Jeffrey S. Baird, JD, Esq

On November 4, 2021, CMS issued its IFR (effective November 5, 2021) regarding mandatory COVID-19 vaccinations for all facilities participating in Medicare and Medicaid. The Background section of the IFR states its applicability to “21 types of providers and suppliers, ranging from hospitals and hospices to rural health clinics to long term care facilities.”

Pharmacies are not included in the list of providers and suppliers to which the vaccine mandate applies. Therefore, the IFR does not impact retail (customer walk-in) pharmacies that do not work with facilities that participate in Medicare or Medicaid programs.

However, the IFR potentially impacts pharmacies that provide services under a contract or arrangement with a facility that participates in Medicare or Medicaid programs. The IFR requires staff at facilities that participate in Medicare or Medicaid to be vaccinated. The initial dose must be received by December 6, 2021, and the second dose by January 4, 2021.

The IFR states that the vaccination requirements must apply to all staff who directly provide any care, treatment or other services for the facility or its patients. For such staff, COVID-19 vaccination is required as a condition for continued provision of services for the facility or its patients.

In addition to a facility’s employees, practitioners, and volunteers, the IFR broadly includes anyone who (1) provides services to the facility under a contract or an arrangement and (2) potentially comes in contact with the facility staff or patients. Thus, if a pharmacy delivers drugs to hospitals, SNFs and other facilities, the delivery employee will likely need to be vaccinated.

The CMS Rule does not apply to “one off” vendors, volunteers or professionals who infrequently provide ad-hoc, non-health care services. Lastly, the IFR does not prohibit facilities from extending the vaccination requirements beyond their staff.

On November 4, 2021, OSHA issued its ETS regarding mandatory COVID-19 vaccinations for all private sector employers with 100 or more employees. Under the ETS, covered employers must implement and enforce a mandatory COVID-19 vaccination policy under which employees may either (1) become vaccinated or (2) undergo regular COVID-19 testing (at least once every 7 days for employees in the office each week) and wear a face covering.

Exceptions for medical (or disability) and sincerely held religious beliefs apply to the OSHA ETS. OSHA will begin enforcing the ETS on December 5, 2021. This is the date by which unvaccinated workers need to begin wearing masks. Employers must begin collecting tests from their unvaccinated workforce on January 5, 2022.

Employers must count all employees, including part-time workers, remote workers, minors, and temporary employees, in determining its threshold compliance responsibility. Employers cannot consider separate locations as separate workforces; the 100-employee threshold includes all employees in all locations.

For example, if corporation A owns 3 pharmacies (i.e., under a single tax ID number), each with 40 employees, then corporation A is subject to the OSHA ETS because it has a total of 120 employees. On the other hand, if John Smith owns 3 pharmacies under separate corporate entities (i.e., 3 different tax ID numbers) and each pharmacy has 40 employees, then none of the pharmacies are subject to the OSHA ETS.

A pharmacy that has fewer than 100 employees at the start of the OSHA ETS effective date is not subject to the ETS. However, if that pharmacy then hits the 100-employee threshold, the pharmacy becomes subject to the ETS for the duration of the standard, even if the employee count drops back under 100 employees.

The 100-employee threshold does not include independent contractors or workers provided by staffing agencies. Employers should be very careful when classifying workers as independent contractors, as the Department of Labor (DOL) and state agencies critically review these classifications and make determinations that workers are actually employees and not independent contractors.

Employees are entitled to PTO for the time necessary to receive the COVID-19 vaccine. The amount of vaccine PTO available is defined as a “reasonable” amount of time, not to exceed 4 hours.

Employees are also entitled to PTO for the time necessary for recovery due to the adverse effects (AEs) of COVID-19 vaccination. Employers may not force employees to use vacation pay to cover an absence period arising due to AEs from receipt of the vaccine.

