Liraglutide Injection Marks Debut as First Authorized Generic GLP-1 Product

In late June, Teva Pharmaceuticals launched the first “generic” GLP-1 (Glucagon-Like-Peptide-1) receptor agonist in the United States, known as Liraglutide injection (6 mg/mL). This authorized generic of Victoza® is a once daily noninsulin injection approved to treat type 2 diabetes in adults and children aged 10 and older. It is also approved to reduce the risk of cardiovascular events like heart attacks and stroke in adults with type 2 diabetes and heart disease.

The FDA defines an authorized generic (AG) drug as the brand name drug that is marketed without the brand name on its label. So other than not having Victoza® on the label, Liraglutide is the exact same drug product as the brand Victoza®. An AG may be marketed by the brand name drug company or another company with the brand’s permission. While it is the same as the brand name product, companies typically choose to sell the AG at a slightly lower cost than the brand.

PAAS Tips:

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  • An AG is therapeutically equivalent to its brand name drug because it is the same drug
  • An AG is marketed under the brand name drug’s NDA (New Drug Application), therefore it is not listed in the FDA Approved Drug Products With Therapeutic Equivalence Evaluations (the Orange Book)
  • A pharmacy can substituted an AG for the brand name without the prescriber’s approval or a new prescription
  • Be alert that GLP-1 medications (originally approved to treat diabetes) are also FDA approved, marketed and prescribed for obesity under a different Trade Name and NDA
    • Saxenda® (Liraglutide) is FDA approved for obesity
    • AG Liraglutide injection is only approved to treat type 2 diabetes in adults and children aged 10 and older

2024 DMEPOS Series #6: Immunosuppressive Drugs for Transplant

Many pharmacies struggle with DMEPOS audits due to the complexity in medical billing and the onerous documentation requirements. Medicare Part B suppliers need to be able to produce all the required documentation if audited, and make sure all documentation meets Medicare Part B standards. This DMEPOS series is intended to help you understand these complexities and gather the needed documents.

Specifically, you need to demonstrate the following in case of an audit regarding immunosuppressive drugs for transplant:

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  • Standard Written Order (SWO)
  • Medical Records
    • Type of transplant must be documented (see documentation checklists in PAAS tips for full list)
    • The drugs prescribed following the transplant
    • Date and location where transplant was performed (in a Medicare approved facility)
  • Proof of Delivery
  • Proof of Refill Request and Affirmative Response
    • Required if delivered or mailed

Coverage criteria for immunosuppressive therapy:

  • The beneficiary was enrolled in Medicare Part A at the time of the transplant.
  • The beneficiary was enrolled in Medicare Part B at the time the drugs are dispensed.
  • The drugs were furnished on or after the date of discharge from the hospital following a covered organ transplant.
    • For date of service (DOS) on or after April 3, 2019 mail-order deliveries of immunosuppressive drugs may be mailed one or two days prior to a beneficiary’s anticipated date of discharge from an inpatient facility to a qualified place of service or alternate address, such as the inpatient hospital that performed the transplant or alternative location where the beneficiary is temporarily staying (such as temporary housing). The DOS on the claim must be the date of discharge.
  • The transplant was performed at a Medicare-approved facility.
  • The dosage, frequency and route of administration conform to generally accepted medical practice and is medically necessary to prevent or treat the rejection of an organ transplant.
  • If the prescribed drug is parenteral azathioprine (J7501) or methylprednisolone (J2920, J2930), medical records confirm that the medication cannot be tolerated or absorbed if taken orally and is being self-administered by the beneficiary.

