An Overview and Comparison of Workers Compensation Pharmacy Services Batch Invoicing And

An Overview and Comparison of Workers’ Compensation Pharmacy Services Batch Invoicing and the NCPDP Batch Standard Version 1.1

Within the last several years, the Workers’ Compensation industry has been slowly, but surely, progressing towards electronic connectivity between payers, providers, vendors and clearinghouses for the purpose of bill submission and adjudication. One only has to attend an International Association of Industrial Accident Boards and Commissions (“IAIABC”) conference to obtain an understanding of the movement within the industry.

Many workers’ compensation jurisdictions have adopted or are in the process of adopting regulations that require electronic billing and adjudication between providers and payers. Predominantly the standards that are being adopted in workers’ compensation are HIPAA compliant, with slight modifications based on jurisdiction specific needs.

NCPDP Pharmacy Billing Standards

NCPDP provides two HIPAA mandated billing standards for pharmacy use: the Telecommunication Standard version 5.1 and the Batch Standard version 1.1. Most billing transactions are performed on-line, real-time, within the health insurance arena. For several reasons, most notably connectivity requirements, some billings are submitted in batch mode.

In order to assure consistency of data and to allow implementers to code once, the Batch Standard was developed to support the same functionality as the Telecommunication Standard, using the same syntax, formatting, and data set. The billing transaction is created and then enveloped, either singularly or in aggregate, in the batch header and trailer for EDI transport. Therefore, a pharmacy system can generate a billing transaction and submit it online (via the Telecommunication Standard), or collect it with other billing transactions and submit it in a batch (via the Batch Standard) at a later time.

The pharmacy may submit the batch transaction directly or through a clearinghouse to a PBM or group health plan. In this scenario, the payee is the pharmacy. The workers’ compensation process for pharmacy services invoicing depicts another use of the batch process. For the purposes of this overview, only the batch process will be discussed.

Workers’ Compensation Pharmacy Billing

The Workers’ Compensation environment presents a different use case for the Batch Transaction. Because workers’ compensation claims management is highly burdensome; therefore, most pharmacies do not submit their claims directly to the payer (insurer or third party administrator) but send their claims to a third party biller “TPB” or Pharmacy Benefit Manager “PBM”. The TPB/PBM accepts the pharmacy claim electronically, provides reimbursement to the pharmacy based upon a contractual arrangement, and takes ownership of the claim. The TPB/PBM submits the claim to the carrier or their agent for payment. The service provider on the claim remains the pharmacy, but payment is remitted to the TPB/PBM.

The pharmacy may submit the batch transaction directly or through a clearinghouse to a PBM or group health plan. In this scenario, the payee is the pharmacy. The workers’ compensation process for pharmacy services invoicing depicts another use of the batch process. For the purposes of this overview, only the batch process and the necessary workers’ compensation specific modifications will be discussed.

Group Health vs. Workers’ Compensation Batching – The Differences

Steps in GH – with TPB/PBM/Clearinghouse

–Pharmacy provides the service (eligibility of the claim usually known)

–Pharmacy sends a batch of claims to the TPB/PBM/Clearinghouse

•On each claim, the pharmacy information is at the header level of the 5.1 claim and contains the line detail level

•The batch from the pharmacy may consist of claims to many payers, with the intent that the TPB/Clearinghouse will break up the claims to go to the appropriate payer(s).

–The TPB/PBM/Clearinghouse manages the batch process and forwards the claim(s) to the GH Payer

–The claims are forwarded as follows:

•1 file (with one to many claims for a singular pharmacy) to GH Payer 1 for Pharmacy 1

•1 file (with one to many claims for a singular pharmacy) to GH Payer 1 for Pharmacy 2

•1 file (with one to many claims for a singular pharmacy) to GH Payer 1 for Pharmacy 3

•1 file (with one to many claims for a singular pharmacy) to GH Payer 2 for Pharmacy 1

•1 file (with one to many claims for a singular pharmacy) to GH Payer 2 for Pharmacy 2

•1 file (with one to many claims for a singular pharmacy) to GH Payer 2 for Pharmacy 3

•Or

•1 file (with one to many claims for different pharmacies) to GH Payer 1

•1 file (with one to many claims for different pharmacies) to GH Payer 2

•1 file (with one to many claims for different pharmacies) to GH Payer 3

–This process cycle is repeated to each GH Payer, for each individual pharmacy

–The GH Payer adjudicates the claims and creates a batch response file with payment or reject information for each claim.

