Just last month the "Improving Transparency and Accuracy in Medicare
Part D Spending Act" was introduced in the Senate to amend
the Social Security Act. The bill seeks to prohibit Part D
plans (and their contracted pharmacy benefit managers (PBMs)) from
retroactively reducing payments to pharmacies for clean
claims. The bill would allow Part D plans and PBMs to reduce
an already completed payment to a pharmacy if a claim is found not
to be clean. Not surprisingly, Part D plans would also be
allowed to increase payments to pharmacies under the bill.
This seems to be the latest chapter in the war over fees between
Part D plans, PBMs and pharmacies. As discussed here, CMS addressed Part D plans' and
PBM's practice of charging pharmacies administrative and
transaction fees at the point of sale or retroactively in its 2014 Call Letter published in April
2013. Eventually, CMS amended the definition of "negotiated price" in the Part D
regulations to take into account fees paid by pharmacies to Part D
plans or PBMs that effectively reduce the price that a pharmacy is
paid. As a result of the change to the definition of
"negotiated price" and CMS guidance, Part D plans were no
longer allowed to report these fees/reductions in their direct and
indirect remuneration (DIR) report if they were reasonably
determinable at the point of sale. Because certain reductions
in price or fees charged to the pharmacies are not reasonably
determinable at the point of sale, some are still reported by plans
as DIR. The bill introduced in September targets these
reductions in price and fees that are applied to pharmacy claims
Some plans and PBMs have been reducing the amounts paid to
pharmacies by tying pharmacy payments to performance metrics that
are determined after the claims have been paid. Tying
performance metrics to payments is something that CMS has appeared
to be in favor of, so it is unclear what type of support the bill
will receive from the agency. If plans are no longer able to
tie payment to performance in a way that results in some pharmacies
receiving decreased payments, some plans may try to negotiate lower
initial pharmacy prices and then pay performance
"bonuses" to the pharmacies that it determines meet the
required performance metrics. It is unclear whether receiving
less money initially or receiving more money upfront but having
some of it at risk will be better for pharmacies.
This legislation has little likelihood of passage in 2016.
However, the current political conversation regarding drug pricing
is certain to draw in PBMs as both the drug industry and
pharmacists call for greater transparency. Next year might be
a busy year for PBMs as they will likely need to address other
legislative proposals aimed at pricing and transparency.
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