Best Practices for Financial Hardship Waivers

PAAS National® analysts have noticed an increase in PBM audits focusing on copay collection. These audits requested a copy of the pharmacies’ policies and procedures addressing copay collection and financial hardship.

In general, PBMs require that pharmacies collect copays at the point of sale and retain a “financial paper trail” to prove such collection took place. Pharmacies will be asked to provide check copies (front and back), credit card receipts with authorization numbers and bank deposit slips as evidence of receiving cash from patients. Pharmacies may also be required to provide Accounts Receivable balances and Coordination of Benefits billing information, where applicable.

If patients are unable to pay their copay and the pharmacy waives or discounts the copay due to financial hardship, then you must have a robust written policy explaining the details on how such a policy is operated.

In general, financial hardship policies should include the following:

Become an audit assistance member today to continue reading this article. As a member, you’ll have access to hundreds of articles and receive our monthly proactive newsletter!

  1. A written policy, with clear guidelines on application process, required documentation to establish patient eligibility and standard benchmarks of need.
  2. Patients must complete a written application and sign/date as confirmation of truthfulness and accuracy.
  3. Patients must provide objective documentation to substantiate their need is legitimate (possibly from all earners in the household). Examples may include monthly income documentation such as pay stubs, social security checks, unemployment checks, and pension distributions as well as assessments of other assets.
  4. Pharmacies must use a standard benchmark to determine financial need such as a multiple of the HHS Poverty Guidelines, which are updated annually, take into account the number of persons in household, and vary between Alaska/Hawaii and the 48 contiguous states.
  5. Pharmacies must reassess eligibility at a designated frequency (e.g., annually).
  6. Pharmacies must not advertise the availability their financial hardship program and should use as a last resort only after considering alternative options such as therapeutic alternatives that may be less expensive for the patient and/or a monthly payment plan (via an Accounts Receivable or “house charge”).

Be aware that insufficient copay collection (or evidence thereof) is one of the leading causes of network pharmacy termination.

PAAS Tips:

  • Caremark provides the most explicit expectations for pharmacy financial hardship programs in section 3.03.09 of their Network Pharmacy Provider Manual.
  • PAAS National® FWA/HIPAA compliance members can provide section 4.1.5 Copay Collection in their FWA/HIPAA Policy & Procedure Manual.
  • Patients who qualify for Medicaid and Medicare Part D Low Income Subsidy have already provided financial documentation to government agencies and proven their financial need.
  • Federal laws prohibit pharmacies from denying service to Medicaid patients who cannot pay 
Eric Hartkopf, PharmD