Questions about PBM audit procedures? We have the resources for you!

Check out the statute below or a 2018 ALBOP Policy Statement stating PBM auditors are not allowed access within the four wall confines of a pharmacy to perform the audit.

34-23-184 Audit procedures; report

The entity conducting an audit shall follow these procedures:

• The pharmacy contract shall identify and describe in detail the audit procedures.
• The entity conducting the on-site audit shall give the pharmacy written notice at least two weeks before conducting the initial on-site audit for each audit cycle. If the pharmacy benefit manager does not include their auditing guidelines within their provider manual, then the notice must include a documented checklist of all items being audited and the manual, including the name, date, and edition or volume, applicable to the audit and auditing guidelines. For on-site audits a pharmacy benefit manager shall also provide a list of material that is copied or removed during the course of an audit to the pharmacy. The pharmacy benefit manager may document this material on either a checklist or on an audit acknowledgement form. The pharmacy shall produce any items during the course of the audit or within 30 days of the on-site audit.
• The entity conducting the on-site audit may not interfere with the delivery of pharmacist services to a patient and shall utilize every effort to minimize inconvenience and disruption to pharmacy operations during the audit process.
• An audit that involves clinical or professional judgment shall be conducted by or in consultation with a licensed pharmacist.
• The audit shall not consider as fraud any clerical or record-keeping error, such as a typographical error, scrivener’s error, or computer error regarding a required document or record; however, such errors may be subject to recoupment,  provided that a pharmacy shall not be subject to a charge-back or recoupment for a clerical or recordkeeping error in a required document or record, including a typographical or computer error, unless the error resulted in overpayment to the pharmacy. The pharmacy shall have the right to submit amended claims through an online submission to correct clerical or record-keeping errors in lieu of recoupment of a claim where no actual financial harm to the patient or plan has occurred, provided that the prescription was dispensed according to prescription documentation requirements set forth by the Alabama Pharmacy Act and within the plan limits. The pharmacy shall not be subject to recoupment of funds by the pharmacy benefit manager unless the pharmacy benefit manager can provide proof of intent to commit fraud or such error results in actual financial harm to the pharmacy benefit manager, a health insurance plan managed by the pharmacy benefit manager, or a consumer. A person shall not be subject to criminal penalties for errors provided for in this subsection without proof of intent to commit fraud, waste, or abuse.
  • Any amount to be charged back or recouped due to overpayment shall not exceed the amount the pharmacy was overpaid.
  • The auditing entity shall not include the dispensing fee in the calculation of an overpayment unless a prescription is considered a misfill. As used in this paragraph, misfill means a prescription that was not dispensed, a prescription in which the prescriber denied the authorization request, a prescription in which an additional dispensing fee was charged, or a prescription error.                     
• An entity conducting an audit shall not require any documentation that is not required by state and federal law. The information shall be considered to be valid if documented on the prescription, computerized treatment notes, pharmacy system, or other acceptable medical records.
• Unless superseded by state or federal law, auditors shall only have access to previous audit reports on a particular pharmacy conducted by the auditing entity for the same pharmacy benefit manager, health plan, or insurer. An auditing vendor contracting with multiple pharmacy benefit managers or health insurance plans shall not use audit reports or other information gained from an audit on a particular pharmacy to conduct another audit for a different pharmacy benefit manager or health insurance plan.
• Audit results shall be disclosed to the health benefit plan in a manner pursuant to contract terms.
• A pharmacy may use the records of a hospital, physician, or other authorized practitioner of the healing arts for drugs or medicinal supplies written or transmitted by any means of communication for purposes of validating the pharmacy record with respect to orders or refills of a legend or narcotic drug.
• If the pharmacy benefit manager or its representative conducts an audit, the sample size shall not be greater than 150 prescriptions, provided that a refill does not constitute a separate prescription for the purposes of this subdivision.
• Reasonable costs associated with the audit shall be the responsibility of the auditing entity if the claims sample exceeds 100 unique prescription hard copies.
• A finding of an overpayment or an underpayment may be a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs, except that recoupment shall be based on the actual overpayment or underpayment of actual claims.
• A finding of an overpayment may not include the cost of the drugs that were dispensed in accordance with the prescriber’s orders, provided the prescription was dispensed according to prescription documentation requirements set forth by the Alabama Pharmacy Act and within the plan limits. A finding of an overpayment may not include the dispensing fee amount unless any of the following apply:
  • A prescription was not actually dispensed.
  • The prescriber denied authorization.
  • The prescription dispensed was a medication error by the pharmacy.
  • The identified overpayment is solely based on an extra dispensing fee.
• Each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies audited by the entity and must be audited under rules applicable to the contractor and time period of the prescription.
• Where not superseded by state or federal law, the period covered by an audit may not exceed two years from the date the claim was submitted to or adjudicated by a managed care company, nonprofit hospital or medical service organization, health benefit plan, third-party payor, pharmacy benefit manager, a health program administered by a department of the state, or any entity that represents those companies, groups, or department. An audit may not be conducted six months past the date the pharmacy benefit management plan terminated its contract to adjudicate claims with a pharmacy benefit manager, health plan administrator, or any other entity representing those companies.
• An audit may not be initiated or scheduled during the first five calendar days of any month.

