Auditor McGuiness: Survey Shows Predatory PBM Practices Destroying Independent Pharmacies

DOVER, Del. – A survey of Delaware’s independent community pharmacists on the impact of pharmacy benefit managers (PBMs) reveals predatory practices are potentially devastating these small businesses, State Auditor Kathy McGuiness said today as she released a new special report.

“Your community pharmacists – who are your first line of defense when you are sick or hurting and need to talk – are struggling to keep their doors open,” said McGuiness, who is a licensed immunizing pharmacist and former small-business owner. “Our survey results show that these prescription drug middlemen, known as PBMs, are strangling these critically important community businesses.”

McGuiness’ office surveyed independent community pharmacy owners across Delaware in June regarding how practices by PBMs are affecting their businesses.

“The results were astounding,” McGuiness said. “The big three PBMs – CVS, Express Scripts Inc. and OptumRx, which control approximately 80 percent of the PBM market share – are using tactics that eat away at the thin profits these small-business owners fight to earn.

“What’s even worse is that the PBMs are trying to place Delawareans’ healthcare in the hands of big-box retail establishments.”

Among the survey results: 

  • PBMs’ use of one specific kind of fee that is imposed on pharmacies after a prescription sale has exponentially increased over the last few years. Known as DIR fees, these reduce or eliminate a pharmacy’s profit on a prescription transaction, and they are financially ravaging independent pharmacies. 
  • Delaware’s independent pharmacists report being squeezed by PBMs through lower reimbursements, exclusionary formularies and preferred pharmacies. By restricting increasing numbers of patients to mail-order-only pharmacies, PBMs are limiting access to medications. 
  • Delaware’s independent pharmacies suffer from similar problems noted in the 2019 National Community Pharmacists Association (NCPA) survey, which observed that greater oversight is needed “over the PBM corporations that contract with the state to manage prescription drug benefits for its Medicaid program and state employees.”

Read the new special report, “Predatory Practices: Survey Says Middlemen Destroying Delaware’s Independent Pharmacies,” on our website here.

Learn about the Delaware Auditor’s Office at https://auditor.delaware.gov.

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Contact:       

Anna Nuzzolese, Executive Assistant

302-857-3907

Anna.Nuzzolese@delaware.gov


State Auditor McGuiness Finds Second Long-Term Care Facility to be ‘Unauditable’

DOVER, Del. – State Auditor Kathy McGuiness said today her office was unable to fully complete an examination of another long-term care facility because of a lack of proper documentation.

The Cadbury At Lewes Senior Living Community did not have the necessary documentation to support approximately $1.1 million – about 18 percent of the total costs – during 2016, McGuiness said.

“I certainly understand that all long-term care facilities were hit hard by the pandemic and needed to focus resources on caring for their residents, but the new management at Cadbury At Lewes was unable to access the necessary records that the previous administration used to support its Medicaid Cost Report,” McGuiness said. “That rendered portions of the cost report unauditable.”

Delaware Code requires the State Auditor’s Office to perform audits of long-term care facilities (LTCFs) each year for the state Department of Health & Social Services (DHSS). The state’s LTCFs are audited on a rotating basis, and the Cadbury At Lewes Residence was among six facilities audited in fiscal year 2020-21 for its 2016 Medicaid Cost Report and Nursing Wage Survey.

“I acknowledge that Cadbury At Lewes has undergone a transition since becoming an affiliate of Springpoint Senior Living Inc. in 2017,” McGuiness said. “However, keeping track of this type of financial documentation should be part of every transaction.”

Although LTCFs are usually audited only every five to eight years, McGuiness said, her office will examine the facility, now known as The Moorings at Lewes, again in fiscal year 2022 for its 2018 Medicaid Cost Report and Nursing Wage Survey.

Last month, McGuiness said her office could not complete an examination of the Jeanne Jugan Residence in Newark because of a severe lack of documentation. In that case, facility management was given 18 months – nine months before the pandemic and nine months after – to produce documentation supporting approximately $4 million in costs and did not do so.

The Cadbury At Lewes examination can be found on the Auditor’s Office website here.

Learn about the Delaware Auditor’s Office at https://auditor.delaware.gov.

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Contact:       

Anna Nuzzolese, Executive Assistant

302-857-3907

anna.nuzzolese@delaware.gov


Auditor McGuiness Applauds Protect Our Care Rally, Reiterates Call for Express Scripts to Give Taxpayers Back $24.5M

DOVER, Del. – State Auditor Kathy McGuiness applauded the Protect our Care rally that took place yesterday at Wilmington’s Chase Center on the Riverfront.

“As a pharmacist, I have seen firsthand the impact high drug prices have on families,” McGuiness said. “People are regularly forced to choose between putting food on the table and affording their life-saving medications.”

