Independent pharmacies know the drill. A Pharmacy Benefit Manager (“PBM”) sends a request for records or notice of audit. The pharmacy responds to a request for records. The PBM sends unwarranted audit findings and recoups money from said pharmacy. It’s a tale as old as time.
Recently, Frier Levitt attorneys Dae Y. Lee and Adam C. Farkas, whose practices focus on representing pharmacies dealing with abusive PBM actions, assisted four pharmacies across the country in successfully appealing audit findings issued by three large PBMs. A review of these matters makes clear that PBM audits are becoming more aggressive, with PBMs identifying discrepancies and seeking chargebacks with little or no basis whatsoever. In some instances, PBMs patently ignored documentation until Frier Levitt attorneys stepped in. More importantly, these outcomes highlight the importance of contesting any and all PBM audit findings. PBMs hope pharmacies simply accept their allegations, allowing PBMs to recoup potentially significant amounts of money from the pharmacy regardless of the legitimacy of the alleged discrepancies. Pharmacies cannot give PBMs what they want and simply lay down when confronted with adverse PBM audit findings. Pharmacies must push back and break the abusive PBM audit cycle.
Case Study #1 – 100% Reversal of Audit Findings for Arizona Based Pharmacy
In the audit findings, a major PBM primarily alleged two discrepancy types: (1) drug invoice shortages; and (2) shipping into states where the pharmacy was not licensed. For each discrepancy, prior to our attorneys’ involvement, the PBM ignored documentation provided by the Pharmacy that irrefutably disproved both discrepancies. Specifically, regarding the drug invoice shortage discrepancies, the pharmacy provided purchase histories showing that it purchased the relevant product, but in a different package size. The package size did not change the fact that the products were otherwise identical. Once our attorneys highlighted this fact, all inventory shortage allegations were reversed. With respect to the allegations that the pharmacy shipped products into states where it did not have state licenses, the pharmacy had previously submitted proof of deliveries showing that each prescription was shipped to an Arizona address (i.e., within the pharmacy’s home state). While the relevant patients ’insurance information listed addresses in different states, these patients received their medication following a recent move to Arizona or during elongated stays within the state. The PBM received the relevant shipping information establishing that all claims were shipped and received within Arizona, but not until Frier Levitt attorneys stepped in was the PBM willing to reverse the unfounded discrepancies.
Case Study #2 – Roughly 96% Reversal of Audit Chargeback for Texas Pharmacy
Our next case study focuses on a major PBM’s assertion of drug invoice shortage discrepancies before even reviewing the pharmacy’s complete set of purchase records. The PBM knew that it had not received purchase histories from all of the pharmacy’s vendors, but decided to issue initial audit findings anyway. Once our attorneys received the relevant purchase records and argued that the pharmacy’s purchases far exceeded the quantities dispensed, the PBM reversed all inventory shortage allegations leaving less than $1,000.00 remaining at issue.
Case Study #3 – Reversal of Nearly $300K Worth of Discrepancies for PA Pharmacy
In another instance involving unwarranted drug invoice shortage discrepancies, a Pennsylvania pharmacy received audit findings that alleged significant inventory shortages. Here, the audit findings were the result of the pharmacy’s software vendor’s refusal to submit a drug utilization report directly to the auditor. The auditor claimed that it could not perform the invoice reconciliation without receiving a drug utilization report directly from the pharmacy’s processor. Not only is this type of request exceptionally rare, it is also untrue, as PBMs possess their pharmacies’ claims histories. As a result of the auditor’s illegitimate claims, the dispensing report provided by the pharmacy was not accepted until Frier Levitt attorney’s challenged the auditor’s position and resubmitted the dispensing report along with all relevant purchase histories. Following our attorneys’ submission of the pharmacy’s appeal response, the auditor reversed nearly $300k worth of drug invoice shortage discrepancies.
Case Study # 4 – 96% Reversal of PBM Audit Findings for Utah Pharmacy
Finally, Dae Lee and Adam Farkas assisted a Utah pharmacy in reversing 96% of a major PBM’s audit findings which identified numerous different discrepancies, including: (1) missing signature logs; (2) lack of specific directions for use; (3) directions for use on computer record do not match the prescription; and (4) prescription contained incomplete quantity. With respect to the missing signature log allegation, the claim at issue was filled over six years prior to the audit – a violation of applicable state Fair Audit Laws. In addition, the PBM’s own auditor reviewed the relevant signature log and left a handwritten annotation stating the patient’s signature was present, but faded when the document was scanned. Despite these facts, the PBM attempted to recoup funds from the pharmacy. Utilizing the law as well as guiding the pharmacy to compile documents responding to each of the discrepancy types, Frier Levitt attorneys drafted a robust appeal response on the pharmacy’s behalf. Once the appeal and supporting documentation, which included signed prescriber statements on specifically tailored template forms provided by our attorneys, the PBM reversed nearly all discrepancies at issue.
Key Takeaways – Appeal, Appeal, Appeal!
A survey of these recent successes exemplifies the need for pharmacies to contest any and all audit findings. Consistently, PBMs are ignoring responsive documentation and searching for any reason to identify discrepancies – even if that reason must be manufactured – with the hope that the victimized pharmacy will take the audit findings at face value, fail to contest them, and willingly allow the PBM to recoup funds. These types of abusive PBM practices can only be addressed by pharmacies’ willingness to stand up to PBMs– to fight back. In doing so, pharmacies not only protect their business from chargebacks and potentially more serious PBM actions, but also help prevent the aggressive PBM audit cycle from continuing.
How Frier Levitt Can Help
Regardless of the size of your pharmacy or the amount at stake, Frier Levit is ready to assist you in challenging PBM abuse of your pharmacy. Our life sciences attorneys are prepared to provide guidance as your pharmacy prepares for PBM audits and take an aggressive approach to fight for your rights following adverse audit findings or other PBM action. If you have questions or need assistance combatting adverse PBM actions, contact us to speak to an attorney.
