Transferring from AWP to WAC: picking your new data should not be like picking lottery numbers.
Due to the already well documented transition in AWP (average wholesale price) reimbursement, many facilities are now choosing to base their charges on WAC (wholesale acquisition cost). This reduces the potential for fraudulent charges being passed on to the payer; whether a government plan, self paid by the patient or by insurance coverage.
In order to ensure a smooth transition of charges being passed on, there are many checks and balances to be accommodated by both the finance department and pharmacy. A review of the previous year’s charges should be available to ensure that there is no overall change in revenue (unless that is another goal of the facility in question).
Then, as this is a relatively large transition and will be planned for well in advance, it is also a good time to do some housekeeping. Take the opportunity to review the profit margin of each drug group where you can. For example, if your facility uses a lot of chemo/monoclonals ensure you have your billing equations set up so they accommodate the extra workload required to monitor lab values and pre-treatment questionnaires that are necessary prior to treatment initiation.
Also consider issues involving billing for medication actually administered along with the portion wasted. This can be done in various ways and extensive testing should be carried out with all proposed changes prior to going live.
Another aspect of housekeeping which is worthy of carrying out at this time is to ensure that each drug is included within the correct charging category. For example, it is not unusual to find nebules being charged as bulk items and inhalers being charged as meds. Not only does this cause problems within the financial and pharmacy departments, it can also create issues for nursing when BMV (Bedside Medication Verification) is implemented.
Further aspects of investigation which will ensure a smooth transition from AWP to WAC regards how price updates are received and their accuracy when passed on to the patient/payer. One item which often presents an issue is insulin. If the cost comes in as a vial but it is dispensed in units, one would not want to charge for an entire vial. Of course there are many other pitfalls, but the objective here is to present the issues, not to bring about total resolution.
Once it is ensured that all drug dictionary items are within the appropriate charging category and each price is accurate, it is then prudent to ensure that the total new charges will be aligned with the previous year’s data. So again, extensive testing is recommended. At this point it should be evident that the test portion of the system should reflect what will ultimately be transitioned into live, thus allowing legitimate speculation for forthcoming revenue.
When a facility is finally ready to move the new data into live it should occur as quickly and seamlessly as possible, ensuring there is little likelihood of two different charges for the same item to occur on one individual’s bill. The timing should also reflect a low a patient population and availability of maximum support should issues arise.
Naoise G. Nickolay RPh.
Senior Consultant