Youngstown Daily Legal News

Bill would protect pharmacists from sketchy auditing practices

TIFFANY L. PARKS
Special to the Legal News
Published: July 22, 2014

Independent pharmacists are standing alongside a Zanesville lawmaker in pushing for the passage of Senate Bill 258.

The proposed legislation would establish standards for the performance of pharmacy audits such as required notice if an audit is to be conducted on the premises of a pharmacy.

The bill, sponsored by Republican Sen. Troy Balderson, specifies that claims for payments more than two years old cannot be included in a pharmacy audit.

It also details how a pharmacy may validate a pharmacy record or claim for payment and requires auditing entities to submit a preliminary report to pharmacies prior to completing the final report.

The bill would also ban an auditing entity from seeking to recoup amounts from a pharmacy when the audit identifies a clerical or record-keeping error that caused no financial harm, absent an indication that there was an error in the dispensing of a drug.

“As a pharmacist and a business owner, I realize the importance of audits in an effort to decrease fraud, waste and abuse,” said John Coler of Shrivers Pharmacies, located in the Zanesville area.

“However, the pharmacy benefit manager (PBM) industry has used this audit need to give them the opportunity to wrongfully take back money from pharmacies that were paid for services provided to their client.”

As an example, Coler said a pharmacy will provide a medication, a patient will use the medication and then, up to five years later, the PBM will conduct an audit and recover money paid to the pharmacy for services based on clerical errors.

“These companies have learned to target claims that are high-dollar medications that are likely to have a clerical error,” he said.

“Payments are wrongfully taken back when the doctor uses a patient’s middle name or nickname, the provider forgets to date the prescription or write the patient’s address, the provider forgets to write their DEA number (or) the technician enters an incorrect number in the computer that had no effect on patient care and resulted in no cost to the PBM.”

Coler said SB 258 provides safeguards for such tactics.

“The PBMs have come to utilize audits as a revenue stream for their companies. They are aware that their current auditing practices are not based on what is honest and fair, but a way for them to take money back that was rightfully paid to the providers that care for their patients,” he said.

If enacted, SB 258 would authorize a pharmacy to appeal findings in an auditor’s preliminary report, requires auditing entities to submit a final report to pharmacies and permits a pharmacy to resubmit a disputed or denied claim for payment, so long as the time period for resubmission has not expired.

The bill also aims to exclude Medicaid managed care organizations from the provisions governing pharmacy auditing procedures if application of the provisions would violate federal law.

In support of SB 258, the National Community Pharmacists Association issued a statement saying Ohio pharmacists need relief from “abusive” audits.

“It should not be a punishable offense when a pharmacist dispenses the right medication as prescribed to the right patient at the right time and for the agreed-upon reimbursement,” said NCPA CEO B. Douglas Hoey.

“Yet across the Buckeye State, pharmacists are struggling with egregious audits focused on hyper-technical clerical issues. These time-consuming reviews limit pharmacists’ ability to care for patients. In addition, auditors seek any excuse, no matter how small, to take thousands of dollars away from pharmacies and local communities and send them out-of-state to Fortune 500 pharmaceutical middlemen.”

Richard Carano, who owns a chain of independent pharmacies with his wife, also endorsed SB 258.

“I have two pharmacies in the Youngstown area and a pharmacy in Pennsylvania. Over just the past three years, eight independent pharmacies inside a 10-mile radius of my pharmacy in New Middletown have closed their doors for good,” he said.

“I have done my best to meet the needs of the affected patients, but my ability to service the people of my community and remain profitable is seriously affected by PBMs. They have become powerful players in a complex health care system and are capable of exerting massive influence in many harmful ways.”

In filling a prescription for Accutane, Carano said one of his pharmacists failed to recognize that the physician had mistakenly dated the prescription for the following day.

“The auditor rhetorically asked, ‘How can you fill a prescription before it was written?’ and promptly disallowed the claim. My pharmacy spent $500 for the cost of the drug and had performed a legitimate service for an eligible patient, but because of an insignificant oversight that was really an error by the prescriber, the PBM auditor claimed the right to recoup the entire cost of the prescription,” he said.

Carano then pointed to a situation involving his “best and most careful pharmacist” and a prescription for Lovenox and six refills.

The prescription was written by an Ohio doctor and filled in Pennsylvania.

Carano said his pharmacist called the insurance help desk to inquire how they wanted to handle the doctor’s number since he had no Pennsylvania license number.

“She was instructed to use a dummy DEA number so that the claim could go through. Upon a later PBM audit, the auditor deemed the DEA number invalid and charged back the value of the Lovenox and all of the refills,” he said, noting the value of the prescription was $18,000.

“It took four months of letter writing and phone calls to finally get his decision overturned. Sure, I got the money back that time, but of course, there is no reimbursement for the countless time and effort I had to put in to settle this totally unnecessary matter.”

Carano said none of his colleagues believe that PBMs should not be able to audit but want the audits limited to acts of fraud, waste and abuse.

“We feel helpless and abused by the massive size and strength of the PBM industry. Their demands consume much of our time and are financially destructive, and in the end, no patient or plan sponsor sees any of this money that they take back,” he said, adding that PBMs started out as a facilitator to the insurance industry.

“In time they found that they were positioned right in the middle of every transaction that occurs between the insurance company, pharmacy, drug company and plan sponsor, and there is no doubt plenty of financial incentive to take advantage of their position.”

In noting that more than 30 states have enacted measures similar to SB 258, Coler expressed concern about speaking out against the current PBM industry.

“Our pharmacy deals with 20 to 30 audits a year, so there is always one on our plate. And unfortunately, I am concerned that ... I will receive more audits,” he said. “In fact, I know many pharmacies that are afraid to be public about many of the problems they have with PBMs out of fear of retribution.”

After unanimously being passed by the Senate in late March, the proposed legislation was recently reported out of the House Health and Aging committee.

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