UNC Health
Morrisville, NC
Health systems are facing increased pressure to protect or improve margin, with many health systems resorting to layoffs or hiring freezes to achieve cost reduction efforts. Expenses continue to outpace revenue as inflation, technology, infrastructure, and administrative costs of navigating an increasingly complicated revenue cycle rapidly mount. Whether through expense reduction or revenue growth, there is intense focus, now more than at any other time, on developing a sustained plan for margin protection.
Pharmacy services are often a primary revenue driver for health care institutions and as such, have a vital role to play in the overall institutional revenue integrity strategy. Given the intricacies of drug billing and variability in reimbursement structure across payer and site of care, equal attention should be given to the pharmacy revenue cycle, with niche content experts housed within the pharmacy department. The combination of operational efficiency in the medication use process and prioritized focus on billing compliance ensures complete and correct reimbursement, avoiding net revenue leakage and preserving critical cash flow.UNC Health established a comprehensive Pharmacy Revenue Integrity program for outpatient medical benefit claims within pharmacy services, aligning financial, clinical and operational areas to ensure department and institutional long‐term financial strength.
The infrastructure for program development and implementation can be divided into three pillars, which also serve as the program’s mission: minimize revenue loss, optimize revenue capture, and ensure billing compliance. Select functions supporting these pillars include denials management for outpatient medical benefit claims, performing bi‐weekly and monthly high dollar charge and reimbursement audits, monitoring charge work queues, and leading multi‐disciplinary projects with health system revenue cycle teams aligning with pharmacy services and health system financial goals.
The Pharmacy Revenue Integrity team has been in place since 2017 and has led to significant margin protection. The overall initial denial rate for outpatient high‐dollar drugs, defined as >$1,000 charge, has dropped to 2.06%. For an almost $850M annual gross revenue stream, this was $17.5M in denied charges, and $6M in expected reimbursement for Fiscal Year 2021. The combined work of the pharmacy precertification and denials management teams minimizes institutional net revenue loss, translating to a 0.3% terminal write‐off rate. For new to market drugs with an unclassified HCPCS code, proactive intervention and post‐bill auditing resulted in $114,000 in net revenue capture, Medicare New Technology Add‐on Payment auditing resulted in $183,500 in net revenue capture, and the monthly blood factor charge audit identifying missing charges resulted in $190,000 in net revenue capture. Equally as significant are the system process improvements put into place so that audit safety nets are not relied upon in future years. UNC Health’s comprehensive Pharmacy Revenue Integrity program represents an innovative and unique approach to mitigating the institutional revenue risk associated with drug coverage. As pharmacy services continue to represent a large percentage of the health system’s budget, it is imperative that as a profession, we develop content experts within the pharmacy profession and retain ownership of the comprehensive revenue cycle for pharmacy.
From left to right: Katherine Miller, Suzanne Francart, Lindsey Amerine, and Ruth-Ann Lee