Obtaining reimbursement for pharmacist patient care services directly or indirectly is a challenging endeavor. In the fee-for-service model, which remains prevalent as the major healthcare payment structure, obtaining sufficient renumeration for pharmacist patient care services requires a patchwork of allowable billing options. Unfortunately, many of the billing choices do not match well to the breadth and depth of services provided by many pharmacists. Adding telehealth to the reimbursement patchwork further magnifies the complexity.

Today's healthcare environment requires providers, including pharmacists, not only to pay attention to their costs and revenue generation to sustain their practices, but also to demonstrate the value of their services by its contribution to their patients’ health outcomes. Consequently, pharmacists, regardless of their practice settings, should have a solid understanding of the basics of medical billing and healthcare revenue generation. Doing so enables you to navigate the communication bridge with billers, administrators, compliance officers, and payer personnel as you embark to secure reimbursement and overcome the numerous barriers to maximize the revenue-generating capabilities of your service.

Direct reimbursement to pharmacists for patient care services remains uncommon, existing in only a handful of states across the country and for a few billing codes at the federal level. For direct reimbursement to occur, benefit policies need to recognize pharmacists as legal healthcare providers, and benefit plans need to cover pharmacist services. Although many states and the District of Columbia have statutes that classify pharmacists as healthcare providers,1 the ability to bill for services remains unavailable in most states. Reimbursement hinges on three criteria governed by legislative action at the state level.2

  1. Pharmacists by legislation and rule are recognized as healthcare providers in the state.

  2. The services pharmacists provide and bill are clearly described under a defined scope of practice within the state pharmacy practice act.

  3. Insurance laws direct commercial health plans to include pharmacists as a provider eligible to bill and receive payment for patient care services within the payer's benefit plans and within the pharmacist's scope of practice.

Without each of these criteria in place, pharmacists must rely on generating revenue by partnering with authorized billing providers who are able to delegate and then bill for services delivered by a pharmacist designated as ancillary services to the care they provide.

Healthcare Payers

The initial step in determining how to generate revenue for your services is to determine your payer mix or the major healthcare payers for your patient population. Reimbursement amounts and rules will differ among payers, and you will want to maximize your revenue options from those payers that insure most of your patient population. In the United States, healthcare services are primarily paid for by government at the federal and state level and commercial payers. For the typical ambulatory care provider, commercial payers compose the largest payer group at 43%, with Medicare the second largest at 29% and state Medicaid at 17%.3 Contributing to a lesser degree are self-pay patients, or smaller payers such as workers’ compensation. Geographic location of your practice will greatly influence your payer mix, for urban, suburban, and rural practices will differ in the age and economic makeup and thus the insurer of the population. For most practices, Medicare is the largest single payer and one reason most payment strategies focus on Medicare.

Tool for telehealth pharmacy practice billing: Reach out to billing staff and/or financial administrators in your health system or at your local clinic(s). Most will be willing to share the specific payer mix of their patient population to help guide you in identifying billable services.

Commercial Payers

The commercial payer group is composed of many entities offering a myriad of benefit plans that can differ greatly in services covered. State laws and rules mandate what commercial payers licensed in their state are required to provide as benefits to all beneficiaries, to which providers must be paid for providing those services within the providers’ state scope of practice. State laws and rules mandate what commercial payers licensed in their state are required to provide as minimal healthcare benefits to all state residents, which providers must be paid for providing those services if they are within their state scope of practice. With the variety and variability in commercial plans, it is difficult to provide specific guidance on the best strategy to secure payment for pharmacist services. You may wish to work with your organization to identify the commercial health plans that predominate in your population and propose developing specific contracts with the payers to cover your services with agreed-upon service billing codes. Though not widespread, these types of payment models do exist in the commercial space. When no specific contract exists, commercial payers follow the rules of the industry standard billing system, which is the Medicare billing system.

Tool for telehealth pharmacy practice billing: If you find many of your patients are employed by a specific company, it can be helpful to reach out to the employer to discuss services you can provide. The employer can work with you and their insurance provider to develop a method for providing reimbursable services.

