Millions of Americans across the country are employed by public-sector entities and other self-funded employers, insurers, and managed healthcare organizations (collectively “Plan Sponsors”), who often turn to Pharmacy Benefit Managers (PBMs) for the administration and management of pharmacy benefits. PBMs are tasked, among other things, with maintaining a network of pharmacies and monitoring the pharmacies’ claims through various mechanisms, ranging from routine pharmacy audits to Fraud, Waste, and Abuse (FWA) investigations. Notably concerning, PBMs are using the pharmacy audits as another line of revenue by charging “audit fees” to both pharmacies and Plan Sponsors.
PBMs conduct pharmacy audits on a regular basis either through on-site audits, whereby an auditor physically visits the pharmacy, or through a desktop-audit, where PBMs request documents from the Pharmacy, such as hardcopy prescriptions, signature logs, proof of copayment collection, and invoices for drug purchases. During the process, PBMs charge the pharmacies “audit fees” as high as 20% of the total claim recoupment amount or chargeback. It is not difficult to imagine how a routine audit could cause significant financial damage to a pharmacy. Importantly, it is highly questionable whether PBMs demand the same degree of audit fees from their own/affiliated pharmacies (and even if they do, the audit fees are getting transferred from one pocket to another). Regardless, the audit fees are significantly disproportionate to the “actual cost” of conducting pharmacy audits, especially desktop-audits, which don’t require PBMs to expend any resources beyond that of a typical audit. To make matters worse, PBMs assess audit fees from Plan Sponsors, who may not be aware of the audit fees assessed on the pharmacies. PBMs are engaging in a “double-dipping” revenue scheme, which in turn, raises the total cost of drug spending at the expense of the pharmacies, the patients, and the taxpayers. Plan Sponsors must monitor PBMs and their practices.
If you are a Plan Sponsor entering into a new contract with PBM or experiencing PBM disputes, contact Frier Levitt today. We routinely work with Plan Sponsors to contain drug spending and to help procure radical transparency from PBMs.
