- Patient has confirmed type 2 diabetes mellitus (T2DM)
- Patient does NOT have confirmed T2DM and claim pays at point-of-sale:
- WITH utilization management edit (Prior Authorization)
- WITH utilization management edit (Diagnosis Restricted)
- WITHOUT utilization management edit
- Prescription indicates it’s for off-label use via directions or diagnosis code
The risk of PBM audit recoupment for “off label” use is non-existent in scenario #1. Additionally, #2a and #2b seem to have minimal risk as the PBM has identified the indication for use BEFORE approval and payment of the claim. Number #2c poses a higher potential for recoupment for off label use because the PBM is not confirming diagnosis upon adjudication. While it shouldn’t be the pharmacists’ responsibility to confirm a diagnosis (and CMS tends to agree), some PBMs have language in their provider manuals to define a ‘clean claim’ as one that is being used for a medically accepted indication (i.e., not for off-label weight loss). The #3 scenario is the highest risk because an auditor will be able to easily identify off-label use if the prescription is audited.
From a practical standpoint, it may be impossible for pharmacy staff to differentiate between #2b, and #2c if the pharmacy is sending a diagnosis code with every initial claim submission. If the prescriber does not provide a diagnosis code, consider sending initial claims without a diagnosis code so you can tell the difference. Beyond diagnosis code E11 (T2DM), PAAS is not aware of any other ‘acceptable’ diagnosis codes.
Unsurprisingly, PBMs continue to be mute on the subject – all too happy to collect rebates and administrative fees for high price drugs. Due to their lack of fiduciary duty to often uninformed Plan Sponsors (i.e., employers), utilization management edits are slow to implement. However, at $12,000 per patient annually, you can bet self-insured payors will figure it out quickly and push for recoupment of claims paid outside the benefit design. Consider reading the February 2023 AI Alert from Codoxo: Gains and Losses with Weight Loss Prescription Drugs. While a smaller auditing entity, Codoxo is providing analytics on prescribers and pharmacies dispensing weight loss drugs to Plan Sponsors looking for potential Fraud. Plan Sponsors can redesign the plan benefit and conduct audits, but they also, importantly, control which pharmacies participate in their network; and pharmacies disproportionately dispensing GLP-1s could find themselves out of network if they’re an outlier.
Most pharmacies want to know what they should do with prescriptions that fit into the #2c or #3 bucket. While PAAS National® ® cannot tell you what is right for your pharmacy, there are three possible approaches with varying levels of patient & prescriber pushback and audit risk.
| Approach |
Pharmacy Action |
Patient & Prescriber Pushback |
Risk of PBM Audit Recoupment |
| Red Light
STOP |
Refuse to dispense |
High |
Lowest |
| Yellow Light
SLOW DOWN |
Tell patient the insurance plan may not cover unless type 2 diabetes and that you want to confirm coverage before dispensing |
Moderate |
Low |
| Green Light
GO |
Dispense if paid claim |
Low |
Highest |
Conservatively, PAAS would recommend pharmacies slow down by taking the yellow light approach. This minimizes risk of audit recoupment because you confirm that the payer knows why the patient is using the medication and that they approve before you dispense. While patients are eager to start therapy, these are long-term treatments, and patients are unlikely to suffer clinical harm while awaiting coverage confirmation. For those patients very eager to begin therapy, consider encouraging them to contact their insurance and prescriber to expedite a response.
PAAS Tips:
- Pharmacists should review patient profile for medications that may imply a diagnosis of T2DM
- Always obtain diagnosis code (ICD-10) for GLP-1 medications to show you performed “due diligence”
- While reviewing a patient profile for proxy medications like metformin may be sufficient, inclusion of medications is not definitive for type 2 diabetes
- Without a confirmed (and documented) diagnosis from prescriber, PBMs could conclude that you “didn’t do enough”
- If the prescriber does not provide a diagnosis code, send initial claims WITHOUT a diagnosis code to determine if the drug is diagnosis restricted
- This will help in the event of a future audit if the claim is not diagnosis restricted, bolstering your defense as you can argue that the PBM/Plan “should have asked for proof of diagnosis upon adjudication”
- If being used for T2DM (code E11), then there is no risk of audit recoupment for off-label dispensing
- If being used for anything other than T2DM, then confirm coverage with insurance plan before dispensing (note, you will need to talk with prior authorization department and not the regular help desk)
- Alternatively, consider obtaining a prescription for Wegovy® or Saxenda® – FDA approved GLP-1s for weight loss
Best Practices for Dispensing GLP-1 Medications and Reducing Recoupment Risk
Pharmacies continue to see a large number of prescriptions for GLP-1 medications like Ozempic® and MounjaroTM and have concerns about the risk of PBM audits and recoupments. While PAAS National® sees audits for these medications every day, there are only a few audits where the PBM has pursued recoupment for off label use. However, with continued popularity of these medications, audit practices may change.
