Monday, November 17, 2008

Providers Behaving Badly

We're quite privileged to present our latest Guest Blogger. Regular reader and commenter "Roland" (not his real alias) worked for over 10 years for a major insurance carrier, transitioning to a TPA (Third Party Administrator) in the past year. Because of his unique perspective from the claims side of the business, Roland has graciously agreed to share a recent situation, in which he played a pivotal part, in order to present "the rest of the story" for our readers:

I had a file at work this week that's been bothering me all weekend and I'd like to share it to tell the other side of the coin that the MSM always seems to ignore: physicians and hospitals behaving badly.
A few of our groups have elected to use a Specialty RX Program through their PBMs [Pharmacy Benefit Managers: companies hired by insurers to handle the procurement and disbursement of meds] to control the cost of some of the more expensive drugs/injectables out there and, of course, chemotherapy drugs are at the top of that list.
As it stands now, when we receive a claim for chemotherapy case management is immediately initiated and we administratively cover the first visit. We then send a letter to both the facility and the patient stating that, on subsequent visits, the facility will have to purchase the chemotherapy drugs through the PBM. The reason for this (for people outside the industry) is that providers tend to jack up what they actually paid for the drug well over AWP [Average Wholesale Price], sometimes up to 500% over that amount. To which of course then the facility usually has a contact with a network that just knocks X% (normally anywhere from 5% to 15%) off whatever they bill, a thorn in my side that's a discussion for another time.
When we initiated this procedure on one file, we got a letter from the facility with two complaints. The first was that, by the time they got the letter, the patient had already had 5 chemotherapy treatments, and the provider had already bought and supplied those drugs.
While this seems like a valid argument, we didn't know that this patient was receiving chemotherapy until we got the claims in. Considering in today's health care world that there isn't an insurance carrier out there who isn't utilizing case management on chemotherapy files, I find part of the fault of that lies at their feet. A simple phone call before the patient had begun chemotherapy (even by the patient) would have averted that issue.
The second complaint was that they refused to participate in what they term "brown bagging" situations. This term comes from the fact that some PBMs will ship the drugs to the patient's normal pharmacy (say Walgreen's) and then the patient picks them up and brings them to the facility themselves. They claim there are major liability risks in this and quite honestly, I tend to agree since the drugs have to be handled carefully.
However, our PBM is a step "above" some of its competitors, and will work with the facility to ship the drugs directly to the provider, thereby avoiding the "brown bagging" issue. Which means that the only difference between the facility buying it from their vendor and buying it from our PBM is...cost. When they buy it from the PBM, the PBM will cut it down to AWP plus a certain percentage over it (anywhere from 150-200%). When the facility buys it from their own vendor, we don't know what they actually paid for it and can mark the drug up as much as they want and then get their PPO "discount".
[ed: Think of it like a furniture store. They buy the mattress for $100, tag it at $500, then have a 50% off sale. They're still making a $150 profit on the item, but it "looks" like a "deal."]
The facility basically stated that unless we agreed to cover the claims business as usual, they would no longer be able to treat the patient.
The Friday before last, I sent a letter to the facility offering them three options:
1. I detailed that this PBM would ship the drugs directly to their facility and therefore since their concerns about "brown bagging" were unfounded due to that, implored them to work with the PBM.
2. Stated that if they still decided not to cooperate with the PBM, they could then supply the drugs as usual. However, we would then deny those charges until the invoices and/or NDC numbers of those drugs were supplied and we would internally apply AWP to them and not honor any PPO percentage discount.
3. The patient could pay for the cost of the drugs themselves (an unlikely scenario due to the cost of some of them), and then we would still request the same information as in number two, but send the payment directly the patient.
What we really wanted was a paper trail, a way to show the patient that we were doing our best to get the facility to cooperate so she would get the maximum benefit allowable under the terms of her contract. We stated that we would need a written response within thirty days stating what they would do, otherwise we didn't see how it would be feasible for the patient to continue treatment there.

Stay tuned for Part 2 to learn more about this heart-breaking example of health care run amok.
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