When using a DAW, be sure to have supporting documentation
Pharmacies must ensure documentation exists on the hardcopy anytime they are billing a DAW (other than DAW 0). If the PBM audits a claim with a particular DAW, documentation on the hardcopy needs to support the DAW billed or the pharmacy will risk potential recoupment. Passive DAW 1 indicators on electronic scripts (e.g., a simple DAW checkbox) have been known to be challenged by PBMs, requiring further documentation. Additionally, pharmacies need to be mindful of their state laws and Medicaid requirements on DAW 1. Some state Medicaid programs require an explicit handwritten or electronic note stating “Brand Medically Necessary” in order for a DAW 1 to be billed appropriately.
PAAS Tip 2: Where applicable, bill the generic/interchangeable biosimilar of the medication utilizing a DAW 0 first, unless the prescriber or patient has indicated a preference for the product dispensed (DAW 1, DAW 2, respectively). Make note of any rejected messages received and follow adjudication logic.
Let’s walk through an example of billing a Lantus® prescription, including the suggested corresponding DAW, for a patient who has never been on this medication before. Claim adjudication would typically begin with Semglee®, an interchangeable biosimilar product to Lantus®, utilizing a DAW 0, similar to choosing an A or AB-rated generic medication to bill first in place of a brand medication.
In instances where there is only an unbranded biologic or an authorized generic on the market, such as the case with Humalog®, pharmacies can attempt to bill the unbranded biologic (insulin lispro) first. Recall that an authorized generic or unbranded biologic is considered the same product as the brand name/reference product since they have the same NDA/BLA number, per the Orange Book and #11 in the Purple Book FAQ Resource. Therefore, both the reference product (Humalog®) and the unbranded biologic (insulin lispo) can be billed as a DAW 0.
Subsequent steps should be guided by the reject message received. For example, if a patient’s plan requires a different reference product be dispensed, such as Basaglar®, the prescriber must be contacted to approve as this is not considered to be a product that can be freely substituted. In addition, documentation of the conversation should be included in a clinical note that includes the date, title, and name of the person spoke with, a recap of the conversation, and pharmacy staff initials.
If the claim for Semglee® returns the reject message “Lantus required by plan”, Lantus® should be billed with a DAW 9 – plan requires brand – along with a notation on the hardcopy. Should the plan require an unbranded biologic equivalent (e.g., insulin glargine-yfgn), PAAS would recommend billing that as a DAW 0.
Unfortunately, adjudication rejections are not always explanatory – not surprising with opaque PBMs, but frustrating for pharmacies and technicians. Their lack of communication can be intentional, leading to underpaid claims or forcing pharmacies to play a guessing game of how to bill the claim correctly based on formularies. If there are predominate plans/payors in your market, having access to their formulary may help save you team a lot of headaches.
PAAS Tip 3: Do not use DAW 9 unless adjudication logic or plan formulary explicitly shows the plan requires brand.
This is a newer piece of guidance. In the absence of an adjudication reject that states, “Drug X not on Formulary, bill Drug Y as DAW 9” (or something analogous), PBMs have questioned why a DAW 9 was used when in fact the plan formulary does not show the drug product billed is plan-preferred. The better question is why didn’t the PBM reject the claim if it wasn’t not covered? Protect yourself by being able to substantiate why the pharmacy is billing a brand or reference product as DAW 9 (as stated in PAAS Tip #1). Looking at the plan’s formulary may help guide your decision on whether a DAW 9 is appropriate or not. Express Scripts and Humana put out communications that list products they expect to be billed as DAW 9, but be mindful that some Plans may not accept DAW 9 on any claims and formularies can change at any time. Technicians need to watch adjudication messaging closely – even for paid claims. If a PBM rejects a DAW 9 stating the Plan Benefit design doesn’t allow the use, a DAW 0 may be the pharmacy’s only choice.
PAAS Tip 4: In instances where adjudication rejections are unclear, take an all-encompassing approach to determine what medication and DAW to bill.
