Many reimbursement issues (and the corresponding revenue) are associated with the Average Wholesale Price (AWP). Misconfigured file update settings or outdated data could mean sending an inaccurate AWP value during the prescription submission process, potentially resulting in lost revenue.  

The AWP is the industry benchmark price for a drug. Manufacturers, wholesalers, pharmacy benefits managers (PBM), the government, and pharmacies use this value as the “standard” price for selling, purchasing, and billing for medications throughout the supply chain, from the factory to the patient. Typically, the average wholesale price is not the actual purchase price, but it is vital to ensure accuracy at every point within the buying, billing, and reimbursement process. Contracts negotiated between a pharmacy and PBMs frequently include reimbursements based on the AWP minus a set percentage. If the AWP increases on a drug, the reimbursement should increase as well. However, there are times that it does not happen. Below are several reasons why.

Update Your Dispensing Software Data

Accuracy in the dispensing software is crucial.  Regular AWP price file updates are an important and automated way to keep your AWPs up to date and accurate. Many software systems offer daily, weekly, or monthly updates. If you are updating your dispensing software less than daily, be aware that there could be a gap between when the AWP was increased and when your software was updated. Any prescription billed during that gap could be reimbursed at the old AWP, which is typically a lower amount.  Net-Rx’s EditRx service includes an AWP Verification report, which helps to identify claims submitted with outdated AWP values.  With this report in hand, you can update the AWP and rebill those prescriptions to receive the maximum reimbursement.

Verify the PBM

Like dispensing software, the PBMs must also update the AWP file on their systems, which can result in the same gap between when the AWP was increased and when their system was updated. If the pharmacy is submitting a claim with the new AWP, the PBMs may still use the AWP that is currently in their system, which may be lower. Review your prescriptions to ensure you are reimbursed based on the last AWP at the time of fill. Net-Rx’s EditRx service includes the AWP Retro report, which will identify prescriptions with reimbursement rate changes that you can resubmit for proper payment.

Read more about successful prescription pricing strategies.

New Year, New Price

While the manufacturers can change the AWP at any time, we see the largest number of AWP changes in January and June.  Due to the many changes occurring during this time, staying vigilant in confirming you are using the correct AWP and you are reimbursed accurately can have a positive effect on your bottom line.

In summary, reimbursements hinge on the accuracy of the AWP. An incorrect AWP in the pharmacy’s dispensing software or the PBM’s system can result in lost revenue for the pharmacy which will likely continue with every fill until the AWP is updated.

Net-Rx’s Reimbursement Suite is an enhanced claims editing service that uses proprietary analytics along with the support of a pharmacy reimbursement trained analyst to detect under-reimbursed claims. Your analyst will review the AWP Verification and Retro reports with you and suggest best practice solutions to help you correct anomalies, prevent missed opportunities, and recover lost revenue.

To learn more about Net-Rx’s suite of solutions, fill out our contact form, email us at Sales@Net-Rx.com, or call 1-866-336-3879.  

Top 5 Ways Pharmacies Can Optimize Their Prescription Reimbursement From Third-Party Payers

Author:

Vicki Nahorn    Operations Manager, Net-Rx   Joined Net-Rx in 2005

Vicki started her pharmacy career in 2002 as a pharmacy technician in a local retail pharmacy. She joined Net-Rx in 2005 as an Account Analyst, and she enjoyed consulting on pricing strategies, finding billing opportunities and helping pharmacies resolve claim rejections. After getting her BA in Personnel Psychology, she moved into management. When not working, Vicki enjoys spending time with family, hiking, and learning about photography.

References

3 ways to optimize pharmacy revenue capture and boost the bottom line. (2018, March 13). Retrieved from Becker's Healthcare: https://www.beckershospitalreview.com/finance/3-ways-to-optimize-pharmacy-revenue-capture-and-boost-the-bottom-line.html

Davis, W. A. (n.d.). AWP (Average Wholesale Price) And Industry's Search for a Viable Replacement Pricing Benchmark. Retrieved from American Conference Institute: https://www.americanconference.com/rx-drug-pricing-boot-camp-841l14-snf/wp-content/uploads/sites/1586/2016/08/Davis.William.pdf

Joey Mattingly, P. M. (2012, June 20). Understanding Drug Pricing. Retrieved from U.S. Pharmacist: https://www.uspharmacist.com/article/understanding-drug-pricing

Leigh Ann Anderson, P. (2022, January 27). Average Wholesale Price (AWP) as a Pricing Benchmark. Retrieved from Drugs.com: https://www.drugs.com/article/average-wholesale-price-awp.html