Payor Network Access and Defense of Network Terminations

Pharmacy Providers are not only faced with several challenges when seeking admission into Pharmacy Benefit Manager (PBM) networks; they continue to face issues while participating in the network, potentially resulting in “network termination.” As a national healthcare and life sciences law firm, Frier Levitt has assisted providers throughout the country to navigate payor network issues.

Payor Network Access

PBMs restrict access into their pharmacy networks. As a consequence, Providers find it increasingly difficult to obtain admission and gain the ability to service their patients. Only three PBMs process more than three-quarters of all prescription claims and each of these PBMs share common ownership with a major insurer and, in turn, with a mail order/specialty pharmacy. To limit participation in their networks, PBMs establish restrictive networks and artificial barriers of entry by way of heightened terms and conditions of participation, which often do not demonstrate any correlation with improving patient care and outcomes.

For example, several mail order and specialty pharmacy networks require that providers meet onerous terms and conditions, including obtaining multiple accreditations—instead of only one accreditation, investing in expensive and often unnecessary equipment, and implementing several, burdensome clinical measures that often have no demonstrative improvement on the providers’ ability to service patients. Further, some payors have even gone so far as to close their networks and indicate they are no longer accepting applications. In the event that payors do accept applications, they often provide pretextual reasons as a basis of denial of the provider’s application.

As networks continue to become more restrictive, providers have several legal tools available to leverage and assist them in their efforts to gain network admission, including but not limited to Federal and State Any Willing Provider Law, Anti-Mandatory Mail Order Laws, and Fair Trade and Antitrust Laws.

Network Terminations

Even after providers gain network access, they face significant restrictions in their participation. Payors and PBMs often find pretextual bases of termination as a means to limit networks and keep lucrative prescriptions for the PBM-owned specialty pharmacy. One of the most common bases of a network termination amongst pharmacy providers is a PBM audit. PBMs conduct onsite and desktop audits and investigations on pharmacies to review their respective compliance with the PBM’s terms and conditions under the provider manual and agreement. In the course of their audits, PBMs aggressively seek to allege discrepancies and recovery efforts against the pharmacy. Often, if audit issues remain unresolved, PBMs may seek further action against the pharmacy by removing them from the network and limiting their ability to credential for a significant period of time. Providers have legal tools available to address network terminations, in addition to the terms and conditions in the payor contract. Providers should understand the avenues they can pursue to prevent and address any potential network terminations and to ensure continued participation in payor networks.

How Frier Levitt Can Help Address Network Access and Termination Issues

Frier Levitt represents thousands of different providers to obtain and maintain network access and participation. Frier Levitt’s legal services related to network participation issues include:

  • Review of provider credentialing applications

  • Review and negotiation of PBM contracts, provider agreements and manuals

  • Review of pharmacy services administrative organization (PSAO) contracts

  • Defense against PBM audit and recoupment actions

  • Defense against PBM network terminations

  • Addressing Direct and Indirect Remuneration (DIR) fees

  • Negotiation of reimbursement rates

  • Analysis and guidance on payor network participation, inclusive of network terms and conditions and applicable law

Frier Levitt has over 20 years of experience in the healthcare and life science industries. For more information, contact Frier Levitt today to speak with an attorney.