New Survey Reveals Pharmacists Are Increasingly Struggling to Care for Patients Amid Predatory Audits, Unfair Reimbursement Practices

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National Community Pharmacists Association

Aug 03, 2011, 11:59 ET

Trend Threatens Pharmacists' Participation in Medicare, Health Plans

ALEXANDRIA, Va., Aug. 3, 2011 /PRNewswire-USNewswire/ -- A new survey of 1,850 members of the National Community Pharmacists Association (NCPA) released today has identified two rising problems that are increasingly undermining the trusted, cost-saving patient care that millions of seniors and other Americans rely on from independent community pharmacists.

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NCPA asked community pharmacists about their experiences with pharmacy audits and generic-drug reimbursement limits (known as "maximum allowable costs" or MACs). Employers and health plans often contract audit and MAC-setting responsibilities to controversial, middlemen known as pharmacy benefit managers (PBMs), which also operate mail order facilities that compete with local pharmacies.

The survey produced two main findings. First, the pharmacy audits, rather than concentrating on true fraud, often punish pharmacies severely for trivial issues (e.g., a busy physician misspelling a patient's name or writing the incorrect date). Second, pharmacies are not privy to basic reimbursement (MAC) methodology prior to signing contracts with health plans and find that, during the life of contract, those MAC limits are both lowered arbitrarily and raised belatedly in response to generic drug cost increases. The 1,850 survey respondents represent a significant increase from the 107 responses received to a similar survey in 2010, which would seem to indicate that the severity of these issues is rising.

"Ostensibly, pharmacies are audited to guard against fraud, whereas payment caps are established to ensure appropriate reimbursement for generic drugs," said NCPA Executive Vice President and CEO B. Douglas Hoey, RPh, MBA. "However, this survey indicates that both have gone well beyond their intended purpose, while padding windfall PBM profits. Left unchecked, these practices will further undermine both the pharmacists' ability to care for patients, as well as the viability of small business, community pharmacies and the local jobs and taxes they provide."

Among the survey's findings:

Excessive audits are decreasing the time pharmacists can devote to patients. Illustrating the compliance burden, 62 percent considered the audit requirements to be completely inconsistent from one health plan to another; 48 percent of pharmacists report auditors asking them to justify claims that are two years old or older; and, of the pharmacists who report having appealed a PBM audit, 81 percent describe that process as burdensome and unsatisfactory;
98 percent say PBM record keeping requirements go beyond state and federal law and that even minor, incidental instances of noncompliance are harshly penalized by commission-driven auditors;
Community pharmacies must sign "blind", take-it-or-leave-it contracts with large PBMs to maintain access to patients. Nearly all (91 percent) community pharmacists report receiving little or no information justifying how PBMs arrive at reimbursement rates for generic drugs and how often the prices will be updated to reflect a pharmacy's cost;
71 percent of pharmacists tried to use the PBM's appeals process when they believed that the reimbursement caps, or MACs, did not reflect the pharmacy's costs. Many pharmacists complained about the one-sided nature of the appeals process and noted that MAC-based reimbursement can take months to increase after drug costs spike (and is virtually never done retroactively), but is reduced immediately when prices go down; and
Finally, when asked how PBM reimbursement and auditing practices affect pharmacists' ability to provide patient care and remain in business, 97 percent said it was a significant or very significant factor.

To see pharmacist quotes which are representative of the findings above read "2011 PBM Audit Survey Stories" available here.

"The inappropriate use of prescription medication is already estimated to cost as much as $290 billion annually," Hoey added. "In addition, community pharmacists dispense lower-cost generic drugs over 20 percent more often than mail order, which favors more expensive alternatives. Government and private payers deserve measures that prevent fraud but the survey suggests that PBMs are overplaying their market dominance and picking the pocket of small business owners based on technicalities and rules rigged to penalize legitimate prescriptions. The survey also looked at the PBM's appeals processes and the findings suggest that they are mostly window dressing designed to frustrate pharmacies until they give up. Considering the emphasis PBMs place on moving prescription business out of communities and into their own mail order pharmacies, one has to wonder if there is underlying motivation.

Hoey concluded, "Medicare, in particular, is a program in which community pharmacists play a vital role helping seniors. We urge the Centers for Medicare and Medicaid Services to use their authority to issue guidance to plans about legitimate audits designed to catch true fraud and require a prompt appeals process. For these and other reasons, Congress should move to hold hearings and pass the bipartisan Pharmacy Competition and Consumer Choice Act."

The Pharmacy Competition and Consumer Choice Act of 2011 (S. 1058/H.R. 1971) would attempt to address these abusive practices. The bill, opposed by the major PBMs due to its potential affect on their earnings and their executives' Wall Street-inspired compensation packages, would:

Prohibit unfair penalizing of pharmacies for typographical/recordkeeping errors and keep the focus of audits on the actual pursuit of fraud.
Prohibit forcing patients to use a specific pharmacy (retail, mail, specialty) if the PBM has an ownership interest in that pharmacy (or vice versa).
Prohibit PBMs from requiring more stringent recordkeeping than state or federal law/regulation.
Allow for a written appeals process and require disclosure of audit recoupment to the sponsor.
Allow pharmacies access to basic methodology for determining reimbursement rates and require those rates to be updated frequently.

The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies, pharmacy franchises, and chains. Together they represent a $93 billion health-care marketplace, have more than 315,000 employees including 62,400 pharmacists, and dispense over 41% of all retail prescriptions. To learn more go to www.ncpanet.org or read NCPA's blog, The Dose, at http://ncpanet.wordpress.com.

SOURCE National Community Pharmacists Association