PAAS National®® previously discussed this topic in our February 2023 article, Ozempic® and MounjaroTM Prescriptions – Between a Rock and a Hard Place which included an in-depth discussion on the background of how PBM adjudication systems appear to handle these medications. Outlined below is a systematic approach that we suggest pharmacies consider when evaluating which scenarios pose the most audit risk and how to balance patient care, pushback from patients & prescribers, and audit risk.
Three different scenarios, ranked from lowest to highest risk:
The risk of PBM audit recoupment for “off label” use is non-existent in scenario #1. Additionally, #2a and #2b seem to have minimal risk as the PBM has identified the indication for use BEFORE approval and payment of the claim. Number #2c poses a higher potential for recoupment for off label use because the PBM is not confirming diagnosis upon adjudication. While it shouldn’t be the pharmacists’ responsibility to confirm a diagnosis (and CMS tends to agree), some PBMs have language in their provider manuals to define a ‘clean claim’ as one that is being used for a medically accepted indication (i.e., not for off-label weight loss). The #3 scenario is the highest risk because an auditor will be able to easily identify off-label use if the prescription is audited.
From a practical standpoint, it may be impossible for pharmacy staff to differentiate between #2b, and #2c if the pharmacy is sending a diagnosis code with every initial claim submission. If the prescriber does not provide a diagnosis code, consider sending initial claims without a diagnosis code so you can tell the difference. Beyond diagnosis code E11 (T2DM), PAAS is not aware of any other ‘acceptable’ diagnosis codes.
Unsurprisingly, PBMs continue to be mute on the subject – all too happy to collect rebates and administrative fees for high price drugs. Due to their lack of fiduciary duty to often uninformed Plan Sponsors (i.e., employers), utilization management edits are slow to implement. However, at $12,000 per patient annually, you can bet self-insured payors will figure it out quickly and push for recoupment of claims paid outside the benefit design. Consider reading the February 2023 AI Alert from Codoxo: Gains and Losses with Weight Loss Prescription Drugs. While a smaller auditing entity, Codoxo is providing analytics on prescribers and pharmacies dispensing weight loss drugs to Plan Sponsors looking for potential Fraud. Plan Sponsors can redesign the plan benefit and conduct audits, but they also, importantly, control which pharmacies participate in their network; and pharmacies disproportionately dispensing GLP-1s could find themselves out of network if they’re an outlier.
Most pharmacies want to know what they should do with prescriptions that fit into the #2c or #3 bucket. While PAAS National® ® cannot tell you what is right for your pharmacy, there are three possible approaches with varying levels of patient & prescriber pushback and audit risk.
STOP
SLOW DOWN
GO
Conservatively, PAAS would recommend pharmacies slow down by taking the yellow light approach. This minimizes risk of audit recoupment because you confirm that the payer knows why the patient is using the medication and that they approve before you dispense. While patients are eager to start therapy, these are long-term treatments, and patients are unlikely to suffer clinical harm while awaiting coverage confirmation. For those patients very eager to begin therapy, consider encouraging them to contact their insurance and prescriber to expedite a response.
PAAS Tips:
Continuous Glucose Monitors and Potential Audit Risk with PHE Ending
As the COVID-19 Public Health Emergency (PHE) declaration comes to an end on May 11, 2023, preparing for some changes to current flexibilities, actions and waivers that have been in place since COVID-19 began is crucial. While clinical indications for Continuous Glucose Monitors (CGMs) have not been enforced by Medicare during the PHE, PAAS National® advises pharmacies to take special precaution for any patients who obtained a CGM during this time.
PAAS questioned Noridian and CGS on this topic:
For beneficiaries who obtained a CGM during the PHE (when clinical indications for coverage of CGMs was not enforced), will those beneficiaries be grandfathered in, or will they need to meet the current coverage criteria?
While awaiting Noridian’s response, CGS responded that they are awaiting an answer from CMS for this exact question. Once the DME MACs receive direction from CMS, they will email notifications to suppliers. The MACs will also be hosting webinars, ask-the-contractor (ACT) teleconference calls and post topics under the Education section on their websites to address the end of the PHE.
PAAS Tips:
PBMs on the Hot Seat in Key Legal and Administrative Battles
In a not-so-strange turn of events, pharmacy benefits managers (PBMs) are under scrutiny for alleged legal and administrative violations in states with robust PBM reform. Additionally, the United States Senate Committee on Finance gathered insight from experts at an official hearing on PBM reform. Although the legal disputes and senate hearing are seemingly unrelated, together they offer optimism that PBM conduct will continue to be questioned in state and federal spotlights.
