Given the number of cases against corporate health insurers for violating their contractual obligations with Medicare, the issue is not whether there will be more, but which health insurers will be found culpable, when, and will the federal government protect enrollees from the bad actors. The FTC is now taking a deep look into the largest Pharmacy Benefit Managers (PBMs), all of whom are linked in one way or another to a health insurance company covering Medicare benefits. What would the FTC or anyone else need to find for Congress to step in to remove PBMs and private insurers from the administration of Medicare benefits?
Pharmacy Benefit Managers are middlemen that work in collaboration with the Medicare Part D health insurers. PBMs negotiate rebates and fees with drug manufacturers. They also decide which drugs go on the health insurers’ list of covered medicines, where people can buy their prescriptions, what they pay out of pocket, and a slew of related policies. PBMs pay pharmacies to fill prescriptions for Part D enrollees.
Most recently, the law firm of Frier Levitt announced a significant victory on behalf of a minority and woman-owned specialty pharmacy, Mission Wellness, against CVS Caremark. CVS Caremark is a Pharmacy Benefit Manager (PBM) serving the Medicare population through Medicare Part D. Mission Wellness prevailed on its claim that CVS Caremark imposed unreasonable “direct and indirect remuneration” or DIR fees on it.
In arbitration, Frier Levitt obtained an award of more than $3.6 million for breach of contract. CVS Caremark was ordered to return all the DIR fees it had received from Mission Wellness as well as to pay attorneys’ fees and interest. But, to date, CVS Caremark has not paid the amount awarded.
If you think that the CVS Caremark breach of contract does not affect you, think again. When a Medicare contracting entity fails to pay health care providers what they are due, providers reconsider whether they will continue treating people with Medicare. Mission Wellness lost money as a result of the DIR fees, while it was a member of CVS Caremark’s Part D network.
You might wonder why CMS isn’t looking out more for people with Medicare and hasn’t cancelled its contract with CVS Caremark. According to Frier Levitt: “Caremark refused to provide the required discovery throughout the arbitration, including discovery necessary to “audit” Caremark’s calculations of medication adherence, which serves as the basis for its recoupment of DIR fees. Even after being sanctioned by the Arbitrator, Caremark refused to provide the basis for the DIR methodology.”
Right now, the FTC is investigating CVS Caremark and other PBMs in the Medicare Part D program regarding recoupment of DIR fees. The biggest PBMs are part of corporations that include health insurance companies and pharmacies. The FTC wants to know what fees PBMs charge pharmacies that are not in their networks, what they do to incentivize patients to use their pharmacies, their prior authorization policies, how rebates and fees from drug manufacturers affect which drugs are on a formulary and what people pay, and more.
Here’s more from Just Care:
- CVS charged with health care fraud
- ‘Real risk of medication errors at CVS and other chain pharmacies
- United Healthcare cuts costs and jeopardizes access to specialty care
- Anthem penalizes patients who seek emergency room care
- Aetna under investigation for denying care without appropriate review of medical records
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