February 10, 2021

Transparency benefits WDRT 8


Do the numbers 835 mean anything to you?

I incorporated this question into the latest episode of Wee Dose of Radical Transparency.

You can catch the full-length episode on YouTube here or listen at our site here.

OK, I’ve been involved with tearing pharmacy benefits contracts apart for years now and when it comes to audit rights, I’ve seen it all.

Usual suspects (we can talk offline) mysteriously leave 835 data provisions out of their stock contracts. The best of the best, meaning the pharmacy benefit managers delivering radical transparency (again, we can talk offline) will allow for transmission of 835 data. That’s critically important – And, I’ll come back to it in a moment.

To walk through the range of what I see, let me say this:

The pharmacy benefit managers who score the lowest within our proprietary system will allow for audits but expressly limit information access in the contract either in terms of manufacturer remittances or other forms of line item details.

Other times, we’ll see PBMs willing to allow audits but caveat this provision with inconveniences like requiring 60 or 90 days to prepare for audits or limitations on site of audit.

But the crème of the crop, the PBMs delivering radical transparency are allowing full audit rights of all client-related pharmacy benefit files including specific claims. Specifically, they are allowing access to 835 data from pharmacies and manufacturer remittances for all forms of payment to the PBM by pharmaceutical manufacturers.

Point is, you’ve got to ensure that there is language in the audit rights which provides you with reasonable access to audit the 835 file. Why is this important?

Well, it contains the remittances information and shows exactly how much each pharmacy was reimbursed by the PBM. With this information, you can match this data against what was billed to the plan sponsor on a claim specific level.

Any difference in dollar amount is what we call spread. And, who keeps the spread? The PBM. Imagine this happening 20 times a day, 7 days a week, for a year …… Makes you wonder if the PBM’s mission is aligned with yours, right?!

So, that’s why the numbers 835 should be on your radar – Especially, if you’re not yet in a transparent contract.

If you’re interested in this concept of transparency and want to learn more, we offer a contract health assessment through our Kinetiq Health Pharmacy Benefits Consulting practice. Happy to talk further. Just reach out to @ slong@apexbg.com.

Scott Long

Authored By

Scott Long, CPBS, CHVP, CSFS

Executive Advisor


Meet Scott