A PBM pharmacy network termination notice is something that is capable of striking fear in many, particularly for independent pharmacy owners. Pharmacy Benefit Managers (PBMs) are increasingly focusing attention on independent pharmacies in particular, relying on potential breaches (whether material of not) of the pharmacy network participation agreement, as well as unsupported allegations of “fraud” in dispensing prescription medications as the basis to begin expensive recoupment efforts by way of audits. In fact, PBMs target not just individual pharmacies but entire networks of pharmacies under common ownership, affiliation, or relationship. Such terminations can effectively put a pharmacy out of business. However, pharmacies have many legal, administrative and contractual rights to pre-emptively avoid such adverse actions, and if necessary, to effectively fight back when confronted by PBM termination tactics.
An Ounce of Prevention
It is often noted that bad news delivered early is good news and nowhere is this maxim truer than in the initial and renewal applications for network participation. PBMs will often scrutinize pharmacy network applications and recredentialing applications, looking for discrepancies in responses and failures to fully and completely disclose potentially relevant information. It is crucial that the individual completing any such applications have intimate knowledge of the legal, compliance and operational history of the pharmacy. Often, this important task is delegated to individuals who are not familiar with the preparation of these crucial documents and may otherwise lack the knowledge necessary to accurately and comprehensively prepare a completed application. Failing to fully disclose or provide notice where otherwise required to do so of prior professional disciplinary history, network terminations, adverse court decisions, or payor exclusions may otherwise cause a pharmacy to be terminated. This is particularly true when there are public matters that can easily be identified by PBMs as they review pharmacies against their credentialing and recredentialing applications. PBMs typically pounce on these issues and use them as a wedge to sever pharmacies from network participation. Full and complete disclosure obviates this PBM termination tactic.
In addition, proactive compliance measures are a crucial step in reducing exposure to PBM termination tactics. A robust and effective compliance plan, and the implementation of policies and procedures, limit the likelihood of a PBM audit that results in significant adverse audit findings that could lead to a network termination. Regular internal audits identify errors, and combined with prompt corrective actions, can lead to reduced exposure of chargebacks or further action. Moreover, it is recommended to restrict access to controlled substances to authorized personnel and implement automated systems that minimize human error and generate detailed audit trails. Pharmacies should bear in mind that a pharmacy can have every possible policy and procedure on paper, but failure to train personnel on these policies and procedures actually increases the likelihood of negative audit findings, because it indicates to the PBM that the pharmacy knew or should have known that these measures were needed, but chose to delay or disregard implementation. Documentation is key, and to that end, “contemporaneous documentation” is essential.
Having these tools at hand, backed by reliable documentation, puts your pharmacy in the best position to cope with an intensive and intrusive PBM audit. However, an important question is what triggers a PBM audit in the first place, and how best to minimize the risk of an audit?
Staying Out of the Line of Fire
There are a number of “best practices”, apart from the compliance initiatives noted above, that can reduce the likelihood that your pharmacy is audited by PBMs. These practices include:
- Maintaining accurate records of controlled substances, including proper storage and dispensing procedures.
- Ensuring accurate prescription dispensing, including correct dosage, patient information, and proper labeling.
- Maintaining accurate and up-to-date patient information and prescription records.
- Maintaining open communication with the PBM and promptly addressing any questions or concerns they may have. All communications should be documented and consider any additional changes to your practices and compliance posture as may be necessary.
First Steps Upon Receipt of a Notice of Termination
What should you do, if despite taking all reasonable steps to avoid termination, your pharmacy receives a notice of termination? First, remember that you have both contractual and legal rights that govern this process and offer the pharmacy the opportunity to challenge any proposed termination. It is important that you understand the basis for termination as provided in the notice of termination. The notice should clearly state the reason for termination, such as alleged violations of the PBM agreement or non-renewal. The notice should also outline the termination date, any required notification procedures, and the conditions under which the termination can be reversed or the pharmacy can reapply. The next step is to review the termination clauses that are set forth in the PBM Agreement – these clauses will outline the grounds for termination, the process for termination, and the required notice periods. The last point is particularly crucial. Time frames are usually set forth unambiguously, and failure to respond with the time frame provided can be fatal to any attempt to fight the proposed termination.
How Frier Levitt Can Help
The experienced attorneys at Frier Levitt have successfully worked with hundreds of pharmacies facing PBM network terminations. At Frier Levitt, we are committed to supporting independent pharmacies in navigating these complex challenges posed by PBMs. Our team is dedicated to defending pharmacies against unjust PBM termination practices and ensuring their continued ability to serve their communities. If your pharmacy is facing any adverse action by a PBM or a threat of termination, we are here to help you protect your business and secure your future.
Please contact us today to speak to an attorney. By staying informed, prepared, and united, independent pharmacies can resist the pressures of PBM terminations, ensuring their vital role in the healthcare system endures.
