Has Your Pharmacy Been Audited? Here’s How the Pharmacy Audit Appeal Process Works
A pharmacy audit appeal is the opportunity for a pharmacy to object, in writing, to the preliminary audit findings report and to ask that some or all results (discrepancies) be overturned by providing additional information to support the original claim. The appeal period varies by state. Some states allow for more than one appeal.
During the course of normal and routine business, healthcare providers may receive insurance payments that result from an unintentional mistake or billing error. Pharmacies are no exception. Sometimes an overpayment merely involves a mistake based upon the coding used. Errors can be the result of the amount paid or the drug billed for by the provider. These mistakes in billing/coding can sometimes be resolved by simply paying back the money or making adjustments to billing/coding. Other times a detailed explanation can resolve a denial or audit issue. These are the simple solutions.
Where the Problems Begin
A more complex problem arises when the provider is unaware of a billing/coding issue. If the issue goes unnoticed for months or years, it can result in an enormous “overpayment” by the government. A pharmacy can have substantial difficulty repaying the outstanding balance of the overpayment claim. The greater risk, though, is that an overpayment may trigger a fraud investigation by the government or third-party contractor auditors.
Losing an overpayment appeal is devastating to almost any pharmacy. Overpayment determinations can involve massive revenue losses that force a provider to evaluate whether they can remain solvent in business. Additionally, there may be tax consequences involved. Sometimes a pharmacy owner may determine that the only viable recourse is to close the pharmacy business. Failure to survive an overpayment appeal is often a devastating blow to a pharmacy’s business model. This is why it can be very beneficial to engage with experienced attorneys, like the team members at Oberheiden P.C. We can help you determine a path to success, which includes keeping your pharmacy open.
What to Expect During the Audit Appeal Process
Specific timelines must be met to trigger an appeal. Compliance with these timelines will vary from state to state; these timelines are codified by the individual states. A pharmacy may appeal the preliminary findings within 10-60 days from the date of the preliminary findings notice or date of the onsite audit. This is why it is so important to retain an experienced attorney at the earliest stage possible, preferably before or during the audit.
To preserve the right to appeal, the pharmacy must fax, mail, or email a written statement showing that they wish to appeal and why they wish to appeal. The preliminary audit findings letter will include necessary contact information. When sending an appeal letter, the pharmacy must include appropriate documentation to support the appeal as well as the audit reference number. Phone calls are not accepted as appropriate documentation.
If an appeal is not received in a timely manner as specified by state law, the pharmacy will be notified in writing at the close of the audit that any claims will be reversed or adjusted depending on the identified discrepancy. The auditor who conducted the original audit will typically review the pharmacy’s appeal. When the appeal has been reviewed, the pharmacy will be notified of the result.
There is a possibility of a second appeal, but this situation varies by state. Second appeals are handled on an individual basis. Any unresolved audit results and/or appeals are documented and presented to the plan sponsor for final determination as governed by state or federal law and according to the terms of the pharmacy contract.
Consider These Additional Aspects of Audit Appeals
- CMS-directed or CMS-recommended audit claims may follow a different timeline and documentation requirements than that of other contracts, such as Pharmacy Benefit Managers (PBMs).
- After the end of an audit resulting in discrepancies, pharmacies must complete a Root Cause Analysis (RCA) form explaining why each discrepancy occurred. The form will also include a timeline for corrective action by the pharmacy to prevent repetition of the discrepancy. A pharmacy’s RCA response will not change the outcome of an audit, but it will be considered when evaluating future audits.
- Claims with common package size or quantity errors (often resulting from keying errors by pharmacies) may be adjusted by programs. Appeals will not likely be accepted for obviously overbilled quantities.
- Many programs aim to close desk and onsite audits in about 90-120 days. Depending on the circumstances, findings of the audit, and state-mandated appeal timelines, the audit may take more or less time to complete.
- Audit notices are usually sent via fax to a pharmacy’s fax number on file with NCPDP. In order to receive audit notices, pharmacies must update their fax numbers with NCPDP.
Upon receipt of the final audit results letter, pharmacies may appeal the final audit findings by submitting a pharmacy audit appeal form. On the form, the pharmacy will explain why it disagrees with the audit findings for each claim deemed discrepant. No new documentation will be considered.
Initial appeals should be submitted via certified United States Postal Service mail, FedEx, United Parcel Service, or another traceable shipping method. Appeals must be postmarked within 30 days of the date of the final audit results letter. If the appeal is not postmarked by this date, the audit will be considered closed and the adjustment process will begin.
Audit Appeals Are Not Always a Win or Lose Situation
After an audit of your pharmacy business has been conducted, it’s possible that you will be ordered to repay the PBMs, Medicare, or Medicaid claims that have been determined by the auditor as inappropriate. Oberheiden P.C. can work directly with you to guide the appeals overpayment process and to avoid any overreach of the pharmacy audit reimbursement program.
This is not a black or white, win or lose situation; an audit appeal “win” can be a compromised settlement which has the net effect of a substantially smaller reduction in governmental revenue recoupment. A win could also be a total reversal of the overpayment audit demand upon the submission of additional supporting documentation. Your pharmacy could find success through a negotiated settlement of a repayment schedule that allows for your pharmacy to remain solvent, continuing in operation while the repayment is ongoing.
Talk to a Pharmacy Audit Defense Attorney at Oberheiden P.C.
Our experienced pharmacy audit defense attorneys will remain steadfast allies, aggressively and assertively working to whittle away at the audit finding and quashing the pain of the final audit. The Oberheiden P.C. office assists clients by representing them in the overpayment determinations process.
Auditors utilize a language often foreign to average pharmacists or managers in the pharmacy industry, but we “speak auditor.” Understanding the audit process is necessary to assertively dispute all purported errors and to prove the validity of claims. In the end, we’ll help you avoid a substantial reduction of reimbursement and a negative perspective of your pharmacy. If you’d like to talk to an attorney today, call us at 888-680-1745 or send us a message online.