Pharmacy is a difficult business for a lot of reasons. The PBM industry, years ago, turned the profession upside down by transitioning from selling a service to pharmacy (processing claims) to selling access to their pharmacy networks, and later also selling patients of those networks as a commodity. This pivot made pharmacies essentially dependent on the PBM industry for access to their own patients.
When a PBM is involved, pharmacies do not have any real control over what they are paid for product or work. If a PBM wants to pay a pharmacy less than the product costs, a pharmacy has few alternatives. The only way to take back control is to cancel contracts with a PBM network. Of course, this also carries the risk that patients using that insurance will go to a different pharmacy to use their insurance. A serious Catch-22.
There are examples, however, when pharmacies do cancel contracts. I have seen pharmacies drop major payers due to poor reimbursement. The question becomes, if I am being reimbursed so poorly that I will go out of business if I continue to take the insurance, then the loss of that bad business might be enough to keep the doors open. This is akin to amputating a leg with gangrene. Tough choices need to be made in order to survive.
Some contracts that are bad for a pharmacy have less draconian implications. A good example is a discount card with high transaction fees leaving little or no margin for the pharmacy. These cards may advertise themselves to patients as a good option, but they are bad business for pharmacies. As there are many options for discount cards, cancelling an egregious contract for a discount card is not as risky to the pharmacy as cancelling a network based insurance contract.
Pharmacy is also a very dynamic industry. One cannot become complacent as things are always changing. The PBM industry has a new trick up its sleeve: piggyback discounts. The PBMs claim that they need to offer their clients (businesses and insurance providers) better copays. Never mind that the PBM completely controls the copay structure. They want to reduce copays but not impact their own pocketbook or cost their customers more money. And they have found a way to achieve this.
Today, when some PBMs receive a claim electronically from the pharmacy, they then submit the claim to one or more discount cards. If the discount card offers a better price than the PBM’s logic, it uses that instead. This all happens outside of the normal claim response loop. In other words, the claim is sent to and returned from the insurance, but it also took a stop elsewhere. Essentially, a bait-and-switch tactic on the pharmacy.
This extra (and secret) hop can create problems. For example, some of the discount card partners being used by the PBMs are the same one that many independent pharmacies went out of their way to cancel. The PBM, with this new program, has essentially overridden the pharmacies preference to not do business with what they perceived as a bad player by piggybacking the discount plan’s contract onto the PBM’s contract with the pharmacy. The PBM contract has vastly more significance to the pharmacy if it wanted to opt-out.
The biggest challenge with the new tactics is that it is essentially transparent to the pharmacy. Unless you are looking closely at the claims, you will be unlikely to notice that it happened. We have also been told that patients and payers are also unaware that this switch is taking place. So how can a pharmacy ascertain if this is happening? There are a few things you can do to flag these claims in your pharmacy system.
- Ask your switch to capture any of these types of claims and then return a soft-reject, essentially giving you an alert that something has happened. At this time, our switch is working on an implementation, and expects that it will be ready to deploy in April of 2024. If this is not soon enough for you (and it isn’t for us), then continue below.
- Create a filter or restriction on claims based on an ingredient cost paid field returned by the insurance. Look for when the returned value is less than $0. This is NCPDP D.0 field 506-F6. Discount cards in general return a negative value here (this is the claw-back or fee the card takes). This is a very GENERAL test for claw-backs and discount cards.
- Finally, and most specific, create filters or restrictions on claims based on the Network Reimbursement ID field. This is NCPCP D.0 field 545-2F. What you look for here depends on the payer. The values and their affiliated plans to capture in the field are:
######GDRX for GoodRx where the ###### are numbers (often a BIN number) *
######SSRX for SureScripts with the ###### like above again *
CNTRCT5001 for the Caremark internal discount card
CASH for Cigna patient not covered anymore discount card
NET=9185 for the Humana OTC discount / not covered item
OPTPRP is the Optum Patient Relief (no longer covered)
*Because the ###### component may change, you will need to look for the static part by using logic like "Contains GDRX" Alternatively, you may find PBM published payer sheets that outline the actual numbers. In my state, for example, the insurance using GoodRx returns 999999GDRX in 545-2F.Most of the above programs have very high fees. These fees fall on the pharmacy, and not the PBM or the patient! The list above is not guaranteed to be complete, and values can change.
Personally, I consider this tactic unethical. As the tactic is just now appearing in our area of the country and we don’t have enough data at this time to fully comprehend the implications nor the significance of the change. One expert on pharmacy contracting indicated that the strategy was used in other areas of the country in the fall of last year. That plan phased the strategy out, apparently using what it learned from the discount card partnership to lower their own Maximum Allowable Cost (MAC) pricing.
Assuming that this practice is here to stay, what can a pharmacy do? A pharmacy refusing to run these claims has to understand the contractural implications. Refusing to run claims might put your pharmacy in violation of a network contract and run the risk of being terminated from the network.
At this point, our pharmacies are collecting data: we have implemented filters to flag these claims as they occur. Our staff has been instructed to document the information and forward for analysis. Until we understand how this strategy is being used in our area, we cannot formulate our response. With more information, we can decide what our response might be going forward. Your assignment this week: put these types of flags into place in your pharmacy and prepare to make Every Encounter with your claims Count!
Footnote: If you are not sure how to implement a restriction or alert on your pharmacy system based on returned claim information, contact your pharmacy management software vendor. I am familiar with two common systems being used by independent pharmacies, Pioneer and Liberty. Both allow this type of implementation. Others undoubtedly have similar features.