It is common, if not, expected, that participation in PBM networks will subject pharmacies to audits. During these audits, PBMs will review a number of claims submitted by a provider during a specified period of time. Although the purported reason for these audits is to ensure pharmacies’ compliance with the terms and conditions of their Provider Manuals, PBMs often use these audits as an opportunity to recoup the amounts already reimbursed to their providers. All too often, PBMs will cite the alleged non-compliance with their Provider Manuals as a basis for large “clawbacks”, despite otherwise valid provisions of pharmacy services by their providers.
Pharmacy Benefit Managers regularly perform audits on the pharmacies participating in their network under the guise of protecting its members from fraudulent and wasteful claims. In actuality, however, these audits serve no other purpose other than recoup the amounts already reimbursed to their providers, citing alleged non-compliance with the strict provisions of their own provider agreements to delegitimize the services that were otherwise validly provided to its members. Despite the fact that they seem to be facing a higher degree of scrutiny from a regulatory perspective, PBMs have become increasingly more particular with respect to the audit documentation they will accept. Therefore, it is even more important for pharmacies to be aware of the types of documents that PBMs are looking for during audits in order to avoid and combat any attempts at unjust recoupment.
Inventory
Invoice and NDC reconciliations are a common occurrence during PBM audits. In order to confirm the legitimacy of the claims billed by their pharmacies, PBMs will compare the quantities of drug products, often on an NDC-level, for which pharmacies submitted claims against the purchases made by the pharmacy during the relevant time period. Ideally, the quantity purchased should be the same if not greater than the quantity billed and dispensed during the audit period. However, PBMs often cite discrepancies between the quantity purchased by the pharmacy and the amount for which they billed and were reimbursed as a basis for recoupment.
While an inventory shortfall can be caused by pharmacies’ failure to purchase enough quantities of a drug product to support the amount dispensed, the appearance of a shortfall can also be caused by PBMs’ own refusal to consider all relevant purchases based on a seemingly minor violation of their terms and conditions. For example, despite the fact that pharmacies often dispense medications from pre-existing inventory, some PBMs will not consider purchases made more than thirty (30) days prior to the audit period or place other restrictions on their ability to make bulk purchases that limit the purchases that the PBM will consider during their reconciliations. Therefore, even when a pharmacy has provided an invoice demonstrating the purchase of a relevant drug product, a PBM may refuse to consider that quantity in their reconciliation and therefore allege a shortfall.
In these circumstances, pharmacies should be sure to keep detailed purchasing records, but also dispensing logs that track the quantity retained by the pharmacy the audit period is sufficient to account for the “missing” quantity identified by the invoice reconciliation. In addition, pharmacies should ensure that they are appropriately sourcing their medications from wholesalers permitted to be used by the PBM under their relevant provider agreements and manuals. While it is common practice for pharmacies to obtain inventory from other pharmacies as needed, these arrangements often do not generate invoices and are not properly documented by either party. Therefore, pharmacies should be sure to keep a record of any and all transactions between themselves and other pharmacies in accordance with the terms and conditions of the PBMs.
Member Denials
A common prescription-specific discrepancy identified during PBM audits is member denial. These discrepancies arise where the PBM has reached out to its members to confirm the validity of the claim, which often requires recollection of the member to provide information for prescriptions dispensed over a year prior in some instances. As a result, members are often unable to recall requesting or receiving their medications from the pharmacy, or the copayment they remitted upon their acceptance of their medications. Although unintentional, members may give false denials, which PBMs eagerly use in order to seek recoupment. While written attestations are helpful, unfortunately even in cases where PBMs receive such explicit confirmations from their members, PBMs often cite their own subsequent communications with members following the submission of such attestations as a basis to refuse to amend the relevant discrepancies. Therefore, it is crucial for pharmacies to keep records of their interactions with patients and prescribers in order to dispute these denials as they are alleged. While documentation requirements vary across PBMs, there are certain documents that pharmacies should be sure to maintain in order to be able to dispute these types of discrepancies. For example, providers should be sure to maintain a copy of the patient’s signature log as clear evidence of their acceptance and receipt of the medication, or a record of the tracking number indicating delivery to the relevant address where the medication was delivered directly to the patient’s home.
Copayment
PBMs will often also request proof of copayment during the course of an audit, or will inquire with patients as to whether they remitted a copayment. In order to demonstrate that copayments were collected as required, pharmacies should be sure to maintain copies of the receipts generated at point-of-sale. These receipts should clearly indicate the patient’s name, prescription number, the date of the pick-up or delivery, and the payment method used during the transaction. For example, where a credit card is used, pharmacies should be sure that their point-of-sale system keeps a record of the last four digits of the credit card. Where a member pays with a check, the pharmacy should be sure to retain a copy of the front and back of the check for their records. Even where members pay with cash, pharmacies should be sure to keep track of the cash deposited into their own bank accounts in order to demonstrate the collection of the copayment to PBMs’ satisfaction. However, some PBMs also require that pharmacies maintain additional documentation in support of a patient’s remittance of copayment, and to that end, pharmacies should review their provider agreements and manual to ensure that they maintain the required documentation.
Prescribers Denying Authorization of Prescriptions
In order to confirm that pharmacies are satisfying their obligation to confirm the validity of prescriptions prior to dispensing, PBMs will often confirm the authorization of prescription numbers with the underlying prescriber during an audit. However, pharmacies often suffer the consequences of physicians’ poor record keeping or faulty memories. Therefore, pharmacies should be sure to maintain copies of electronic and fax prescriptions as they are received. If a pharmacy receives a verbal prescription authorization via telephone, pharmacies should be sure to document the details of the interaction and request a hard copy of the order for its records.
How Frier Levitt Can Help
Whether you are currently undergoing an audit or in the process of appealing preliminary or final results, Frier Levitt can help you coordinate your efforts to obtain responsive appeal documentation, as well as prepare a substantive response to the discrepancies alleged by your PBM. Contact us to speak with an attorney today.
