The outcome of an audit can mean that a pharmacy is required to pay a large sum of money. In order to properly confront an audit of a pharmacy, an attorney should be involved to safeguard the rights of the pharmacy and to negotiate any issues that may arise during the audit. Keep reading to learn what else you should know about a pharmacy audit.
What Exactly is an Audit?
Audits are carried out by pharmacy benefit managers (PBMs), which are third party companies that function as intermediaries between insurance providers and pharmaceutical manufacturers. PBMs utilize audits to monitor a pharmacy’s performance and recover any payments made improperly to pharmacies. Although the stated purpose is to ensure that pharmacies are in compliance with a particular PBM’s terms and conditions, PBMs are notorious for auditing pharmacies with the intent of seeking large recoveries, including a clawback of the entire reimbursement amount paid on a prescription claim in addition to an audit fee proportionate to the recovery amount.
Responding to an audit in an efficient manner is imperative since audits will not only affect the day-to-day business operations of a pharmacy, but they may lead to additional sanctions against the pharmacy including termination from their network.
Audits of prescription records and purchase history generally occur every 2 to 3 years as a standard part of a pharmacy’s participation in a network. Other times, though, some audits occur as a result of the PBM wanting to closely review a pharmacy for a particular issue. These issues can include: when a pharmacy’s dispensing volume rapidly increases, when a pharmacy dispenses a large percentage of medications in one therapeutic category, or even when a pharmacy’s patients reside a relatively far distance from the pharmacy.
Types of Audits
There are several types of audits that may be conducted, and in some cases more than one type of audit will be conducted. The different types of audits include:
Field/On Site Audits: Field/On-site Audits are performed at the pharmacy and involve physical observations, prescription reviews, inventory, and checks for compliance with Medicare Part D regulations and procedures.
Purchase Verification: Purchase Verification Audits review the amounts and NDCs of medications that are submitted by pharmacies from wholesale receipts.
Investigational Audit: A pharmacy is usually contacted by phone or mail and asked to provide photocopies of specific documents and records related to claims paid to the pharmacy during a specified period.
Desk/Mail Audits: Desk/Mail Audits use automated means to review pharmacy claims and encounter data received by the plan or PBM. This type of audit requires the pharmacy to locate prescription records and send them to the PBM.
Prescriber/Member Audits: Prescriber Audits have specific claim information submitted by the pharmacy and is then thoroughly verified by a prescriber/physician to ensure that each party’s records coincide.
Telephone Audits: The pharmacy is contacted by the PBM usually to correct claim billing on a single or small number of claims.
How To Respond to an Audit
When a pharmacy is first made aware of an audit, it is important to review the audit request closely. Pharmacies should pay particular attention to any deadlines identified, any points of contact (such as an auditor), and the information being requested.
When a pharmacy receives an audit request, all of the requested information should be gathered and internally reviewed and documented before being sent to the auditor. It is wise to include an experienced attorney in this process.
If there are any discrepancies or issues after reviewing the information requested by the auditor, the pharmacy, with guidance from its attorney, should gather and provide supplemental information to cure the issue. A knowledgeable lawyer is imperative because they can negotiate and protect the pharmacy’s rights during this time before the issue becomes larger and more costly.
Fair Audit Laws
Protections for pharmacies undergoing an audit are provided by each state’s Fair Audit Laws. Fair Audit Laws may limit the number of prescriptions that the PBM may review, how long a PBM can take before issuing initial and final audit results, and even recoveries on minor, clerical issues. Because audits are complex and the consequences of them can be dire, pharmacies are highly encouraged to use legal assistance when working through the process of an audit.
There has also been a bill introduced in the New Jersey Senate titled “New Jersey Pharmacy Audit Bill of Rights” which seeks to protect pharmacies during the audit process by establishing procedures that auditors must follow during an audit.
The Bottom Line
Pharmacy audits can be intimidating, costly, continue on for long periods of time, and require a lot of hard work and attention to detail (sometimes uncovering details from years past) to get through. Hiring a competent, experienced legal team is the right choice in protecting your pharmacy from the consequences of an audit.
The team at The Law Offices of Robert J. DeGroot has decades of experience defending the law, as well as specialized pharmacy criminal inquiries attorneys who can help. Don’t hesitate to reach out when you receive an audit inquiry, the sooner we have to address it, the more likely a positive outcome will occur.
Contact the Law Offices of Robert J. DeGroot today for more information about pharmacy audit protection. We’re here to help!
