As any independent pharmacy owner knows, Pharmacy Benefit Managers (PBMs) have substantial latitude to decide which pharmacies will be part of their networks. In recent years, PBM power has reached unprecedented levels, with PBMs finding new ways to justify hefty recoupments and terminations for hundreds of pharmacies across the country. Lately, PBMs are zeroing in on pharmacies’ roles in the prior authorization (PA) process as a means to squeeze thousands of dollars from pharmacy owners and, in some cases, terminate a pharmacy from network.

The Hidden Risk Behind PAs

While experienced pharmacy owners know that PBM scrutiny over claims requiring PAs is nothing new, PBMs are now using vague allegations of “prior authorization concerns” as a basis to impose hundreds of thousands of dollars in recoupments. Under this theory, PBMs will assert that pharmacies made false representations when submitting PAs through third-party processors (like CoverMyMeds) by misrepresenting themselves as providers or office staff. Even pharmacies with no prior adverse audit findings, or pharmacies that have signed attestations from prescribers confirming the legitimacy of a PA, can find themselves at risk.

Why PA Processes Can Make or Break Your Pharmacy During a PBM Audit

Some PBM provider manuals explicitly contemplate pharmacies’ involvement in the PA process to ensure prescriptions are timely dispensed for patients. But without a strong documentary record and clear policies and procedures for PA approvals in place, pharmacies can quickly find themselves accused of submitting false or inappropriate PAs. A single provider denial can mean the difference between security and serious financial and reputational blowback.

Allegations like these are not to be taken lightly. A pharmacy’s survival often depends on a successful appeal response, requiring a carefully executed strategy supported by audit-ready documentation. Allegations suggesting fraudulent practices not only invite PBMs to terminate a pharmacy’s contract, but can also serve as the basis for a fraud referral to state or federal agencies, opening pharmacy owners and staff up to civil and criminal investigations.  

Protecting Your Pharmacy

In today’s enforcement environment, pharmacies that wait to address risks until PBMs come knocking will face a never-ending battle to keep their doors open. Now more than ever, it’s crucial for pharmacy owners to ensure that every policy and procedure is carefully documented. For any claim requiring a PA, pharmacies must ensure that all PA requests that are initiated and sent to a provider’s office are complete and accurate. Pharmacies should also closely review PBM provider manuals’ sections on prior authorizations, making sure to carefully tailor their PA protocols to ensure full compliance with all legal and contractual requirements. Anything short of robust documentation can easily land a pharmacy in hot water, placing your network status in serious jeopardy.

How HLA Can Help

In an era of unprecedented PBM power, appealing PBM audit findings or terminations can feel like an impossible challenge. As seasoned pharmacy audit counsel, we’ve taken on the nation’s largest PBMs time and time again—and won. Health Law Alliance specializes in providing high-quality representation to help pharmacies fight back against unjust audit findings and terminations.  

If your pharmacy has found itself in a PBM’s crosshairs, don’t wait. Contact us today for a free legal consultation.