Prior authorization is a critical process in healthcare, requiring providers to obtain advance approval from a health plan before a procedure, service, or medication is covered. This system is designed to control costs and ensure that prescribed therapies are appropriate and safe for patients. However, regulatory complexities surrounding prior authorization can pose challenges for pharmacies offering support to prescribers.
Delegation of Prior Authorization Processing
Federal law does not specify who must complete a prior authorization request. However, since medical necessity determinations must be attested by a prescribing provider, their involvement is typically required. Many Pharmacy Benefit Managers (PBMs) and insurers mandate that the physician submit the request directly, explicitly limiting pharmacy involvement. By way of example, CVS Caremark, Express Scripts, OptumRx, Prime Therapeutics, and Humana generally prohibit a pharmacy from initiating and/or submitting the prior authorization request itself, and they each impose contractual nuances as to how, if at all, a pharmacy may be involved with the preparation of the request that is ultimately submitted by the prescriber. Pharmacies must be aware of how PBMs restrict participating pharmacies from initiating, completing, or submitting prior authorization requests to avoid scrutiny from the payor.
Federal Anti-Kickback Statute Risks
The Federal Anti-Kickback Statute (AKS) prohibits knowingly offering, paying, soliciting, or receiving any form of remuneration to induce or reward referrals for items or services covered by federal healthcare programs, such as Medicare and Medicaid. Pharmacies offering free prior authorization services to prescribers may be scrutinized under the AKS if such services are perceived as inducements from the pharmacy in exchange for that prescriber’s referrals.
Due to the prevalence of these models, the Office of Inspector General (OIG) has reviewed and issued advisory opinions on the permissibility of multiple prior authorization assistance models between pharmacies and prescribers. These opinions have focused on payment structures rather than the delegation of administrative tasks. In forming its opinions, the OIG has frequently relied on common factors relevant to these arrangements when indicating whether they are or are not permissible, including:
- The free services must be made available to all prescribers, not just high-volume referrers.
- No additional financial relationships between the pharmacy and prescribers should exist.
- Transparency is crucial—pharmacies must identify themselves when submitting prior authorization requests.
- Pharmacies must have a legitimate business interest in offering these services, distinct from incentivizing referrals.
Where prior authorization models are structured properly and meet the elements described in OIG’s advisory opinions, there is a greater likelihood that the model will be considered acceptable. Notably, OIG advisory opinions only apply to the parties who requested them and are not legally binding on others. However, these opinions can serve as useful guidance for structuring compliant prior authorization assistance programs.
Lessons from Enforcement Actions
Enforcement actions provide important lessons on compliance risks associated with prior authorization assistance. In one matter, pharmaceutical executives were prosecuted for providing free prior authorization assistance while misrepresenting their identities to insurers. Falsifying prior authorizations can even leave pharmacists with criminal liability. These cases underscore the need for transparency, proper documentation, and adherence to legal requirements to avoid fraudulent or deceptive practices.
Other enforcement actions have highlighted improper financial incentives and conflicts of interest in prior authorization processes. Companies that tie prior authorization assistance to prescribing behavior or fail to ensure fair market value for services have also faced legal repercussions. Pharmacies and healthcare entities must establish clear policies to prevent any perception of inducement, ensure compliance with insurer requirements, and maintain auditable records of their interactions.
Latest Trends
Electronic prior authorization (ePA) platforms, such as CoverMyMeds, have streamlined the prior authorization process, but their use raises important legal considerations. One key risk arises when pharmacy personnel initiate or complete prior authorizations while misrepresenting themselves as the prescriber, potentially exposing both the pharmacy and the prescribing provider to compliance and liability concerns. To mitigate this risk, it is critical to ensure that any involvement by non-prescribers is properly documented and authorized. Written agreements that clearly appoint pharmacy staff as agents of the prescriber for prior authorization purposes can provide protections, but may not completely eliminate risk. The structure and execution of such documentation must be handled carefully to align with applicable legal and regulatory requirements. For guidance on best practices and ensuring compliance, we recommend discussing your specific situation with legal counsel.
Best Practices for Compliance
To mitigate legal risks associated with prior authorization support, pharmacies should:
- Avoid submitting prior authorizations under a prescriber’s credentials.
- Ensure transparency in interactions with insurers and prescribers.
- Structure assistance programs to align with regulatory guidance and fair market value.
- Review state-specific laws and insurer contracts before offering prior authorization support.
Conclusion
While pharmacies can play a role in supporting prescribers with prior authorizations, careful structuring of these services is essential to comply with federal and state regulations. By adhering to transparency requirements and avoiding arrangements that may be construed as improper remuneration, pharmacies can offer valuable assistance while minimizing legal risk. For further guidance on structuring compliant prior authorization support programs, contact Frier Levitt to navigate the evolving regulatory landscape.
