RON EDITORIALKENTUCKY (5/22/19) — If you have a copay for prescription drugs, ask your pharmacist how much the prescription is if you just pay for it rather than use your insurance. The cost of the prescription may be LESS than your copay. The pharmacist can tell you when you ask but he or she is prohibited by contract to tell you up front without you asking! So, where does the extra money go? It is called a “clawback” and is taken away from the pharmacy. 

The contract mentioned is between your pharmacy and a pharmacy benefit manager. CVS Caremark and Express Scripts are the two PBMs in Kentucky and both have been in the news and the subject of legislation in multiple states including Kentucky. Despite the Kentucky legislation, Senate Bill 5 passed in 2018, independent pharmacists say that the PBMs are ignoring the law.

SurfKY News has spoken with several independent pharmacists in Kentucky and they all agree that PBMs are violating the law and that neither the governor nor attorney general have taken action to hold the PBMs accountable.They point out that PBMs only process the paperwork and payments between pharmacies and managed care operators. The MCOs contract with Medicare, Medicaid and insurance companies.

On or prior to May 10, 2019, Stephanie Bates, Deputy Commissioner, Department for Medicaid Services emailed all MCOs the following:

…”Effective immediately any change in reimbursement, to a pharmacy, for an individual drug over 5% should be sent to DMS for approval and any reimbursement for an individual drug should be as it was on April 1, 2019. Because DMS currently lacks the expertise and resources to effectively consider the potential volume of these requests long term, DMS is working with its contracted consultant on an automated process for reviewing approval requests for the future. DMS will evaluate this system and recommend potential changes to the statute, if any, to the Kentucky Legislature during their next legislative session.

Effective June 1, 2019, corrective actions and/or penalties will be assessed for violations.

Section 40.2 of the MCO contract states the following:

A finding by any authorized agency that the Contractor has violated any State or Federal Law as it relates to any obligations or requirements under this Contract shall subject the Contractor to immediate withholding, penalty and forfeiture as a Type A violation without the necessity for a Letter of Concern or a Corrective Action Plan.

Section 40.6 of the MCO contract also states the following:
The Department shall withhold one-half of one (0.5%) percent of one monthly Capitation Payment for Type A deficiencies until the corrective action has been completed. The Department shall impose a nonrefundable penalty of $50,000 for each Type A infraction.”

On May 15, 2019, Chris Traylor, Deputy Administrator and Director of Center for Medicaid and CHIP Services sent out a CMCS Information Bulletin. In that bulletin, a specific example relates to how pharmacies are to be reimbursed and the required accounting that must be generated and provided. The Bulletin warns: “CMS intends to begin working with states to conduct financial audits of Medicaid managed care plans’ MLR calculations. We are planning for these audits to specifically focus on ensuring that subcontractors’ expenditures (such as PBM costs) are properly incorporated into the MLR calculations.”

Despite SB 5 and numerous bulletins and email from CMS, Dr. Gregg Henry of the Sacramento Pharmacy says that 95 percent of his reimbursements through the Wellcare MCO have dropped by 20-70 percent since April 15. Henry said that he is losing money on most of the Wellcare prescriptions he fills.

“This is a clear violation of Senate Bill 5 that we worked so hard to pass," Henry said.

The problem is much larger than Kentucky. Claims that PBMs overcharged Medicare more than $1 billion are now in court. Legislation or court action against PBM are on going in Georgia, Arkansas, Ohio, New York, Pennsylvania and others each documenting millions of dollars of questionable charges by PBMs.

U.S. Senators Charles Grassley and Ron Wyden have petitioned the Inspector General for U.S. Department of Health and Human Services to launch an investigation into PBMs.

In Ohio in 2017, PBMs CVS Caremark and OptumRx charged taxpayers $224 million more for Medicaid drugs than they paid pharmacists. That spread (9%) is at least triple the going rate.

An analysis by the Illinois Pharmacists Association shows PBMs, were charging taxpayers 23 percent more for generic drugs than they were paying pharmacists for those drugs.

In Owsley County Kentucky, there are only three pharmacies and they are all three independents. Joe Hall owns one of the pharmacies in Boonville. Hall said that it was clear to him that the big companies were trying to squeeze out the little guys. “In my county people would have to travel many miles to pick up their prescriptions if they take us out. Forty-five percent or more of rural pharmacy business in Kentucky is Medicaid. Patients on Medicaid do not have the means to travel to the next county to a PBM owned chain pharmacy (i.e. Caremark).” Hall also believes the PBMs are ripping off Kentucky taxpayers to the tune of $205 million per year.

Joe Hall put it in a nutshell: “We have 530 independent pharmacies in Kentucky, and many are hanging on by a thread because we aren’t being paid for our services. Taxpayers are being ripped off and health care delivery in this state is in jeopardy. We need help and we need it now!”

Ron Sanders
SurfKY News

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