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Report PBM Violations

Thursday, November 20, 2014   (0 Comments)
Posted by: Jeff Rochon
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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
PBM Registration

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.

Audit Provisions


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

Notification Requirements

  • 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

Post-Audit Reporting
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).
  • Due to the number of complaints about violations and clarification over the jurisdiction of the OIC, we have been asked to tell patients or pharmacists/technicians filing complaints on behalf of a patient to call 1-800-562-6900 for guidance.  
  • The complaint must be filed against the health insurance plan (carrier) that has contracted with the PBM for provision of the pharmacy benefit. Please reference the PBM in the complaint but the complaint must be directed at the Health Insurance Plan since the OIC only has jurisdiction over health plans.
  • Patients are encouraged to file their complaints! Ask them to call 1-800-562-6900 for guidance.
  • Pharmacy personnel can file complaints on behalf of their patients but they must have permission to release the patient's medical information. If you include your patient's name or personal information, you must include the patient's signed medical release -- see Page 3 of the OIC Complaint Form. If you're only submitting general claim information (no patient names or personal information), you don't need a medical release.
  • OIC Guidance for Medical Providers Filing a Claim for a Patient

  • Who to Contact for Issues with Your Employer Health Plan
  • The OIC states that they do not have jurisdiction over self-funded plans, Medicare Advantage plans, Uniform Medical Plan, Federal employee health plans, or pharmacy benefit managers (PBMs). However, they do have jurisdiction over fully funded health plans which includes the contracted work done by PBMs for their beneficiaries.
  • Link to Contact Numbers for Health Plans NOT in the Jurisdiction of the OIC
    • In addition to the list above:
      • Tri-Care Puget Sound (800) 329-8387
      • Tri-Care Spokane (800) 325-7940
      • Tri-Care Western Washington (888) 874-9378

If you have any questions, please feel free to contact Jeff Rochon at

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