Pharmacy Benefit Manager Oversight and Audit

Through our work with numerous government agencies over the years, we know that pharmacy benefit manager programs (PBMs) and the administration of the pharmacy benefit is profoundly complex. Governed by extensive regulatory requirements, legislative standards, and government scrutiny, these programs incorporate multi-dimensional features alongside highly specialized drugs with differing tiers of accessibility and pricing. We also know that each of these issues can create numerous difficulties for those charged with managing such demanding programs and that accountability through PBM oversight and audit programs is essential.

That’s why government agencies need a partner with specialized knowledge and dedicated expertise to help them navigate these challenges and deliver results. Our real-world understanding of federal, state, and local government agencies makes us particularly well qualified to provide clients with the timely and targeted solutions they need most. That’s because we know well the difficulties they face in overseeing their prescription benefit programs.

The rising cost of prescription drugs coupled with the need for drug-pricing transparency are issues at the forefront of the national health care policy debate. As new, costly, and innovative products come to market, reimbursement and policy decisions must keep pace.

Our team of pharmacists, accountants, analysts, and data specialists work together providing their specialized knowledge assisting our government clients in the oversight and management of their prescription benefits.

One of the strengths of our PBM oversight and audit staff is our extensive understanding of pharmacy reimbursement and benefit management. We have pioneered innovative pharmacy reimbursement strategies based on actual drug acquisition costs and the expenses pharmacies incur when dispensing prescriptions. This work has contributed to drug-pricing transparency, generated substantial program savings for our clients, and enhanced our PBM oversight and audit approach.

Our Services

Myers and Stauffer has considerable experience providing multiple channels of support in working with drug formularies and PBM systems. Our services include oversight and compliance within the management of the state Medicaid pharmacy benefit through both the managed care and fee-for-service (FFS) delivery systems, oversight and audit within state employee and municipal health benefit programs, and support for state PBM licensure and regulatory compliance programs.

Additionally, our PBM audit practice extends federally to CMS, as we have performed financial-related examinations of health and drug plans participating in the Medicare Advantage (Part C) and Medicare Prescription Drug (Part D) programs since 2006.

PBM Oversight within State Medicaid Programs

In recent years, many states are focusing on the provision of the Medicaid pharmacy benefit via managed care programs. Emergent concerns include:

  • Excessive PBM administrative costs being passed through to the Medicaid agency via the capitation rate-setting process.
  • Spread pricing.
  • Plan-specific Preferred Drug Lists (PDLs) that may not align with the overall financial goals of the Medicaid program at large given federal and supplemental rebate opportunities.
  • Adequacy and fairness of pharmacy reimbursements and 340B reimbursement policies that may not benefit the Medicaid program.

Myers and Stauffer assists state Medicaid clients with oversight of their health plans and PBMs to ensure compliance with state policies on spread pricing, retrospective reimbursement adjustments and transaction fees applied to pharmacies, single statewide PDL fiscal-impact analysis, and 340B policy development.

Our firm also has an established practice of performing medical loss ratio (MLR) audits for state Medicaid agencies, which includes a comprehensive review of administrative and drug costs reported for the provision of the pharmacy benefit.

For Medicaid programs interested in exploring alternative models for delivery of the pharmacy benefit, Myers and Stauffer assists states with evaluation of various options, such as the single PBM model used within the managed-care environment or the potential of a carve-out of the pharmacy benefit from the managed care benefit. Additionally, we help states implement new pharmacy-benefit delivery models through procurement support, readiness reviews, reimbursement consulting, and post-implementation oversight.

We also help our state clients with oversight of their FFS pharmacy benefit administrators to ensure accurate claims processing and appropriate implementation of clinical edits and prior authorizations. In recognition of the importance of an efficient and accurate Medicaid drug-rebate program and the need for accurate claims data to support the rebate function, Myers and Stauffer performs audits of the rebate invoicing and collection functions performed by states’ rebate vendors. From our experience, missed rebate opportunities, such as incorrect identification of 340B claims, can cost state Medicaid programs millions of dollars.

PBM Oversight with State Municipal Employee Health Benefit Programs

We provide PBM audit services to a variety of state and municipal programs for oversight of the pharmacy benefit provided through employee health-benefit programs. These programs tend to incorporate contracting terms commonly applied in commercial insurance programs, including pricing, rebate, and other performance guarantees, as well as detailed benefit-design specifications, including formulary, step therapy and prior authorizations.

We audit all of the major PBMs and have developed systems and analytical processing programs to test compliance with contract parameters. Our testing offers the most current intelligence customized exactly to each health plan’s prescription benefits and contract requirements to meet the specifications of each audit.

PBM Oversight within State Licensure and Regulatory Compliance Programs

As more states are tasked by their legislative branch with the responsibilities to license and regulate the PBM industry, states are developing standards and requirements that protect the interests of patients, pharmacies, and health plans operating in their states. Given the depth and breadth of our experience in PBM audit and oversight, Myers and Stauffer is ready to assist clients as they establish or enhance PBM compliance audits within their state’s regulatory environment.

We have helped clients with Maximum Allowable Cost fee-schedule compliance, reimbursement appeals process oversight, prompt payment requirement testing, and other areas for which states are implementing regulations on PBM operations.

PBM Oversight within the Medicare Advantage and Medicare Prescription Drug Programs

Since 2006, we have worked with CMS to perform financial-related examinations of health and drug plans participating in the Medicare Advantage (Part C) and Medicare Prescription Drug (Part D) programs.

These examinations include extensive sampling of drug and medical claims, as well as review procedures to ensure that direct/indirect remuneration and drug rebates are correctly calculated and reported. We have also participated as a Medicare Drug Integrity Contractor since the inception of Medicare Part D assisting in the identification and prevention of fraud, waste, and abuse.

Since 2010, we have partnered with CMS to establish audit designs, protocols, and procedures for conducting compliance and performance audits in the review of prescription drug plans (PDP) and Medicare Advantage Organizations (MAO) to ensure compliance with Medicare program requirements. While conducting these audits, we focus on evaluating plan sponsors’ compliance with requirements for formulary administration, coverage determinations, appeals and grievances, and compliance program effectiveness.

Allan Hansen, (Principal)

PH 816.945.5318

Andy Ranck, CPA (Member)

PH 410.581.4555

Bobby Courtney, JD, MPH (Principal)

PH 317.815.5475