Health System Recovers More Than $500K in Pharmacy Underpayments by Correcting Site of Service Configuration

Key Takeaways

• Health system identified significant underpayments tied to outpatient treatment reimbursement

• Titan uncovered coding and CDM configuration errors affecting pharmacy reimbursement

• More than $500K recovered and billing configuration corrected to prevent future losses

The Challenge

A Southwest health system identified a pattern of underpaid outpatient claims in which payer reimbursement excluded the cost of high value drugs associated with treatment. Although services were being delivered appropriately, payments consistently failed to reflect the full cost of care, creating ongoing revenue loss.

Leadership required a detailed analysis to determine why pharmacy reimbursement was being excluded and whether the issue stemmed from payer behavior or internal billing configuration.

The Solution

Titan analyzed the impacted claims and discovered that injection services billed under CPT code 96377 were paired with revenue code 361, which designates operating room services. This combination caused the payer to classify the encounters as outpatient surgical cases subject to case rate reimbursement. Under this methodology, payments are bundled into a single all inclusive rate that does not reimburse pharmacy charges separately.

Review of medical records confirmed the services were not performed in an operating room setting. Titan determined that the hospital’s Charge Description Master had been incorrectly configured for this payer and service combination.

Corrected claims were resubmitted using CPT code 96377 with revenue code 761, representing a treatment room setting. This adjustment allowed the payer to reimburse the associated pharmacy charges appropriately.

Titan’s auditors also used the engagement as a training opportunity, educating the client’s billing and CDM teams on proper configuration practices to prevent recurrence.

The Results

The health system recovered more than $500K in pharmacy underpayments across the accounts reviewed by Titan Health. Updating the CDM eliminated the configuration issue, ensuring future claims would be reimbursed correctly and reducing ongoing revenue risk.