The Business of Pharmacy Podcast™
Feb. 21, 2022

More PBM Audit Abuse | Dae Lee, PharmD, and Harini Bupathi, Attorneys at Frier Levitt

More PBM Audit Abuse | Dae Lee, PharmD, and Harini Bupathi, Attorneys at Frier Levitt

Dae Lee, PharmD, and Harini Bupathi, Attys at Frier Levitt talk about new abusive audit practices by the PBMs.

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More PBM Audit Abuse | Dae Lee, PharmD, and Harini Bupathi, Attorneys at Frier Levitt

Mike Koelzer, Host: [00:00:00] You're listening to The Business of Pharmacy Podcast with me, your host, Mike Keer

Day and Harini. For those that haven't come across you online, introduce yourself and tell our listeners what we're talking about today. My name is 

Harini Bupathi, Attorney: Seren bpa. I'm an associate at the law firm of Fry and Levit. I'm in what we considered to be our PBM practice. 

Dae Lee, PharmD, Atty: My name is Lee. I'm one of the pharmacist attorneys at Fire 11.

I'm in the same PBM department as Reini. Today we are going to discuss PBMs ongoing audit efforts against pharmacies, as well as the, uh, abusive practices against pharmacies and the recent action taken by the states, including state laws that have been enacted to give, uh, another layer of protection for the pharmac.

Mike Koelzer, Host: You said the word against and when I think of it like an IRS audit or something like that, I haven't had one. And thankfully I don't plan on getting one. But when I hear, like if I said that the IRS was going to audit me, my mind would not say the IRS is coming against me. And I think that just shows right off the bat that the PBMs are against us.

Dae Lee, PharmD, Atty: Yeah, a hundred percent PBMs, although they purport to maintain a network of independent pharmacies for their plan sponsors, you know, they do have contractual obligation for the plan sponsor to audit the pharmacies. The purpose of the audit is to monitor the pharmacies, um, performance as well as to, uh, reduce any errors or reduce the, uh, waste.

Prescription filling. However, audits for PBMs have been a source of revenue, so that's why I characterize it as, uh, PBMs auditing against the pharmacies instead of trying to serve the main purpose, which is find errors or, uh, inadvertent errors, uh, or to reduce the total drug spending of their plan sponsor.

Mike Koelzer, Host: The thing that gets me too is these are public companies and it's a very mature market. It's not like they're gonna go out and just gain a bunch of market share. And so when you look at a public company, they've got to raise their profit every year and. It seems like this is a way to do that. If you're not gonna get a lot more lives, you, you make money on the front end and back end, however you can.

And I'm sure this is a way they do it. 

Dae Lee, PharmD, Atty: Yeah. Yeah. I totally agree. Uh, with your, um, comment, I mean, PBMs, there are top three PBMs that handle, uh, or that process 80% of the Americans' prescriptions and prescription claims. and these three PBMs are in the Fortune 500 list and you know, from 30,000 feet above.

What they are doing is they're basically administering and managing, you know, prescription benefits. And it is quite hard to understand how their main function, which is managing and administering prescription claims, lands them in the Fortune 500 company list. If you look at, you know, the underlying activities conducted by pbm, it is more geared towards profit making because they all have shareholders and they do owe obligations to their shareholders to increase the profits.

You know, unfortunately, at the expense of the pharmacies, at the expense of the, um, patients and the 

Mike Koelzer, Host: taxpayers. Harini, you've been in this now for a few years. Are you jaded yet? It's 

Harini Bupathi, Attorney: hard to say. I guess I wouldn't say the word jaded. I do almost have personal feelings invested in the fights that pharmacies have now.

Um, We just see so much going on When we deal with audits, when we deal with terminations, it's important not to just realize that they're, yes, businesses and pharmacies, but we're obviously dealing a lot with the pharmacy owners themselves. Um, so it takes a lot more of a, I don't know, I, I, I guess maybe a little bit jaded.

Um, looking back at that, it's definitely frustrating to see the ongoing, um, struggles that you see a lot of independent pharmacies. Especially when you go back to how much money PBMs make. Um, audits are bad. Yes, they're a means of recovery. But looking at audits, you also have audit fees and they're pretty arbitrary in many senses.

