As a pharmacy owner, you’re an expert at navigating the world of prescription billing. You know the ins and outs of the PBM system, you wrestle with DIR fees, and you manage the daily reality of shrinking reimbursement margins on the dispensing side.

I’ve been there. I remember the frustration of looking at a patient’s file, knowing I could provide a clinical service that would genuinely help them—like a comprehensive medication review or a point-of-care test—but having no clear path to get paid for my time and expertise.

The PBM system was built to pay for a product. The medical system is built to pay for a service.

This is the single biggest shift in the pharmacy business model. Unlocking medical billing is the key to finally getting paid for your clinical knowledge, securing new revenue streams, and practicing at the top of your license.

But let’s be honest: pharmacist billing on the medical side can feel like learning a new language. It’s complex, it’s fragmented, and it’s intimidating.

This guide is here to change that. We’re going to demystify the process, step-by-step, from a pharmacist-owner’s perspective.

Why Is Medical Billing a Game-Changer for Independent Pharmacies?

For decades, nearly 100% of your revenue has likely come from the “pharmacy benefit” side, managed by Pharmacy Benefit Managers (PBMs).

• Pharmacy Benefit (PBM): Pays for the drug product (e.g., a 30-day supply of lisinopril). You submit a claim using an NDC number.
• Medical Benefit (Payer): Pays for the clinical service (e.g., the time, expertise, and testing to manage the patient’s hypertension). You submit a claim using CPT and ICD-10 codes.

The problem? The PBM model is squeezing independent pharmacies to the breaking point. The solution is to diversify your revenue by tapping into the medical benefit.

When you successfully bill the medical side, you open up entirely new, high-margin revenue streams for clinical pharmacy services that PBMs simply do not cover. This is how you transition from just dispensing to truly managing patient care—and get paid fairly for it.

The First Hurdle: Becoming a “Provider” (Credentialing)

This is the step that makes most pharmacy owners want to give up before they even start. You cannot bill for medical services until you are “credentialed” with payers.

Credentialing is the formal process that medical payers (like Medicare, Medicaid, and private insurers) use to verify your license, education, and qualifications. Once approved, you are officially in their network as a “provider” who is eligible for pharmacist reimbursement.

Key Steps to Get Credentialed:

1. Get Your NPIs: You already have a National Provider Identifier (NPI) for your pharmacy (a Type 2 NPI). You and your other pharmacists will also need individual Type 1 NPIs.
2. Enroll with Medicare: This is the most critical starting point. Enrolling as a Medicare Part B provider (using form CMS-855B) allows you to bill for services like vaccines, diabetes self-management training (DSMT), and “incident-to” services.
3. Enroll with State Medicaid: Each state’s Medicaid program has its own enrollment process. This is essential for billing for services provided to your Medicaid population.
4. Enroll with Private Payers: This means contacting each major private insurer in your area (Blue Cross, Aetna, Cigna, etc.) and applying to join their medical network as a “Durable Medical Equipment” (DME) supplier and/or a “limited-service healthcare provider.”

A Pharmacist’s Perspective: I won’t sugarcoat it—credentialing is a mountain of paperwork. It’s slow, it’s tedious, and it’s confusing. But it’s a one-time mountain. Once you’re in, you’re in. Don’t let this first step stop you from building a more sustainable business.

The New Language: Understanding Medical Billing Codes

In the PBM world, you live by NDC numbers. In the medical billing world, you will live by two new sets of codes: CPT and ICD-10.

• CPT® (Current Procedural Terminology) Codes: These codes describe what you did (the service). Think of them as the “action” codes.
  • Example: 90471 is the CPT code for the administration of one vaccine.
  • Example: 99605 is the code for the first 15 minutes of a Medication Therapy Management (MTM) service.
• ICD-10-CM (International Classification of Diseases) Codes: These codes describe why you did it (the diagnosis). Every medical claim needs a diagnosis code to establish medical necessity.
  • Example: Z23 is the ICD-10 code for “Encounter for immunization,” which justifies the vaccine administration.
  • Example: E11.9 (“Type 2 diabetes mellitus without complications”) would be a diagnosis code to justify a DSMT service.

