Health plans, including employer and government sponsored health care programs, use prior authorization to optimize patient outcomes and reduce drug spending. Specifically, prior authorization is designed to ensure patients receive the most appropriate medication to treat their condition while simultaneously reducing waste in the form of unnecessary prescriptions. In recent years, prior authorization requirements have become more and more common as health plans attempt to combat the rising cost of drugs. At the same time, there has been increased scrutiny over pharmacies that take a part in the prior authorization process.
By way of brief background, prior authorization is a requirement imposed by health plans that forces physicians to obtain pre-approval to prescribe a specific drug before it qualifies for coverage under the plan. For example, medications that often require prior authorizations include:
- Specialty or high-cost medications
- Brand name medicines that have a generic available
- Medicines with high risk side effects
- Medications used for cosmetic purposes
- Medications that may not be medically necessary
- Medication not typically covered by an insurance plan
- High dosage prescriptions, among others
Patients are often informed that the medications they have been prescribed require prior authorization when they attempt to fill their prescriptions at their pharmacy. Typically, when a pharmacy sees the prior authorization requirement, it contacts the prescribing physician, who will either substitute the prescribed medication or submit prior authorization forms to the patient’s insurance company.
It is no secret that prior authorization process is complex, time consuming, and often requires coordination between multiple parties to be completed. Such a delay can hinder patient access to care and create healthcare issues. However, pharmacies, specialty or otherwise, must take special care when completing the prior authorization process. Any false information provided in the prior authorization process can lead to criminal or civil penalties under various state and federal laws. Failure to provide truthful and accurate information exposes pharmacies to multiple forms of disciplinary actions.
As mentioned above, pharmacy could be subject to criminal and/or civil penalties if the pharmacy submitted false or inaccurate information when completing a prior authorization. Indeed, the United States Department of Justice (“DOJ”) often initiates actions against pharmacies that submit false or fraudulent prior authorization forms. For example, on December 8, 2021, the DOJ reached a $1 million settlement with a Michigan pharmacy after the pharmacy allegedly submitted false and misleading prior authorization requests. According to the DOJ, the pharmacy submitted prior authorization requests that included clinical assertions for the drug in question that lacked factual basis and also represented that the prior authorization requests were completed by the prescribing physician when in fact the physicians did not review, sign, or submit any of the prior authorizations at issue. Further, pharmacies are liable for the actions of their employees in the event pharmacy employees submit false or fraudulent prior authorization requests.
Moreover, submission of inaccurate, misleading, or fraudulent prior authorization information often leads to investigations and/or disciplinary sanctions imposed by Pharmacy Benefit Managers (“PBMs”) against the pharmacy. When PBMs suspect fraudulent prior authorization practices, the PBMs can initiate a Fraud, Waste and Abuse (“FWA”) investigation or similar form of audits and review the pharmacy’s claims history including prior authorization submissions. In the event the alleged fraudulent conduct is identified, PBMs can and will impose sanctions including, but not limited to, payment suspension and network terminations. Additionally, PBMs may also cooperate with government authorities.
Considering the significant consequences pharmacies face if false or inaccurate information is submitted during the prior authorization process, pharmacies should take certain precautions to ensure proper prior authorization practices. Specifically, pharmacies should maintain and adhere to robust prior authorization policies and procedures that comply with Federal and State laws as well as the terms of Provider Manuals and Provider Agreements between the pharmacy and the PBMs. Additionally, pharmacies should routinely provide its employees with adequate training to confirm pharmacy staff adheres to the pharmacy’s policies and procedures.
How Frier Levitt Can Help
Our life science attorneys have the expertise and knowledge to assess your pharmacy’s prior authorization practices, employee training, and standard operating procedures to ensure regulatory compliance and compliance with pharmacy benefit managers’ terms and conditions. Frier Levitt offers flat fee services aimed at pharmacies including, without limitation, drafting and implementing robust prior authorization policies and procedures. Contact us today to speak to an attorney.