Employers must require employees to provide acceptable proof of vaccination, which includes: (1) a record of immunization from a health care provider or pharmacy; (2) a copy of the employee’s COVID-19 vaccination record card; (3) a copy of medical records documenting the vaccination; or (4) a copy of an immunization record from a public health, state, or tribal immunization system, or a copy of any other official documentation that contains the type of vaccine administered, date(s) of administration, and the name of the health care professional or clinic site that/who administered the vaccine.

These are considered medical records and should be stored in employees’ medical files (separate from their HR or disciplinary files).

Weekly Testing for Unvaccinated Employees

Employers are allowed to mandate their entire workforce to be vaccinated (except for any employees with disability, medical, or religious accommodations). However, under OSHA’s ETS, covered employers may provide a soft compliance option for unvaccinated employees in lieu of mandatory vaccination.

Under this approach, unvaccinated employees must provide the employer with a negative test result every 7 days for continuing access to the workplace. Unvaccinated employees who come into the workplace less than once every 7 days must only obtain a negative test result within 7 days prior to their return to the workplace.

Unvaccinated employees who work exclusively from home, or exclusively outside, are not required to submit to testing. Employees granted a religious, disability, or medical accommodation from the COVID-19 vaccination must still submit weekly negative COVID-19 tests, even though granted an accommodation from receiving the COVID-19 vaccine.

The testing requirement may be satisfied through a negative nucleic acid amplification test (NAAT), a rapid-result antigen test, or through other testing options approved by the FDA. Employees may not rely upon tests that are both self-administered and self-read. Instead, an authorized health care provider must administer the test, which likely includes pharmacists, though this is not explicitly stated in the regulations.

Employees who submit weekly negative COVID-19 tests in lieu of vaccination must wear masks in the workplace. Employers who allow for weekly COVID-19 testing in lieu of mandatory COVID-19 vaccinations are not required to pay for the cost of weekly COVID-19 testing.

However, OSHA reminds employers: “…Payment for testing may be required by other laws, regulations, or collective bargaining agreements or other collectively negotiated agreements.”

Unvaccinated employees must wear approved face coverings (beginning December 5, 2021) when indoors and when occupying a vehicle with others for work purposes. This policy must be enforced at all times, except: (1) when the employee is alone in a room with floor-to-ceiling walls and a closed door; (2) for a limited time period to allow the employee to drink and/or eat; (3) when the employee is wearing a respirator; or (4) where the employer can show that the use of face coverings is infeasible or creates a greater hazard.

OSHA will begin enforcing the ETS on December 5, 2021. This is the date by which unvaccinated workers need to begin wearing masks. Employers must begin collecting tests from their unvaccinated workforce on January 5, 2022.

If an employer with 100 or more employees does not comply with the OSHA ETS, OSHA can penalize the employer for each individual violation. Each individual violation could lead to a fine of up to $14,000.

OSHA intends to penalize employers for each employee who is negatively impacted by the employer’s failure to comply and for each instance of “failing to protect” an employee. OSHA has stated it anticipates that the penalties will be large to achieve a deterrent effect.

On November 6, 2021, the Fifth Circuit Court of Appeals (the Federal Court of Appeals governing Louisiana, Mississippi, and Texas) issued a stay temporarily blocking OSHA’s ETS.

The Fifth Circuit ordered the Biden Administration to file initial legal papers by November 8, 2021, and requested responsive filings by November 9, 2021. The court is expected to move quickly to issue a final ruling on whether the new policy can be enforced.

We recommend that employers with 100 or more employees prepare for compliance with the ETS, even though it is currently stayed, especially given the short compliance deadlines in the rule. Further, even though it appears as though the stay applies nationwide, the Fifth Circuit may later clarify that its applicability is only to Texas, Mississippi, and Louisiana.

., is Chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States.Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or 

, is an attorney with the Labor and Employment Law Group at Brown & Fortunato. She represents clients in a wide range of employment litigation and agency matters, as well as in employment counseling throughout the United States.Ms. Hinton can be reached at (806) 345-6365 or 

Articles

CMS Interim Final Rule on mandatory COVID-19 vaccinations for all facilities participating in Medicare and Medicaid potentially impacts pharmacies that provide services under a contract or arrangement with these facilities.