•The response file matches the request file (e.g. 1 file (with one to many claim responses for a singular pharmacy) or 1 file (with one to many claims for different pharmacies))

•The TPB/PBM/Clearinghouse manages the batch process and sends the appropriate batch response file to the appropriate pharmacy

•The GH Payer responds with 835 details to the TPB/PBM/Clearinghouse which is then passed to the corresponding Pharmacy

Note: Payee is not contained on the batch file. Payee is determined by the contractual relationship that is established between the trading partners.

Steps in GH – Pharmacy to GH Payer Direct

–Pharmacy provides the service (eligibility of the claim usually known)

–Pharmacy sends a batch of claims to the specific payer

•On each claim, the pharmacy information is at the header level of the 5.1 claim and contains the line detail level to GH Payer

–The batch of claims from the pharmacy will occur as:

•1 file (with one to many claims for this pharmacy) to GH Payer 1

•1 file (with one to many claims for this pharmacy) to GH Payer 2

•1 file (with one to many claims for this pharmacy) to GH Payer 3

–The GH Payer adjudicates the claims and creates a batch response file with payment or reject information for each claim.

•The response file matches the request file (e.g. 1 file (with one to many claim responses for this pharmacy))

–The GH Payer sends a payment remittance file (835) to the Pharmacy provider

Note: Payee is not contained on the batch file. Payee is determined by the contractual relationship that is established between the trading partners.

Steps in Workers’ Compensation Pharmacy Services Processing (Pharmacy real-time, Payer batch) – one model in current environment

•Pharmacy provides the service (eligibility not usually known)

•Pharmacy sends transaction requests, using NCPDP standard, to the TPB/PBM

–TPB/PBM sends the pharmacy transaction responses and pays the pharmacy provider for services rendered based on a contractual relationship

•TPB/PBM conducts eligibility inquiry, usually by placing several telephone calls to the employer or carrier, if known, to determine appropriate Payer

•TPB/PBM, will batch all pharmacy transactions for submission to a single insurer, using a modified batch format. The batch will include claims for multiple pharmacies with multiple dates of service for a given period of time.

–The TPB/PBM information (FEIN), is at the header level of the 5.1 claim and contains the line level detail of the pharmacy services. The TPB/PBM is identified as the singular payee for all claims submitted (This is a modification from the Batch Standard).

–The claim level identifies the pharmacy that provided the line level service (This is a modification from the 5.1 and Batch Standards)

•The submitter receives an acknowledgment of the batch file submitted.

•The payer remits payment and EOB/835 to the TPB/PBM

Steps in Workers’ Compensation Pharmacy Services Batch Processing

•Pharmacy provides the service (eligibility not usually known)

•Pharmacy sends a batch file of claims, using NCPDP standard, to the TPB/PBM

•TPB/PBM sends the pharmacy a batch file of claim responses and pays the pharmacy provider for services rendered based on a contractual relationship

–(It should be noted that these first 3 steps may be performed by the submission of real-time transactions between the pharmacy and the TPB/PBM.)

•TPB/PBM conducts eligibility inquiry, usually by placing several telephone calls to the employer or carrier, if known, to determine appropriate Payer

•TPB/PBM, will batch all pharmacy transactions for submission to a single insurer, using a modified batch format. The batch will include claims for multiple pharmacies with multiple dates of service for a given period of time.

–The TPB/PBM information (FEIN), is at the header level of the 5.1 claim and contains the line level detail of the pharmacy services. The TPB/PBM is identified as the singular payee for all claims submitted (This is a modification from the Batch Standard).

•The payer adjudicates the claims and creates a batch response file with payment or reject information for each claim.

•The payer remits payment and EOB/835 to the TPB/PBM

The workers’ compensation processes are performed today with proficiency, based on proprietary solutions. NCPDP Workgroup 16 (Workers’ Compensation/Property & Casualty) will be introducing a concept to produce and adopt a batch standard (or modifications to the NCPDP Batch Standard) that supports the unique needs of workers’ compensation electronic pharmacy services billing.