A successful challenge highlights the importance of timely action, contractual notice requirements, and continuity of patient care in pharmacy network disputes.
Frier Levitt recently secured a major California health plan’s agreement to allow a home infusion pharmacy to re-contract after the plan initially refused to renew its network agreement. The pharmacy serves medically fragile patients and was facing removal from the plan’s network after it missed the plan’s re-contracting deadline and the plan declined further discussions, effectively terminating the pharmacy from its network.
The outcome shows how pharmacies may successfully challenge network terminations or refusals to contract by addressing contractual notice requirements, procedural concerns, and potential disruptions to patient care. Specialty and home infusion pharmacies facing similar disputes should understand their contractual rights and available options.
How a Missed Re-Contracting Deadline Threatened the Pharmacy’s Network Participation
The health plan mailed a single letter announcing a new reimbursement methodology for specialty and home infusion pharmacies and warning that the pharmacy’s agreement would terminate later in the year unless it re-contracted by a specified deadline. However, the letter never reached the pharmacy’s management. By the time the pharmacy learned of the notice, after patients began inquiring about its network status, the deadline had passed. The plan declined further discussions, even though the pharmacy was willing to accept the new reimbursement terms.
How Frier Levitt Challenged the Pharmacy Network Termination
Frier Levitt sent a formal letter to the health plan demanding that the pharmacy be permitted to re-contract, emphasizing three key arguments.
1. Contractual notice and re-contracting requirements.
The initial letter was not a routine termination notice. It was a re-contracting offer tied to a material change in reimbursement terms, and both the pharmacy’s agreement and the plan’s own published practices provided for clear, repeated notice and good-faith discussions.
2. Continuity of patient care.
Patients stood to lose continuity of therapy. California law provides certain continuity-of-care protections for eligible enrollees receiving treatment for serious chronic conditions and other qualifying medical conditions when a treating provider leaves a health plan’s network. Abruptly transferring infusion patients could increase the risk of missed doses and adverse clinical events.[1]
3. Absence of cause for termination.
The dispute did not involve any credentialing, accreditation, quality-of-care, fraud, or patient-safety concerns. Instead, the pharmacy was willing to accept the new reimbursement terms but had not received the original notice.
Shortly after receipt and review of the letter by Frier Levitt, the plan reversed its decision, allowing the pharmacy to re-contract and maintain its participation in the network.
What Pharmacies Should Know About Network Terminations and Re-Contracting Disputes
Review your contract’s notice requirements.
A termination letter that also changes reimbursement terms may trigger additional contractual notice or re-contracting requirements beyond those applicable to a standard termination without cause.
Act promptly when you learn of a potential termination.
Document when and how you first learned of the notice and respond in writing as soon as possible. A missed deadline does not necessarily end the opportunity to challenge a termination or negotiate a new agreement.
Emphasize continuity of care and procedural requirements.
Potential disruptions to patient treatment, contractual notice provisions, and a health plan’s established procedures may provide important grounds for challenging a network termination or refusal to contract.
How Frier Levitt Can Help
Frier Levitt represents pharmacies in health plan and pharmacy benefit manager (PBM) network disputes, terminations, and refusals to contract. If your pharmacy is facing a network termination, re-contracting dispute, or refusal to contract, contact Frier Levitt to discuss your legal options.
[1]Cal. Health & Safety Code § 1373.96.
Senior Associate
