Independent pharmacies doing business in Pennsylvania should make sure they are aware of all legal rights they are afforded under Pennsylvania law (and other applicable law) including the legal rights afforded to pharmacies under Pennsylvania’s Fair Audit Law. Pennsylvania’s Fair Audit Law protects independent pharmacies against unfair and aggressive audit practices commonly used by PBMs. Specifically, Pennsylvania’s Pharmacy Audit Integrity and Transparency Act (“Act”), can be utilized by independent pharmacies in the fight against PBMs’ improper audit practices (and other improper business practices) to ensure that PBMs are complying with all obligations owed to pharmacies when a PBM conducts an audit.
For example, the Act, which can be found at PA ST 40 P.S. § 4511, requires that PBMs or other entities that audit independent pharmacies comply with many rules meant to protect pharmacies from PBMs using predatory audit tactics. Among these rules are the following requirements:
- A PBM must provide a pharmacy with at least fourteen (14) calendar days of prior written notice before conducting an audit;
- PBMs must refrain from auditing a pharmacy during the first five (5) business days of the month for pharmacies averaging more than 600 prescriptions per week;
- PBMs are obligated to limit their review of audited prescription claims to no more than 250 prescriptions in the preceding 24 month period;
- PBMs must accept different types of paper and electronic records provided by a pharmacy to validate the audited prescription claims; and
- PBMs cannot include dispensing fees in calculating overpayments unless the prescription is considered a mis-fill.
Additionally, the Act prohibits PBMs from initiating a charge-back or recoupment of claims based on clerical or recordkeeping errors. It also prohibits PBMs from initiating a charge-back or recoupment until the audit appeal process has been completed. Many of these requirements and obligations are often overlooked by PBMs or otherwise blatantly not complied with. To ensure that PBMs are complying with these laws, it is critical to have qualified legal counsel assisting with an audit to ensure that PBMs do not disregard these clear requirements.
Pennsylvania’s independent providers can utilize the provisions of the Act and challenge any violation of the Act by PBMs including through private dispute resolution. This Act remains another important tool for pharmacies doing business in Pennsylvania in addition to the legal rights and remedies pharmacies may have arising under federal law, including under Medicare, as well as under their private contracts with the various payers throughout the country.
Frier Levitt represents numerous pharmacies in Pennsylvania and across the United States in challenging unfair and aggressive audit practices and has extensive knowledge on all aspects of pharmacy audits. Contact us to speak with an attorney about how your pharmacy can leverage the protections afforded by the Fair Audit law and other laws governing PBMs.
