Based on the number of calls we have received this past year, it appears that more and more desk audits are being performed resulting in notification of overpayments. FMG Pharmacy Law has assisted many clients in resolving audits in their favor, from zero withhold to only a percentage of what was sought.
In order to provide you with an advantage in the event you face a desk audit, we provide the following suggestions:

  1. Maintain prescription records for the required amount of time.
    This includes prescription hardcopies, signature logs, dispensing records, purchasing Invoices, any other supporting documentation.
  • Medicare Part D must be maintained for ten years, or longer If Involved in an audit.
  • Commercial must be maintained for seven years.
  • Do not throw away dictated phoned-in prescriptions and refill authorizations after entered into the pharmacy’s computer system.
  1. Ensure prescription records include the required elements.
  • At a minimum, retail prescription hardcopies must contain the following elements: patient name, date of issuance, drug name and strength, specific directions, quantity, refills (if applicable), prescriber name and prescriber NPI(or DEA if a controlled substance).
  • Long Term Care (LTC) prescription orders must at a minimum contain the following elements: patient name, date of order, drug name and strength, specific directions, prescriber name.
  • Please note the Drug Enforcement Agency (DEA) has additional requirements for controlled substance prescriptions.
  • The prescriber NPI may be documented on the label affixed to the hardcopy. The pharmacy is responsible for ensuring the accuracy of the prescriber ID.
  1. Submit correct claims data.
    The claim entry must be supported by the prescription order. The most common claim billing errors Identified during audits Include:
  • Over-dispensing – The pharmacy understates the day supply and dispenses more medication than is allowed by the benefit For example, dispensing a 40 day supply and billing as a 30 day supply.
  • NDC Errors -The pharmacy submits a different NDC than what was actually dispensed.
  • DAW 1 Errors-Records do not support that the prescriber ordered the brand name medication.
  1. Input the correct “Origin Code” when entering a prescription into the pharmacy computer system.
    Some 3rd Party payors now require a proper “Origin Code” that could result in an audit discrepancy if it is incorrect or missing.

Despite CMS direction that such audit findings are not to be “punitive,” we have seen audits where the auditor seeks a full recoupment of a claim for submission of an origin code that is not supported by the prescription documentation. Most recently, we have heard that even if a corrected origin code may be submitted that a $25 “administrative fee” will be charged for such a correction.

If a pharmacy is unable to populate these values within the pharmacy’s practice management system, it should contact its current software vendor for assistance.

This article is not intended to be an exhaustive list of requirements. Please see your Pharmacy Participation Agreement and the Prime Provider Manual for a full listing of requirements. If you are faced with an audit, FMG Pharmacy Law is here to help you.

Fredrickson, Mazeika & Grant, LLP, is a full service law firm with offices in San Diego, Las Vegas, San Francisco and Los Angeles. The firm’s specialty areas include construction law & construction defect, products liability, personal injury & property damage, business & real property transactions, business litigation, transportation litigation, pharmacy law, environmental/toxic tort claims, insurance law, real estate & land use litigation, equine law, and general civil litigation.

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