PAAS National Articles

There's a Bad Moon on the Right

H. Edward Heckman, R.Ph.

If third-party contracts aren't one sided enough, new clauses with new requirements will increase the risks and responsibilities of community pharmacies. I recently reviewed new contracts from Prudential HealthCare Pharmacy Services, Aetna U.S. Healthcare and Humana. All three were quite lengthy ranging from 18 to 36 pages. Just their girth is a challenge to most pharmacists that translates into a minimum of two or three hours to carefully review. For those of us who did not go to school to learn how to read contracts, this is precious time hard to allocate to this task.

Below are some of these interesting new contract twists. These references do not name the specific contract that the clauses are contained in. Your own independent study will reveal the identities of the third parties.

"If this Agreement terminates as a result of insolvency or cessation of operations of the third party . . . Pharmacy shall continue to provide Covered Services to all Members for the period which premium has been paid."

By agreeing to this clause, a pharmacy opens themselves up to the potential of being forced to provide prescription services for free. Even if the third party shuts down and doesn't pay your claims, you will be required to continue serving the plan participants.

"Provider shall provide, at the request of third party, a Pharmacist employed by the Provider . . . to work with the third party and assist in programs relative to this Agreement. This may include, but not be limited to serving on local drug utilization committees, participating in educational programs for physicians or Members sponsored by third party and attending meetings on a regular basis as requested by third party. There will be no additional charges to third party for this service."

If you accept a contract with this requirement, you obviously agree to provide a pharmacist for the third parties use, free of charge. The alarming feature of this provision is that it is totally open-ended. If the third party decides they have enough work to keep two of your full time pharmacists busy, you have agreed to provide them to the third party at no charge.

"Pharmacy may not dispute any payment if the total amount in dispute is less than five dollars ($5.00) or 10% of Pharmacy's original claim, whichever is greater."

At first blush, it seems that the third party just doesn't want to be bothered adjusting payments on small discrepancy amounts. A more in depth view reveals that the10% cap could result in some large discrepancies that the contract prevents you from disputing. As an example, many biotech drugs (neupogen, epoetin) result in claims of over $1,000.00. Unless the third party had erred by more than $100.00 (10% of the claim), the pharmacy can not question or receive an adjustment for an underpayment.

"Services that are not Covered Services may be billed to Members by Pharmacy only if (a) the Members' Plan provides and/or Company confirms that the services are not covered; (b) the Member was advised in writing prior to the services being rendered that the specific services are not Covered Services, and (c) the Member agreed in writing to pay for such services."

Yes, you are allowed to bill the Member for Pharmacy Care Services not paid by their third-party plan. Under this contract you can . . . if you jump through enough hoops. First, you must receive notification from the patient's plan that the proposed service is not covered. Secondly, you must then draft a written correspondence to the patient informing them that your pharmacy care service is not going to be covered by their insurance plan. Last, the member must give written authorization for you to provide the not-covered service. To prove your compliance, have the patient sign copies of this correspondence.

It does strike me odd that this third party believes they have the legal boundary to control that which isnít covered and included in the contract for payment. Without payment there is no consideration, and consideration is a mandatory element to create any contract.

"Pharmacy records shall include, but not be limited to, the Member's name, address, telephone number as well a pertinent information regarding the pharmaceuticals dispensed, the Members known allergies and allergic reactions to date and a pertinent medical history of Member."

The information requested above is very basic until you get to the portion requesting information on allergies. While knowing about a patient's allergies is important, most community pharmacies, chain or independent do not collect this information. The last bit of information, the medical history is the most intimidating requirement contained in this passage. I am not aware of many pharmacists who take medical histories. I am not aware of many pharmacy dispensing software systems that have data fields setup to collect "a pertinent medical history." So where does the pharmacist store this information once he or she collects it? The real kicker here is that physicians receive payments for taking medical histories. In this contract, the pharmacist does not receive additional compensation for taking the medical history.

These five passages are just the tip of the iceberg. There are many more new wrinkles lurking in all three of these contracts. Study them carefully.

As you can see, blindly signing third party provider agreements without thoroughly reading and reviewing them can unknowingly result in some formidable and rather daunting requirements. All pharmacists are cautioned to make sure they understand what they are signing before endorsing any contract.