Pharmacists Speaking Out on the Need for PBM Audit Reform

By Kevin Schweers

A recent Washington Post story brought high-profile attention to the growing concerns of many community pharmacists with regard to pharmacy benefit managers’ (PBM) seemingly unfair audit practices. As compelling as that one account is, it’s indicative of an expanding audit imbalance between PBM auditors and small pharmacies.

The Post’s report noted that CVS Caremark was cancelling the contract of Cathedral Pharmacy, a well-regarded community business established in 1924 and owned by the same pharmacist for the past 38 years over a disputed audit. According to the owner, the loss of this contract may push Cathedral out of business and cause many employees to lose their jobs.

This news is not surprising to those independent community pharmacists who have endured PBM audit practices that seem to focus on technical paperwork errors rather than on what most would consider “fraud, waste and abuse.” Just recently we heard about a pharmacy that was billed a recoupment of $376,000 by a major PBM following an audit. The PBM claimed discrepancies for about 20 medications. However, according to the pharmacist, there were no descriptions provided regarding what the alleged “indiscretions” were, even though the Plan manual stated there would be.

After reviewing the audit findings and pharmacy’s documentation, the final recoupment was ZERO. But getting from $376,000 to zero was hardly easy. The pharmacy staff spent over 220 hours between internal meetings discussing the appeals process and producing documentation to refute the findings. That is practically an entire working month. The erroneous claims included the PBM trying to collect re-payment for a drug which was never acquired by the pharmacy. In fact, it had been discontinued prior to the audit period.

Separately, a midsized PBM recently re-opened and audited prescription claims that were filled prior to this PBM even having a contract with the pharmacy. The PBM did not process the claims; another PBM processed and approved them long ago.

If these examples sound familiar, concerned pharmacists and patients can contact their members of Congress and tell them to pass S. 1058/H.R. 1971, legislation to level the imbalanced audit system. Please contact both your Representative and two Senators and let them know the time has come to pass this legislation.

Additionally, if you have an example of an egregious audit act by a PBM, consider writing a personalized letter to your elected officials detailing the experience. Below is an example of an effective letter by an independent pharmacist. Similar letters, and shorter ones, carry great resonance.

Dear [Congressional Aide],

Please let me start by saying that I am a constituent of the congressman and support NCPA and PPA’s efforts to have the Pharmacy Fair and Uniform Audit issue addressed in Washington as soon as possible.  Community pharmacy plays a vital role in a healthcare system that is being overrun with companies more worried about profits than patients.  Now is the time to evaluate the practices of these companies.

Ganse Apothecary Inc. has been in business since 1970 and services retail and long term care consumers.  Our focus has mostly been in mental health, intellectual disability and addiction recovery.  Our radius of business goes well outside of Lancaster.  We service clinics and group homes all over eastern Pennsylvania, with focuses in Lancaster and Philadelphia.

Over the last five years that I have been involved in our family business it has been my responsibility to endure the auditing process.  This is by far the most frustrating part of my job.  It takes countless hours to perform an audit, let alone the time and money it takes to fight the results.  We have had as many as four audits in a 3 month time period.  Sometimes they will ask to do 2 in one day so they don’t have to come back.  That means I have to dedicate staff including myself to them for a whole day.  I want to break this down a little for you so you get the real picture of what this process is like.

The auditor (certified pharmacy tech or RPh) shows up either in the morning or the afternoon almost in the same fashion as the cable company.  We have no idea what time they are coming, just a window of opportunity for them.  We have actually had auditors show up at 5pm to start an audit when we close at 6pm and give us a hard time about rescheduling.  We have also had auditors not show up at all and then call to reschedule.  Upon setting up their scanners in our office they proceed to give us a list of close to 300 prescriptions and 30 patient signatures logs that they need to see.  What I find very interesting is the formula that the audit companies use to generate the claim lists.  One would think that it would be fair to audit a random sample of claims that have been adjudicated.  The formula is cost based, not claim based and they admit to that.  I have included a pre audit report page that lists the RX# and medication they are going to audit.  Please take notice that all of these medications are Brand products with the exception of clozapine which is a very expensive generic product.  Keep in mind that the dispensing rate of generic product to brand products is close to 4 to 1, but they have no interest in auditing those claims?  Trust me, as a pharmacy that specializes in mental health, there is no shortage of expensive claims to audit.  I suspect that this formula was created because the audit companies are being paid a percentage of the amount they “recoup” from us.

