Performance Audit Report: Pharmacy Benefit Manager Services for the Physical HealthChoices Medicaid Program in Pennsylvania
Learn how the AI-generated research projects were createdOverall Conclusion
The audit identifies three findings with 17 recommendations. DHS generally disagreed with Finding 1 and agreed with Finding 2; PerformRx generally agrees with Finding 3. The auditors note ongoing concerns about spread pricing, data integrity, and contract monitoring, and reserve the right to follow up on implementation of recommendations.
Source Document
Audit Scope
This performance audit examined the Pennsylvania Department of Human Services (DHS) Physical HealthChoices Medicaid program and its PBM PerformRx, LLC for the period January 1, 2022, to December 31, 2022. The scope includes DHS's monitoring of PBM claims data, performance of contract monitoring of PBMs with HealthChoices MCOs, and PerformRx's compliance with Act 120 of 2020 related to charges and fees to pharmacies, with an emphasis on transparency in transmission fees, spread pricing versus pass-through pricing, and the data reported to PROMISeTM and used to calculate MLR and capitation rates. The audit covers the HealthChoices program only and excludes other DHS programs, such as Community HealthChoices and Behavioral HealthChoices, the Adult Autism and CHIP programs, and any non-healthcare PBM activities.
Key Findings Summary
Finding 1 – DHS did not effectively monitor pharmacy drug claims which resulted in undisclosed spread pricing, overstated pharmacy data, and a lack of transparency.
Finding 2 – DHS did not effectively monitor contracts between the Physical HealthChoices managed care organizations and pharmacy benefit managers.
Finding 3 – PerformRx, LLC was transparent and accountable to the pharmacies for transmission fees but was not transparent to the MCOs and DHS regarding the fees which resulted in undisclosed spread pricing.
AI-Assisted
AI Scope Summary
Assess DHS's effectiveness in monitoring HealthChoices PBMs (claims data accuracy, transparency of pricing, and contract compliance) and Evaluate PerformRx's adherence to Act 120 of 2020 regarding transmission fees and transparency to MCOs and DHS.
AI-Generated Insight
This performance audit exposes significant gaps in oversight of the HealthChoices program, including undisclosed spread pricing and inadequate contract and data-validation monitoring. The findings suggest a systemic need for stronger DHS policies, more robust monitoring of PBM practices, and improved transparency to ensure accurate MLR calculations and capitation rate setting, with broader implications for Medicaid program integrity and federal funding risk.