Maintaining a Compliant Pharmacy Department

Recently there has been pressure on all departments of a hospital to be profitable, including the pharmacy.  There is also an expectation for the pharmacy department to maintain an acceptable level of compliance with current regulations.  It can be difficult for the pharmacy to meet both demands, but we at HC Healthcare Consulting, LLC believe that it is possible to achieve accuracy and compliance while also turning a profit.  The following points should  be addressed in order to do so:

  1. Maintain an accurate charge description master (CDM) to ensure accurate HCPCS and revenue code reporting ,
  2. Maintain a process for assigning accurate HCPCS codes to all drug claims including periodic audits to assure coding accuracy,
  3. Maintain a process for updating  National Drug Codes (NDC)including periodic audits to assure accuracy., and
  4. Periodically review the reporting of billable units.

Accurate reporting of drug units is a current enforcement focus of both the Office of Inspector General (OIG) and Recovery Audit Contractors (RAC).  There are numerous ongoing, nationwide audits focused on accurate reporting of drug units by providers. A small sample of recent audit findings include:

  •  Arroyo Grande Community Hospital in California returned overpayments totaling $51,562 after a review of 43 Adenosine line items.
  • St. Joseph Hospital in California returned overpayments totaling $281,391 after a review of 10 Privigen and Adenosine line items.
  • University of California, Irvine, Medical Center returned overpayments totaling $50,073 after a review of 18 line items consisting of Bevacizumab, Rituximab, and Pemetrexed.

Additional drugs which the OIG has recently focused on in the broader context of hospital audits include:

Alpha   1-Proteinase Inhibitor
Alteplase   Recombinant
Doxorubicin   Hydrochloride Liposome
Emend   (Brand name Aprepitant)
Epoetin   Alfa
Immune   Globulin


If your pharmacy is billing for any of the above listed drugs regularly, you should consider auditing a sample of those claims against the medical record and the CDM to confirm compliant billing practices.  Additionally, your entire pharmacy CDM should be evaluated to confirm that billing units are appropriately correlated with the dosage reporting requirements based upon the HCPCS description.  For example, some HCPCS codes are reported 1 unit per 10mg administered while others are reporting 1 unit per mg administered.  If your CDM is not programmed correctly, it can result in each and every claim for a specific drug to be misreported and may result in either significant lost revenue and/or substantial overpayment exposure.  Furthermore, you should perform ongoing CDM evaluations on a quarterly basis to coincide with the quarterly updates issued by Medicare.   HC Healthcare Consulting has extensive expertise in charge description master, coding and billing compliance.  We regularly assist hospitals with ongoing charge description master, coding, billing, and compliance.

HC Healthcare Consulting staff includes certified coders, physicians, consultants certified in healthcare compliance, certified public accounts, certified fraud investigators and statisticians that are available to provide expert assistance with your charge description master and compliance program.

DISCLAIMER:  This post contains only summary information and highlights; it should be read in conjunction with the full article or document provided as a link.  Any advice or recommendations given is general and specific questions should be directed to professional counsel.

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