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Where oh where did my reimbursements go? Today’s pharmacy audit landscape


There is no doubt about it. Pharmacy audits can be time consuming and laborious for all parties involved. And as both government and commercial money gets tighter and tighter, all of health care is searching for the most effective means to manage the financial challenges associated with doing business. In addition to the clinical aspects, audits are used to identify genuinely fraudulent or erroneously paid healthcare claims. Nevertheless, a survey released in September 2012 by the National Community Pharmacists Association found that nearly 87% of those surveyed stated that reimbursement and auditing practices are “significantly” or “very significantly” affecting their ability to provide patient care and remain in business.

As audits continue to rise, more and more pharmacies are finding it increasingly important to identify possible situations and trends that might help them legitimately reduce their exposure to auditable situations. One method is to properly determine a prescriber’s eligibility before the claim is submitted to payers for processing and the prescription is dispensed. According to Emdeon data, a sanctioned prescriber could write more than 400 prescriptions per month, totaling more than $30,000 in at-risk drug costs. That could mean almost $400,000 of financial exposure to a pharmacy in a year from just one ineligible physician.  Some doctors write a lot more prescriptions than these numbers.

Pharmacies can help mitigate audit risk by incorporating improved prescriber management into their workflow. Utilizing real-time methodology, such as prescriber eligibility alerts, can not only help pharmacies lessen the audit risks and financial penalties associated with submitting prescriptions written by prescribers who do not have prescribing authority, but it can also reduce administrative costs by decreasing the time personnel may otherwise spend researching prescribers and plans. Real-time screening can be greatly improved by accessing the most current federal and state prescriber data available. Prescriber eligibility alerts can provide an advanced validation component that is able to check each submitted pharmacy claim in real time for licensure, status, sanction, DEA prescriptive authority and other issues. Rejected claims return compliance notifications with clear messaging that identifies the reason for rejection.

In addition to prescriber eligibility, pharmacies also can help protect against audits by determining appropriate patient eligibility. Pharmacy claims can be billed as primary to state Medicaid plans if, and only if, patients have no other active coverage. Consequently, pharmacies that submit claims to Medicaid for patients who are covered by other plans can be billed or penalized by the state for paid Medicaid claims.

Here are five things a pharmacy should be aware of when they are examining means to manage audits:

  1. During an audit, the scope of the claim review can cover up to three years retrospectively. Pharmacies should implement controls today to reduce the risk of potential audits tomorrow.

  2. An audit performed by the Centers for Medicare and Medicaid is contracted to a recovery audit contractor. The purpose of a RAC audit is to identify improper Medicare payments and fight fraud, waste and abuse in the Medicare program.                     

  3. RAC audits review claims prescribed by an excluded or ineligible provider. Several third-party and private payers are adopting the same excluded provider provisions and audit criteria.

  4. According to the NCPA survey, 3-in-4 pharmacists (76%) responded that audit requirements across Medicare Part D plans are not consistent, increasing their compliance burden.

  5. Pharmacies can participate in forums to discuss and collaborate with their peers who have completed an audit.

At the end of the day, healthcare stakeholders on all sides want to see an efficient healthcare system. Healthcare payers want to ensure they are paying valid claims, and pharmacies want to dispense accurate, legitimate medications from eligible prescribers to qualified patients.

Paul Hooper

Emdeon VP of pharmacy network services

As VP of pharmacy network services at Emdeon, Paul Hooper directs the company’s pharmacy network services initiatives with a focus on developing programs, standards and partnerships that increase pharmacy efficiency and reduce healthcare costs. Paul has spent more than 25 years in the healthcare industry with a predominant focus in pharmacy. During this time, he has held roles in product development, systems, finance and operations at various recognized industry leaders: BASF, Abbott Laboratories, Cardinal Health, ArcLight and Emdeon. He holds a master's degree in business administration from Ohio University and a bachelor of science in food science from The Pennsylvania State University.



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