Health Plan Blog

Health plan and pharmacy benefits designs have become increasingly complex. Today there are several hundred different benefit plan designs in existence: one large national Blue Cross and Blue Shield plan alone has more than 2,000 live benefit design offerings. And each benefit design offering is typically customized for each employer client or for the market your plan operates within. That, plus the fact that member benefit designs and PBM systems often change annually, means the chances for errors are high.

These errors can wreak financial and other havoc on your individual plan members – and increase health plan regulatory compliance risks. Conducting a pharmacy benefits plan audit can help health plans determine if their PBM vendor is properly administering the pharmacy benefits to the member on the plan’s behalf – and take proactive steps to get problem areas resolved.

For commercial plans, conducting a pharmacy benefits plan audit offers several advantages:

• Keeps your health plan competitive in the market by reducing the number of errors that occur that adversely impact the member financially or procedurally. Continually high levels of member dissatisfaction with their pharmacy benefits and how they are administered can undermine your plan’s reputation and success in the market. In fact, if you start getting an unusually high number of member complaints, it’s probably time to conduct a pharmacy benefits plan audit.
• If your plan has many employer Administrative Services Only (ASO) clients, conducting a pharmacy benefits plan audit on behalf of employer clients demonstrates that your plan is committing to providing high levels of service. It’s an important value-add that can differentiate your plan in a crowded, commoditized market, foster stronger relationships with your employer clients, and help you keep their business.
• Conducting a pharmacy benefits plan audit using an outside firm is a good way for health plans to validate how good, or not, their own internal auditing processes are. Any key findings or learnings revealed by the benefits plan audit can then be applied by your plan in subsequent years as part of its own internal audit and quality control processes.

About 40% of pharmacy benefits plan audits identify errors in how member benefits are being administered by the PBM, and these often result in significant added member costs. It is particularly important to consider conducting a pharmacy benefits plan audit under the following circumstances:

• The benefit has a high deductible or integrated medical and pharmacy accumulators. A pharmacy benefits plan audit will help make sure the member isn’t being inadvertently charged two separate, incorrect deductible or maximum out-of-pocket charges – one for medical and one for pharmacy – if the member has high out-of-pocket costs for pharmacy drugs. A good pharmacy benefits plan audit will include a review of medical and pharmacy claim accumulators to make sure the benefits are truly integrated.
• Your plan recently switched PBM vendors or the PBM recently switched computer, claims processing, or operational systems. Member disruptions are common in such cases, so a pharmacy benefits plan audit can address and correct problems sooner rather than later.
• The benefit design has unique elements that create complexities. For example: a diabetic supply bundling program, in which after three separate fills at retail with a copay, the member can get the same supplies through mail service with no copay. Unique elements increase the risk of your PBM implementing the program incorrectly.

For Medicare Part C and Part D plans, doing a pharmacy benefits plan audit is also important from a CMS compliance perspective. Even though PBMs are generally aware of all existing and new CMS rules, they often don’t know how to correctly operationalize and implement these requirements from a claims processing and billing perspective. This means things often don’t work correctly in the system, resulting in members being charged incorrect amounts.

During CMS routine audits, CMS auditors typically zero in on making sure Medicare members aren’t being rejected or overcharged – and look closely at benefit-specific coding and processes. Given that CMS changes member benefit thresholds and calculation rules each year, it’s good to conduct a pharmacy benefits plan audit to make sure your PBM is complying.

Other CMS compliance areas that can be avoided by conducting a thorough pharmacy benefits plan audit of your PBM include:

• Short-cycle dispensing requirements for all pharmacies that dispense to Long-Term Care (LTC) facilities (the supply can’t be for more than 14 days)
• Medicare daily cost-sharing rule (to accommodate initial fills of new prescriptions without members having to pay a full month’s copayment)
• Low-Income subsidy (LIS) cost sharing values (these vary and if applied incorrectly result in members being charged incorrectly)
• Medicare and Medicaid retroactive eligibility
• End stage renal disease (ESRD) members and the benefits they can and cannot receive
• Part A vs. Part B vs. Part D processing rules

Often, a health plan and a PBM may have different interpretations of a Medicare rule and how it should be implemented in the system. Another advantage of working with an outside pharmacy benefits plan auditor is that the firm, not the plan, can ask CMS directly for clarification on any discrepancy. The plan can then work with the PBM to implement the rule correctly and remain anonymous to CMS.

Auditing your PBM for accuracy in administering member benefits can also help your plan anticipate and avoid certain pitfalls that put your members – and your plan – at risk.