Copayments are used by insurers to sensitize patients to the cost of their medications and give patients financial incentives to reject medications that are not medically necessary or add little to no value to patients’ treatments.
Third Party contracts obligate pharmacies to collect patient copayments in full; however, merely collecting copayments upon dispensing is not nearly enough. You must also be able to show proof of copay collection. PAAS continues to see pharmacies struggle with copay collection documentation due to inferior Point of Sale systems, poor record keeping, and banking relationships.
In order to show proof of copay collection, PBMs may ask for: front and back copies of canceled checks, bank deposits, and even Credit Card Merchant Account Reporting, including evidence of settlement and payment through bank records.
Stop and think for a moment about how you would prove copay collection.
Patients paying with cash also create record keeping headaches. Being able to show the copay receivables for a given time period, and the corresponding bank deposits can be challenging. How often do you make deposits? Do you ever pull money out of the till to pay vendors where amounts wouldn’t reconcile?
House charge accounts add another layer of complexity for pharmacies. Developing a robust policy and procedure on billing, collection, record keeping, and management of accounts is an absolute necessity to prevent issues. When payments are received, are you using a tick and tie accounting practice, or applying payments to the oldest outstanding balance? How do you handle payments that only cover a partial copay? See our November 2018 Newsline article: Beware If You Offer Patient or House Charge Accounts for additional guidance.
Be wary of copay collection schemes and artifices. Some pharmacies have tried to ‘bury’ the copay in the reimbursement for compounded prescriptions (e.g. with pain and scar creams). They create house charge accounts with no intent to collect outstanding balances, thereby waiving the copay.
Pharmacies may claim that patients are indigent and unable to pay and in the case of Medicaid, this is an acceptable practice. However, for other insurers, you must have a formal, written policy to address a potential hardship waiver. This includes having patients apply for a waiver, tax return documentation collected by the pharmacy to show proof of need, and a host of other requirements.
As a reminder, manufacturer copay discount cards cannot be used with Medicare, Medicaid, and TRICARE patients. Many PBMs have additional restrictions on what manufacturer copay cards they will allow pharmacies to use.
Financial recoupment on claims where you cannot show proof of copay collection should be the least of your worries. Network termination may ensue, and the pharmacy risks a Fraud, Waste, and Abuse investigation and charges stemming from the False Claims Act. Copay collection is not worth putting your license, and pharmacy, at risk!