Um, there used to be small audit fees associated with audits a couple years ago. Now you have some audit fees that account for about 20% of a pharmacy's total. Now you take a routine desktop audit of a pharmacy, [00:05:00] um, and you assess a 20% fee on that. That's, it's, it's a lot for any small pharmacy business.

Mike Koelzer, Host: Wait a minute. The fee, The fee. Tell me about the fee. I'm, I'm just not imagining that. I'm thinking of a penalty. What does fee mean? Sure. 

Harini Bupathi, Attorney: So you'll have some major PBMs who audit pharmacies, subject pharmacies to those, um, full recoveries of the claims that they submitted. Sure. That's because of the alleged discrepancies that they've made, and, you know, somebody in the claims over to the pbm.

But the problem is that you also have a percentage taken on top of that. So you might have, say, an audit fee of about a hundred thousand, uh, but then you might have a PBM who assesses a 20%. The Audit fee on top of that is a hundred thousand. So that amounts to what, 120,000 in total for the, for the pharmacy to have to pay back.

So not only are they paying the total amount of the claim reimbursement that they receive, they're also paying those feedback over to the pbm. And according to PBMs, it's the cost of what it takes to conduct an audit of the pharmacy. And I mean, Basically, pharmacies are the ones fueling, uh, the salaries of the auditors to some extent, and that's not, you know, much more than that as well.

Um, so, you know, the fee is really troubling. Uh, pbm a, it's the cost of an audit, but that's very doubtful. 

Mike Koelzer, Host: That 20% they probably say that goes to the. Audit organization or do that, They don't make any bones about saying that. That's just going right to the pbm. They've 

Harini Bupathi, Attorney: Just always said, We are assessing an audit fee for the cost of an audit.

So I'm sure it goes over to the PBM versus the audit department, but we don't have that insight because a PBM is not transparent about those types of auto fees. 

Dae Lee, PharmD, Atty: It would be also interesting to see. That PBM also charges the plan or plan sponsor who is footing the bill for the patient's claims for conducting the same audit.

So PBM could be, you know, double dipping, getting the audit fee from the pharmacy, getting the same audit fee from the plan sponsor. Typically, 

Mike Koelzer, Host: are those audit teams, are they actually employees of the PBMs, or do the PBMs use a, like an outside firm of some sort? You'll 

Harini Bupathi, Attorney: have a combination. Uh, most PBMs will have their own audit team to conduct audits of pharmacies, but you'll also have the same PBMs contract out a number of audits to third party groups.

And those third party groups arguably would be much more financially incentivized to find discrepancies. During those audits. 

Mike Koelzer, Host: The third parties would have more incentive because they need to get paid on top of that. That's their revenue source versus a pbm, which is already getting revenue, arguably.

Harini Bupathi, Attorney: Yeah. Um, you could have a third party auditing group who might be contracted on a percentage basis as well. You know, we don't have insight into what those contracts look like with those third parties. 

Mike Koelzer, Host: You guys probably never get the pleasure of talking to an auditor themselves, right? 

Harini Bupathi, Attorney: We get to have some connections with auditors, uh, some limited interactions, but being legal counsel, we do also converse primarily with legal counsel of the major PBMs.


Mike Koelzer, Host: We know that the PBMs are always trying to increase their profit. What are the new tricks they have, and I'm gonna call 'em tricks and scams. What are the new tricks and scams they have? Have they been creative over the last year? 

Harini Bupathi, Attorney: Yep. We have this new requirement that a major PBM put out there that pharmacies who plan to make bulk purchases of medications.

Now I have to ask permission to make those bulk purchases for those drug products from the pbm. And it's not a situation right now as we're aware of where you just email the PBM and say, Hey pbm, I'm gonna make this bulk purchase. You have to physically mail a request over to the pdm and the PBM has to physically mail back, presumably, or fax.

We're not sure yet of how that's gonna play out with their team. Um, permission to the pharmacy saying, Hey, pharmacy, All right, looks good. You know, you can go ahead and make this bulk purchase. And the reason that they're doing that is because you'll have inventory audits. And so a lot of PBMs restrict how far.

