Does anyone know if it's illegal to cash out medicare covered prescriptions to avoid reaching the donut hole? I'm trying to find documentation on it so I can give it to a patient who got upset because we wouldn't cash out her prescription.
Cashing Out Medicare RXs to Avoid Donut Hole
- Thread starter rx2010
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This site (political in nature -- it just happened to pop up first in my google search) gives a citation under the second numbered statement that would support this:
http://www.cchfreedom.org/cchf.php/308
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Think about it......Is the patient bound by law to use thier Medicare benifit on every prescription? Are people with commercial insurance bound by law to use thier insurance when filling arescription. Is anyone?
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How will they ever get out of the donut hole if you do that?
You are not forced to use your insurance. If you want to pay cash, you certainly can. Even if it was mandatory to use, how do you know if the patient has Medicare or not? It's not sucking money out of Medicare, because they either pay $x in cash and avoid the donut hole, or they use Medicare the whole time, and end up paying cash later on when they hit the donut hole. It's just a bit easier on the patient to pay for cheap generics and stay out of the donut hole than to bill the insurance but eventually pay full price for their brands.
If they do end up in the donut hole, it was a waste for them to do it, though. That money they paid cash could have gone towards getting them out of the donut hole.
If they do end up in the donut hole, it was a waste for them to do it, though. That money they paid cash could have gone towards getting them out of the donut hole.
We were told by corporate recently that we are not allowed to cash out prescriptions for medicare patients no matter what, even if they want to avoid reaching the donut hole by paying case for $4 medications. They said it was against the law. I know private insurance patients don't have to use their insurance if they don't want to, but medicare is funded by the government and I'm not sure what the law is on that.
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There is no law. It is a voluntary insurance program.
Are you getting confused with the gift card and incentive program policy. You are not allowed to give gift cards or other incentives to Medicate members evenif they are paying cash for a prescription.
Use some logic and reasoning here. How could a corporation have a polivy forcing someone to use a voluntary benefit?
Nope, I've always known it's illegal to offer incentives such as gift cards to anything government funded, but we received an e-mail shortly after Walgreens was fined for giving gift cards to medicare patients that in addition to the already known law of not offering incentives such as gift cards, we can not cash out medicare prescriptions when patients want to pay cash for $4 generics to avoid reaching the donut hole. I've always cashed them out when the patients requested until we received that e-mail. Just wondering if others heard of this. It didn't make sense to me either that medicare patients are required to run every prescription under medicare if they want pay cash for it. I may just call Medicare and confirm with them.
Do you have bonus points/coupons? It sounds like the company could be trying to cover their ass. By refusing the cash option there is no risk of giving accidental kickbacks.
I have heard about this with Medicaid but not specifically Medicare. With Medicaid the premise is an applicant is declaring he or she cannot afford medications. Therefore he or she is supposed to use Medicaid for all prescriptions. So no cashing out the Lortabs for the Medicaid population, or any other medication, but it is still done in practice. (YMMV by state?)
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Have fun calling Medicare! Do you need to call the weatherman everyday and ask him if the skyis blue?
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I don't think there are any laws that specifically address this, but it probably falls under Medicare Fraud, Waste and Abuse. This would be in a very, very, very gray area and is not something we can reasonably debate on a pharmacy internet forum. It is something that very highly paid attorneys from pharmacy chains and the government might argue one day in the Supreme Court. Imagine a whistle blower bringing a lawsuit against a pharmacy chain for knowingly aiding Medicare patients to receive more prescription benefits than they are otherwise entitled to, thus causing fraud, waste and abuse.
The prudent thing to do would be to steer away from this practice, which it seems corporate has already advised rx2010 to do.
The prudent thing to do would be to steer away from this practice, which it seems corporate has already advised rx2010 to do.
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The problem with doing it at Walgreen's would be if they are using the PSC for it. Medicare/Medicaid are automatic disqualifiers for PSC.
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Just curious retail and managed care peeps ---
Do they count the full negotiated price towards the donut hole or just the patient's copay? For instance if the patient is paying $1.10, but the negotiated price between Medicare D and the pharmacy for reimbursement is $10, which one gets added towards the total for the patient reaching the donut hole?
