In Wisconsin, Governor Tony Evers recently signed a bipartisan bill into law aimed at regulating pharmacy benefit managers (PBMs). This law, which was unanimously passed in the Wisconsin legislature, is significant for several reasons including because, prior to its enactment, Wisconsin did not regulate PBMs. Wisconsin’s new law regulates several controversial PBM practices that have garnered greater attention over the past several years including PBM audit practices, retroactive claim reduction/recoupments, and collection of manufacturer rebates.
As it relates to PBM audit practices, the law specifies certain rules that a PBM must follow in conducting an audit. For example, a PBM may not audit a pharmacy within the first five business days of a month unless the pharmacy consents to an audit during that time. If a PBM intends to conduct an audit on the pharmacy’s premises (commonly known as an “onsite audit”) the pharmacy is entitled to a minimum of two weeks’ notice before the audit can be conducted. Importantly, this law also prohibits a PBM from recouping or assessing other penalties against a pharmacy until the audit appeal process is exhausted and the PBM has issued its final audit report to the pharmacy. This is a critical component of the law since PBMs routinely recoup money from pharmacies well before the audit and all appeals have been finalized.
As to the controversial practice of retroactive claim reduction, under Wisconsin’s new law, a PBM may not retroactively reduce a pharmacy’s reimbursement after the claim is adjudicated unless certain exceptions are shown, e.g., that the claim was submitted fraudulently or that the original claim was paid incorrectly. This type of prohibition is especially relevant to PBM recoupments or “claw backs” that can arise from Brand Effect Rate (BER), Generic Effective Rate (GER), and Direct and Indirect Remuneration fees, more commonly known as DIR fees.
Regarding PBMs’ collection of manufacturer rebates, beginning on June 1, 2021 all PBMs must submit a report showing the aggregate rebate amount that a PBM received and retained from all pharmaceutical manufacturers—this requirement is limited to contracts held with pharmacies located in Wisconsin. This is a substantial change intended to increase transparency on manufacturer rebates paid to PBMs.
This law is a significant step forward for Wisconsin pharmacies and pharmacy providers should learn about the law and the many protections afforded thereunder, so that they can benefit and compel PBM compliance when necessary.
How Frier Levitt Can Help
Frier Levitt represents numerous pharmacies across the United States in challenging PBM audits, network access, reimbursement practices and has extensive knowledge on all aspects of the pharmacy-PBM relationship. Contact us today to speak with an attorney about how your pharmacy can leverage the various laws and protections afforded to pharmacies, including Wisconsin’s new PBM law.
