In November, Express Scripts announced their ClearNetwork where they claim to base reimbursement on the “lesser of” a few different acquisition cost benchmarks plus a flat dispensing fee to network pharmacies plus a 15% markup or spread that will be shared between the dispensing pharmacy and Express Scripts. Express Scripts states the ClearNetwork will be offered to Plan Sponsors in early 2024.
Most PBM contracts have a lesser of reimbursement methodology. For example, Pharmacy Provider will receive reimbursement equal to the lesser of:
- Pharmacy’s Usual and Customary Retail Price;
- Pharmacy’s submitted ingredient cost; or
- The total of the Acquisition cost, plus a margin fee, plus applicable dispense fee
So how is the Acquisition cost determined? Well, that’s a lesser of scenario as well. The lesser of:
- NADAC
- PAC (Predictive Acquisition Cost)
- WAC
Most pharmacies are familiar with NADAC and WAC, but Predictive Acquisition Cost (or PAC) is new. It’s maintained by GlassBox Analytics and published through Elsevier. PAC uses a predictive analytics model to “predict” a range for pharmacy acquisition cost based on numerous inputs that includes published priced lists (AWP, WAC), voluntary National Average Drug Acquisition Cost (NADAC) data, various state actual acquisition cost surveys, and more. GlassBox Analytics has stated that PAC is, on average, about 1% lower than NADAC.
In December, CVS Health (Caremark) announced their version of a cost plus play called TrueCost which will launch in 2025. This announcement also included a revised retail pharmacy pricing strategy for its CVS pharmacies called CostVantage.
Beyond these announcements, there are little details available to understand the implications of these revised reimbursement models. PBMs have been under much scrutiny from lawmakers at the federal and state level for opaque business practices and hiding revenue via rebates and spread pricing, the FTC has an ongoing study of PBMs, and independent pharmacies have spoken out about the numerous abuses they face from PBMs on a daily basis.
Perhaps they’ve started to feel the heat and coming regulation that would force their hand and they devised a new trojan horse as a peace offering which sounds great on paper but does little to reduce costs for payors, repair broken relationships with independent pharmacy partners or improve patient choice, access and outcomes.
Only time will tell whether network pharmacies and PSAOs choose to enroll in these networks, whether plan sponsors elect such network designs, and whether costs go up or down.
Major PBMs Announce “Cost Plus” Pharmacy Networks
In the fourth quarter of 2023, two of the “Big 3” PBMs announced that they will introduce new reimbursement methods for network pharmacies in the coming year(s) based on Cost Plus formulas in place of the typical AWP Minus terms.
In November, Express Scripts announced their ClearNetwork where they claim to base reimbursement on the “lesser of” a few different acquisition cost benchmarks plus a flat dispensing fee to network pharmacies plus a 15% markup or spread that will be shared between the dispensing pharmacy and Express Scripts. Express Scripts states the ClearNetwork will be offered to Plan Sponsors in early 2024.
Most PBM contracts have a lesser of reimbursement methodology. For example, Pharmacy Provider will receive reimbursement equal to the lesser of:
So how is the Acquisition cost determined? Well, that’s a lesser of scenario as well. The lesser of:
Most pharmacies are familiar with NADAC and WAC, but Predictive Acquisition Cost (or PAC) is new. It’s maintained by GlassBox Analytics and published through Elsevier. PAC uses a predictive analytics model to “predict” a range for pharmacy acquisition cost based on numerous inputs that includes published priced lists (AWP, WAC), voluntary National Average Drug Acquisition Cost (NADAC) data, various state actual acquisition cost surveys, and more. GlassBox Analytics has stated that PAC is, on average, about 1% lower than NADAC.
In December, CVS Health (Caremark) announced their version of a cost plus play called TrueCost which will launch in 2025. This announcement also included a revised retail pharmacy pricing strategy for its CVS pharmacies called CostVantage.
Beyond these announcements, there are little details available to understand the implications of these revised reimbursement models. PBMs have been under much scrutiny from lawmakers at the federal and state level for opaque business practices and hiding revenue via rebates and spread pricing, the FTC has an ongoing study of PBMs, and independent pharmacies have spoken out about the numerous abuses they face from PBMs on a daily basis.
