This year, the California State Board of Pharmacy (“Board”) adopted a new regulation applicable to pharmacies where pharmacists perform non-professional activities because they work alone. The regulation – Title 16, California Code of Regulations, Section 1714 – establishes criteria a pharmacy must meet to identify and ensure that a person is assigned to assist the pharmacist when the pharmacist is otherwise working alone, as required by Business and Professions Code Section 4113.5.

Prior to the enactment of Section 4113.5, pharmacists were often working alone for extended periods of time. This resulted in the pharmacist having to perform non-pharmacist related functions, including staffing the cash register and assisting customers with non-pharmacy purchases. According to the Board, performing these duties takes time away from the pharmacist’s professional responsibilities and could impact public health as the pharmacist has insufficient time to safely exercise their professional judgement while reviewing and filling prescriptions. Additionally, it impacts the pharmacist’s ability to provide appropriate patient centered care.

Therefore, Section 4113.5 was enacted to prohibit a community pharmacy from “requiring a pharmacist to engage in the practice of pharmacy while the pharmacy is open to the public unless another employee of the pharmacy or the establishment is always made available to assist the pharmacist.” The section also specifies that the prohibition shall not apply to pharmacies that meet specific criteria, including, but not limited to, a hospital pharmacy (as defined by Section 4029 or 4056), a hospital outpatient pharmacy, “a pharmacy owned by a person or persons who, collectively, control the majority of the beneficial interest in no more than four pharmacies in California,” or a government owned pharmacy.

Section 1714.3, in turn, was enacted to identify the criteria that the pharmacy must meet to comply with Sec. 4113.5.

Sec. 1714.3 now requires the following:

  • the pharmacy must identify one or more persons who will be available to assist the pharmacist;
  • the backup person must be able to perform the duties of non-licensed pharmacy personnel
  • the pharmacy should run background checks for each backup person (this designated person should be qualified to have access to controlled substances)
  • the designated person must respond and be able to assist the pharmacist within five minutes (!) after the pharmacist’s request.
  • the pharmacy must have policies and procedures addressing how a designated person is identified, trained, and contacted.

If your pharmacy has a pharmacist working alone (and you are not exempt as provided by Section 4113.5), you must comply with both sections (Sec. 1414.3 and Sec. 1714.3) If you need assistance with drafting policies and procedures as required by these regulations, feel free to contact RxPolicy. 

 

 

I often say that pharmacies that bring legal actions against PBMs do not have a good precedent to rely on. Things might be changing soon with a recent California case holding that Optum’s provider agreement is unconscionable and thus unenforceable (specifically, its arbitration clause).

The court noted that the search for the true meaning of “the arbitration clause – requiring the combined intellect of three appellate justices to parse – further highlights the procedural unconscionability. The complexity of the prolix rendered the substance opaque and, consequently, unenforceable.” (Prescription Care Pharmacy, LLC Vs. OptumRx PBM Of Illinois, Inc. (Superior Court of California, County of Orange) Minute Order, 2/22/2021).

The court emphasized the substantive unconscionability because the contract provided that Optum could allege fraud, but “provide no specific evidence until 40 days after the claim for arbitration and can require [pharmacy] to present its own response at the same time, without even knowing the evidence involved.” Id.

The case was brought by a compounding pharmacy – Prescription Care Pharmacy LLC (PCP) – which dispensed compounded medication to Optum’s members relying on prior authorizations. Optum, however, alleged that the pharmacy submitted claims at pricing that was well above the lowest “average wholesale price,” which was what defendant would have paid its network pharmacies. As a result, Optum terminated the pharmacy in 2016. Pharmacy filed a legal action against Optum, who in turn filed a motion to compel arbitration.

To make the story short (there is some important procedural history here, such as a remand to the superior court to determine whether the provider manual was unconscionable): the court explained that “procedural unconscionability focuses on “oppression” or “surprise” and unequal bargaining power.” Id. The court agreed with the pharmacy that the parties had unequal bargaining power, with Optum’s yearly revenue far exceeding PCP’s revenue. PCP also presented evidence that Optum’s members comprised a majority of PCP’s business (roughly 80%).  Due to this economic pressure, the court found a degree of procedural unconscionability.

