DES MOINES — The Iowa House Government Oversight Committee is launching an investigation into whether pharmacy benefits managers are overcharging public entities, including the state Medicaid program.
At this point, the committee has no evidence that the managers are overcharging Medicaid, but similar investigations in other states “are finding the millions of dollars of overcharges,” Chairman Bobby Kaufmann, R-Wilton, said Wednesday.
“This is about the potential for fraudulent dealings with state taxpayer dollars,” he said.
In additions to findings in other states, the committee is aware of what Rep. John Forbes, D-Des Moines, called “egregious billing practices” of a pharmacy benefits manager to a public entity.
“We’re finding out some serious billing discrepancies from what (pharmacy benefits managers) are paying the pharmacy to what it is charging the public entity,” Forbes said.
He was contacted by a pharmacist who thought he was being underpaid for claims. When the pharmacist compared what he was being paid with what a local jail was being charged, he found discrepancies as large as $100, Forbes said.
In one case, a pharmacy was being paid $10 for a medication, but the pharmacy benefits manager was charging a public entity about $190 for that prescription.
“We’re talking about public money here,” he said.
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Public benefits managers are basically a middle man between insurance companies and pharmacies, explained Forbes, a pharmacist. They were designed to process claims for a fee.
“What we’re finding out is they are charging the processing fee but also taking the ‘spread’ between what’s being paid to a pharmacy and what they are billing,” Forbes said. “So far, we’re talking thousands of dollars. I think we’re going to see more.”
The committee will start by hearing from small town pharmacies that believe they are not treated fairly by the managers, Kaufmann said.
“Then we’ll bring in the big chief PBM,” which he identified as CVS Health.
This is not the first time the Iowa Legislature has addressed the pharmacy benefits manager issue. In 2014, lawmakers authorized the Iowa insurance commissioner to regulate PBMs, but that law was overturned by a federal court, Forbes said.
Sen. Michael Breitbach, R-Strawberry Point, chairman of the Senate Government Oversight Committee, said he will let the House take the lead on the investigation, getting involved if problems are uncovered.
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