Pharmacy Benefit Manager (“PBM”) tactics are well known in the pharmacy industry: unsustainable levels of reimbursement; opaque business structures enabling retention of hidden cash flow; and, maybe most significant for independent pharmacies, abusive audit practices. While the main purpose of a PBM audit is to confirm the validity of claims submitted by a pharmacy for reimbursement, PBMs often use audits of their network pharmacies as an alternative revenue stream, syphoning funds from small businesses into their own pockets. When it comes to long-term care (“LTC”) pharmacies, this reality remains the same and, like retail pharmacies, LTCs must be prepared to address PBM audits, respond to audit requests, and contest unwarranted audit findings. Such preparedness demands proactive measures, including awareness of prevalent PBM audit trends and routine discrepancy types alleged by PBMs so that they are aware of what documentation they must retain to verify a specific claim when their PBM comes knocking.
Trending Issue #1 – Establishing Patient Receipt of Medication
While there are many components of prescription validity that pharmacies should keep in mind when preparing for or responding to audit requests, one component PBMs often assess during these audits seems simple enough to establish – receipt of the medication by the relevant patient. For retail pharmacies, this can be easy enough to prove. A written attestation from the patient confirming that they either picked up their medication from the pharmacy directly, a signature obtained at the point-of-sale, or even a delivery confirmation can establish that the prescriptions dispensed and billed by a pharmacy were received by the patient. However, because of the nature and manner of the services they provide, LTC pharmacies have unique challenges in proving patient receipt.
LTC pharmacies typically provide medications to patients who reside in facilities where they are receiving long-term treatment, such as nursing homes, skilled nursing facilities, or rehabilitation facilities. Therefore, long-term care pharmacies deliver medications for their patients to these facilities, rather than directly to the patients themselves. Once a long-term care pharmacy delivers a patient’s medication, the facility is responsible for not only dispensing but often times, administering the medication to the patient directly. As a result, patients in these long-term care facilities may even assume that their prescriptions are coming directly from the facilities themselves and are not aware of the fact that the medications were actually provided to the facilities from outside pharmacies. Therefore, during a PBM audit these patients may indicate that they did not receive a medication for which a claim was billed by the pharmacy that actually dispensed the medication, which in turn results in the issuance of adverse findings against the dispensing pharmacy. In these circumstances, it is crucial that pharmacies can provide evidence that the medication was not only successfully delivered to the facility, but also that the medications were received by the patient. While long-term care facilities do keep medication administration records (i.e. MARs) to track the medications given to patients, pharmacies do not typically have access to these records. Therefore, it is important for pharmacies to confirm ultimate patient receipt of the medications they dispense by way of the facilities’ confirmation or by way of request of access to MARs. Of note, if there are multiple pharmacies that service a particular facility, it is possible that only the “primary” pharmacy provider’s dispensing information is logged in an MAR. Pharmacies who service patients at such facilities should make sure they are maintaining accurate documentation and records, and importantly, maintain a written agreement with the facility they are servicing to access relevant information or records in audit situations.
Trending Issue #2 – Inspection of Patient Residence Codes
Frier Levitt attorneys have also learned of a recent trend where major PBMs are scrutinizing the Patient Residence Code (“PRC”) included in claims billed by LTC pharmacies. Some insurance plans, including government funded plans like Medicare Part D, require the PRCs, which indicate where the patient was living when the prescription was filled. However, guidance on which PRC applies to a given claim is sparce, and exposes LTC pharmacies to claim rejection or recoupment when an incorrect PRC is submitted. For instance, industry experts have indicated that improper use of PRCs is increasing, particularly as it relates to PRC 04 (designated for patients residing in Assisted Living), and that PBMs are beginning to take notice.
In fact, Frier Levitt is aware of at least one major PBM that has issued an “LTC and Home Infusion Pharmacy Qualification Checklist” that accompanies a notice of audit to dozens of pharmacies across the country. The Checklist is intended to ensure that only qualified LTCs (as opposed to LTCs that are more aptly suited under another designation such as community or retail pharmacy) are submitting LTC claims and that when such claims are submitted, amongst other things, that the proper PRC is utilized. Failure to meet the requirements of the Checklist could lead to recoupment of funds during an audit of your LTC pharmacy. LTC pharmacies must be cognizant of what requirements must be adhered to for continued classification as LTC, as well as what limited guidance is available to determine which PRC is required for a given claim.
How Frier Levitt Can Help
If your pharmacy is undergoing an audit or has recently been issued audit results against a PBM which require the submission of medication administration records from prescribers or question the PRC submissions for claims, Frier Levitt attorneys can help. Contact us to speak with an attorney today.
