PHARMACY ALERT: Importance of Disclosing Accurate Ownership Information to PBMs

Pharmacy Benefit Managers (PBMs) routinely request that pharmacies submit credentialing and re-credentialing applications, which require pharmacies to provide complete ownership information. In addition, PBMs require that pharmacies identify any other pharmacies that might have common ownership and even other pharmacies owned by family members. There has been a recent increase in pharmacy providers being terminated or subjected to audits for concerns of common ownership or affiliation that was not disclosed during the credentialing or re-credentialing process. In particular, there is a growing trend of PBMs subjecting pharmacies to such audits or potential termination when they might share ownership or affiliation with another pharmacy that had significant audit findings or was previously terminated from the PBM’s network.

According to many PBMs, common ownership and affiliation can include any a host of relationships. For example, “common ownership” could consist of direct or indirect owners of the pharmacy based on interest percentage. At the same time, affiliation could extend to common employees, such as a Pharmacist-In-Charge, and even a pharmacy technician.

PBMs have terminated pharmacies in which the common ownership structure was not disclosed to a PSAO at the time of credentialing, and the PSAO subsequently reported the ownership information to the PBM. If there is common ownership between pharmacies that should have otherwise been disclosed to the PBM, or one that extends beyond a familial connection (i.e., similar practices, patients, prescribers, drug mix, etc.), there is a lower likelihood of success in trying to demonstrate that the pharmacy should not be compared to the previously terminated pharmacy, mainly if the audit results are similar.

It is important that pharmacies disclose their ownership structure upon initial credentialing and re-credentialing with a PBM. Suspected common ownership can remove the pharmacy from the PBMs’ network or impact a pharmacy trying to credential with a PBM as a network provider. A PBM may state that a pharmacy does not meet the PBMs’ contracting requirements based on common association, ownership, or relationship to another pharmacy. Even more concerning, many PBMs retain the ability to terminate or deny participation to a pharmacy based on common ownership or affiliation with another pharmacy that has had an adverse relationship with the PBM.  For pharmacies that are wrongly terminated due to an alleged common ownership with a pharmacy that was previously terminated,  it is essential to provide the PBM with all documentation disputing the affiliation between the two pharmacies (i.e. underlying transactional documents). In addition, pharmacies should also take proactive efforts to resolve any discrepancies as unresolved findings may lead to termination of not only the pharmacy presented with the audit findings, but also any other pharmacies that maintain common ownership or affiliation.

If your pharmacy received notice of termination due to common ownership/affiliation and requires assistance, contact Frier Levitt to speak to an attorney. Frier Levitt’s attorneys have substantial experience and knowledge in dealing with the specific concerns that PBMs have regarding network access and have assisted numerous pharmacies in overcoming PBM termination issues.