Essential Elements of Corrective Action Plans

PAAS National® analysts have recently seen an increased number of PBM audits with “significant” results, including a large number of unique issues, large dollar amounts (>$100,000) or both. Audits of this magnitude may trigger further consequences such as additional audits, payment suspension and/or threat of network termination. In these instances, pharmacies may need to perform a documented “deep dive” and uncover the root causes and implement corrective actions to convince the PBM that there is no Fraud, Waste or Abuse and that it is safe to retain the pharmacy as a network provider. This deep dive is often referred to as a Root Cause Analysis or Corrective Action Plan (CAP). These CAPs are intended to improve operations moving forward and generally do not resolve the audit discrepancies or reduce the recoupment amounts.

While there is no mandatory format for CAPs, there are a few essential elements that should be considered.

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Step 1 Identify and investigate each possible unique problem to find the root cause(s)

  • All possible errors should be considered until you can rule them out by process of elimination
  • Obtain an external point of view (e.g., PAAS) to eliminate confirmation bias

Step 2 Develop and implement a corrective action plan for each unique root cause identified in step 1

  • May include new/revised policy and procedure, new technology implementation or re-training on existing procedures
  • System solutions that remove the potential for human error, and prevent mistakes from recurring, are ideal
  • Designate a staff member to be the lead and develop a timeline for implementation
  • There may be one or more solutions for a given root cause – identify what works for your pharmacy based on available resources

Step 3 Train staff and implement corrective action plan

  • May include a staff memo, email, or meeting
  • May need formal training if new technology is implemented
  • All training should be documented and include when it occurred, who was involved and what was covered

Step 4 Perform internal scheduled audits to ensure that corrective actions are working

  • Document these audits both for your records and to prove to a PBM (if required) that you are following through on any promises made

In many audit situations, pharmacies go through these steps on a small scale without realizing it; however, when an audit is significant, it is worth your time to go through a formal/documented process.

The most common audit scenario that demands a CAP is an invoice shortage as PBMs often presume/assert fraud unless the pharmacy can prove otherwise. While each audit may uncover unique issues, here is a summarized CAP example.

Example audit situation: PBM invoice audit results show pharmacy has purchase shortages on 10 drugs over a 12-month period that total $150,000.

Summary example of 4-step Corrective Action Plan:

Step 1 – Pharmacy identifies the following issues

  • Root Cause #1 Purchased diabetic test strips from vendor that is not an authorized distributor
  • Root Cause #2 Wrong NDC billed
  • Root Cause #3 Purchases from another pharmacy without documentation
  • Root Cause #4 Missing wholesaler invoices
  • Root Cause #5 Bulk quantity on-hand prior to audit date range

Here is an example of Steps 2-4 for Root Cause #1 only, there would be similar details for all unique problems identified in each audit.

Root Cause #1: Purchased diabetic test strips from vendor that is not an authorized distributor

Step 2 Corrective Action Revise inventory purchase policy to verify that diabetic test strips are only purchased from supplier on manufacturer’s authorized distributor lists as explained in July 2021 and February 2022 PAAS Newsline articles.
Lead Staff Member Pharmacist-in-Charge
Timeline Immediate
Step 3 Training/Implementation Email sent to all staff on 12/20/2022 with copy of revised inventory purchase policy
Step 4 Follow-up Spot check purchase history for test strips in 30, 60, and 90 days.

  • If no problems, then stop monthly review
  • If continued problems with inventory source, revisit policy and provide additional training with purchasing staff and continue monthly review x 3

PAAS understands that developing a written CAP can feel daunting and may not always be necessary; however, should you need to implement a CAP, consider the steps discussed in this article and contact PAAS for support should the need arise.

PAAS Tips:

  • Internal CAPs may prove useful to reduce the likelihood of continued errors, lower future audit liabilities and potential stave off termination
  • A quality CAP that is well thought out, and documented, can benefit the pharmacy and address issues more effectively
    • CAPs that are poorly written, incoherent, or don’t effectively address the issues and resolution are often a waste of time and can do more harm than good
      • Do not just “check the boxes” if asked to produce a CAP
  • The Arkansas Office of the Medicaid Inspector General has a good discussion of Corrective Action Plans here

Eric Hartkopf, PharmD