As pharmacies enter the fourth quarter, we expect pharmacy benefit managers (PBMs) to intensify audit activity, pursue audit recoupments and increase efforts to suspend or terminate pharmacies from their networks. Pharmacy owners should prepare for heightened scrutiny of purchasing records, copayment collection, dispensing practices and compliance with provider agreements as the year closes. The potential consequences extend beyond repayment demands, as an adverse audit finding can threaten the pharmacy’s continued network participation and ability to serve its patients.
Pharmacies should use this period to examine whether their records support the claims they have submitted and whether their operations satisfy applicable contractual requirements. Waiting until a PBM issues an audit notice or termination letter leaves less time to investigate discrepancies and assemble a complete response. Identifying potential exposure allows the pharmacy to correct ongoing practices, organize supporting documentation and address issues before they threaten the business.
Year-End PBM Scrutiny Can Put Network Participation at Risk
Pharmacy owners understandably focus on the amount a PBM seeks to recover following an audit. However, the same findings may also support allegations that the pharmacy violated its provider agreement. Depending on the contract and circumstances, a dispute involving purchasing records, copayment collection or dispensing documentation may lead to corrective action requirements, payment restrictions, suspension or network termination.
For that reason, pharmacies should evaluate financial exposure and network consequences together. Agreeing to repay a disputed amount does not necessarily resolve the underlying contractual allegation. Before accepting a settlement or repayment arrangement, the pharmacy should seek clarification concerning which findings are resolved and whether the PBM reserves the right to pursue additional action based on those findings.
Reconcile Drug Purchases Before an Invoice Audit
Drug invoice reconciliation deserves particular attention because an alleged purchasing shortage presents questions about whether the pharmacy purchased the medication it billed. Pharmacies should compare quantities dispensed against documented purchases and investigate discrepancies at the National Drug Code (NDC) level. The review should identify whether the available records substantiate the products and quantities dispensed during the relevant period.
A meaningful reconciliation requires more than downloading invoices from the primary wholesaler. Pharmacies should examine beginning inventory, purchases from secondary suppliers, returns, credits, inter-pharmacy transfers and package-size conversions. Records documenting inventory acquired through a pharmacy purchase may also be relevant. Each explanation should connect the product and quantity to the pharmacy through reliable supporting documentation.
Pharmacies should also examine the PBM’s calculations rather than assume that every alleged shortage is accurate. An apparent discrepancy may reflect incomplete supplier data, an incorrect unit conversion or the exclusion of purchases outside the selected review period. Whether particular records must be accepted depends on the governing requirements, but identifying methodological problems early helps the pharmacy present a specific, documented challenge.
Confirm Copayment Collection Practices and Records
Copayment collection should receive the same attention as prescription and purchasing records. Pharmacies should test whether they can connect the amount collected to the patient, prescription and transaction. Point-of-sale records, receipts, payment processor reports and other supporting documents should consistently demonstrate what occurred rather than require staff to reconstruct transactions from memory.
Where a pharmacy offers financial hardship assistance, permits payment arrangements or accepts third-party assistance, it should review the applicable legal and contractual requirements. Staff should understand when an arrangement is authorized and what documentation must be retained. A written copayment policy provides limited protection if the pharmacy’s actual collection practices do not follow it.
Pharmacies should also investigate recurring unpaid balances and discrepancies between their dispensing systems and financial records. The purpose is to identify whether an isolated documentation problem or a broader operational issue exists. Discovering that distinction before an audit allows the pharmacy to address the cause and explain its practices accurately.
Preserve Proof of Delivery and Dispensing Documentation
For delivered or shipped prescriptions, pharmacies should confirm that retained records connect each medication to the corresponding delivery event. Depending on applicable requirements, supporting evidence may include tracking information, delivery logs, signatures or other records of receipt. Pharmacies relying on outside delivery platforms should determine how long those records remain accessible and retrieve them before they become unavailable.
An internal review should also examine prescriptions that were prepared but potentially never received by the patient. Staff should confirm that return-to-stock procedures and related claim reversals occurred when required. Inconsistent records concerning dispensing, delivery and reversal activity can make a legitimate transaction difficult to defend and may create questions extending beyond the individual claim.
Review of High-Risk Claims and Prior Authorizations
A focused internal review should include claims that would create substantial exposure if challenged. High-cost prescriptions, frequent overrides, unusual billing patterns and products involving complicated quantity or days’ supply calculations warrant close attention. The prescription, dispensing record, submitted claim and supporting communications should provide a consistent account of the transaction.
Prior authorization records should also be examined for accuracy and completeness. Pharmacies should preserve relevant prescriber communications and understand how diagnosis information or other clinical representations entered the authorization process. Payment of a claim should not be treated as confirmation that every underlying billing, documentation or contractual requirement was satisfied.
Address Credentialing and Ownership Discrepancies
Year-end preparation should include a review of information supplied to PBMs and other payors. Ownership, pharmacist-in-charge, licensing, location and operational information should be compared against current records. If a change occurred, the pharmacy should determine whether it triggered a notice, consent, application or recredentialing requirement under the applicable agreement or law.
This review is especially important for pharmacies that completed acquisitions, changed ownership structures or expanded services during the year. Updating one agency or database does not necessarily satisfy separate reporting obligations. Pharmacies should evaluate requirements imposed by their board of pharmacy, government programs and individual PBMs, including the procedures and deadlines applicable to each.
Evaluate Pharmacy Audit Protections and Exception
State pharmacy audit laws may provide meaningful protections, but pharmacies must examine their scope and exceptions before relying on them. Depending on the jurisdiction and circumstances, relevant provisions may address notice, audit procedures, documentation, appeals or recoupment practices. The analysis should account for the claims being reviewed, the type of coverage involved and the conduct alleged.
Particular care is necessary when a PBM characterizes a review as involving fraud or intentional misrepresentation. For example, certain exceptions under Ohio’s pharmacy audit provisions depend on evidence indicating fraud or other intentional or willful misrepresentation. Pharmacies should examine whether the alleged facts satisfy the applicable standard rather than assume that the PBM’s characterization alone resolves the issue.
Establish a Response Process Before Notices Arrive
Every pharmacy should designate a person responsible for receiving, reviewing and tracking PBM communications, with backup coverage during absences. Notices delivered through portals, email, fax or mail should enter the same response process. Holiday schedules and staff vacations should be addressed in advance so that an audit request or termination notice does not remain unattended.
The pharmacy should record document-production deadlines, appeal deadlines, proposed recoupment dates and effective dates for network action. Requests for extensions should be made promptly and documented, but preparation should continue while those requests remain pending.
Before submitting a response, the pharmacy should connect each disputed finding to the records supporting its position. A large document production without an explanation may obscure an otherwise viable defense. Pharmacies should retain the exact submission, proof of delivery and subsequent communications so that the record remains complete if the dispute escalates.
Respond Before Network Access Is Interrupted
A threatened suspension or termination requires prompt attention to the notice, governing agreement, available appeals and potentially applicable legal protections. The pharmacy should assess the proposed effective date and whether additional relief must be pursued before the internal review process concludes. Waiting until claims stop processing can substantially complicate efforts to protect the business and maintain continuity of patient care.
As PBMs increase year-end pressure, pharmacies should approach Q4 preparation as a business priority. Organized purchasing records, consistent copayment practices, accurate dispensing documentation and a reliable response process can strengthen the pharmacy’s ability to challenge unsupported findings. Acting before an audit or termination notice arrives gives pharmacy owners a better opportunity to protect revenue, preserve network participation and continue serving their patients.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
