For new pharmacy owners, participation in a pharmacy benefit manager (PBM) network presents both opportunity and exposure. While network membership enables access to critical reimbursement streams, it also carries an ongoing obligation to comply with PBM  provider manuals and complicated audit requirements. Notably, the majority of various PBM contracts and provider manuals grant PBM auditors broad authority to review claims and records with little or no notice. Therefore, pharmacies must be prepared for regular scrutiny and increased oversight. In today’s regulatory climate, treating audit readiness as a continuous compliance function, rather than an emergency response, can save significant time, expense, and operational disruption.

Audit preparedness begins with understanding the terminology that governs PBM oversight. The phrase “days’ supply” must align precisely with the prescriber’s instructions and the plan’s rules; miscalculations in this area will result in audit discrepancies. Moreover, signature logs and/or proof of delivery documentation must consist of legible, date-matched signatures and/or delivery confirmations that clearly indicate when the prescriptions were delivered and received by the intended recipient. Notably, PBMs  monitor claim data continuously for anomalies such as early refills, unusually high-dollar transactions, test claims, and various reversal trends. These data points often serve as “audit triggers,” alerting PBMs to patterns that warrant further review. Understanding these terms and triggers in advance helps new pharmacy owners anticipate what auditors will request and why.

Before filling a single prescription, it is essential for new pharmacy owners to establish a robust recordkeeping and compliance infrastructure. PBM provider manuals typically require pharmacies to maintain complete documentation, including prescription hardcopies, signature logs, purchase invoices, eligibility verification, and detailed copayment collection records. These materials must be readily accessible for both desk and field audits, which may occur with minimal notice. Many PBM contracts also impose lengthy document retention periods, making it crucial for new pharmacies to adopt a document management system that allows for quick and full retrieval of all relevant records. Pharmacies unable to produce the requested documentation risk large recoupment demands and, in more serious cases, termination from the network.

When an audit is initiated, PBM auditors frequently begin their review with high-cost or high-reimbursement claims, as these present the greatest potential for financial recovery. Their analysis typically focuses on verifying the legitimacy of the prescriber–patient relationship, confirming that copayments were collected prior to dispensing, ensuring the days’ supply aligns with the prescriber’s directions, and confirming that delivery or pickup was properly documented.

Auditors also scrutinize claim reversal activity and closely review inventory records to identify discrepancies or inconsistencies. In essence, to minimize the risk of substantial recoupments, every claim, particularly those of high monetary value, should be treated as audit-ready from the moment it is processed and submitted for reimbursement. 

Indeed, thorough and well-organized documentation remains the pharmacy’s strongest line of defense. Every prescription and refill should be maintained in a system that allows for efficient and immediate retrieval. Signature logs must be orderly, clearly legible, and accurately matched to their corresponding prescriptions.

For prescriptions delivered to patients, delivery confirmations must be easily accessible. This is especially critical when third-party vendors are used for deliveries and signature collection. Because such vendors often retain delivery confirmations only for a limited period, pharmacies should ensure that these records are promptly downloaded and securely stored within the pharmacy’s software system.

PBMs explicitly reserve the right to recoup funds when documentation is missing, incomplete, or illegible. Therefore, consistent and comprehensive recordkeeping is not only a regulatory obligation but also a key demonstration of the pharmacy’s diligence and good faith efforts in any future audit appeals.

Additionally, when an audit notice is issued, time is of the essence as deadlines are strict. PBMs typically begin the process by issuing an initial discrepancy report, followed by a limited appeal window during which pharmacies may submit supporting records and written explanations to dispute or clarify audit findings. Familiarity with each PBM’s online portal, documentation requirements, and appeal procedures is essential, as missed deadlines can result in automatic forfeitures and substantial financial loss as well as network termination.

PBM audit preparedness is a comprehensive compliance function within the pharmacy, one that requires coordination across multiple levels. Pharmacies should designate a primary staff member to oversee all audit responses, train personnel in document retrieval and portal management, and maintain ongoing relationships with counsel experienced in PBM audit defense. Regular internal reviews further strengthen readiness by allowing pharmacies to identify and remediate potential deficiencies before they escalate into formal audit findings.

Sustained success in the PBM environment depends on treating compliance as a continuous operational priority, not a reactive, crisis-driven exercise. Pharmacies that implement robust documentation protocols, maintain accurate recordkeeping, and adhere to proper claims submission practices will be best positioned to navigate audits efficiently and with minimal disruption.

At Health Law Alliance, our experienced PBM audit defense attorneys advise independent and specialty pharmacies on all facets of PBM compliance, audit response, and regulatory risk management. We assist clients in interpreting complex PBM contract provisions, developing comprehensive policies and procedures, and preparing persuasive audit appeal submissions when disputes arise. For new pharmacy owners entering the PBM landscape, early and proactive legal guidance can make the difference between maintaining long-term network participation and facing costly recoupments and/or network terminations. Contact us today to ensure your pharmacy is fully prepared to respond effectively to PBM audits and safeguard its continued success.