They'll look at a pharmacy's inventory to account for the claims that they might have dispensed in a particular time period, which makes absolutely no sense. Absolutely no sense. 

Mike Koelzer, Host: We got screwed on that by our state, whatever the PBM they use, and the person on my team doing this [00:10:00] told me, this was a few years ago.

The person on my team told me, Well, we can only show the purchases in like. Let's say December for the following year's audit. And I thought, of course he was wrong. I'm like, Well, no. We bought a ton of it back in March when it was lower priced, but they wouldn't take that. And needless to say, I was angered by that.

If I still let them get me angry, I, and I know I'm not supposed to let people get me angry. That's like a new psychological thing. And you know, people's like, Well, you're in control of your own feelings. But I still say that PBMs are forcing me to be angry. That's a ridiculous thing. 

Harini Bupathi, Attorney: Yep. It used to be that, okay, fine.

During the time of an audit, they'll go back about three months. Some PBM will only allow for a month, but this new bulk purchase notification requirement is just absolutely ridiculous. It goes against. A standard pharmacy practice, like you said, a pharmacy's gonna make purchases knowing that prices are gonna go up or they're getting a good deal to be able to purchase medications in bulk.

And as long as the medication's not expired, what's it to anyone? You know, um, there's a lot of assumptions that PBMs will say that they're giving pharmacies by giving, um, them like a certain month look back period. For example, uh, we're only auditing your claims for our pbm, uh, for our patients. We have to assume that you're dispensing medications to other patients of PBMs, and we're not looking at that.

So that's why we think a month or three months is the reason. But to add on another layer of, um, I guess a requirement for pharmacies that they basically have to ask for permission, that I think is just a, is a bit too 

Mike Koelzer, Host: far. Let me get this straight. They're not really asking for permission because a pharmacy can buy anything, right?

They're basically saying, You can buy it, but if you don't get permission ahead of time, it's not gonna pass an audit. Would that be a fair statement? 

Harini Bupathi, Attorney: Yes, exactly right. So if a pharmacy gets audited and you're asking the PBM to consider, say, purchases from two months prior to the audit for this particular pbm, they're saying, we won't consider it because you didn't get our permission.

To make this purchase to be considered in this audit, we might make what we might have on your pharmacy. 

Mike Koelzer, Host: What is the standard? Is it a month without permission? 

Harini Bupathi, Attorney: It depends on the PBMs. Uh, you'll have some PBMs who have introduced this requirement, some that have not. Uh, but for the, this particular pbm, it's a month 

Mike Koelzer, Host: That is so disgusting.

With that permission, you have to have, I can't even take it. We have to go onto the next one. 

Dae Lee, PharmD, Atty: Well, besides implementing new audit practices, PBMs also implement additional requirements. For example, like copay, right? Historically, when PBMs ask for, um, ask for, uh, copay documents from pharmacies to demonstrate that the pharmacy did in fact collect the copays from the patient, historically, pharmacies can, you know, provide, uh, cash register receipt or, uh, with, uh, you know, last four digits of, um, uh, uh, credit card or check images.

But nowadays they even go beyond. And PBN started asking about, uh, asking pharmacies to provide patient test stations on top of what, you know, what they have been requesting from the pharmacies. Keep in mind the audits are happening on claims that have been filed a year or two years ago, and a pharmacy has to juggle through, you know, their day to day operation on top of, you know, uh, responding to the audit.

And they have to now go back to the patient and ask for, uh, test station signed by the patient. 

Mike Koelzer, Host: So this is not a signature log that they got the medicine. This is another atest station that they paid for? Yes. That's crazy. 

Dae Lee, PharmD, Atty: And a patient may not even be a patient of the pharmacy anymore at that time. And how, like, who's gonna respond to that And if the pharmacy doesn't provide all the requested documents?

Then the PBMs will recoup the entire amount of the reimbursement paid on that claim and the claim being filed a year or two years ago, and the pharmacy already dispensed that drug. 

Mike Koelzer, Host: What if the person died? 

Dae Lee, PharmD, Atty: The person dies. Then you can't get an attestation and you have to explain that to the pbm 

Mike Koelzer, Host: unless they're cremated.

I'd go and put a pen in. their Shriveled up gray hand in the grave and signed their name with it. 