PAAS Tips:

  • Immunosuppressive drugs are only covered under Part B to maintain an organ transplant that was Medicare eligible
  • The quantity of immunosuppressive drugs dispensed is limited to a 30-day supply
  • The KX modifier must be added to the claim line(s) for the immunosuppressive drug(s) only if all of the following four requirements are met:
    • The supplier has obtained from the ordering treating practitioner the specific date of the organ transplant, and
    • The supplier is retaining this documentation of the transplant in its files, and
    • The beneficiary was enrolled in Medicare Part A, at the time of the organ transplant (whether or not Medicare paid for the transplant), and
    • The transplant date precedes the date of service on the claim
  • If all coverage criteria are not met, the GY modifier must be added to the claim line(s)
  • The diagnosis code(s) that justify the need for these items must be included on the claim
  • Download PAAS’ Proof of Refill Request and Affirmative Response form under Proactive Tips on the Member Portal where you can document the required information from the beneficiary or their caregiver if the prescription is being mailed or delivered
  • Review documentation checklist for Jurisdiction A and D
  • Review documentation checklist for Jurisdiction B and C
  • Review the Immunosuppressive Drugs LCD and Policy Article
  • Review the following Newsline articles for additional information:

PAAS Audit Assistance members can search the Newsline archive for keyword “DMEPOS series” to read previous articles in this series. If you have any questions on accessing the Member Portal, or need help adding employees so they have access, please contact us at (608) 873-1342 or info@paasnational.com and our staff can assist you.

DAW 8: Documentation When the Generic is Not Available

DAW code billing on multi-source brand medications is a frequent audit target for PBMs due to their potential higher cost, change in pharmacy reimbursement, and impact on patient copays. PAAS National® recommends …

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supporting documentation be placed on any prescription billed with a DAW code (DAW 0 does not require documentation). Supporting documentation when the prescriber, patient, or insurance require the brand name medication is simple and straightforward. However, what steps should be taken when dispensing a brand name due to the generic not being available?

DAW 8 is only used in situations where the prescriber is allowing a substitution, a generic product exists, but you are unable to order it due to a market shortage. PAAS recommends documenting the date and the fact the generic is not available in the marketplace on the prescription. Ideally, take the time to capture an image from your pharmacy wholesaler’s website showing the generic product unavailability on that date and retain the image in a way it can be easily obtained for an audit (e.g., file it with the hardcopy prescription). Alternatively, you can reference the invoice number from your wholesaler showing the product was ordered but not sent due to being out of stock. An auditor may never ask for this proof, but if they do, you may struggle years later when the claim is audited.

PAAS Tips:

  • Always document the reason on the prescription any time a DAW other than 0 is used
  • When billing DAW 8, document the market shortage and ideally maintain proof from your wholesaler of the generic being out of stock (e.g., screen capture, invoice, etc)
  • For a detailed description of each DAW code, refer to DAW Codes Explained under Proactive Tips.
  • Review the April 2024 Newsline article, 2024 Self-Audit Series #2: DAW Codes for best practices when billing DAW codes

Do The Math and Avoid the Recoupment

Proper mathematical calculations are critical to billing prescriptions correctly. The action of translating directions on the prescription into a mathematical equation seems simple, but PAAS National® analysts see claims billed with incorrect days’ supply every day! Though many PBMs may not recoup for a simple days’ supply calculation error, the error itself can cause additional discrepancies on the claim, which usually do result in a financial penalty. For instance, if the pharmacy bills three 10.2 g Symbicort® 160 mcg/4.5 mcg inhalers with directions of 1 puff BID as a 90 days’ supply when it should be a 180 days’ supply, that will likely result in several discrepancies. First, an invalid days’ supply discrepancy. Second, the claim is usually flagged with an overbilled quantity discrepancy which results in a partial recoupment when the plan limit is 30 or 90 days. Third, it could cause a refill too soon penalty on the next fill which would result in a full recoupment of the subsequent claim. The penalties and subsequent recoupments can add up fast! 

For many medications, the mathematical calculation is straightforward; however, not all medications are easily calculated. Below is a table of the common days’ supply calculation pitfalls and ways to avoid them.

