Court: Drug Reimbursement Price Quotes Contractually Bind Health Plan

August 4, 2003 ( - Electronically quoted reimbursement rates given to pharmacists required by a contract take precedent over any claims for alleged overpayments.

The Allegheny County (Pennsylvania) Court of Common Pleas determined the University of Pittsburgh Medical Center (UPMC) Health Plan could not cut future reimbursements to make up for alleged overpayments. This was due to the plan being contractually bound to reimbursement rates it electronically quoted to pharmacists, according to an A.M. Best Company, Inc. report.


One hundred Pennsylvania pharmacies brought suit against UPMC in response to the health plan’s announcement that it would cut future prescription reimbursements to make up for the overpayments. UPMC said a computer processing error that persisted from June 2001 and through May 2002 caused the overpayments.

The error caused the pharmacies to receive electronic price quotes for prescription reimbursement from UPMC’s agent, Argus Health Systems Inc., that were higher than the rates set by UPMC’s participating plan.

However, the court determined that each transaction with a pharmacy constituted a separate contract that was binding once a pharmacist filled a prescription at a reimbursement rate agreed to by Argus. Thus, “the issue of mistake arises only in the relationship not in question here, that of defendant and its agent, Argus,” Judge Judith Friedman said in the ruling.

In a statement, UPMC said they disagreed with the judge’s decision and would appeal.