The True Cost of Invoice Audits and Shortages

Analysts at PAAS National® assist with invoice audits on a daily basis. While not as common (in number) as desk audits, the implications of bad audit results are high and can be challenging to appeal. Often questions come up asking why it matters if the exact NDC is billed? A few recent cases from the Department of Justice show “bad actors” hiding behind false claims and the cases were built on not having adequate inventory to support billed claims.

One example was a pharmacist and brother who were sentenced to multiple years in federal prison and ordered to pay restitution for billing prescriptions that were not dispensed to patients. The defendants in this case billed expensive medications, such as antipsychotics and inhalers to Medicare and Medicaid (among other plans) and concealed the shortages from auditors. This resulted in over $15 million in losses to the plans.

In another case, a pharmacist billed Medicare for high-reimbursing prescription drugs, that the pharmacy didn’t have the inventory to dispense, causing $4 million in losses to Medicare. The fraud was concealed by manipulating inventory purchases at the pharmacy and then transferring proceeds from the fraud, diverting for his own personal use and benefit. The pharmacist was sentenced to 46 months in prison, ordered to pay restitution, and forfeit real estate properties and cash.

The final case is of a pharmacist who pled guilty to a fraud billing Dificid® pharmacist who pled guilty to a fraud billing Dificid®. Over a two-year period, at least 591 claims were billed to Medicare for Dificid® for approximately 61 Medicare beneficiaries. Of the claims submitted, the pharmacy should have dispensed at least 11,820 units of the drug, but only 100 units were ever purchased. This resulted in approximately 99% of the claims not having enough drug on hand to dispense. The $2.5 million in proceeds were spent on luxury vehicles and other personal expenses of the pharmacist.

These cases show the severe punishments for outright fraud, but a pharmacy is usually viewed as “guilty until proven innocent” when it comes to PBM invoice audit shortages. PBMs check if you are billing valid prescription claims by reviewing the paid claims against product ordered. If the numbers don’t match, it can cause significant issues for the pharmacies.

PAAS Tips:

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Did you know there is much more to your audit assistance membership than just help with audits? The PAAS Member Portal contains a wealth of information and resources to assist you with audits and member service questions. Below is a list of 6 pages found on the Audit Assistance section of the PAAS Member Portal to assist you and your pharmacy staff to be proactive when it comes to audits.

  • Access Services
    • Audit Documentation Submission Guidance
    • An online form to submit safe filling and billing questions
    • Your PAAS Membership Manual
  • Newsline
    • Monthly newsletter articles, written by our expert PAAS analyst team, provide safe filling and billing tips and relays relevant/current PBM trends to be help prevent audits
    • Search the Newsline Archive to get PAAS tips at the click of a button
    • Special Edition Newslines including: Top 10 articles of the prior year, DMEPOS Article Series and a Self-Audit Article Series
    • Ability to print monthly issues or individual articles
  • Proactive Tips
    • Audit flags – list of various claim attributes the PBMs use to select claims for audit
    • Billing insulin vials – flowchart to assist whether you should bill Medicare Part B vs Part D
    • DAW Codes Explained – use to understand when to effectively use DAW codes, their definitions and why claims may be flagged for audit if a DAW code is used incorrectly
    • Basic DMEPOS documentation guidance
    • Onsite Credentialing Checklist and expanded definitions of policies and procedures
    • Proof of refill request and affirmative response form for DMEPOS items
    • Steps on how to prepare for an onsite audit
    • And more!
  • Days’ Supply Charts
    • Utilize the days’ supply charts for inhalers, insulins, nasal sprays, eye drops and topicals to aid you in calculating the correct days’ supply
    • Guidance on overbilled quantities and incorrect days’ supply account for a sizable portion of audit chargebacks
    • Additional miscellaneous charts, which include: Dispense in Original Container and Return to Stock
  • Forms
    • Signature Logbook for print
    • Signature Trifold Mailer
    • Fax and Email Coversheet
    • Patient Attestation for over-the-counter COVID-19 test kits
  • On-Demand Webinars
    • Short webinars on hot topics in the PBM industry. Here are a few examples:
      • USP 800 Compliance
      • Cultural Competency Training
      • Dispensing Prescriptions Off-Label
      • Biologic Medications and Interchangeability
      • Continuous Glucose Monitor Requirements for Medicare Part B

PAAS Tips:

  • MORE AUDITS, MORE INSIGHT – PAAS National® is the industry-leading defender of community pharmacy dealings with Prescription Benefit Programs, including Caremark, Express Scripts, Humana, Medicaid, OptumRx, Prime Therapeutics., and more. PAAS assists on all third-party audits, including: desktop audits, onsite audits, invoice audits, OIG/Medicaid audits, Medicare B audits. The PAAS team is dedicated to helping you! We have five pharmacists and a complement of technician analysts with over 50 years of dedicated audit assistance experience. PAAS continuously updates their database with every audit received — in fact, we even keep a scorecard on individual auditors.
  • Get answers to your questions on days’ supply calculations, drug substitutions, billing practices, required documentation, prior authorization requirements, record retention, and internal audit procedures – just to name a few. As a trusted partner, we will provide tailored guidance to help you proactively prevent audits. Remember, the prescription claims you submit today are the audits of the future.
  • Keep your employees engaged and help lower audit risk by adding all employees to the portal and giving them permission to access these tools, resources and eNewsline. For more information review September 2019 Newsline article, What Are You Waiting For? Make Sure ALL of Your Employees are Added to the PAAS Portal!
  • Contact PAAS at (608) 873-1342, if you would like a tour of your PAAS Member Portal, so you can reap all the benefits of your PAAS Audit Assistance. We appreciate you being a member.

Erin McDonald, PharmD
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