Adjudication (Pharmacy)
Adjudication is the real-time electronic process by which a pharmacy submits a prescription claim to a patient's insurance plan and receives an immediate approval, rejection, or request for additional information.
Exam Tip
Adjudication is the real-time insurance claim process. Know common rejection codes (75 = PA required, 79 = refill too soon) and resolution steps for the ExCPT Dispensing Process domain.
What Is Pharmacy Claims Adjudication?
Adjudication is the automated process that occurs when a pharmacy transmits a prescription claim to a third-party payer (insurance company or PBM). The system evaluates the claim against the patient's benefit plan in real time and returns a response within seconds.
Steps in the Adjudication Process
| Step | Description |
|---|---|
| 1. Claim Submission | Pharmacy sends patient, prescriber, and drug information electronically |
| 2. Eligibility Check | System verifies the patient's insurance coverage is active |
| 3. Formulary Check | System checks if the drug is on the plan's formulary |
| 4. DUR Screening | Drug utilization review checks for interactions, duplications, age/gender conflicts |
| 5. Copay Calculation | System determines patient cost share based on tier and benefit design |
| 6. Response | Claim is approved (paid), rejected, or flagged for pharmacist review |
Common Rejection Codes
| Code | Meaning | Resolution |
|---|---|---|
| 75 | Prior Authorization Required | Contact prescriber for PA |
| 76 | Plan Limitations Exceeded | Check quantity/day supply limits |
| 79 | Refill Too Soon | Verify last fill date |
| 70 | Product/Service Not Covered | Check formulary alternatives |
| 65 | Patient Not Covered | Verify BIN/PCN/Group number |
Key Terms in Adjudication
- BIN (Bank Identification Number): Identifies the insurance processor
- PCN (Processor Control Number): Routes the claim to the correct plan
- Group Number: Identifies the employer or group plan
- DAW Code: Indicates brand vs. generic dispensing preference
- U&C (Usual and Customary): The pharmacy's regular cash price
Exam Alert
The adjudication process is a core topic in the Dispensing Process domain (55% of the ExCPT). Know the claim submission workflow, common rejection codes and how to resolve them, and the role of PBMs in managing pharmacy benefits.
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Related Terms
Formulary
A formulary is a list of prescription drugs approved for coverage by a health insurance plan, pharmacy benefit manager (PBM), or healthcare institution, organized into tiers that determine patient cost-sharing.
Prior Authorization (PA)
Prior authorization is a requirement by a health insurance plan that a prescriber obtain approval before a specific medication, procedure, or service will be covered, used to ensure medical necessity and manage costs.
Drug Utilization Review (DUR)
Drug utilization review (DUR) is a systematic process of evaluating prescription drug use to ensure medications are used appropriately, safely, and effectively, as mandated by OBRA-90 for Medicaid patients.
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