Navigating the Changing Tides of PBM Audits: A Forecast and Strategy for Independent Pharmacies

Pharmacy benefit managers (PBMs) have exerted significant influence over the independent pharmacies within their networks through rigorous audit processes. These audits, often perceived as aggressive, aim to identify and rectify instances of non-compliance, fraud, waste, and abuse. In recent years, the trend has shown no signs of abating, with PBMs expanding their audit scope to encompass a wide array of operational and financial aspects within pharmacies. For example, PBMs have continued to audit pharmacies for their inventory management and prescription documentation, particularly during the course of routine audits, but have expanded their overview into pharmacies’ greater business practices, such as hub relationships, copayment collection, and application of coupons. These activities underscore the necessity for pharmacies to remain vigilant and well-prepared for potential audits. By understanding the nuances of PBM audit strategies, pharmacies can implement proactive measures to mitigate risks of recoupment, payment suspensions, and, in severe cases, network termination.

Proactive Measures for Pharmacies

To navigate the complexities of PBM audits effectively, pharmacies should consider the following proactive strategies:

1. Comprehensive Compliance Programs: Develop and maintain robust compliance programs tailored to address the specific requirements and common pitfalls identified in PBM audits. Such compliance programs should include a regular review of the pharmacy’s policies and procedures against any updates to PBMs’ terms and conditions, often publicized through new updates to their Provider Manuals or “provider alerts” sent via fax, email, or through the pharmacy’s PBM account.
2. Regular Internal Audits: Conduct regular internal audits to identify and address potential areas of concern before they attract PBM scrutiny. It is helpful for pharmacies to identify 1 or 2 individuals in their employee roster, preferably in a management position, to be responsible for conducting regular audits and maintaining a written record of such audits. If there is any oversight identified, it is crucial for pharmacies to implement internal corrective actions to prevent them from recurring.
3. Educate and Train Staff: Ensure that pharmacy staff are well-informed about compliance protocols and the implications of audit findings, fostering a culture of transparency and accountability. Since pharmacy staff are involved in the day-to-day operations of the pharmacy that are often the subject of scrutiny during PBM audits, all pharmacy staff should be trained on the pharmacy’s policies and procedures and be aware of any changes to such policies.
4. Engage Expert Support: Consider enlisting the expertise of legal and consulting professionals specializing in pharmacy compliance and PBM audits to navigate the intricate audit process and respond effectively to findings. It is always helpful for pharmacies to be proactive in securing their business from PBM audit recoveries and terminations.

2024 Early Assessment and the Outlook

In 2024, PBMs have intensified their audit and investigation efforts, particularly focusing on areas they perceive as vulnerable to non-compliance or abuse. This trend is occurring amidst growing legislative pressures at both the federal and state levels that are aimed at curbing PBM practices deemed unfavorable to pharmacies.The audit trends involve more scrutiny on the pharmacy’s billing, filling and dispensing practices, inventory management, copay collection, use of patient assistance programs, and any third-party relationships (ie, hubs, management companies, marketing companies, etc).

Despite legislative efforts to level the playing field, PBMs have been seeking to offset potential financial setbacks by rigorously auditing network pharmacies. This underscores the importance for pharmacies to not only anticipate and prepare for increased audit activity but also to engage in advocacy and dialogue with legislators and industry stakeholders to foster a more equitable health care system.

Conclusion

The relationship between independent pharmacies and PBMs is at a critical juncture, with audit practices and regulatory landscapes rapidly evolving. By staying informed of audit trends, adopting proactive compliance strategies, engaging in collective advocacy, and understanding any administrative appeals process and legal tools available to them, pharmacies can navigate these challenges and secure a more stable and prosperous future.

About the Authors

Dae Y. Lee, PharmD, Esq, CPBS, is a pharmacist attorney in Frier Levitt’s Life Sciences Group and co-chairs the Plan Sponsor Practice Group. His practice focuses on pharmacy operations, Plan Sponsor operations and compliance, and PBM regulations. He advises clients in a wide range of matters including insurance and PBM audits and termination, wrongful recoupment, wrongful network exclusion, and governmental investigations. Dae is a CPBS (Certified Pharmacy Benefits Specialist), which is a certification designed to cover complex topics of pharmacy benefit management to provide a foundational knowledge required for higher-level evaluation of PBM business operations and advanced evaluations of PBM business operations.

Harini Bupathi, Esq, is a partner practicing in Frier Levitt’s Life Sciences Group. Her practice focuses on counseling pharmacy providers on their relationships with PBMs and other similar payors. She advises clients in a wide range of PBM-related matters including network access, audits, termination, wrongful recoupment actions, and fraud, waste, and abuse investigations. Bupathi utilizes her knowledge and experience to counsel on strategies and best practices to avoid any adverse action from payors and PBMs.