Harini Bupathi, Attorney: And 

Even then, sometimes when you do get attestations if the auditor says that he can't confirm or authenticate an attestation with a patient, probably because he tried to call the patient and the patient didn't pick up.

That's [00:15:00] another reason for them to not accept it. 

Mike Koelzer, Host: Wait, 

the auditor contacts the patient? 

Harini Bupathi, Attorney: Yes. 

Mm-hmm. , 

Dae Lee, PharmD, Atty: and it's not a friendly conversation that the PBM's auditor is having 

Mike Koelzer, Host: The auditor calls up Mrs. Smith, who is 83 years old and says, Did you pay this pharmacy $20 18 months ago on October 3rd? Something like that.

Yep. That's what they do. 

Harini Bupathi, Attorney: And Mrs. Smith might say, Oh, I don't know what you're talking about. 

Mike Koelzer, Host: Goodbye. Why would they even answer their phone? I mean, I don't answer my phone if I don't know who it is. Why would they not think it's a scam that someone's calling and asking that? And if they don't get ahold of 'em, then that goes against the pharmacy.

Yep. Yeah. And not only for the copay, but you're saying the whole amount of the drug because they're saying that it was wrong. So we're not just gonna recoup the 20 bucks, we're gonna recoup the $500 cost of the drug. Yes, exactly. Yep. That's insane. 

Dae Lee, PharmD, Atty: And who knows where the money goes exactly. Is it gonna be in the, uh, PBS pocket or is it gonna be relayed back to the A plan 

Mike Koelzer, Host: sponsor?

Doesn't seem right that a third party can even get in there, and it's not even a letter to the patient's home. It's a phone call. 

Harini Bupathi, Attorney: We'll see a combination depending on the auditor, depending on the pbm, we'll see communications being sent out to patients or prescribers depending on the issue. Uh, or we'll say, uh, follow up calls as well.

So it. And when they make this call, it's pretty aggressive. Uh, especially if you have a PBM who says that they're conducting an investigation of a pharmacy versus an audit of a pharmacy. The conversation becomes much more different when they use the word investigation or the words potential fraud.

Waste abuse becomes a very different conversation on the receiving end. 

Mike Koelzer, Host: I'm still walking across these hot colds. I can't spend too much time on these or I'll get damaged. What's another example? 

Harini Bupathi, Attorney: I know Day loves, uh, signature issues with covid weavers . 

Dae Lee, PharmD, Atty: Right, Right. Um, it is, you know, As you may know, PBMs, other government bodies have been issuing or have announced, uh, waivers to, you know, encourage or to ensure that the patients have access to healthcare during the time of.

Covid pandemic. Right. And a lot of PBMs, especially the top three or the major ones, have come out with, uh, covid, uh, signature log waivers. So that was announced. Those waivers were announced. Um, I believe sometime in 2020 maybe, um, March, uh, April of 2020. And then a year or two years later now, we are seeing a lot of, uh, PBM audit activities on claims that have been.

Or filled and dispensed during the pandemic. And one of the documents that they're seeking is, of course, a signature log. When they actually waive that, that, um, signature log requirement. And when they only requested pharmacies to write, you know, covid, and then in lieu of the patient signature because, you know, they, they're, they allow the pharmacist to either deliver those medication without getting the patient signature, um, or, you know, uh, giving it to the patient on a curb.

But now, you know, a year or two later, two years later, they're auditing those claims, you know, trying to penalize the pharmacy for not collecting signature logs when they're the one who actually waived those requirements. So that is another, you know, prime example of PBMs, abuse audit practices against pharmacies.

Mike Koelzer, Host: I put nothing past them as far as doing that. It's not like that's an error on their part. They can basically do what they want and who's gonna fight that. And if some people fight it, not everybody's going to. That's disgusting right there, you know, taking advantage of the 

Dae Lee, PharmD, Atty: pandemic. Right, Right. And, uh, even if they con pvs conduct an audit, right then the audit amount is, you know, uh, pretty small maybe, um, thousand or 2000.

