Self-Audit Series #12: Invoice Audits

PBMs have dramatically increased the number of invoice audits conducted and some pharmacies continue to be at risk for significant financial recoupments and contract terminations. It is not uncommon for invoice audit results to exceed six figures. To reduce the risk of your pharmacy having problems during a PBM invoice audit, consider performing a mock audit on your practice. The PBM is simply comparing the “ins” and “outs” of your pharmacy inventory for a specific period. If your “ins” are less than your “outs” for the PBM auditing, they conclude you have a shortage and will initiate recoupment. The “ins” are your acquisitions, or purchases, from wholesalers, manufacturers, trade shows or other pharmacies (note: there is no accounting for inventory on-hand). The “outs” are the claims that you billed to the PBM conducting the audit as well as any returns. The PBM already has the billed claims for the defined window, so when they initiate the invoice audit, they’re typically just in need of your purchasing history. Several PBMs, including OptumRx®, Elixir®, and Express Scripts® may even require the pharmacy to submit a full dispensing history for further reconciliation. Follow the tips below to reduce the risk of your pharmacy having problems during a PBM invoice audit.

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PAAS Tips:

  • Create and maintain a list of all wholesalers from who you purchased prescription, over-the-counter (OTC) and supply items that are billed to third parties
  • Verify that wholesalers are licensed in your state, National Association of Boards of Pharmacy (NABP)  Drug Distributor accredited, and can provide pedigrees in accordance with FDA Track and Trace Law
    • OptumRx requires network pharmacies source both prescription and OTC products from a supplier that is a licensed drug wholesaler in your state AND meets accreditation
    • Caremark and Express Scripts both require network pharmacies only purchase diabetic supplies from suppliers that are identified as “authorized distributors” by the manufacturers. Please refer to the July 2021 Newsline article, Life Scan Hires Law Firm to Pursue Pharmacies Purchasing from Unauthorized Distributors for manufacturer links to their authorized distributor lists.
  • Bulk purchases made outside the invoice audit date range are not always accepted by the PBM to account for additional inventory
    • CVS Caremark’s 2022 Provider Manual explicitly calls out bulk purchases of more than 30 days of inventory need to be preapproved, in writing [PAAS views the requirement as absurd and strongly opposes it]
  • Limit or eliminate the amount of inventory acquired from other pharmacies
    • If you must purchase inventory from another pharmacy, be aware of Drug Supply Chain Security Act (DSCSA) exceptions and keep good records of inventory acquisition, including proof of payment
  • Retain access to invoices and proof of payment for 10 years to coincide with Medicare Part D record retention requirements
  • Bill accurate NDC on all claims – all 11 digits are important
  • Bill accurate quantity on all claims – call PAAS National® (608) 873-1342 if unsure about billing unit or package size
  • Check your will-call bins to ensure that you are adhering to your Return to Stock (RTS) Policy, reverse any claims that are exceeding PBM limits
  • Verify that pharmacy management software has products marked as “active” only if you have physical product on the shelf to reduce data entry errors
  • Read the Self-Audit Series #12: Invoice Audit  Newsline article from January 2020 on how to perform a self-audit on invoices
  • See our Self-Audit Mindset document available on our portal for additional guidance
Jennifer Ottman, CPhT
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