Our system is computerized, so we print a scanned copy of the prescription, but this usually takes about 3 to 4 hours to complete between 2 staff members.  They check every small detail of the prescription.  Everything from date to doctor to notes on the prescription.  I even had an auditor ask me for the back label that goes on the prescription.  Why that is relevant is beyond me and I told him he could go through the hard copies as we don’t scan the front and the back of the prescriptions.  He declined and said he would work around it.  When they are done reviewing all of the prescriptions we are given a summary of issues and later receive a formal communication from the auditing company detailing the issue, the chargeback and where to send our dispute.   Most of the findings that come from these audits are bogus.  They will tell us we altered a prescription or submitted the incorrect prescriber and upon further review they rescind their findings after we provide further documentation.

There have been several times though that they will not accept our documentation and we have had to go to the insurance company ourselves to plead our case.  In one recent audit the doctor changed the amount of refills without initialing it. The auditor caught it and requested $1700 back from us.  We had the physician write a letter admitting that it was her handwriting and that she did indeed want those refills for the patient.   The audit refused her letter and we disputed one more time.  We had the physician write another letter and again they refused it.  It’s too expensive to fight with a lawyer, so I am forced to lose $1700.

In another audit we had a similar situation.  The doctor wrote for a specific strength of Seroquel ($13 a tablet) and had to retrace the strength on the hard copy because his handwriting is a little shaky.  The auditor claimed we altered the script without documentation and therefore it was invalid.  We asked the doctor to write a letter and they accepted our documentation.  What is the standard of disputing documentation when they only accept certain letters in similar situations?

We have had auditors tell us we altered prescriptions for solutions and medications that are billed based on ml/mg only to find out what they are seeing is our pharmacists calculation that he wrote on the script to ensure they were not being over billed based on days supply.  These auditors are supposed to be certified pharmacy technicians or pharmacists with experience in the field.  How is it possible for them to see these types of calculations and claim that we altered the prescription?  Many times a doctor will write for a total mg dose of an oral medication not realizing that the medication does not come in that size and we need to substitute it for 2 pills of a smaller strength or 1 pill of a larger strength.  The auditors go crazy over those prescriptions, but we haven’t done anything wrong.

I will give you one last example.  In this example we made a mistake, but not a major one and they asked for $6,074 in charge back.  We adjudicated the claim with the wrong doctor’s name.  The doctor was in the same practice and had also seen this patient the month before, but for whatever reason he saw another doctor in the same practice and we missed it.  We are human, we make mistakes.  The audit company refused all of our documentation including letters from both doctors saying they were fine with the error.  We had to call the insurance company and ask them to review the claims of the audit company.  The insurance company’s audit department asked for all the documentation and said they would review it.  Within 24 hours they called us back and had manually changed the doctors in their system to reflect the correction.  If it is just that simple why are we being penalized for such small discrepancies?

I would like you to keep one last question in mind when you are reading this letter.  Do you think this practice is consistent across the board?  Who is regulating this practice?  Do you think that the auditing companies that are being contracted by the PBM’s are auditing chain pharmacies the same way, in particular CVS?  What does Caremark (one of the largest PBM’s) do when they audit their own company CVS?  Is there more room for error, do they penalize themselves the same way they do community pharmacy?

I strongly believe community pharmacies are targeted by this unfair auditing practice because we are smaller businesses with fewer resources to fight with.

Best Regards,

Greg Ganse
Vice President
Ganse Apothecary Inc.
355 West King St.
Lancaster, Pa 17603

Ganse Apothecary

7 Responses to “Pharmacists Speaking Out on the Need for PBM Audit Reform”

  1. 1 tony August 25, 2011 at 7:10 pm

    These people doing the audits should go to hell

  2. 2 pharmacist November 10, 2011 at 10:27 am

    The widespread use of proven PBM tools in Medicare Part D has contributed to the program’s total expenditures being 43 percent lower than originally projected.

