Common Problems Faced by Pharmacies in PBM Audits: Insights into CVS Caremark, OptumRx, and Express Scripts

Common Problems Faced by Pharmacies in PBM Audits: Insights into CVS Caremark, OptumRx, and Express Scripts

Pharmacy Benefit Managers (PBMs) such as CVS Caremark, OptumRx, and Express Scripts play a pivotal role in managing prescription drug benefits for millions of Americans. While they help control costs and streamline the drug distribution process, their audits can pose significant challenges for pharmacies. These audits are designed to ensure compliance with contracts, detect fraud, and prevent abuse, but they often lead to substantial financial and operational stress for pharmacies. Understanding the common problems that trigger PBM audits can help pharmacies better prepare and protect themselves from potential negative outcomes.

1. Inaccurate Billing Practices

One of the most common problems that trigger PBM audits is inaccurate billing practices. CVS Caremark, OptumRx, and Express Scripts are particularly vigilant about ensuring that pharmacies bill correctly for the services they provide. Inaccurate billing can include a range of issues, such as:

• Incorrect National Drug Code (NDC) Numbers: Pharmacies are required to bill using the correct NDC numbers that correspond to the medications dispensed. If a pharmacy consistently bills with incorrect NDCs, it can trigger an audit.
• Misuse of Dispense as Written (DAW) Codes: DAW codes are used to indicate whether a prescription should be filled with a brand-name drug or if a generic alternative can be used. Misuse of these codes, such as coding a generic drug as a brand-name to receive higher reimbursement, can lead to scrutiny from PBMs.
• Billing for Non-Covered Items: Pharmacies sometimes mistakenly bill for items that are not covered under a patient’s insurance plan. This can occur due to misunderstandings of coverage rules or clerical errors, but it often triggers an audit to ensure that the pharmacy is not intentionally billing for non-covered items.

To avoid these issues, pharmacies must ensure that their billing practices are accurate and in line with PBM guidelines. Regular internal audits and staff training can help identify and correct errors before they trigger an external audit.

2. Overbilling and Duplicate Billing

Overbilling and duplicate billing are significant concerns for PBMs like CVS Caremark, OptumRx, and Express Scripts. These issues can arise from honest mistakes or from attempts to maximize reimbursement, but either way, they are red flags that can lead to audits.

• Overbilling for Medication Quantities: Pharmacies may inadvertently bill for more medication than was actually dispensed to the patient. For example, if a prescription is filled for a 30-day supply, but the pharmacy bills for a 60-day supply, this could trigger an audit.
• Duplicate Billing for the Same Prescription: This occurs when a pharmacy bills for the same prescription multiple times. This can happen if a patient receives a partial fill and then returns for the remainder of the prescription, and the pharmacy mistakenly bills for the entire prescription twice.
• Billing for Brand-Name Drugs When Generics Are Dispensed: PBMs require pharmacies to bill accurately based on whether a brand-name or generic drug was dispensed. Billing for a more expensive brand-name drug when a generic was provided can lead to significant financial penalties during an audit.

Pharmacies must have robust billing systems in place to prevent overbilling and duplicate billing. Regular checks and balances, along with staff education, are essential in ensuring that these issues do not occur.

3. Insufficient Documentation

Another common issue that triggers PBM audits is insufficient documentation. PBMs like CVS Caremark, OptumRx, and Express Scripts require pharmacies to maintain detailed records of all transactions, including prescriptions, patient interactions, and billing information. When documentation is incomplete or inconsistent, it raises red flags that may prompt a closer look.

• Lack of Prescription Documentation: Pharmacies must keep accurate records of all prescriptions filled, including the original prescription, refill requests, and any communications with the prescribing physician. If documentation is missing or incomplete, it can suggest that the pharmacy is not following proper protocols.
• Incomplete Patient Records: Patient records must be thorough and up-to-date, including information about allergies, previous medications, and any other relevant health information. Incomplete records can lead to concerns about patient safety and compliance with PBM requirements.
• Missing Signature Logs: For controlled substances and other high-risk medications, pharmacies are often required to obtain signatures from patients or their representatives at the time of dispensing. Missing signature logs can trigger audits, as they suggest potential fraud or diversion of medications.

To mitigate the risk of audits due to insufficient documentation, pharmacies should implement strict record-keeping practices and conduct regular audits to ensure all documentation is complete and accurate.

4. Failure to Comply with Prior Authorization Requirements

Prior authorization (PA) is a process that PBMs use to ensure that certain medications are medically necessary before they are approved for coverage. Pharmacies that fail to comply with PA requirements can face audits and potential penalties from PBMs like CVS Caremark, OptumRx, and Express Scripts.

• Dispensing Without Prior Authorization: If a pharmacy dispenses a medication that requires prior authorization without first obtaining the necessary approval, it may be subject to an audit. This is particularly common with high-cost or specialty medications.
• Incorrect Prior Authorization Codes: When submitting claims for medications that require prior authorization, pharmacies must use the correct codes to indicate that the authorization was obtained. Using incorrect codes can lead to rejections or audits.
• Inconsistent PA Documentation: PBMs require pharmacies to maintain records of prior authorization requests and approvals. Inconsistent or missing documentation can trigger an audit to ensure that the pharmacy is complying with PA requirements.

To avoid these issues, pharmacies should have a clear process in place for managing prior authorizations, including tracking requests and approvals, and ensuring that the correct codes are used when submitting claims.

