Pharmaceutical Contract Review Yields Significant Cost Recovery
Business Situation
This client engaged BMI to conduct a pharmaceutical claims audit and contract review of their self-insured pharmaceutical plans and third-party administrator (TPA), with an emphasis on whether all financial and performance guarantees were met per their pharmaceutical ASO contract.
Solution
In addition to a full-service pharmaceutical drug audit, BMI performed a comprehensive pharmaceutical contract review and assessment covering all aspects of applicable financial and performance guarantees. This analysis covered:
AWP discounts – including specialty drugs
Generic dispensing rates
Dispensing fees
Minimum rebate payments
And other contract language impacting client drug costs
Audit Finding
The minimum rebate payment guarantee was not met by the TPA.
BMI identified that the TPA engaged in ‘spread’ pricing – the practice of billing the client a higher price for a drug versus paying the pharmacy a lower price for that same drug.
Audit Outcome
As a result of a shortfall with the minimum rebate payment guarantee, BMI identified over $1.6 million dollars in payments that were due the client. This shortfall payment has subsequently been made to the client by the TPA. While BMI identified that the TPA engaged in ‘spread’ pricing, this was contractually allowed per their current ASO agreement. However, the client is now aware of this and can therefore negotiate with their TPA to eliminate this billing practice.