I'm assuming it is the reimbursement price (and not the copay) in which case this whole thing really makes no sense b/c the patient is going to pay similar to the reimbursement price (or even more possibly?) if paying cash even for the cheap generics (which really aren't going to push the patient towards the donut hole that fast anyway at $10 a pop...). Am I missing something here???
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Any way that the policy for not cashing out the $4 generics when the patient has insurance is because the reimbursement from the insurance is more than $4?
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They count the total drug cost which is the patient's copay and the pharmacy reimbursement. Knowing this (I only realized yesterday), you can see how it is slightly beneficial to the patient to cash out the Rx and not have their copay count towards the donut hole limit ($2,930), especially with cheap generics where the pt copay covers most or all of the Rx cost and there is little or no reimbursement from the plan.
This leads to "aiding Medicare patients to receive more prescription benefits than they are otherwise entitled to, thus causing fraud, waste and abuse."
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Help me understand your logic because something is not making sense. Take two patients each requiring a total of $7000 worth of medication in a years time. The first patient puts all of his drugs on medicare insurance which has a $200 deductible pays 20% until reaching the doughnut hole from 2500 to 6000 where he pays 50% of cost, after which he pays 5%. Total out of pocket expense for this patient is $200 + 2300*0.2 + 3500 *0.5 + 1000*0.05 = 2460. The amount of money covered by medicare is thus 4540.
Patient two has the exact same medicare benefit as patient one along with the same medication requirement, except he is thinking he can pull a fast one by paying out of pocket for some of his drugs so he can delay the doughnut hole. Thus he decides to pay $500 of the drug cost himself before reaching the hole. Here is what his out of pocket expense looks like: 200 + 500 + 2300*0.2 + 3500*0.5 + 500*0.05 = 2935 and thus medicare has to pay 4065. So tell me exactly how medicare loses out on this deal?
You may say, well the patient may have used special pharmacy promotions on the scripts he paid for out of pocket and for the 500 he paid, may have gotten 1500 worth of drugs. This does not matter because the 1000 came out of the pocket of the pharmacy and not of medicare so his true drug need is actually 6000 per year instead of 7000. Ok, doing the math for his out of pocket expense looks like this: 200 + 500 + 2300*0.2 + 3000*0.5 = 2660 and medicare had to pay 3340. Thus both the patient AND medicare have less cost, the one entity losing on this deal is the pharmacy because they have 1000 less revenue.
As I said in the beginning, please help me understand your logic by substituting any of your numbers into my formula or telling me why my formula is wrong. For your convenience my formula is as follows:
D + O + (S-D)*C + (E-S)*P + (T-E)*Z = X
D= deductible
O= out of pocket expense the patient chooses to pay
S= starting dollar amount of doughnut hole
C= Percentage copay patient pays between deductible and start of doughnut hole
E= ending dollar amount of doughnut hole
P= percentage patient pays while in doughnut hole
T= Total dollar amount of drugs pt needs in one year (if T<E, replace E with T in the formula, because the patient did not get out of the doughnut hole)
Z= Percentage patient pays when he/she is over the doughnut hole's upper limit
X= total out of pocket cost for the patient
Also note that T-X= medicare's contribution to drug coverage
Holy crap I must be bored this morning.
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It is both the copay and the reimbursement price that go toward the donut hole.
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When the $4 generics started and may be still the case the copay would be $4 and the reimbursement would be $10. So cashing the rx out would count only $4 to the donut hole instead of $10. Last I checked the copay is $4 and the reimbursement is $4 for most plans.
It really does not make sense for a member to pay cash for prescriptions to avoid the donut hole. They will end up paying more in the end. Plus they miss out on paying the negotiated rate and now with brand name drugs they get a 50% discount. The best way they can avoid the donut hole is to take low cost generics if possible. If they are on 5 brand name drugs then they are screwed and will likely end up in the hole.
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Since when do insurance companies reimburse more than your U&C of $4 on a $4 medication? 
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Since when do insurance companies reimburse more than your U&C of $4 on a $4 medication?
It was right after Walmart started the $4 generic disaster and before the company I was working for came out with a $4 list. It seemed like it took a couple of months and the copays for Walmarts $4 generics started showing up as $4 copays for Medicare members. However we were billing the insurance company like $39.00 or something and getting reimbursend $10.00. I am not sure it it was due to contracts in place but it is not that way any more.
