Pharmacy Benefit Managers (PBMs) And Pharmacy Auditing

Tuesday, June 14th, 2016

Pharmacy benefit managers (PBMs) are the companies that work between insurance companies and pharmacies in the healthcare industry. PBMs play a large role in the world of healthcare, producing seventy percent of all medical prescriptions, which amounts to over six billion prescriptions every year. PBM companies make over 120 billion dollars a year processing prescriptions, operating mail-order pharmacies, and negotiating rates between pharmacies and drug makers. Because of the importance of the relationship between PBMs and pharmacies, PBMs will sometimes conduct an audit to verify contracts are being kept. It is important to understand these factors, how to prepare for an audit, how PBMs conduct audits, and what happens after an audit.

The relationship between PBMs and pharmacies

Modern pharmacies cannot do business without interacting with large PBMs, so they carefully review all contracts and agreements with the PBMs. A careful review of the contracts may indicate that the terms should be negotiated before anyone signs them.

One example of a common problem between PBMs and pharmacies is the incorporation of the PBMs policy manuals into its contracts. The manuals can end up having the same importance as the contract. Pharmacies that do not fully understand the details of the policy manuals can encounter problems due to their significance. Compounding is one area of healthcare that is often outlined in PBM policy manuals. Due to unfamiliarity with compounding policies, a pharmacy can inadvertently come into violation of its contract with the PBM company. To ensure policies are being followed, contracts usually give the PBM the authority to conduct an audit. The auditing process is typically where the pharmacy and the PBM can come into conflict.

How to prepare for a PBM audit

Pharmacies need to be prepared for audits well before a PBM requires one. Being prepared for an audit will ensure the pharmacy is in compliance with its contracts and will also make the audit process easier.

All agreements, contracts, and policy manuals should be kept in one location. The documents should be carefully reviewed to ensure the pharmacy is in compliance with them. Ignorance of the agreement or policies does not protect the pharmacy from its obligations. Any questions about an agreement with the PBM should be asked and answered in writing.

The PBM will conduct an audit for a number of reasons. Some audits are conducted randomly to ensure compliance with policies. Other audits are triggered if claims analysis indicates a need. Still, other audits occur upon the request of clients. The pharmacies that are most likely to have discrepancies are going to be audited.

How an audit is conducted by a PBM

The pharmacy will usually receive a letter from the PBM indicating that an audit is scheduled. Once the letter is received, the pharmacy needs to prepare. The agreement and policy manuals should be reviewed to determine the exact rights the auditor has.

A pharmacy representative should contact the auditor to determine basic information. Basic information about the audit includes when the audit will occur, how long it should last, and what kind of audit it will be. Pharmacies should also ask what procedures will be used during the audit and why it is being conducted. Having this basic information will help the pharmacy prepare for the audit.

One person from the pharmacy should be assigned to deal directly with the auditor throughout the entire process. The designated person should be a pharmacist or officer of the pharmacy and should have no distractions while the audit is being conducted.

The auditor should not be provided free access to the pharmacy or its records. The auditor can request files and the pharmacy representative can make those records available. If the auditor wants copies made, a duplicate set should be made for the audit file. All employees should be told to send questions to the pharmacy representative and not answer any questions the auditor may have. All concerns and questions posed by the auditor should be noted by the pharmacy representative.

At the end of the audit, all concerns raised by the auditor should be reviewed for clarification. No follow-up commitments should be made without careful review by pharmacy management and owners. If the auditor contacts the pharmacy after the audit with further questions, those calls should be directed to the designated pharmacy representative. Calls should be transferred even if the auditor asks to speak with someone else directly.

After the PBM conducts the audit

Once the audit is done, the auditor should issue a report and send a copy of it to the pharmacy. The report will outline what the auditor found and whether the PBM will request recoupment. Those requests for recoupment can be appealed and disputed by the pharmacy.

If your pharmacy is dealing with any PBM issues, it is in your best interest to have an experienced attorney close at hand. Contact the attorneys here at Brown & Fortunato in Amarillo to see how our Healthcare team can help you. You can reach us at (806) 345-6300 or stop by our offices at 905 S. Fillmore, Suite 400. You can also Contact Us by email with your question and concerns.

This information is subject to change. Please check for updates that are more recent than the published date of this article.