MEDICARE PLANS TO AUDIT 25% OF PARTICIPATING OUTPATIENT PHARMACIES EACH YEAR, HCFA TELLS NOV. 21 INFORMATIONAL MEETING; RFPs DUE IN MID-AUGUST 1989
Medicare plans annual audits for about 25% of the pharmacies participating in the new outpatient drug benefit, Health Care Financing Administration staffers said at a Nov. 21 briefing in Baltimore. Louis Hays, HCFA's associate administrator for operations, said the underlying intention is to have all participating pharmacies audited within the first four years of the program, which gets under way Jan. 1, 1991. HCFA officials indicated that they will conduct "compliance audits" to determine whether pharmacies abide by program rules rather than financial audits to determine how much money pharmacies are making. The emphasis will be on identifying patterns of "aberrant behavior." Chuck Schreibeis, director of the HCFA Office of Financial Operations, said: "We will be looking for behavior patterns ... We'll do a random sample that will probably take into account size of pharmacies, number of beneficiaries, number of claims, [etc.]..." The audits will be based on information generated by the organizations chosen to process drug claims, according to Frank Derville, deputy director of the Bureau of Program Operations. "We'll be looking for trends there: trends to the excessive number of bills, high average prescription costs, high utilization, low rate of generic billing or high rate of generic billings, high number of refills, high ingredient costs and so on. We'll respond to a particular pharmacy or group of pharmacies ... clearly out of the norm." Aside from the audits, the program will conduct utilization reviews. These will examine quality of care, drug interactions, "misutilization," excessive use of services, and program fraud and abuse. Derville said that utilization reviews will include physicians, "to the extent possible. We'll be looking obviously at the quality of the prescribing and the needs of the beneficiary and how that's being put together, the profile of the physicians, their practice, their prescribing, and so forth." He noted, however, that although HCFA has a good deal of experience "in medical utilization review with our [Part B] carriers, we have almost ... no background dealing in this particular environment." The Baltimore session focused on HCFA's present plans for setting up an administrative structure for handling the drug benefit. These efforts are centered at HCFA's Bureau of Program Operations. BPO's Drug Implementation Task Force is coordinating drug benefit activities of the different offices within the bureau, and providing liaison with other HCFA bureaus. Issues such as price-setting are being addressed by other divisions, such as the Bureau of Eligibility, Reimbursement and Coverage. By Aug. 15, HCFA plans to issue a request for proposals (RFP) from firms that want to bid on claims processing contracts. The agency plans to select three to five organizations by Dec. 15, 1989 (see box below). The Dec. 15 selection deadline is somewhat more ambitious than the agency's original schedule, which called for issuing an RFP by late 1989, or possibly 1990. Payments for home I.V. therapies will be administered separately (see following story). Regarding the target dates of Aug. 15 for the RFP and Dec. 15 for contract awards, Derville remarked: "We now know, and you know, that isn't very much time between those two dates to really digest the proposals, and at the same time, prepare a response to the bids. We're going to try to move those dates a little bit, the December one back a little and the August one up a little." The HCFA officials indicated that each contractor will be assigned a specified geographic region, with boundaries drawn so that the processors have about equal workloads. The regions have not yet been decided. Derville also said HCFA has not determined how it will pay the contractors and this question might be addressed as part of the bidding process. Asked whether a firm could receive a contract in more than one region, Derville said that BPO's "current thinking is that we would allow a bidder to be in more than one region but probably not in more than two," in part because of the large number of claims involved. In addition, the bureau is leaning toward "global" bids, that is, making the contractor responsible for all claims payment and review functions for its region, Derville said. He explained that a small number of HCFA staffers are handling the bidding process, and thus favor the "global" contracts. However, Marilyn Koch, director of BPO's Office of Program Administration, noted that the drug benefit law does not preclude a claims processor from subcontracting out some tasks. Koch also said that BPO is likely to award claims processing contracts for "more than one year." HCFA projects that Medicare will pay 700 mil. drug claims in 1991. There will be roughly 65,000 to 75,000 "dispensing points," including 55,000 retail pharmacies. The agency expects to reimburse pharmacies monthly, with payment dates staggered across the country, Derville said. The agency envisions about a 20-second turnaround between the pharmacist's entry of the beneficiary's name into Medicare's point-of-sale (POS) computer terminal and the contractor's response on whether the patient has reached the drug deductible. HCFA would like the initial response to also include some additional information, such as other drugs the patient is taking that could cause drug interactions. Derville said the agency is also considering requiring the contractors to provide an "800" telephone number for pharmacists to obtain further information. A few conference participants suggested that Medicare should reimburse a pharmacy's administrative costs for submitting claims before a patient reaches his or her deductible. Consistent with Medicare policy for other providers, pharmacists are unlikely to receive such a payment, Derville said. Derville also was asked whether pharmacists could use Medicare's POS terminals for other drug reimbursement programs. "There's a commonsense answer and it's `yes.' And then there's a regulatory answer, and that is: `I'm not sure,'" the HCFA official said. Use of the terminals for multiple payers is "something probably everybody should move towards," but government rules may bar use of the terminals by outside groups. Derville reported that HCFA officials are meeting with representatives of state Medicaid programs to determine how administration of Medicare's drug benefit might be integrated with state programs that reimburse Medicare deductibles and copayments for low-income Medicare beneficiaries. Even though the claims system will be automated as much as possible, Derville estimated that as many as 35 mil. to 60 mil. paper claims could be submitted each year. These would include claims for patients who choose a pharmacy not linked into Medicare. Such patients must submit claims themselves. Table or Chart Omitted
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