OIG Special Bulletin Warns Drugmakers About Improper Copayment Coupon Use

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By James Swann 

Sept. 19 — Drug manufacturers that provide patients with copayment coupons may not be doing enough to ensure that the coupons aren't used for drugs paid for by federal health-care programs, specifically Medicare Part D, according to a report and special advisory bulletin from the Department of Health and Human Services Office of Inspector General released Sept. 19.

The bulletin alerted manufacturers to the fact that they are responsible for the proper use of the coupons and face penalties for any improper use.

Concurrent with the bulletin, the report, “Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs” (OEI-05-12-00540), said that while most drug manufacturers have edits built into their pharmacy claims transaction systems designed to stop copayment coupons from being used for drugs paid for by Medicare Part D, “claims processing edits currently in use may not stop all coupons from being processed for drugs paid for by Part D because manufacturers cannot accurately identify a beneficiary's Part D enrollment status.”

The claims edits may not contain actual Medicare Part D enrollment information and can often include incorrect data, the OIG said.

Drug manufacturers are often the only entities with the ability to identify copayment coupons as they go through the claims process, according to the OIG, and this can prevent “Part D plans, other primary insurers, and pharmacies from preventing the use of coupons for drugs paid for by Part D and oversight entities, like CMS and OIG, from monitoring the use of coupons.”

Copayment coupons are intended to help patients defray the cost of their copays for specific brand-name drugs.

Coupons can come in several forms, including printed coupons, electronic coupons, a debit card or direct payments from the manufacturer to the patient.

However, under the anti-kickback statute, drug manufacturers can be held liable “if they offer coupons to induce the purchase of drugs paid for by Medicare Part D or any other Federal health care program,” the report said.

Mark Merritt, president and chief executive officer of the Pharmaceutical Care Management Association, said drug manufacturers need to make every effort to ensure that copayment coupons aren't increasing demand for their brand-name drugs and increasing costs for the Medicare program.

“Manufacturers would do more good by focusing on the millions of uninsured Americans who must bear the full cost of drugs, not merely the copay,” Merritt said in a statement Sept. 19.

Special Advisory Bulletin

In addition to alerting drug manufacturers to the possibility of being held liable under the anti-kickback statute for using copayment coupons, the special advisory bulletin said the coupons can have an adverse impact on federal health-care program costs.

“The availability of a coupon may cause physicians and beneficiaries to choose an expensive brand-name drug when a less expensive and equally effective generic or other alternative is available.”

—OIG bulletin

“Pharmaceutical manufacturers that offer copayment coupons may be subject to sanctions if they fail to take appropriate steps to ensure that such coupons do not induce the purchase of Federal health care program items or services, including, but not limited to, drugs paid for by Medicare Part D,” the bulletin said.

“The availability of a coupon may cause physicians and beneficiaries to choose an expensive brand-name drug when a less expensive and equally effective generic or other alternative is available,” the bulletin said.

Cost sharing is key to the sustainability of federal health-care programs like Medicare Part D, the bulletin said, and is contingent on physicians and patients making decisions based on the real cost of a drug.

“When consumers are relieved of copayment obligations, manufacturers are relieved of a market constraint on drug prices,” the bulletin said.

Beneficiary Notice

The OIG sent out surveys to 34 drug manufacturers that offer copayment coupons, and all 30 respondents said they provide notices to either Medicare Part D beneficiaries or pharmacies that the copayment coupons can't be used for drugs paid for by federal health-care programs

The bulk of respondents (27) also reported having pharmacy claims edits in place to block copayment coupons being used for drugs paid for by federal health-care programs.

However, the OIG said the edits often used flawed information that prevented their proper use.

For example, nine of the 30 respondents reported having a claims processing edit that used a patient's primary insurer's bank identification number (BIN), which would ostensibly allow the manufacturers to determine which insurers offered Medicare Part D plans and block any improper copayment coupon use.

“These edits may not be reliable because they use BIN lists that are collected at a point in time and may not be accurate or current,” the OIG said.

Five manufacturers also reported having claims processing edits that used patient birth dates, allowing the manufacturer to identify patients who were eligible for Medicare coverage.

In this case, the OIG said birth date alone can't be used to identify all patients with Medicare coverage, as “17 percent of Medicare beneficiaries are disabled and under age 65.”

OIG's Recommendation

Ensuring that copayment coupons aren't used for drugs paid for by federal health-care programs will entail increased cooperation between federal regulatory agencies and drug manufacturers, the OIG said.

As such, the OIG recommended that the Centers for Medicare & Medicaid Services “cooperate with industry stakeholder efforts to improve the reliability of pharmacy claims edits and make coupons transparent.”

To further this goal, the OIG said that the CMS could take several steps, including:

  • • looking at options to verify a patient's Medicare Part D enrollment prior to a copayment coupon being processed;
  • • changing the Medicare Part D program to improve enrollment verification; and
  • • working with stakeholders to identify and make transparent the use of copayment coupons.

The CMS agreed with the OIG recommendation.

“CMS concurs with OIG's suggested recommendation to work with relevant stakeholders to improve the reliability of pharmacy claims edits that facilitate verification of Part D enrollment and to explore how best to make coupons universally identifiable and transparent in pharmacy claims data,” the CMS said in response to the OIG.

To contact the reporter on this story: James Swann in Washington at jswann1@bna.com

To contact the editor responsible for this story: Ward Pimley at wpimley@bna.com

The OIG report is at https://oig.hhs.gov/oei/reports/oei-05-12-00540.pdf.

The OIG special advisory bulletin is at https://oig.hhs.gov/fraud/docs/alertsandbulletins/2014/SAB_Copayment_Coupons.pdf.