Pharmacies Face Extra Audit Burdens That Threaten Their Existence

By Markian Hawryluk, Published August 6, 2021 by Kaiser Health News

The clock was about to strike midnight, and Scott Newman was desperately feeding pages into a scanner, trying to prevent thousands of dollars in prescription payments from turning into a pumpkin.

As the owner of Newman Family Pharmacy, an independent drugstore in Chesapeake, Virginia, he was responding to an audit ordered by a pharmacy benefit manager, an intermediary company that handles pharmacy payments for health insurance companies. The audit notice had come in January as he was scrambling to become certified to provide covid-19 vaccines, and it had slipped his mind. Then, a month later, a final notice reminded him he needed to get 120 pages of documents supporting some 30 prescription claims scanned and uploaded by the end of the day.

“I was sure I’d be missing pages,” he recalled. “So I was rescanning stuff for the damn file.”

Every page mattered. Pharmacy benefit managers, or PBMs, suspended in-person audits because of covid last year, shifting to virtual audits, much as in-person doctor visits shifted to telehealth. Amid added pandemic pressure, that means pharmacists such as Newman are bearing significantly more workload for the audits. It also has allowed benefit managers to review — and potentially deny — more pharmacy claims than ever before.

According to data from PAAS National, a pharmacy audit assistance service, while the number of pharmacy audits in 2020 declined nearly 14% from the year before, the overall number of prescriptions reviewed went up 40%. That meant pharmacies had to provide more documentation and stood to lose much more money if auditors could find any reason — even minor clerical errors — to deny payments.

The average audit in 2020 cost pharmacies $23,978, 35% more than the annual average over the previous five years, the PAAS data shows. And the number of prescriptions reviewed in September and October was fourfold over what PAAS members had seen in previous years.

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