The Definition of Oversee: to watch over and direct (an undertaking, a group of workers, etc.) in order to ensure a satisfactory outcome or performance.
This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.
How to Determine if Your Company [or Client] is Overpaying
Step #1: Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.
Step #2: In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.
Step #3: Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.
Step #4: Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.
Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.
— Tip —
Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.
The Mississippi Division of Medicaid confirmed the probe to the Daily Journal on Monday. Medicaid officials said the attorney general’s office hired outside attorneys to “investigate and potentially pursue claims” that include Centene’s management of pharmacy benefits.
Tyrone’s Commentary:
States have pivoted from evaluating PBM performance on discount guarantees and rebates to the PBM’s management fee. EACD or the PBM management fee is the amount of money a PBM is being paid to provide its services. It is only after you know how much money a PBM is taking home that you begin to realize the magnitude of overpayments. Running an efficient pharmacy benefits program requires sophistication, bravery and steadfastness.
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In my business, I’ve always recommended a continuous monitoring process. Continuous Monitoring or CM would have identified Ohio’s and Mississippi’s problems before they got out of hand. This of course assumes you have the right advisor working on your behalf. Most don’t know the difference between a ZBD claim and a clawback. But I digress. Audits occur 12 – 24 months after the fact which is too late to recoup the majority of overpayments. Continuous Monitoring on the other hand, catches and resolves overpayments or other issues much faster. Even with the full power of the AGs office, I’d be surprised if the plaintiffs win.
The investigation is in the early stages but is similar to a recently-announced Ohio lawsuit against Centene, said Colby Jordan, a spokeswoman for Attorney General Lynn Fitch. In that case, authorities allege Centene overcharged Ohio taxpayers by millions of dollars.
The Ohio suit, according to Yost, alleges three areas of wrongdoing: requesting reimbursements for amounts already paid by the state, failing to disclose the true cost of pharmacy services, and artificially inflating drug dispensing fees. Yost’s office suggested that Centene’s practice of subcontracting with more than one firm to provide pharmacy benefits had raised red flags.
In Mississippi, Magnolia Health uses at least two companies – Envolve Pharmacy Solutions and RxAdvance – to get drugs to Medicaid recipients, according to a 2019 Centene news release.
How many businesses do you know want to cut their revenues in half? That’s why traditional pharmacy benefit managers don’t offer a fiduciary standard and instead opt for hidden cash flow opportunities such as rebate masking. Want to learn more?
“Thank you Tyrone. Nice job, good information.” David Stoots, AVP
A snapshot of what you will learn during this 30 minute webinar:
In response to growing consolidation and increasingly monopolistic behavior in the pharmacy and health care industries, AIDS Healthcare Foundation (AHF) is launching a new advocacy campaign to take on pharmacy benefit managers (PBMs) that are undercutting community pharmacies and driving up drug prices.
AHF’s ‘Stop PBMs’ campaign will include direct and online community mobilization, legislative outreach, online and print advertising, a website, social media posts and more, all urging greater regulation of these corporate health care middlemen that are driving up drug prices. According to AHF, Ryan White contract pharmacies & independently owned pharmacies are being hurt by PBMs in several ways:
(1) PBMs often enforce mandatory mail order of prescription drugs by their patients/clients, and
(2) Force expensive drugs onto patients
(3) Send six months’ worth of medications that may, or will expire
(4) Send refrigerated medications that will go bad sitting on doorsteps
(5) Force pharmacies into accepting reimbursement that doesn’t cover their costs through take it or leave it contracts and abusive practices like clawing back reimbursements months or years after payment.
Tyrone’s Commentary:
If you’ve read any of my previous blog posts you know that I give non-fiduciary PBMs no slack. I just personally believe it is better to do a lot of good and make less money then to make a lot of money and do harm. That being said, most of what AHF is purporting is spot on but one thing bothers me. The finger always gets pointed at the PBM. Plan sponsors rarely take responsibility for their role in how the pharmacy benefit is managed or what it ultimately costs. No one ever says, “You know we really suck at managing our pharmacy benefit no wonder our PBM takes us to the cleaners. Maybe we should get smarter about how to manage the darn thing.” PBMs generally rely on the demands of their clients for how much information they disclose and how close you get to lowest net cost. If you are overpaying, it is likely your own fault. The non-fiduciary PBM is simply leveraging the purchasing power of its unsophisticated clientele.
This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.
How to Determine if Your Company [or Client] is Overpaying
Step #1: Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.
Step #2: In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.
Step #3: Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.
Step #4: Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.
Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.
— Tip —
Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.
This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.
How to Determine if Your Company [or Client] is Overpaying
Step #1: Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.
Step #2: In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.
Step #3: Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.
Step #4: Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.
Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.
— Tip —
Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.
1. Network tightening, including removing a single large chain, can result in more aggressive savings on ingredient costs without any loss in access. The type of network a PBM is running (i.e. acquisition cost, pass-through etc.) is less important than knowing what exactly the pharmacy is being reimbursed. The difference between what a plan sponsor is billed for ingredient costs and the amount a PBM reimburses a pharmacy for the same claim is called the spread.
2. The best way for a plan sponsor to determine if they are paying a spread is to know what the pharmacy is being reimbursed for that same claim at the NDC level. The 835 Health Care Claim Payment and Remittance Advice is the tool you need for disclosure of this information and ultimately getting to lowest net cost. Two basic sources of information are needed to permit an audit of the spread on a series of prescription transactions: (1) employers’ line-item Rx transaction invoices received from PBMs each month and (2) dispensing pharmacies’ itemized list of Rx transactions received with PBMs monthly payments. Generic discounts are often priced in one of two ways: as an AWP discount or at Maximum Allowable Cost (MAC). A large price gap usually exists between these two pricing elements.
