…for Leaders, Managers, and Decision-Makers in Skilled Nursing and Long-Term Care.

When a medication is dispensed in a skilled nursing facility (SNF) or long-term care (LTC) facility, the question isn’t just clinical, it's financial. Who pays for it? Was the claim routed to the right payer? Was it even covered? The answers depend on a complicated behind-the-scenes process called claims adjudication. For SNFs, this process can make or break margins.

This article demystifies adjudication, explains why it matters in post-acute care, and highlights how modern, real-time models like Vista's can protect bottom lines and reduce operational chaos.

What Is Adjudication?

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In simple terms, adjudication is how claims are analyzed for accuracy. 

Think of it like airport security for medical bills: 

1. Each claim is screened

2. Rules are applied (Was the drug covered? Was there a clinical risk? Was it priced correctly?)

3. And a decision is made: pay, deny, or pend for further review.

In the pharmacy world, adjudication should happen every time a drug claim is submitted through a pharmacy system. Ideally, this happens in real time: moments after a pharmacy hits “send,” the claim is reviewed, validated, and either approved or rejected with feedback.

In SNF settings, the process is often more fragmented. If claims are adjudicated, it’s often done in large batches that are manually adjudicated on a weekly or monthly basis. 

As we’ll see later, batch adjudication is a flawed process that only benefits cost management. It creates delays later down the line, misses opportunities to catch errors early, and ultimately costs SNFs time and money. 

Yes! Claims Adjudication Differs in Skilled Nursing

Pharmacy adjudication in skilled nursing settings is more complex than in retail environments. Why?

SNFs must navigate multiple benefit “buckets,” including Medicare Part A, Medicare Part D, Managed Care, and Medicaid. Claims for every resident must be routed to the correct payer based on the resident’s status, which change depending on the length of stay.. Routing claims incorrectly results in SNFs being charged for drugs, denials, reimbursement delays, or claims being audited months later. 

In order to prevent these costs and errors, SNFs can adjudicate claims in two phases: before and after the point of sale, or when the drug is dispensed. 

Each type of adjudication is an opportunity to catch errors, but the later the intervention, the more expensive the fix. 

Since batch adjudication happens after the point-of-sale (and primarily serves rebate submission by a rebate manager on behalf of a SNF), it cannot help with billing errors or corrections like off-formulary drugs or incorrect pricing. 

[So, are SNFs even adjudicating??] 

What the heck is an “edit”?:

If you’ve read about adjudication before, you’ve seen the word come up, but its meaning isn’t as intuitive as you’d expect. 

In claims processing, an “edit” is a programmed rule or test that a claim must pass before the payer’s system will authorize, price, and pay it. The term comes from early EDI software that literally edited a flat-file record by flagging bad data or non-compliant codes. 

An edit doesn’t change the claim; it evaluates data and either:

• Accepts/auto-pays (the claim moves forward),

• Rejects (sends the claim back to the submitter for correction before adjudication), or

• Pends/denies (holds the claim for further review or fully disallows payment).

What this means for SNF administrators

An edit is simply a policy rule encoded in software. The earlier and faster those edits execute the sooner you reap the benefits:

• Stop non-formulary or billing errors that erode net drug cost.

• Capture TI savings at the point of dispense.*

• Protect adherence metrics that drive PDPM and value-based purchasing bonuses.

Real-time adjudication, like Vista’s Focus platform, move the edits to the front of the line so problems are fixed before they create financial leakage and additional workload later.

Batch adjudication is limited. Facility and pharmacy staff have to work retroactively to secure savings on drugs already dispensed. 

*TI logic in the pharmacy system can auto-swap medications to a specific, formulary preferred option or suggest prescriber outreach. Studies have found annual savings from inpatient TI at $389–$452 per Medicare beneficiary.

The Different Types of Adjudication 

Adjudication isn’t one-size-fits-all. Here’s a breakdown of the most common types, with special attention to SNFs.

1. Pre-Adjudication Edits

Checks made before a claim is ever submitted by a SNF or LTC pharmacy. Includes:

• Part A vs. Part D status

• Drug eligibility/formulary fit

• Flagging of high-cost medications

• Drug utilization review edits (drug-drug interactions, refill too soon, dosage errors, etc.) 

These ‘gatekeeping’ edits run within the pharmacy software or EHR (like PointClickCare), helping reduce errors and promote regulatory compliance before a claim is submitted to a pharmacy.

2. Real-Time Adjudication

The gold standard for accurate, reliable pharmacy billing. Within milliseconds, a claim is checked, scored, and returned with a paid or denied status. Critical for:

• Coverage accuracy

• Step therapy and PA checks

• DUR (Drug utilization review)

• Coordination of benefits

Making changes before a medication is dispensed

Real-time adjudication stops errors before the drug ever reaches the med pass. It happens between the SNF and pharmacy system, enabling real-time interventions. 

Real-time adjudication requires a robust software build-out that is most commonly seen in commercial PBMs. Since skilled nursing is a much more complex payer and pharmacy space, it’s rarer to see real-time adjudication implemented at SNFs. 

3. Batch Auto-Adjudication (or Flat-File Adjudication)

Used mostly for high-volume, institutional claims like skilled nursing and LTC. Think UB-04 forms and 837 files. Claims are processed days after submission, which delays feedback and make corrections significantly more time-intensive. This method involves more manual work (preparing batch files, submitting them to third-party vendors) and requires manual interventions to correct issues that are flagged during adjudication. 

4. Manual/Pended Review

When claims don’t pass auto-edits, they’re reviewed by payer pharmacists or nurses. These reviews are labor-intensive and expensive, with each denial costing an average of $57.23 in rework labor. In the SNF setting, where staffing remains an ongoing issue, the technical aspect of identifying errors and correcting them adds time and resources to billing offices that, more often than not, are unavailable. 