Perhaps they’ve started to feel the heat and coming regulation that would force their hand and they devised a new trojan horse as a peace offering which sounds great on paper but does little to reduce costs for payors, repair broken relationships with independent pharmacy partners or improve patient choice, access and outcomes.
Only time will tell whether network pharmacies and PSAOs choose to enroll in these networks, whether plan sponsors elect such network designs, and whether costs go up or down.
Prescriber Statements for Successful Appeal
One of the most common requirements for appealing audit discrepancies is to provide a signed statement from the prescriber to confirm, clarify, or validate a prescription. Prescriber statements that do not meet all PBM requirements may be denied on appeal.
Pharmacies are often confused by what or why these statements are necessary and often find it very difficult to obtain a statement that meets all the requirements. PAAS National® analysts have years of experience with prescriber statements and are happy to walk you through this process for the best possible outcome on your appeal.
Humana currently includes a prescriber statement template with their audit results. While this template does make obtaining a complete statement from the prescriber much easier, this form does not meet the requirements of other PBMs.
Prescriber statements are often denied when pharmacies create the statement for the prescriber. It is imperative you provide the prescriber with the detailed information needed; however, the statement itself must be created by the prescriber, or prescriber’s office.
Elements missing from a statement can be another reason for denial. Here is a list of the most common requirements, but be sure to check with your PAAS analyst for specific PBM nuances:
Have audit results and need assistance with appeal? Contact PAAS National®® today for one-on-one assistance with an experienced analyst.
Be Conscientious When Refusing to Dispense (or Bill Insurance)…
No pharmacy should be forced to dispense prescriptions below their acquisition cost. With the effective date of the CMS Final Rule regarding DIR fees in 2024, we suspect that pharmacies will see an increased number of prescriptions paid below cost and PAAS National® wants to support you and help you steer clear of PBM scrutiny, where possible.
While there are many states that allow pharmacies to refuse dispensing below their acquisition cost, this typically only applies to commercial claims (including ERISA, thanks to Rutledge v. PCMA). The decision was made not to pursue Medicare Part D preemption in the Rutledge case, so state laws may be harder to enforce with PBMs on Part D (and Medicaid) claims underwater– but we still recommend pushing the issue with the PBMs. On generics, make sure you’re filing MAC appeals, even it feels like it falls on deaf ears. PAAS also recommends complaining to your respective insurance commissioner or PBM oversight entity – if they’re not hearing complaints from pharmacies, they think regulations are working.
In talking with pharmacy owners across the country, we know many pharmacies are refusing to dispense GLP-1 agonists. Not only is supply sporadic, but WAC discounts from wholesalers are lacking and pharmacies are seemingly losing money with every dispense (not to mention the potential audit risk – see December’s Newsline Zepbound Means Decreased Audit Risk…Right?).
PBMs will not (knowingly) contract with a pharmacy who is refusing to dispense a medication (outside of state law allowances); however, there are a few provisions when a pharmacy can adhere to PBM Provider Manuals while refusing to dispense:
Ozempic® and Mounjaro® being prescribed for off-label use is an acceptable method for refusing to dispense, however difficult that conversation with the patient might be. Don’t feel obligated to dispense the Type II Diabetes (T2DM) products if Wegovy® or ZepboundTM are unavailable; it’s an audit risk and likely not worth your trouble. Refusing to dispense GLP-1s for T2DM when supply is available is a slippery slope. Telling patients you can’t dispense the medication because of reimbursement issues might turn them into your advocate – and work against you at the same time.
There are numerous situations that may alert a PBM to a network pharmacy’s refusal to bill insurance, some bring more scrutiny than others.
Consequences that may stem from a pharmacy’s refusal to bill insurance may include a threatening PBM phone call, a “breach notification” letter requiring pharmacy to respond and attest that the violation will not be repeated, or potentially network termination (egregious situations).
