🇦🇺Australia

Billing Method Selection Error (Per-Encounter vs. Monthly Capitated)

1 verified sources

Definition

Per [2], pharmacies must choose between per-encounter billing (only when service delivered + documented) and monthly capitated billing (fixed fee per patient with elevated MTM risk). Per-encounter requires robust coding schema and documentation discipline. Capitated requires accurate patient risk profiling. Wrong method selection underutilizes billing capacity or over-commits resources.

Key Findings

  • Financial Impact: AUD 8,000–20,000 annually per pharmacy (estimated from: monthly capitated loss if underestimating patient volumes = lost per-encounter upside; per-encounter loss if over-selecting without coding infrastructure = missed claims from poor documentation)
  • Frequency: One-time strategic decision; ongoing impact if not reviewed annually
  • Root Cause: Lack of patient volume and risk profile analysis before billing method selection, no financial modeling of method profitability, absence of annual billing method review

Why This Matters

The Pitch: Retail pharmacies choose sub-optimal billing methods due to lack of patient volume analysis and financial modeling. Switching from per-encounter to capitated (or vice versa) can unlock AUD 8,000–20,000 annually by aligning method to actual patient risk profile and workload.

Affected Stakeholders

Pharmacy Owner, Finance Manager, Pharmacy Practice Manager

Deep Analysis (Premium)

Financial Impact

Financial data and detailed analysis available with full access. Unlock to see exact figures, evidence sources, and actionable insights.

Unlock to reveal

Current Workarounds

Financial data and detailed analysis available with full access. Unlock to see exact figures, evidence sources, and actionable insights.

Unlock to reveal

Get Solutions for This Problem

Full report with actionable solutions

$99$39
  • Solutions for this specific pain
  • Solutions for all 15 industry pains
  • Where to find first clients
  • Pricing & launch costs
Get Solutions Report

Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Unbilled or Delayed Medication Management Services

AUD 2,000–8,000 per pharmacy annually (unclaimed QUM base payments: AUD 125/quarter + AUD 12.50 per bed; unclaimed DMMR: AUD 180.65 per eligible patient annually; follow-up services: AUD 56.33–28.16 per service)

Billing Scope Violations & Over-Claiming Risk

AUD 5,000–50,000+ per audit cycle (typical MBS recovery for ineligible claims: 10–50 services × AUD 180–250 per claim; potential compliance penalty under Health Insurance Act)

Quarterly Arrears Payment Delays & Accounts Receivable Drag

15–30 days A/R cycle extension per pharmacy; estimated working capital drag: AUD 5,000–15,000 annually (based on typical pharmacy MTM revenue AUD 60,000–120,000/year at 30% arrears float)

Documentation & Coding Errors Leading to Claim Denials & Rework

AUD 4,000–10,000 annually per pharmacy (estimated: 5–10% denial rate × 40–80 MTM claims/year × AUD 180–250 per claim × 2 hours rework per denial × AUD 30/hour labor cost)

TGA Enforcement Action & License Revocation Risk

Business closure/license revocation = 100% revenue loss (unquantified in sources; typical community pharmacy revenue AUD 500k-2M+ annually at risk); estimated enforcement investigation cost: AUD 5,000-15,000 in compliance remediation and legal fees

Manual Documentation Bottleneck & Service Capacity Loss

Estimated 15-30 hours/month of pharmacist time at AUD 50-80/hour (fully-loaded cost) = AUD 750-2,400/month per FTE = AUD 9,000-28,800/year per pharmacist; 2-5% revenue leakage due to lost/delayed scripts during manual documentation bottlenecks = AUD 10,000-50,000/year for typical community pharmacy (estimated AUD 1-2M annual turnover)

Request Deep Analysis

🇦🇺 Be first to access this market's intelligence