Pharmacy benefit managers (“PBMs”) audit pharmacies within their network to ensure its contracted pharmacies are in compliance with their contractual obligations as well as applicable State and Federal laws. However, PBMs often implement audit tactics that seem abusive and only geared towards recouping money from pharmacies. For pharmacies, it is important to know that PBMs are required to afford pharmacies the opportunity to appeal unwarranted audit findings.
Even if PBMs impose certain policies or procedures through their contracts with pharmacies, applicable laws might grant pharmacies rights that trump the PBM’s contractual terms. For example, many states have enacted Fair Audit Laws that provide pharmacies with far greater protections than PBM contracts. Typically, Fair Audit Law protections include a limitation on the number of claims a PBM can audit at once, a specific timeframe in which pharmacies can submit audit appeals, prohibitions on PBM recoupment based on mere clerical errors, and may even outline certain documents that PBMs must accept to reverse alleged discrepancies. Fair Audit Law is vital to combating abusive PBM audit tactics as it is not uncommon for PBMs to impose improper deadlines for pharmacies to submit documents, request access to documents that are legally not subject to an audit, or fail to notify pharmacies of the appeal rights altogether. Thus, when submitting an audit appeal, pharmacies should be cognizant of their legally enforceable rights and challenge any PBM conduct which violates those rights.
Next, and perhaps most importantly, pharmacies must include supporting documentation in their audit responses that address each discrepancy alleged by the PBM. Any argument put forth by a pharmacy, even if factually accurate, will be meaningless in the eyes of a PBM when there is no documentary evidence to support the pharmacy’s position. Put another way, PBMs will not simply “take your word for it.” To illustrate, if a PBM alleges that a pharmacy failed to collect copayment for a given claim, if the pharmacy cannot provide the PBM with the appropriate documentation to establish copay collection, the alleged discrepancy will not be reversed on appeal regardless of whether the pharmacy actually collected the copay in question.
As the example above makes clear, supporting documentation is a key component of a successful PBM audit appeal. Without supporting documents, pharmacies face a significant uphill battle to defeat even unwarranted audit findings. Moreover, PBMs will not accept a given document simply because the pharmacy believes it proves their position. Instead, pharmacies must provide PBMs with specific types of documents that PBMs consider “sufficient” to reverse audit findings. For example, prescriber attestations are a common form of documentation that pharmacies should include in their audit appeals to defend against discrepancies such as invalid prescriptions. However, even if a pharmacy can obtain written confirmation from the prescriber confirming that they authorized the prescription at issue, PBMs will not accept the prescriber attestation if it fails to include certain information or signs of validity like the physician’s own letterhead. Another form of documentation that, on its face, appears to warrant reversal of a given discrepancy, but is unlikely to be accepted by a PBM, is certain purchase history records used to overturn allegations of inventory shortages. Specifically, PBMs are reluctant to accept purchases made from certain vendors (e.g., pharmacy to pharmacy transfers) alone, and will likely require additional documentation to further support the transactions. Similarly, when it comes to bulk purchases (i.e., purchases of more than a thirty [30] day supply of a single drug), PBMs refuse to accept these purchases, regardless of whether or not they establish the pharmacy maintained an adequate inventory of a specific drug, if the purchases were made outside of a very specific timeframe. Furthermore, pharmacies may even be required to obtain prior approval from the PBM before placing a bulk purchase. Accordingly, pharmacies must ensure that they practice proper record-keeping practices to include the appropriate and necessary documents to defeat erroneous PBM audit findings.
How Frier Levitt Can Help
Regardless of the size of your pharmacy or the amount at stake, Frier Levitt is able to assist you in challenging a PBM’s audit of your pharmacy. Our life science attorneys are prepared to provide guidance to help your pharmacy prepare for PBM audits as well as provide an aggressive approach to fight for your rights following a PBM audit. Contact us today to speak to an attorney.
