Pharmacy ALERT: Increase in Pharmacy Services Administrative Organizations (PSAOs) Withholding Funds

In a growing trend, we have seen Pharmacy Services Administrative Organizations (PSAOs) recently undertake new efforts to withhold reimbursements due and owing to pharmacies after they have been terminated by one or more pharmacy benefits managers (PBMs).  Specifically, the PSAOs have indicated they are withholding funds from the pharmacy either due to a pending audit conducted by a PBM, or out of concern about future “potential” audits or takebacks by the PBM. However, even in instances where there is an ongoing audit, many PSAOs are withholding funds well in excess of any potential PBM audit findings. Furthermore, payment withholdings have even arisen when a PBM has not issued any negative audit findings and does not have any pending audits.

Even more concerning, when pharmacies try to obtain information from the PSAOs, they are informed that the pharmacy’s agreement with the PSAO allows the PSAO to withhold funds even in anticipation of a potential PBM audit. Further, PSAOs often fail to provide the pharmacies with an explanation of the underlying basis of the excess withholding, whether it be for an outstanding PBM audit or PBM termination. In other words, PSAOs claim they can withhold funds indefinitely at their sole discretion.

Not only can the PSAO withhold funds, but they can also terminate the agreement with the pharmacy under the suspicion that a future withholding or recoupment by a PBM is likely to occur. When a pharmacy tries to discuss this matter with their PSAO, typically, they are not provided with any updates, and the PSAO continues to withhold funds.

How Frier Levitt Can Help

In our experience, PSAOs request assurances from the PBMs indicating that the PBM does not have any future audits of the pharmacy planned or will not recoup additional funds from the pharmacy. In other words, the PSAO wants assurances that the PBM will not saddle the PSAO with the withheld amount if the PBMs intends to claw back additional funds.

However, certain legal and contractual rights do exist for affected pharmacies.  If your pharmacy is faced with issues in which a PSAO is withholding funds, please contact us to speak to an attorney today.

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