New Rules on Mandatory COVID-19 Vaccinations: Applicability to Pharmacies

Working with pharmacy benefit managers (PBMs) can be a frustrating experience for pharmacies. The PBM possesses the pharmacy’s money. If the PBM does not pay the pharmacy, the pharmacy is harmed, regardless of whether the PBM has the right to withhold money. This falls under the adage “Possession is 9/10ths of the law.”

PBMs have the upper hand in negotiations, a result of the following factors:

 Under federal law, PBMs have a great deal of authority, with little accountability. The scenario is substantially the same with state law. However, some states are enacting laws designed to protect pharmacies and to rein in the more egregious activities of PBMs. PBMs are challenging these state laws in the courts.

 PBMs have a great deal of money. When a pharmacy challenges a PBM, the PBM can easily “lawyer up” and fight the pharmacy.

 The existing PBM model has been around for many years. Elected officials, government regulators, and even pharmacies are so accustomed to the existing PBM model that they have difficulty pushing for changes to the model.

 As PBMs possess the pharmacies’ money, whether PBMs are right or wrong does not matter from a practical standpoint. If they refuse to pay pharmacies, the pharmacies are forced into a precarious position.

The most common audit is one in which the PBM requests that the pharmacy produce documents supporting the claims that the pharmacy previously submitted to the PBM. If the PBM concludes that the documents do not support the claim, the pharmacy may face a clawback. Other types of audits can more closely resemble investigations. With these types of audits, the PBM may require documentation or other information from the pharmacy that addresses 1 or more of the following areas:

Federal law, state law, and most PBM contracts require pharmacies to make a reasonable attempt to collect co-pays. These laws and contracts generally allow a pharmacy to waive or reduce a co-pay only if the patient properly establishes a financial inability to pay the co-pay. If a PBM concludes that a pharmacy is routinely waiving co-pays, then the PBM will likely terminate its contract with the pharmacy.

 Generally speaking, federal and state laws prohibit health care providers from paying commissions to 1099 independent contractor marketing reps (individuals and marketing companies). If a PBM concludes that a pharmacy is paying commissions to 1099 independent contractor marketing reps, the PBM will likely terminate its contract with the pharmacy.

 Most pharmacies are in the PBM’s retail network. PBMs restrict how much their retail network pharmacies can engage in mail order. If a PBM concludes that a retail network pharmacy is engaging in mail order beyond the guidelines imposed by the PBM, the PBM will, again, likely terminate its contract with the pharmacy.

With these factors in mind, the pharmacy’s mind-set should be “Let’s solve the problem” rather than being defensive and attempting to “win the argument.” This approach can create an opportunity to reach a settlement with the PBM that both sides can live with.

An important first step for the pharmacy is to hire a health care attorney with experience in working with PBMs, to guide the pharmacy in responding to the audit. The attorney is the objective outsider who can see both sides of the argument. If a pharmacy responds to an audit on its own, by human nature, the pharmacy will be on the defensive and be combative. An experienced attorney can help the pharmacy avoid these pitfalls.

Once the pharmacy has adopted the proper mind-set and has hired a health care attorney, it should take the following steps:

If the pharmacy is not careful, it can be tripped up by the deadline to respond. The initial letter from the PBM may contain a specific date by which the pharmacy is to respond. This is straightforward. However, the letter might present a deadline that is “30 days from the date of this letter” or “30 days from the date of your receipt of this letter.” This is ambiguous. The pharmacy needs to carefully calculate the date by which it must respond.

Request a response extension, if necessary.

 It is reasonable for the pharmacy to ask for a 1-time extension (usually 10-14 days). If the PBM does grant an extension, the pharmacy must obtain confirmation in writing.

 With hope, the letter from the PBM notifying the pharmacy of the audit will clarify what the PBM is focusing on. If the letter is unclear, the pharmacy should contact the PBM and ask for clarity. In the past, the PBM’s primary focus was on whether the pharmacy received a valid prescription, dispensed the drug in accordance with the prescription, and submitted the claim for exactly what was dispensed. However, in recent years, PBM audits have been resembling investigations rather than documentation audits. The latter asks for documentation or information designed to allow the PBM to determine whether the pharmacy is in compliance with the PBM’s contract and collateral documents and is engaged in fraudulent activities.

