Overview of Pharmacy Billing

female pharmacist using computer

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As a pharmacist, you may think that your most difficult tasks will include helping patients and keeping track of possible contraindications between medicines. But many pharmacists say those tasks are easy compared to the unique accounting and bookkeeping needed in a pharmacy.

Pharmacy billing is no simple matter, although technology removes most of the headaches. Here’s what pharmacy billing entails.

Sign Up With NCPDP

Before anything can be accomplished, a pharmacy needs to sign up with the National Council for Prescription Drug Programs (NCPDP), a database service that allows it to bill. The NCPDP provides each pharmacy with a unique six-digit number, known as a BIN, that identifies it for billing purposes.

Understand Third-Party Relationships

Realize that the insurance companies don’t do their own billing. Each has a third party—a Pharmacy Benefit Manager (PBM) such as Express Scripts or Medco. These intermediaries are billed when a prescription is filled, and they audit files to make sure everything is correct and assure the insurance company that they’ve done due diligence.

Apply for Contracts

The next step is to apply for insurance contracts. First, sign up with some local pharmacy groups (these groups may have the ability to sign on several insurance plans at a time) then sign up the contracts through that group.

It’s essential to sign contracts, but remember to know what you’re signing. Allowable and payable charges are important numbers to understand.

A pharmacy can’t bill to a PBM unless it has signed a contract. That contract designates how much the PBM pays to the pharmacy, co-pays, etc. Each PBM has different contracts.

Start Billing

Once the contract is signed, the pharmacy can bill. Through the pharmacy computer program, when a prescription is filled, and all of the customer’s demographic information is filled in, it goes to the PBM. Seconds later it comes back saying paid or denied, how much is paid and the amount of the co-pay.


In pharmacies, there might be a single person or a larger contingent of staff—depending on the size of the pharmacy or whether it is part of a chain—associated with the billing process. A manager typically oversees the process and one person is responsible for the final adjudication and checking of claims.


All billing is conducted through pharmacy billing software such as QS1. Most of the process is automated from the moment a prescription is filled, but some cases require special billing and prior approval. For these cases, it’s often necessary to call the insurance company to verify that a drug is reimbursable.

Technology is essential to this process. Without up to date systems, it is impossible to communicate accurately with insurance companies, third-party managers, and physicians.

Challenges in Pharmacy Billing

It’s vital to ensure that the paid amounts are correct in the final claims adjustment. So the amount paid by the insurance company and the copay must equal the amount billed. These figures must be reconciled for financial integrity.

Also important is an understanding of the third party contracts and deciding whether they’re worth signing. Some may not be worth signing. However, a pharmacy cannot bill claims to any third party with which it has not signed a contract.

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