With COVID-19 upending the economy, tightening program integrity controls is paramount to the fiscal integrity and long-term sustainability of our nation’s healthcare system. In our ongoing series on containing healthcare costs during the pandemic, we have identified several methods for preserving public and private healthcare dollars in the face of uncertainty and volatility. Many of these methods are, in effect, longstanding best practices considered in the context of the pandemic, as existing healthcare challenges have largely been exacerbated by the crisis, rather than caused by it.
This is true too in the realm of prescription drug coverage. Pre- and post-pandemic regulatory measures, combined with a general lack of oversight of prescription claims, have created an environment that is particularly ripe for improper payments. Here, we are examining three best practices for controlling prescription drug costs, including special considerations in light of COVID-19.
1. Maximize Medicaid Drug Rebate Returns
Established in 1990 through the Omnibus Reconciliation Act, the Medicaid Drug Rebate Program lowers prescription drug costs for the Federal Government and states by requiring pharmaceutical manufacturers to discount their drugs as a condition of participating in Medicaid. The program has been effective in meeting this purpose; of the $64 billion Medicaid spent on prescription drugs in 2017, nearly $35 billion was collected in rebates, according to a MACPAC analysis.
However, errors in rebate requests submitted to drug manufacturers — especially given the number of systems and stakeholders involved in the submission process — can lead to Medicaid losing millions of dollars in missed rebates. Supplementing internal controls with a formalized pharmacy rebate audit program can help to close this gap. In many cases, errors in prescription claims can be identified and reconciled on a pre-rebate basis, cutting down on administrative work and bringing substantial value to the Medicaid program during this time of health and economic crisis.
2. Implement a Comprehensive Pharmacy Benefit Review Strategy
The majority of Medicaid programs contract their pharmacy benefits to pharmacy benefit managers (PBMs). Because PBMs are reimbursed based on transaction volume and payment amount, incentives to control costs may be misaligned.
Pharmacy benefit reviews can detect and mitigate fraud, waste and abuse in prescription drug claims. Conducting these reviews as part of a larger, strategic program — one that goes beyond claims data alone to examine contracts, pricing, invoices and other key elements affecting program integrity — are most effective in capturing various types of improper payments and bolstering the overall integrity of PBM services.
3. Conduct Retrospective Reviews of Pharmacy Claims
On April 21, 2020, the Centers for Medicare & Medicaid Services issued an updated guidance for Medicare Advantage and Part D plans that included the suspension of plan-coordinated pharmacy audits during the COVID-19 emergency period. As such, many entities have requested waivers of pharmacy audits. Given this lapse, conducting retrospective reviews can provide a vital safety net to verify compliance with all policy and billing requirements for pharmacy claims submitted during the declared emergency.
For more information on strengthening program integrity around prescription drug coverage, see our guide to controlling prescription medication costs across populations. And for more resources to help healthcare stakeholders navigate the current and future healthcare landscape, check out our full content hub at Health Ideas.