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Medication FormulationCommon Days’ Supply Calculation MistakesBest Practice to Avoid Days’ Supply Calculation Errors
Colonoscopy Prep KitsNon-calculable directions such as:“Use as directed”“Follow instructions provided by gastroenterology” Directions on the prescription and patient label should indicate whether a single-day regimen or a split-dose regimen is being followed so a proper days’ supply can be billed (1 or 2 days, respectively)Clarify “use as directed” instructions by contacting the prescriber’s office to update the directions to “use as directed per package labeling”, annotate the clarification with a clinical note, update the directions on the patient label, and (if audited) be sure to include a copy of the instructions found within the manufacturer’s product labeling
Eye DropsNon-calculable directions such as “Use in affected eye(s)”Forgetting to consider product beyond use dating (BUD)Ensure the prescription and patient label indicate which eye or eyes are being treatedEnsure a frequency is listed on the prescription and labelIf the patient is doing a short course, then discarding the remainder of the bottle, be sure the hardcopy and the patient label reflect the treatment duration and that they will throw away the remainder; the correct days’ supply would be the same as the treatment duration.If the patient is doing a short course but there are no directions to discard the remainder, calculate the days’ supply based on the drops/mL specified by the PBM to which the claim is being billed; refer to the PAAS Eye Drops chart for additional guidanceConsider the BUD of the eye drops, where applicableRefer to manufacturer guidance on drops/mL for unique products such as Miebo®, Veyve®, and Vyzulta®
InsulinSliding scale insulin without a max daily dose (MDD)Insulin titration to meet a specific blood glucose goal without a MDDForgetting to consider product BUDObtain a MDD for sliding scale insulin or insulin titrations to meet a blood glucose goal; document the MDD on the prescription and on the patient labelDocument priming units if used in days’ supply calculations for insulin pensConsider BUD on pens and vials 
Migraine Rescue MedicationsNon-calculable directions such as:“Use as needed”“Use as directed”No indication of whether an additional dose can be taken (after the applicable waiting period) for the same episode for qualifying medications and dosesIgnoring dosage and administration guidance from the package insert or adjudication messaging Ensure the prescription includes the amount of medication to be taken per administration and a specified frequency of administration (including the frequency of repeat dosing)Obtain the allowable number of migraines the patient can treat per week or per month, document this information on the prescription and on the patient’s label and use this information in the days’ supply calculationPay attention to dosing and administration guidance within the package insert and to the payer’s messaging upon claim adjudication to avoid audit triggers for excessive amounts billed 
Pancreatic EnzymesMissing the total number of capsules per dayMissing the number of snacks per dayThe directions on the prescription and the patient label should include either:The total number of capsules per day the patient can consumeThe number of meals and snacks per day with which the medication is takenAuditors will generally assume 3 meals/day but the number of snacks per day should be indicated on the prescription and labelRemember to account for the FDA product label update from 10/12/2023 which now requires all strengths of Creon® to be dispensed in the manufacturer’s bottle
Topicals (creams, gels, ointments, solutions) Non-calculable directions such as:“Use as directed”“Apply to affected area once daily”Santyl® ointment missing the wound length and width, missing the treatment duration, not using the Santyl® calculator, forgetting to account for inherent rounding issues with manufacturer’s online calculatorJublia® directions to “apply to toenails once daily” Ensure the hardcopy and the patient label list the grams/application or grams/day the patient is usingReview the PAAS Topical Creams and Ointments tool for guidance on the Fingertip Unit (FTU) method1 FTU = 0.5 gThe prescription must have the site(s) to which the topical is being applied and an application frequencyDocument your FTU calculation on the prescription or within the electronic prescription recordSantyl® ointment prescriptions require the wound(s) length and width (in cm) plus the treatment duration and use of the manufacturer’s online calculator or the PAAS Rx Days’ Supply Calculator AppJublia® prescriptions (and the patient label) must include the number of applications needed per day. Each toenail being treated would require one application, except each big toenail treated would require two applications. A 4 mL bottle contains approximately 200 applications.
Vaginal CreamsNon-calculable directions such as:“Use as directed”“Pea-sized amount”“One application twice weekly”Estrace® (estradiol) 0.01% vaginal cream comes in a
42.5 g tube and has a graduated applicator with measurements from 1 g to 4 g, in 1 g incrementsPremarin® (conjugated estrogens) vaginal cream comes in a 30 g tube and has a graduated applicator with measurements from 0.5 g to 2 g, in 0.5 g incrementsA “pea-sized amount” should be clarified to be an amount in grams (e.g., insert a pea-sized amount (0.25 g) vaginally twice per week)An “application” is not specific enough to calculate a days’ supply; however, “1 applicatorful” or “half an applicatorful” would be sufficient along with a frequency (e.g., insert half an applicatorful twice weekly for Estrace® would be 2 g twice per week and for Premarin® would be 1 g twice per week)

