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Pharmacy Benefit Manager Fees Must Be Reported on Schedule C

February 22, 2010 By: Nadia Category: Medtipster, Prescription News

Source: U.S. Department of Labor, 2/2010

The Department of Labor published FAQs to supplement FAQs published in July 2008, and to provide further guidance in response to additional questions from plans and service providers on the requirements for reporting service provider fees and other compensation on the Schedule C of the 2009 Form 5500 Annual Return/Report of Employee Benefit Plan. Inquiries regarding these supplemental FAQs may be directed to EBSA’s Office of Regulations and Interpretations at 202.693.8523.

The new FAQs — numbers 26 and 27 — note that PBMs perform many services for which they are compensated, including services as a third-party administrator, claims processor, and developer of the plan’s formulary and pharmacy network. The FAQs make clear that fees for these services would be reportable as direct compensation on Schedule C.

Q26: Pharmacy Benefit Managers (PBMs) provide services to plans and are compensated for these services in various ways. How should this compensation be reported?

PBMs often act as third party administrators for ERISA plan prescription drug programs and perform many activities to manage their clients’ prescription drug insurance coverage. They are generally engaged to be responsible for processing and paying prescription drug claims. They can also be engaged to develop and maintain the plan’s formulary and assemble networks of retail pharmacies that a plan sponsor’s members can use to fill prescriptions. PBMs receive fees for these services that are reportable compensation for Schedule C purposes. For example, dispensing fees charged by the PBM for each prescription filled by its mail-order pharmacy, specialty pharmacy, or a pharmacy that is a member of the PBM’s retail network and paid with plan assets would be reportable as direct compensation. Likewise, administrative fees paid with plan assets, whether or not reflected as part of the dispensing fee, would be reportable direct compensation on the Schedule C. Payments by the plan or payments by the plan sponsor that are reimbursed by the plan for ancillary administrative services such as recordkeeping, data management and information reporting, formulary management, participant health desk service, benefit education, utilization review, claims adjudication, participant communications, reporting services, website services, prior authorization, clinical programs, pharmacy audits, and other services would also be reportable direct compensation.

Q27: PBMs may receive rebates or discounts from the pharmaceutical manufacturers based on the amount of drugs a PBM purchases or other factors. Do such rebates and discounts need to be reported as indirect compensation on Schedule C?

Because formulary listings will affect a drug’s sales, pharmaceutical manufacturers compete to ensure that their products are included on PBM formularies. For example, PBMs often negotiate discounts and rebates with drug manufacturers based on the drugs bought and sold by PBMs or dispensed under ERISA plans administered by a PBM. These discounts and rebates go under various names, for example, “formulary payments” to obtain formulary status and “market-share payments” to encourage PBMs to dispense particular drugs. The Department is currently considering the extent to which PBM discount and rebate revenue attributable to a PBM’s business with ERISA plans may properly be classified as compensation related to services provided to the plans. Thus, in the absence of further guidance from the Department, discount and rebate revenue received by PBMs from pharmaceutical companies generally do not need to be treated as reportable indirect compensation for Schedule C purposes, even if the discount or rebate may be based in part of the quantity of drugs dispensed under ERISA plans administered by the PBM. If, however, the plan and the PBM agree that such rebates or discounts (or earnings on rebates and discounts held by the PBM) would be used to compensate the PBM for managing the plan’s prescription drug coverage, dispensing prescriptions or other administrative and ancillary services, that revenue would be reportable indirect compensation notwithstanding that the funds were derived from rebates or discounts.

More information to follow via our blog at www.medtipster.com

Does Your Employer Prescription Plan Cost You… Nothing At All?

February 03, 2010 By: Tylar Masters Category: Free Prescriptions, Prescription News, Prescription Savings

Generic drugs save people hundreds or even thousands of dollars each year, but did you know you could be paying absolutely nothing out of pocket, and your employer’s cost could be significantly reduced – both at the same time.

By now you’re familiar with Medtipster.com. We encourage generic drug purchasing over brand name drugs because they are just as effective, and cost less. You also know where to find your generic prescription at the lowest cost, right in your neighborhood.

If you have insurance, the cost of a generic for you could be a $15 co-pay, and your employer eats up the remainder of the cost, which is an average of $17.00. If you’ve found your generic on a $4 generic program by using Medtipster.com, you pay $4, and your employer pays nothing. We know you love Medtipster.com, but now we want your employer to love Medtipster.com too!

Free prescriptions have been our thing lately, in case you haven’t noticed. Thousands of Michigan residents have received free prescriptions since the beginning of December 2009. We are almost ready to take this free prescription giveaway nationwide, but first, we thought of another way to encourage generic drug purchasing, and you don’t have to be a Michigan resident to take advantage of this program. It’s called the Medtipster MVP.

