So you’ve decided to audit your PBM! What should you expect?
An audit can be like cooking, in that some dishes can be prepared quickly, and others can take a long time and require a lot of effort. Have you ever been to a restaurant when after placing the order, you wait for what seems like an eternity to get what you ordered? This could be due to the complexity of the dish, a lack of staff experience, a problem with how the order was taken or written down, or problems with the ingredients in the dish itself. Some or all of these types of complications may also be found during a pharmacy benefit audit.
When a restaurant patron walks in to eat, they often walk in with an expectation of how long they believe the experience may take. If conditions exist which may alter the time frame, its up to the restaurant to adjust the client’s expectations. Otherwise, there may be an unhappy customer. Some plan sponsors begin the audit process with an expectation that a pharmacy benefit audit will be done within a thirty to sixty day timeframe which in many cases is unrealistic.
A good starting point is to talk with the auditing firm to understand the type of audit being done, what is needed from the plan sponsor,and from the PBM. The range of areas being audited can include basic financial aspects of the contract such as discounts, generic drugs, fees, pass through pricing, etc. Other audits may include performance guarantees, rebate management and reporting, eligibility, and plan design.
With a Financial Audit, the audit focus is on the pricing defined in the current contract and how the contract’s provisions were and are being adjudicated. Financial Audits are often completed within three months which is generally faster than other types of audits potentially taking up to 4, 5, or even 6 months depending on the full audit scope.
Keep in mind that not all PBM’s are created equal. Some PBMs may assign a very experienced internal audit support team to work with the auditor, while other PBMs may lack experience with the audit process which can add to the audit timetable. Properly formatted claim files must be obtained by the auditor along with properly executed contracts and associated documents. Each PBM has their own timetable in working with audits. Once the PBM receives formal notification of the audit, the PBM will then require NDA’s and other documents and agreements to be in order before the kickoff call to start the audit. After the kickoff call the PBM will ask for a minimum of 15 to 30 business days to provide the claims files and documents after all required NDAs are signed. PBMs will often want a minimum of 30 days to review any sample claims submitted by the auditor and some may require up to 60 days for claim research.A final point worth noting is that timeframes can be further extended when a large amount is involved. The PBM may dispute the findings. Arbitration may be necessary, or there may be a negotiation that takes place between the PBM and the plan sponsor.
Unlike the restaurant patron who may be unaware of the upcoming long wait before their meal comes, a plan sponsor who is beginning an audit of their PBM can more easily gain clarity on what their experience may be like by asking good questions of the pharmacy auditing firm and of the PBM. Clear answers may not always be forth coming from the PBM, but that alone may provide some indication of how long the process may take.