State Medicaid

Medicaid is a state-run program that provides healthcare coverage for people with extremely low or no income. Medicaid is jointly funded by the state and federal government, where the federal government matches state funding based on a specified percentage of program expenditures, called the federal medical assistance percentage (FMAP). FMAPs range from 50 to 75%, with an average of 57%, and are adjusted every three years. For states that expand Medicaid under the Affordable Care Act, the federal government assumes 100% of the FMAP for a set number of years for the added beneficiaries. Individual states construct their own Medicaid benefit plans and provider reimbursement rates within federal requirements and use either a fee-for-service or a managed care model in administering benefits. Thus, there is variability in rules and regulations regarding pharmacists’ ability to bill and be reimbursed. Fourteen state Medicaid programs offer some level of direct reimbursement to pharmacists for patient care services, and reimbursement for telehealth pharmacy practice services varies among these states (Table 6.1).4 All 14 states are authorized for Medicaid reimbursement of live video telehealth, but only three states (Minnesota, Missouri, and Oregon) allow reimbursement for three forms of telehealth (live video, store-and-forward, and remote patient monitoring).5 If Medicaid is a major payer for your population, consult the state regulations where you practice for the rules on billing and reimbursement for pharmacist patient care services.

Table 6.1.

States with Medicaid Reimbursement for Pharmacist Patient Care Services, and Corresponding Telehealth Medicaid Reimbursement


Medicaid Reimbursement for Telehealth

Live Video


Remote Patient Monitoring









New Mexico

North Dakota





A specific group of Medicaid beneficiaries, termed “dual eligible,” is eligible for Medicare benefits but is also of extremely low income and qualify for Medicaid as a secondary payer that assumes payment for any Medicare copay the beneficiary accrues. Dual-eligible patients are considered a high-risk population for both medical conditions and cost.


Medicare is the federal government's health insurance program available to any U.S. citizen or legal resident (or their spouse) who has paid at least 10 years of taxes into Medicare through their employment and has been a citizen or legal resident in the United States for a minimum of 5 years. Health coverage begins when a person reaches 65 years of age or older or has become medically disabled. Medicare benefits are established through legislative action by the U.S. Congress, which began with the Social Security Act in 1965 and many subsequent laws since. By law, Medicare Part A and Part B plans cover 80% of any billable service and require the patient to be responsible for the remaining 20%. Patients may have coinsurance that assists in covering the 20% co-pay. This may be in the form of private retirement health insurance benefits, Medigap plans, or state Medicaid coverage in the dual-eligible population.

Table 6.2 summarizes four Medicare benefit plans. The Center for Medicare and Medicaid Services (CMS) is the federal agency under Health and Human Services whose role is to administer Medicare benefits and set the rules and regulations for how each plan is administered. It is important to be aware of who CMS pays under each plan and the documents that annually update the rules and regulations for each benefit. Knowing who gets paid directs you to the organization or providers pharmacists must speak with to secure reimbursement for services provided to the Medicare's plan patient population. The rule document will provide what is allowable by CMS for generating revenue as pharmacists, who are considered ancillary clinical staff in Medicare regulations. Staying current is critical, and CMS provides a weekly Medicare Learning Network newsletter and other helpful resources to assist providers. The resources are publicly available, and pharmacists may sign up to receive weekly announcements regarding rules and resources at the following link: https://www.cms.gov/Outreach-and-Education/Outreach/FFSProvPartProg/Electronic-Mailing-Lists.

Table 6.2.

Medicare Benefits Summary

Benefit Design

Medicare A

Medicare B

Medicare C

Medicare D







Hospital care

Long-term care

Some home health

Outpatient services

Durable medical equipment

Preventive services

Ambulance services

Some home health

Must include Part A and Part B

May add other services

  • Prescription

  • Eye care

  • Dental

  • Hearing

  • Other

Prescription Medications

Annual Rules Document(s)

IPPS (Inpatient Prospective Payment System)

PFS (physician fee schedule)

HOPPS (Hospital Outpatient Prospective Payment System)

CMS Call Letter

CMS Call Letter

MTM Program Guidance Memo

Timing of call for annual comments to the final rule





CMS Payment

To Hospitals based on:

MS-DRGs (Medical Severity Diagnosis-Related Groups)​

Revenue codes ​

Quality Metrics

To eligible providers for services and procedures using HCPC codes

Quality Metrics

To contracted commercial payer

Quality Metrics

To contracted PDP

Quality Metrics

Medicare Part A covers hospital, long-term care services, hospice, and certain home health services that occur after an institutional stay. Since beneficiaries contribute to Medicare Part A while employed, once they are eligible for benefits, they incur no additional charges when they enroll in Medicare Part A.

