Frier Levitt attorneys recently reversed roughly ninety-six percent (96%) of the audit findings issued by a major PBM against a Georgia-based pharmacy. With the help of Frier Levitt’s guidance, the Pharmacy compiled supporting documentation that refuted nearly all of the PBM’s audit findings. After reviewing the audit findings and documentation, Frier Levitt submitted an appeal response relying on the supporting documents and the law to reverse almost the entire audit finding. Although Frier Levitt is happy to have achieved a great result for their pharmacy client, this matter also illustrates abusive payment withholding practices PBMs often engage in. Specifically, the PBM in this matter has currently withheld over three times the amount at issue in the audit. As such, our attorneys have shifted their focus from rectifying the audit findings to ensuring a prompt return of the excessively withheld funds.
Challenging PBM Audits
This matter exemplifies the importance of pharmacies challenging any and all discrepant audit findings issued by a PBM. As illustrated in this matter, PBM audit findings are often wrong and impose unwarranted discrepancies in an effort to recoup funds from their network pharmacies. Thus, it is imperative that pharmacies utilize the contractual appeal process outlined in their PBM agreements to combat audit findings to avoid imposition of payment withholdings as well as additional adverse action in the future. Even if a PBM does not immediately impose additional adverse action (beyond recoupment of the amount at issue) against the pharmacy following an audit finding, PBMs keep track of their network pharmacies’ audit histories. Alarmingly, PBMs have increasingly relied on previous audits and a pharmacy’s audit history to justify termination of a pharmacy from its network pharmacy. Thus, whether a pharmacy receives audit findings that place relatively small or massive amounts at issue is irrelevant, as pharmacies should be challenging audit findings regardless of the amount placed at issue. Even seemingly insignificant amounts at issue can be used to justify additional adverse action, including network termination, down the road.
In this matter, the PBM alleged copay discrepancies against the pharmacy and claimed the pharmacy did not provide sufficient proof that copays were collected. When challenging any audit discrepancy, pharmacies must submit supporting documentation that verify the legitimacy of the claim at issue and refute the PBM’s allegations. Copay discrepancies are amongst the most common issues raised by PBMs and can be challenging to overturn because of the difficulty in proving payment was actually received in some instances, such as when a patient pays their copay with cash. With the help of Frier Levitt’s attorneys, the pharmacy collected the responsive documents, and was able to overturn nearly all of the copay discrepancies alleged by the PBM.
PBM Audits and Payment Withholdings
PBMs often attempt to use routine audits as a tool to seek unwarranted recoupment of funds from their contracted pharmacies. As such, and as was the case in this matter, PBMs regularly identify unwarranted discrepancies and place the onus on the Pharmacy to submit documentation in line with the stringent requirements imposed by PBM Provider Manuals to overturn the discrepancies. Thus, even when the alleged discrepancies do not actually exist, PBMs will refuse to reverse the purported discrepancies without the precise documentation it requires—documentation that may not even be accessible to pharmacies in certain situations. Due to strict PBM supporting document requirements, it is critical that pharmacies adhere to proper document retention policies and procedures specifically designed to ensure the pharmacy maintains the necessary records to overturn unjustified PBM discrepancies.
In addition, as exemplified through this case study, PBMs will often withhold payments owed to pharmacies during an ongoing audit, regardless of the accuracy of the alleged discrepancies. In doing so, they may place the pharmacy on an indefinite payment withholding, usually until initial audit findings are released or the discrepant amount has been fully recouped. More troubling, this case also illustrates the common PBM practice of withholding funds far in excess of the amount at issue. Withholding funds can have dire consequences for a pharmacy. Thus, as is being done in this matter, once an audit finding is reversed and the PBM no longer has any basis to withhold payments from a pharmacy, the pharmacy must shift its focusing to demanding the PBM promptly return all wrongfully withheld funds.
How Frier Levitt Can Help
Regardless of the size of your pharmacy or the amount at stake, Frier Levitt is ready and able to assist you in successfully challenging PBM abuse of your pharmacy. Our life sciences attorneys are prepared to provide guidance as your pharmacy prepares for audits as well as take an aggressive approach to fight for your rights following a PBM audit. If you have questions or need help fighting adverse PBM actions, contact us to speak to an attorney.
