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The Allstate – Prescription Partners suit; the details…

The big auto insurer’s civil suit against AHCS subsidiary Prescription Partners is comprehensive, thorough, and very, very persuasive.  Allstate is demanding a return of all monies paid to Prescription Partners, and a ruling preventing PP from billing Allstate going forward.

The insurer is seeking declaratory relief (a legal finding that Allstate does not have to pay bills going forward) and the return of all monies paid.  

They are demanding a jury trial; my sense is this is not just legal maneuvering, but intended to make a clear, very loud, and very public statement.

Allstate’s attorneys have done their homework.  The suit filed in Federal District Court lays out a detailed description of exactly how and why Prescription Partners, a “technology” company, has no legal standing to bill an insurer for drugs.

Prescription Partners/AHCS pays the physician 70% of the amount it expects to bill the insurer, keeping 30% for itself.  Remember, this is based on the price for a repackaged drug, an issue specifically addressed in the suit

“Michigan courts have stated explicitly that “medical care providers are prohibited from charging more than a reasonable fee…Prescription Partners appears to have charged Allstate the national average wholesale price (AWP) for repackaged drugs…[the]repackaged AWP for drugs is substantially higher than the amount charged by local Michigan pharmacies from which insureds can also receive prescription medication…The repackaged AWP is also significantly higher than the original drug manufacturer is clear that the charges submitted by Prescription Partners using the former are grossly inflated and do not constitute a “reasonable” charge. [emphasis added]”

The documents cite several specific drugs with prices 70% to 1200% of the original un-repackaged drug, and include an AHCS price list in the Exhibits featuring a column showing the doctor their “guaranteed profit”, as well as a listing of each claimant, the amount billed, and the original manufacturer’s AWP.

That exhibit alone is worth the price of downloading the entire filing.

More, much more, to come.

What does this mean for you?

At last, the insurance industry steps up to take on the physician dispensing industry.  One wonders where the workers’ comp insurers are, as they’ve been victimized by the industry for years…

4 thoughts on “The Allstate – Prescription Partners suit; the details…”

  1. GO ALLSTATE! I do hope we see some filings from the big companies and that they take a harder look at what the contracted companies profit lines are before they sign the dotted lines.

  2. Joe,
    I would warn the Workers’ Comp programs that utilize a PBM to manage their pharmacy benefit to inquire whether there is an existing contract between the PBM and Prescription Partners and whether reimbursement terms are unreasonable. If the PBM’s pricing spread is more profitable than having a script filled at a retail pharmacy, how can you expect your PBM to help reduce the exposure of in-office dispensing? Talk about out of the frying pan and into the fire!!

    Thanks for the deeper dive into this case today! I appreciate that you continue to focus on this matter and those who are exploiting the system. My only hope is that those states, where Prescription Partners and others of the same cloth have placed their efforts, will begin to enact legislation (that hasn’t been swayed by the repackager’s lobbying money) to eliminate reimbursement loopholes.

  3. Thanks for making me feel even better about my very recent move from State Farm to Allstate for home and auto coverage. Saved me a significant amount of money and they’re picking the right fights.

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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