OLA#: 016-03M

LEGISLATIVE ANALYST REPORT

TO: Honorable Members of the Board of Supervisors

FROM: Office of the Legislative Analyst

DATE: June 5, 2003

SUBJECT:Employee Suggestion Nos. 181 & 512: SFGH Drug Cost Reimbursement

EMPLOYEE SUGGESTION

An employee at San Francisco General Hospital made two suggestions: (1) revamp the pharmacy billing system to better maximize patient, Medi-Care and Medi-Cal reimbursement rates, and (2) interface computer systems so that certain prescriptions do not have to be entered into separate systems.

EXECUTIVE SUMMARY

The Department of Public Health (DPH) bills the state Medi-Care and Medi-Cal programs on a capitated basis (a set rate per patient or clinic visit) for hospital inpatient stays and hospital-based clinics, and not a fee for service based on the price of the service or prescription. The occasional pharmacy data entry error, therefore, does not impact the Department's ability to recover reimbursements from the state. In addition, DPH plans to implement a new computer system beginning in July or August of this year that they hope will reduce the need for duplicate entries into separate computer systems.

ANALYSIS & RECOMMENDATIONS

The employee was concerned that some prescriptions filled by the pharmacy department were not entered into the computer system correctly and therefore the department was not maximizing state Medi-Care and Medi-Cal reimbursement rates. However, according to the Administrator for DPH's Pharmaceutical Services Division, Sharon Kotabe, even if some inpatient prescriptions are not entered correctly, the Department is not missing the revenue associated with the patient's hospital stay. State prescription reimbursements for clinic visits are billed to the state Medi-Care and Medi-Cal programs on a capitated basis (a set rate per patient or clinic visit) and not as a fee for service based on the price of the prescription filled.

In addition, DPH is working on a new computer system that will begin operation in July or August 2003 and be implemented over the following eighteen months. One of the improvements the Department hopes to make by implementing this new system is to interface existing computer systems and eliminate the need for duplicate entries.