Maximizing Pharmacy Revenue – Tips and Tricks to Improve Pharmacy Related Billing

1. Maximizing Pharmacy Revenue – Tips and Tricks to Improve Pharmacy Related Billing Anders Westanmo, PharmD, BCPS, MBA, PMP August 3/4, 2011

2. Objectives • 1. To be able to explain the origin of the Business Office Reorganization • 2. To be able to explain the origin of Consolidated Patient Accounts Center (CPAC) • 3. To be able to explain the pharmacists role in determining Service Connected determination of prescriptions

3. Collections

4. Medical Patient Case Load http://www.va.gov/budget/docs/summary/Fy2012_Volume_I-Summary_Volume.pdf

5. VA Budget http://www.va.gov/budget/docs/summary/Fy2012_Volume_I-Summary_Volume.pdf

6. Medical Care Collections Fund (MCCF) http://www.va.gov/budget/docs/summary/Fy2012_Volume_I-Summary_Volume.pdf

7. History of VA Collections • 1986 – Congress gave VA authority to bill 3rd party for Tx of Non-SC Conditions • 1990 – Omnibus Reconciliation Act of 1990 - $2 copay for each NSC prescription • 1997 – part of Balanced Budget Act of 1997 Congress allowed VA to retain 1st and 3rd party collections – the law established the Medical Care Collections Fund (MCCF)

8. Government Accountability Office (GAO) • The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for Congress. Often called the "congressional watchdog," GAO investigates how the federal government spends taxpayer dollars. • We advise Congress and the heads of executive agencies about ways to make government more efficient, effective, ethical, equitable and responsive. • Our work leads to laws and acts that improve government operations, saving the government and taxpayers billions of dollars http://www.gao.gov/about/index.html

9. Government Accountability Office (GAO) • 1997: GAO “reported that VA was billing for medical care that it could not expect to collect” (http://www.gao.gov/archive/1998/he98004.pdf). • 1999: GAO “VA’s third-party collections have declined in each of the past 3 fiscal years and may decline again by the end of fiscal year 1999” (http://www.gao.gov/archive/1999/he99196t.pdf)

10. GAO: 1999 • “The Business Model Concept Has Not Been Fully Implemented” • “In its 1998 report, Coopers and Lybrand pointed out that only 25 percent of the 24 VA sites it visited incorporated the various functions of the medical care collections program under a centralized management structure—what it calls the “business model.”According to Coopers and Lybrand, this type of organization is characteristic of successful private-sector hospital operations.” • (http://www.gao.gov/archive/1999/he99196t.pdf)

11. GAO: 2001 • GAO 2001 - Titled, “VA Has Not Sufficiently Explored Alternatives for Optimizing Third-Party Collections” http://www.gao.gov/new.items/d011157t.pdf • “…In addition, VA’s recent 2001 Revenue Cycle Improvement Plan does not call for a comprehensive comparison of alternatives nor does it focus on net revenues—collections minus operations costs. To collect the most funds for veterans’ medical care at the lowest cost, VA needs to develop a business plan and detailed implementation approach that will provide useful data for choosing the best alternative for optimizing net revenues from third-party payments.”

12. GAO: 2003 • GAO 2003 – “VA has been improving its billing and collecting under a reasonable-charges fee schedule it established in 1999, but VA has not completed its efforts to address problems in collections operations. In this regard, fully implementing the 2001 Improvement Plan could help VA maximize future collections by addressing problems such as missed billing opportunities.” http://www.gao.gov/new.items/d03740t.pdf

13. 2006 – CPAC Pilot • VISN 6 – Consolidated Patient Account Center Pilot Program.

14. GAO 2008 (June) – The Final Straw

15. GAO (2008) - continued • CPAC billing and follow up generally better than non-CPAC http://www.gao.gov/new.items/d08675.pdf

16. 2008 (July) - CPAC • VETERANS' HEALTH CARE POLICY ENHANCEMENT ACT OF 2008 - House Report 110-786 • Sec. 1729B. Consolidated patient accounting centers • (a) In General- Not later than 5 years after the date of enactment of this section, the Secretary of Veterans Affairs shall establish not more than seven consolidated patient accounting centers for conducting industry-modeled regionalized billing and collection activities of the Department. http://thomas.loc.gov/cgi-bin/cpquery/?&sid=cp110w2SuW&refer=&r_n=hr786.110&db_id=110&item=&sel=TOC_8326&

17. CPAC Functions (July 08 cont.)(from - House Report 110-786) • (1)Reengineer and integrate all business processes of the revenue cycle of the Department. • (2) Standardize and coordinate all activities of the Department related to the revenue cycle for all health care services furnished to veterans for nonservice-connected medical conditions. • (3) Apply commercial industry standards for measures of access, timeliness, and performance metrics with respect to revenue enhancement of the Department. • (4) Apply other requirements with respect to such revenue cycle improvement as the Secretary may specify

