Financial Wellness

Would You Pay Your Credit Card Bill Before Reviewing It?

Imagine receiving your credit card bill every month, and the only information you're provided is an amount due and a "pay by" date of 48 hours from now.  The amount due doesn't look too far off from what it was on your last statement, so you shrug and just pay your bill - you can trust your credit card company, right?  

Let's say you realize one month you should be responsible and decide to check your bill for accuracy.  You contact your credit card company for a full statement complete with the charges you've made, but they tell you you're not allowed to review your bill now but can conduct a spot audit at the end of the year.  

For the audit, only a couple weeks of a detailed account of your purchases will be provided and referenced for accuracy, and the weeks chosen will be at the credit card company's discretion.

Sound ridiculous?  Of course it is.

We may scoff at this scenario and think no corporate entity can be this unaccountable with people's hard-earned money.  Yet a similar system has been used for prescription medication bills across the nation for decades now.  Every two weeks, $12 billion of pharmacy benefit claims is paid to pharmacy benefit managers (PBMs) without review.

Corporations, government entities, and unions - to name a few - receive their prescription claim bills every other week and often have only 48 hours to write checks to their PBMs for the amount due.  Payers do not receive detailed statements of all the claims for which they are being charged, and even if they did, their HR departments certainly do not have the resources to review spreadsheets with millions of fields of data for accuracy-and certainly not within 48 hours.  

Compound this lack of oversight with the fact that errors and overcharges do occur.  Insurance companies and PBMs play a crucial role in ensuring healthcare is available to people across the country.  But while their functions are indeed valuable, the cost to payers of doing this kind of business is billions of dollars each year in preventable overcharges.

You might ask why these errors even occur.  The reasons center around the complexity of the current drug payment system in the United States.  PBM contracts are long and complex, and the systems used to process claims data are old and never move out of production.  

As a nation, we have come to accept margins of error.  They seem to be inevitable.  However, with skyrocketing healthcare costs stifling economic recovery and significantly impeding the ability of businesses to grow, the margin of error on drug spend has a direct impact on the level of success that companies, government entities, states, and the nation as a whole are so desperately looking to achieve or sustain.  

IMS Institute reports U.S. national drug spend to be at $307.4 billion for 2010.  Looking at a reasonable margin of error anywhere from 2 to 5 percent, we as a country are spending $6 billion to $15 billion in errors.

Our governments have put policies and measures in place to help protect health information and enforce responsibility and accountability through legislation such as Medicare Prescription Drug Improvement and Modernization Act of 2003 (Medicare Part D) and the Sarbanes-Oxley Act (SOX).  

But there is nothing in place to mandate transparency or drug spending accountability, despite great pressure on entities to comply in such a complex drug care system. Prescription drug costs continue to grow at 7 percent year over year and are on pace to double within ten years, so this issue will only grow in importance going forward.

While credit card holders are generally not held responsible for errors on their credit card bills, payers are responsible for errors on their prescription claim invoices - PBMs assume no liability, so payers alone have the fiduciary responsibility to protect their plan members.  

As prescription drug costs continue to rise, reviewing the PBM bill with each invoice is an important step to providing immediate plan savings today and ensuring cost containment in the future.

About The Author

Dr. Kristin Begley is responsible for developing and implementing strategic programs for pharmacy benefit management at Truveris.

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