5. Post-Adjudication Reconciliation and Audits

Reviewers audit paid claims to make sure the right drugs were billed at the correct rates and under the correct benefit. These audits can have serious consequences and initiate major technical and workload hurdles for SNFs and LTC pharmacies if significant errors are identified. 

• Overpayments: Was too much paid because the resident was on Part A, the price file was wrong, or the days’ supply was off?

• Duplicates or split claims: Was the same fill billed twice, or split in a way that increased payment?

• Rebate validation: If a manufacturer rebate or DIR credit was expected, do the claim details prove it?

• Adherence measures): Do refill patterns show the member was covered with medication as required?

These reviews can trigger actions:

• Paybacks/clawbacks: Money is taken back if a claim was paid incorrectly.

• Claim reversals and corrections: B2/B3 activity to fix dates, quantities, codes, or the payer of record.

• Corrective Action Plans (CAPs): The Provider must change a process, retrain staff, or add checks.

• Heightened monitoring or sanctions: Tighter prepayment review, or in serious cases, network consequences for a pharmacy.

Decoding Adjudication and Savings: Real-Time Adjudication vs. Rebate Optimization vs. Lowest Net Cost 

There is a lot of talk about ‘real-time adjudication’ in skilled nursing, especially when it comes to drug cost savings. Rebate managers have provided adjudication services that promise to be ‘real-time,’ at closer inspection, are simply batch adjudication. 

In effect, batch adjudication is really good at one thing: drug rebate optimization. 

Critically, because batch adjudication does not happen before a medication is dispensed, it cannot proactively stop billing and adherence errors that end up adding to a SNF’s net drug cost. 

This is the fundamental difference between rebate optimization and the lowest net cost. 

Adjudication Is More Than Billing. It’s a Business Lever.

Since drug costs represent one of the largest operating costs for SNFs (second only to labor costs), adjudication is an important step in tracking and controlling drug spend. Robust adjudication practices like real-time adjudication can help SNFs and LTC pharmacies reduce their net drug spend by preventing costly errors and maximizing savings opportunities. 

Margin Protection

Every misrouted claim or late denial eats into SNF revenue. For example, the Office of Inspector General found $465 million in improper Part D drug payments during SNF stays between 2018 and 2020—largely due to poor adjudication timing and outdated census data.

Expense Predictability

Real-time adjudication means SNFs can close their books each month with fewer adjustments. For risk-sharing contracts with managed care payers, this improves cash forecasting by reducing denials and rebills. 

Labor Savings

Avoiding denials saves an average of $57.23 per claim in rework costs. Multiply that across your monthly claim volume, and the scale of savings becomes very clear.

Compliance & Audit Readiness

With real-time edits and accurate benefit assignment, you reduce exposure to OIG audits and False Claims penalties. You also reduce dependence on third-party auditing firms to adjudicate on a monthly basis.

Strategic Data Insights

Clean adjudication data feeds rebate optimization, formulary management, and adherence programs. Each of these influences net costs and quality scores.

Vista’s Approach to Adjudication

Real-time adjudication is the only viable solution that can keep up with modern post-acute care and drug cost management.

Cost management requires flexibility that preceding forms of adjudication fail to achieve. We’ve seen it over and over—end-of-month audits, flag errors, duplicates, and incorrectly billed claims that are left to back office staff to fix. The later these come to light, the less likely it is that SNFs receive reimbursement.

These slow, manual-heavy processes aren’t just inefficient and antiquated: they’re costly to providers. From SNFs to pharmacies to specialty providers, retrospective bill audits and after-the-fact adjudication are a recipe for financial and operational disaster. They have survived only because profit margins have allowed them to.

Moving forward, however, real-time adjudication is the only viable option for providers. Especially those in skilled nursing and LTC, where large volumes of claims are generated daily for multiple payers. 

Here’s how we do real-time adjudication:

Our real-time adjudication platform is purpose-built for skilled nursing and long-term care pharmacies, making it the most robust tool of its kind.

We started with the best commercial platforms and made major advancements to meet a specific set of criteria and ensure reliable performance for our customers. 

1. NCPDP Standards:

We adjudicate claims to make sure they’re accurate according to the same standard that large-scale PBMs use.

2. Real-Time Means Real-Time:

Many claim to offer adjudication in real-time, but in reality, submit claims days or weeks later. We work with leading providers like PointClickCare to integrate directly with EHRs at the point of sale, enabling real-time adjudication of claims according to custom rules that providers can dictate. 

3. Flexibility to Work with Anyone:

Vista’s adjudication platform can adjudicate claims data in any format and works with every pharmacy system. Whether you have a preferred rebate manager, manufacturer relationship, or other vendor that needs claims data, it’s quick and easy to send accurate claims on any schedule you need. 

“Our system prevents the issue before it ever hits the facility’s ledger. And if a pharmacy doesn’t allow third-party adjudication, we still audit faster than anyone else. We can turn audits around daily or weekly, so the window to reverse claims is still open. This is almost impossible to achieve on a 30-day recurring schedule.” —Rob Thorn, CRO

Read our Q&A to learn more

Taking Integration To a New Level

One of the fundamental principles that guides all our innovation at VistaRx is connectivity. But not in the 2000s sense of the word. We’re interested in connecting providers and pharmacies, specialty providers, and manufacturers. 

By creating fast, seamless ways to send data back and forth, we can help everyone involved bring down costs, eliminate costly errors, and gain better insights into what’s going on with their pharmacy spend. 

Interested in learning more about our platforms?