I got into a heated discussion with some hard headed old Medicare member who insisted we run his prescription for a $4 copay for cash and then match Walmart's price. The cash price was the companies minimum price which was $11.99 I think. I told him I wasn't going to do it because he had insurance and price matching was for people who did not have insurance.
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Mountain
You mean there was a time when 11.99 was the minimum? And people actually paid it?
You mean there was a time when 11.99 was the minimum? And people actually paid it?
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Yep....20 cents worth of Metformin.....$11.99...Ahhh the good o'ole days!
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@Dr Wario
Your example is sound, but unfortunately not what I was talking about. A lot of MPD plans have a tiered copay structure (fixed $ amt per Rx), rather than the coinsurance (pay % of Rx) used in the standard MPD plan and in your example.
I will use the AARP MedicareRx Preferred plan as an example as it is one of the most popular.
It has no deductible, and the copays are:
$4 for Tier 1
$8 for Tier 2
$41 for Tier 3
$95 for Tier 4
33% for Tier 5 (Specialty Tier)
until total drug costs reach the $2,930 donut hole. Then the pt pays 86% for generics and 50% + dispensing fee (ignored below) for brand drugs.
Say we have two patients taking the same drugs:
Five Tier 1 generics that are also on the pharmacy's '$4 generic list'. Since the 'Usual & Customary' price for these drugs at this pharmacy is $4, the pharmacy does not receive any additional reimbursement from the plan.
Two brand name drugs:
- Advair Diskus 250/50 #60, plan agreed total drug cost $245, Tier 3 $41 copay
- Dexilant 30mg #30, plan agreed total drug cost $136, Tier 4 $95 copay
Total drug cost for the entire year is $4,812, so these patients do not exit the donut hole.
Patient A runs all rxs through the insurance while patient B pays cash for all the generics.
Here is a script by script breakdown:
Notes:
- I'm not sure what happens to the script on the borderline as the pt goes into the donut hole. I prorated the copay:Medicare for the portion before the donut hole, and did 50:50 after the donut hole.
- I made a separate manufacturer column for the 50% discount for brand name drugs in the donut hole because this is funded by the manufacturer, not Medicare. Nonetheless, they are added in at the bottom in the "Reimb" cell representing the total amount reimbursed to the pharmacy.
- I put the generics of Patient A covered at 14% in the donut hole. Patient B could do the same, and this would slightly increase the amount reimbursed by Medicare.
So Medicare pays $112.47 more for patient B, or $32.47 more if you include the brand manufacturer's contribution. Thus patient B pays $32.47 less out of pocket. I did say it would only be "slightly beneficial to the patient to cash out the Rx and not have their copay count towards the donut hole limit ($2,930), especially with cheap generics where the pt copay covers most or all of the Rx cost and there is little or no reimbursement from the plan."
Your example is sound, but unfortunately not what I was talking about. A lot of MPD plans have a tiered copay structure (fixed $ amt per Rx), rather than the coinsurance (pay % of Rx) used in the standard MPD plan and in your example.
I will use the AARP MedicareRx Preferred plan as an example as it is one of the most popular.
It has no deductible, and the copays are:
$4 for Tier 1
$8 for Tier 2
$41 for Tier 3
$95 for Tier 4
33% for Tier 5 (Specialty Tier)
until total drug costs reach the $2,930 donut hole. Then the pt pays 86% for generics and 50% + dispensing fee (ignored below) for brand drugs.
Say we have two patients taking the same drugs:
Five Tier 1 generics that are also on the pharmacy's '$4 generic list'. Since the 'Usual & Customary' price for these drugs at this pharmacy is $4, the pharmacy does not receive any additional reimbursement from the plan.
Two brand name drugs:
- Advair Diskus 250/50 #60, plan agreed total drug cost $245, Tier 3 $41 copay
- Dexilant 30mg #30, plan agreed total drug cost $136, Tier 4 $95 copay
Total drug cost for the entire year is $4,812, so these patients do not exit the donut hole.
Patient A runs all rxs through the insurance while patient B pays cash for all the generics.
