Why pbm contracts take so long

Scenario: You’re sitting in your brand new pharmacy and have been waiting and waiting to hear back from “PBM #1” that your contract is approved. It’s been 6 months since you applied and no one can give you an answer.

What’s the deal??

Answer: Pharmacy Benefit Managers (PBMs) prefer not to approve contract for first time pharmacy owners. They see too much risk.

CVS Caremark, Express Scripts, Humana, MedImpact, Prime Therapeutics are the major PBMs making up about 95% of the market. And even if you sign up with a PSAO, this process can be long and taxing.

The prevalence of fraud is the main reason. And your geographic location can play a part of it.

HEAT ZONES

In May 2009, the Department of Justice and Dept of Health and Human Services created a team to fight against Medicare fraud. The team was called HEAT (Health care fraud prevention and Enforcement Action Team.) As other departments joined the effort, they focused on certain cities and most of these became known as “HEAT zones.” New rules and regulations were created to prevent fraudulent activity in all aspects of healthcare based on what they saw. This eventually rolled down hill where PBMs involved in CMS services began implementing their own requirements in HEAT zones and even designating some of their own locations.

One area affected: new pharmacy applications.

Each PBM will have specific requirements that must be met apart from the PSAO process altogether. They may even have additional identified Heat Zones.

While details of the credentialing process by each PBM differ, here are some additional requirement examples:

open periods

Before you can even apply, a PBM may require the pharmacy to be in operation for a certain period of time. This can range from 6 months to 2 years.

Additional application documents

Some of these may be online, but others may require manual submissions. One mistake can cause delays or even denials.

Additional application fees

These can reach over $1,000 in some cases.

Surety bonds

A PBM may require some pharmacies to apply for a Surety Bond for a certain period of time. Surety Bonds can range from $50,000 to $500,000. They do this to ensure monetary compensation should the pharmacy breach their contract.

On-site audits

Visits are usually unannounced and can be as scrupulous as a State Board Inspection. So make sure you have your Policies and Procedures printed, signed, and dated.