Close up of credit card transaction taking place at a cash register.

Are Cash Cards Killing your Copay Program Budget?

If you are a pharma manufacturer today, you most likely have a patient copay assistance program in place as it is a necessary piece of your patient affordability strategy. You may feel these programs are set up with pretty strict business rules which should ensure that your monies are going to the intended patients and the programs are being executed according to those rules at the point of purchase. That is a bad assumption…here’s why…

There is a rapidly growing issue of incorrectly processing cash cards which can shift significant costs to the brand versus the PBM. Many times, these “processing errors” are the result of a lack of training by either a pharmacy chain or independent pharmacy on the correct way to process the copay and cash cards, other times it’s something much more sinister than that.

The whole copay card process is handled via the terminals you see behind the pharmacy which use the NCPDP system. This system is old and does not have the capabilities to handle all the intricacies of today’s copay assistance programs. The software worked well when the copay process was introduced over a decade ago but not so much now.

So, what happened? The software is old and it’s now prone to misuse at the pharmacy level. For example, those copay offers (for any delivery except electronic) still work on the simple premise that a commercial patient can be identified by the system because the system has seen that a “primary” payment has already been made. The copay cards were always meant to be “secondary payers” for commercial patients where the primary payer was always meant to be the insurance company. That was true then. But now, enter the “cash card” …

Cash cards are cards issued by an outside marketing company that has negotiated certain rates with PBM’s to offer discounts for uninsured patients only. They can be mailed directly to homes or made available at doctors’ offices. Used correctly, they can and do provide discounts to those uninsured patients. But, don’t confuse these with a cash offer your brand may or may not extend to uninsured or cash paying patients via your copay card as they are not the same.

For example, an uninsured patient walks into a pharmacy with their cash card and uses it to get a small discount. If they have or if the pharmacist also has your manufacturers copay discount card meant for commercial patients only, they can also run the copay card through the system and get your significant discount which was meant for commercial patients only! This can be done because the system recognizes the cash card as a “primary payer” and delivers your discount on top of the cash card payment thinking it’s an insurance company that has made the initial payment. These individual payments can be hundreds or even thousands of dollars depending on the cost of the brand and the rules set for your copay program.  

This flaw in the system is allowing the pharmacist to intervene in the process altering the payment for the patient either knowingly (fraudulent claim) or unknowingly (incorrectly processed claim) and it will not be fixed anytime soon!

Many pharma companies have stopped copay offers for cash paying patients due to low profitability and therefore they think they can’t have a problem with cash paying patients because they have no program. But this may not be the case.  Cash cards are being used incorrectly and copay programs are then having to pay claims for cash patients.  

The result of pharmacies incorrectly processing these cash card claims can be devastating for the brand in the form of significant extra costs which are not accounted for in the brand forecasts, and net margin estimates.

A copay claims audit, conducted by an independent third-party familiar with claims level data is the primary way to identify this practice.  Only when the offending pharmacies are identified can the issue be fixed.

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