Mar 11, 2019
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PBM audits: focus on proper procedures for preparing Prior Authorizations

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Several PBMs now require their in-network pharmacies assisting prescribers with Prior Authorizations (PAs) to have written policies and agreements with the prescribers on how PAs are prepared and submitted.
Preparing PAs is a time-consuming and tedious process. Often, prescribers are not willing to invest their staff’s time and resources into preparing and submitting them. To streamline the PA process and to ensure the continuity of care, many pharmacies offer PA assistance. Pharmacies, however, are also financially interested in PAs being timely submitted to PBMs and their reimbursement directly depends on which medication is dispensed. PAs are usually necessary for more expensive medications or medications that are not on PBMs’ formulary lists. Therefore, several PBMs have conducted – and are still conducting – audits targeting PAs and medical necessity of medications prescribed.
During these audits, PBMs discovered cases of (1) improper monetary compensations for signing or preparing PAs; (2) pharmacies that sign PAs on behalf of prescribers; (3) prescribers that sign PAs for patients they have never seen. As a result, some pharmacies have lost their contracts with PBMs and facing monetary recoupments and even criminal investigations. Many PBMs require an agreement between the pharmacy and the prescriber describing the PA procedure.
What PBMs are looking for: there should be a legitimate medical need for PAs. Needless to say, no money should be exchanged between the prescriber’s office and the pharmacy for preparing PAs. PAs should be prepared for the benefit of mutual patient only. Often PBMs scrutinize PAs on whether other alternatives were available and how PAs were prepared. Therefore, the pharmacy should have a clear policy on how to prepare and submit PAs.
The PAs policy and procedure (and the agreement with the prescriber) should specify that the pharmacy is acting as the prescriber’s agent in preparing and submitting the PAs (creating “limited agency”). At no time, a pharmacy should sign a PA. It can prepare and prepopulate the form but never sign it, even if authorized by the prescriber.
The policy should also describe emergency situations when a PA may not be practical to obtain and when a pharmacy may dispense first and obtain the PA at a later date.
Improperly performed PAs may also implicate kickbacks. In 2010, the Office of Inspector General (OIG) issuedan opinion focusing on PAs. The opinion described that preparing PAs free of charge for prescribers may violate the anti-kickback statute:
"When a party in a position to benefit from referrals provides free administrative services to an existing or potential referral source, there is a risk that at least one purpose of providing the services is to influence referrals,"
The OIG concluded that as long as no payments (or any other rewards) are made to physicians, no assurances to physicians or patients are made that the PA would be approved, and the service is provided for the benefit of the mutual patients only – the provider [pharmacy] has a legitimate business interest in offering uniform pre-authorization services.
While pharmacies may continue witnessing enhanced PA reviews by PBMs, proper policies and agreements with the prescribers may help avoid terminations, recoupments, and possibly government investigations.



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