Monday, August 22, 2016

State employee drug insurance error: How bad?

Posted By on Mon, Aug 22, 2016 at 12:09 PM

Still waiting for firm information about an item I mentioned here Saturday — failure of the company that manages state employees' pharmacy benefit to reimburse pharmacies. It now appears the problem persisted for the first two weeks of July for all pharmacies, potentially $3.2 million worth of prescriptions based on budget numbers.

My brief response to an inquiry Friday from the Department of Finance and Administration said the problem had been corrected, but a spokesman then was unable to say the size of the problem, how it had happened, how long it persisted and the amount of money at issue. Also at issue is whether any penalty should be sought from the contractor, MedImpact. It's not known, for example, if pharmacies incurred  financial costs — say a bounced check fee — when payments for prescriptions weren't automatically made.

Two weeks of state employee drug benefits could amount to as much as $3.2 million worth of prescriptions. In addition to the reimbursement problem, an unknown number of state employees also had problems getting prescriptions filled in the first place because of a coding problem.

The issue arose at a meeting of the board of the State Employee Benefits Division last Tuesday.  According to e-mails I received under a Freedom of Information Act request, John Kirtley, director of the state Board of Pharmacy, asked DFA officials for information on the payments withheld.

Chris Howlett at DFA responded Thursday:

This information has been requested from MedImpact. They are gathering the information but have not reported it to us yet. It is our understanding all pharmacies were involved. More information will come as it is made available to us.
Medimpact took over the management of pharmacy benefits July 1. The change was expected to reduce costs.

UPDATE: This new information from Jake Bleed at DFA:

We are still following up with our pharmacy benefits manager, but we’ve learned that some claims filed by Arkansas pharmacies between July 1 and July 11 were not paid. All of those claims have since been paid and the issues in payment of eligible claims have been resolved.

In total, 737 pharmacies were affected, with a total number of 22,767 claims filed. The total amount in delayed payments was $2,246,078.56.
I also asked Bleed about potential for penalties.

We are still looking into the issue, but penalties are definitely an option we are considering at this time. We’ve not made a decision on whether or how to help pharmacies. We have also not been alerted to a problem with patients not being able to fill prescriptions, but based on this email, are looking into whether a problem exists.
My sources indicate some patients definitely ran into glitches on prescription approval in the early days of the new manager, but the problem didn't appear to be as widespread or long lasting as the failure to reimburse pharmacies.

UPDATE: Scott Pace, director of the Arkansas Pharmacists Association, said a Little Rock pharmacist discovered the reimbursement problem and he got in touch with Chris Howlett at MedImpact after confirming the problem was widespread. He said Howlett reported to him it had been fixed by Aug. 12. The patient coding problem was apparently a much more limited issue and it occurred on the first day of the new management, July 1. It was fixed within hours, he said. He said he still wasn't sure how the larger problem had arisen, but said he'd been told by MedImpact that a process in which approved claims are "kicked out" for further review (say a person left state coverage) had led to ALL claims being held up. He said the pharmacists had a "good interaction" with Howlett in addressing the problems.

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