pharmacy audits: what every pharmacist should know

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  1. 1. Pharmacy Audits David L. Rogers & John R. Wright Rogers Mantese & Associates, P.C.
  2. 2. Who will I be talking about today? 2 Pharmacists subjected to audits Those who own, operate or work in pharmacies This presentation will be focused at pharmacists who are in a managerial role, but will still be informative for pharmacists who are strictly employees Payers who perform, or hire a company to perform audits Insurance companies Pharmacy Benefit Managers (PBMs)
  3. 3. What will I be talking about? 3 Audits, in general Internal Audit Self-Audit a pharmacy performs on its own volition A parent companys audit of its stores Insurance Private insurance company audits often performed by private audit companies PBMs Express Scripts CVS Caremark Prime Therapeutics United Health Government payor: Medicare/Medicaid Medicare within 1 year, within 4 years for good cause, or anytime for fraud
  4. 4. Auditors are looking for problems to be remedied All prescriptions however generated Logs: Signature, prescription, shipping, controlled substances Policies and procedures Invoices Pricing information Staff: Full-time, part-time and temporary Will often take a statistical sample and extrapolate the amount owed from that Auditors are almost never allowed to look at financial information regarding the business operations of the pharmacy An audit is distinguished from an investigation or inspection looking for problems to be corrected or punished 4 What is audited?
  5. 5. Where will an audit take place? 5 Desk audit Auditor will contact pharmacy by e-mail, phone or fax By mail Auditor will contact pharmacy by letter On-Site At the pharmacy itself Behind-the-scenes Technically, pharmacies are always being audited by automated systems
  6. 6. Audits are typically announced beforehand, two to three weeks in advance These are more efficient, but potentially less reliable since there is time to clean up, so to speak There is typically an audit notification letter identifying documents that the auditor wants to review These are typically chosen by a statistical sampling method that might not be revealed until after the audit Always clarify the scope of the audit Ask for clarification in writing and keep it in your records Notification letters can be accompanied by a questionnaire asking for general information about the pharmacy Do not take such a questionnaire lightly Even an answer to a seemingly innocuous question could have consequences Never, under any circumstances, alter records Altering records can have consequences that are worse than what a person is trying to cover up The time to supplement information is in the rebuttal/appeal process 6 When will an audit take place?
  7. 7. DSS brought unsuccessful action against pharmacy Sought to recover Medicaid overpayments Pharmacy sought attorney fees Hearing referee denied, but circuit court reversed and awarded $38K Attorney fees only available when claim is frivolous 3-year audit (1983-1985) 120 of 150 random samples showed overpay, example of statistical sampling and extrapolation. 8.4 percent error factor, total paid claims $265K, overpayment $22K, later reduced to $21K DSS Manual recommended 100 prescriptions per year (300) Court of Appeals reversed the circuit court Not frivolous, reasonable basis in fact, not an abuse of discretion Sherman Pharmacy, Inc. v Department of Social Services, unpublished opinion per curiam of the Court of Appeals, issued May 16, 1997 (Docket No. 188114). 7 Sherman Pharmacy, Inc. v. Department of Social Services
  8. 8. Unannounced audits These types of audits are less efficient, but more reliable indicator of daytoday operations Random or triggered Triggered audits may be caused by patient complaints substantiated by false information Example: Could be patient complaint that medication paid for by insurance, but not dispensed when, in fact, medication was dispensed All the more reason to take the time to communicate with each and every patient If you do not, the patients next step could be a complaint Along with patient complaints, other triggers are complaints by competitors, significant variances from a group of other similar pharmacies, substantial change in billing pattern, cost of ingredients, quantity dispensed, compounds, and schedules of drugs Anonymous tips: See US v Little, 59 F Supp 2d 177, 180 (D Mass 1999). If there is a variance from a group, confirm that the pharmacy is assigned to an appropriate group 8 When will an audit take place?