And then the pharmacy doesn't have the time and resources to fight that. And though, and that audit amount or discrepant amount is gonna be, um, recruited by the p. However, that doesn't mean that that audit discrepancy is gone. It's still there. It's kept within the pharmacist's file. Just because you pay back the amount of money requested by PVM does not mean that you're under-cleared.

So what the PBMs gonna do is they're gonna come back a year or two years later, do another, another audit, combine the old audit finding, which you already pay for, plus the new audit finding. And try to come up with a reason to terminate a pharmacy from 

Mike Koelzer, Host: their. Yeah, you're saying that there's probably a certain level where a pharmacist is not gonna fight too much.

In other words, maybe it's under a thousand [00:20:00] dollars, they're not going to do much, but over 10 they're going to then put up a bigger fight. You're saying that these smaller ones, a lot of the pharmacies say, Screw it. They don't wanna spend the time, so they get the money that way. But then as you say, you've got.

Chits against you and you're on your way to maybe being tossed out. Yeah. 

Dae Lee, PharmD, Atty: And we have seen a lot of, uh, termination activities in the past month or so. Uh, even stemming from a very, very small discrepancies in dollar 

Mike Koelzer, Host: amount. Watch. Here's my take on it, the. PBMs, they've got a certain formula where they wanna have a certain amount of pharmacies in the rural areas, and they only want the chains in certain areas, and they want the mail order, this and that.

They've got their targets and they would rather find a reason to boot people out in these certain areas if they have to get to their target. I mean, there's no reason not to. That's their excuse. 

Harini Bupathi, Attorney: You know, actually on that, I've seen a termination recently or an attempted determination over signature logs. A pharmacy gets audited for that signature log issue, gets an audit discrepancy, says, All right, it's a small amount.

We'll leave that alone. PBM comes and tries to terminate the pharmacy. In the meantime, they get a second audit. Same exact documentation submitted during, you know, the same time as the first. Absolutely no discrepancies found with this. Those signatures look exactly the same. There's absolutely no issues with that auditor.

It's different from the first audit, and it's just so puzzling. Obviously, you could see that they're not even applying it consistently. And you know, the pharmacy was facing termination over a discrepancy that wasn't a. because of the waiver that the PBM had placed and also in light of the second audit that had been conducted of the pharmacy.

It's not 

Mike Koelzer, Host: the same exact claim though, right? Not the same exact claim, but the same period, same reason, 

Harini Bupathi, Attorney: same type of audit, same type of documentation, same waiver in place. Different outcomes. 

Mike Koelzer, Host: I wonder who cooks up these things. They're definitely cooked up. It's not like you've got some high school kid that got hired in and is kind of just making an error or reading something wrong or something like that.

These are definitely cooked up. 

Harini Bupathi, Attorney: I wish I was able to sit inside a PBM audit. And see what goes on there. 

Mike Koelzer, Host: If somebody were listening in to this, not in the pharmacy world, the biggest issue I see is how these auditors take back the full amount of a claim for an error. Let's say you have a thousand dollars drug and there's some clerical error or something.

It's never a $50 fine on a thousand dollars drug. It's a thousand dollars fine. Plus 20% kind of thing. Yeah. 

Dae Lee, PharmD, Atty: Yeah. I mean, we deal with it on a daily basis and especially for things like clerical errors that result in a thousand dollars. Um, recruitment on a, on a claim, you know, certain states have the, um, have enacted PBM reform laws, uh, that take away theoretically, uh, prohibit PBMs from assessing, uh, re recruitment on, uh, clerical errors.

Pharmacies, you know, wouldn't really know that. So, you know, they contact us. And as the, uh, legal representative of the pharmacies, we argue our argument, legal argument is creed around the um, uh, applicable federal and state laws. 

Mike Koelzer, Host: I've set you up for a trick question earlier about being jaded because here's the thing with you guys.

You might be jaded in the sense that a pediatric cancer doctor is maybe jaded with his patients, unfortunately dying. But that's his job. That's what he gets paid for. You guys are just in this position where, and rightfully so, you're in this position to help all the pharmacists getting screwed over by this.

And you know, that's job security and there's certainly nothing wrong with that, but it's just a shame I think, of these poor I'm, I guess I'm part of 'em. We don't do brand names anymore, so I've got a certain protection against. The future of an audit, just that the numbers aren't there. But I think of these pharmacists that are putting out thousands and thousands of dollars, often taking a loss on it and then having themselves opened up for that audit down the road.

