As the year draws to a close, independent pharmacies often face heightened scrutiny from Pharmacy Benefit Managers (PBMs) through intensified audits, Fraud, Waste, and Abuse (FWA) investigations, and (re)credentialing reviews. Year-end oversight by PBMs can lead to unexpected findings, recoupment demands, and even network terminations if pharmacies are unprepared.
With proactive planning and a clear understanding of PBM policies, pharmacies can mitigate these risks. Here’s a closer look at the most common “red flags” pharmacies should be aware of, along with strategies for navigating them.
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Rigorous Audits
PBMs may ramp up their audit activities at year-end, focusing on claims accuracy, billing practices, and compliance with contractual obligations. These audits aim to identify any overpayments or discrepancies, with the potential for significant recoupments. Independent pharmacies may find these audits especially challenging, as the burden of proof often falls on them to justify claim data and provide comprehensive documentation.
Tips for Handling PBM Audits:
- Stay Organized: Keeping all transaction records, invoices, and communications well-organized is essential. PBMs will expect prompt responses to their audit requests.
- Review Common Audit Areas: High-dollar claims and specialty medications are frequent targets in audits. Pay extra attention to these areas in your records.
- Document Everything: Documentation is often the best defense. Ensure records are accurate, complete, and reflect consistent billing practices across claims.
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Increased FWA Investigations
Fraud, Waste, and Abuse investigations can spike at the end of the year as PBMs seek to confirm that pharmacies comply with ethical and billing standards. Even minor inconsistencies can trigger audits, requiring pharmacies to provide extensive documentation to prove compliance. FWA investigations can create added stress and resource demands, especially when pharmacies have limited time to respond.
Tips for Navigating FWA Inquiries:
- Ensure Staff Training: Review FWA compliance procedures with your team, including billing practices and documentation standards.
- Conduct Internal Audits: Proactively review billing practices and claim submissions to ensure compliance with FWA guidelines.
- Prepare Responses in Advance: Establish protocols for gathering required documentation quickly if an investigation arises.
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Rigorous Credentialing and Recredentialing Reviews
As the year-end approaches, PBMs frequently conduct comprehensive reviews of the pharmacies within their networks. These evaluations often involve assessing past audit performances and any history of adverse actions. PBMs may also require pharmacies to complete a “re-credentialing” process, where they must answer detailed questions about ownership structure, business location and hours, affiliations with other pharmacies, and any disciplinary actions from State Boards of Pharmacy or other PBMs.
When completing re-credentialing forms, it is essential for pharmacies to provide accurate, updated information. Equally important is verifying that responses align with the initial credentialing forms, as PBMs typically mandate that pharmacies disclose any significant changes since their initial submission. Any discrepancies or inaccuracies can lead to delays—or even a denial—in the re-credentialing process, potentially jeopardizing the pharmacy’s network status.
Tips for a Smooth Recredentialing Process:
- Double-Check for Consistency: Compare your responses on the re-credentialing form with your original credentialing submission to identify any discrepancies and address them proactively.
- Update PBMs on Changes Promptly: If there have been any ownership or operational changes, make sure these have already been disclosed to PBMs per network requirements.
- Keep Documentation Ready: Be prepared with supporting documents for your responses, especially for questions about ownership, business structure, or past audit findings.
Why Independent Pharmacies Should Be Proactive
PBM audits and investigations can result in significant financial and operational consequences, from recoupment demands to network exclusions. By proactively addressing common “red flags,” pharmacies can better protect themselves from adverse findings and ensure seamless year-end transitions.
Key Steps for a Proactive Year-End Strategy
- Regular Compliance Checks: Reviewing PBM contract terms and ensuring that all compliance measures are up-to-date can prevent issues.
- Consult with Experts: Engage advisors who understand PBM policies and regulations if your pharmacy is dealing with complex audit findings or credentialing challenges.
- Leverage State Pharmacy Audit Laws: Many states have fair audit laws that provide protections for pharmacies during audits. Understanding these laws can be an asset in responding to PBM audits.
In conclusion, this dynamic regulatory landscape necessitates independent pharmacies to stay vigilant and prepared. By addressing these problem areas head-on, pharmacies can navigate year-end PBM scrutiny more confidently and focus on providing uninterrupted patient care.
How Frier Levitt Can Help
If your pharmacy has recently received an audit request or wants to ensure that they are prepared for an audit, Frier Levitt can help. Contact us today to speak with an attorney.