5. Issues with Inventory Management

Inventory management is another area where pharmacies can run into problems with PBMs like CVS Caremark, OptumRx, and Express Scripts. Proper inventory management is essential for ensuring that pharmacies are billing accurately and maintaining compliance with PBM contracts.

• Discrepancies Between Inventory and Billing Records: PBMs often audit pharmacies to ensure that the inventory on hand matches the medications billed to insurance companies. Discrepancies, such as billing for more medication than is in stock, can trigger an audit.
• Poor Record-Keeping for Controlled Substances: Controlled substances require particularly stringent inventory management practices due to their potential for abuse. PBMs may audit pharmacies to ensure that controlled substances are accounted for and that there are no discrepancies between inventory and billing records.
• Expired or Recalled Medications: Dispensing expired or recalled medications can lead to serious legal and financial repercussions, as well as audits. Pharmacies must have processes in place to regularly review their inventory and remove any medications that are no longer safe to dispense.

By maintaining accurate inventory records and conducting regular checks, pharmacies can reduce the likelihood of triggering an audit due to inventory management issues.

6. Non-Compliance with State and Federal Regulations

Pharmacies must adhere to a wide range of state and federal regulations, and failure to comply can result in audits from PBMs like CVS Caremark, OptumRx, and Express Scripts. These regulations cover everything from controlled substances management to billing practices, and non-compliance can have serious consequences.

• Controlled Substance Regulations: Pharmacies must comply with strict regulations governing the dispensing of controlled substances. This includes maintaining accurate records, following proper prescribing guidelines, and ensuring that all staff are trained in handling these medications. Non-compliance can lead to audits and significant penalties.
• HIPAA Violations: The Health Insurance Portability and Accountability Act (HIPAA) requires pharmacies to protect patient information. Failure to comply with HIPAA regulations, such as improperly handling patient data, can trigger an audit and result in fines.
• Medicare and Medicaid Fraud: Fraudulent billing practices related to Medicare and Medicaid are a major focus of PBM audits. This includes billing for services not provided, upcoding, and other fraudulent activities. Pharmacies found to be engaging in these practices can face audits, legal action, and exclusion from federal healthcare programs.

Pharmacies must stay informed about the latest state and federal regulations and ensure that their practices are in full compliance to avoid triggering audits.

7. Excessive Dispensing of High-Cost Medications

PBMs closely monitor the dispensing of high-cost medications, particularly those used to treat chronic conditions or requiring special handling. Pharmacies that dispense a high volume of these medications may attract the attention of PBMs like CVS Caremark, OptumRx, and Express Scripts, leading to audits.

• High Volume of Specialty Medications: Pharmacies that dispense a large quantity of specialty medications, such as those for cancer, HIV, or autoimmune diseases, may be audited to ensure that the medications are being used appropriately and that there is no fraud or abuse.
• Expensive Brand-Name Drugs: Pharmacies that frequently dispense expensive brand-name drugs instead of their generic equivalents may trigger audits. PBMs are focused on controlling costs, and excessive dispensing of brand-name drugs can raise concerns about whether the pharmacy is following formulary guidelines.
• Compounded Medications: Compounded medications, which are custom-made for individual patients, can be expensive and are subject to strict regulations. Pharmacies that frequently dispense compounded medications may be audited to ensure compliance with PBM and regulatory guidelines.

To avoid audits related to the dispensing of high-cost medications, pharmacies should ensure that they are following PBM guidelines, maintaining accurate documentation, and dispensing medications appropriately.

8. Contractual Non-Compliance

Finally, one of the most common triggers for PBM audits is non-compliance with the terms of the contract between the pharmacy and the PBM. CVS Caremark, OptumRx, and Express Scripts all have specific requirements that pharmacies must meet, and failure to adhere to these terms can lead to audits and penalties.

• Failure to Adhere to Formulary Requirements: PBMs often have specific formularies that list the medications they cover. Pharmacies must adhere to these formularies when dispensing medications, and failure to do so can result in audits and recoupment of funds.
• Non-Compliance with Audit Provisions: PBM contracts often include provisions that allow for regular audits of the pharmacy’s operations. If a pharmacy does not comply with these audit provisions, such as failing to provide requested documentation in a timely manner, it can lead to further scrutiny and penalties.
• Breach of Network Requirements: Pharmacies are typically required to meet certain network requirements, such as maintaining specific hours of operation, providing particular services, and adhering to quality standards. Non-compliance with these requirements can trigger audits and result in exclusion from the PBM’s network.

Pharmacies should carefully review their contracts with PBMs and ensure that they are in full compliance with all terms to avoid triggering audits.

Conclusion

PBM audits by CVS Caremark, OptumRx, and Express Scripts can be a daunting challenge for pharmacies, with significant financial and operational implications. By understanding the common problems that trigger these audits—such as inaccurate billing practices, overbilling, insufficient documentation, non-compliance with prior authorization requirements, inventory management issues, and non-compliance with state and federal regulations—pharmacies can take proactive steps to mitigate risk and prepare for potential audits.

Implementing robust compliance programs, conducting regular internal audits, training staff, and maintaining accurate records are critical strategies for minimizing the likelihood of triggering a PBM audit. In the event of an audit, seeking professional legal counsel can help pharmacies navigate the process, challenge unjust findings, and protect their interests.

By staying vigilant and informed, pharmacies can successfully manage their relationships with PBMs and continue to provide essential services to their patients without the fear of costly audits.