic conditions, and often need atypical and complex services. Risk selection occurs when the health care needs of beneficiaries enrolled in a specific plan differ systematically from the needs of the overall beneficiary population and payments do not reflect those needs. We assess the extent of risk selection among managed care plans for SSI beneficiaries over the first three years of Tennessee's Medicaid managed care program, TennCare. Using claims data containing fee-for-service expenditures prior to enrollment in managed care, we find substantial evidence of persistent risk selection among plans. Results are robust to most alternative measures of risk selection for most plans.

Aid to Families with Dependent Children↗

Practicing in a fish bowl.

Intent on recovering "overpayments" to doctors, private insurers are turning to on-site practice audits. Here's a survival guide for these quasi-legal skirmishes.

Health Services Misuse↗