(WTAJ) — Pennsylvania Auditor General Timothy L. DeFoor released an audit showing that taxpayers in the Commonwealth paid $7 million more for Medicaid prescription drug benefits than they should have in 2022.
According to DeFoor, the overcharging is a result of a lack of oversight of pharmacy benefit managers (PBM) by the Department of Human Services (DHS) and that the discrepancy is partly because of the DHS failing to monitor the Physical HealthChoices Medicaid program’s expenditures, which reached $4.6 billion in 2022.
This lack of oversight allowed for PBMs to not disclose transmission fees they charged pharmacies meaning that PBMs didn’t tell Managed Care Organizations who contracted them to manage the prescription drug benefits for the program how much money they were making from the pharmacies.
‘The need is obvious:’ Legislators hear from local transit authorities “Let’s say it’s $10. $10 includes dispensing fees, co-pays and the cost of the drug. So that $10 goes back to the pharmacy benefit manager. They then deduct the fee of let’s say a dollar and give the pharmacist $9. The spread is the dollar because the MCO paid ten, the PBM paid nine,” said Peggy Morningstar, the auditor assigned to the case.
DeFoor said DHS didn’t have the policies and procedures to monitor and verify that the PBM contracts complied with the HealthChoices contracts.
“The three MCOs using Perform Rx as it’s PBM reported to DHS that they weren’t charging any additional fees to pharmacies called ‘pass through pricing’. DHS accepted them as their– at their word and never verified if this was actually true,” DeFoor said.
DeFoor said there is no way to recuperate the $7 million as it has already been spent.
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There is a call for legislation to be drafted that will fully ban spread pricing and prevent similar situations from occurring in the future.
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