Legislature(2011 - 2012)BARNES 124
03/16/2012 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB218 | |
| HB259 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 218 | TELECONFERENCED | |
| += | HB 259 | TELECONFERENCED | |
HB 259-PHARMACY AUDITS
4:45:00 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 259, "An Act establishing procedures and
guidelines for auditing pharmacy records; and providing for an
effective date."
CHAIR OLSON opened public testimony on HB 259.
4:45:09 PM
ROSE KALAMARIDES, Administrator, Alaska Teamster Trust Funds, on
behalf of the Teamsters and the Teamster-Employee Trust Funds,
spoke in opposition to HB 259. She said she has read through
the bill and it is not well-defined and will be a confusing bill
for the state, especially since the state will need to
administer it.
MS. KALAMARIDES then read from a prepared memo, dated March 16,
2012, which read [original punctuation provided]:
Plans, such as ours, hire a pharmacy benefit manager
(the PBM), which provides all pharmacy services to our
members and helps us control pharmacy costs. Part of
the role of the pharmacy benefit manager is to audit
the claims for our members.
This bill clearly goes to protect the pharmacies but
does little for the consumer (our member) who is the
payer. This is not a revenue neutral bill. This would
require state oversight which is duplicitous and
unnecessary. The bill is so poorly written that it
would be onerous for the state to administer.
MS. KALAMARIDES paraphrased that the contract between the PBM
and the pharmacies covers much of this. When a PBM contracts
with a pharmacy it covers all types of issues, including the
notice requirements contained in the first two subsections of HB
259.
MS. KALAMARIDES continued to read from a prepared memo, dated
March 16, 2012, which read [original punctuation provided]:
While we have no problem with these, they are
unnecessary and an issue to the contracting parties.
We take particular issue with several of the
requirements:
Subparagraph 3 requires the audit of a claim shall
occur within two years. Medicare and Medicaid require
10 years.
Subparagraph 4 is vague and not well written. In
reading it, I'm not even sure what supposed problem
they are attempting to address.
Subparagraph 5 is vague and not well written. Who will
decide the standards and parameters? What is the
definition of a "similarly situated pharmacy?" The
contracts between the PBM and the pharmacy already
cover the auditing standards.
Subparagraph 6 is the most objectionable in the
proposed law. One of the major benefits of an audit is
for a consumer to find fraud. For example, if a
pharmacy is committing fraud by marking up
prescriptions by $1, this subparagraph could hinder
the auditor's authority to name it what it is-fraud.
Subparagraph 7 is vague and not well defined.
Subparagraph 8 is objectionable. There are several
parties involved in a prescription benefit plan,
including the member, the fund, the consultant, the
attorney, the PBM and the pharmacy. There are already
confidentiality agreements imbedded in the contracts
between the PBM and the pharmacy so these reports can
only be distributed to interested parties under the
contract terms.
4:48:24 PM
MS. KALAMARIDES continued to read from a prepared memo, dated
March 16, 2012, which read [original punctuation provided]:
Subparagraph 9 and 10 are objectionable. Extrapolation
is used in most audits. When you have volume claims,
it is not possible to audit every claim, so
extrapolation is a reasonable method to determine the
amount the pharmacy should pay if errors are found.
Extrapolation is used in all forms of audits. Besides,
if the error rate is high, the auditor will continue
to expand the sample until they establish a pattern.
This is clearly an attempt by pharmacies to limit
their financial exposure which is unfair to those who
are paying these claims.
Subparagraph 11 doesn't make sense. Dispensing fees
are not the only revenue the pharmacy receives. They
may claim this, but they make money on the drug too.
There is a lot of revenue built into the dispensing
fee and is paid by the plan and should be part of the
overall claim.
Subparagraph 12 is unnecessary. This is covered in the
contracts with the pharmacy and they generally allow
for 90 days.
Subparagraph 13 is interesting. In the prior
paragraph, the auditor must deliver the audit "within
60 days" and in this paragraph, the pharmacy has "at
least 30 days to respond." Clearly this entire piece
of legislation is tilted in favor of the pharmacy and
away from the consumer.
Subparagraph 14 is vague and could only create
problems and costs for the state who will be expected
to administer such a provision.
Subparagraph 15 is confusing. Doesn't a final appeal
come after a final audit report? 14 and 15 appear to
create an unending circle. Again, this is too vague to
administer.
Subparagraph 16 is unnecessary. This is covered in the
contract between the parties. Again, dispensing fees
should not be excluded from the final analysis of an
audited claim.
Subparagraph 17 is objectionable. How we pay our
auditors should not be something the pharmacy
dictates. The pharmacies do not pay for these audits.
Plans like ours do. Thereare many different manners in
which auditors may be paid. Restricting the consumer's
freedom to contract with auditors on their own terms
is objectionable.
Subparagraph 18 is objectionable. If we have overpaid
a pharmacy, why should they have had the use of our
revenue without refunding us, plus interest?
We have no objection with subparagraph 19.
4:51:15 PM
CHAIR OLSON asked whether the Alaska Teamster-Employer Trust
Funds receive a fee or rebate from the PBM based on the audit.
MS. KALAMARIDES answered that the manufacturer, but not PBM
provide the rebates.
4:51:37 PM
REPRESENTATIVE SADDLER referred to the objection in [paragraph]
11. He asked for clarification on who is paying the claim, for
what, and to whom.
MS. KALAMARIDES responded that the Alaska Teamster's Plan is a
self-funded plan and the plan is not insured. The money that
pays for all the claims results from direct negotiations between
the union and the employers who employ the members.