Medicare Part B covers outpatient services, which includes services provided by physicians and other advanced practice practitioners that have Part B provider status, some preventive services, and some homecare services. Medicare beneficiaries are automatically enrolled in Part B when they become eligible for benefits and must opt out if they do not wish to participate and pay the required monthly premium. If a beneficiary does not have existing full retirement or employment health insurance and delays signing up for Medicare Part B beyond when they are first eligible, the beneficiary faces a financial penalty if they enroll at a later time. Most of the reimbursement opportunities for pharmacist patient care services, including those related to telehealth, exist under the Medicare Part B benefit. Payments by CMS for Medicare Part B services are made directly to eligible physicians and nonphysician providers, referred to in CMS regulations as qualified healthcare professionals. As previously noted, pharmacists are not considered healthcare providers under federal healthcare law and are not included in the list of eligible nonphysician providers. Medicare Part B rules published in the physician fee schedule (PFS) and the Hospital Outpatient Prospective Payment System (HOPPS) documents are updated annually at the end of the calendar year.

Medicare Part C is a benefit plan whose structure is based on a managed-care model. CMS outsources the management and design of these plans to approved commercial payers. Each plan, referred to as Medicare Advantage plan, must offer all the benefits under Parts A and B and abide by CMS established rules, but they are free to add more benefits if desired, such as vision, dental, hearing, or prescription drug coverage. Plans may set their own out-of-pocket costs and make additional rules such as requiring primary care to approve referrals for specialists. Unlike Medicare Part B, where the fee for service is paid to the provider, CMS pays the commercial Medicare Part C plan a set amount per member per month. Attached to the payment are required quality measures known as Star Ratings. The plans may receive both financial and program incentives if they can achieve a 4–5 rating on their Star Ratings on a 1–5 scale. Plans with poor ratings in the 1–2 range risk reductions in payment as well as termination from the program. Payers establish their own structure to pay providers for services under the Medicare Advantage plans, generally following processes similar to other benefit plans in their portfolio. Medicare Advantage plans have seen a steady rise over the past 10 years, with over 24 million beneficiaries currently in such plans, which is 36% of all Medicare enrollees.6 To receive reimbursement for services provided from Medicare Advantage plans, pharmacists need to work with their organizations to ensure their services are included in the organization's agreements with the Medicare Part C contracted commercial payers.

Medicare Part D is the newest Medicare benefit, enacted in 2003 through the Medicare Modernization Act. As with Medicare Part B, beneficiaries contribute to Medicare Part D with monthly premiums and may opt out of this benefit; however, if they do not have acceptable prescription coverage and then decide to opt back in later, they will incur financial penalties. CMS contracts with commercial companies, referred to as Prescription Drug Plans (PDPs), to administer the plan. The PDP is paid a direct subsidy payment by CMS per enrollee with risk adjustments, administrative fees, quality bonuses or penalties, and reinsurance payments for high-cost enrollees. As most pharmacists are aware, this benefit includes medication therapy management (MTM) services, which PDPs fund out of their administrative fees. This benefit provides an opportunity for pharmacists to provide patient care services. Each PDP, within CMS rules, may design how its MTM program is delivered. To obtain reimbursement for Part D MTM services, pharmacists should contract with the PDPs offering benefits within the community or state where they practice; or they may use vendors that contract with payers who develop a network of pharmacists and pharmacies to provide the MTM benefit. Like Part C, Star Ratings based on quality metrics are attached to the payment PDPs receive with similar incentives or penalties based on the star level achieved.

Tool for telehealth pharmacy practice billing: Although it is the PDPs that are required to report on Star Ratings, the responsibility of achieving the ratings is often pushed to the pharmacy. Pharmacists should be aware of these Star Ratings, which may change over time, particularly for Part D. Many of the measures can be positively impacted by leveraging telehealth. For example, one measure associated with medication use is related to medication adherence. Pharmacists can utilize telehealth pharmacy practice to follow up with patients to optimize their adherence. By positively impacting Star Ratings, pharmacies ensure that PDPs will want to continue contracting with them. Part C Star Ratings can also be impacted by leveraging telehealth services to optimize clinical quality measures, such as helping patients control their diabetes.


Medicare Parts A and B contract with private commercial organizations to assist in administering the benefits. The Medicare Administrative Contractors (MACs) are responsible for enrolling providers into Medicare, processing fee-for-service claims, managing reimbursements, making audits of provider billing, and providing education regarding Medicare rules. MACs also may add interpretation to Medicare billing codes. Historically, these interpretations have significantly affected pharmacists’ reimbursement; therefore, it is wise to check with your region's MAC for any additional rules prior to recommending any Medicare billing code for your services. The United States is divided into 12 regions, each with its own MAC contract (Figure 6.1). You will note that the same company may have a contract with multiple regions.

Figure 6.1
Figure 6.1

CMS MAC contracts per region as of December 2020

Source: FCSO—First Coast Service Options, NGS—National Government Services, WPS—Wisconsin Physician Services https://www.cms.gov/files/document/ab-jurisdiction-map-dec-2020.pdf. Accessed May 18, 2021.