It's just a sad thing. Yeah. 

Dae Lee, PharmD, Atty: But, um, fortunately in the past, in the past years, [00:25:00] there have been a lot of, um, state actions. Against, um, PBMs, uh, whether it be enacting, uh, PBM reform laws in different states, or, you know, creating a, a grassroot movement, The legislators, uh, introducing new bills to regulate PBM because at the end of the day, Until several years, years ago, PBMs have not been regulated at all.

Even in the, um, public space, even in the, uh, government funded, uh, space, they have not been regulated at all. But fortunately nowadays, you know, the landscape is changing, uh, significantly. 

Mike Koelzer, Host: I'm glad you brought up the states cuz as I sit here bemoaning the fact of the PBM abuse, that does seem to me to be the spot where some work is being done.

At the state level. How much pushback are the states getting for pbm? Legislation like this, like audit stuff. This seems to be more like fine line stuff. And I know that there was a whole Rutledge SCOTUS thing about that. Maybe it didn't seem to be as simple as this, you know, Would a, would changing a line in a PBM audit that the state allowed, is that like a Supreme Court thing, or is that like an easy gateway for the state to do?

I wanna 

Dae Lee, PharmD, Atty: say it's not easy because, you know, PBMs have deep pockets, they have a very, um, expensive, uh, lobbying power. So it's not easy for states to enact. You know, PBM reform bills, uh, that is geared towards giving, uh, some sort of a protection for independent pharmacies. So not all 50 states have fair audit laws, you know, that can provide, uh, uh, some sort of a layer of protection for the pharmacies.

Mike Koelzer, Host: Do you ever have clients that cry in front of you? Um, 

Dae Lee, PharmD, Atty: I had a couple and I have couple who you know, I mean, I don't wanna grim the whole picture, grim picture, but, uh, some of our clients had to close their shop and then sell their pharmacies, uh, send them a dollar to the, uh, big change, which are also, uh, affiliated or owned by PBMs.

Mike Koelzer, Host: My employees never heard of this before. Have you ever heard of the term going post? Going postal, you guys are too young. Back in the eighties there was like three post office shootings with disgruntled employees and for some reason it was, I dunno if it was just coincidence or if there was something more tangible with the post office service, but they called it going postal when these employees would go in and like unfortunately they went in like shot up the place, you know?

But it seems that. The way that pharmacists, hopefully it doesn't get to that. I'm not implying that, but it seems to me that pharmacists either get sad with this or get really, really pissed about it. I guess both. 

Harini Bupathi, Attorney: Probably both. But it's great if they could channel that towards some of the grassroots efforts that really put forth some of these laws.


Mike Koelzer, Host: A cool thing about state government is that it's not city government. There's more power than that, but it's not federal where. To have not much of a chance of knowing you're representative and so on. But the state level is really cool because that's where a lot of these laws can reign in the PBMs.

And a lot of these legislators, they live in your backyard. They go to the same restaurants you go to and things like that. And I had heard from one of my guests, he said that if a state legislator gets like, Phone calls about something, you know, just six phone calls about something that's a big deal for them.

As a state legislator, 

Harini Bupathi, Attorney: I believe it, we've had a lot of support for a lot of our pharmacies, uh, when facing PBMs. And it goes a long way, I think, for a lot of our clients. 

Mike Koelzer, Host: Do you guys know any other industry? And I Yes. We're focusing on the bad here. Yeah, . There's a lot of bad stuff to focus on. Do you know any other industries that are like this?

I know there's a lot of other things in industries like monopolies and. I had Luke Lindy and Benjamin Jolly on, and they were talking about how it's important that pharmacists don't think we're too special because we need to compare ourselves to other industries where there's monopolies to get Washington to listen to a bigger group.

But as far as PBM audits, can you think of any other industry? Does that take back And then also the abuse that can go on, or are [00:30:00] we special as pharmacists? Um, 

Dae Lee, PharmD, Atty: I can't think of any industry in that sense, but at the same time, PBMs are doing this because they are allowed to do it. And you know, I'm not pointing fingers to the pharmacies or anybody else.