The entity shall provide the pharmacy with a written report of the audit and comply with all of the following requirements:

• The preliminary audit report shall be delivered to the pharmacy within 90 days after the conclusion of the audit, with a reasonable extension to be granted upon request.
• A pharmacy shall be allowed at least 30 days following receipt of the preliminary audit report in which to produce documentation to address any discrepancy found during the audit, with a reasonable extension to be granted upon request.
• A final audit report shall be delivered to the pharmacy within 180 days after receipt of the preliminary audit report or final appeal, as provided for in Section 34-23-185, whichever is later.
• The audit documents shall be signed by the auditors assigned to the audit. The acknowledgement or receipt shall be signed by the auditor and the audit report shall contain clear contact information of the representative of the auditing organization.
• Recoupments of any disputed funds, or repayment of funds to the entity by the pharmacy if permitted pursuant to contractual agreement, shall occur after final internal disposition of the audit, including the appeals process as provided for in Section 34-23-185. If the identified discrepancy for an individual audit exceeds twenty-five thousand dollars ($25,000), future payments in excess of that amount to the pharmacy may be withheld pending finalization of the audit.
• Interest shall not accrue during the audit period.
• Each entity conducting an audit shall provide a copy of the final audit report, after completion of any review process, to the plan sponsor in a manner pursuant to a contract.

Alabama Administrative Rule 420-4-1-.04 requires pharmacists to report to the State Health Officer the dispensing of anti-tuberculosis medications and dispensing of antiretroviral medications to an infant. Please see full Rule below:

420-4-1-.04 Reporting.

(1) Responsibility for Reporting. Each physician, dentist, nurse, medical examiner, hospital administrator, nursing home administrator, laboratory director, school principal, and child care center/Head Start director shall be responsible to report cases or suspected cases of notifiable diseases and health conditions. Reports by laboratories as outlined in 420-4-1-.04(3) shall not substitute for reports by persons responsible for reporting cases or suspected cases of notifiable diseases and health conditions. Said report shall contain such data as may be required by the rules of the State Board of Health. Said report shall be in the manner designated in Rule 420-4-1-.04(3)-(7).

(2) Reports by Pharmacists. Pharmacists shall report to the State Health Officer or designee in the manner designated in Rule 420-4-1-.04(4)-(7) the dispensing of:

• Any anti-tuberculosis medication;
• Any antiretroviral (ARV) medication to an infant

Report dispensing of anti-tuberculosis medication to ADPH by:

1. calling 334-206-5330
2. faxing information to 334-206-3734 (secure fax), or
3. online through REDCap: https://epiweb.adph.state.al.us/redcap/surveys/?s=H37ENP8ADD.

Report dispensing of ARV medications to an infant to ADPH by:

1. calling 800-228-0469
2. faxing information to 334-206-3773 (secure fax), or
3. online through REDCap: https://epiweb.adph.state.al.us/redcap/surveys/?s=H37ENP8ADD, including the name of the dispensed medication(s) in the comment section.

Questions about TB? Contact the Division of Tuberculosis Control at ADPH: 334-206-5330 or online.

Questions about ARV? Contact the Office of HIV Prevention and Care at ADPH: 800-228-0469 or online.

On August 22 2022, ALBOP received the following guidance from DEA:

“In the past few months, DEA has received an increasing number of questions concerning pharmacists’ ability to add or modify information—like a patient’s address—on paper prescriptions. To address these questions, DEA has been reviewing the relevant regulations and working to draft new regulations to address this issue. As an interim measure, pharmacists are permitted to adhere to state regulations or policy regarding those changes that a pharmacist may make to a schedule II prescription after oral consultation with the prescriber.”

On July 6, 2022, in a letter to Pfizer, Inc from the FDA, the FDA has now concluded that a pharmacist may prescribe Paxlovid only pursuant to strict compliance to certain conditions.  While it is your responsibility to read and understand the entirety of the referenced letter, the Board directs your specific attention to the following portions appearing on page 4 of the letter.

• PAXLOVID may also be prescribed for an individual patient by a state-licensed pharmacist under the following conditions:
  • Sufficient information is available, such as through access to health records less than 12 months old or consultation with a health care provider in an established provider-patient relationship with the individual patient, to assess renal and hepatic function; and 
  • Sufficient information is available, such as through access to health records, patient reporting of medical history, or consultation with a health care provider in an established provider-patient relationship with the individual patient, to obtain a comprehensive list of medications (prescribed and nonprescribed) that the patient is taking to assess for potential drug interaction. 
• The use of PAXLOVID covered by this authorization must be in accordance with the authorized Fact Sheets.
• Here is the link to the full FDA updated EUA for Paxlovid – Emergency Use Authorization (EUA).

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