Medical Rx

By definition, medical pharmacy involves physician administered drugs (PADs) that most Payers (Medicare, Medicaid and Commercial) have identified as being reimbursed by health plan’s medical benefit using a HCPCS code rather than the pharmacy benefit using only a NDC. In order to effectively identify errors in the billing of medical pharmacy it is imperative to understand drug data, distribution systems, coding systems, reimbursement and the accepted billing conventions of those claims containing such pharmaceutical components.

Traditionally these pharmaceuticals are usually high cost, injectable medications. These pharmaceuticals are not suited for dispensing in retail pharmacies so instead are dispensed and administered from distribution systems that include hospital outpatient and inpatient departments, physician offices, clinics and free standing infusion suites, home infusion companies, dialysis centers, DME vendors, specialty pharmacies, mail order pharmacies and retail pharmacies. The commonality of all these distribution channels is in their claim submission. They all create claims electronically or on paper by coding drugs, supplies and services utilizing Health Care Procedure Coding system (HCPC), convert NDC quantities to HCPC dosage code units and bill primarily into a health plan’s medical benefit.

To differentiate between medical pharmacy and specialty pharmacy, it can be said that specialty pharmacy is a subset of medical pharmacy. Specialty pharmacies by definition are pharmacies that tend to focus on injectable drugs that have limited formularies and are typically billed to the retail benefit of a health plan through a PBM verses to the plan's medical benefit. On average the number of drugs represented by specialty pharmacy tends to be around 140. Specialty Pharmacies are considered to provide high clinical intervention or “high touch” for those drugs and therapies dispensed. The table below compares the number of HCPCS codes represented by the products on formulary for a specialty pharmacy versus the universe of codes that represent medical pharmacy:.

Medical Pharmacy / Specialty Pharmacy 

Drug HCPCS code universe 832 

Number of HCPCS Code that are Specialty Rx 156

Current number of NDCs linked to these HCPCS - over 30,000

Analyzing medical pharmacy data for billing and reimbursement errors is not limited to specialty pharmacy or home infusion, but rather is a comprehensive service, which recognizes that the pharmaceutical spend involves a variety of distribution systems, difficult coding systems, unique coding requirements, and involves both the retail and medical benefit of a health plan.