Health Decisions Webinar: July 2013 auditing pbm oversight
PBM auditing involves retrospectively reviewing claims to validate compliance with contracts and benefit plans. It helps identify issues and future changes. Auditing is important for several reasons: it fulfills fiduciary responsibilities; provides an impartial view of PBM performance; and contributes to reducing overall healthcare costs as pharmacy costs and utilization increase. Common areas reviewed include pricing, benefit design, fraud/waste/abuse, and guarantees/rebates. Audits commonly find disputes over contract interpretations and issues like incorrect copays, quantities, and rebate calculations. Recovered amounts vary depending on the type of issue identified. Examples of past audit findings include guarantee calculation errors, formulary noncompliance, and unclaimed rebates totaling over $1 million
Health Decisions Webinar: July 2013 auditing pbm oversight
- 1. April 2013 Auditing / PBM Oversight
- 2. PBM Auditing confidential and proprietary • What is it? – Retrospective review of claims – Validates compliance with “contract” and benefit plan – Tool for identifying future changes • What it isn’t – Substitute for effective management of pharmacy benefit – Get Rich Quick Scheme – Vehicle for enacting vengeance on PBM
- 3. Auditing – Why do it? • Fiduciary Responsibility to stakeholders • Provides external impartial view of PBM performance • Pharmacy costs continue to increase – Utilization continues to increase • Most highly utilized employee benefit • Most visible benefit – Strategic pharmacy benefit management is critical • significant generic launches • costly specialty pipeline • contract mergers and other factors – Contributes to a reduction in overall healthcare costs confidential and proprietary
- 4. Auditing – When should it be done? • Anytime – contracts typically establish limits • Periodically to meet Fiduciary Requirements • Known issues that aren’t being resolved • Suspect areas of contract non-compliance • Before or after changes in benefit design confidential and proprietary
- 5. Auditing - What areas can be reviewed? • Any and all areas allowed by contract – Pricing (Discounts, Fees, Credits) – Benefit Design • Copays • Step Therapies • Quantity Limits • Product Inclusions / Exclusions • Fraud Waste & Abuse – Contract Guarantees – Rebates confidential and proprietary
- 6. Types of Issues Commonly Identified • Disputes on definition of Contract wording and terms • Wrong adjudication rates • Incorrect Copays • QLL’s not established or tracked improperly • Calculation of Guarantees (financial and performance) • Incorrectly calculated rebates confidential and proprietary
- 7. Recovery of Disputed Amounts • Some issues are straight forward – easy to collect – Benefit design findings – Some pricing findings – Most rebate amounts • Issues based on Contract interpretations are difficult – Used to improve future contracts – May require legal action confidential and proprietary
- 8. Examples of Audit Findings 1. Guarantee Calculation, Admin Fees ($280K) 2. Formulary Compliance, Copay, days supply, Min/Max ($630K) 3. Rebates ($20K +) 4. Pricing Guarantees ($374K) 5. Manufacturer Rebates ($865K) 6. Benefit Design (copay, excluded products, accumulators, pricing, formulary) ($500K) confidential and proprietary
- 9. Auditing – should YOU do it? ABSOLUTELY confidential and proprietary