PAAS Tips:

  • A complete clinical note should include four elements:
    1. The date/time of the call
    2. The name and title of the person you spoke with at the prescriber’s office
    3. The clarification
    4. Your initials
  • Ensure the instructions on the patient label are updated to reflect any clarification made to the directions on the prescription so the patient receives the full set of instructions at the time of dispensing
  • Follow the Can You Bill It As 30 Days? (The ILQ Process) guidance when a claim billed with the correct days’ supply rejects due to plan limitations exceeded

2024 Self-Audit Series #6: Return to Stock

PAAS National® analysts continue to see pharmacies face recoupment on audits due to return to stock violations. Pharmacies argue the patient received the medication, so how can the claim be recouped? Unfortunately, each PBM contract has a specific number of days, within which, the pharmacy must dispense the medication. Dispensing outside this time frame will likely result in full recoupment of the claim if discovered upon audit.

PBM return to stock windows range from 10 – 30 calendar days. With no industry standard interval, PAAS recommends …

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pharmacies set their policy for the most conservative number of days to ensure no claims will be missed. See our Return to Stock Chart, located on our website, for the most current PBM policies.

PAAS FWA/HIPAA members can review and update their current policy, located in Section 4.1.1 Unclaimed Prescriptions, in their policy and procedure manual. Additionally, members have access to an Unclaimed Prescription Reversal Log, that can be found in Appendix B.

PAAS Tips:

  • Review your current Return to Stock policy and procedures to ensure compliance with 10 calendar days
  • Prioritize time for an assigned employee to complete this task
  • Run daily reports identifying prescriptions not picked up according to your policy; this should include completions of partially filled prescriptions due to medication out of stock issues
  • Regularly monitor oversized bins, special order areas, and refrigerators
  • Watch for out-of-stock prescriptions, claims should be billed when product is available
  • Contact your pharmacy management and/or point of sale system to see if they can program to stop sales of prescriptions that exceed your policy
    • This would allow the claim to be reprocessed with an updated fill date which would reset the return to stock timeline
  • LTC claims are not exempt from return to stock windows; the clock starts from the date billed, not the date physically filled
  • Beware of REMS prescriptions having specific restrictions for pick up, see our June 2021 Newsline article, Would Your REMS Prescription Pass an Audit?
  • Reverse and rebill any prescriptions the patient intends on picking up soon or asks you to “hold”
  • Do not have patients sign for prescriptions that were previously received, this does not provide accurate dating during audit review and can hurt your appeal options

Don’t have written compliance policy and procedures? Consider joining the PAAS National® FWA/HIPAA Compliance Program today! info@paasnational.com or (608) 873-1342.

NEW Dispense as Written (DAW) Code Revealed

Chances are you have come across a claim or two (or several thousand!) with a DAW code of 1, 2, or 9. Pharmacy staff are usually knowledgeable about when to use these DAW codes – that a DAW 1 may be appropriate to use when the prescriber does not authorize generic substitution on a multi-source brand, a DAW 2 when the patient requested the brand name, and a DAW 9 when the plan explicitly indicates the brand name product is preferred. The same DAW guidance applies for biologic reference products (e.g., Lantus®) with an interchangeable biosimilar (i.e., Semglee®).

