Recently, Frier Levitt has seen an uptick in network terminations initiated by Pharmacy Benefit Managers (“PBMs”) which appear to stem from insignificant amounts of PBM audit findings. This is highly concerning for independent pharmacies as they are not only forced to defend themselves against audit findings and purported termination, but also their contracts with other PBMs are put in jeopardy.
PBMs routinely audit their network pharmacies to ensure compliance with PBM Provider Manuals and Provider Agreements, as well as applicable state and federal laws. Typically, multiple audits that result in significant discrepancies and high overpayments, or audits that discover fraud, waste and abuse, can lead to a pharmacy’s termination from a PBM’s pharmacy network. It is also common for major PBMs to require that their contracted pharmacies report any incidents which result in the imposition of disciplinary action or termination from a plan or PBM network against the given pharmacy (in fact, commonly asked during credentialing or recredentialing procedures). Critically, once a PBM receives the contractually required notice, the PBM may use the notice as a justification to impose their own sanctions, including network termination. Therefore, even if a pharmacy is terminated from a PBM’s network due to relatively insignificant audit findings, the termination can, and often will, lead to further PBM sanctions or result in a pharmacy being denied enrollment in another PBM’s pharmacy network.
It is often the case that pharmacies allow PBM audit findings to go uncontested due to smaller recoupment amounts. Even if a PBM audit does not result in adverse action beyond the recoupment of monies from the pharmacy, PBMs keep track of their network pharmacies’ audit histories. Increasingly, PBMs are using prior audit results as justification to terminate the pharmacy years after the pharmacy has another adverse audit finding. As such, although smaller audit amounts may not seem to be “worth” disputing, failure to do so may serve as the basis for network termination by a PBM somewhere down the road.
In light of the recent uptick in PBM network terminations due to minimal audit findings and the repercussions of a PBM termination, it is more critical than ever that pharmacies contest PBM audit findings, even if the PBM seeks to recoup only a seemingly insignificant amounts of monies. To that end, it is imperative that pharmacies are aware of the tools and resources at their disposal that can be utilized to prepare for and combat PBM audit findings. For example, every PBM maintains a contractual audit appeals process which allows pharmacies to submit additional documentation to overturn the alleged discrepancies contained in PBM audit findings. Likewise, many states have enacted legislation in the form of “Fair Audit Laws” to grant protections to pharmacies facing PBM audits. For a more detailed discussion of the strategies and resources at a pharmacy’s disposal, please refer to our recent article explaining PBM audits and available tools for pharmacies.
How Frier Levitt Can Help
Regardless of the size of your pharmacy or the amount at stake, Frier Levitt is ready and able to assist you in successfully challenging a PBM’s audit of your pharmacy. In addition, if your pharmacy has already been terminated from a PBM’s network, Frier Levitt can assist your pharmacy in reversing the termination decision and/or seeking readmission to the PBM’s network. Our life science attorneys have the knowledge and experience to provide guidance and an aggressive approach to fight for your rights following a PBM audit, or worse, PBM termination. If you have any questions or need help fighting abusive PBM conduct, contact us to speak to an attorney today.
