The Centers for Medicare & Medicaid Services mandates that state Medicaid agencies must be the payer of last resort. In order to ensure compliance with this regulation, the Vendor Drug Program transitioned from a retroactive pay-and-chase model to a point-of-sale cost avoidance coordination-of-benefits (COB) model.  The cost avoidance model checks for other known insurance at the point of sale, preventing Medicaid from paying a claim until the pharmacy attempts to obtain payment from the client’s third-party insurance.

The Vendor Drug Program implemented the cost avoidance model in two phases.  Phase I covered all adults (age 21 and over) and implemented January 20, 2009. Phase II covered the entire Medicaid population (including children) and implemented July 20, 2009.

• Training Opportunities
• Who to contact for Coordination of Benefits (COB) issues
• Resources
  

Claim Processing

Health Management Systems (HMS), the third-party recovery vendor, determines if the client has other prescription drug coverage through a third-party payer (other than Medicare, as there is an established process already in place). HMS sends verified drug insurance eligibility and insurer information to First Health Services Corporation, the Vendor Drug pharmacy claim administrator, who uses the information for claim adjudication.

If other insurance exists in Vendor Drug's records, and Medicaid is billed as the primary insurer, then the claim will reject at point of sale with error code 41 (“Submit Bill To Other Processor or Primary Payer”).

The pharmacy will be provided with the third-party billing information needed for claims submission to the other payer.  The message will be returned in “Additional Message Information” (Field 526-FQ) and read “Bill Other Payer (Payer ID:x, Policy No:x, BIN:x, PCN:x, Group:x, Cardholder ID:x)”.  If your software does not display the Additional Message Information field then please contact your software provider.

If the pharmacy submits the claim to the primary payer and it is denied, the pharmacy should contact the primary payer and/or prescriber to address the denial reason. If the claim is not payable by the other insurer, Medicaid may pay the claim depending on the reason for denial (including expired coverage). Providers should submit the claim to Medicaid and include the other payer’s rejection code in the “Other Payer Reject Code” field (472-6E).

Medicaid will continue to reject the claim until billing to all other known payers has been attempted.  If the client is assessed a deductible or co-payment, the pharmacy should submit the claim to Medicaid (as secondary payer) and include the amount paid by the primary insurer. Vendor Drug will pay deductibles and co-payments, up to the amount Medicaid would have reimbursed, for eligible clients and covered drugs.

The client should always walk out of the pharmacy with their prescribed medications and no out-of-pocket expense.

Training Opportunities

To learn more about the cost avoidance program, Vendor Drug and Health Management Systems have created the following educational documents for use by pharmacists and other pharmacy staff:

• Vendor Drug Cost Avoidance Training presentation (audio/video in Adobe Captivate)
• Vendor Drug Cost Avoidance Training presentation (PDF)
   

Who to Contact for Coordination of Benefits (COB) Issues

To help provide the quickest resolution for pharmacies and to help prevent unnecessary hold times, please use the following information to appropriately direct your calls:

• When your customer says that he/she does not have any other insurance although Medicaid has other insurance on file, please contact the HMS Texas Third Party Support Call Center at 866-389-5594. The call center is open Monday through Friday, 8:30 a.m. to 5:30 p.m., Central Time.  HMS will re-verify the other insurance within 72 hours. Pharmacy providers may also fax the information to HMS by completing the "Third Party Payer Verification Request form" to 1-866-389-6342. (Form updated January 23, 2009)
• When you receive a rejection from the primary insurance (e.g. Blue Cross, Medco, Aetna, etc.), please contact the primary insurance. Medicaid does not have the ability to assist with the correction of a non-Medicaid rejection.
• When you do not know how to enter a COB claim in your system, please contact your software help desk or corporate office.
• When you receive a rejection from Medicaid and do not know how else to resolve it, please continue to contact the Vendor Drug Pharmacy Resolution Help Desk.

Resources

• Cost Avoidance Frequently Asked Questions – Updated January 28, 2009
• Vendor Drug Procedure Manual (with payer sheets)
• Vendor Drug newsletters
• July 1, 2009 Announcement
• December 10, 2008 announcement