Health system bolsters financial performance by reviewing pharmaceutical charging structure
Learn how Baker Tilly helped a healthcare system transform their pharmaceutical charging structure and increase profitability.
Client background
A healthcare system in the southern region of the U.S. that serves more than 150,000 patients and has nearly 200 hospital beds.
The business challenge
The health system was looking for ways to enhance revenue and restore positive cash flows. One area they were not focused on was their pharmacy departments, particularly the pricing strategies of their products, including those within their 340B Drug Pricing Program.
Baker Tilly solution-driven approach
To help the healthcare system enhance their revenue streams, Baker Tilly initiated an assessment of the organization’s pharmaceutical charging structure, as well as their 340B Drug Pricing Program. This entailed a set of recommendations, which included adjustments to markup tables, opportunities within clinical workflows, and changes in system design. The objectives of the assessment included:
- Reviewing the claims file provided by the client to ensure appropriate procedure codes.
- Validating pharmacy billing for both government and commercial payers.
- Documenting and validating an approach to ensure compliance with the 340B Drug Pricing Program for all affected stakeholders, employing modifier flags on claim transactions and various dollar value tracking methods.
- Validating end-to-end workflows influenced by pharmacy and related billing processes involved in the billing of drugs on medical claims subject to the 340B Drug Pricing Program.
The accomplished results
With the help of the assessment, the health system was able to celebrate a myriad of quick wins that resulted in millions of dollars that continued to enhance the organization’s bottom line. This included identifying incorrect revenue codes, inaccurate Healthcare Common Procedure Coding System (HCPCS) quantities, and flawed rounding factors contributing to a decrease in reimbursement. In addition, by using strategic modeling tools, Baker Tilly helped the client identify an additional $11.3 million in annual gross charges with a significant anticipated increase in claims paid.
The health system was also provided with additional recommendations from Baker Tilly to continue optimizing the financial performance of their organization and pharmacy department, including:
- Using claim data to perform price modeling to achieve charge neutrality within acceptable increase limitations noted in payor contracts, and that the pricing modeling should be using NDC to NDC cost mapping by payer type for each transaction line based on detailed claim data provided by client.
- Adjusting markup tables and/or add an additional markup table supported by charge modeling.
- Updating all medications with appropriate procedure code.
- Updating modifier builds (U8, TB, JG, UD, JW, JZ).
From the outset, the objective was to deliver tangible value and empower the client to become self-reliant. By fostering collaborative efforts with their revenue cycle, pharmacy operations, and IT teams at every stage, the client celebrated immediate financial gains and gained the capacity for ongoing enhancements to their system and workflows independently.
