Alphabet Soup: SIGIS, PBMs, AMP


Dear Colleague,

We are hearing complaints from members about major problems with FSA/HRA card transactions since July 1, and we are casting a wide net to try to resolve them.

July 1 was when health plan administrators implemented different rules and procedures to comply with a new IRS requirement for tracking customer purchases of medical items eligible for flexible spending account (FSA) and health reimbursement arrangement (HRA) deductions. We are actively exploring legal avenues available to us, and how the Small Business Administration and members of Congress may be able to lend assistance.



I know many of you are frustrated and upset, especially those of you registered with SIGIS for the "90% rule" exemption—a pharmacy with almost all of its sales in prescription and other qualifying medical supplies. That exemption is supposed to allow pharmacies to continue to process the cards without using a POS system. But cards are being declined. We've even heard of SIGIS-certified pharmacies with POS systems unable to transmit card transactions.

Our general counsel and outside legal counsel both have been calling and e-mailing SIGIS, but the calls are going right into voice mail with a promise of a response within 48 hours. That deadline is not being met for either the voice mail or e-mail messages that they've left.

Whether SIGIS, the organization established to help all pharmacies meet the IRS rule, is having July 1 start-up glitches (shades of Part D!), just is overwhelmed by the volume of calls, or is being purposefully non-responsive, doesn't really matter—to you or us. What does matter first of all is that we want flex card plan administrators and transaction processors, when a customer is able to get through to a live person to report a problem with their card not being accepted, to stop referring them to a chain pharmacy. If you have personal examples of this most egregious, discriminatory behavior, please send them to our
general counsel. These examples are definitely legal fodder.

Here's more of what we've been able to learn. Some POS vendor did not fully communicate to pharmacies all the steps they needed to take to have access to the SIGIS list of eligible medical items. As a result, some of the claims are being rejected. Contacting the vendor and/or SIGIS to determine what information is missing or steps that need to be taken should resolve that aspect.

Another problem seems to be that card issuers aren't keeping their files up to date with approved pharmacies. SIGIS may not be telling the plan administrators that a newly certified pharmacy has been added. We are trying to determine exactly what the time lag is and what is being done to shorten or eliminate it.

We've also learned that at least three major card issuers have decided not to honor the 90% rule exemption. (It is not mandatory.) We are in the process of reaching out to them so they know the full value of independent community pharmacies.

Here is
a link to SIGIS information on the 90% rule.

NCPA is also working with FSAOk Auto Copay, which uses the pharmacy's existing pharmacy management system to process FSA claims. Right now prescription co-pay claims can be processed using FSAOk Auto Copay as well as card issuers other than Visa.

SIGIS, unfortunately, is not the only problem we're hearing about. Some card issuers apparently are placing pharmacies that have a POS system into an eMerchant category because the pharmacies sometimes take credit card numbers over the phone. At least one major credit card levies a $1,000 fee for that category. We're trying to determine what possible reason pharmacies in this case are being lumped together with gambling operations and tobacco sales.

This is a highly fluid situation, but we won't just stand by a wait for the system to work out its kinks. Please let us know if the situation is getting better or worse, and know, too, that we are working hard on your behalf.

With all that swirling around, I still want to remind you that NCPA Secretary-Treasurer Mark Riley, PharmD, testified at a Capitol Hill hearing yesterday on competition (or the lack thereof) in the health care market place. Riley, executive vice president of the Arkansas Pharmacists Association, detailed for Senators how PBMs are using their own mail order pharmacies to compete directly against community pharmacies; explained that the supposed savings in mail order do not materialize; pinpointed the most commonplace and manipulative tactic used by PBMs, spread pricing; and discussed the negative consequences of the ill-advised merger between CVS and Caremark. [The
entire testimony and the attachments that accompany it are available for download.]

Also on Capitol Hill, the health care reform train, or at least parts of it, is moving down the track keeping our lobbying team running at breakneck speed. Earlier this week, Democrats on the three House committees with a piece of the action unveiled the America's Affordable Health Care Choice Act, H.R.3200.

As written, the 1,018 page bill would exempt community pharmacists who provide durable medical equipment, such as diabetes testing strips, from the duplicative and onerous accreditation and surety bond requirements. The measure also includes a much more fair definition of Average Manufacturer Price for use in the Medicaid generic drug reimbursement formula. We have concerns, however, that the 130% multiplier of the weighted AMP still may not cover acquisition costs.

We will continue to work with the House and the Senate to ensure that health care reform allows community pharmacies to remain a valuable cog in America's health system. When that occurs patients will have better outcomes and cost savings can be found.

Last but not least, please come to our
annual convention in New Orleans Oct. 17-21.

Bruce Roberts, RPh. 



Bruce Roberts, R.Ph.

Executive Vice President & CFO