Here is a script by script breakdown:
Code:
Patient A Patient B
Copay Mcare Manuf Cash Copay Mcare Manuf
Jan gen A 4.00 4.00
gen B 4.00 4.00
gen C 4.00 4.00
gen D 4.00 4.00
gen E 4.00 4.00
Advair 41.00 204.00 41.00 204.00
Dex 95.00 41.00 95.00 41.00
Feb gen A 4.00 4.00
gen B 4.00 4.00
gen C 4.00 4.00
gen D 4.00 4.00
gen E 4.00 4.00
Advair 41.00 204.00 41.00 204.00
Dex 95.00 41.00 95.00 41.00
Mar gen A 4.00 4.00
gen B 4.00 4.00
gen C 4.00 4.00
gen D 4.00 4.00
gen E 4.00 4.00
Advair 41.00 204.00 41.00 204.00
Dex 95.00 41.00 95.00 41.00
Apr gen A 4.00 4.00
gen B 4.00 4.00
gen C 4.00 4.00
gen D 4.00 4.00
gen E 4.00 4.00
Advair 41.00 204.00 41.00 204.00
Dex 95.00 41.00 95.00 41.00
May gen A 4.00 4.00
gen B 4.00 4.00
gen C 4.00 4.00
gen D 4.00 4.00
gen E 4.00 4.00
Advair 41.00 204.00 41.00 204.00
Dex 95.00 41.00 95.00 41.00
Jun gen A 4.00 4.00
gen B 4.00 4.00
gen C 4.00 4.00
gen D 4.00 4.00
gen E 4.00 4.00
Advair 41.00 204.00 41.00 204.00
Dex 95.00 41.00 95.00 41.00
Jul gen A 4.00 4.00
gen B 4.00 4.00
gen C 4.00 4.00
gen D 4.00 4.00
gen E 4.00 4.00
Advair 41.00 204.00 41.00 204.00
Dex 95.00 41.00 95.00 41.00
Aug gen A 4.00 4.00
gen B 4.00 4.00
gen C 4.00 4.00
gen D 4.00 4.00
gen E 4.00 4.00
Advair 17.24 85.76 41.00 204.00
Donut hole 71.00 71.00 Dex 12.57 5.43
Dex 68.00 68.00 59.00 59.00
Sept gen A 3.44 0.56 4.00
gen B 3.44 0.56 4.00
gen C 3.44 0.56 4.00
gen D 3.44 0.56 4.00
gen E 3.44 0.56 4.00
Advair 122.50 122.50 122.50 122.50
Dex 68.00 68.00 68.00 68.00
Oct gen A 3.44 0.56 4.00
gen B 3.44 0.56 4.00
gen C 3.44 0.56 4.00
gen D 3.44 0.56 4.00
gen E 3.44 0.56 4.00
Advair 122.50 122.50 122.50 122.50
Dex 68.00 68.00 68.00 68.00
Nov gen A 3.44 0.56 4.00
gen B 3.44 0.56 4.00
gen C 3.44 0.56 4.00
gen D 3.44 0.56 4.00
gen E 3.44 0.56 4.00
Advair 122.50 122.50 122.50 122.50
Dex 68.00 68.00 68.00 68.00
Dec gen A 3.44 0.56 4.00
gen B 3.44 0.56 4.00
gen C 3.44 0.56 4.00
gen D 3.44 0.56 4.00
gen E 3.44 0.56 4.00
Advair 122.50 122.50 122.50 122.50
Dex 68.00 68.00 68.00 68.00
Totals 2099.04 1811.96 901.00 240.00 1826.57 1924.43 821.00
Reimb 2712.96 Pt pays 2066.57 Reimb 2745.43- I'm not sure what happens to the script on the borderline as the pt goes into the donut hole. I prorated the copay:Medicare for the portion before the donut hole, and did 50:50 after the donut hole.
- I made a separate manufacturer column for the 50% discount for brand name drugs in the donut hole because this is funded by the manufacturer, not Medicare. Nonetheless, they are added in at the bottom in the "Reimb" cell representing the total amount reimbursed to the pharmacy.
- I put the generics of Patient A covered at 14% in the donut hole. Patient B could do the same, and this would slightly increase the amount reimbursed by Medicare.
