Pharmacy Alert: Preparing for PBM End-of-Year “Housekeeping”

As we begin to enter the holiday season, pharmacies need to be cognizant that not everyone is eager to dive into the holiday spirit. Indeed, for pharmacy benefit managers (“PBMs”), the holiday season is merely the starting point of year-end “housekeeping” where PBMs’ actions against their network pharmacies ramp up, including network suspension and termination.

During the housekeeping phase, PBMs review a pharmacy’s audit history dating back multiple years and rely on multiple, small audit findings to justify a network termination. It is often the case that pharmacies allow PBM audit findings to go uncontested due to smaller recoupment amounts. Even if a PBM audit does not result in adverse action beyond the recoupment of monies from the pharmacy, PBMs keep track of their network pharmacies’ audit histories and routinely rely on these audit histories near the end of a calendar year to issue notices of termination. PBMs review the pharmacy’s credentialing/re-credentialing application to find any discrepancies that exist between the applications, which in turn, can be an independent basis of network termination. Moreover, PBMs will monitor the pharmacy’s practices more closely to confirm whether the pharmacy’s operation is in line with standards set forth in the PBM’s Provider Agreement/Manual (e.g., shipping/mailing prescriptions in a retail pharmacy network, exceeding the threshold of Aberrant Quantities and Volume List). Also, in instances where the PBM discovers the government may impose or has already imposed discipline against the Pharmacy, PBMs will use this information to terminate a pharmacy from its network during end-of-year housekeeping.

The aforementioned information begs the question, “What can pharmacies do to prepare for end of year housekeeping?” As a threshold matter, it is critical that pharmacies contest PBM audit findings to the fullest extent—even if the PBM seeks to recoup only a seemingly insignificant amount of monies. It is imperative that pharmacies are aware of the tools and resources that can be utilized to prepare for and combat PBM audit findings. For example, every PBM maintains a contractual audit appeals process that allows pharmacies to submit additional documentation to overturn the alleged discrepancies contained in PBM audit findings. Likewise, many states have enacted legislation in the form of “Fair Audit Laws” to grant protections to pharmacies facing PBM audits.

In addition to contesting audit findings throughout the year, pharmacies should take proactive measures to ensure compliance with PBM Provider Manual and Agreements, as well as all applicable Federal and State laws. For example, as part of routine pharmacy practice, each pharmacy should have detailed policies and procedures that set out a standard operating procedure that complies with applicable Federal and State regulations/laws, as well as PBMs’ terms and conditions. Once these policies and procedures have been drafted, pharmacies should strictly adhere to them as robust policies and procedures drastically decrease the probability of pharmacy non-compliance. As such, by updating the pharmacy’s policies and procedures and/or technology regularly, pharmacies are putting themselves in a better position to avoid PBM audit findings in the first place, and, if audit findings still arise, the pharmacy will at least be in a better position to provide supporting documentation to reverse those discrepant findings in the appeals process.

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 unwarranted PBM actions, including, but not limited to, unsubstantiated audit findings and unjustified terminations. Our life science attorneys have the knowledge and the experience to provide guidance and an aggressive approach to fight for your rights following a PBM audit, or worse, PBM termination. In addition, for a flat fee, our attorneys can create robust policies and procedures, approved by PBMs and government entities alike, that, if followed, drastically decrease the likelihood of PBM adverse actions impacting your pharmacy. If you have any questions or need help fighting abusive PBM conduct, contact us to speak to an attorney.