CVS Caremark Pharmacy Audit Defense

If CVS Caremark is your pharmacy benefit manager (PBM), facing an audit could have serious consequences. Our CVS Caremark Audit Defense Attorneys represent pharmacies in CVS Caremark audits nationwide.

For pharmacists and pharmacy owners, working with pharmacy benefit managers (PBMs) is a fact of life. These entities serve as intermediaries between pharmacies and payors; and, while they can help streamline the billing process and help to facilitate timely payment, they can also create headaches for pharmacies that are subject to strict billing rules, conditions, and guidelines. In particular, pharmacies working with CVS Caremark – one of the nation’s largest PBMs – face extensive compliance obligations, and CVS Caremark audits can lead to penalties including recoupments (or “retractions”), offsetting of future billings, and contract termination.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Gamal Abdel-Hafiz
Gamal Abdel-Hafiz

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

Is Your Pharmacy Being Audited by CVS Caremark?

If your pharmacy is being audited by CVS Caremark, it is not alone. CVS Caremark’s audit program operates around the clock; and, at any given time, numerous pharmacies are being audited. While CVS Caremark audits can be triggered by specific events – such as complaints or concerns raised by patients or payors – CVS Caremark also conducts routine audits to assess pharmacy compliance with their obligations under their PBM contracts.

While a CVS Caremark audit can lead to trouble, it doesn’t have to. If your pharmacy is fully compliant, then avoiding recoupments and other penalties should be a relatively simple matter of supplying the necessary documentation to CVS Caremark’s auditors. Even if mistakes have been made, with the right approach, it is still possible to resolve a CVS Caremark audit without significant liability. However, mistakes and oversights during the audit process can create unnecessary complications, and this is true even for pharmacies that have dutifully complied with their contractual obligations during the time period that is subject to review.

12 Types of Issues that Can Create Problems During a CVS Caremark Pharmacy Audit

During a CVS Caremark audit, auditors will be looking for any indication that the pharmacy has improperly billed its payors. CVS Caremark’s auditors will be looking for evidence of other contractual violations as well; and, generally speaking, if a pharmacy is not able to affirmatively demonstrate compliance, a negative inference will be drawn. As a result, it is incumbent upon pharmacies to utilize their internally-generated compliance documentation to protect themselves, and pharmacies must ensure that CVS Caremark’s auditors do not make flawed assumptions or other mistakes that lead to unjustified determinations of liability.

At Oberheiden P.C., we have significant experience defending pharmacies in CVS Caremark and other PBM audits. We deal with CVS Caremark’s auditors directly on behalf of our clients, and we work closely with our clients before, during, and after their audits to ensure that they are protected. We have experience defending pharmacies against all types of allegations in CVS Caremark and other PBM audits, including (but not limited to):