So Medicare pays $112.47 more for patient B, or $32.47 more if you include the brand manufacturer's contribution. Thus patient B pays $32.47 less out of pocket. I did say it would only be "slightly beneficial to the patient to cash out the Rx and not have their copay count towards the donut hole limit ($2,930), especially with cheap generics where the pt copay covers most or all of the Rx cost and there is little or no reimbursement from the plan."
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Dude....seriously? Thats awesome but you have waaaay to much time on your hands!
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In that specific case I would tell the patient hell no I'm not cashing out your generics simply because I'm not making any money off of you and that would be a PITA. I can tell you though that there is no federal law that states if you have medicare insurance that you are required to use it, and thus, this would fall under the category of cost avoidance instead of insurance fraud/abuse.
Also, do not forget that each claim will incur a cost to medicare imposed by PBMs for their services, and that would more than likely negate any additional amount medicare would have to pay. In your example medicare would have to incur the expense of around 50 additional claims for pt #1.
Also, do not forget that each claim will incur a cost to medicare imposed by PBMs for their services, and that would more than likely negate any additional amount medicare would have to pay. In your example medicare would have to incur the expense of around 50 additional claims for pt #1.
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Hey Dr Wario, like I said from the very beginning, this is not something we as pharmacists need to debate here. What may seem innocent and frivolous to pharmacists such as substituting capsules and tablets of ranitidine, can and has been argued in court.
Basically you do not want, in any way whatsoever, to be seen as trying to 'game the system' when it comes to Medicare or Medicaid. The patients doing this know they are trying to game the system, and someone at corporate for the OP knows that it is a bad idea so they have issued a policy to stop the practice.
Whether or not you realize it is wrong is irrelevant, just like the store managers who thought they could simply give Medicare patients a $25 customer service gift card for complaining instead of a $25 transfer gift card. Seemed innocent to them at the time, but it still ended up in court and the pharmacy chain lost.
Especially now that this is on a public internet forum, all it takes is one whistle blower to convince the Office of Inspector General that someone is trying to game the system, and they will bring a lawsuit against your company. You need to be prudent and not wait for a court to rule whether cashing out Rxs for Medicare patients is legal or not, and nip it in the bud.
Basically you do not want, in any way whatsoever, to be seen as trying to 'game the system' when it comes to Medicare or Medicaid. The patients doing this know they are trying to game the system, and someone at corporate for the OP knows that it is a bad idea so they have issued a policy to stop the practice.
Whether or not you realize it is wrong is irrelevant, just like the store managers who thought they could simply give Medicare patients a $25 customer service gift card for complaining instead of a $25 transfer gift card. Seemed innocent to them at the time, but it still ended up in court and the pharmacy chain lost.
Especially now that this is on a public internet forum, all it takes is one whistle blower to convince the Office of Inspector General that someone is trying to game the system, and they will bring a lawsuit against your company. You need to be prudent and not wait for a court to rule whether cashing out Rxs for Medicare patients is legal or not, and nip it in the bud.
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Fair enough, we have both wasted wayyy too much of our lives on this anyway.
(Though I still disagree with you, as I previously stated, I am fairly certain medicare would still come out ahead for patient #2)
(Though I still disagree with you, as I previously stated, I am fairly certain medicare would still come out ahead for patient #2)
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That's fine. I wish to call stalemate on this debate as well, so I can head off to the beach or something...
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I don't see how this is controversial at all, no one is required to use a third party insurance plan on a prescription, Medicare does not require recipients to use it on all prescriptions. I don't get it...
It seems weird, but the pharmacist I work with doesn't let us cash out prescriptions for Medicaid patients as she says it is against the law. I kind of thought the same applied to Medicare, but I'm not sure. My only source is basically hearsay; I'd like to know whether this is a real issue or not.
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I agree that it is best to be proactive, as wtf does the pharmacist get out of doing this... but seriously, these are the stupidest ****ing laws if they do exist --> the Medicaid patient could just go / transfer the rx to a different pharmacy and not provide their Medicaid card. Same w/ the Medicare geezers and their cheapo generics.
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Another try at explaining...