    • 3 ncpa1 November 10, 2011 at 10:30 pm

      While it’s true Medicare Part D expenditures are below the original projections and community pharmacists have played a big part (such as by promoting the appropriate use of generics), Part D’s costs would be lower if not for PBM games on manufacturer rebates, as HHS’ Inspector General noted, spread pricing, etc.

  3. 4 david goldberg rph December 17, 2011 at 4:32 pm

    The latest PMB/Audit Company Pharmacy Scams….

    I am sure most of you independent pharmacy owners have been through the latest never-ending PBM/ “audit company” audits and really want to know why and how they may operate. Well, I was recently subjected to another one of these onsite audits by the so-called tag-team-duo: WellCare/ACS (PBM/Audit company) and they provided me some info that I find priceless. It all started when I got a fax from the tag-team stating that in one month time they will visit my pharmacy in order to conduct an audit of approximately 150 medications that were dispensed within the last year in the pharmacy. Upon looking at the least of medications, I noticed a trend. All of the drugs audited are between $300-1000 each prescription and what is more interesting is that they only targeted expensive medications. So they did not just target brand medications, as most of us would think, they targeted all expensive medications (brand and generics). On the day of the audit a lady came out with a scanner and a computer from ACS and scanned all the prescriptions that were the target of the audit. I was polite to her and provided all that she asked for. Upon the completion of the audit, I asked her about the whole audit process and this is the gist of what info I got from her. She said that these days most, if not all, of these audits are there to make money for PBM’s and audit companies. Basically, any auditing company can approach any PBM and offer “Bids” to purchase the prescription information. Thus, for example, PBM-X has paid for 500 prescriptions to ABC Pharmacy in one year. Any audit company can place bids to purchase the “rights” to these 500 prescriptions from PBM-X and start the audit process to make a buck. So let’s say that these 500 prescriptions amount to $20,000 that PBM-X paid ABC Pharmacy in the past year to fill the prescriptions. The audit company basically offers maybe $2000 to PBM-X to purchase all the rights to audit and recovery of the aforementioned 500 prescriptions. This means that the audit company has basically purchased HIPPA protected patient information, just for pennies-on-the-dollar. Next, the audit company turns around and starts there audit of the 500 prescriptions of ABC-Pharmacy. Upon the audit, the audit company will willfully and egregiously look for ways to recover any amount of the $20,000 from ABC Pharmacy. To further our example, they may recover $10,000 from the pharmacy, at which point, they will be very happy because they have made an $8000 profit for their audit company in just 2-3 hours of grilling the small community pharmacy( $10,000 recovered – $2000 paid for “info”= $8000 profit ). Granted, you might think that all is well and the taxpayers got reimbursed $8000. This is where you are dead wrong. The only people who got rich here were the PBM and the audit company. None of the amounts recovered were paid back in any way to the government program that originally paid for the 500 prescriptions mentioned. Medicare did not get back even a penny of the $10,000 recovered from ABC Pharmacy. I hope I have shed some light on the latest corruption scheme between these new-age mobs. Should any one of you reading this think any of what I mentioned above seems kind of fishy, and outright illegal, please do not refrain to contact someone who may have some power to stop them. As for me, my aim here is to inform you, so that one day we may all get outraged enough to start up our own “mob” against this kind of tyranny.


  4. 5 December 19, 2012 at 3:44 pm

    Many Thanks for writing Pharmacists Speaking Out
    on the Need for PBM Audit Reform NCPA’s The Dose – The Voice of the Community Pharmacist, I just actually was searching for something very similar and was pleased to find the advice through this particular blog post.

  1. 1 Audit Companies | CPA Blog, Free Information Tips and Resources. Trackback on August 3, 2011 at 10:40 pm
  2. 2 Pharmacists Speaking Out on the Need for PBM Audit Reform | Extreme Recent News Today Trackback on October 10, 2011 at 12:13 pm

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