Top 6 Ways Pharmacies Can Optimize Their Prescription Reimbursement from Third-Party Payers

Pharmacists sometimes have hundreds of prescriptions to fill each day. They need to move quickly and efficiently to get it all done, while still considering the health and wellbeing of their patients.

In a fast-paced pharmacy environment, good billing practices, pharmacy claims management processes, and operational habits can sometimes be overlooked, jeopardizing the financial health of your business.

Here are the top 6 things you should do to help you receive optimal prescription reimbursement from third-party payers and pharmacy benefit managers (PBMs).

1. Update the Average Wholesale Price (AWP) in your dispensing system regularly.
Contact your dispensing system vendor to find out how frequently the AWP updates occur. If your dispensing system is updated less than daily, there could be a gap between when an AWP is increased by the manufacturer and when your software is updated. Submitting a lower than eligible AWP during claims adjudication could result in lost reimbursement revenue and reduced pharmacy profitability.

2. Use the correct Dispense as Written (DAW) code when dispensing a brand drug that has a generic alternative. 
If a brand drug must be dispensed instead of a generic alternative, an appropriate DAW code should be used. Depending on formulary restrictions, patient preference, and other variables, you may be required to dispense a generic instead of the brand. Neglecting to use the proper DAW code could result in lower reimbursement and prevent your pharmacy from receiving the appropriate payer reimbursement.

Click here to see definitions of the Dispense as Written codes, pharmacy use cases, and expected payer outcomes.

3. Audit your inventory and inventory management software regularly for discontinued National Drug Codes (NDCs).

Although there may be purchasing discounts on discontinued NDCs, it is important to review the possible reimbursement on inactive NDCs. Once an NDC is discontinued, AWP updates cease, which may result in lower reimbursement. Dispensing an active NDC that costs a little more, could yield a higher profit due to a higher AWP due to a higher AWP and improved reimbursement performance. This is an NDC-specific analysis.

4. Purchase the best-priced drugs to yield a higher profit margin.

Frequently check your cost to reimbursement margin to ensure you are purchasing the best priced product. Consider that newly developed branded therapies may offer higher margins than traditional generics when adding in GPO and/or wholesaler off invoice discounts and manufacturer rebates. Strategic pharmacy purchasing and procurement decisions could result in higher revenues and improved pharmacy margin performance.

5. Review your cash pricing regularly.

Review your Usual and Customary price (U&C) and your Gross Amount Due (GAD) in relation to your contracted reimbursement rate with the PBMs. Many PBMs reimburse based on the lowest of the following: Contract Rate, U&C, or GAD. Managing your U&C and GAD and comparing them to the contracted rate could provide opportunities for higher reimbursements and stronger revenue cycle management.

Ensuring optimization of your reimbursements requires continuous monitoring, pharmacy reimbursement expertise, and an in-depth knowledge of the pharmacy industry.

6. Stay Informed on Regulatory Changes Impacting Pharmacy Reimbursement

Changes in healthcare policy, including the Inflation Reduction Act (IRA), are fundamentally reshaping the pharmacy reimbursement landscape—particularly in Medicare. The Medicare Drug Price Negotiation Program (MDPNP) introduces Maximum Fair Prices (MFP) for high-cost brand drugs, while new infrastructure such as the Third-Party Support Entity (TPSE) role and the Medicare Transaction Facilitator (MTF) modules enable structured data exchange and financial transactions. Together, these changes are expected to influence payer behavior, reimbursement rates, pharmacy operations, and prescription claims processing.

Pharmacies that stay informed and proactively adapt their workflows will be better positioned to optimize reimbursements, reduce financial risk, improve accuracy, and maintain sustainable margins in this evolving environment.

One key step pharmacies can take to safeguard their reimbursements under the IRA is to register for the Medicare Transaction Facilitator Data Module (MTF DM). Net-Rx customers for RecRx services can also designate Net-Rx as your Third-Party Support Entity (TPSE).

As an enrolled TPSE, Net-Rx offers a single, integrated platform for managing both PBM reimbursements and manufacturer refunds. This provides pharmacies with complete 360-degree visibility into expected and actual payments.

By centralizing all reimbursement and refund data in RecRx, pharmacies can:

•        Reconcile transactions more easily

•        Quickly identify missing or underpaid amounts

•        Track expected payments

•        Strengthen overall cash flow management

Net-Rx also streamlines the flow of manufacturer remittance data directly from the MTF DM, reducing administrative burden and simplifying reconciliation.

As healthcare policy continues to evolve, pharmacies should evaluate whether their Group Purchasing Organization (GPO) or Pharmacy Services Administrative Organization (PSAO) provides access to government policy experts. These experts can help explain new regulations, assess their operational and financial impact, and deliver timely guidance.

Access to strong advocacy and expert support enables pharmacies to:

•        Make informed strategic decisions

•        Prepare effectively for new requirements

•        Identify opportunities to protect reimbursement and profitability

Organizations with dedicated healthcare policy teams and a proven track record of pharmacy advocacy — such as MHA — are valuable partners in helping pharmacies stay ahead of industry changes and adapt successfully.

At Net-Rx™, a provider of pharmacy reimbursement solutions exclusively for pharmacies, we provide pharmacies with reimbursement solutions designed to drive operational excellence and optimum financial performance across reconciliation, reimbursement verification, and prescription pricing. Our solutions include reports that monitor AWP, DAW, U&C, and more. Additionally, our pharmacy reimbursement trained analysts will suggest best practice solutions to correct anomalies, prevent missed opportunities, and recover lost revenue.

We help you take care of your business so you can take care of your patients.

Read more articles that cover topics such as submission clarification codes and how formulary status affects claim responses and reimbursement.

Author:

Kathleen Skokan  Manager Joined Net-Rx in June 2005

Working in a pharmacy as a technician provided Kathleen with a unique perspective of the challenges our members face in billing and reimbursement from third party payers and helped frame her commitment to find workable solutions to those challenges. As a manager she is privileged to work with a team of knowledgeable individuals who care deeply about the success of our members, which continues to be her source of motivation. She is a west coast girl from Portland, Oregon. She loves the beautiful Cascade Mountains, the Oregon Coast, and spending time with her very large family.