Legislature(2011 - 2012)BELTZ 105 (TSBldg)
03/01/2012 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB190 | |
| SB116 | |
| SB199 | |
| SB217 | |
| HB168 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 217 | TELECONFERENCED | |
| + | SB 199 | TELECONFERENCED | |
| += | HB 168 | TELECONFERENCED | |
| += | SB 190 | TELECONFERENCED | |
| = | SB 116 | ||
SB 217-PHARMACY AUDITS
2:20:34 PM
CHAIR EGAN announced consideration of SB 217.
DANA OWEN, staff to the Senate Labor and Commerce Committee,
sponsor of SB 217, said the issue of pharmacy audits has been
brought forward numerous times by local pharmacists, and an
identical bill was introduced into the other body. He said
Alaskan pharmacists are being bombarded with audits from the
pharmacy benefits management companies (PBM), insurance
companies and other state health care providers. SB 217 attempts
to standardize the audit process in order to allow pharmacists
to spend less time on paperwork and focus more time on patient
health.
Additionally, this legislation seeks to bring fairness to the
unregulated and expanding practices of pharmacy audits by ending
abusive practices that have harassed and harmed pharmacy
businesses. While audits are necessary and even a welcome part
of a good business practice, pharmacy audits have become unduly
burdensome and, in many cases, predatory. So acute has this
problem become that national companies have been formed to help
pharmacists with audits recover millions of dollars of
inappropriate audit charge backs.
SB 217 will ease the burden on pharmacists by requiring uniform
common sense standards and criteria for all pharmacy audits,
requiring written notice of at least two weeks before an on-site
pharmacy audit, requiring that an on-site audit not interfere
with the health care services being provided by pharmacists by
banning audits during the first seven calendar days of each
month when patient volume is highest unless the pharmacy and
auditor agree otherwise.
MR. OWEN said that SB 217 will further eliminate the highly
questionable practice of extrapolation as justification for
taking back claim money. It will eliminate the unfair take back
of money in cases of simple typographical errors when no
financial harm has occurred to the plan's sponsor, the PBM or
the patient. It will further require that audits involving
clinical or professional judgment be conducted by or in
consultation with a pharmacist licensed in the state.
For small pharmacies, especially, audit practices that have
become common are much more than mere nuisances. The time and
money lost can threaten the very viability of these businesses,
and SB 217 seeks to bring fairness and predictability back to
the practice of pharmacy audits.
SENATOR PASKVAN moved to bring SB 217, version 27-LS1411\A,
before the committee for discussion purposes.
CHAIR EGAN objected.
2:25:44 PM
MARGARET SODEN, Alaska Pharmacists Association, said she is
mostly retired as a community pharmacist in Fairbanks. She
supported SB 217. When she started being a pharmacist 45 years
ago, most patients paid cash for their prescriptions. Now the
majority of prescriptions are billed to third parties and along
with that has come audits of prescription records. SB 217 just
brings some standardization and fairness into the audit process.
The provisions of this bill allow pharmacists time to comply
with this audit request but cause less disruption to patient
care that pharmacies provide every day.
2:26:43 PM
BARRY CHRISTENSEN, Co-Chair, Legislative Committee, Alaska
Pharmacists Association, Ketchikan, supported SB 217. He said
their members work hard every day in retail pharmacies,
hospitals, nursing homes and medical clinic settings throughout
the state. This legislation would help create a level playing
field for pharmacists when dealing with pharmacy audits. Their
membership has made this their number one legislative priority.
They support the needs for audits to ensure that fraud, waste
and abusive activities are checked, but they must be conducted
in a fair and balanced manner allowing for a fair appeal and
payment for all services performed within the patient's benefit
structure.
He said pharmacies generally contract with PBMs in order to fill
and bill for consumers as part of the health benefit plan. PBMs
are names like Express Scripts, Medco and Caremark. Nearly all
prescriptions are filled electronically in real time. That is,
the pharmacy sends prescription information to the PBM and in
turn it sends back authorization for payment and other clinical
edits of concern like high dose warnings, drug interactions et
cetera. Pharmacies are reimbursed back for the cost of
medication plus a dispensing fee that covers the pharmacy's cost
of doing business. Typically, either the PBM or an entity
contracted by the PBM will perform audits on contracted
pharmacies to legitimately protect against fraud and abuse.
MR. CHRISTENSEN said it has been suggested by some that
pharmacies should be able to contractually deal with their
auditing concerns directly with a PBM, but most Alaskan
pharmacists have never been able to alter the terms of the
contract given to them except for the dispensing fees. It is
usually a take it or leave it offer. That is why they are asking
for some standardization in auditing practices to be applicable
to all plans and pharmacies in the state.
2:30:25 PM
DIRK WHITE, Vice Chairman, Board of Pharmacy, Sitka, said he
also serves on the Legislative Committee for the Alaska
Pharmacists Association. He supported SB 217. At their February
meeting they voted unanimous support for the House bill on this
issue. He said the audits are onerous and emphasized that there
are no errors on these prescriptions. They are valid
prescriptions, and the patient has received it from their
physician and brought it to the pharmacist who has filled it; it
has been legally transposed and complies with the patient,
pharmacist and physician triad working together to improve the
health of the patient.
