Over the past several months, Frier Levitt attorneys have noticed an increasing trend where pharmacy benefit managers (PBMs) are cracking down on pharmacy enrollment applications, leading to increased enrollment denials and network terminations. In order for a pharmacy to successfully enroll in a PBM’s provider network, it must complete the PBM’s credentialing process. The credentialing process and accompanying applications can be onerous, and typically involves disclosing certain information regarding the pharmacy’s history, ownership/employees, and dispensing practices, amongst other things. However, PBMs increasingly exploit these disclosures and rely on any bit of information – regardless of how insignificant or ridiculous – to prohibit otherwise eligible entities from enrolling in their provider networks in an effort to promote the PBM’s affiliated pharmacy.
Enrollment Denials and Terminations Based on Common Association/Affiliation
Recently, Frier Levitt has encountered numerous situations where PBMs cite remote relationships or affiliations between the applying pharmacy and separate entities or individuals to justify an enrollment denial. Such practices are not only harmful to a pharmacy’s business, but they are completely unjust, as the “affiliations” PBMs rely on are often extremely remote and insignificant. For example, in a recent matter, a pharmacy client’s enrollment application during re-credentialing was denied due to an alleged affiliation between the pharmacy’s owner, a pharmacy employee, and a former “owner” of the pharmacy. This shows that PBMs will rely on outdated and insignificant relationships to justify enrollment denial and terminations without considering more applicable facts that should alleviate any of the PBM’s concerns. To illustrate, in the above example, the pharmacy’s current owner has operated the pharmacy while employing the employee cited in the enrollment denial without any discrepant audit findings or disciplinary action imposed by the PBM or other third-party payer. Thus, the pharmacy’s history made it clear that it was fully capable of complying with all of the PBM’s terms and conditions, as well as applicable federal and state laws. Similarly, in a separate matter, the same PBM attempted to deny a pharmacy’s enrollment application and terminate the pharmacy from its networks after the pharmacy underwent a change of ownership because the pharmacist-in-charge employed by the pharmacy worked at a pharmacy that received significant audit findings over four years prior to the pharmacy’s application submission. Critically, the PBM ignored the fact that the pharmacist-in-charge worked at the applying pharmacy for each of the past four years without any adverse audit findings from the PBM.
What Pharmacies Can do to Challenge PBM Enrollment Denials and Terminations
Despite the uptick in adverse PBM actions against pharmacies, pharmacies have options and tools at their disposal to combat abusive PBM practices. One such tool is the pharmacy’s contractual appeal and dispute resolution rights afforded by PBM Provider Manuals. In instances where PBMs seek to simultaneously deny a pharmacy’s re-credentialing and terminate an existing contract, pharmacies are able to use both their right to appeal and the dispute resolution processes. Conversely, when PBMs deny a new pharmacy’s enrollment application, pharmacies are still encouraged to appeal the adverse decision to the fullest extent and within the timeframe afforded in the denial notice. In addition, to avoid the risk that adverse audit findings are relied upon in the future to justify an enrollment denial or termination, pharmacies must use these appeal and dispute rights to contest any discrepant audit findings. Even when the amount at issue seems insignificant, as the examples above illustrate, PBMs will routinely seek to use old and seemingly resolved audit findings as a basis to terminate or otherwise exclude pharmacies from their networks. Finally, governments at both the state and federal levels are honing in on abusive PBM actions and new legislation is regularly being introduced to address conduct like unjustified network terminations and enrollment denials. To illustrate, many states have enacted Any Willing Provider laws and similar statutes specifically aimed at addressing unwarranted network exclusions.
How Frier Levitt Can Help
Regardless of the size of your pharmacy or the amount at stake, Frier Levitt is ready and able to assist you in successfully challenging PBM abuse of your pharmacy. Our life sciences attorneys are prepared to provide guidance as your pharmacy prepares for audits as well as take an aggressive approach to fight for your rights following a PBM audit. If you have questions or need help fighting adverse PBM actions, contact us to speak to an attorney.