Ohio Attorney General Sues Multiple PBMs for Anticompetitive Practices
The Ohio Attorney General has filed a lawsuit against Express Scripts, Prime Therapeutics, and Humana Pharmacy Solutions, among other subsidiary and parent entities. The filing alleges that the three largest PBMs (Caremark, Express Scripts, and OptumRx) which control more than 75% of market share use mutually owned group purchasing organizations (GPOs) to collude on drug rebate negotiations. This produces a monopolistic environment which may benefit PBMs and harm patients by inflating drug list prices. Ohio’s Valentine Act prohibits such practices and is punishable by fines and banishment from doing business in Ohio.
CVS Caremark Faces Administrative Action in Oklahoma for Steering Practices
The Oklahoma Insurance Department, an agency responsible for PBM oversight, has filed administrative action against CVS Caremark for allegedly violating the Oklahoma Patient Right to Pharmacy Choice Act. The notice of hearing outlines over 100 instances where Caremark misinformed patients regarding their right to use an in-network pharmacy of their choice for 90-day drug supplies. Caremark coerced patients to use pharmacies they owned by rejecting drug claims and then telling patients via phone that they must use CVS or their mail-order pharmacies. Furthermore, upon initial warning by authorities, Caremark sent letters to patients falsely stating that they could no longer obtain 90-day drug supplies due to action by the Oklahoma government.
U.S. Senate Hearing on PBMs and the Drug Supply Chain
The U.S. Senate Committee on Finance heard from a panel of economists, business experts, and law experts to gather insights into the need for federal PBM reform. Throughout the hearing, Senate members demonstrated thorough understanding of the harms of PBMs by asking questions about rebate aggregation, increasing drug list prices, vertical integration within the healthcare system, and direct and indirect remuneration fees. Senate members called for more transparency in PBM practices and continued efforts to regulate the PBM industry. Watch the recording here.
PAAS Tips
HIPAA Breach Notification Letter Sent to 82,466 Patients Due to Improperly Shared Data
According to the U.S. Department of Health and Human Services breach portal, the mail-order pharmacy Healthy Options dba Kroger Postal Prescription Services (PPS) reported a breach of information which affected 82,466 patients. Kroger’s March 10, 2023 press release described the incident as “an internal error” which caused patient names and email addresses affiliated with Kroger PPS to be “improperly shared with its affiliated grocery business”.
This breach comes two years after the Accellion incident which also affected Kroger. Accellion is a company which provides secure third-party data file transfer services to businesses, one of which was Kroger. Their services were used to send human resources data, pharmacy patient information, clinic patient information, and money services records through secure file transfers. Kroger’s internal review indicated the Kroger systems were not directly accessed, and that the information was obtained only through Accellion. Kroger cut their ties with Accellion and sent out HIPAA breach notification letters to the affected individuals.
As these two incidents illustrate, breaches can happen—sometimes they are malicious in nature and sometimes it is due to poor training or lack of appropriate safeguards. PAAS National® analysts suggest regularly evaluating your pharmacy’s HIPAA compliance program and implementation to identify deficiencies so improvements can be made in a timely manner. If you are not sure where to begin or what a “top of the line” HIPAA program looks like, just contact us (608) 873-1342 for a virtual overview of the PAAS National® Fraud, Waste and Abuse and HIPAA Compliance Program. We are here to guide you through compliance – get started today.
Caremark Memo: Novolog® and Novolin® ReliOn®
In March 2023, many pharmacies received a fax from Caremark labeled Claim Submission Education pertaining to claims billed for Novolog® and Novolin® ReliOn® NDCs. The Caremark memo includes a list of ReliOn® claims that the pharmacy billed and requests that pharmacies confirm if they have billed the correct NDC. If the NDC was submitted correctly, pharmacies must provide a copy of a wholesaler invoice and information to support DSCSA pedigree or track and trace (transaction statement, transaction history, transaction statement).
In theory, the ReliOn® branded insulins are made exclusively for Walmart and Sam’s club pharmacies and Caremark is questioning if pharmacies billed the incorrect NDC or obtained products from an inappropriate source.
Here are the ReliOn® products under review:
Novolog (Rx only)
Novolin 70/30 (OTC)
Novolin N (OTC)
Novolin R (OTC)
PAAS Tips:
Nuances of Insulin Pens and How They May Differ
Priming insulin pens prior to use helps ensure the appropriate dose is being administered. Calculating the priming units in your days’ supply is very important. These additional units added for “priming” or “safety checking” the insulin pen and pen needle for each injection, could greatly influence the quantity and days’ supply you are billing.
