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.]