  • Accepting Prescriptions from Excluded Providers – The U.S. Department of Health and Human Services’ Office of Inspector General (DHHS OIG) maintains a list of excluded providers who are prohibited from billing services to Medicare, Medicaid, and the other federal healthcare benefit programs. Pharmacies are also prohibited from billing for prescriptions that are issued by excluded providers. CVS Caremark has adopted a similar policy, and pharmacies can face penalties in CVS Caremark audits if they have intentionally or unintentionally billed for prescriptions written by excluded doctors.
  • Invoice Shortages – Invoice shortages are common issues during CVS Caremark audits. An “invoice shortage” occurs when a pharmacy bills for more prescriptions than it has purchased. While there are some valid reasons why a pharmacy’s purchase records and billing invoices may not match exactly, CVS Caremark will often allege that such discrepancies are indicative of purchasing medications from illegitimate sources, selling samples, returning drugs to stock, and selling prescription medications that have been returned.
  • Failure to Generate and Retain Records – In addition to failing to generate and maintain adequate records of prescription drug purchases, pharmacies can face scrutiny for other documentation-related issues as well. As a general rule, pharmacies must maintain comprehensive documentation pertaining to all aspects of their operations, and any deficiencies are going to be viewed as red flags for fraud or other unlawful practices.
  • Falsification of Patient or Prescription Records – CVS Caremark auditors are also going to be looking for any evidence to suggest that your pharmacy may have altered or fabricated patient records. The same is true of any other records that are necessary to substantiate your pharmacy’s billings to private payors. While this is not a concern for most pharmacies, rogue employees and aggressive attempts by CVS Caremark auditors to secure retractions can lead to unexpected allegations.
  • Filling Illegitimate Prescriptions or Refills – Filling illegitimate prescriptions is another common issue in CVS Caremark audits, and whether a prescription is “legitimate” is often a question that is not easily resolved. Similarly, filling illegitimate refills, including those for which medical necessity has not been confirmed, can lead to allegations of fraud, diversion, and other prohibited practices. Again, thorough documentation is critical, and pharmacies must be prepared to effectively present the right documentation during CVS Caremark audits.
  • Billing for Unapproved or Illegitimate Prescription Drugs – Under the Drug Supply Chain Security Act (DSCSA), pharmacies have an obligation to verify the legitimacy of all prescription drugs they purchase. Billing for medications purchased from illegitimate sources can lead to significant penalties in CVS Caremark audits; and, like many of the other issues on this list, can also trigger an investigation by the U.S. Drug Enforcement Administration (DHS), DHHS OIG, and other federal agencies. The same is true of dispensing medications that have not been approved by the U.S. Food and Drug Administration (FDA), or for which FDA approval has been withdrawn.
  • Billing and Coding Errors (Intentional and Unintentional) – Billing and coding errors are common; and, while it is easy for billing administrators to make mistakes, these mistakes will not be forgiven. This applies to mistakes made by in-house billing administrators as well as third-party billing companies, as pharmacies remain directly responsible for ensuring that the bill all payors correctly. Submitting the wrong billing code, upcoding, double billing, and numerous other issues can lead to retractions and other penalties, and they can increase pharmacies’ risk of facing future audits from CVS Caremark.
  • Issues Involving Compound Prescriptions – Compounding pharmacies are frequent targets of CVS Caremark audits. Allegations of compound pharmacy fraud can take many different forms, ranging from billing for unauthorized medications to offering and accepting kickbacks and other prohibited fees from referring physicians. In addition to representing compounding pharmacies in CVS Caremark and other PBM audits, we also represent these pharmacies in federal audits and investigations.
  • Licensing Violations – Pharmacies that violate state licensing laws and regulations will find that these violations can trigger substantial penalties in CVS Caremark audits. This includes violations such as operating without a license (i.e. opening for business before a license has been obtained), operating on a suspended or revoked license, and dispensing medications to out-of-state patients. Of course, these violations can lead to other disciplinary and law enforcement action as well, and pharmacies accused of licensing violations must often be prepared to defend themselves on multiple fronts.
  • PBM Contract Fraud – CVS Caremark’s PBM contract contains numerous terms, conditions, and restrictions that govern participating pharmacies’ prescription and billing practices. All of these provisions must be carefully followed, and contractual breaches are common issues in CVS Caremark and other PBM audits. If your pharmacy is accused of violating its PBM contract during an audit, you will need experienced legal counsel in order to address the allegations effectively and minimize any potential liability.
  • Mail Order and Telemedicine Violations – Mail-order pharmacies and those that dispense medications pursuant to prescriptions written following telemedicine consultations will often face enhanced scrutiny from CVS Caremark. These are both considered high-risk areas for prescription drug fraud, and CVS Caremark (along with other PBMs and the federal government) closely monitors pharmacies’ practices involving mail order and telemedicine prescriptions.
  • Deductible Waivers, Prescription Mistakes, and Other Issues – Authorizing deductible waivers, dispensing the wrong drug or the wrong dosage, and various other issues can trigger retractions and other penalties during CVS Caremark audits as well. When facing a PBM audit, pharmacy owners need to be prepared, and this means having a comprehensive understanding of any and all issues that have the potential to be raised.  

At Oberheiden P.C., we provide comprehensive advice and representation for pharmacies facing CVS Caremark audits. Our clients work directly with our senior pharmacy defense lawyers and pharmacy compliance consultants, many of whom are former agents with the DEA and DHHS OIG. When you contact us, we will work quickly to proactively assess your pharmacy’s potential exposure, and we will prepare and execute a defense strategy that is custom-tailored to the circumstances of your pharmacy’s CVS Caremark audit.

Speak with a CVS Caremark Audit Defense Attorney at Oberheiden P.C.

If you would like more information about our firm’s pharmacy audit defense practice, please contact us to arrange a confidential consultation with one of our senior attorneys or compliance consultants. Call 888-680-1745 to schedule an appointment, or tell us how you would like to be contacted and we will be in touch with you shortly.

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