Medicare Report Urges More Oversight of Pharmacy Benefit Managers (PBMs)

The Centers for Medicare & Medicaid Services (CMS) recently released a report on 2011 program audits of the Part D prescription drug program and sent guidance to plan sponsors urging more robust oversight of their pharmacy benefit managers (PBMs).

CMS conducted 11 program audits to ensure sponsors were in compliance with Medicare Advantage/Part D requirements relating to the following areas: Part D Formulary Administration, Part D Coverage Determinations and Appeals, Part D Grievances, Part C and D Agent & Broker Oversight, and Part C and D Compliance Program Effectiveness.

 Among various findings, CMS found that:

  • Several sponsors lacked an understanding of the formulary and transition requirements. While most sponsors delegated the implementation of key formulary functions to their PBM, they did not ensure the functions were in compliance with CMS requirements.
  • Patients were denied transition fills for non-formulary drugs, protected class drugs, and drugs subject to utilization management restrictions during their transition period. This was due, in part, to the lack of appropriate oversight of the PBM. CMS recommended that sponsors perform regular and adequate oversight of their PBMs to ensure that they are complying with all CMS requirements.  
  • Sponsors lacked adequate tracking of and failed to appropriately address beneficiary questions and complaints against agents and brokers. This calls to mind concerns previously expressed to NCPA regarding agents potentially misleading patients about preferred Part D networks.
  • In terms of compliance program effectiveness, sponsors did not perform effective monitoring, auditing, and oversight of First Tier, Downstream, and Related Entities (FDRs) delegated to perform critical Medicare operational functions, especially over PBMs.  CMS recommended that sponsors implement a program for oversight and evaluation of FDR performance, including an escalation process to senior management to report non-compliance or projected areas of non-compliance, as well as meeting regularly with leaders of their FDRs and holding them accountable for the functions they are contracted to perform.

 The report is further support for the arguments raised by NCPA and others that PBMs lack appropriate oversight, regardless of the government or private industry programs they participate in.

1 Response to “Medicare Report Urges More Oversight of Pharmacy Benefit Managers (PBMs)”

  1. 1 Van G. Coble Dph, CDM, FASCP February 3, 2012 at 3:25 am

    This is not news to any pharmacist! The fears of independent, retail community pharmacists are becoming reality. Allowing PBMs to sink “their teeth” into a previously pool of individuals without prescription coverage ends up as a license to steal from the taxpayers.

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