Essentially, it is the members' money since it is part of their
wage package, including their medical and pharmacy benefits.
The Teamsters contract with the PBM, which is simply an agency
that controls the pharmacy costs. She described the process.
Members take their prescription to a pharmacy, which is also
under contract with the PBM. The members bring in their
prescription drug cards, which identify them as Teamster members
with health and pharmacy benefits. The pharmacy runs their
cards through the program, which identifies the amount the PBM
will cover for the drugs and the amount the members must pay.
She concluded that at the end of the day the Teamsters pays the
PBM for all pharmacy transactions for all Teamster members.
4:53:44 PM
CHAIR OLSON suggested that Representative Saddler might be
confusing claim and benefit. He clarified that it is a claim
when the prescription is made against the plan, but the
prescription is a benefit to covered employee.
MS. KALAMARIDES agreed.
4:53:56 PM
DIRK WHITE, Pharmacist, White's Inc.; Member, Board of Pharmacy,
Department of Commerce, Community & Economic Development, stated
that the Board of Pharmacy supports the bill. He said committee
members' should have a letter of support from the Board of
Pharmacy in their packets. The pharmacists do not have any
issue with audits being conducted for fraud and abuse; however,
when a prescription is legal, valid, and filled according to
state and federal statutes and regulations it should be allowed
to stand as unrecoverable. He indicated that audits can be very
costly to pharmacies and if pharmacies must absorb these costs
it might reduce access to the primary care community pharmacies
provide when the pharmacies close. He pointed out that his
pharmacy is currently undergoing several audits that total about
$7,000 for two wheelchairs and he may need to close that portion
of his business since his pharmacy cannot suffer that type of
loss. He said the pharmacy provided the wheelchairs to the
patients and the chairs worked well for the patients, but the
pharmacy cannot produce a certain piece of paper for the
auditors. There is no fraud or misuse, yet the auditors will
likely require his pharmacy to repay the cost. He pointed out
that complaints of fraud and misuse come to Board of Pharmacy
and are reviewed. Thus he did not see the need for audits
outside of federal regulations. He commented that he has heard
previous testimony that pharmacists can negotiate their
contracts, but he has never received a returned contract
containing his modifications. He lines out items but the
revised contract is not returned and when he calls about the
contract is informed that he must accept the terms. The
contracts are "take it or leave it." He also heard testimony
that dispensing fees cover the costs. He recently opened a
contract containing a dispensing fee of $1. The Alaska Medicaid
[and Health Care Policy, Division of Health Care Services] did a
cost to dispense survey three years ago and found dispensing
fees should range from $11 to $27 in rural areas. He said that
no insurance company or PBM is currently paying that type of
dispensing fee. He urged members to please support HB 259.
4:57:04 PM
JULIE MCDONALD, Independent Pharmacist, PHARMD, Board Member,
Alaska Pharmacists Association, stated that she is speaking on
behalf of independent rural pharmacists. In 2008, she became a
pharmacist. She initially thought the audits would be great,
but she has since come to the opinion that audits are nothing
more than an attempt to recruit revenue back to the insurance
company. She described a scenario in which a patient named Anne
obtains a prescription and the prescriber writes the name as
Ann. The pharmacist fills the prescription and even though the
last name, date of birth, and address make it very clear the
correct patient is being served, an auditor will say the doctor
did not put an "e" at the end of the name "Ann" and reach the
conclusion that is the wrong patient. Next, the auditor will
require repayment for the original prescription filled as well
as every subsequent refill for the prescription drug. She
acknowledged this scenario only represents one instance, but she
has also seen independent pharmacies billed up to $12,000 on
audits. Rather than highlight numerous instances of problems
she has encountered, she offered to describe six trends she has
observed happening in audits: First, the selection of high cost
prescriptions to audit instead of an auditing prescriptions that
have high error rates or those drugs which are frequently
abused. Second, auditors consistently seem to arrive at the
busiest time for the pharmacies, such as on a Monday or the
first week of the month. Third, the audits greatly disrupt the
pharmacists from providing patient care and interrupts workflow.
Fourth, auditors use extrapolation to calculate overpayment,
which results in grossly exaggerated figures. Fifth, auditors
frequently ask for documentation that is not required by state
or federal law and has not previously been requested by
insurance companies. She related a scenario in which a patient
needed a prescription drug filled for a vacation - a vacation
supply. The pharmacist called the doctor and the insurance
company before filling the prescription early. The pharmacist
noted remarks on the prescription including the reason for the
early filling. More than a year later the auditor wanted to
know why a specific code was not written on back of the
prescription. The pharmacist did not understand the need for
the code and the auditor subsequently required repayment of the
claim. Sixth, the most troubling of all is that pharmacies are
not left any means to adequately appeal audits, which is
especially true for small independent pharmacies since these mom
and pop pharmacies do not have legal departments or other
resources available to them. She concluded by noting that
sometimes audits are conducted by insurance or PBMs owned by a
large chain store. Therefore small independent pharmacies are
essentially being audited by their much larger competitors. She
said she is not opposed to large chain pharmacies; however, she
characterized this as similar to having Burger King inspect
Bob's Hamburger Shop, which might result in a large problem for
Bob. She appreciated the committee's willingness to hear HB
259.
5:01:19 PM
REPRESENTATIVE SADDLER asked for the fourth trend.
DR. MCDONALD answered that extrapolation leads to exaggeration.
[HB 259 was held over.]