Earlier this year, Frier Levitt hosted a comprehensive webinar to provide insights into emerging audit trends, practical strategies for safeguarding pharmacy practices, and tools to address potential risks. The session highlighted the challenges and opportunities the changing industry will bring, offering administrative and legal frameworks to protect businesses. The webinar was designed for pharmacists, pharmacy owners, technicians, potential pharmacy buyers, and wholesalers looking to stay ahead in the industry. It is important for pharmacies to understand what key areas of focus could be for PBM audits in 2025.
Understanding PBM Audits
There are several different types of audits and investigations that a PBM may initiate against a pharmacy. While both audits and investigations involve a review of claims submitted by pharmacies within a set period in order to identify any potential instances of noncompliance, investigations have a higher level of scrutiny and require pharmacies to respond to documentation requests within shorter timeframes. To that end, audits and investigations could be done either through onsite reviews or desktop requests to the pharmacy, and in response, pharmacies are expected to provide a host of prescription documentation. In addition to a prescription review, PBMs could also conduct invoice reconciliations of the pharmacy that review the pharmacy’s inventory records to ensure that the pharmacy has sufficient inventory to support claims that were billed during the audit period. It is also common in the course of PBM audits and investigations that a PBM inquires about the pharmacy’s policies and procedures, including any arrangements with third-party marketing companies.
While PBM audits are often performed routinely, certain pharmacy conduct can trigger a PBM to perform an audit. For example, PBMs often monitor the amount of high-cost medications filled by pharmacies, compared to other similarly situated pharmacies in the network. They also take note of what percent of the prescriptions filled come from a single prescriber’s office, particularly taking into account the prescriber’s specialty, the types of medications being prescribed, etc. PBMs may also check to confirm whether a pharmacy is regularly filling prescriptions for patients who live far away, particularly where there are other pharmacies closer to the patient’s address. Meanwhile, investigations may be triggered for the same reasons an audit may be, but could also be initiated as a result of complaints from patients or prescribers, referrals from regulatory agencies, or internal analytics that raise red flags about the pharmacy’s participation in the network.
2025 PBM Audit Trends
Prior Authorization
PBMs continue to review pharmacies for their involvement in the prior authorization process, especially if there is a limitation on the pharmacy’s ability to engage in the process under the PBM’s Provider Manual and/or Agreement. PBMs may review the submissions of prior authorizations to identify whether they are coming from the pharmacy or the prescriber and whether the submission was done in accordance with the PBM’s terms and conditions. PBMs will also ensure that the information submitted is accurately based on the patient’s medical records, such as for areas of “tried and failed” medications, diagnosis codes, etc. Pharmacies are encouraged to have robust policies and procedures on prior authorization practices if they are engaged in the process at all.
Invoice Reconciliation/Inventory Audits
Often, PBMs will conduct invoice reconciliations alongside a desktop or onsite audit or investigation to ensure that pharmacies maintain sufficient quantities of drug products to support claims that are being billed during a certain time frame. In the event there is a shortage identified, PBMs allege that a pharmacy is billing for claims that the pharmacy is not purchasing medications for or otherwise dispensing. However, in conducting invoice reconciliations or inventory audits, PBMs ignore the reality of standard pharmacy practice as it relates to inventory management and deny accepting purchases for a number of reasons. For example, a PBM may deny accepting purchases that were made too far in advance of an audit period, from an un-accredited wholesaler or unauthorized distributor, or through a marketplace or another pharmacy. Pharmacies that undergo such audits should provide all responsive documentation in support of its purchases to ensure they are not subject to clawback, particularly where the medications were dispensed.
Patient/Member or Prescriber Denials
It is also common for PBMs to send out questionnaires or make some form of outreach to patients and prescribers to confirm their authorization of prescriptions. In making this type of communication to patients and prescribers, PBMs often use alarming language and suggestive comments that pharmacies are engaged in some wrongdoing that is causing the PBM to question them about prescriptions. Pharmacies should be cautious of the possibility that a patient or prescriber may deny their authorization of a prescription or even receipt of a prescription. To combat against such denials, pharmacies should maintain sufficient documentation confirming a patient’s and prescriber’s authorization of any prescription.
Copayment Collection
PBMs continue to aggressively audit pharmacies on their copayment collection practices and in doing so, often require excessive documentation beyond what is reasonable. For example, it is common for a PBM to request a pharmacy to provide merchant reports from the pharmacy’s credit card processor to demonstrate the pharmacy did in fact receive payment from the patient. Pharmacies continue to be subject to strict documentation requirements to demonstrate their collection of copayment from patients, and pharmacies should ensure they have a robust policy and procedure that clearly outlines their collection practices.
Mailing on a Retail Contract
With the expiration of the Public Health Emergency in 2023, many PBMs have reinstated their pre-COVID-19 mailing limitations on network pharmacies. While some PBMs prohibit mailing altogether, other PBMs may limit mailing to a certain percentage of overall claims or within a certain radius from the pharmacy. Should pharmacies continue to engage in the mailing of prescriptions, PBMs may subject those claims to chargeback or subject the pharmacies to network termination.
Third Party Relationships
Pharmacies who contract with any third parties to assist in any aspect of their businesses could reasonably expect to disclose such relationships with PBMs either through the course of the credentialing process or at a later point in their relationship with the PBM. For example, third parties could include pharmacy consultants, marketing companies, management companies, or even software vendors that offer to streamline the pharmacy’s processing of claims. Recently, PBMs have audited pharmacies or sent cease and desist letters to pharmacies who have engaged such third parties and allowed them the ability to process “benefits verification checks” using pharmacies’ NPIs. Any pharmacy who provides access to their claims processing software should ensure that a third party is not using their credentials to submit any claims, including test claims, on behalf of the pharmacy.
Importance of Challenging Audit/Investigation Results
Pharmacies that receive any audit or investigation results are encouraged to appeal and challenge them to avoid unreasonable chargebacks or potential further action, such as termination. PBMs often compound a pharmacy’s past audit results, however minor, to demonstrate a pattern of concerning behavior and justify further adverse action against the pharmacy.
How Frier Levitt Can Help
Regardless of the audit amount or the size of your pharmacy, it is critical for pharmacies to challenge PBM audits. Frier Levitt is prepared to assist you in challenging adverse PBM audits and actions against your pharmacy. Our life sciences attorneys have significant experience and can provide guidance in preparing for and challenging audits. Contact us to speak to an attorney today.
For more information, access the webinar, “What to Expect in 2025 for PBM Audits” available on-demand HERE.
