Frier Levitt recently achieved a significant victory by assisting an Illinois-based pharmacy client in challenging the final audit findings of a major Pharmacy Benefit Manager’s (“PBM”). The final findings had placed nearly $300,000 at issue. The PBM alleged “Quantity Discrepancies,” claiming that the pharmacy had billed quantities larger than the quantity authorized by the prescriber. Astonishingly, the Quantity Discrepancies accounted for 99.96% of the total amount in question, leaving only $111.91 outside the scope of the dispute.
To make matters worse, the PBM already withheld the nearly $300,000 before the pharmacy had the opportunity to fully dispute the final findings. Under Frier Levitt’s guidance, the pharmacy invoked its dispute resolution rights under the Provider Manual. Our attorneys gathered the required supporting documents to address the Quantity Discrepancies such as prescriber attestations provided by Frier Levitt’s attorneys and submitted a Notice of Dispute/Appeal of the Final Findings. Leveraging our attorneys’ experience and knowledge in both clinical matters and applicable law, we successfully overturned each Quantity Discrepancy resulting in the return of 99.96% of the wrongfully withheld amount by the PBM.
Why Pharmacies Should Appeal PBM Audit Findings
This case serves as a critical example of why it is essential for pharmacies to fight back against any PBM audit findings. In this instance, the PBM’s discrepancies and withheld funds amounted to approximately $300,000. Had the pharmacy not sought assistance in addressing the Final Findings, the PBM may have upheld the discrepancies even though even though nearly all of them were proven to be incorrect. Such a significant payment withholding or chargeback could have had dire consequences for the pharmacy’s operations. Thankfully, with the help of Frier Levitt’s attorneys, the pharmacy was able to overturn almost all of the discrepancies and recovered almost $300,000 of wrongfully withheld payments.
The amounts involved in PBM audits can be substantial as demonstrated in this case. Regardless of the amount at issue, it is imperative for pharmacies to utilize the contractual appeal process outlined in their PBM agreements to contest any and all audit findings. Often, pharmacies allow PBM audit findings to go uncontested due to seemingly insignificant amounts at issue. However, even if a PBM does not impose any additional adverse action beyond the recoupment of seemingly insignificant funds, PBMs keep track of their network pharmacies’ audit histories. Alarmingly, PBMs too often rely on prior audit histories to justify the termination of pharmacies from their networks years later. This practice is particularly common during re-credentialing, ownership changes, or if a pharmacy has additional adverse audit findings years later. Frier Levitt has seen instances where a major PBM sought to terminate a pharmacy due, in part, to audit findings dating back approximately six years. Thus, even seemingly small amounts are worth disputing, as failing to do so may serve as a basis for severe PBM sanctions, including network termination, down the road.
PBM Audits and Payment Withholdings
PBMs frequently use routine audits as a tool to seek unwarranted recoupment of funds from their contracted pharmacies. As such, they regularly identify discrepancies and place the onus on the pharmacy to submit documentation that meets the stringent requirements imposed by PBM Provider Manuals to overturn these unwarranted discrepancies. Thus, even when the alleged discrepancies do not actually exist, PBMs will refuse to reverse the purported discrepancies without the precise documentation it requires—documentation that may not even be accessible to pharmacies in certain situations. Due to strict PBM supporting document requirements, it is critical that pharmacies adhere to proper document retention policies and procedures specifically designed to ensure the pharmacy maintains the necessary records to overturn unjustified PBM discrepancies.
In addition, as exemplified in this case study, PBMs will often withhold payments owed to pharmacies during an ongoing audit, regardless of the accuracy of the alleged discrepancies. In doing so, they may place the pharmacy on an indefinite payment withholding, usually until initial audit findings are released, or the discrepant amount has been fully recouped. Furthermore, pharmacies must demand that PBMs return any funds withheld in excess of the amount at question in the audit findings. Unfortunately, tactics like excessive payment withholding and erroneous audit findings are becoming increasingly common.
How Frier Levitt Can Help
Regardless of the size of your pharmacy or the amount at stake, Frier Levitt is prepared to assist you in challenging PBM abuse of your pharmacy. Our life sciences attorneys are prepared to provide guidance as your pharmacy prepares for audits and take an aggressive approach to fight for your rights following a PBM audit. If you have questions or need assistance in combatting adverse PBM actions, contact us to speak to an attorney.
Note: The information provided in this article is based on the specific circumstances of a particular case and should not be construed as legal advice. Each situation is unique, and it is recommended to consult with an attorney for individualized guidance.