McGuiness released a report in June, titled “Lack of Transparency & Accountability in Drug Pricing Could be Costing Taxpayers Millions,” which looked at the role pharmacy benefit managers (PBMs) play in the prescription drug industry. The report found that, over just three years, Delaware likely overpaid Express Scripts Inc., the PBM for its state employees and retirees, by $24.5 million.

“That $24.5 million belongs to the taxpayers of Delaware,” McGuiness said. “And they deserve to have it returned to them by Express Scripts.”

McGuiness said rallies such as Tuesday’s event, which was part of the national Protect Our Care bus tour, are crucial for raising awareness among the public – and for demonstrating to legislators that healthcare is a critical issue for so many people.

“I will continue the fight to ensure taxpayer dollars are not used to line the pockets of these PBMs,” McGuiness said, “and to make certain that every dollar that should go toward lowering drug prices actually does so.”

 

Learn about the Delaware Auditor’s Office at https://auditor.delaware.gov.

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Contact:       

Anna Nuzzolese, Executive Assistant

302-857-3907

Anna.Nuzzolese@delaware.gov

 


Auditor McGuiness’ Project: Gray Fox Launches

DOVER, Del. – State Auditor Kathy McGuiness said today she is excited to announce her Project: Gray Fox website is ready for use at auditor.delaware.gov.

“My team and I have worked hard to establish an online resource for municipalities, counties, school districts and state agencies to securely track their American Rescue Plan Act spending so that Delawareans understand how these millions of dollars are being invested in their communities,” McGuiness said.

As American Rescue Plan Act (ARPA) fund recipients begin to spend the approximately $1 billion they are receiving, officials will input their spending information, and the auditor’s website will transform the information into easy-to-read charts and graphics so that all Delawareans can be citizen fiscal watchdogs over these funds.

“I have received a tremendous amount of interest and engagement from officials excited about what this initiative means for accessibility, transparency and good governance in the First State,” McGuiness said.

“Kudos to the officials from Lewes, Dewey Beach, Newark, Wilmington, Harrington, Fenwick Island, Georgetown, Ocean View, Rehoboth Beach, Seaford, South Bethany, Slaughter Beach and Camden, who are leading the pack and demonstrating their commitment to transparent and accountable government by joining this initiative already,” she continued.

As state auditor, McGuiness is dedicated to identifying fraud, waste and abuse of taxpayer dollars. Project: Gray Fox proactively seeks to prevent those issues by providing an accessible, online way for Delawareans to review their communities’ ARPA spending.

“Together, we can build a better First State, and our participants are actively demonstrating their dedication to the people they serve.”

For more information on Project: Gray Fox, follow @DEAuditor1 on Twitter, @DEAuditor on Instagram and on Facebook at facebook.com/deauditor.

The new Project: Gray Fox section of the Auditor’s Office website can be found here or by using this QR code:

QR Code for Project: Gray Fox

Learn about the Delaware Auditor’s Office at https://auditor.delaware.gov.

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Contact:

Anna Nuzzolese, Executive Assistant

302-857-3907

Anna.Nuzzolese@delaware.gov 

 


State Auditor McGuiness Says Jeanne Jugan Residence ‘Unauditable’

Dover, Del. – State Auditor Kathy McGuiness said today that her office was unable to complete an examination of the Jeanne Jugan Residence nursing home because the facility did not keep proper documentation to support $4 million in costs.

“Simply put, the Jeanne Jugan Residence was unauditable,” McGuiness said. “I certainly understand that all long-term care facilities were hit hard by the pandemic and needed to focus resources on caring for their residents, but auditors gave the administration at Jeanne Jugan a total of 18 months – nine months before the pandemic began and nine months after it began – to produce the necessary documentation.”

Delaware Code requires the State Auditor’s Office to perform audits of long-term care facilities (LTCFs) each year for the state Department of Health & Social Services (DHSS). The state’s LTCFs are audited on a rotating basis, and the Jeanne Jugan Residence was among six facilities audited in fiscal year 2020-21 for its 2016 Medicaid Cost Report and Nursing Wage Survey.

“I applaud the sisters at the Jeanne Jugan Residence for their mission to help those who are the most vulnerable among us,” McGuiness said. “However, when any entity cannot produce basic financial records – in this case, patient census data and payroll supporting documents – I become concerned.”

Although LTCFs are usually audited only every five to eight years, McGuiness said, her office will examine the Jeanne Jugan Residence again in fiscal year 2022 for its 2018 Medicaid Cost Report and Nursing Wage Survey.

“It’s my sincere hope that next year’s examination finds adequate internal controls and acceptable accounting practices,” McGuiness said.

The Jeanne Jugan Residence examination can be located on the Auditor’s Office website here.

Learn about the Delaware Auditor’s Office at https://auditor.delaware.gov.

 

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Contact:

Alaina Sewell, Chief of Staff

302-857-3931

Alaina.Sewell@delaware.gov