Frier Levitt Successfully Appeals 100% of PBM Audit Findings for New York-Based Pharmacy

Frier Levitt helped a New York pharmacy successfully appeal initial audit results in their entirety that were issued by a large PBM. Despite the pharmacy’s submission of purchase information directly from its wholesalers, the PBM alleged shortfalls of several medications and sought recovery of the total of all claims associated with the shortfalls. Specifically, the audit findings alleged that the pharmacy did not adequately establish that it purchased enough of the relevant medications to support the amounts that was billed to the PBM during the audit period. In this instance, the appearance of the shortfalls as alleged were solely caused by the PBM’s failure to accurately account for all the pharmacy’s purchases despite the pharmacy’s timely submission of relevant purchase information. As a result, the PBM alleged a significant recovery related to the audit findings and the pharmacy could have faced a significant audit fee.

However, with the help of Frier Levitt, the pharmacy was able to gather the relevant documentation and information to establish clearly that it had made sufficient purchases to support the claims billed to the PBM. Frier Levitt and the pharmacy compiled the necessary purchase and dispensing histories and demonstrated to the PBM that its calculation was inherently incorrect and the pharmacy did not have any shortfalls that otherwise should subject them to recovery. As a result of Frier Levitt’s assistance, the audit findings were reversed in their entirety, and the pharmacy did not have to make any payments for the identified claims nor for an audit fee back to the PBM.

Inventory reconciliations are commonly performed during a PBM audit. PBMs require pharmacies to submit invoices for purchases over the relevant audit period directly from wholesalers to be compared against all the claims submitted during the relevant audit period. In the absence of sufficient purchase records, the PBM may allege audit findings or identify drug shortfalls, as was the case here. While it was not an issue in this matter, many PBMs also place specific terms around the purchasing practices of pharmacy providers, including a limitation on making “bulk purchases,” the requirement to purchase from only certain wholesalers that maintain accreditations, etc. Non-compliance with these purchase conditions may constitute a basis for PBMs to refuse to consider some otherwise valid purchases, which may cause the allegation of shortfalls. For example, if a pharmacy purchases from a non-accredited wholesaler when the PBM requires the pharmacy to only purchase from accredited wholesalers, the PBM may deny the purchase during the time of an audit and allege the associated claims as discrepant, subjecting the pharmacy to recovery and potential further action.

How Frier Levitt Can Help

Pharmacies should seek assistance to develop proper inventory management practices to prevent discrepancies during inventory reconciliation audits and take particular care to ensure that they are making purchases according to the conditions set by PBMs and are maintaining complete and accurate records of their purchasing and dispensing activities. If your pharmacy is currently being audited or if you recently received audit findings alleging inventory shortfalls, contact Frier Levitt to speak with an attorney.