Express Scripts 2014 Annual Report Download - page 16

Express Scripts 2014 Annual Report
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Pharmacy Benefit Management Regulation Generally.Certainfederalandstatelawsandregulationsaffectormay
affectaspectsofourPBMbusiness.Amongthelawsandregulationsthatmayimpactourbusinessarethefollowing:
Federal Healthcare Reform.InMarch2010,thefederalgovernmentenactedtheAffordableCareAct,asamended
bytheHealthCareandEducationReconciliationActof2010(“HealthReformLaws”).TheHealthReformLawsinclude
numerouschangestomanyaspectsoftheUnitedStateshealthcaresystem,including,butnotlimitedto,additionalenforcement
mechanismsandrulesrelatedtohealthcarefraudandabuseenforcementactivities,healthplancoveragemandates,additional
rulesandobligationsforhealthinsuranceproviders,certainPBMtransparencyrequirementsrelatedtothenewhealthcare
insuranceexchangesandexpandedhealthcarecoverageformoreAmericans.Whilelong-termimpactsremainunclearwith
respecttotheimplementationofcertaincomponentsoftheHealthReformLawsandrelatedregulatoryguidance,theHealth
ReformLawsimpactourbusinessinavarietyofways.Knownimpactsinclude,butarenotlimitedto,anincreaseinutilization
ofthepharmacybenefitbyanewlyenrolledpopulationwithanunknownriskprofile,additionalcomplianceobligations
stemmingfromincreasedstateandfederalgovernmentinvolvementinthehealthcaremarketplace,shiftingclaimsliability
fromplansponsorstothird-partyadministratorsforcertainwomen’spreventivebenefits,increaseddatareportingobligationsto
supporthealthplanissuersandinsurersoperatinginthehealthcareexchanges,theimpactofgeneralmarketreformsprohibiting
theuseofmanyfactorstraditionallyusedtoestablishpremiumsandadjustmentsimplementedbyhealthplansponsorsand
healthinsuranceprovidersinresponsetoavailabilityofnewinsuranceproductsandothermarketplacechangesarisingin
connectionwiththeHealthReformLaws.
Medicare Part D.WeparticipateinvariouswaysinthefederalMedicarePartDprogramcreatedunderMMA,and
itsimplementingregulationsandsub-regulatoryprogramguidance(the“MedicarePartDRules”)issuedbyCMS.Throughour
licensedinsurancesubsidiaries(i.e.,ExpressScriptsInsuranceCompany(“ESIC”),MedcoContainmentLifeInsurance
CompanyandMedcoContainmentInsuranceCompanyofNewYork),wesponsorMedicarePartDPDPsofferingMedicare
prescriptiondrugcoverageandservicestoMedicarePartDbeneficiaries.Wealso,throughourcorePBMbusiness,provide
MedicarePartD-relatedproductsandservicestootherMedicarePartDPDPsponsors,MedicareAdvantagePrescriptionDrug
PlansandotheremployersandclientsofferingMedicarePartDbenefitstoMedicarePartDeligiblebeneficiaries.
Medicare Part B and Medicaid.WeparticipateintheMedicarePartBprogram,whichcoverscertaincostsfor
servicesprovidedbyMedicareparticipatingphysiciansandsuppliersanddurablemedicalequipment.Wealsoparticipatein
manystateMedicaidprogramsdirectlyorindirectlythroughourclientswhoareMedicaidmanagedcarecontractors.Wealso
performcertainMedicaidsubrogationservicesforclients,whichareregulatedbyfederalandstatelaws.
Anti-Kickback Laws.Subjecttocertainexceptionsand“safeharbors,”thefederalanti-kickbackstatutegenerally
prohibits,amongotherthings,knowinglyandwillfullypayingorofferinganypaymentorotherremunerationtoinducea
persontopurchase,lease,orderorarrangefor(orrecommendpurchasing,leasingorordering)items(includingprescription
drugs)orservicesreimbursableinwholeorinpartunderMedicare,Medicaidoranotherfederalhealthcareprogram.Several
statesalsohavesimilarlaws,someofwhichapplysimilaranti-kickbackprohibitionstoitemsorservicesreimbursablebynon-
governmentalpayors.Sanctionsforviolatingthesefederalandstateanti-kickbacklawsmayincludecriminalandcivilfines
andexclusionfromparticipationinthefederalandstatehealthcareprograms.
Thefederalanti-kickbackstatutehasbeeninterpretedbroadlybycourts,theOfficeofInspectorGeneral(“OIG”)
withintheDepartmentofHealthandHumanServices(“HHS”),andadministrativebodies.Becauseofthefederalstatute’s
broadscope,federalregulationsestablishcertain“safeharbors”fromliability.Apracticethatdoesnotfallwithinasafeharbor
isnotnecessarilyunlawful,butmaybesubjecttoscrutinyandchallenge.Anti-kickbacklawshavebeencitedasapartialbasis,
alongwithstateconsumerprotectionlawsdescribedbelow,forinvestigationsandmulti-statesettlementsrelatingtofinancial
incentivesprovidedbydrugmanufacturerstopharmaciesinconnectionwith“productconversion”programs.
Thereareotheranti-kickbacklawsthatmaybeapplicable,suchasthePublicContractsAnti-kickbackAct,the
ERISAHealthPlanAnti-kickbackStatuteandvariousotherstateanti-kickbackrestrictions.
Federal Civil Monetary Penalties Law.Thefederalcivilmonetarypenaltystatuteprovidesforcivilmonetary
penaltiesagainstanypersonwhogivessomethingofvaluetoaMedicareorMedicaidprogrambeneficiarythepersonknowsor
shouldknowislikelytoinfluencethebeneficiary’sselectionofaparticularproviderforMedicareorMedicaiditemsor
services.Underthislaw,ourwholly-ownedhomedelivery,specialtypharmacies,infusionpharmaciesandhomehealth
providersarerestrictedfromofferingcertainitemsofvaluetoinfluenceaMedicareorMedicaidpatient’suseofservices.The
HealthReformLawsalsoincludeseveralnewcivilmonetaryprovisions,suchaspenaltiesforthefailuretoreportandreturna
knownoverpaymentandfailuretogranttimelyaccesstotheOIGundercertaincircumstances.
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