In giving consideration to whether healthcare regulations apply to a proposed course of conduct it’s absolutely vital for a pharmacy to know its payor! This is especially so in the context of patient marketing and the various regulatory prohibitions on paying for healthcare referrals. Unfortunately, some pharmacy owners remain a bit mixed up about who the ultimate payor is for the medications they dispense, and, depending on that pharmacy’s billing operations, such mistakes can have devastating consequences.
A large part of this confusion might be attributed to the fact that in most instances, a pharmacy is not billing the ultimate payor directly (unlike a DMEPOS provider that may be directly submitting claims to Medicare Part B), but rather, the pharmacy is billing an intermediary entity called a Pharmacy Benefit Manager (“PBM”), which is usually a commercially run entity (non-government owned) that manages and adjudicates claims on behalf of health insurance plans that cover pharmacy benefits.
A single PBM may be the ‘hub’ for hundreds or more healthcare insurance plans that a pharmacy bills claims to and through. Some of those health insurance plans may be commercial in nature, however, often times, the PBM is also managing claims that are paid by federal and state funded programs (e.g., Medicare Part D and Medicaid, respectively), which many pharmacies are unaware of.
Pharmacies may wrongfully think, in billing a PBM, that there are no state or federally funded payors involved, and as such, they can get “creative” in their marketing efforts, and engage in activities that may otherwise be prohibited by the Federal Anti-Kickback Statute, which prohibits the offer or receipt of any form of renumeration in exchange for referrals that are reimbursable through federally or state funded healthcare programs. They’re incorrect, because as stated above, in many instances although they’re billing through a commercially owned PBM, the ultimate payor is indeed a state or federally funded program.
They are further mistaken because even if they are strictly billing commercial health insurance payors managed by the PBM, federal commercial health insurance fraud laws provide the federal regulators (Office of Inspector General, FBI, etc.) essentially the same power to investigate, enforce, and levy similar penalties provided by the Federal Anti-Kickback Statute for inappropriate referral activities, which can be criminal in nature.
So that clears that up – PBMs manage claims on behalf of both federally/state funded healthcare programs as well as commercial health insurance plans, both of which the federal regulators are tasked with policing, and both of which prohibit paying for patient referrals.
But wait, there’s more! What about patients that have no health insurance – nothing payable through federal/state healthcare program benefits (and thus not under the auspices of the Federal Anti-Kickback Statute) and not payable by a commercial health insurance provider (and thus out of the reach of the federal commercial health insurance fraud laws) – let’s talk about cash. Is a pharmacy free to engage in activities that would otherwise violate these federal laws?
At least in Florida, the answer is a resounding NO! This is because the Florida Patient Brokering Act has the same referral prohibitions as the federal regulations mentioned herein, but then further extends those prohibitions beyond federally/state funded and commercial payors to even cash paying patients.
Clearly, it’s absolutely vital to “know your payor” in pharmacy billing and ensure your patient marketing practices are complaint. The most cautious approach is to take the most restrictive standards and to apply them to overall operations.