Understanding the importance of DAW codes, how they could be eating into your profits and what you can do about it.
What are DAW codes and why do they matter?
To understand why Dispense as Written (DAW) codes are important, let’s first understand what a DAW code is and the impact it has on pharmacy billing.
A DAW code specifies the prescriber’s instruction for dispensing a specific medication or allowing the substitution of a generic equivalent. When a pharmacy submits a claim with a DAW code, the third-party payer can use that information to determine reimbursement.
The code submitted (by the pharmacy) within the claim can factor into how the third-party payer reimburses or pays the pharmacy for that prescription claim.
When the DAW code is missing, invalid, or incorrect, it may have a negative impact on both the pharmacy as well as the patient.
How DAW code errors may affect pharmacies
- Reimbursement Rate – Improper or incorrect use of DAW codes can lead to generic rate payments for brand-name drugs, potentially resulting in a loss.
- Formulary Selection – Dispensing drugs that are not on the payer’s formulary list may result in higher copays for the patient, while still reimbursing the pharmacy at the generic rate on brand-name drugs.
- Claim Rejections – Missing or invalid DAW codes can trigger claim rejections. These rejections cause workflow interruptions because of extra processing time and rebilling in the pharmacy, along with workflow interruptions and can also result in delays in the delivery of patients’ medication.
- Audit Triggers – If the pharmacy is audited with insufficient documentation to support their DAW code usage, the third-party payer can take money back from the pharmacy at a later date.
