One of Frier Levitt’s New Jersey-based pharmacy clients recently faced audit findings worth tens of thousands of dollars from a major PBM. With the guidance of Frier Levitt attorneys, the pharmacy was able to overturn more than 91% of the amount at issue—all but three of the original roughly 700 alleged discrepancies. That said, Frier Levitt continues to challenge the remaining discrepancies and remains confident that additional reversals are warranted.
In the audit findings, the major PBM alleged three main discrepancy types: (i) missing proof of delivery; (ii) drug invoice shortage; and (iii) missing pharmacy license. Each of the alleged discrepancies are commonly asserted by PBMs without an adequate basis. Accordingly, it is imperative that pharmacies understand what supporting documentation is necessary to overturn false allegations. Additionally, this successful result illustrates the importance of adhering to stringent document retention policies and procedures, as the Pharmacy’s ability to quickly locate the responsive supporting documents was critical to overturning the unwarranted discrepancies.
Missing Proof of Delivery
The PBM’s audit findings erroneously asserted that the pharmacy lacked proof of delivery for nearly 650 claims. Unsurprisingly, the PBM failed to provide any insight as to the basis of its staggering allegations. The Pharmacy was able to obtain signature logs and/or delivery confirmations for each of the claims at issue, irrefutably disproving any allegation that the claims were not properly dispensed.
Drug Invoice Shortage
Next, the PBM asserted that inventory shortages existed for two products during the relevant audit period. Again, the PBM provided no support for its allegations, despite having received the pharmacy’s purchase histories directly from the pharmacy’s wholesalers. Thankfully, the pharmacy adhered to rigid document management policies and retained PDF copies of its invoices and purchases. Utilizing these PDF invoices and the wholesaler purchase summaries, Frier Levitt’s attorneys were able to disprove each of the inventory shortage discrepancies.
Missing Pharmacy License
Finally, the PBM claimed that the pharmacy shipped medication into states where it did not maintain a valid state license. Of note, the PBM asserted these discrepancies despite having received documentation from the pharmacy establishing that nearly all of the claims at issue were either picked up at the Pharmacy’s location or shipped to a New Jersey address—the pharmacy’s home state. The patients’ insurance information associated with these claims likely listed addresses in different states, causing the PBM to assert the discrepancies. However, the pharmacy is located on the border of New Jersey and a neighboring state. Thus, it is not surprising that the pharmacy is still the closest pharmacy available to many residents living in the nearby state. Again, due to the pharmacy’s robust document management, the Pharmacy was able to locate documents showing the medication was received in New Jersey for nearly all claims.
Key Takeaways
This matter demonstrates several important lessons. First, PBMs often assert discrepancies against pharmacies without an adequate basis. In doing so, PBMs hope that pharmacies do not contest the allegations, allowing the PBM to recoup funds and enhance their own profits. Consequently, it is critical that pharmacies contest any and all audit findings; especially when considering the increased frequency of network terminations and cross-network terminations (where termination from one PBM’s network results in termination from other PBMs’ networks when the previous termination is disclosed during recredentialing).
Secondly, this matter personifies the importance of pharmacies practicing stringent document management practices. Ultimately, the best way to overturn unwarranted PBM audit findings is to submit responsive documentation disproving the PBM’s allegations. In order to submit such documentation, however, pharmacies must ensure that they keep detailed and organized records establishing all claims were properly filled and billed, that the pharmacy maintained sufficient inventories to support its billed claims, and that any patient pay amounts were properly collected. It is imperative that pharmacies retain robust policies and procedures outlining their protocol for retaining necessary documentation. In doing so, pharmacies are far better positioned to challenge unwarranted PBM audit findings. All pharmacies get audited. It’s not a matter of if illegitimate discrepancies are asserted against your pharmacy, it’s a matter of when.
How Frier Levitt Can Help
Regardless of the size of your pharmacy or the amount at stake, Frier Levitt is ready to assist you in challenging PBM abuse of your pharmacy. Our life sciences attorneys are prepared to provide guidance as your pharmacy prepares for PBM audits and take an aggressive approach to fight for your rights following adverse audit findings or other PBM action. If you have questions or need assistance combatting adverse PBM actions, contact us to speak to an attorney.
