Proof of Delivery is Key to Maximizing Pharmacy Reimbursement, Defending Audits and Preventing Costly Write-Offs

In earlier articles, we examined various ways specialty pharmacies can be proactive with their outreach and communication to patients and inform them proactively of the delivery status of their medication or packages:

1. The benefits of a pharmacy’s ability to leverage multiple communication channels, such as email and mobile text messaging, to enhance patient engagement are key to improving health care outcomes.
2. Leveraging parcel tracking and monitoring technology with real-time data, insights, and the ability to predict medication delays or packages at risk—before an order even ships.
3. Tracking and monitoring a package to predict successful delivery of all critical medication while proactively communicating with patients when needed and rescuing critical packages that are in distress or cannot be delivered on time.
4. The need for processes, systems, and tools to quickly determine medication delivery status, communicate and coordinate resources across the teams, and reassure patient confidence while alleviating patient anxiety and concerns.

Importance of proof of delivery

Government-sponsored health insurance will continue to be a significant and growing source of medication reimbursements,¹ and Medicare will increasingly drive more revenue for specialty pharmacies.

This trend is driven by a growing aging population with chronic medical conditions that need new specialty pharmacy medications and services (projected 9% increase between 2020 and 2030²).

Because the average patient cannot pay out of pocket for these life-critical and, at times, costly medications, insurance providers and government-sponsored insurance will continue to provide support these medications. Government-sponsored health insurance requires specific specialty pharmacy documentation to ensure accurate reimbursements of the disbursed patient medications.

Proof of delivery information and verification for each medication delivered to a patient’s home. The proof-of-delivery document should include the beneficiary’s name, delivery address, description of the delivered item(s), date, time, and patient signature to validate the successful delivery of the medication to the patient.

The documentation, in some cases, must be stored in a secure environment for 7 to 10 years, be retrievable on-demand to provide proof-of-delivery documentation to payers when requested, and support payer audits.

Business drivers—challenges for specialty pharmacies

Health care providers rely on US carriers such as FedEx, UPS, and USPS to capture tracking information on every package delivered successfully to a patient.

Proof-of-delivery information that carriers capture may not always be sufficient to support Medicare and Medicaid required documentation standards. Each carrier has its method of securing proof of delivery documentation, and their methods may not consistently capture complete and accurate documentation on every package delivered.

Carriers typically retain proof-of-delivery information for 120 days to 18 months. But, depending on the payer, specialty pharmacies and health care providers may be required to capture and retain proof-of-delivery information for as much as 7 to 10 years.

Specialty pharmacies may need to audit the information provided by their carrier to ensure the documentation will satisfy payor requirements. This can be costly and time-consuming for most pharmacies.

For those deliveries that cannot consistently capture all required documentation, pharmacies will need to track and collect proof-of-delivery attestation by sending a postage-paid return envelope with the patient’s receipt, which must be signed and sent back via mail or email. This will require additional resources and more paperwork for pharmacies.

Experts predict health care providers will see increased claim audits from Medicare and other government funding³

Each year, the Centers for Medicare & Medicaid Services (CMS) manages against fraud, waste, and abuse. Medicare Advantage issuers have been targets of multiple government investigations, Justice Department whistleblower lawsuits, and Medicare audits.

In July 2020, the Justice Department consolidated 6 cases against Kaiser Permanente health plans. In August, California-based Sutter Health agreed to pay $90 million to settle a similar fraud case. Previous settlements have totaled more than $300 million.⁴

Most audits occur 5 or more years after the medication has been delivered. Returning to the patient to capture the required missing information 5 years later is nearly impossible. This lack of proper documentation may lead to a pharmacy’s inability to defend audits and increase costly medical write-offs.

Technology exists to streamline the capturing, auditing, and the secure storing of the required proof of delivery information

Choosing the right solution can be confusing. Carriers may say that they provide this, but to what degree? Ask these specific questions when evaluating a proof-of-delivery solution:

• Is there a web-based user interface for on-demand retrieval of proof-of-delivery information by package ID or order number?
• Can you configure it by package type (cold chain, ambient, carriers, or couriers)?
• Are there recipient electronic communication capabilities to confirm package delivery?
• Can it audit all carrier delivery information internally to meet external audit standards?
• When the required data are missing, can it reach out to a patient and capture the missing proof of delivery documentation, such as a recipient’s signature, as evidence of the package delivery?
• Does it provide a secure online system that can store proof of delivery data for 7 to 10 years and retrieve it on demand?

The advantages of a proof of delivery solution are clear

Proof of delivery helps pharmacies keep track of medication delivery and verify whether a package was delivered to the correct location and on time.

When pharmacies can produce documentation on every medication shipped using the information expected by Medicare and Medicaid, proof of delivery ensures reimbursement for every order and prevents costly audits and write-offs. This allows the pharmacy to run a more efficient organization with proper documentation, adhere to compliance and enhance patient engagement.

About the Author

Sebastian Pistritto is chief marketing officer at ParcelShield.

References

1. Kaiser Family Foundation analysis of CMS National Health Expenditure Data for Historical (CY2005-2014) and Projected (CY2015-2024) Retail Prescription Drug Expenditures, 2013-2024.
2. https://www.aha.org/system/files/content/00-10/071204_H4L_FocusonWellness.pdf
3. https://hme-business.com/Articles/2022/02/01/Audits.aspx
4. Medicaid & Medicare: A Legal Blog (https://medicaidlawnc.com/2021/09/20/audits-surge-with-medicare-advantage-and-tpe-audits-increased)