All pharmacies operating in the United States are subject to audits by Pharmacy Benefit Managers (PBMs) and governmental payors. There is no denying that these audits are often effective at ensure compliance with federal and state Fraud, Waste and Abuse (FWA) laws. However, one unintended consequence of such audits is that they often provide a windfall to PBMs in the form of unwarranted chargebacks and fees. Often, even the most compliant pharmacies fall victim to errors and miscommunications during audits. Experts at PharmPilot highly recommend engaging in a thorough, independent audit preparation and verification process prior to submitting data to PBMs, as well as conducting continuous pre-audit pharmacy monitoring.
On average, independent pharmacies face audits once a month. In connection with drug invoice shortages audits, most PBMs require that the pharmacy’s wholesalers provide purchase histories directly to the PBM. When purchased quantities do not match submitted claims, PBMs view it as evidence of fraud, waste and abuse. While such conclusions are warranted in some instances, in reality, it is not always clear-cut. There are many variables at play, and odds are stacked against pharmacies. For instance, PBMs often cannot properly account stock-on-hand prior to audit date, returns, inter-store transfers, KOWs, and the like.
One of the most frustrating issues that pharmacies face is inaccuracies and errors in data provided by pharmacy wholesalers in connection with audits. Sometimes, pharmacy wholesalers are no longer in business. Alarmingly, even major wholesalers are less than diligent in providing timely responses. Also common are errors in processing data by PBM auditors.
Several recent examples highlight the need for independent data verification. Recently, PharmPilot, along with our legal partners, assisted a specialty pharmacy with a reversal of audit findings from a major PBM. A major wholesaler submitted erroneous and improperly coded purchase data to the PBM. The PBM processed the data as received, claimed a large shortage, placed the pharmacy on a temporary payment suspension, sent notices of termination to the pharmacy, and started sending patients notifications of the impending termination of their pharmacy. During the post-audit review, PharmPilot conducted an independent purchase data analysis and reviewed the initial audit findings. It became immediately clear that the receiving PBM relied on erroneous data provided by the wholesaler. PharmPilot was able to instantly isolate the issue, and the pharmacy was able to completely reverse the audit finding; however, some avoidable damage has already been done to the pharmacy.
Another pharmacy client of PharmPilot luckily did not fall into the data trap. When the pharmacy’s primary wholesaler sent the data to the PBM, it did not copy the pharmacy on the email. The PBM reached out to the pharmacy and advised them of potential shortages. PharmPilot was able to do a complete analysis of the items that the PBM claimed were short, and it became obvious that the wholesaler did not include purchase data from one of the pharmacy’s account. The wholesaler immediately rectified the issue, sent complete data to the PBM, and the audit was closed before any damage was done.
Unfortunately, such cases are all too common in the industry today. It is the pharmacy’s job to ensure that it has the best chance at a positive audit outcome, and that includes overseeing the conduct of wholesalers and PBMs.
PharmPilot processes the data for you both pre- and post-audit. PharmPilot has developed processes for data analysis and aggregation that allows independent pharmacies to level the playing field when it comes to data. Arm your pharmacy with PharmPilot products to monitor and analyze pharmacies dispensing and purchase data and assist pharmacies with adverse audit results.
Contact PharmPilot to speak with an audit preparedness expert today.