  9. 9. DEA investigated a physician writing improper prescriptions in 1995 Licensed pharmacist opened a Medicine Shoppe pharmacy Two years later, DEA investigators found that Medicine Shoppe continued to fill doctors prescriptions even though other pharmacies in the area had stopped DEA then audited the pharmacy in 1999, 2001 and 2002 and found a number of discrepancies DEA then revoked registration and denied renewal application The court denied Medicine Shoppes petition for review Med Shoppe-Jonesborough v Drug Enforcement Admin, 300 F App'x 409 (6th Cir 2008). 9 Medicine Shoppe-Jonesborough v DEA
  10. 10. Prevent Fraud, Waste and Abuse (Commonly: FWA) Find overpayments and underpayments, believe it or not Health Care Fraud and Abuse Control (HCFAC) Program brings in $8.10 for every $1.00 spent on enforcement Fiscal Year 2012: The government won or negotiated over $3.0B in health care fraud judgments and settlements 10 Why are there audits?
  11. 11. Pharmacy owner sought to annul finding of Administrative Law Judge Court: NY State Dept of Health (DOH) allowed to seek recoupment However, determination of overpayment irrational and unreasonable An extrapolation based upon an audit utilizing a statistical sampling method certified as valid will be presumed, in the absence of expert testimony and evidence to the contrary, to be an accurate determination of the total overpayments made or penalty to be imposed. The appellant may submit expert testimony challenging the extrapolation by the department or an actual accounting of all claims paid in rebuttal to the departments proof. 18 NYCRR 519.18(g). Medicare Program Integrity Manual (MPIM): In simple random or systematic sampling the total overpayment in the frame may be estimated by calculating the mean overpayment, net of underpayment, in the sample and multiplying it by the number of units in the frame. MPIM; see 3.1[A]. Bulmahn v New York State Office of Medicaid Inspector Gen, 106 A D 3d 1504, 1506, 964 NYS 2d 853, 855 (2013) reargument denied, 109 AD3d 1220, 972 NYS 2d 140 (2013) and leave to appeal denied, 22 NY 3d 860, 981; NYS 2d 370 (2014). 11 Bulmahn v. New York State Office of Medicaid Inspector Gen.
  12. 12. How should audits be handled? 12 Dont take it personally Consider audits to be inevitable Also consider negative findings in an audit to be inevitable Dont give information beyond what is requested Ask for proof of authorization to perform the audit Clarify the scope of the audit Accept that, either way, once the audit starts, it does not stop
  13. 13. Organization and documentation are of utmost importance Allow access to originals, provide copies Keep originals onsite Have all licenses and certifications for the facility and staff in order Print off records requested by the auditor and put them where the audit will take place Set aside an empty room or space away from the daily operations of the pharmacy Make sure there is a desk and chair, as well as an outlet to plug in a laptop 13 What should be done prior to an audit?
  14. 14. Ask for the identification and credentials of everyone who arrives with the auditor Have everyone who arrives with the auditor sign a visitor log Obtain a business card from everyone who arrives with the auditor The auditor may bring an assistant or a supervisor If the auditor is accompanied by a law enforcement officer or someone from the Department of Health and Human Services, Office of Inspector General, this should be a red flag You should call an attorney if you have not already 14 What should be done during an audit?
  15. 15. Show the auditor to the space you set aside Provide instructions on how to access a restroom, if necessary Be cooperative and polite The auditor may be polite or rude It is easy to remain wary of a rude auditor, but be wary of a polite auditor too Offer coffee or water 15 What should be done during an audit?
  16. 16. What should be done during an audit? 16 Supervise the auditor at all times Do not delegate supervision to staff You may have to leave the auditor to go get a document or file, in which case you will leave the auditor in the room or space you set aside Feel free to ask the auditor questions, but only provide answers or information when asked Take detailed notes
  17. 17. Exit Conference If you are not offered an exit conference, ask for one They are generally conducted after an audit and can give you an idea of how the audit went Evaluation/Discrepancy Report You will receive a report with findings either at the conclusion of the audit or within approximately 3060 days Typically there will be a finding and typically there will be a demand for money The amount of money may dictate whether you decide to pay or appeal 17 What should be done after an audit?
  18. 18. Appeal Process Medicare/Medicaid appeals are governed by extensive regulations The appeal process for private insurances is found in a provider Participation agreement, provider manual, or payer publications Often timesensitive Typically a 30day deadline 18 What should be done after an audit?
  19. 19. The Department of Health and Human Services, Office of Civil Rights Is sending surveys out to 80


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