PBM audits and network terminations can result in devastating consequences, including huge recoupments, exclusion from network participation, and even criminal prosecution. Pharmacies must hold PBMs accountable to their legal obligations and provider agreements.
Pharmacy Benefit Manager (PBM) audits can threaten the stability of your pharmacy, impacting both your operations and finances. A prompt, strategic response is critical to protect your pharmacy’s future.
Health Law Alliance represents independent, specialty and compounding pharmacies nationwide in audits by OptumRx, CVS Caremark, Express Scripts, Prime Therapeutics, Humana and other PBMs and payors, from audit preparation through network termination appeals, settlement and any government investigation that follows a PBM referral.
Some clients turn to us when stakes are the highest, when their businesses are threatened, when their license is challenged, and when their options are limited. Many more clients, however, turn to us at the first sign of potential trouble, when we can neutralize the problem before it grows.
We have created this guide as a universal resource for providers, and any legal advice in the context of an attorney-client relationship would be more tailored to your unique circumstances.
To design an effective PBM audit response strategy, providers must understand the chain of events both prior to the initiation of a PBM audit and afterwards. For example, Special Investigative Units (SIUs) are often the genesis of a pharmacy audit, and the presence or absence of “audit risk factors” is informative on potentially broader exposure beyond the claims under audit.
CVS Caremark, OptumRx, and Express Scripts, control at least 80% of the market, making them the three biggest PBMs. Humana also ranks among the largest. In addition, these PBMs regulate access to networks for smaller competitors, such as ESI’s partnership with Prime. Plan sponsors, such as United Health, Cigna and Aetna, are vertically integrated with these PBMs, increasing audit risk for pharmacies because network sanctions are more likely to affect a significant aspect of a pharmacy’s business across both government and commercial claims.
Common types of PBM audits include desk audits; on-site audits; invoice audits; and prescription audits. Irrespective of the type of PBM audit, all interactions with PBMs should be taken extremely seriously and can lead to severe consequences if not handled appropriately. For example, there has been a sharp increase in the federal prosecution of pharmacists for audit-related conduct, including answering PBM questions incorrectly. Accordingly, pharmacies should consider using outside audit counsel to avoid these pitfalls.
Pharmacies can take various steps to prepare to meet PBM audits, including routine self-audits. In fact, the government publishes comprehensive guidance and a checklist to assist pharmacies in their audit planning, including self-audits around prescribing practices, controlled substance management, invoice management, and billing practices. If you need assistance designing or implementing an audit protection plan, please do not hesitate to contact us.
Defending against a PBM audit requires comprehensive knowledge of the rights, responsibilities, and intricacies of pharmacies and their laws and regulations. If your pharmacy has been identified for a PBM audit, there are a number of potential defenses available to you. The first defense against a PBM audit is to be proactive, and audit planning can lessen the chance of unfavorable findings. That said, it is often necessary to involve an attorney to hold PBMs to their obligations under law and provider agreements. For this reason, national audit services and pharmacy audit consultants are often ineffective.
Audit discrepancies and findings can be appealed based on the specific procedures outlined in the provider manuals. It is important to follow these requirements exactly, within the timeframes established, or your appeal rights could be lost and further review denied. In an appeal, it is critically important to make a complete record of why the audit findings or sanctions should be reversed, including through documentation, legal arguments, and corrective actions, if any. Depending on the outcome of the appeal, you may have further legal recourse against the PBM.
Any decision to resolve an audit should be informed and result in a full and final settlement of all liability, but PBM audit settlements need to be structured carefully to achieve this goal.
We offer flexible fee arrangements based on the scope of representation required and audit stage. The earlier we are involved the better, as we can shape and limit audit scope, making legal representation more effective and less costly.
Our attorneys will guide your response from beginning to end, using the law and your provider agreements to defeat arbitrary audit clawbacks.
PBMs and payors use artificial intelligence and data mining across medical and pharmacy claims to identify areas of potential inquiry. Among others, these inquiries typically involve:
PBM audits can have severe repercussions depending on the results of the pharmacy audit, including:
Agency and company marks identify former professional experience of individual HLA team members. They do not imply affiliation, endorsement, or a client relationship.
Learn directly from pharmacy owners that were targeted by PBM audits and referred to government prosecutors: with our assistance, they fought back and won.
PBM audit uncovered 25,000 unit discrepancy of Zegerid and other violations. PBM referred “fraud” to Massachusetts Attorney General’s Medicaid Fraud Control Unit (MFCU). MFCU indicted Pharmacy & Owner on numerous criminal charges, including False Claims & Larceny. After HLA was retained, State dropped all charges before trial and abandoned the prosecution. Owner admitted no wrongdoing and was not excluded; Pharmacy avoided all network sanctions.
PBM audit uncovered $6.5 million inventory shortfall in compound cream active pharmaceutical ingredients (APIs). PBM referred “fraud” to U.S. Attorney’s Office for the Eastern District of Pennsylvania, FBI, and HHS-OIG. After HLA was retained, federal prosecutors declined to bring criminal charges against Owner. Client settled case for $2.5 million, or less than 40% of the government’s claimed loss on claims paid. Owner admitted no wrongdoing, was not excluded, and suffered no licensing or other consequences.
PBM audit uncovered $600,000 inventory shortfall in brand and generic medications. PBM referred “fraud” to Pennsylvania Attorney General’s Medicaid Fraud Control Unit (MFCU). MFCU opened grand jury investigation against Pharmacy and Owner for Medicaid Fraud and Theft. After HLA was retained, State declined to bring criminal charges against Owner. MFCU charged the Pharmacy, a corporate entity, instead.
Attorney advertising. Prior results do not guarantee a similar outcome. Case summaries are generalized for confidentiality and are not a substitute for legal advice on your specific matter.
Anthony Mahajan is a former federal prosecutor who served as Chief Compliance Officer and Executive Leadership Team member for UnitedHealth Group, with oversight of Optum and UnitedHealthcare, including the SIUs within those platforms. Diana Yastrovskaya is PBM audit and compliance counsel and defends pharmacies in federal and state investigations. When a PBM refers an audit to prosecutors, the same team defends the investigation.
Seven questions that come up on almost every first call. The answers below are general; specific situations require privileged consultation.
Speak with an experienced attorney today at no cost - evaluate your situation and learn how we can help. Confidential, no obligation.
(800) 345 - 4125