The Fastest Way to Get Audited by a PBM

In today’s ever-changing digital age, more and more human processes are being replaced by computers, with pre-coded algorithms, and now, through artificial intelligence.  These same advancements that have created tools across multiple industries have now enabled pharmacy benefits managers (PBMs) and other payors to mine claims data, and importantly, to flag pharmacies and other providers for audits. 

PBMs are using these tools to automatically detect certain types of pharmacy conduct and claims submission practices, which if engaged in by pharmacies, can mean an express ticket to an audit. The following are types of activities that PBMs are actively tracking through data mining and claims review algorithms.

• Aberrant Product Dispensing – Several PBMs have designated certain products as being “aberrant” or otherwise “non-preferred.”  These could be products specifically identified by the PBM, or simply products that are not listed on core formularies for the PBM.  These products typically are higher cost drug products (or drug products that have high margins), and which have low clinical value (as determined by the PBM).  PBMs monitor the dispensing of these products, and when a provider has dispensed aberrant quantities of a product or a disparate volume of claims within a therapeutic category (e.g., topicals, dermatologicals), as measured by number of claims, quantity dispensed and/or dollars, the PBM will institute an audit.  The PBM may also track a pharmacy’s dispensing of products by manufacturer, and when the PBM determines that the pharmacy’s dispensing patterns have a higher share of a particular manufacturer’s products compared to other pharmacies, the PBM may trigger an audit or further investigation into the pharmacy’s relationship with that manufacturer.
• Test Claims – Many PBMs have focused on activities involving test claims.  This is typically uncovered when the PBM sees that the pharmacy has submitted a claim, then quickly reversed it.  This is viewed especially poorly by PBMs when it involves submitting test claims with no subsequent paid claims (also known as “negative claims”) and/or without an actual prescription in hand from a patient or prescriber.  The PBMs view this as disregarding a patient’s private and confidential information, and when it is identified through data mining, the PBM will initiate an audit.
• Allowing Another Pharmacy to Submit Claims on Your Behalf – Again, going back to the trove of digital data found in every claims’ submission, PBMs have begun to flag claims where it has been determined that the pharmacy allowed another entity (including another pharmacy or a hub) to use its NPI number, NCPDP number, software certification ID, or other identifier to submit a claim (including a test claim) to the PBM.  PBMs have specifically uncovered this when they have seen claims come through on the pharmacy’s behalf under one software certification ID which differs from the software certification ID maintained by the pharmacy on other claims being submitted by the pharmacy.  This has also happened when the initial test claim and subsequent reversal occurred through one software certification ID, only to have a second claim submitted under a separate software certification ID (albeit the same NPI and NCPDCP number).  The PBMs have maintained that claims submission must utilize the NPI/NCPDP number of the pharmacy that gives or delivers the product to the patient.
• Outsourced Copay Collection – Certain PBMs have also prohibited outsourcing the collection of copays.  PBMs view this activity as an extension of efforts to facilitate higher-cost products being billed to patients and have mandated that all collection of copays must occur at the pharmacy’s location, and cannot be performed by another entity (e.g., a hub).  When the PBM discovers that a particular manufacturer has structured a hub to facilitate copay collection on pharmacies’ behalf, it will proceed to audit other pharmacies with significant claims volume for that manufacturer’s products.
• Hub Participation – While hubs have become commonplace in many areas (including specialty pharmacy), not all have been viewed favorably.  In fact, PBMs have specifically targeted pharmacies participating in hubs or other actions, programs and/or business models that result in the selection and dispensing of products that increase the amount billed to the PBM, plans or patients.  These types of activities typically involve one or more of the foregoing elements, but they may be done by one or more other parties.  For example, certain manufacturers hire marketing teams to encourage doctors to write prescriptions for their product, and then cause those prescriptions to be sent to a handful of specifically identified pharmacies (sometimes this is accomplished through a hub, as well).  When the PBMs see an overwhelming number of claims coming from just a handful of pharmacies, it is certain to lead to an audit.

As algorithmic tools and AI become more powerful, pharmacies can expect PBMs’ to become more efficient in their ability to automatically flag claims and pharmacies for audit.  Fortunately, however, there are many steps pharmacies can take to mitigate their exposure and pass audits, or even avoid them altogether.

How Frier Levitt Can Help

If your pharmacy has engaged in any of these practices or received an audit tied to any of them, please contact Frier Levitt to speak with an attorney on the matter.