3. Does the PBM offer any programs to help offset the cost or manage specialty drugs that are paid on the medical benefit? Site of care optimization simply means having a strategy to seek out and promote the most economical and clinically effective place to deliver care for a particular patient. While this may prove bothersome to some patients and third party administrators, you can’t have it both ways. Whomever covers the largest share of the drug cost should have the most say in the locations from which these very expensive drugs are dispensed. I don’t walk into my friends’ homes go into the refrigerator and put my feet on their sofas. You know why? I don’t pay their mortgages. Site of care management is good for self-funded employers. Since you cover most of the drug costs, its only right you have the final say so in where high cost drugs are dispensed.
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| Source: Evernorth 2020 Drug Trend Report |
4. COVID-19 may have depressed your overall utilization. Health insurance carriers have reported in their earnings calls that utilization of outpatient care was down significantly for much of 2020. New starts for prescriptions were also down. Find out your plan’s utilization patterns and if you should expect an increase as states reopen.
5. Programs that utilize manufacturer copay coupons to offset specialty medication costs are gaining in popularity. For plan participants, these programs typically set a zero-dollar cost share for qualifying specialty medications. For plan sponsors, these programs may save up to 20%-25% of specialty spend.
6. Tweak your formulary with little to no member disruption. A formulary is a list of drugs favored by the PBM for their clinical effectiveness and cost savings. Manufacturers of specialty and branded drugs often promise financial incentives to have their drugs featured on the formulary. Drug formularies can be open, incented, closed or hybrid. There are five factors necessary for the makings of a good formulary. These factors include multiple enforcement mechanisms, a minimum five-tiered list of drugs, understanding of how the drugs are assessed, a firm dispute resolution process and an expedited appeal process. Each PBM has varying degrees of flexibility when it comes to formularies. A change may lead to lower net costs.
7. Human immunodeficiency virus (HIV) medications have recently become a hot topic in the pharmacy space. Per the Affordable Care Act (ACA), employer-sponsored health plans are required to cover the HIV specialty drugs Pruvada and Descovy at 100% beginning their first plan year following June 19, 2020. The requirement follows a United States Preventive Services Task Force (USPSTF) recommendation that health plans cover pre-exposure prophylaxis (PrEP) with effective antiretroviral therapy to persons who are at high risk of HIV acquisition. Across our book of business, we saw an increase in the usage of these medications. This caused the HIV class to jump up for many employers’ top therapeutic classes. Plans should budget for this trend to continue.
8. A 2020 drug trend report concluded specialty drug spending outweighed traditional drug spending for the first time ever. Commercial employers must engage all stakeholders and develop a pharmacy benefits management strategy which centers around high-cost ($15,000 or more per year) drug therapies. It goes without saying, any effort by a non-fiduciary PBM to protect its profit margins will start and end with specialty drugs. Understand PMPM by comparing your YOY trend and how it compares to relevant benchmarks. Put trend in context as percentages can be misleading.
There are two things which should be non-starters for purchasers of PBM services. One, having full access to your own claims data free of charge. Second, knowing what you pay a PBM for the services it was hired to perform. Your PBMs management fee is hidden in the plan’s final cost. Alvin Toffler wrote, “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” Education is the most logical and effective foundation for achieving extraordinary levels of efficiency in a pharmacy benefit program.
This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.
How to Determine if Your Company [or Client] is Overpaying
Step #1: Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.
Step #2: In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.
Step #3: Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.
Step #4: Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.
Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.
— Tip —
Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.
On the heals of SCOTUS’s recent ruling, several states have passed legislation to regulate PBMs. The United States Supreme Court declared in Rutledge v. Pharmaceutical Care Management Association that states do have the ability to pass legislation that requires pharmacy benefit managers to reimburse pharmacies for drugs at a rate equal to or higher than the pharmacies’ wholesale cost.
In its unanimous 8-0 opinion, the Court ruled that Arkansas’s law is not preempted under ERISA and that states may enact laws that regulate PBM reimbursement costs to pharmacies. Now, there is a model law making its way through the National Association of Insurance Commissioners (NAIC) that would establish a licensure requirement and rules of conduct for PBMs.
(2) Prohibition on Gag Clauses – A PBM may not prohibit a pharmacist from (i) discussing information regarding the total cost for pharmacist services for a prescription drug.
(3) Limitation on Price – A PBM may not require a covered person purchasing a covered prescription drug to pay an amount greater than the lesser of (i) the covered person’s cost-sharing amount and (ii) the amount the covered person would pay for the drug if the covered person were paying the cash price.
There is little doubt that the Supreme Court’s ruling is going to cut into non-fiduciary PBMs’ cash flow. They are going to be required to reimburse pharmacies more and will no longer be able to charge the higher copay when the ingredient cost is lower (clawback), for example. Yet, non-fiduciary PBM revenues and profits will continue to grow but how? They will shift the cost but where? Unsophisticated commercial employers will undoubtedly pick up the lion’s share of the cost shift.
In 2020, specialty drug spending outweighed traditional drug spending for the first time ever. Commercial employers must engage all stakeholders and develop a pharmacy benefits management strategy which centers around high-cost ($15,000 or more per year) drug therapies. It goes without saying, any effort by a non-fiduciary PBM to protect its profit margins will start and end with specialty drugs.