18. 2008 – CPAC Passed into Law • Veterans Mental Health Care and Other Care Improvements Act of 2008 • PUBLIC LAW 110–387—OCT. 10, 2008 • Signed into law by President Bush on October 10, 2008 http://www.gpo.gov/fdsys/pkg/PLAW-110publ387/pdf/PLAW-110publ387.pdf

19. March 18,2011 – Actual Cost Billing • $51 billed per Rx stops • Actual Cost Billing Starts • Actual Cost (based on location and date of purchase, bill charged will vary) • Administrative Fee • $11.40 per fill (updated annually)

20. April 27, 2011 New Funds – 5287XX • Accounts Receivable Patch PRCA*4.5*273 will change the current Fund from 528704 for third party prescription billing to Fund 528711 • Prior to patch there was no reliable way to evaluate the amount collected from Pharmacy Insurance

21. CPACs

22. Consolidated Patient Account CentersFunctional Organization Chart Facility Revenue Division remains at VAMC

23. Operational Interdependence

24. Operational Interdependence Process repeats up to 12 times for each single Prescription w

25. How Will CPAC Be Funded • “All CPAC operational costs will be recovered from serviced VISNs.” • CPAC reimbursed based on percentage of revenue targets met. • Revenue targets set annually. http://vaww4.va.gov/CPAC/Financial_FAQs.asp

26. What Have We Achieved • -We have (or soon will have) Centralized Revenue Maximizing Operations (i.e. CPAC) • -We can bill actual cost of prescriptions for most drugs • -We have a fund where we can track what we collect for Pharmacy related revenue • -ePharmacy increasingly utilized to automate pharmacy billing

27. Ongoing Challenges • -3rd Party Focus • Majority of Pharmacy Revenue in First Party Copay Collections • -Silos • CPAC does not directly answer to facility, but facility receives the revenue. • Prior Authorization • Service Connection Determination • Education/Training locally

28. New Challenges • Decentralized (regional) management • Limited local business office staff for increased pharmacy billing related needs (e.g. prior authorization, ePharmacy)

29. PBM/HMO Similarities • Specialty Pharmacy • From CVS/Caremark, “CVS Caremark Specialty Pharmacy Services is a full-service specialty pharmaceutical provider. Specialty pharmaceuticals or products are used in the management of specific chronic or genetic conditions and certain catastrophic diseases such as cancer.” https://www.caremark.com/portal/asset/Prescribing_Guide_Un-Authenticated.pdf

30. CVS Caremark Specialty Pharmacy https://www.caremark.com/portal/asset/Prescribing_Guide_Un-Authenticated.pdf

31. CVS Caremark Specialty Pharmacy https://www.caremark.com/portal/asset/Prescribing_Guide_Un-Authenticated.pdf

32. CVS Caremark Specialty Pharmacy https://www.caremark.com/portal/asset/Prescribing_Guide_Un-Authenticated.pdf

33. Prior Authorization

34. CVS Caremark Prior Authorization

35. How Much Gets Collected

36. Staff Dedicated to Maximizing Revenue vs Revenue Sources • Pharmacy in Blue

37. Pharmacy Role • Providers enter SC determination • Pharmacists accept or change the determination – that’s the final call • Generally no review after that

38. Maximizing Revenue • Ensure Appropriate SC Determination Designation for all Prescriptions.

39. Loss of Revenue • Errors in SC Determination • SC determination errors 1% - 30% depending on facility • Agent Orange Designation errors 5% - 40% • MST, IR, etc…

40. Pareto Principle • A small percentage of providers account for the vast majority of errors • A small percentage of pharmacists account for the vast majority of errors • targeted intervention (e.g. education) can do a lot to reduce errors

41. Pharmacy Opportunities? • MCCF/UR Pharmacist at your facility? • It is easy to develop a strong proposal that estimates revenue impact and ROI. The role involves clinical and informatics skills to optimize revenue maximization. Please email me if interested in methodology or have further questions about this: anders.westanmo@va.gov

42. VA Quality of Care Re-Engineering Analogy • With VA’s first “Re-Engineering” efforts from 1994-1998 came the following: • Number of inpatient beds cut in half • CBOC’s started • “Performance Measures” initiated Within 10 Years VA Health care was outperforming private health care when compared head to head.

43. Business Office Re-Engineering (CPAC): History in the Making • 2006 – 2012: CPAC infrastructure is being put into place • 2012 - ??? - Opportunities and Challenges for pharmacy involvement

44. CPAC Coming to a VA Near You