On the substantive unconscionability, the court focused on the one-sidedness of the arbitration provision and that it did not allow any discovery. Optum was the party with the majority of the relevant documents, precluding PCP from its fair pursuit of the claims. The pharmacy also argued that a three-arbitrator panel and their undisputed high rates would have made arbitration excessively costly. The court agreed with the PCP’s arguments and denied the motion to arbitrate.

In my opinion, this is the most favorable arbitration ruling for pharmacies. There were too many cases enforcing arbitration provisions in pharmacy contracts. Arguments that these clauses are unconscionable are usually futile.  Too many pharmacies spent years fighting motions to arbitrate, not even getting to substantive arguments, exhausting their legal pockets, and eventually abandoning their claims.

Prescription Care Pharmacy, LLC Vs. OptumRx PBM Of Illinois, Inc. is litigated by Dorros Law.

 

 

I am excited to announce a new webinar that I will be presenting with Marina Plotkin, Harrison Beach. The American Society for Pharmacy Law is hosting the webinar on March 10 at 12pm (Central) (10am PST). The presentation will focus on pharmacy operation during the times of natural and man-made disasters, local/state/national emergencies, and other catastrophic situations. We will present information on:

(1) state and federal waivers of certain regulatory compliance, such as prior authorization requirements, prescription refill limits, cost sharing obligations, ratios, etc.;

(2) potential issues with PBM audits based on emergency medication dispensing;

(3) opportunities for pharmacies to better serve patients (hand-sanitizer compounding, pharmacists prescribing authorities, community involvement, etc.);

(4) anti-fraud enforcement during coronavirus;

(5) immunity under the law for the diagnosis, prevention or treatment of COVID-19,  including pharmacist-administered vaccines.

The attendees will receive a copy of a template of “Disaster and Contingency Plan” policy and procedure.

More information and registration.

The announced Medi-Cal Rx implementation date, which was initially set for April 1, 2021, is postponed. (See a related Blog Post).

Magellan Haelth, Inc – a PBM that will administer the program – is in the process of being acquired by Centene Corporation. Centene operates managed care plans and pharmacies that participate in the Medi-Cal program. As a result, the Department of Health Care Services (DHCS) is analyzing potential conflicts with Centene managing Medi-Cal Rx on behalf of the DHCS.

The DHCS has announced that this transition was unexpected and “requires additional time for exploration of acceptable conflict avoidance protocols to ensure that there will be acceptable firewalls between the corporate entities to protect the pharmacy claims data of all Medi-Cal beneficiaries, and to protect other proprietary information.” See DHCS’s announcement.

The DHCS is expected to provide additional information on the new implementation date in May.  We will continue covering the progress towards this important transition.

The California Department of Healthcare Service (DHCS) has just posted an update regarding Medi-Cal Rx transition (See Related Blog Post). In anticipation of this transition, there are some early cutoff activities that California pharmacies should note:

  • Pharmacy Paper Claim Submitters: The cutoff for claims processing for paper claim submissions to the current FI is March 14, 2021. Paper claim submissions received after this date will be routed to Medi-Cal Rx for processing on April 1, 2021.
  • Pharmacy Claim Inquiry Forms (CIFs) and Appeals: The cutoff for the receipt of pharmacy CIFs and Appeals to the current FI is March 14, 2021. Submissions received after this date will be routed to Medi-Cal Rx for processing on April 1, 2021.
  • Pharmacy Computer Media Claim (CMC) Batch Submitters: The cutoff for the receipt of pharmacy CMC submissions is March 14, 2021 at 11:59 p.m. CMC claims sent to the current FI on or after March 14, 2021 will be rejected. For batch claim submissions after this cutoff, DHCS recommends that submitters prepare these files per the Medi-Cal Rx Payer Sheet and then hold the files and submit them to Medi-Cal Rx on or after April 1, 2021.
  • Pharmacy Treatment Authorization Request (TAR) Fax Lines: The existing pharmacy TAR fax lines (800-869-4325, 800-371-0712, 800-829-4325, 800-641-1021, 213-346-9424, 209-933-9593) will be shut down on March 31, 2021 at 5:00 p.m. These numbers will be transitioned to Medi-Cal Rx and are scheduled to be available for Fax Prior Authorizations and attachments for Medi-Cal Rx on April 1, 2021.
  • Pharmacy TAR Fax Attachment Line: The existing free-form attachments for the electronic TAR fax line (877-270-8779) will continue to operate for non-carved out pharmacy services and medical services. As of April 1, 2021, the pharmacy free-form attachments line for Medi-Cal Rx is 800-869-4325.

For more information, visit Medi-Cal Rx website.

If you are into pharmacy technology, you might have heard of a new pharmacy software designed to optimize profitability – UGO. It was built by pharmacy owners who know the industry and day-to-day problems that independent pharmacies face. For example, the platform integrates and functions with most existing pharmacy operating systems and provides “Key Performance Indicators” highlighting what the pharmacy is currently doing and ways it could improve its profitability. It also provides a “Medicare Part-D” tool that searches approved medications and provides information on their reimbursement prices.

Some other interesting features are:

  • A forum where independent pharmacy owners can discuss common problems and ask questions.
  • A marketplace, which provides information about competitive pricing on inventory and other pharmacy items.
  • News where leading industry professionals offer industry updates and trends.
  • Wholesale calculator tool to target and negotiate the most favorable prices.

UGO’s website explains that the intention behind the platform was to improve pharmacy’s “efficiency by reducing the number of software/programs needed to operate, monitor, and manage the business aspect of the pharmacy.”

Sounds interesting? If so, check out UGO’s video explaining their product.

 

I am starting a series of posts consisting of mini-topics that I covered during my December webinar. I had many questions regarding the information presented and will try to address some of the issues in this series.

Today I will be talking about manufacturer coupons, which is a common cause of significant PBM recoupments.

Let’s review when a pharmacy can safely apply manufacturer coupons. According to PBM manuals, coupons may be applied when a pharmacy:

  • complies with the pharmaceutical coupon program. For example, all such programs exempt government-sponsored plans.
  • does not apply coupons on any compounds, medical devices or medical foods. Sounds straightforward? Often, however, pharmacies fail to spot these products. For example, one of the cases I had last year involved a scar gel, which the FDA classifies as class 1 medical device.  As a result, a PBM recouped 100% of what it paid to the pharmacy for dispensing these expensive gels.
  • does not apply coupons on products not subject to the FDA approval process, such as multivitamins and supplements.
  • does not apply coupons to non-FDA approved drugs. In my experience, this is the most common PBM issue relating to inappropriately applied coupons. The easiest way to verify if the drug is FDA approved is to consult the Orange Book.

Some PBMs also exclude coupons from specific programs or associations. Make sure to review your manuals to ensure compliance with each specific PBM requirement.

Related Blog Post: “When applying manufacturers coupons could get a pharmacy in trouble.” 

The transition date of Medi-Cal managed care claims to fee-for-service is still set for April 1, 2021.

Medi-Cal Rx – the name of the new program – will apply to all pharmacy services billed on pharmacy claims. However, most DME claims are exempt. For a complete list of exempt products, visit Medi-Cal Rx website.

The existing Medi-Cal managed care pharmacy carve-outs will continue to be reimbursed in the same manner (e.g., blood factor, HIV/AIDS drugs, antipsychotics, or drugs used to treat substance use disorder).

The Department of Health Care Services (DHCS) promises that the entire dedicated Medi-Cal Rx website will be fully operational by April 1, 2021. In the meantime, DHCS encourages Medi-Cal providers, health plans, beneficiaries, and other interested parties to sign up for the Medi-Cal Rx Subscription Service, which sends Medi-Cal Rx updates by email.

DHCS will allow beneficiaries to have enough time during the transition period to work with their prescribers to either submit prior authorizations (TARs) based on medical necessity, or switch to a preferred Medi-Cal Rx covered drug. If a drug is not listed on the Medi-Cal Contract Drug List, a TAR will be required.

For all Medi-Cal beneficiaries with an existing prescription that did not require a TAR but will otherwise require it after the implementation, DHCS will use paid claims data received from Managed Care Plans to “look back” and validate that a prior prescription existed for the applicable medication.

For existing prescriptions with previously approved TARs, DHCS will use TAR history data to “grandfather” those prescriptions to allow continuation of the TAR through its stated duration, e.g., three months, six months, etc., but not to exceed one (1) full year from the original TAR start date.

Some additional changes:

  • The DHCS will not enforce “6 prescriptions per month” requirement.
  • The DHCS will not require pharmacy lock-ins as some managed care plans do.
  • The DHCS plans to eliminate some co-pays and to have long-running TARs for certain conditions and classes of drugs. For example, TARs lasting up to 5 years, for such conditions as ADHD, Alzheimer and drugs as Antidepressants, hormone replacement and many others.
  • The DHCS also plans to expand auto-adjudication functionalities to reduce the number of drugs with TAR requirements with manual review.

Prior to the implementation date, the DHCS encourages pharmacies to submit test transactions to ensure connectivity and uncover any software issues. If you would like to submit test claims, please email MRxPharmacyTesting@magellanhealth.com with your Contact Name, Phone Number, Pharmacy National Provider Identifier (NPI), and Switch information

DHCS will also be transferring previously established Electronic Fund Transfer (EFT) account information from the existing Medi-Cal fee-for-service (FFS) Fiscal Intermediary to Medi-Cal Rx. However, for those pharmacy providers that do not wish to have their EFT account information transferred over to Medi-Cal Rx for use after the April 1, 2021, assumption of operations, an option to “opt out” is available. Opt-out instructions.

Registered users who wish to provide new or modified EFT account information to Medi-Cal Rx for use after the Medi-Cal Rx assumption of operations may do so at this link.

 

The SUPPORT Act (Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act) requires that controlled substances prescriptions covered under Medicare Part D be transmitted electronically. The effective date for compliance was set for January 1, 2021. Does this mean that pharmacies can no longer accept paper/faxed prescriptions?

First of all, the Act only applies to prescribers (not pharmacies) and requires them to have technology that supports e-prescribing. There are a number of exceptions to the requirement that a controlled substance prescription must be transmitted electronically. For example: prescriptions for hospice patients, for dual patients residing in skilled nursing facilities, emergency circumstances (as determined by the prescriber), or if a prescriber has a waiver. The Act and its guidance specifically states that pharmacies can continue filling scripts issued for a legitimate medical purpose by an individual practitioner acting in the usual course of their professional practice. Therefore, the responsibility for compliance rests on the prescribers and not on pharmacies.

Secondly, CMS announced that due to the Covid outbreak, it will delay compliance until 2022 to allow prescribers ample time to install and test the technology. The announcement states that no penalties will be imposed until that time.

Pharmacies may continue accepting Part D prescriptions for controlled substances transmitted by means other than e-prescribing platforms as long as all other requirements are met.

The news are full of excitement regarding a recent US Supreme court decision in Rutledge v PCMA. But there is still lots of confusion what this decision means for independent pharmacies.

So let’s look at what the case is really about.

It all started in Arkansas when the state passed Act 900, which provided that:

  1. PBMs are to tie reimbursement rates to pharmacies’ acquisition costs by timely updating their MAC lists when drug prices increase in a timely manner.
  2. PBMs must provide administrative appeal procedures for pharmacies to challenge MAC reimbursement prices that are below the pharmacies’ acquisition costs.
  3. PBMs must allow pharmacies to reverse and rebill each reimbursement claim affected by the pharmacy’s inability to procure the drug from its typical wholesaler at a price equal to or less than the MAC reimbursement price.
  4. The Act permits a pharmacy to decline to sell a drug to a beneficiary if the relevant PBM will reimburse the pharmacy at less than its acquisition cost.

The Pharmaceutical Care Management Association (PCMA) representing the 11 largest PBMs in the country, challenged the Act arguing – like in many other state cases – that ERISA pre-empted it and the state could not regulate PBMs in how they administer pharmacy benefit. The Eight Circuit (the appeal court) agreed with the PCMA. The state appealed the case to the U.S. Supreme Court which held that ERISA does not necessarily interfere with state objectives: “ERISA does not pre-empt state rate regulations that merely increase costs or alter incentives for EIRSA plans without forcing plans to adopt any particular scheme of substantive coverage.”

While the case is a strong step towards effective PBM regulations, a lot of work still remains to strengthen and enact proper regulations that would protect independent pharmacies and reduce drug cost. Also remember, Rutledge only deals with a narrow issue whether ERISA  preempts state laws regulating PBMs. After losing this argument, PCMA may come up with other arguments why states cannot interfere with PBM practices.