PBMs don’t always take adverse actions against pharmacies solely based on audit findings. Often, PBMs seek disciplinary actions, such as network termination, over non-compliance with PBM terms and conditions, including the failure to disclosure relevant information about the pharmacy’s licensure, ownership, and other key information. There has been an increasing trend in PBMs seeking network action against pharmacies for failures to report disciplinary actions taken against pharmacies and individual employees, or even exclusion from other PBM networks. Pharmacies should be aware of their obligations as network providers to avoid such adverse action.
PBM Provider Manuals and Agreements require pharmacies to ensure that every aspect of the services rendered is done in compliance with network terms and conditions. They also obligate pharmacies to notify their PBM of certain changes and updates that may have the potential to impact their ability to service their patients. For example, many PBMs require providers to provide notice of any disciplinary action taken against the pharmacy or its employees by any Federal or State agency, such as a State Board of Pharmacy. This is because some disciplinary actions may affect the pharmacy’s ability to operate in good standing, which is particularly true when the pharmacy is under probation or similar limitations by the State Board of Pharmacy. That said, there are many circumstances under which a disciplinary action does not affect the pharmacy’s ability to service its patients.
Whether or not such an action or change to the pharmacy’s licensure actually impacts the pharmacy’s ability to operate may be irrelevant. Often, it is the failure to disclose such actions- not the actions themselves that concerns PBMs. This is particularly true when pharmacies complete credentialing or re-credentialing applications with PBMs and fail to disclose any past, or even pending, disciplinary actions. PBMs will often allege that the failure to disclose any disciplinary actions is a violation of their Provider Manual and/or Agreement and seek network exclusion and termination accordingly. In addition, PBMs may require pharmacies to make notifications regarding other important aspects, particularly ownership structure and key personnel.
Therefore, when doing something seemingly non-consequential such as hiring a new pharmacist-in-charge or moving locations, or as serious as facing disciplinary action by a State Board of pharmacy or another regulatory authority, pharmacies should be sure to check their Provider Manuals and agreements to confirm whether they are obligated to disclose such actions to their PBMs. Pharmacies should also pay careful attention to any requirements regarding how and when such disclosures must be made.
In addition to knowing the type of changes or updates that necessitate a disclosure to their PBMs, pharmacies should also be sure to know the method by which the disclosures must be made, as both the method and timing of disclosure can vary by PBM and by the type of change. As an example, a PBM may require certain disclosures, such as changes in a pharmacy’s ownership structure, before the change takes effect, while the issuance of a Board of Pharmacy disciplinary action or exclusion from a federal healthcare program to be made in writing within five days of its issuance. In fact, some PBMs will require disclosure as soon as a pharmacy becomes aware of any potential disciplinary action. Accordingly, pharmacies should be reviewing their Provider Manuals and Agreements to ensure they are aware of their reporting obligations, particularly for updates relating to ownership, management changes, and disciplinary actions.
How Frier Levitt Can Help
If your pharmacy has experienced any changes, such as an ownership change, licensure issues, or disciplinary action, Frier Levitt’s attorneys can help you understand your disclosure obligations and ensure compliance with PBM requirements. Contact Frier Levitt to speak to an attorney.
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