PAAS Tips:
2024 Update: CMS Mandatory E-Prescribing Requirements for Controlled Substances – Final Rule
2024 Update: CMS Mandatory E-Prescribing Requirements for Controlled Substances – Final Rule
The SUPPORT Act was created to address the opioid crisis in our nation. Section 2003 states that all Schedule II-V controlled substance prescriptions under Medicare Part D and Medicare Advantage plans (MA-PD) must be transmitted electronically. Prescribing controlled substances electronically has many benefits such as improved patient safety, more efficient workflow, fraud deterrence and medication adherence. The CMS Electronic Prescribing for Controlled Substances (EPCS) Program is separate from any state EPCS program requirements. PAAS National® last updated our members regarding the enforcement of EPCS in January 2023. On November 16, 2023, CMS released the Calendar Year 2024 Physician Fee Schedule Final Rule. See below for three major takeaways regarding the CMS EPCS program and a timeline table.
Timeline:
Now that CMS has data from 2023 for ALL prescribed controlled substance prescriptions, they will begin to measure the compliance rate this summer. CMS takes the number of electronically prescribed Part D Schedule II through V controlled prescription claims from an individual prescriber (using their NPI) and divides that number by ALL Part D Schedule II through V controlled substance prescription claims found under that NPI and multiplies by 100. If the prescriber’s compliance rate is 70% or higher, they are considered compliant.
If a prescriber is non-compliant, CMS will enforce compliance by sending non-compliance notices to prescribers who do not meet the program requirements. These notices will be sent via email addresses found in the Provider Enrollment, Chain, and Ownership System (PECOS), the National Plan and Provider Enumeration System (NPPES) or regular mail if an email does not exist for a prescriber. First notices will be sent this Fall of 2024 for the 2023 measurement year. A prescriber will have 60 days to request a measurement year waiver if there are circumstances beyond their control in which they were unable to send electronic controlled substance prescriptions. This waiver can be requested via the CMS EPCS Prescriber Portal in the Fall after the measurement year.
In addition to an approved waiver, there are two other exceptions to the program. A prescriber would not be required to comply with the program requirements if they issue 100 or fewer Medicare Part D controlled prescriptions in a measurement year. Secondly, if a prescriber is in an area that has been declared as an emergency or disaster by the Federal, State, or local government, they are not required to comply with the EPCS program. CMS has identified which emergencies and disasters qualify for this exception in the Final Rule linked above.
Top 10 PAAS National Articles of 2023
PAAS Audit Assistance members receive a monthly newsletter with new audit tactics and prevention tips. The printed newsletter, PAAS National® Newsline (sample) is only a fraction of the content that we put out each month as members have access to additional content online in the Member Portal, in addition to an archive of articles.
The top 10 Newsline articles for 2023 include:
Top eNewsline Exclusives: Articles that did NOT make print
PAAS Audit Assistance Admins can also keep their employees informed to increase engagement and lower audit results by adding employees to the Portal so that their whole staff has access to the eNewsline.
Days’ Supply Considerations for Eye Medications
PBM audits regularly target eye medications looking to recoup on claims for incorrect days’ supply or early refills. For this reason, it is important that pharmacies are both aware and have a proactive plan to ensure appropriate billing and documentation. As with all prescriptions, the day supply is a function of quantity dispensed and daily dose; however, there are a few additional considerations that may impact what days’ supply is correct.
PBMs each have their own drops per mL estimates for eye drops that are published in Provider Manuals and vary from 15-20 drops per mL for solutions and 12-20 drops per mL for suspensions (or emulsions). There is no industry accepted conversion for gel or ointment products.
In addition to the mathematical days’ supply calculation, pharmacies must also consider the individual product beyond use date as specified by the manufacturer. In general, eye drop products are considered to be safe to use until the printed-on expiration date; however, there are a few products with specified beyond use dates (e.g., Xalatan® is 42 days). Pharmacies can visit DailyMed for medication information, including How Supplied/Storage and Handling requirements under Section 16 of the drug label information or review product labeling included inside the box. We encourage LTC pharmacies to review our June 2022 Newsline article, Beyond-Use Date vs. Nursing Home Storage Policy – Avoid this Recoupment Trap! for additional comments related to nursing home policies.
Additional considerations include if the patient has an antibiotic or steroid product with a specific treatment duration such as use for 10 days, then stop or if the patient is having cataract surgery separately on each eye and the prescriber wants the patient to discard the bottle used on the first eye and get a refill for the second eye for infection control purposes.
PAAS Tips:
PBM Prescription Validation Requests Rose 123% in 2023 – What You Need to Know
PAAS National® saw the number of validation requests/concurrent claim reviews more than double in 2023! OptumRx®, who conducts the majority of these reviews, discusses the Prescription Validation Request (PVR) in their pharmacy manual as follows:
Administrator conducts limited scope prescription validation reviews for quality assurance purposes (“PVRs”), which are distinct from and are not considered audits. PVRs are utilized to verify the accuracy and validity of prescription claim submissions. Claims are monitored daily for appropriateness and potential billing errors and selected for review prior to payment. Network Pharmacy Providers are typically contacted via fax or email and asked to provide photocopies of specific documents and records related to its claims submitted to Administrator.
While they want to skirt audit laws by not calling them an audit, make no mistake – they are audits, and payment is at stake! Besides OptumRx®, we also see claim reviews from Caremark®, Express Scripts®, Humana®, MagellanRx, MedImpact and Prime Therapeutics. Below you can see the top 5 drugs reviewed in 2023 and the top 5 concerns after reviewing each claim.
Top 5 drugs reviewed in 2023:
The top 5 concerns:
PAAS Tips:
Painful Lessons: What You Should Know About Return to Stock Timeframes
PBMs allow a limited amount of time for a prescription to be picked up or delivered to a patient before the claim must be reversed and the medication placed back into the pharmacy’s stock inventory. These time limits are in place to help prevent a claim from being paid for a medication that was never actually received by a patient.
Unfortunately, there is no standard timeframe across the industry for a medication to be returned to stock, ranging anywhere from 10 calendar days to 15 business days. Pharmacies need to be aware of the individual PBMs’ timeframe or go with the shortest amount of time, 10 calendar days, to reverse and return unclaimed medications to stock.
PAAS National® regularly sees claims flagged for full recoupment when a prescription under audit has been dispensed after the allowed return to stock timeframe. These recoupments are difficult to appeal, so your best defense is to make sure you have a procedure in place to reverse claims not picked up within the PBM’s return to stock policy window. PAAS FWA/HIPAA members have access to an Unclaimed Prescription Reversal Log found in Appendix B of their policy and procedure manual to help with this task. Members should also review Section 4.1.1 Unclaimed Prescriptions of their policy and procedure manual and update their timeframe as needed.
PAAS Tips:
Transfer Tragedy: A Timeworn PBM Target
It’s a tale almost as old as time – a patient’s medication is sent to one pharmacy only to have the patient decide they want it filled by your pharmacy instead. You contact the other pharmacy for a transfer, fill the medication and the patient is on their way. All is well until you receive a PBM audit. Suddenly, that transferred prescription is under scrutiny, and you are wondering what the problem could possibly be.
Transferred prescriptions have become an easy target for PBMs due to their additional documentation each state requires, which can be easily forgotten in the rush to take down all the information. PBMs identify transferred prescriptions through the origin code billed and will look for any technicality to recoup (e.g., missing the word “transfer” on the prescription). Check your state’s transfer requirements to ensure all elements are present on your transferred prescriptions, regardless of how the transfer is received (e.g., via fax or verbally). The receiving pharmacy is responsible for ensuring all transfer requirements are present, so if any elements are missing, verify them and make note of the missing information on the prescription.
PBMs also look for other missing or inaccurate information. Some PBMs, like Humana, will interpret state laws referencing a transferred prescription be “reduced to writing” as needing to be hand-written by the receiving pharmacy. Additionally, if the original written date of the prescription is missing or entered incorrectly, the claim could be flagged for “wrong hard copy,” and risks being refilled after expiration. Finally, the quantity on a transfer needs to be specific and contain a unit of measure. For example: insulin pens written with a quantity of 15 without a unit of measure, should be clarified with the transferring pharmacy as 15 mL, 15 pens, or 15 boxes.
PAAS Tips:
Elixir Audit Notice Delivery Methods
What is worse than receiving an audit notice? Receiving audit results which state “NRS – No Response to Audit Request” when the pharmacy never received the audit notice. Although pharmacies could potentially not receive an audit notice with any PBM, PAAS National® has commonly seen this be an issue with Elixir. In instances where the pharmacy did not respond to the audit, Elixir recoups on all fill dates for the prescription numbers instead of the originally audited fill date only.
So, how can pharmacies prevent audit notices from not being delivered or being missed in the shuffle?