Pharmacy Benefit Managers (“PBMs”) have been focusing on invoice reconciliation audits, particularly concerning highly reimbursable drug claims and products purchased through online marketplaces. These audits can have significant implications for your pharmacy’s operations and financial health. It is crucial to understand the audit focus, appeal and dispute resolution procedures, and the legal protections available to you.
Invoice Reconciliation Audits and Recent Developments
PBMs have intensified their audit activities, zeroing in on products purchased through online marketplaces where pharmacies sell their overstocked inventories to other pharmacies. These audits often target highly reimbursable drug claims, scrutinizing the invoices to ensure compliance with PBM contract terms. The aim is to identify discrepancies that could justify recoupments or other penalties against network pharmacies. Recently, an online marketplace filed a lawsuit against a major PBM, citing tortious interference with its business as the PBM was refusing to consider the marketplace’s clients, or pharmacies that participated in the PBM’s network, purchases made through the marketplace. As a result of this recent lawsuit, the PBM party to the litigation has been increasing its scrutiny over such “marketplace purchases,” leading to larger recoveries and network actions against pharmacies. To that end, PBMs have requested pharmacies provide onerous documentation to support their online marketplace purchases, including copies of the original invoice from the original pharmacy who purchased the medications from their wholesaler and is now selling on the marketplace, proof of payment for the transaction, as well as a copy of the selling pharmacy’s license as a pharmacy and a wholesaler. The request for such extensive documentation can be of significant difficulty to obtain for various reasons, but importantly, the question remains whether it is reasonable or required of a pharmacy to obtain this information and documentation when purchasing medications through a platform, such as an online marketplace.
Protections for Pharmacies
It is important for pharmacies to be familiar with administrative appeal processes and dispute resolution procedures warranted under PBMs’ Provider Manuals and, in turn, the pharmacies should be able to fully exhaust the procedures and contest the alleged (often egregious) audit findings. The Provider Manual provides a roadmap for challenging audit results, which can often be arbitrary and unfair. Timely and well-documented disputes can prevent unwarranted recoupments and safeguard your pharmacy from further sanctions. In addition to PBM-specific procedures, pharmacies have the support of federal and state laws. State pharmacy fair audit laws, for instance, offer significant protections against unjust audit practices as they typically set standards for audit processes, limit the period for which audits can be conducted, and protect pharmacies from retaliatory actions by PBMs. Federal laws also provide a layer of protection by ensuring that pharmacies can operate without undue interference. Understanding these legal frameworks is essential for effectively contesting audit findings and maintaining compliance.
When faced with unfavorable audit results, it is imperative to contest them to the fullest extent. The failure to do so can result in severe consequences, including network suspension or termination. As PBMs continue to ramp up their audit activities, independent pharmacies must be vigilant and proactive. Understanding the focus of these audits, knowing the appeal and dispute resolution process, leveraging applicable laws, and hiring capable legal counsel can provide a robust defense against unjust practices. Contesting audit findings vigorously is not just a matter of protecting your pharmacy’s financial health but also ensuring its continued participation in PBM networks.
How Frier Levitt Can Help
If you receive notice of a PBM audit and are subject to results that include the discrepancies discussed, or any others, you must consult with an experienced legal counsel. Frier Levitt attorneys have extensive experience combatting abusive PBM audit practices and their investigatory allegations. Our attorneys have assisted hundreds of pharmacies in overcoming these results with positive outcomes. Pharmacies should emphatically contest audit discrepancies and demand transparency from PBMs, especially when the pharmacy provided sufficient documentation to overturn the discrepancies. If your pharmacy is facing a PBM audit, contact us to speak to an attorney.
