Reimbursement, Copays, and Coordination of Benefits
The math and the two payers
The reimbursement formula is ingredient cost plus dispensing fee. Ingredient cost is generally the lesser of the contracted rate (AWP minus a percentage, or MAC) and the pharmacy's U&C. Copays are not extra revenue: the plan payment plus the patient's copay equals total reimbursement.
Copay structures include flat dollar amounts by tier, coinsurance as a percentage of the negotiated price, a deductible before benefits begin, and an annual out-of-pocket maximum. On a coinsurance benefit the patient's share rises with the drug's price even at the same tier.
Coordination of benefits applies when a patient holds two coverages. Determine primary versus secondary by plan rules: the plan covering the patient as subscriber is generally primary over a plan covering them as a dependent, and Medicare is secondary to most employer group health plans for active employees. Bill the primary first, then submit the secondary claim with the other coverage code and the primary's paid amount. Medicaid is the payer of last resort.
Compliance traps cluster here. Routinely waiving or discounting Medicare Part D or Medicaid copays can raise anti-kickback and beneficiary inducement concerns, even when the patient asks. Balance billing a Medicare or Medicaid patient beyond the copay is prohibited.
Worked example: MAC ingredient cost 150.00 plus a 2.00 dispensing fee gives 152.00 total. The patient's tier copay is 10.00, so the plan pays 142.00. If the MAC is later adjusted down to 140.00, the pharmacy absorbs the difference, but the patient still pays 10.00.
Rule of thumb: net reimbursement equals plan payment plus patient pay, and only those two.