Copayment collection practices continue to draw heightened scrutiny in pharmacy benefit manager (PBM) audits. Recent audit trends suggest that PBMs are no longer focused solely on whether a copayment was charged. They are increasingly examining whether the pharmacy can substantiate that the copayment was actually collected, whether any waiver was permissible under applicable law and the terms of the PBM provider manual, and whether the pharmacy maintains policies and documentation sufficient to support its practices.
For pharmacies, these issues warrant careful attention, particularly as common operational practices, such as delayed copayment collection, use of patient charge accounts, undocumented financial hardship accommodations, and insufficient payment records, can trigger significant audit exposure.
PBM Copayment Documentation Expectations
PBM audits frequently cite discrepancies alleging that a pharmacy failed to collect the applicable copayment, often requiring the pharmacy to produce documentation expressly confirming that a copayment was not only charged, but was actually collected. Such documentation may include:
- Point-of-sale or register receipts;
- Credit card merchant reports confirming settlement of funds;
- Bank records showing cash deposits;
- Patient account ledgers and transaction logs;
- Patient attestations confirming payment; and
- Documentation supporting payment toward patient charge or “house” accounts.
Accordingly, pharmacies should consider whether their documentation practices adequately support not only the assessment of a copayment, but also the collection and reconciliation of those funds. Robust documentation can be critical both for demonstrating compliance and for defending against PBM audit findings.
Routine Copayment Waivers May Create Regulatory Risk
While PBM provider manuals often restrict waiver of copayments as a contractual matter, pharmacies should also be mindful that improper waiver practices may raise broader fraud and abuse concerns, including under the federal Anti-Kickback Statute (AKS) and analogous state laws. In particular, routine copayment waivers may be viewed as impermissible remuneration intended to induce patients to obtain services from a particular pharmacy.
That does not mean copayment waivers are categorically prohibited. Rather, they must be implemented carefully and in accordance with both applicable law and PBM contractual requirements. This is particularly important in cases involving demonstrable financial hardship. While many PBMs permit hardship-based waivers, those exceptions generally contemplate individualized determinations supported by appropriate documentation, rather than informal or across-the-board waiver practices. At a minimum, pharmacies should consider whether they maintain:
- A written financial hardship policy;
- Objective criteria for hardship determinations;
- Consistent procedures for documenting hardship approvals;
- Supporting documentation maintained in the patient profile or otherwise retrievable; and
- Staff training to ensure the policy is applied consistently.
These safeguards can help mitigate both PBM audit risk and broader compliance exposure. Importantly, pharmacies should have such measures in place before receiving notice of an audit or investigation. This is especially critical because pharmacies that collect copayments after a PBM initiates an audit or investigation are more closely scrutinized.
How Frier Levitt Can Help
If your pharmacy is currently being audited, has received audit findings alleging that copayments were not properly collected, or has concerns that its current copayment collection practices may present compliance risk, Frier Levitt can help. Our attorneys routinely assist pharmacies in defending against PBM audit findings and network terminations, as well as in developing copayment policies and procedures designed to withstand regulatory and PBM scrutiny.
Contact us to speak with an attorney today.