The crucial point in being able to game the system is that the percentage paid by the pt, Medicare and the manufacturer varies depending on the drug and whether they are in the donut hole. This is also why Dr Wario's example, while correct, does not apply here because it assumes a fixed percentage of pt:Medicare.
A $4 generic would be 100% pt, 0% Medicare.
From my AARP example, Advair is 17% pt, 83% Medicare, then 50% pt, 50% manufacturer in the donut hole.
Dexilant is 70% pt, 30% Medicare, then 50% pt, 50% manufacturer in the donut hole.
A MPD plan basically covers $2,930 of *total drug costs* (both pt copay and Medicare reimbursement) before the donut hole. For a $4 generic where the pt pays 100% anyway, it is to their benefit to not have the $4 count towards the $2,930, so that the coverage can be used for other drugs like Advair where Medicare pays 83%.
In my example, by cashing out the generics, patient B has 5 drugs x $4 x 8 months = $160 more of the $2,930 coverage to be used for the Advair and Dexilant, where Medicare is paying 83% or 30% respectively.
In the donut hole is another story because now the manufacturer is paying 50% of brand name drugs, and Medicare pays 14% of generics.
To those saying that there is no law that requires a pt to use their insurance, be it Medicare or commercial, that is probably correct. But if the pt is doing it to receive more benefits from Medicare, that is a problem.
And make no mistake, the Office of Inspector General can, will and has filed many lawsuits for some seemingly obscure cases of Medicare fraud, waste and abuse. Should you be unfortunate enough that the OIG puts you on their black list, I guarantee you will have a very harrowing story to tell indeed...
The crucial point in being able to game the system is that the percentage paid by the pt, Medicare and the manufacturer varies depending on the drug and whether they are in the donut hole. This is also why Dr Wario's example, while correct, does not apply here because it assumes a fixed percentage of pt:Medicare.
A $4 generic would be 100% pt, 0% Medicare.
From my AARP example, Advair is 17% pt, 83% Medicare, then 50% pt, 50% manufacturer in the donut hole.
Dexilant is 70% pt, 30% Medicare, then 50% pt, 50% manufacturer in the donut hole.
A MPD plan basically covers $2,930 of *total drug costs* (both pt copay and Medicare reimbursement) before the donut hole. For a $4 generic where the pt pays 100% anyway, it is to their benefit to not have the $4 count towards the $2,930, so that the coverage can be used for other drugs like Advair where Medicare pays 83%.
In my example, by cashing out the generics, patient B has 5 drugs x $4 x 8 months = $160 more of the $2,930 coverage to be used for the Advair and Dexilant, where Medicare is paying 83% or 30% respectively.
In the donut hole is another story because now the manufacturer is paying 50% of brand name drugs, and Medicare pays 14% of generics.
To those saying that there is no law that requires a pt to use their insurance, be it Medicare or commercial, that is probably correct. But if the pt is doing it to receive more benefits from Medicare, that is a problem.
And make no mistake, the Office of Inspector General can, will and has filed many lawsuits for some seemingly obscure cases of Medicare fraud, waste and abuse. Should you be unfortunate enough that the OIG puts you on their black list, I guarantee you will have a very harrowing story to tell indeed...
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From what I understand, the law (and the link that was posted about this) refers to Medicare Part B....if someone gets a nebulizer & Medicare Part B won't pay for it, it is illegal to sell it to the pt for cash. Does this apply to Medicare Part D? As far as I know, it doesn't....but I've never really had anyone ask about this. Other than a few exception near the end of the year, I don't see how it's going to benefit anyone. Anyone that close to the donut hole, is going to hit it as soon as they get their brand name prescription filled, and it will hit for whatever portion of the prescription isn't covered (IE, it's not like they can make sure they have $1.00 left, and then get Pradaxa or something, and Medicare will pay for it all, Medicare will pay the $1.00 they have left, and then the remainder of that RX will go to the donut hole.
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What are you talkng about?
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Um, the question posed in the first post? What part of my post are you questioning?
I never really thought about calculating out the total amounts paid, just the fact that you were delaying the giant copays as long as possible. I think most patients would rather pay $20 for 12 months than pay $4 for 10 months and get slammed for 2 months of $100. They still pay the same $240, but as we all know they're "on a fixed income" .
.
