Key Takeaways
- Third-party insurance requires BIN, PCN, Group ID, and Member ID for processing.
- Common rejection codes: NDC not covered, quantity limits exceeded, refill too soon, prior authorization required.
- Copays vary by formulary tier: generic (lowest), preferred brand, non-preferred brand, specialty (highest).
- Prescription transfers require specific information and documentation per state law.
- Prior authorization (PA) is needed when insurance requires prescriber justification before covering a medication.
Last updated: January 2026
Insurance, Billing, and Prescription Processing
Quick Answer: Insurance claims require BIN (Bank Identification Number), PCN (Processor Control Number), Group ID, and Member ID. Common rejections include NDC not covered, refill too soon, and prior authorization required. Copays are based on formulary tiers, with generics typically having the lowest copay.
Understanding insurance billing and prescription processing is essential for pharmacy technicians. This section covers third-party billing, common rejection codes, copays, prior authorizations, and prescription transfers.
Insurance Card Information
Required Fields for Billing
| Field | Description | Example |
|---|---|---|
| BIN | Bank Identification Number (6 digits) | 004336 |
| PCN | Processor Control Number | ADV |
| Group ID | Employer/group identifier | RX1234 |
| Member ID | Individual member number | 123456789 |
| Person Code | Identifies family member (01, 02, 03...) | 01 |
Coordination of Benefits (COB)
When a patient has multiple insurance plans:
- Primary insurance is billed first
- Secondary insurance is billed for remaining balance
- Patient pays any remaining copay or deductible
Formulary Tiers and Copays
Insurance companies use tiered formularies to control costs:
| Tier | Category | Typical Copay | Examples |
|---|---|---|---|
| Tier 1 | Generic | $0-$15 | Metformin, Lisinopril |
| Tier 2 | Preferred Brand | $25-$50 | Lipitor (if preferred) |
| Tier 3 | Non-Preferred Brand | $50-$100 | Brand when generic available |
| Tier 4 | Specialty | $100-$500+ | Biologics, Humira |
Formulary Terms
| Term | Definition |
|---|---|
| Formulary | List of medications covered by insurance |
| Preferred drug | Covered at lower copay |
| Non-preferred drug | Covered at higher copay |
| Step therapy | Must try cheaper drug first before covering expensive one |
| Quantity limits | Maximum amount covered per fill or time period |
Common Rejection Codes
| Rejection | Meaning | Resolution |
|---|---|---|
| NDC not covered | Drug not on formulary | Contact prescriber for alternative |
| Refill too soon | Filled recently, too early to refill | Wait or request override |
| Prior authorization required | Insurance needs prescriber justification | Submit PA request |
| Quantity limit exceeded | Quantity exceeds plan maximum | Reduce quantity or get override |
| Member not found | Invalid member ID or not active | Verify insurance information |
| Drug-drug interaction | System detected interaction | Pharmacist review required |
| Plan limitations exceeded | Annual or lifetime limit reached | Contact insurance |
| Invalid date of birth | DOB doesn't match insurance records | Verify patient information |
| Invalid prescriber | Prescriber not recognized | Verify NPI or DEA number |
| Days supply limit | Exceeds maximum days allowed | Adjust days supply |
Prior Authorization (PA)
When PA is Required
- Non-formulary medications
- High-cost medications
- Medications with quantity limits
- Step therapy requirements not met
- Brand-name when generic available
PA Process
- Pharmacist identifies PA requirement from rejection
- Pharmacy contacts prescriber's office with PA form
- Prescriber submits medical justification to insurance
- Insurance reviews and decides (approve, deny, or request more info)
- Pharmacy receives determination and processes accordingly
Turnaround Times
| Type | Typical Timeframe |
|---|---|
| Standard PA | 2-5 business days |
| Urgent/expedited PA | 24-72 hours |
| Emergency supply | May dispense limited quantity while PA pending |
Prescription Transfers
Information Required for Transfer
| Element | Details |
|---|---|
| Patient information | Name, DOB, address, phone |
| Drug information | Name, strength, quantity, directions |
| Prescriber information | Name, address, phone, DEA (if controlled) |
| Rx number | Original prescription number |
| Date originally written | Original prescription date |
| Refills remaining | Number of refills left |
| Date last filled | Most recent fill date |
| Quantity last dispensed | Amount dispensed at last fill |
| Transferring pharmacy | Name, address, phone, pharmacist name |
Transfer Rules
| Rule | Detail |
|---|---|
| Who can transfer? | Pharmacist to pharmacist (technicians gather information) |
| Controlled substances (C-III to C-V) | One-time transfer only (unless shared database) |
| Non-controlled medications | May transfer remaining refills |
| Documentation | Both pharmacies must document the transfer |
| Original Rx | Marked "VOID - transferred to [pharmacy]" |
Note: Schedule II controlled substances cannot be transferred - a new prescription is required.
Refill Processing
Refill Authorization Limits
| Medication Type | Maximum Refills |
|---|---|
| Schedule II | No refills allowed |
| Schedule III-V | 5 refills within 6 months |
| Non-controlled | As prescribed (commonly up to 12 months) |
Early Refill Guidelines
- Insurance rule: Often 75-80% of days supply must be used
- Example: 30-day supply can be refilled after day 23-24
- Controlled substances: More strict, often 90%+ required
- Vacation/travel override: May request early fill with documentation
Unit Dose and Repackaging
Unit Dose Packaging
- Definition: Single doses packaged individually
- Used in: Hospitals, long-term care, blister packs
- Label requirements: Drug name, strength, lot number, expiration date, manufacturer
Repackaging Requirements
| Requirement | Detail |
|---|---|
| Beyond-use date (BUD) | 1 year or manufacturer expiration (whichever is sooner) |
| Documentation | Drug name, strength, lot, BUD, technician initials |
| Label | Must include all required elements |
| Storage | Appropriate conditions (light, temperature, humidity) |
Medication Packaging Aids
| Type | Description |
|---|---|
| Blister packs | Individual doses sealed in plastic/foil |
| Compliance packaging | Multi-dose blister cards organized by day/time |
| Unit-of-use packaging | Manufacturer-packaged specific quantities |
| Strip packaging | Individual doses in connected strips |
Claim Submission and Adjudication
Real-Time Adjudication Process
- Enter prescription into pharmacy system
- Transmit claim to pharmacy benefit manager (PBM)
- PBM processes claim (check formulary, eligibility, interactions)
- Response received (paid, rejected, or needs review)
- Pharmacist reviews any clinical alerts
- Medication dispensed and claim finalized
Pharmacy Benefit Managers (PBMs)
Common PBMs include:
- CVS Caremark
- Express Scripts
- OptumRx
- MedImpact
- Prime Therapeutics
Important Billing Codes
| Code Type | Purpose |
|---|---|
| NPI | National Provider Identifier (pharmacist/pharmacy) |
| DEA | Required for controlled substance prescriptions |
| ICD-10 | Diagnosis codes (sometimes required) |
| Compound codes | For compounded medications |
Test Your Knowledge
A prescription claim is rejected with the message "Refill too soon." What does this typically mean?
A
B
C
D
Test Your Knowledge
Which of the following is required for processing a third-party insurance claim?
A
B
C
D
Test Your Knowledge
A patient wants to transfer their alprazolam (C-IV) prescription from another pharmacy. What is true about this transfer?
A
B
C
D
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