Third-party billing: claims, rejections and prior authorisation

How Third-Party Billing Works

When a patient uses prescription insurance, the pharmacy does not collect the full retail price at the counter. Instead, the pharmacy submits a claim electronically to a third-party payer—usually a pharmacy benefit manager (PBM) such as Express Scripts, CVS Caremark, or OptumRx—and the payer adjudicates (processes and decides) the claim in seconds. The payer pays the pharmacy a contracted amount, and the patient pays only the portion the plan assigns, called the copay or cost-share.

As a pharmacy technician, you will enter prescription data into the dispensing software, trigger the claim, read the response, and resolve any problems before the pharmacist verifies the final product. Accuracy at every step protects patient safety and the pharmacy's revenue.

Information Required to Submit a Claim

Every claim travels in a standard electronic format called the NCPDP SCRIPT standard (National Council for Prescription Drug Programs). The dispensing system gathers several data fields before transmitting:

• BIN (Bank Identification Number): a 6-digit number that routes the claim to the correct PBM.
• PCN (Processor Control Number): a secondary routing number used by some PBMs.
• Group number: identifies the employer group or plan.
• Member ID / Cardholder ID: the patient's unique identifier on the insurance card.
• Date of birth: used for eligibility verification.
• Drug information: NDC (National Drug Code), quantity dispensed, days' supply.
• Prescriber NPI (National Provider Identifier): the prescriber's 10-digit identifier.
• DAW code (Dispense As Written): tells the payer whether the prescriber required brand or a generic was dispensed.

Always copy the BIN, PCN, group, and member ID exactly from the insurance card. A single transposed digit causes an immediate rejection.

Reading the Adjudication Response

After the claim transmits, the payer sends back one of two responses:

Paid (approved): The screen shows the amount the payer will reimburse the pharmacy and the patient's copay. Collect the copay from the patient at pickup.

Rejected: The screen shows a two- or three-character rejection code and a brief message. The most common codes technicians encounter are listed below.

Common Rejection Codes and How to Resolve Them

Refill Too Soon (Rejection Code 79)

The plan's records show the patient received a supply of the same drug recently and not enough days have passed. Steps to resolve:

1. Calculate when the fill will be eligible by reviewing the previous fill date and days' supply on file.

2. Inform the patient of the eligible date.

3. If the patient has a documented clinical reason (lost medication, vacation override, dose change), contact the PBM to request a override or ask the pharmacist to do so.

4. Never dispense and bill before the eligible date without authorization.

Drug Not Covered (Rejection Code 70)

The drug is not on the plan's formulary (the list of covered medications). Steps to resolve:

1. Check the plan's formulary for a covered therapeutic alternative.

2. Notify the pharmacist, who will contact the prescriber about switching to a covered drug.

3. Offer the patient the cash price or direct them to manufacturer or discount programs.

Prior Authorization Required (Rejection Code 75)

The plan requires the prescriber to obtain advance approval before the drug is covered. Steps to resolve:

1. Notify the pharmacist immediately—prior authorization (PA) must be handled by the prescriber's office.

2. Provide the prescriber's office with the PBM's PA phone number or fax number printed on the rejection screen.

3. Document that a PA is pending; do not dispense until approval is received unless the pharmacist authorizes an emergency supply.

4. Once the PA is approved, the PBM issues an authorization number; re-submit the claim and include the authorization number in the appropriate field.

The Patient's Copay

A copay is the fixed dollar amount (or sometimes a percentage called coinsurance) the patient owes per prescription. Plans often use a tier system: Tier 1 (lowest copay, usually generic drugs), Tier 2 (preferred brand), Tier 3 (non-preferred brand), and Tier 4 (specialty). The adjudication response tells you exactly what to collect. Never estimate or guess; always read the copay from the approved claim screen.

Some plans have a deductible—an amount the patient must pay out of pocket before insurance begins to cover costs. Early in the plan year, a patient who has not met their deductible may owe the full negotiated price rather than a copay. The adjudication screen will show the patient-pay amount; explain this clearly and calmly.

Documentation and Compliance

Every billing action is audited. PBMs conduct retrospective audits and can charge back payments if the pharmacy billed incorrectly. Federal law (through the False Claims Act) and state pharmacy law prohibit billing for drugs not dispensed, altering quantities, or waiving copays routinely. Always bill the exact quantity dispensed and collect the correct copay.

Workflow Summary

1. Collect and verify insurance card data.

2. Enter prescription and patient data precisely.

3. Transmit the claim.

4. Read the response: paid or rejected.

5. If rejected, identify the rejection code and follow the appropriate resolution steps.

6. Pharmacist verifies the prescription and approves dispensing.

7. Collect the correct copay at pickup.

8. Document any PAs or overrides.

Mastering this workflow keeps patients from leaving without needed medications and keeps the pharmacy financially healthy.