While those three DAW scenarios are fairly straightforward, real-world claim adjudication can be a bit more complex and a single numeric DAW code may not accurately convey the true billing situation. Take for instance a patient with a commercial plan for their primary coverage and Medicaid as their secondary. Sometimes, one payor may prefer the brand while the other prefers the generic. Then what?!

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The National Council for Prescription Drug Programs (NCPDP) has added its first non-numeric DAW code. The first alpha code, DAW A, can now be found in the NCPDP Telecommunication Version D and Above Questions, Answers and Editorial Updates Version 65, updated May 2024.

DAW A is utilized on multi-payor claims (i.e., when the same prescription is processed by at least two payors) and can be used on either the claim to the primary payor or on the coordinate of benefits claim to the secondary payor. It is only used to indicate to one payor that the other payor is requiring the multi-source brand or reference product (with an interchangeable biosimilar) be dispensed.

  • A DAW 9 will be used on the claim to the payor requiring the multi-source brand/reference product to be dispensed (as long as the prescriber did not require the brand/reference product). It does not matter if this is the primary payor or secondary.
  • A DAW A should be submitted on the claim to the other payor that is not requiring the multi-source brand/reference product to be dispensed. Again, it does not matter if this is the primary payor or secondary.

Utilizing a DAW A code allows the payor that is not requiring the multi-source brand/reference product to accept the claim with the associated brand pricing rules or reject the claim as 70: Product/Service Not Covered – Plan/Benefit Exclusion.

PAAS Tips:

  • As with any DAW code other than 0, ensure there is appropriate documentation on the hardcopy or within the prescription record to indicate which plan required brand and which did not
  • The most common scenario is when Medicaid is the secondary payor and they are requiring the brand/reference product, but the primary payor is not. The pharmacy would follow these steps:
    1. Submit the claim for the generic drug using DAW 0 to primary for a paid claim with non-$0 patient copay
    2. Continue billing and submit the claim for the generic drug using DAW 0 to Medicaid (secondary)
    3. Medicaid would reject the claim as 606-Brand Drug/Specific Labeler Code Required
    4. Reverse the claim and resubmit the multi-source brand/reference product to the primary with DAW 9; they should reject with 22: M/I DAW Code and if the pharmacy would continue and bill to Medicaid (secondary), Medicaid may reject the claim as 6E: M/I Other Payor Reject Code
    5. The pharmacy would then bill the claim to primary for the multi-source brand/reference product with a DAW A (Multi-Payor Brand/Reference Product Formulary Conflict) and the primary payor should accept the claim and apply brand pricing
    6. The pharmacy would then continue to bill the multi-source brand/reference product to Medicaid as the secondary payor with DAW 9
  • Be aware of DAW A utilization and remain conscientious .
    • Watch for DAW code updates from your software vendor
    • While NCPDP billing guidance has been updated to account for this new DAW code, there may be a divergence between NCPDP standards and actual implementation by payors much like the DAW 9 versus DAW 0 situation for a multi-source brand/reference product with an interchangeable biologic in the marketplace (for more information, refer to the February 2024 Newsline article, Best Practices for DAW Billing in Pharmacies)
  • For additional DAW code descriptions and billing scenarios, review the DAW Codes Explained tool which was recently updated to include DAW A guidance
  • Confused about biologic terminology like Reference Products and Interchangeable Biosimilars? Review our February 2024 Newsline article Insulin Substitution Review: Understanding Purple Book Terminology

Auditors Are Drawn to Santyl® Like Moths to a Flame

Summer is here and so are the bugs! While mosquitos, gnats, moths and the like have next to nothing to do with Santyl® ointment for debriding chronic dermal ulcers and severely burned areas, the visualization of auditors being drawn to claims for Santyl® ointment being akin to moths (or other bugs) being drawn to a flame is a parallel not to be ignored.