With this program, employers partner with Medtipster.com to essentially give their employees free prescription cards, redeemable at pharmacies that employees themselves locate on Medtipster.com. The idea is to encourage generic drug purchasing over brand name drugs, and to reduce current and future healthcare costs to the employer.

It works like this example:

Sandy takes Zocor.

Sandy works for ABC123 Inc. and they have partnered with Medtipster.com.

ABC123 informs Sandy that her prescription is available for free if she logs on to the company website portal.

Sandy locates her generic equivalent at her neighborhood pharmacy, then prints out her custom ID card from the company’s privately labeled Medtipster.com site.

Sandy takes her ID card to this participating pharmacy and receives her prescription for Zocor generic equivalent for free.

Because the participating pharmacy has Zocor on a $4 generic program, Medtipster sends ABC123 an invoice for $4, plus a small administration fee.

Looking back at the example in the second paragraph above, this saves the employer an average of $17 per employee’s generic prescription. If you work for a company that employees 1,000 people, and half of those employees take a monthly generic prescription, they spend on average $102,000 each year covering “remaining” costs of their employees’ prescriptions. With the Medtipster MVP, the same company would spend an average of just $24,000 each year, for the SAME generic prescriptions! That’s $78,000 A YEAR!

$78,000 A YEAR.

I like to repeat myself when it sounds that good.

If you would like to see your employer save this kind of money every year, and get free prescriptions, let us know what you think. Let us know who we should talk to at your company about implementing this program. Let’s save some money, and change the way we think about prescription plans.

Look No Further: Prescription Coupons Soon Online

January 28, 2010 By: Tylar Masters Category: Medtipster, Prescription Savings

If you’re searching for savings on brand name prescriptions, our user friendly and searchable database of coupons come straight from the manufacturer.

Many people have trouble affording their prescriptions, especially those without health insurance. In fact, one single prescription for a 30-day supply can cost hundreds or even thousands of dollars. I’ve heard stories of people having to choose between their medications and groceries, and it breaks my heart to think of such dilemma. No one should have to make that choice!

There are ways you can save significant amounts of money on your prescriptions, and I’m not just shouting Medtipster.com here. The growth of internet coupons has exploded over the last few years, to include everything you can imagine – and even, yes, prescriptions. You may already be familiar with our database, which locates the $4 generic program for your specific prescription at your local pharmacy. However, beyond that, we’ve done our homework on certain pharmacy’s required memberships, programs, and rates where necessary. The information is available to everyone right here, at no charge.

If your prescription is not available as a generic, or not available at a pharmacy near you, we have options in store for you! Drug makers often have prescription assistance programs, though in most cases, it is difficult to maneuver through the steps to get the help you need. Here at Medtipster, we understand that frustration and came up with a simple solution to the problem.

Medtispter.com will be implementing a new coupon database and assistance program. The endless internet search through website hoaxes and scams is over! Have you ever tried searching online for “prescription drug coupons?” The results can be a bit confusing, and can stray quite a bit away from what you were really looking to find.

We are working very hard to collect the drug manufacturer’s coupons at large, to create a database that is easy to search through and to find your specific prescription coupon. In many cases, these will save you hundreds of dollars a month! In fact, if your prescription is not available as a generic equivalent, or not available at a pharmacy near you, one click of the button to “locate coupon” will serve as relief, as well as the option to find therapeutic alternatives.

Just say YES to (cheaper) drugs!

December 18, 2009 By: Tylar Masters Category: Medtipster, Prescription Savings

MedtipsterAmericans utilizing prescriptions could each save thousands of dollars if the senate would allow the importation of prescription drugs from Canada and Europe. Sounds great, so, yeah, when can we benefit from that?

Well, not today. Drugmakers win this battle. The possible influx of cheaper medicines is part of a large health care legislation, and the U.S. Senate voted 51-48 in opposition of this movement to loosen importation rules. But the war on prescription drugs isn’t over, and companies like Medtipster are accomplices to win the war.

What does this mean for us, the Americans, who feel the sting when we go to the pharmacy? It means we absolutely need to choose generic drugs over brand names. Generic drugs are the answer.

The issue is that many people do not know that their prescription may be available for even less than what they pay now, that being either their copay or $32.00, which is the average price of a generic drug. More importantly, where do they go to get that prescription on a generic program? Which pharmacy has that generic drug for just $4, or even less?

Medtipser.com has the answer to those questions.

Generic drug programs are available at most pharmacies, and most of their pharmacy websites have an available database or a download-able PDF of their generic drug lists. Medtipster understands what a hassle that can be for consumers, and created the database all in one location, www.medtipster.com. Pharmacy location, phone number, prescription price, even membership information at requiring pharmacies.

If you have trouble affording your medication, please contact us. We are here to help any way we can!

Resource, Bloomberg.com

Follow us on Twitter! www.twitter.com/medtipster.

Tylar Masters
Manager of Marketing and Communications
Medtipster, LLC.
www.medtipster.com

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