January 8, 2014

PBM Auditing Beyond Just Claims Data – A Valuable Approach.

Audit Issue:    
Our client engaged us to conduct an audit of their pharmacy benefit manager (PBM) and Rx plan benefits which included a thorough analysis and testing of relevant ASO contract language stipulations related to several financial and performance guarantees.

Audit Finding:
During the course of carefully evaluating the administrator services agreement (ASO) and auditing the discount guarantees, it was discovered that contract language existed which allowed the PBM to realize a higher average wholesale price (AWP) discount guarantee by using a lower maximum allowable cost (MAC) price, while processing the claim using a higher AWP price.

As a result, the PBM was able to achieve a more favorable discount but did not pass on the lower cost to the plan and/or member when the drug claim was adjudicated.  In addition, the PBM was able to keep the ‘spread’, or difference in price, between the lower MAC cost and the higher AWP price.

Third-Party Administrator/Carrier Response:
The PBM confirmed the relevant contract language which allowed this practice and acknowledged our finding.

Financial Error:

This audit finding identified over $80,000 in plan and/or member overpayments as a result of contract language written to benefit the PBM rather than the plan sponsor and members.  BMI recommended that contract amendments be executed as soon as possible that would correct this unfavorable financial outcome for the client.