Most insulin pens require two units per injection to prime; however, there are three products that require more.
Another consideration between insulin pens is the number of units the pen can dial. While most pens deliver doses in 1-unit increments, there are four specific insulin products that do not. Be mindful that these products can only deliver doses in discrete intervals and be prepared to clarify instructions for use that cannot be administered.
PAAS Tips:
Resist the Urge: Don’t Reverse Claims After Receiving an Audit
Consider the following situation: after pulling hard copy prescriptions for an audit, a billing error is identified; such as an incorrect days’ supply or billed quantity. The initial thought may be to reverse and rebill the claim – a seemingly reasonable action to take; however, one must resist the urge to reverse the claim.
Depending on the PBM, type of audit and auditor preference, the process given to resolve the incorrect claim may differ. Additionally, reversing a claim outside the billing window, without proper authorization, may result in a claim that is unable to be reprocessed. There are also unique exceptions to the guidance of not reversing the claim prior to obtaining direction. For example, some audits of recent claims may include explicit instructions to correct claims if any errors are found. To save time and avoid costly mistakes, Engage PAAS National®® upon receiving an audit notice.
PAAS Tips:
Avoiding Humana Audits for Deceased Patients
Humana has recently sent out another round of audits to pharmacies with the subject line: Review of claim(s) billed after member’s deceased date. The review is taking place, sometimes more than a year after the date of service, because Humana identified some Medicare Part D claims paid after the member passed away. Why would Humana wait so long to review these claims, and why did they not stop them at point of sale? Unfortunately, there is usually significant lag time from when a patient passes away to when this information is reported to the Social Security Administration, and then to CMS and plan sponsors.
Pharmacies have 30 days from the date on the audit letter to provide evidence demonstrating the appropriate billing of these claims. Please see the Humana guidelines set below to combat these recoupments.
Claim date would need to be within 14 days from deceased date for claims billed to patients not in a long-term care facility (retail) and 32 days from deceased date for patients who reside in a long-term care facility.
Accepted documentation for a deceased member (not all-inclusive):
Accepted documentation for a member who is NOT deceased:
PAAS Tips:
Biologic Drug Substitution Best Practices (Update)
**Article update from initial publication in January 2021 due to entry of unbranded biologics in the marketplace and change to BLA approval type for SemgleeTM and RezvoglarTM**
PAAS National® frequently gets questions about whether pharmacies may substitute various medications and if such substitutions require the approval of the prescriber. Pharmacies must refer to the FDA Purple Book to identify if biologic products may be substituted. Additionally, “pharmacy level substitution” is regulated at the state level and you must refer to your individual state pharmacy practice laws. Cardinal Health has a great website to find biosimilar interchangeability laws for each state.
In a June 2020 Newsline article, PAAS discussed the new definition of a biologic product, which now includes commonly dispensed products like insulin, human growth hormone, and pancreatic enzymes. Now licensed as “biologic drugs,” these medications are approved by the FDA under a Biologic Licensing Application (BLA), and listed in FDA’s Purple Book instead of the Orange Book that many pharmacy staff are familiar with.
When reviewing the Purple Book, you will find that pharmacy level substitution of a reference product is only allowed if biologic drugs are either (i) identified as interchangeable OR (ii) an unbranded biologic with the same BLA number of a reference product. For biologic drugs that don’t fall into these two categories, you must obtain prescriber approval prior to substituting.
Let’s look at a few types of insulins as examples.
Insulin lispro U-100
Insulin glargine U-100
FDA approved interchangeable status to Semglee in July 2021 and Rezvoglar in November 2022
Biologic products are not described in familiar terms like “brand”, “generic” or “AB-rated” and the Purple Book uses new terms that are not found in the Orange Book. Here is a short summary of the different terms:
FDA has more detailed definitions on the Purple Book website here. Additionally, there is a frequently asked question section that discusses unbranded biologics (FAQ #11).
PAAS Tips:
Caremark Resumes Signature Log Requirements Effective May 12, 2023
Caremark issued a Pharmacy Update memo on March 8, 2023, stating that they would resume signature log requirements for audits effective May 12, 2023. This coincides with Health and Human Services (HHS) announcement that the formal COVID-19 public health emergency (PHE) will expire on May 11, 2023.
PAAS National® expects other PBMs to follow suit in short order and we recommend that pharmacies begin to transition staff and patients back to pre-pandemic workflow, if you have not done so already. Remember that upon audit, PBMs want to see at least three elements on signature logs – the prescription number, the date dispensed and the signature of patient or representative (some PBMs, like Humana, may also want to see the fill date or fill “number”). For prescriptions that are mailed, make sure that you maintain tracking/delivery confirmation as well.
PAAS Tips: