Health Care Compliance Association: Medicare Part D Compliance Conference
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1 Health Care Compliance Association: Medicare Part D Compliance Conference Pharmacy Audit- What are Part D Plans and PBMs Doing? December 10, 2007 Huron Consulting Services LLC. All rights reserved.
2 Agenda Introduction Structure and Operation of Pharmacy Audit Plan Sponsor or PBM Types of Audits Sources of Information Evaluation of Pharmacy Network and Targeting Techniques Utilizing Audit Results and Disciplinary Actions Summary and Questions/Answers 2 Arjun Aggarwal, Managing Director Office: Cell: aaggarwal@huronconsultinggroup.com Richard Merino, Manager Office: Cell: rmerino@huronconsultinggroup.com
3 Overview and Introduction Medicare Part D plan sponsors are under intense scrutiny from CMS to effectively oversee all aspects of the administration of their Part D programs. One of the major areas of particular focus is the audit and monitoring of the pharmacy providers that contract with Part D plan sponsors or their delegated PBMs. As stated in the Chapter 9 Fraud, Waste and Abuse guidance, the detection of fraud is ultimately the responsibility of the plan sponsor and the expectation is that the plan has a robust program in place that will be able to identify fraud and abuse perpetrated by downstream entities such as pharmacy providers. Since the start of the program, plan sponsors as well as their delegated PBMs have had to: Structure pharmacy audit programs depending on the level of delegation; Establish detection systems; and Develop audit protocols and execute various types of pharmacy audits to satisfy CMS requirements. 3
4 4 Pharmacy Audit Structure and Operation
5 Who is in Charge? The first consideration that has to be addressed when developing or evaluating the structure of the pharmacy audit function is who is responsible. Plan Sponsors have two options: 1. Internalize the pharmacy audit function using its own resources, alternatively owns and operates its own PBM; or 2. Delegate the responsibility to its contracted PBM as part of the services agreement Each option has its own considerations that the Plan Sponsor must review: Internal: Resources, Cost and Infrastructure PBM: Cost, Oversight and Accountability Should the Plan Sponsor decide to delegate the responsibility to the PBM, it is imperative that a program of robust delegation oversight be established to insure compliance with requirements. Regardless of the party that performs the function, the Plan Sponsor is ultimately responsible for the operation of the pharmacy audit function and will be held accountable for any deficiencies by CMS. 5
6 Chapter 9 Requirements The Chapter 9 Fraud Waste and Abuse addresses pharmacy audit and what is expected of Part D plans. Specifically, it is expected that Plan Sponsors utilize data analysis to detect fraud. This analysis can include: Establishing baseline data that enables the plan to recognize aberrant patterns of prescribing and referral, Paid claims reviews that take clinical and utilization information into account; Trending and patterns of prescribing patterns of particular pharmacy providers or prescribers; and Review of specialty pharmacy providers such as Long Term Care pharmacies Sponsors must ensure that contracting pharmacies inform enrollees of the differential between the price of the dispensed drug and the lowest priced generic drug at the point of sale (or at time of delivery for mail order). Sponsors also must provide ongoing reports of all rebates and administrative fees to CMS. Congress is reviewing this data for the first full year of operation under Part D. 6
7 Structure of the Pharmacy Audit Department Pharmacy audit staff should be of a certain type of experience and background that includes pharmacy claims, auditing and systems. Retail pharmacy experience is of particular import. Registered pharmacists and pharmacy technicians are also valuable professionals to have in pharmacy audit structures. Pharmacy audit staff must also be able to perform not only desk audits but also have personnel that can be onsite at pharmacies that are the subject of specific audits. Plan sponsors that delegate the audit function to PBMs should insure that the structure of their audit department is sufficient to perform the function. 7
8 8 Types of Audits and Targeting Techniques
9 Types of Pharmacy Audit- Desk Audits Desk Audits Most plan sponsors perform desk audits using automated means through claims data analysis systems to review pharmacy claims and encounter data received by the plan or PBM. The system is set up to evaluate prescribing patterns, physician referral patterns, utilization overrides, ingredient cost integrity and billing issues to identify possible fraudulent or abusive activity. Pharmacy and prescriber profiling is then performed using these findings to target specific pharmacy providers for follow-up onsite or escalated audit. These profiles can include such reporting as: Payment reports; Drug Utilization; Physician Prescribing Patterns; and Geographic Prescribing reports. Most plan sponsors will audit approximately 75% of their network pharmacies through desk protocol and provider profiling procedures at least once a year. 9
10 Types of Pharmacy Audit- Field Audits Field Audits Field audits are performed onsite at the subject pharmacy and involves the auditor reviewing documentation, policies and procedures, claims information, inventory, and other data. Many times, the audit will also review a sample of claims for discrepancies and communicates with the pharmacy provider about any issues. For most plan sponsors, field audits of between 3%-5% of the pharmacy network is considered standard. 10
11 Audit Targeting For routine desk audits, targeting can be of a particular pharmacy provider or specialty that hasn t been reviewed in a while. Long Term Care pharmacies with different Part D parameters than retail pharmacies can also be targets for desk audits. Field Audits can be targeted using the following sources: Desk audit findings; MEDIC Information; Law Enforcement referral; Credentialing Information; Regulatory Agencies; and Member communication. All documentation used to target specific pharmacies for field audit should be maintained and the related issues reviewed prior to the commencement of the field audit. 11
12 12 What Happens Next?
13 What Happens After the Audit Pharmacy providers, through their network agreement and other provider education should be made aware of the effect of any negative audit findings and potential disciplinary actions. The specific findings of the audit should be made available and a report should be provided to the subject pharmacy. Depending upon the nature of the findings and contractual agreement with the subject pharmacy, an opportunity to respond, cure or provide additional information to the plan sponsor or PBM are usually provided. 13
14 Negative Findings - Next Steps Should there be no resolution of the issues found in the audit, disciplinary activity generally will follow. Network management, SIU, pharmacy and credentialing are often provided information for a decision on punishment, Dependant upon how the network contract is drafted and the nature and severity of the findings of the audit, disciplinary actions can include: Financial repayment or claims offsets; Suspension from the network; Termination from the network; and/or Referral to SIU, MEDIC or law enforcement. 14
15 Wrap-Up and Q&A Pharmacy audit is the first line of defense to detect, correct and report Part D Fraud, Waste and Abuse. Plan Sponsors have to remain vigilant with their oversight of their delegated PBMs to insure that the pharmacy audit function is being administered in a manner that is acceptable to CMS. Consistency in the targeting and scope of both desk and field audits are essential to support the success of a pharmacy audit program. Pharmacy audit departments should make sure to have: Audit work plans and protocols for each type of audit; Data analysis resources that can effectively review and identify aberrant claims and prescribing patterns; The ability to perform comprehensive field audit for at least 3% of the network; and Well established audit reporting and disciplinary procedures to effectuate any required corrections and network management. 15
16 16 Questions
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