Under Audit: How to Survive a PBM Audit and Protect Your Network Spot
A PBM audit can cost you money, your network spot, and your reputation. Two pharmacy attorneys explain what auditors can and can't do, and how to fight back.
Webinar
Watch the Replay
Your speakers
Meet the Speakers
Dae Lee
Pharmacist, attorney, and shareholder at Buchanan Ingersoll & Rooney. He helps independent pharmacies with PBM audits, investigations, ownership changes, and network suspensions or terminations.
Lucas Morgan
Attorney at Buchanan Ingersoll & Rooney. He represents independent pharmacies in federal court, in arbitration, and before state boards of pharmacy.
Learn more about Buchanan Ingersoll & Rooney, a law firm separate from Independent Rx.
Overview
Audits Are Back, and PBMs Are Counting on You to Give In
A PBM audit is a fact of life for independent pharmacies. The panel says on-site audits are returning to pre-COVID levels after a quiet few years. They also say PBMs treat audits as a source of revenue and a path to removing pharmacies from the network. Dae Lee and Lucas Morgan walk through the audit types, the common findings, and the legal tools you can use.
They also cover new pressures outside the PBM. Manufacturers are chasing rebates, PSAOs are changing contract terms, and state boards are talking to PBMs. This session is educational and not legal advice, so talk to your own attorney about your situation.
Key numbers
Deadlines and Dollars to Know
30 days
is the typical time to respond to an on-site or desktop audit.
7 to 14
days is the typical response window for a fraud, waste, and abuse investigation.
100% + 20%
is what one PBM can recoup on an invoice shortage: the full amount plus an audit fee.
1+ a year
is how many audits to expect from a PBM, and more once it calls one an investigation.
What we cover
Eight Things Every Owner Should Know
1
Three kinds of audits
On-site audits come with notice, often about 14 days, and masked prescription numbers to pull. Desktop audits are paperwork heavy. Fraud, waste, and abuse investigations move fastest and carry the most risk.
2
Your rights on audit day
Auditors can only review what the notice lists. They can't log into your software or browse other records. Stand your ground politely and document it, but keep cooperating. State fair audit laws set notice and timing rules you can use.
3
The audit life cycle and your appeals
After the notice, you submit records and receive initial findings. You can appeal with facts, legal arguments, and organized proof. Final findings bring another appeal, and often a dispute resolution meeting with the PBM's counsel. Arbitration is something your pharmacy files.
4
Copay and signature proof
Proof of copay is a hot button. Keep receipts with the last four card digits and cash deposit slips. PBMs now ask for merchant reports and challenge patient attestations. If a family member signs, have them print their name and relationship.
5
Drug invoice shortages
PBMs use an arbitrary audit period and ignore pre-buys. Keep your own purchase records. Have wholesalers send reports directly to the PBM, and ask to be copied. Buy from authorized trading partners. If your purchases cover your claims, show your full dispensing report and do the math.
6
Manufacturer clawbacks
AstraZeneca sent demand letters over Farxiga claims for 2024, asking for dispensing and purchasing reports. Manufacturers want to recoup rebates paid on brand claims when purchases don't match what was billed.
7
PSAO contract trends
Some PSAOs now ask for personal guarantees, which put your own assets at risk. Others are taking issue with mailing outside your home state. When you leave a PSAO, make it a mutual walk-away, not a termination.
8
Boards of pharmacy and PBMs
PBMs file complaints with boards, and boards report discipline to the National Practitioner Data Bank, which PBMs monitor. Notify your PBM of discipline on time, and tell them about changes like a new pharmacist in charge.
The value of fighting an audit isn't the dollar amount. It's your future in the network.
From the webinar
Fight back
Why Small Audits Matter
The panel urged owners to contest even a $2,000 or $5,000 finding. Here is why:
- PBMs can turn a pile of small audits into a pattern or practice and use it to end your contract.
- PBMs can withhold payments before they issue initial findings, so respond fast.
- An invoice shortage can look unfair, and in litigation it can look intentional. Good records make that argument strong.
- Don't expect the PBM to do the math. Build the purchase-to-claims comparison yourself.
- Termination notices often land near holidays, including Christmas Eve.
Board and PBM rules of thumb
Questions the Panel Answered
Attendees asked these questions, and the panel's answers were:
- You will not get in trouble for reporting something you didn't have to report. You can get in trouble for not reporting something you did. When it's a close call, report.
- If you hold licenses in several states, discipline in one usually has to be disclosed to the others.
- When you report discipline to a PBM, explain what happened and your mitigating facts. Timely notice usually keeps the contract, unless the issue involves patient harm or fraud.
- PBMs can't pull your wholesaler purchase history without a subpoena.
- If you buy from online marketplaces, get the pedigree and trace the product back to a known wholesaler. PBMs ask for pedigrees during invoice audits.
- PBMs rarely share findings with each other, except for serious concerns.
- Messy signature pads are fine if you're confident the signature is real. Get a better one if you have doubts.
This webinar is educational and does not constitute legal advice. Laws and PBM manuals change, so check current rules.
Keep exploring
Ready to get ahead of a PBM audit?
Watch our webinar on compounding peptides in independent pharmacy. Read about changes to the Stark and Anti-Kickback statutes. Or explore our pharmacy accounting and data services.
