Report PBM Violations
Thursday, November 20, 2014
Posted by: Jeff Rochon
New PBM Law Goes into Effect: Report Violations to the Office of the Insurance Commissioner
What you need to know about the law
LRAC and the WSPA are pleased to announce that, with the help of a number of members, we successfully passed the first step in PBM reform. However, we are hearing that the PBM's are not complying with the new rules.
It is important for you to know the new law and understand what your rights are when it comes to audits and maximum allowable cost (MAC) pricing.
PBM Law Provisions: ESSB 6137 - An act relating to pharmacy benefit managers regarding registration, audits, and maximum allowable cost standards
PBMs are now required to register with the Washington State Department of Revenue’s Business License Services
- $200 application fee each year
- $19 handling fee with an $11 renewal fee
Maximum Allowable Costs (MAC)
- PBMs cannot place drugs on the list unless there are at least two therapeutically equivalent drugs available from at least two manufacturers or at least one generic drug available from one manufacturer
- All drugs on a list must be available for purchase from national or regional wholesalers and none of the drugs may be obsolete
- Upon request, PBM’s must make available to network pharmacies the sources used to determine the maximum allowable cost pricing
- Each list must be updated every seven business days and made available via website to network pharmacies
- Dispensing fees may not be included in the calculation of maximum allowable cost
PBMs must establish an appeals process to allow pharmacies to appeal a MAC if the reimbursement for the drug is less than the net amount the pharmacy paid to the supplier of the drug.
If the appeal is upheld, the pharmacy benefit manager must adjust its lists for all similarly affected pharmacies within a day of the decision.
Establishes standards for pharmacy benefit managers, insurers, third-party payors, and state agencies to use when auditing pharmacy claims, exempts Medicaid. Entities must:
- Have an appeals process in place for pharmacies to appeal findings
- Audit each pharmacy under the same standards used for other similar pharmacies
- Cannot conduct an audit of claims more than 24 months after the adjudication
- Requires a licensed pharmacist to be consulted with, if an audit involves clinical or professional judgment
- Except in cases of fraud, the entity cannot conduct an audit of more than 250 unique prescriptions within a 12-month period
- Prohibits the use of extrapolation methods and
- Clerical errors cannot be the basis of claims recoupment
- Entities must notify pharmacy in writing 15 days prior to an audit
- Audit cannot be conducted within the first 5 days of the month, unless pharmacy consents
- Entities cannot contract with a third party and give them monetary rewards for audit finding
What is accepted to validate a claim?
The entity must accept:
- An electronic or physical copy of a prescription if it was picked up, delivered, or sent within 14 days of dispensing
- Point of sale electronic register data; or
- Electronic records that have clear and accurate documentation corresponding to a claim
Within 45 days of an audit, the entity must provide the pharmacy with a preliminary report. The pharmacy then has 45 days to:
- Contest the report or any of its findings according to the appeals process; and/or;
- Provide additional documentation in support of the claim they are contesting
- Entity must provide the pharmacy with a final report within 60 days of receipt of the preliminary report or the date the pharmacy contested the report
- The final report must include all of the money to be recovered by the entity
- Recoupment of funds from a pharmacy will occur after the audit and the appeals procedures are final.
- If the identified discrepancy for an audit exceeds $40,000, the entity may withhold future payments until the audit and appeals procedure is complete
These requirements became effective June 12, 2014.
If the PBM fails to abide by these news laws, please file a complaint with the Insurance Commissioner’s Office (OIC).
If you have any questions, please feel free to contact Jeff Rochon at firstname.lastname@example.org