The NEW Inventory Transfer Log and Why it Could Save You Big!
PAAS National® analysts have walked many pharmacies through the ins and outs of invoice audits. During our consultations with members who have their results back, the question of “Why would my invoice not be accepted?” comes up regularly. The answer to this question is multifaceted and can take some investigative work to identify the root cause. The following is a non-exhaustive list of potential issues leading to invoices not being accepted:
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- Invoices were not sent directly from the wholesaler to the auditor
- Invoices were not from a wholesaler with National Association of Boards of Pharmacy (NABP) Drug Distributor Accreditation, formerly known as VAWD, for OptumRx
- Invoices for diabetic supplies were not purchased from an “authorized distributor” for Caremark or Express Scripts
- Invoices show product purchases were outside the audit timeframe
Another invoice audit pitfall that has become increasingly common (possibly due to the increasing number of online purchasing platforms such as RxeedTM or MatchRX) are shortages due to incomplete documentation for pharmacy-to-pharmacy purchases. While the Drug Supply Chain Security Act (DSCSA) allows such sales between pharmacies, DSCSA requires that these transactions include the pedigree (aka Transaction Statement, Transaction History, and Transaction Information or “3Ts”) if they are for general stock replenishment, but DSCSA exempts transactions that are for a specific patient need and does not require the pedigree to be communicated for those purchases.
However, be aware that Caremark’s Provider Manual section 8.05 states that if product is received from another pharmacy, the purchasing pharmacy must obtain and maintain the entire Transaction Statement, Transaction History, and Transaction Information.
Similarly, OptumRx’s 2025 Provider Manual, First Edition Version 1.1 Section B. Pharmacy audits (Audits) and Claim Reviews states “Any inter-pharmacy transfers or purchases made through intermediary third parties or marketplaces for the purpose of increasing or replenishing stock, and not made to fulfill a specific patient need for an identified patient, are subject to the requirement to obtain transaction history, transaction information, and a transaction statement for the product. If purchases were made to fulfill a specific patient need, supporting documentation must be available and provided, if requested.” It goes on to say, “A Network Pharmacy Provider may transfer inventory to alleviate a temporary shortage or for the sale, transfer, merger or consolidation of all or part of the business of a pharmacy from or with another pharmacy, whether accomplished as a purchase and sale of stock or business assets. The transfer or purchase of covered legend and non-legend products or medical supplies form another licensed pharmacy must be verified and documented as originating from a NABP Drug Distributor Accreditation and licensed drug wholesaler, to include DSCSA-compliant transaction history, information and statement.”
PAAS has seen Caremark and OptumRx auditors request copies of the transferring pharmacy’s license and original invoices (and/or pedigree information) from the transferring pharmacy’s wholesaler. While PAAS strongly opposes these policies and enforcement efforts, PBMs hold an upper hand in an audit situation and consider the Provider Manual an extension of the agreement.
For those pharmacies who choose to make pharmacy-to-pharmacy purchases (directly, or indirectly through an online platform), PAAS recommends reviewing Caremark’s documentation guidelines and using a tool to ensure all information regarding the acquisition is appropriately gathered. PAAS analysts have developed just the tool you may wish to use, the Inventory Transfer Log! This log was developed solely to help pharmacies meet the strict requirements of PBMs and PAAS analysts strongly encourage its use for those who still choose to make pharmacy-to-pharmacy purchases. Additionally, for PAAS National® FWA/HIPAA Compliance members, this new tool can be found in Appendix B of your Policy & Procedure Manual with an accompanying Policy and Procedure in Section 4.1.4
This resource guides pharmacies through elements to document regarding the seller, the product purchased, the reason for acquisition, payment information, and even product inspection. While utilization of this tool is optional, procurement without appropriate documentation will likely cause the invoice to be excluded from an auditor’s inventory count and may lead to product shortages, audit recoupment, and (potentially) contract termination.
PAAS Tips:
- Keep copies of all invoices and proof of purchases for 10 years as required by Medicare Part D retention requirements
- Refer to the July 2024 Newsline article, Diabetic Test Strip Authorized Distributors, for links to manufacturer authorized distributor lists for major diabetic test strips
- Review Section 8.05 of Caremark’s Provider Manual for more information on pharmacy-to-pharmacy transfers (available online in the Caremark pharmacy portal, log in required)
- Pharmacies should carefully weigh the pros and cons of purchasing inventory from other pharmacies (whether directly or indirectly)
- The November 2024 Newsline article, U.S. Government Alleges Counterfeit HIV Drugs Hiding in Pharmacy-to-Pharmacy Purchases, provides insight into the potential risks a pharmacy takes by obtaining medication outside of DSCSA “authorized Trading Partners”
I enjoy assisting pharmacy staff both pre- and post-audit and enjoy providing them with knowledge and tools to decrease audit risk going forward. I write articles for Third-Party Newsline each month and answer member questions daily. I look forward to building professional relationships with each of our members and assisting you with your next audit.