A pharmacy billing a claim for Santyl® ointment is likely to see the claim audited in the future because Santyl® ointment has …

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a specialized online calculator developed by the ointment’s manufacturer to aid in appropriate dosing calculations and dispensing. When the ointment is being used for a chronic wound, prescriptions for Santyl® must include the wound length and width (in centimeters) and the treatment duration to appropriately utilize the online calculator. When prescribed for a burn, the total body surface area and number of applications is required. Prescriptions missing applicable measurements will be flagged for non-calculable directions and will face full recoupment. Auditors are drawn to these scripts because they are high dollar claims and prescribers, and pharmacy personnel, often forget to include or obtain the measurements. Without this critical information documented, the claim will meet its demise upon audit.

Another pitfall to avoid with Santyl® ointment claims is the inherent rounding with the online calculator that could inadvertently cause the pharmacy to bill an incorrect days’ supply. The dosing calculator rounds UP to the nearest tube size (packed as 30 or 90 grams), therefore, the true days’ supply must be calculated by the pharmacy to ensure you are not dispensing more medication than what is needed.

Example Wound Calculation:

Wound dimensions in centimeters and the duration of therapy = 6 cm x 2 cm for 30 days

  • Manufacturer calculator results indicate a total of 62 g would be needed, and it suggests dispensing 90 g total
  • The patient would need 3.6 cm per application if dispensing the 90 g tube (or 6.2 cm per application for the 30 g tube due to the tube opening diameter difference)
  • The calculation details state 1.78 cm = 1 g for the 90 g tube size
  • 90 g x 1.78 cm/g = 160.2 cm in the 90 g tube
  • 2 cm / 3.6 cm = 44.5 days’ supply
  • If the pharmacy were to dispense the 90 g tube for a 30-day supply, they would be dispensing too much medication

The pharmacy should dispense two 30-gram tubes in this example

  • The 30 g tube needs 6.2 cm per application (tube opening is smaller than the 90 g tube)
  • The calculation details state 3.04 cm = 1 g for the 30 g tube size
  • 30 g x 3.04 cm/g = 91.2 cm in the 30 g tube
  • 2 cm / 6.2 cm = 14.7 days’ supply
  • Therefore, two 30 g tubes = 29.4 days’ supply

The SIMPLEST Method

The calculation method above is accurate, but also time consuming! The simplest method for calculating the correct quantity and days’ supply for Santyl® for a chronic wound is utilizing the PAAS National® Rx Days’ Supply Calculator app! The wound(s) dimensions are still required but the user-friendly interface has been designed to enhance efficiency and empower pharmacy staff with confidence. The PAAS Rx Days’ Supply Calculator app eliminates the inherent rounding issue seen with the manufacturer’s calculator and provides precise calculations.

Rather than getting zapped with a recoupment, be prepared; have all the appropriate documentation accounted for at the time the claim is billed and bill for an accurate days’ supply. When audited, the claim has a higher probability of passing with no discrepancies and sending the auditor buzzing off with zero recoupment.

PAAS Tips:

  • Add a flag to the 30 g (NDC 50484-010-30) and 90 g (NDC 50484-010-90) tubes of Santyl® ointment in your pharmacy software system reminding pharmacy staff to review the prescription for the wound length and width (in centimeters) and treatment duration
  • If more than one wound is being treated, be sure measurements and the treatment duration for each wound is documented
  • Consider revaluating wound measurements periodically as the wound is (hopefully) decreasing in size during the course of therapy
    • Contact the prescriber’s office and obtain a new prescription if the wound size has changed
    • Plug in the new measurements into the PAAS Rx Days’ Supply Calculator app or Santyl® online calculator and bill for the appropriate quantity and days’ supply
    • Note: the Santyl® calculators will only allow a 30-day maximum duration of therapy, likely to reiterate the importance of wound revaluation
  • For the treatment of a burn, only the Santyl® manufacturer’s online calculator can be utilized for determining the appropriate quantity; just remember to back-calculate the correct days’ supply by following the method outlined above
  • Download the PAAS Rx Days’ Supply Calculator app for a free 7-day trial ($5.99/year thereafter) by visiting the Apple App Store or Android Google Play Store, or check out the website at com/app

