Pharmacies face a wide range of regulatory and contractual challenges, none more daunting than an audit from Express Scripts, Inc. (ESI). These audits, often conducted under the pretense of identifying Fraud, Waste, and Abuse (FWA), can significantly impact a pharmacy's financial standing and its ability to serve patients.
ESI vigorously enforces pharmacies' federal compliance obligations. Suppose ESI accuses your pharmacy of non-compliance in any facet of its operations. In such cases, the consequences can be severe, including loss of eligibility and referral for a federal civil or criminal investigation.
As a result, when facing an ESI audit, a prompt and effective response is required, which begins with engaging a pharmacy compliance and defense law firm with attorneys and consultants who have specific experience dealing with ESI.
Understanding the audit process and your rights as a pharmacy is crucial. It equips you with the knowledge to challenge unfair findings and protect your interests, ensuring a fair and just audit.
At Eisner Gorin LLP, we provide representation for ESI audits nationwide. Our lawyers are highly experienced dealing with the following agencies:
- U.S. Drug Enforcement Administration (DEA),
- U.S. Department of Health and Human Services (DHHS),
- U.S. Department of Defense (DOD) and other federal agencies.
We are familiar with all aspects of pharmacies' compliance obligations under Medicare, Medicaid, Tricare, and ESI's pharmacy benefit manager (PBM) contracts, and we have a proven track record of helping pharmacies, pharmacy owners, and pharmacists avoid serious penalties.
What is Express Scripts, Inc.?
Express Scripts, Inc., now part of Cigna, is one of the largest Pharmacy Benefit Managers (PBMs) in the United States. PBMs act as intermediaries between insurers and pharmacies, managing prescription drug benefits for insurance plans.
They negotiate drug prices with manufacturers, establish formularies, and reimburse pharmacies for dispensing medications to insured patients. This role gives PBMs significant influence over the pharmacy industry.
One of ESI's key responsibilities is monitoring its network pharmacies. Ensuring compliance with its standards and those mandated by state laws requires audits, which are often referred to as FWA investigations. While these audits aim to address fraudulent practices, they can also identify minor errors in documentation or claim submissions.
What is an FWA Audit?
FWA audits are designed to detect and prevent fraudulent billing practices, improper reimbursements, and other irregularities. These audits are often framed around protecting plan sponsors, insurers, and patients from unnecessary financial losses.
However, from a pharmacy's perspective, the audits frequently extend into areas of technical noncompliance unrelated to intentional wrongdoing.
During an FWA audit, ESI reviews claims data along with purchase invoices, prescriptions, and patient records. The audit may include reconciling invoices to verify that the quantities of drugs purchased match the claims submitted.
ESI often questions discrepancies caused by administrative errors or billing practices that comply with state laws but differ from ESI's contract requirements.
What Is At Risk During an ESI Audit?
As with all types of pharmacy audits and investigations, the potential consequences of an ESI audit depend on various factors. These factors include everything from the sufficiency of your pharmacy's compliance efforts to the specific ESI personnel who are examining your pharmacy's books and records.
Mitigating your pharmacy's risk during an ESI audit requires a comprehensive and detail-oriented approach. It's essential to effectively challenge unauthorized practices, faulty assumptions, and flawed methodologies during the audit process.
Understanding the potential consequences of an ESI audit is crucial. Without the necessary steps to protect your pharmacy, an ESI audit can potentially lead to serious outcomes.
- Recoupments. Instituting recoupments is among ESI's most common and most effective enforcement tactics. If your pharmacy is accused of overbilling as a result of an audit, ESI can take recoupment action in order to recover your pharmacy's alleged fraudulent billings.
- Denial of Claims. In addition to recouping payments for previously billed claims, ESI can also deny pending claims. If your pharmacy has a substantial volume of pending claims, this could pose a risk to its cash flow.
- Review of Prepayment. ESI can focus on the amounts billed, subject to its audit, and on future billings. If ESI implements pre-payment review for your pharmacy on allegations of billing fraud, it can lead to more claims being denied and delay payment on future claims by six months or longer.
- PBM Contract Termination. If an ESI audit uncovers significant evidence of billing fraud by the ESI's auditors, it can lead to termination of the subject pharmacy's PBM contract, which carries severe financial consequences.
- Federal Investigation Referral. Suppose ESI's auditors find evidence of large-scale billing fraud or other pharmacy compliance failures. In that case, ESI may refer the subject pharmacy to the DEA or another federal agency for investigation. These federal agencies, such as the DEA, can collect evidence through various other means. If these efforts uncover evidence of civil or criminal statutory violations, then this could lead to federal prosecution for pharmacy fraud.
Potential Penalties for Noncompliance
Failing to meet ESI's standards during an FWA audit can result in penalties ranging from claim reimbursement recoupment to more severe measures, such as network termination. Some common findings that could lead to penalties include:
- Incomplete Documentation: Pharmacies may face penalties for failing to provide original prescriptions, proof of copay collection, or complete purchase invoices.
- Prescribing Errors: ESI may recoup payments for prescriptions deemed invalid due to missing transfer information or dosage discrepancies.
- Quantity Discrepancies: When billed quantities don't align with prescribed amounts, the pharmacy may be required to repay reimbursements.
Recoupment amounts can add up quickly, especially for high-volume pharmacies. A single discrepancy uncovered in an audit can result in an extensive chain of claims being flagged for repayment.
Beyond financial losses, the reputational damage from these audits can be devastating, highlighting the need for proactive defense.
The Right to Challenge Unfair ESI Findings
Pharmacies that face steep penalties or network termination must understand that they have the right to challenge ESI's findings. ESI audits are governed not only by the terms of the PBM's provider manual but also by federal and state pharmacy laws.
PBM overreach occurs more commonly than you think, and knowing how to counter it legally may be key to your pharmacy's viability.
One of the first steps in challenging an unfair audit finding is thoroughly reviewing the audit report. Identifying procedural violations or a lack of evidence to support ESI's conclusions can lay the groundwork for a successful appeal.
Additionally, many states have enacted pharmacy audit laws that offer protection, such as requirements for PBMs to allow pharmacies an opportunity to correct minor clerical errors before penalties are assessed.
It's also important to be aware of contracts and tools designed to support pharmacies. For example, "Any Willing Provider" laws in some states prevent PBMs from terminating pharmacies from networks without proper cause. These laws aim to ensure that patients continue to have access to necessary healthcare services.
How an Attorney Can Help
The best way to address the complexities of an FWA audit and challenge unfair findings is to hire an experienced federal defense attorney. An attorney experienced in pharmacy law and PBM audits can help in the following ways:
- Audit Review and Compliance: A skilled attorney can determine if ESI's audit process complied with laws and contract terms.
- Appeals and Disputes: Attorneys can help appeal audit findings, challenge penalties, and negotiate settlements.
- Preparing for Future Audits: Attorneys can guide pharmacies in corrective actions to prevent issues and improve compliance.
- Legal Protections: An attorney can utilize federal and state laws to safeguard pharmacies against unfair or abusive audit practices.
For additional information, contact our federal criminal defense law firm, Eisner Gorin LLP, based in Los Angeles, CA.
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