A successful medical claim pairs the right service (CPT) with the right reason (ICD-10).

Your New Workflow: How to Bill a Medical Claim

So, how does this actually work in your pharmacy? It requires a new workflow that runs parallel to your dispensing queue.

Step 1: Patient Intake & Verification You must get a copy of the patient’s medical insurance card, not just their PBM card. Your staff needs to be trained to verify this medical eligibility before the service is performed.

Step 2: Clinical Documentation (The SOAP Note) This is the most important, non-negotiable step. If it isn’t documented, it didn’t happen, and you will not be paid for it. You must create a clinical “SOAP” note (Subjective, Objective, Assessment, Plan) for every service. This note is your legal proof of medical necessity.

Step 3: Claim Creation (The CMS-1500 Form) Forget NCPDP layouts. Medical claims are submitted on a CMS-1500 form (or its electronic equivalent, the 837P file). This form is where you enter the patient’s info, your provider info, the CPT codes, the ICD-10 codes, and your charges.

Step 4: Claim Submission You submit the claim to the medical payer, typically through a “clearinghouse.” A clearinghouse is a service that electronically routes your claims to thousands of different payers, which is far more efficient than connecting to each one individually.

Step 5: Revenue Cycle Management (The Follow-Up) This is the part of pharmacy billing that’s often overlooked. You will get rejections. You will get denials. You must have a process for tracking every claim, following up on rejections, correcting errors, and re-submitting them. This is known as “A/R (Accounts Receivable) management,” and it is the key to actually getting your money.

What Clinical Pharmacy Services Can You Bill For?

This is the exciting part. Once you have this system in place, you can start getting paid for your knowledge. The list of “billable” services is growing every year as “provider status” expands.

Here are common services independent pharmacies are billing for today:

• Vaccine Administration: Billing for the administration of flu, COVID, RSV, and other vaccines to Medicare Part B and private payers.
• Point-of-Care Testing (POCT): Billing for the test and your time (using an E/M code) for strep, flu, COVID-19, A1c, and more.
• Medication Therapy Management (MTM): Billing for comprehensive medication reviews using the 99605 – 99607 CPT codes.
• Chronic Care Management (CCM): Billing Medicare monthly for coordinating care for patients with two or more chronic conditions.
• Diabetes Self-Management Training (DSMT): Billing for educating diabetic patients as part of an accredited program.
• “Incident-to” Billing: In some cases, you can bill “incident-to” a physician for services like blood pressure checks or anticoagulation management under a collaborative practice agreement.

(Editor’s Note: On our next blog post: Beyond the Counter: A Pharmacist’s Guide to Launching New Revenue Streams will explore each of these in detail.)

The Big Decision: DIY vs. Outsourcing Your Billing

You have two choices for handling this new workflow:

1. Do It Yourself (DIY): You can buy a medical billing software, train your staff, and manage the entire process in-house.
   • Pros: You have total control.
   • Cons: It requires a steep learning curve, dedicated staff time, and you are 100% responsible for chasing down every rejection.
2. Outsource to a Partner: You can partner with a specialized billing pharmacy service that handles the credentialing, claim submission, and A/R follow-up for you.
   • Pros: You get to focus on patient care, not paperwork. You have an expert team on your side.
   • Cons: It costs a percentage of your collected revenue.

You Don’t Have to Do This Alone

Transitioning into medical billing is a journey. It takes time, patience, and a willingness to learn a new side of the business.

As a pharmacist who has built this system from scratch, I can tell you it’s worth the effort. It’s the most powerful tool we have to secure our businesses, prove our value, and finally earn the pharmacist reimbursement we deserve for the critical care we provide.

You’re a clinical expert. You’re a business owner. But you don’t have to be a medical billing expert, too.