Metformin HCl ER – Audit Considerations

Metformin HCl ER is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus. It is commonly prescribed for patients who have gastrointestinal side-effects when taking the original. non-ER. version of the medication. Unfortunately, the cost difference can be significant, leading to an increased risk for audit – especially when a patient is taking Glumetza® or Fortamet®.

To add to the confusion, there are three different versions of metformin HCl ER, with three different extended-release mechanisms.

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They are not interchangeable with one another and, consequently, have unique Therapeutic Equivalency (TE) codes to show which generic products can be substituted for a specific brand name. When there are multiple branded versions of an identical active drug ingredient, form, and route of administration, then the FDA must assign each brand an additional identifier such as AB, AB1, AB2 and AB3.

Brand Name Strengths (mg) FDA Orange Book TE Codes Extended-Release Format
Glucophage® XR 500, 750 AB, AB1 Dual hydrophilic polymer system
Fortamet® 500, 1000 AB2 Single-Composition Osmotic Technology (SCOT)
Glumetza® 500, 1000 AB3 Gastric Retention Technology

You may only dispense a generic formulation of the above if the TE code matches.

PAAS Tips:

  • Dispensing higher cost medications when lower cost alternatives are available is a red flag for PBMs and can lead to increased scrutiny
  • Auditors may require clarification from the prescriber when dispensing these higher cost medications
  • If switching a patient from metformin HCl to metformin HCl ER for clinical reasons, including side effects, document the rationale on the prescription
  • Switching a majority of your patients on metformin HCl to metformin HCl ER can also be a red flag for auditors
  • This could lead to accusations of solicitation and possible contract termination
  • Prescriptions written for generic metformin HCl ER should be clarified with the prescriber as to which version is preferred and make a clinical note on the prescription
  • Clinical notes should contain the date of the call, the name AND title of who you spoke with, what was discussed, and your initials
  • If substitution is required between versions that do not have the same TE code (e.g., Fortamet® to Glumetza®/AB2 to AB3), you will need to obtain prescriber approval and make a clinical note on the prescription
  • Prescriber approval is required even if the plan requires one formulation over another
  • TE codes can be identified by using the FDA Orange Book

Diabetic Test Strip Authorized Distributors

Independent pharmacies continue to receive threatening letters from LifeScan and an affiliated law firm on a monthly basis. These letters argue that pharmacies submitted more claims for LifeScan’s OneTouch® diabetic test strip products to PBMs than are supported by purchase history from authorized distributors. This is essentially an “invoice audit” conducted behind the scenes and pharmacies are not participants until they receive the negative results.

Additionally, these letters threaten to expose pharmacies to harm by withholding rebate dollars owed to PBMs and notify PBMs of the pharmacy’s “non-compliance” unless the pharmacy pays a large amount of money to make the issue “go away”.

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As readers are well aware, it is difficult to make a profit on insured claims where PBMs control the selling price, so it is logical to look to lower your cost of goods as much as possible to either squeak out a little profit or minimize the losses. What becomes problematic is trying to buy at the lowest cost possible while also adhering to PBM contractual requirements and ensuring that products obtained through the supply chain are legitimate.

Because diabetic test strips are classified by the FDA as OTC medical devices, they fall outside of the Drug Supply Chain Security Act (DSCSA) and there is no requirement for a “pedigree” to ensure sourced product is legitimate and not stolen, counterfeit or previously dispensed (gray market). Pharmacies need to take extra care when considering sourcing product that is advertised at a lower cost compared to your primary wholesaler. Manufacturers have developed and maintained “lists” to aid supply chain partners like pharmacies.