Let’s turn our attention to the contract between the PBM and the pharmacy.

 The contract contains a number of obligations that the pharmacy must meet. In addition, the contract will likely contain a clause that says something like “Pharmacy agrees to abide by the provisions of PBM’s policies and procedures, including PBM’s coverage policies.” Pharmacies must be aware of all applicable rules.

The contract between the PBM and a retail network pharmacy will likely contain a restrictive provision such as “Not more than X% of pharmacy’s dispensed drugs will be via mail order.”

 Several years ago, PBMs were burned by a cadre of compounding pharmacies that were dispensing only expensive pain and scar creams and submitting exorbitant claims to PBMs. PBMs put a stop to this practice. But as a result, most PBM contracts do not allow compounding at all or allow it in only a limited capacity.

 Many PBM contracts have a provision that requires the pharmacy to exert a reasonable effort to collect co-pays and allows the pharmacy to reduce or waive a co-pay only if the patient establishes an inability to pay.

 The contract may specifically address how the pharmacy can and cannot market. Or the contract may generally say that the pharmacy will comply with all applicable laws. In an audit, to determine whether the pharmacy is engaged in improper marketing practices, the PBM may ask the following questions: Does your pharmacy use individual marketing reps to market your pharmacy’s products? If the answer to that question is yes, are the marketing reps W2 employees or 1099 independent contractors? If your pharmacy uses individual 1099 independent contractor marketing reps, how are the reps compensated? Does your pharmacy contract with marketing companies? If so, list their names, and explain how the marketing companies are compensated.

After the pharmacy determines the audit's focus, the pharmacy should take the following steps:

 The pharmacy needs to carefully review each document to be submitted. In doing so, the pharmacy needs to determine whether the document complies with PBM coverage guidelines. When the pharmacy submits the requested documents to the PBM, the documents need to be organized so they tell a clear, concise story. In reviewing the documents requested by the PBM, the pharmacy may conclude that some of them are deficient. If possible, the pharmacy should take steps to rehabilitate the deficient documents. Rehabilitation entails securing contemporaneous documents that fill in the gaps. In rehabilitating documents, the pharmacy must be honest and transparent (eg, no backdating).

 Pharmacies should organize submitted documents so they tell a story. The story that the pharmacy wants to tell is that each product delivered to a patient was in response to a valid prescription, the pharmacy dispensed the exact product that was prescribed, the pharmacy billed only for the product that was dispensed, and the pharmacy is in compliance with both the contract and applicable laws.

 When the pharmacy submits the requested documents to the PBM, the pharmacy needs to retain 2 sets of copies: 1 set for the pharmacy and 1 set for the pharmacy’s attorney. In some but not all instances, it is wise for the pharmacy to include an explanatory letter with the submitted documents.

 After it submits its documents to the PBM, the pharmacy should follow up with the it to confirm that the PBM has received the documents in a timely manner.

The authors presented their legal expertise in PBM audits during a session at the National Association of Specialty Pharmacy 2020 Annual Meeting & Expo Virtual Experience, held September 14 to 18, 2020 

, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, home medical equipment companies, and other health care providers throughout the United States. Baird is board certified in health law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 and jbaird@ bf-law.com.

, is chairman of the Labor and Employment Law Group and a senior health care attorney at Brown & Fortunato, PC, handling governmental investigations, business disputes, and litigation involving health care providers including pharmacies, durable medical equipment companies, manufacturers, home health agencies, and hospitals. Howard is board certified in labor and employment law by the Texas Board of Legal Specialization and can be reached at (806) 345-6310 and bhoward@ bf-law.com.

The pharmacy’s mind-set should be “Let’s solve the problem” rather than being defensive and attempting to “win the argument” with a PBM audit. 