Health Information Management

Advice for billing brand-name v. generic drugs

APCs Insider, April 29, 2005

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Advice for billing brand-name v. generic drugs

QUESTION: How do I bill for a brand-name drug v. a generic drug? Do you have any suggestions for how I can get the pharmacy to accurately match their chargemaster to actual purchases and dispenses so that the patient charge matches the drug dispensed to the patient?

ANSWER: Begin by reviewing the following CMS documents with pharmacy, clinical, and purchasing personnel:

Transmittal 112:

Medlearn Matters article number MM3144:

These documents will help you establish the parameters for which generic and brand-name medications you must code separately. Begin by examining the purchasing process. Many purchasing contracts allow the vendor to substitute generic medications when a brand name is not available.

While you don't necessarily need to change this practice, you must ensure that when your pharmacy receives medications they are separated by medication type and also according to whether or not they are generic. Do not place trade and generic medications into the same drawer. Do not label them with the same ID, or assign them the same internal tracking number.

Assign separate CDM numbers to those medications which CMS has designated a separate HCPCS code for generic and brand-name medications. When your pharmacy issues medications, assign the appropriate charge number. Ideally, you should bar code each medication so if medications were returned for credit, you could appropriately credit them using the correct CDM number.

Your documentation should also reflect the administration of either a generic or brand-name medication. In many instances, clinical personnel don't differentiate between generic and brand-name medications in the patient's chart. While you should change this practice for all medications, you may wish to focus initially on those medications that have separate HCPCS codes.

Most facility formularies allow for the substitution of generic medications when you order a brand-name drug that isn't available. Even though physicians may not be directly involved in this change in billing and reimbursement, keep them in the loop. Explain the CMS requirements and what steps you will take to ensure that the patient is billed correctly.

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