Manufacturer Authorized distributor lists for major diabetic test strips:

  1. Abbott https://www.diabetescare.abbott/support/distributors.html
  2. Ascensia https://www.ascensiadiabetes.com/ (click on “distributors” at the bottom of the page)
  3. LifeScan www.genuineonetouch.com
  4. Roche https://rxvp.accu-chek.com/welcome/adr_list
  5. Trividia HealthTM https://www.trividiahealth.com/where-to-buy/

It is also important to understand what each of the major PBMs have to say about sourcing diabetic test strips. While OptumRx does NOT explicitly require pharmacies to purchase test strips from authorized distributors, they do require that pharmacies source all products (including OTC test strips) from vendors that are both (i) licensed as a drug wholesaler in your state and (ii) an NABP accredited drug distributor. Both Caremark and Express Scripts have language in their respective Provider Manuals to require network pharmacies purchase test strips from authorized distributors only.

Finally, there are two states (California and New Jersey) that have regulations pertaining to the purchase and distribution of OTC diabetic test strips.

PAAS Tips:

  • Be mindful of the interplay between state pharmacy regulations, PBM contract requirements and manufacturer distribution channels when making inventory purchase decisions – the lowest possible price may cause you to run afoul of requirements
  • Contact PAAS at (608) 873-1342 or info@paasnational.com if you receive a letter from LifeScan or an affiliate law firm regarding purchases of diabetic test strips so that we can assist you in navigating a response

Ensuring Audit Readiness: What PBMs Look for in Signature Logs and Proof of Delivery

One of the most common questions PAAS National® receives from our members is: what are the requirements for audits when signature logs are requested. This article contains reminders and requirements auditors will be looking for to help ensure your pharmacy will be prepared.

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With the end of the Public Health Emergency on May 11, 2023, PBM waivers were rescinded regarding signature collection and mailing allowances, except for Humana who permitted the mailing waiver until December 31, 2023. Pharmacies must remind all staff to collect signatures at the time of prescription pickup and delivery. Not complying could result in big audit recoupments and lots of hassle for pharmacies to appeal.

Pharmacies and patients alike became used to not having to sign at prescription pick up, or like the convenience of having their local pharmacy mail or deliver medications to them. Unfortunately, getting patients to understand what their insurance requires can be difficult, but is necessary.

The large PBMs like Caremark, Humana, OptumRx and Express Scripts allow delivery of prescriptions, but some do have limitations or restrictions. Some PBMs may include these restrictions in their pharmacy contract agreements and not their provider manuals.

Two of the largest PBMs restrict delivery as follows:

  • OptumRx® Pharmacy Provider Manual specifically states deliveries can only be done by a pharmacy’s W-2 employee within a 100-mile radius. The use of common carriers, including USPS are prohibited by this PBM.
  • Caremark® Pharmacy Provider Manual states pharmacies that deliver greater than 20% of monthly claims by common carriers, including USPS, are not considered “Retail Pharmacies”.

PAAS Tips:

  • Remind all staff that signatures are now required for all in-store pick-up and delivered prescriptions
  • Signature logs, delivery logs, and tracking must include the date the patient received the prescription
  • Pharmacy staff and delivery drivers are not allowed to sign on behalf of a patient
  • Pictures showing delivery was made, or patient “authorization” to leave at their door is not acceptable for PBM audits
  • When utilizing a common carrier, the PBM requires a link between the prescription and the tracking
  • Tracking information is required for audit purposes, so be sure you have access to this information after deliveries have been made
  • Pharmacies that mail or ship prescriptions out of state must adhere to the receiving state’s licensure requirements
  • PAAS has additional resources available on our website, including Signature Log Book to be Printed and our Signature Trifold Mailer