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.
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.
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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:
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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:
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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:
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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.
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).
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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.