One of the more common DAW questions we get at PAAS encompasses the situation where both the brand and generic (or reference product and interchangeable biosimilar), result in a paid claim with DAW 0, one with a positive margin and the other in a negative margin. What options does the pharmacy have without increasing their risk of recoupment?
One consideration is cost of the product to the patient. State laws commonly have language obligating the pharmacy to dispense the most cost-effective medication to the patient. Therefore, the copay of the brand vs. generic needs to be taken into consideration when determining if the pharmacy can bill for the product that results in a positive margin. In cases where the copays are the same and the patient truly prefers the brand, billing DAW 2 may be appropriate in that scenario (and consider researching the Plan Formulary for a DAW 9 indication). If the copays are not the same, review the adjudication messaging results for any clues and consult the plan’s formulary. PBMs have been known to prefer a Brand and, instead of rejecting the generic, significantly underpaying on the generic. With so many claims underwater, it’s hard to know the difference, so diligence may be prudent. In instances where a product’s unbranded biologic/authorized generic results in a lower cost to the patient, a DAW 0 can be used. Ultimately, determining which product to bill should not be based solely on pharmacy reimbursement.
PAAS Tip 5: Watch claim adjudication messaging carefully – even on paid claims. Rechallenge DAW 9 when new prescriptions are issued and be careful at the beginning of Plan years (particularly the New Year).
Pharmacies can fall into the habit of billing a DAW 9 solely based on history. Plan formularies change often and sporadically with new medications being introduced to the market, and products having generic/interchangeable biologics available that previously were not. Therefore, ensuring the DAW historically used is still warranted is a great preventative step.
PAAS Tips:
Adapting to Change: Levemir® Phase Out and Its Implications for Pharmacies
In November 2023, Novo Nordisk® announced that it would be phasing out the company’s long-acting insulin, Levemir®, in the United States. The company cited “global manufacturing constraints, formulary losses impacting patient access, and the availability of alternative options” as the reasons for discontinuing this medication.
The Novo Nordisk® website shows that supply disruptions of Levemir® FlexPen® would start mid-January with discontinuation complete on April 1, 2024. The Levemir® vial would be discontinued by December 31, 2024. Product will only be available while supplies last. There has been no indication that Novo’s other long-acting insulin, Tresiba®, is being discontinued.
PAAS National® has already seen some audit implications with this phase out of Levemir® products.
We do expect PBMs to audit Levemir® through discontinuation of the product. As supply dwindles, and patients are switched to another product, the best thing you can do to protect yourself from audits is to have a conversation with the patient and prescriber and obtain a new prescription for an alternative product before supply gets constrained.
PAAS Tips:
Best Practices for DAW Billing in Pharmacies
In what should be a fairly straightforward process, proper DAW billing practices can be convoluted. Despite NCPDP guidance to standardize adjudication practices, PBMs do not always adopted these standards, leaving the pharmacy in a gray area of what proper DAW billing should look like.
Due to the variability between each PBM’s (and even individual Plan Sponsor) expectations for DAW billing, pharmacies need to have a multi-pronged approach that includes understanding biologic terminology (PAAS Audit Assistance members can see this month’s article, Insulin Substitution Review: Understanding Purple Book Terminology), a list of core “DAW billing guidelines” to follow, and additional considerations to guide your pharmacy in the scenarios where billing may not be straightforward.
Every claim adjudication comes with its own unique set of circumstances, making it difficult to establish a process that can be applied universally. Furthermore, audit tactics continue to morph and industry dynamics, such as the 2024 elimination of retroactive DIR fees, make the pharmacy’s reimbursement more transparent at point-of-sale, potentially driving DAW considerations. As such, having a grasp on the suggested DAW best practices is necessary.
PAAS Tip 1:
When using a DAW, be sure to have supporting documentation
Pharmacies must ensure documentation exists on the hardcopy anytime they are billing a DAW (other than DAW 0). If the PBM audits a claim with a particular DAW, documentation on the hardcopy needs to support the DAW billed or the pharmacy will risk potential recoupment. Passive DAW 1 indicators on electronic scripts (e.g., a simple DAW checkbox) have been known to be challenged by PBMs, requiring further documentation. Additionally, pharmacies need to be mindful of their state laws and Medicaid requirements on DAW 1. Some state Medicaid programs require an explicit handwritten or electronic note stating “Brand Medically Necessary” in order for a DAW 1 to be billed appropriately.
PAAS Tip 2: Where applicable, bill the generic/interchangeable biosimilar of the medication utilizing a DAW 0 first, unless the prescriber or patient has indicated a preference for the product dispensed (DAW 1, DAW 2, respectively). Make note of any rejected messages received and follow adjudication logic.
Let’s walk through an example of billing a Lantus® prescription, including the suggested corresponding DAW, for a patient who has never been on this medication before. Claim adjudication would typically begin with Semglee®, an interchangeable biosimilar product to Lantus®, utilizing a DAW 0, similar to choosing an A or AB-rated generic medication to bill first in place of a brand medication.
In instances where there is only an unbranded biologic or an authorized generic on the market, such as the case with Humalog®, pharmacies can attempt to bill the unbranded biologic (insulin lispro) first. Recall that an authorized generic or unbranded biologic is considered the same product as the brand name/reference product since they have the same NDA/BLA number, per the Orange Book and #11 in the Purple Book FAQ Resource. Therefore, both the reference product (Humalog®) and the unbranded biologic (insulin lispo) can be billed as a DAW 0.
Subsequent steps should be guided by the reject message received. For example, if a patient’s plan requires a different reference product be dispensed, such as Basaglar®, the prescriber must be contacted to approve as this is not considered to be a product that can be freely substituted. In addition, documentation of the conversation should be included in a clinical note that includes the date, title, and name of the person spoke with, a recap of the conversation, and pharmacy staff initials.
If the claim for Semglee® returns the reject message “Lantus required by plan”, Lantus® should be billed with a DAW 9 – plan requires brand – along with a notation on the hardcopy. Should the plan require an unbranded biologic equivalent (e.g., insulin glargine-yfgn), PAAS would recommend billing that as a DAW 0.
Unfortunately, adjudication rejections are not always explanatory – not surprising with opaque PBMs, but frustrating for pharmacies and technicians. Their lack of communication can be intentional, leading to underpaid claims or forcing pharmacies to play a guessing game of how to bill the claim correctly based on formularies. If there are predominate plans/payors in your market, having access to their formulary may help save you team a lot of headaches.
PAAS Tip 3: Do not use DAW 9 unless adjudication logic or plan formulary explicitly shows the plan requires brand.
This is a newer piece of guidance. In the absence of an adjudication reject that states, “Drug X not on Formulary, bill Drug Y as DAW 9” (or something analogous), PBMs have questioned why a DAW 9 was used when in fact the plan formulary does not show the drug product billed is plan-preferred. The better question is why didn’t the PBM reject the claim if it wasn’t not covered? Protect yourself by being able to substantiate why the pharmacy is billing a brand or reference product as DAW 9 (as stated in PAAS Tip #1). Looking at the plan’s formulary may help guide your decision on whether a DAW 9 is appropriate or not. Express Scripts and Humana put out communications that list products they expect to be billed as DAW 9, but be mindful that some Plans may not accept DAW 9 on any claims and formularies can change at any time. Technicians need to watch adjudication messaging closely – even for paid claims. If a PBM rejects a DAW 9 stating the Plan Benefit design doesn’t allow the use, a DAW 0 may be the pharmacy’s only choice.
PAAS Tip 4: In instances where adjudication rejections are unclear, take an all-encompassing approach to determine what medication and DAW to bill.
One of the more common DAW questions we get at PAAS encompasses the situation where both the brand and generic (or reference product and interchangeable biosimilar), result in a paid claim with DAW 0, one with a positive margin and the other in a negative margin. What options does the pharmacy have without increasing their risk of recoupment?
One consideration is cost of the product to the patient. State laws commonly have language obligating the pharmacy to dispense the most cost-effective medication to the patient. Therefore, the copay of the brand vs. generic needs to be taken into consideration when determining if the pharmacy can bill for the product that results in a positive margin. In cases where the copays are the same and the patient truly prefers the brand, billing DAW 2 may be appropriate in that scenario (and consider researching the Plan Formulary for a DAW 9 indication). If the copays are not the same, review the adjudication messaging results for any clues and consult the plan’s formulary. PBMs have been known to prefer a Brand and, instead of rejecting the generic, significantly underpaying on the generic. With so many claims underwater, it’s hard to know the difference, so diligence may be prudent. In instances where a product’s unbranded biologic/authorized generic results in a lower cost to the patient, a DAW 0 can be used. Ultimately, determining which product to bill should not be based solely on pharmacy reimbursement.
PAAS Tip 5: Watch claim adjudication messaging carefully – even on paid claims. Rechallenge DAW 9 when new prescriptions are issued and be careful at the beginning of Plan years (particularly the New Year).
Pharmacies can fall into the habit of billing a DAW 9 solely based on history. Plan formularies change often and sporadically with new medications being introduced to the market, and products having generic/interchangeable biologics available that previously were not. Therefore, ensuring the DAW historically used is still warranted is a great preventative step.
PAAS Tips:
Tip to Federal Agents Leads to Jail Time for Pharmacy Owner
The Department of Justice announced a Nebraska pharmacist, and owner of two pharmacies, was sentenced to two months of imprisonment, three years of supervised release, and ordered to pay restitution in the amount of $573,000.
The pharmacist was found guilty of making a false, fictitious, and fraudulent statement related to health care services. The investigation began in 2020 based on a tip to Federal Agents, and included pharmacy staff interviews, patient interviews and an inventory audit. The inventory audit reconciled claims billed to both Medicare and Medicaid with invoice purchases made by the pharmacy.
Upon completion of the investigation, the inventory audit identified significant shortages. Investigators discovered the pharmacist was billing for brand name drugs but ordering and dispensing the generics. Additionally, the pharmacist in question was submitting claims that were never dispensed to the patient.
PAAS Tips:
Contact PAAS National®® today and start your robust Fraud, Waste and Abuse and HIPAA Compliance Program, ensuring your pharmacy employees are informed and trained against fraudulent activities.
DMEPOS Updated Refill Request and Affirmative Response Requirements
Medicare Part B/DMEPOS billing and documentation rules are VERY different from most of your pharmacy claims. If you don’t have a strong grasp of these differences, or a process for handling the documentation, then you are sure to experience significant problems during an audit. PAAS Audit Assistance members can download PAAS’ Basic DMEPOS Documentation Guidance resource for a helpful checklist when processing these claims.
This Newsline article focuses on the refill record request and affirmative response requirement that was updated January 1, 2024. Suppliers can find all the revisions in CMS Final Rule 1780-F. DMEPOS items and supplies that are provided on a recurring basis must be based on prospective, not retrospective, use. Medicare requires documentation to ensure the item(s) remain reasonable and necessary, existing supplies are expected to end, and to confirm if there are any changes to the order. If your pharmacy currently has a process for documenting a proof of refill request, PAAS National® would recommend you review and update your form if necessary to meet Medicare’s requirements.
The refill record request, at a minimum, must include:
PAAS Tips:
Don’t Cut Corners: Notations on Prescriptions
Not only are new medications frequently released to market, but also new strengths and formulations of existing medications. For example, consider Humulin® R U-100 insulin which was developed in the early 1980s. In the mid-1990s, Humulin® R U-500 vials became available in the market. That meant prescribers and pharmacists alike needed to be mindful of indicating which formulation of Humulin® R insulin the patient was to receive.
Not only are there new strengths of existing medications, but also new formulations. In 2016, Humulin® R U-500 insulin became available with a dedicated device used for the delivery of insulin – the KwikPen® – after previously only being available by vial. Yet again, this meant pharmacists needed to be explicit in what the patient was to receive, not only for the sake of the patient but also for accurate billing and dispensing.
For medications that come in one strength or dosage form, PBMs have proven to be more lenient with prescription hard copies that do not contain that information. However, medications that come in different strengths or dosage forms must include that information on the hard copy for it to be accepted by PBMs. Instead of trying to remember whether a medication comes in multiple forms, get all pharmacy staff into the practice of including strength and formulation for prescriptions, especially on telephone and transferred prescriptions. Below are the more common types of medications that could be recouped with missing information:
PAAS Tips:
FDA Issues Updates to iPLEDGE® REMS Program
Isotretinoin capsules are FDA approved for the treatment of severe recalcitrant nodular acne in non-pregnant patients 12 years of age and older with multiple inflammatory nodules with a diameter of 5 mm or greater. Due to the risk of severe life-threatening birth defects and risk of embryo-fetal toxicity, isotretinoin is only available under the iPLEDGE® Risk Evaluation and Mitigation Strategy (REMS) program.
On November 30, 2023, the FDA posted an update to the iPLEDGE® program“…to minimize burden on patients, pharmacies, and prescribers while maintaining the safe use of isotretinoin”. Several changes include:
Patients who cannot become pregnant and pharmacies dispensing isotretinoin products will see no changes to the iPLEDGE® program requirements. Pharmacies will still need to:
PAAS Tips:
Law Enforcement Access to Protected Health Information – What’s Your Policy?
Understanding and adhering to the HIPAA Privacy Rule is required for covered entities who handle protected health information (PHI), but because the Privacy Rule was designed to be flexible, implementation of policies and procedures to meet the Privacy Rules can vary from covered entity to covered entity. Look no further than the December 12, 2023 letter from the United States Senate Committee on Finance (herein, “The Committee”) for evidence of this variation and how it can seriously impact the privacy of sensitive patient data.
In the December letter drafted to Xavier Becerra, Secretary of the U.S. Department of Health & Human Services, The Committee outlined the results of their oversight inquiry into the seven largest pharmacy chains (CVS Health, Walgreens Boots Alliance, Cigna, Optum Rx, Walmart Stores, Inc., The Kroger Company, and Rite Aid Corporation), and Amazon Pharmacy. The inquiry focused on obtaining briefings from the major pharmacy chains about their policies and procedures for releasing PHI to law enforcement agencies. Below is a general overview of the findings:
The Committee urged the Secretary to strengthen HIPAA Privacy regulations to better protect PHI, and referenced a 2010 decision from the Federal Court of Appeals which protected the privacy of emails and would require a warrant before providers such as Google, Yahoo, and Microsoft could release customer data.
What does this mean for independent pharmacies? As stated in The Committee’s letter, “These findings underscore that not only are there real differences in how pharmacies approach patient privacy at the pharmacy counter, but these differences are not visible to the American people.” Also, “Proactively notifying customers about any patient record disclosures to law enforcement that impact their medical records, except where prohibited by a non-disclosure or “gag” order issued by a judge, would be a major step forward in patient transparency.”
PAAS Tips:
2024 Fraud, Waste & Abuse and HIPAA Compliance Program Updates
PAAS National® continuously monitors legislative and regulatory changes that may impact your Fraud, Waste & Abuse and HIPAA Compliance Program. We keep a close eye on enforcement from the Department of Justice, Office of Inspector General, State Attorney Generals, and Office for Civil Rights to help ensure the program meets interpretative standards. Furthermore, PAAS works to keep pace with Pharmacy Benefit Managers as they continue to add credentialing requirements that can be extremely difficult, and a significant nuisance, to independent pharmacies.
The PAAS National® FWA/HIPAA Compliance Program has implemented changes to ensure pharmacies continue to have a robust program in place. PAAS FWA/HIPAA compliance members can login to the member portal to view the 2024 FWAC and HIPAA Updates.
Administrators should review all Compliance tasks (located in the left-hand navigation on the PAAS Member Portal) at least annually to keep the program up-to-date and in compliance. Section 2.6 Updates of Policies and Procedures of your manual contains information on maintaining open lines of communication and the distribution of changes.
If you’re not a member of PAAS’ FWA/HIPAA compliance program, contact us today at (608) 873-1342 or info@paasnational.com to add the program for a discounted rate.
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.