The clock struck just before midnight, and Scott Newman frantically fed pages into a scanner to keep thousands of dollars in prescription payments from turning into a pumpkin.
As the owner of Newman Family Pharmacy, an independent drug store in Chesapeake, Virginia, he responded to an exam ordered by a pharmacy services manager, an intermediary company that processes pharmacy payments for health insurance companies. The audit notice had come in January while he was trying to get certified to deliver Covid-19 vaccines and it had gotten out of his head. Then, a month later, a final notification reminded him that by the end of the day he had to scan and upload 120 pages of documents containing about 30 prescription applications.
“I was sure I would be missing pages,” he recalled. “So I scanned stuff again for the damn file.”
Every side was important. Pharmacy Benefit Managers (PBMs) suspended in-person audits last year due to Covid and switched to virtual audits, similar to how personal doctor visits were switched to telemedicine. This means that pharmacists like Newman have to deal with significantly more work for the audits if there is additional pressure from the pandemic. It has also enabled performance managers to review and potentially reject more pharmacy claims than ever before.
According to data from PAAS National, a pharmacy audit assistance service, the number of pharmacy audits in 2020 was down nearly 14% year-over-year, but the total number of prescriptions reviewed increased by 40%. That meant pharmacies would have to produce more records and lose a lot more money if auditors could find a reason – even minor typographical errors – to refuse payments.
The average audit in 2020 cost pharmacies $ 23,978, 35% more than the annual average for the past five years, the PAAS data shows. And the number of prescriptions reviewed in September and October was four times higher than that of PAAS members in previous years.
Pharmacists have long complained that audits seem to have little to do with detecting fraud, waste and abuse, but have become a way for these middlemen to get rich. According to business analysts at IbisWorld, the US pharmacy benefit manager market has grown to nearly $ 458 billion this year, up from less than $ 300 billion eight years ago.
Even before the pandemic, independent pharmacies had to struggle financially with allegedly too low reimbursement rates, the loss of customers to mail order companies or chain pharmacies and various measures by the benefit managers, including the collection of pharmacy fees and compliance with manufacturer discounts for themselves.
Additional insult: Many independent pharmacies report that they have received takeover bids from the large drugstore chains that own the PBMs, which pharmacists see as the main reason for their financial troubles.
At least, so say pharmacists, virtual audits increase waiting times and drive up costs for customers. In the worst case, the audits cost pharmacies thousands of dollars in payments for drugs already dispensed to customers and can ultimately drive them out of business.
“This definitely removes the responsibilities of pharmacy workers and becomes an administrative burden that directly impacts patient safety,” said Garth Reynolds, executive director of the Illinois Pharmacists Association. “You have to be the de facto audit team for the pharmacy benefit manager.”
Trent Thiede, president of PAAS National, said many of the 5,000+ pharmacies he works with have been stepping up to offer Covid tests and shots and becoming an even greater resource for customers during this health crisis. “With the vaccinations in full swing, priorities should focus on serving patients and our communities and not responding to audit requests,” Thiede said.
When auditors are on site in person, they primarily carry out the check themselves and occasionally ask pharmacists to obtain additional documents.
“In these virtual audits, you have to pull the recipe, send it through a copier, put it all together, and get all of the signature logs. You want your license off the wall. They want all employee licenses to be faxed, ”said Thiede. “It’s a lot more troublesome for these pharmacies.”
Express Scripts, one of the largest performance managers in the country, switched to virtual audits as a security measure, said spokeswoman Justine Sessions. “The virtual experience is very similar in scope and scope to the in-person audits and is conducted with the same frequency,” she wrote in an email. “If this is certain, we intend to resume the on-site audits.”
CVS Caremark, a CVS pharmacy chain affiliate, and OptumRx did not respond to interview requests.
Dave Falk, who owns 15 pharmacies in Illinois, said the largest exam he had ever seen before the pandemic hit 60 to 70 prescriptions, valued at $ 30,000 to $ 40,000. Then, last fall, his Robinson pharmacy had to defend $ 200,000 in prescriptions in a virtual audit.
“None of these recipes were under $ 450,” he said. “These audits are not accidental. It’s a money robbery from PBMs. “
He was horrified when the examiner asked his pharmacist to report the temperature of the perishable drug refrigerator. The information does not affect whether prescriptions completed months earlier were appropriate.
“They are looking for a reason to win back funds,” said Falk.
After Falk and his pharmacist spent hours providing the documentation, the examiner initially refused $ 36,000 in drug payments, largely due to a lack of patient signatures. Like most pharmacies during the pandemic, Falk’s stopped collecting patient signatures for security reasons last year. Important trade associations of PBM companies and pharmacies had agreed last year that patients do not have to sign for medicines that are made available by mail order, delivery or pick-up at the roadside.
Even so, Falk staff had to track dozens of patients so they could sign affidavits to receive prescriptions, reducing the auditor’s rejection to $ 12,000.
“That’s $ 12,000 for ridiculous reasons,” said Falk.
In Newman’s eight years as a pharmacist, he went through six audits, except for the most recent one personally. In the virtual one, which was carried out on behalf of the health insurance company Humana, Newman uploaded his documents on time. But he was also reported because of missing signatures.
Dan Strause, president and CEO of Hometown Pharmacy in Madison, Wisconsin, said his pharmacies received more than 1,000 pages of audit requests last year, covering more than $ 3 million in prescription requests. That corresponded to 1.5% of the total annual turnover of his company. He said pharmacists had seen a surge in so-called robbery reviews over the past year, seeking ways to deny legitimate payments for prescriptions.
“What they did in 2020 was reprehensible,” said Strause. “While we were taking care of the patients, they were sitting in their cozy offices and thinking, ‘How can we make money with this? Can we find a loophole? Can we find a missing document? Can we find a reason to take things back? ‘”
Lisa Dimond, a spokeswoman for Humana, said the company was required by the government to conduct audits to see if pharmacies were complying, but conducted fewer audits and checked fewer prescriptions in 2020 than in 2019.
“We have worked to keep the administrative burden for our network pharmacies as low as possible by offering extensions as needed while ensuring that pharmacies fill out prescriptions appropriately for the safety of our members,” she said in a statement.
Pharmacists are reluctant when large pharmacy chains, running their own benefit managers, offer to buy their businesses, realizing that times are tough. Joe Craft owns the Happy Druggist pharmacy chain in central Ohio. He said he regularly received letters asking him to buy his business from the same companies, losing an average of $ 6,000 in payments on each audit, roughly a week’s sales for a single drugstore.
“When you read this letter, think to yourself, ‘Damn it, yeah, times are tough,'” he said. “You of all people should know.”
And often, when independents are sold to larger chains, these drugstores are closed and the chain pharmacy directs customers to one of their locations miles away.
Thiede and many pharmacists believe that the personal audits can be resumed after the pandemic, but virtual audits can also remain.
“You can do more because you don’t have to travel and fly across the country and sit in your pharmacy all day,” said Thiede. “You can just do it from home and achieve more.”
Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation, which is not affiliated with Kaiser Permanente.
Photo: Ridofranz, Getty Images