He said the PBMs, on their own, have come up with arbitrary
reasons for bringing these errors up, and a lot of times it's
fishing expeditions for more money for them. It doesn't apply
just to pharmaceuticals; he and his wife, who works with him as
a pharmacist (and providing durable medical equipment), received
a bench audit for information on two wheel chairs from 2008. One
of them was $3,500 and the other was $3,800. These prescriptions
came from a physician; they measured and got the wheel chair;
the patients received the wheel chair and they received
wonderful benefit from them. Now if he cannot produce all the
paperwork that the PBM wants, they will take that money back. It
may very well close down that portion of his business because
they made only about $500 on each one of those wheel chairs.
SENATOR PASKVAN asked if there is any regulation or control on
how much of the savings is passed on to the employer/consumer
when they negotiate prices. How transparent is that?
MR. WHITE said he didn't know if any of that money even goes
back to the insurance companies. It's not transparent to him.
SENATOR GIESSEL asked how many other states have these kinds of
sidebars on an audit process.
MR. WHITE replied 15 other states.
SENATOR MENARD said she personally thought two weeks' notice
before the audit is too little time and asked what other states
are doing.
MR. WHITE answered that he was speculating, because this is
model legislation that came from the National Community Pharmacy
Association. He would think that it's fairly similar. He agreed
with her.
CHAIR EGAN said he assumed it's no time now.
MR. WHITE responded that they generally try to give some notice;
it could be an hour or two.
SENATOR MENARD asked him to clarify what happens if the
prescription is for 30 pills but at some point you give 31
because a person might traveling or something.
MR. WHITE replied that they might have been talking more about
the number of days' supply. A pharmacist may put it down as a 31
day supply or the physician has written a prescription for just
a 30 day supply and the patient has asked for more because he
would be gone longer. In that case, he would call the physician
and explain and ask for an extra week or so. For whatever reason
the PBMs might not like that.
SENATOR MENARD thanked him for that clarification. She missed
the step that the physician is directing him that he may add one
or two pills.
MR. WHITE said taking it upon himself to do that would be a
violation of the Board's rules and regulations.
2:37:08 PM
CINDY LAUBACHER, Senior Director of Government Affairs, Medco
Health Solutions, opposed SB 217. She said Medco is one of the
PBMs they have been hearing about this afternoon. They currently
manage the pharmacy benefit for approximately 20 percent of the
residents of Alaska. They are here today because they have a
responsibility to their clients who rely on them to protect them
from fraud, waste and abuse that may occur within the pharmacy
network they contract with Medco to use. The auditing of
prescription claim reimbursement is a necessary component of
participation in that prescription drug program. Their plan
sponsors, which include labor unions, health plans, state and
federal governments require them to perform a number of services
including monitoring of prescription claim reimbursements,
conducting audits of prescription claims and the recovery of
overpayments to the pharmacy by the plan's sponsor.
She said they are required to audit not only to the State Board
of Pharmacy rules but also to the plan requirements. That
includes Medicare Part B and maybe 30 other clients. Their
pharmacy audit program focuses on a number of activities
including on-site and desk audits, patient and physician
analysis of Medicare Part B claims and claims analysis to
identify potentially aberrant trends. Their clients demand that
they minimize the number prescriptions claims that are
inaccurate, involve fraud, waste or abuse or are not in
accordance with plan requirements. An effective audit program
helps to protect the financial integrity of the pharmacy network
by identifying those claims that resulted in overpayments and
recovering overcharges where appropriate. She emphasized, "When
we recover, we're recovering on behalf our clients; the money
doesn't go to us. This is money owed to our clients."
SENATOR MENARD asked if they act like a collection agency or do
they have to pay someone to go through that process.
MS. LAUBACHER replied that their auditors are internal and the
auditors are paid pursuant to the contract as set forth by the
client.
SENATOR PASKVAN asked what percentage of the audits uncover
fraud.
MS. LAUBACHER replied that she would have to get a number for
him, but it is a big problem in the Medicaid business. They have
a pharmacy network of some 58,000 pharmacies and do quarterly
analyses to look for trends.
2:41:23 PM
SENATOR PASKVAN said he understood this to be draft legislation
that has been adopted by a national organization and assumed
that this language does not violate Medicare or Medicaid
standards.
MS. LAUBACHER didn't agree. The rules under Medicare and
Medicaid are much different than what this allows for. This
would restrict how far back they can look, but they can go back
10 years for Medicare. This bill doesn't exempt Medicare and
Medicaid yet, but it probably will because of that.
SENATOR PASKVAN asked if state law can overrule the federal
standard of Medicare and Medicaid.
MR. LAUBACHER answered no. There are typically exemptions in the
law for Medicare and Medicaid, but even if there weren't they
would argue a claim involving Medicaid or Medicare would not be
subject to this statute.
2:43:29 PM
SENATOR GIESSEL said the sidebars of the audit seem quite
reasonable. Certainly, pharmacies are incredibly busy the first
seven days of a month and asked what specifically wouldn't work
for Medco.
MR. LAUBACHER replied that the problem with the timeframe is
that lots of states are restricting the time for audits. That
reduces the amount of time they have to go into all pharmacies
by about a week. The amount of notice has to do with preventing
fraud. They have had instances where they notify someone that
they're coming in to do an audit, and the "bad actors" disappear
or cover up by making changes in the "scrips." She wasn't saying
that happened in the State of Alaska, however.
2:45:36 PM
SCOTT WATTS, owner, Ron's Apothecary Shop, Juneau, said he
supported SB 217. He explained that contracts they sign with the
PBMs are "pretty much take it or leave it." This bill levels the
playing field so they can't be taken advantage of by these
audits.
CHAIR EGAN said that concluded public testimony on SB 217 for
today and that it would be held.