The Louisiana Insurance Department (“Department”) recently fined Express Scripts Administrators, LLC (“ESA”) $275,000 and MedImpact Healthcare Systems, Inc. (“MedImpact”) $250,000 for allegedly failing to pay electronically adjudicated insurance claims to pharmacies in a timely manner on behalf of the Louisiana Office of Group Benefits (“OGB”). OGB provides health and life insurance benefits to Louisiana-qualified state employees, retirees of participating Louisiana state agencies, and eligible dependents. ESA and MedImpact are third party administrators (“TPAs”) operating as pharmacy benefit managers (“PBMs”) for OGB.

Per a recent press release issued by the Department, its Office of Consumer Services investigated ESA and MedImpact after receiving thousands of remittance advices from the Louisiana Independent Pharmacy Association to substantiate complaints from 19 independent pharmacies alleging numerous violations of the Louisiana Insurance Code. As a result of the Department’s investigations, it determined that both PBMs failed to ensure electronically adjudicated claims were paid within 15 days as required by Louisiana law.

The Department’s press release also indicated that ESA admitted to failing to pay 1.3 million electronically adjudicated claims within 15 days due to a software issue. ESA has paid $1.5 million in interest to the affected pharmacies and also agreed to pay a $275,000 fine and to make the necessary changes to its processes and procedures specified in a Consent Order with the Department.

The Department’s press release indicated that 664,770 claims were paid by MedImpact in excess of 15 days as required by Louisiana law. MedImpact agreed to pay $602,000 in interest to the affected pharmacies and to pay a $250,000 fine.

Commissioner Donelan also announced in the Department’s press release that neither the software issue cited by ESA, nor the state of emergency declaration cited by MedImpact (related to the Covid-19 pandemic) excused ESA or MedImpact from complying with Louisiana law.

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Polsinelli's TPA and PBM teams provide TPA and PBM licensing services, TPA and PBM regulatory and compliance services, drafting and negotiating of administrative services agreements and a number of other TPA and PBM  services. Our teams include attorneys who were former in-house counsel for TPAs, as well as attorneys who were formerly insurance regulators. By leveraging its extensive experience representing TPAs and PBMs, our TPA and PBM teams help clients avoid the learning curve and related cost implications that can be experienced by working with companies or attorneys less familiar with the regulatory and compliance needs of TPAs and PBMs.  To learn more about our TPA and PBM Licensing and Compliance practices or to contact a member of our TPA and PBM Licensing and Compliance services teams, please visit our Third Party Administrators page.