pharmacy audits: what every pharmacist should know
TRANSCRIPT
Pharmacy Audits
David L. Rogers&
John R. WrightRogers Mantese & Associates, P.C.
www.healthlex.com
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Who will I be talking about today?
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) Medicare and Medicaid
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What will I be talking about?
Audits, in general Internal Audit
Self-Audit a pharmacy performs on its own volition
A parent company’s 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
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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
What is audited?
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Where will an audit take place?
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
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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
When will an audit take place?
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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).
Sherman Pharmacy, Inc. v. Department of Social Services
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Unannounced audits These types of audits are less efficient, but more reliable indicator of day‐to‐day
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 patient’s 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
When will an audit take place?
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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 doctor’s 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 Shoppe’s petition for review
Med Shoppe-Jonesborough v Drug Enforcement Admin, 300 F App'x 409 (6th Cir 2008).
Medicine Shoppe-Jonesborough v DEA
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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
Why are there audits?
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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 department’s 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 § 8.4.5.1; 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).
Bulmahn v. New York State Office of Medicaid Inspector Gen.
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How should audits be handled?
Don’t take it personally Consider audits to be inevitable Also consider negative findings
in an audit to be inevitable Don’t 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
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Organization and documentation are of utmost importance Allow access to originals, provide copies
Keep originals on‐site 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
What should be done prior to an audit?
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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
What should be done during an audit?
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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
What should be done during an audit?
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What should be done during an audit?
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
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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 30‐60 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
What should be done after an audit?
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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 time‐sensitive
Typically a 30‐day deadline
What should be done after an audit?
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The Department of Health and Human Services, Office of Civil Rights Is sending surveys out to 800 covered entities and 400 business associates The survey is designed to assess size, complexity and
fitness for an audit Number of patients/insured lives, use of electronic
information, revenue and location of business Survey should take 30 minutes Date to be announced, but expected soon Receiving a survey does not guarantee an audit An audit does not guarantee an investigation
Also note: Upcoming HIPAA Audits
Questions?David L. Rogers
[email protected] John R. Wright
[email protected] Mantese & Associates, P.C.
Phone: (248) 702-6350www.healthlex.com