Health Law Alliance provides an overview of the PBM audit process and relevant background for providers who suddenly find themselves facing arbitrary recoupments and potentially devastating network consequences. PBM audits are not random or happenstance, and providers must understand the role of Special Investigative Units (SIUs) and the potential for broader liability beyond the audit itself to successfully manage these risks.

If you have received a PBM audit and have concerns about why you are being audited and potential consequences, you have come to the right place. We have created a free PBM Audit Guide resource to help providers begin to understand the sequence of events that takes place before, and after, an audit. The most important thing to keep in mind throughout the process is that you are not alone. We have been involved in thousands of pharmacy audits, and providers across the country are dealing with the same questions and scrutiny that you are facing. Health Law Alliance endeavors to serve as a uniting force for all providers who have been targeted by spreading information, including this guide, on the inside workings of PBMs and strategies for fighting PBM audits successfully.

Pharmacy Audit

At a high level, PBM audits signal the first step in what can be an evolving and very problematic process. Someone has been watching you. That "someone" is a PBM with a very sinister motive: it wants to take back your hard-earned money using arbitrary standards so that it, and its plan sponsors, can make tons of money. If any of the audited claims lack sufficient documentation -- in the PBM's unilateral determination -- the PBM has the power under its provider manual to terminate the pharmacy from its networks. Even more, after it recoups on whatever claims it decides are discrepant, the PBM may refer you to law enforcement for further investigation in an effort to prevent you from fighting back for your money. And even when a PBM audit can be settled, the PBM may allocate the settlement to the claims that generate the most margin for it and its corporate parent, leaving you empty handed when a government payor asks to be repaid on those claims.

In short, if you don't understand the PBM audit process as deeply as you understand pharmacy, you should consider hiring a healthcare defense specialist to assist. In Part Two of our PBM Audit Guide, we will outline a number of considerations that go into that calculus. But first, we discuss in slightly more detail below the key considerations noted here.

The Role of Special Investigative Units (SIUs)

First, PBM audits are not conducted at random. All of the major PBMs and payors employ "Special Investigative Units," often referred to as SIUs, that are typically staffed with former federal or state law enforcement officers. Investigators in these SIUs use fairly sophisticated data analysis and mining tools to identify "outliers" based on a variety of metrics.

A simple metric would be to flag a large number of high-reimbursing products, but certain SIUs have the capability to perform much more detailed data and claims analyses, including cross-triangulation between medical and pharmacy benefits. The use of artificial intelligence (AI) has enabled SIUs to perform these data monitoring exercises across much larger data sets and obtain results far more rapidly.

This means if a particular physician is "flagged" for potential overutilization, scrutiny can spread to pharmacies at which that physician's prescriptions are being filled, as we have noted in our article, “Federal Investigation for OTC Cards is Expanding,” available HERE. This scenario should serve as a reminder to exercise care and caution in selecting your business partners. Likewise, telehealth providers often bring the scrutiny of PBMs due to the high number of prescriptions and dollar amounts at issue.

PBM Audits May Signal Broader Liability

Second, providers must understand that PBM audits are often the tip of the iceberg, and broader liability may follow. As discussed above, it is critical that providers attempt to gain insight into how the PBM audit came about.

For example, is a referral source under investigation? Have patients complained about telemarketing? What is the nature of the provider’s business and how does that intersect with so-called “hot” enforcement zones?

PBM referrals to federal or state regulators are often highly dependent on the underlying audit findings, but Medicare and Medicaid delegates are obligated to refer certain types of cases. In addition, law enforcement has become far more effective in its relationships with the private sector leading to referrals, and that is all the more reason that all of the PBMs hire former law enforcement, including FBI and OIG special agents, to work in their SIUs.

PBM Audit Settlements Need to be Structured Correctly

Finally, given the potential referral of PBM audit issues, settlements can be complicated. For example, if you settle a PBM audit, how can you be sure that the issue is resolved completely, and will not be the subject of later complaints or investigations?

In addition, PBMs are incentivized to allocate recoupments to claims that benefit their "clients," a/k/a corporate parent plan sponsors, the most. Accordingly, if an audit sample includes both government and commercial claims, the PBM likely will attempt to allocate any settlement to the commercial claims first. Similarly, even where the PBM is contracted to manage government claims, it often will allocate any recoupment to the managed care government plans sponsored by its corporate parent before straight FFS government claims.

What does this mean for you? Our point is that, if there has been a referral, you will not know about it. You will only find out, potentially months or even years later, when the government issues a subpoena or starts interviewing patients or physicians. Accordingly, if the PBM did not repay the government claims in the context of your PBM audit settlement, the consequences for any subsequent government investigation are potentially more severe.

HLA Specializes in PBM Audit Defense

Accordingly, in the event of a PBM audit, it is never too early to consult with experienced healthcare defense attorneys before options become more limited as the audit progresses. Here, at Health Law Alliance, as former federal and state prosecutors, we have helped PBM audit clients avoid criminal charges and exclusion sanctions through timely remedial action. We offer free consultations and are available nights and weekends to help alleviate your most pressing concerns.

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