Case Study #1
We were engaged by a manufacturer through its external counsel to perform a Government Pricing (“GP”) Programs compliance assessment. This manufacturer expected that the assessment would yield minimal observations, because it outsourced its Government Pricing Program calculations to an external vendor (a public accounting firm), and because its discount arrangements were not especially complex or unusual.
The approach we took when undertaking the assessment was threefold. First, we reviewed the manufacturer’s documentation (inclusive of its policies, operating procedures, methodology grids, calculation results and reports, etc.) and communications with/ disclosures to the agencies overseeing the GP programs. Second, we conducted process interviews with various personnel that have oversight/ ownership of the data used for GP Programs calculations. Finally, we collected and analyzed the manufacturer’s transactional sales and discounts data for a defined period of time.
At the conclusion of its assessment, we identified several areas in which the methodology used to perform the calculations were not aligned with the requirements of the Medicaid Drug Rebate Program, which obligated the manufacturer to restate AMPs and BPs for a number of its products – including for periods extending beyond the standard 12 quarter restatement window. We assisted the manufacturer, with its external counsel, with various remediation activities – including establishing key controls to mitigate the risk of a future unplanned pricing restatement.
In our experience, manufacturers can fall out of compliance with the requirements of the GP Programs for a number of reasons – the most common of those being 1) when circumstances/ contractual arrangements change over time and processes/ calculation methodologies are not adapted to such change, 2) when there is turn-over of personnel that are responsible for executing the calculations but sufficient knowledge transfer has not occurred, and 3) perhaps most critically, when there is not sufficient exchange of information between the personnel closest to the manufacturer’s contractual arrangements and data and the personnel responsible for the accuracy of the GP Program calculations.
Case Study #2
We were engaged by a manufacturer that was starting up its operations in the United States and unfamiliar with the requirements of the GP Programs. When this manufacturer engaged us for assistance, it had already sold/ shipped product to various wholesalers and had received feedback from its wholesalers that it was having difficulty moving its products because they were not covered by Medicaid.
Our original scope of work was to assist our client with executing the agreements necessary for it to participate in the GP Programs, which we did in a matter of a few days. Our client planned to manage its GP Programs operations internally, but after working with us and receiving an education of the program requirements from us, decided to expand the scope of work to include their ongoing GP Programs operations – inclusive of pricing calculations, rebate adjudication, and payment processing functions. As a result, we were tasked with establishing calculation methodologies, ingesting the manufacturer’s data since its first date of sale, and standing up a system in time for the first pricing submission that was due a few weeks after it first decided to participate in the GP Programs. During that time, we also received and disputed Medicaid rebate claims from a number of states relating to periods prior to the manufacturer’s Medicaid optional effective date.
Our philosophy for delivering business process services on an outsourced basis (which we refer to as Managed Services) is informed by decades of experience working with our clients on pricing compliance matters – dating back to the early 2000’s – prior to the issuance of formal guidance under the Medicaid Drug Rebate Program or even the requirement to calculate and report Average Sales Price under the Medicare Part B program. The major tenants of our philosophy are as follows:
· One Team: Our team operates as an integrated extension of our clients’ teams and collaborates with key stakeholders to accomplish our clients’ goals.
· Continuity: Each client has a dedicated Riparian contact so that we are constantly building our knowledge of our clients’ products/ distribution/ contracting to provide continuous support as their business grows and evolves.
· Clear Expectations: Our interaction model clearly defines the expectations of all parties and the critical milestones that must be met every month.
· Flexibility: Our proprietary GP system is flexible enough to accommodate just about any calculation methodology, and was designed to be used for Managed Services or as a Software-as-a-Service (“SaaS”) platform, should our clients later elect to have their GP calculations performed in house. Our GP system adapts to our clients’ needs, not the other way around.
· Subject Matter Expertise: We pride ourselves on being one of the preeminent consulting groups in the GP space. Our subject matter experts have the breadth and depth of experience to advise our clients on the most complex issues (e.g., bundled sale arrangements, value-based contracting, devices and durable medical equipment, free goods subject to contingency, etc.)