PBMs have, you know, started. They're formed with a good intention and they became very large over a very short period. And at the same time, there has been a lot of vertical irrigation from the plan level plan sponsor level PBM, down to the, uh, pharmacies. So right now they, they have tremendous power and they are using their power and, and, you know, it's, it is tough for independent pharmacies to act.

But at least they shouldn't, they shouldn't let this happen. Meaning they can't just say, Oh, I got, you know, screwed on a small audit. I'm not gonna contest it. That's gonna come back and, you know, um, become a, a, uh, you know, there's gonna be, there's gonna be a domino effect of a small audit. 

Mike Koelzer, Host: Sometimes I'll be sitting.

Someone on my staff, and we follow all the rules of the PBMs, but if there's a loophole or something that you don't have to do, We're not gonna do it. You know, we have enough rules and things, but we're not gonna do it. And so sometimes we think that we're smart because it's like we got around something that you think maybe the PBMs wanted, but it's not written anywhere, you know?

And so you, we think we're all smart and stuff. And the issue is sometimes you think the PBMs, they're not conniving, but. My own little pharmacy. We can come up with something. Think of the minds that these places with this ton of money, these PBMs, just think of the con IRS that they can hire just to pull out the last penny from these people.

Harini Bupathi, Attorney: Yep. And I, I mean, I think that's what they've done, right? I think any single time they see a. They figure out ways to put more conditions and requirements on pharmacies to see if you know there's another hurdle they can try passing or I try to get over. I see. I think that we see that all the time, any single time.

I think a pharmacy figures out a loophole and the PBM becomes aware of that loophole. They take every effort to close it. 

Mike Koelzer, Host: I've been talking about all the negative stuff of these audits, and it just brings out the worst in me. And it's even more frustrating when the PBMs have abused us during a pandemic.

You know, that's just disgusting to me. But speaking of the pandemic, where I think a lot of pharmacists have really discovered some of their own worth more as a community. Caregiver does any good come out of it in our then response to the pbm? Does any power come out of that? Yeah, 

Dae Lee, PharmD, Atty: sure. I mean, they, they certainly, the independent pharmacies that pharmacists certainly, um, you know, established a, a place in the healthcare industry and, you know, we make a point to PBMs that, hey, these pharmacies, they are, The ultimate caregiver to the community patients, you know, they provide, at least in my opinion, better service, you know, or at least comparable services to the big chain pharmacy.

So they're, they, they should be included and remain, remain in the PBMs pharmacy network. And quite frankly, a healthcare provider, losing that, uh, pharmacy, uh, is, is a disservice to the, uh, 

Harini Bupathi, Attorney: patient. It, it really helps to be defined as a healthcare 

Mike Koelzer, Host: provider. We become providers. What's an example of maybe having any kind of power versus what we have now in an audit?

Dae Lee, PharmD, Atty: They may be, they may be entitled to broader rights to remain in the network. They may be entitled to other fair audit practices that right now is only applicable, you know, can be applicable to um, uh, for a finite number. Healthcare 

Harini Bupathi, Attorney: providers, uh, clean claims, right? So you'll have a lot of states who have enacted laws that insurers are required to pay on clean claims.

And during audits, you'll have PBMs who will say, Well, these specific claims that we've audited are clean, and so we're going to subject you to recovery. By being a defined healthcare provider, health provider, pharmacies could seek. Clean, clean laws or unjust recovery laws, you know, in a, in a specific state to be able to go back to the PBM and ask for a release of the monies related to an audit as well.

So it really helps to be defined as a healthcare provider. 

Mike Koelzer, Host: They could [00:35:00] do that because those laws are already in place. So, for example, already a physician or whatever, they already have clean claim laws, so pharmacies could depend on some of those. Yep, 

Harini Bupathi, Attorney: exactly. So you'll have a lot of states who have such laws.

You'll have some states who will expand those over to healthcare providers, along with sort of any providers that receive claims from a, a third party agency like a pbm. Uh, you'll also have situations where, say, for example, any willing provider laws only extend over to healthcare providers and not over to pharmacies.

So by being defined, by having pharmacies be defined as a healthcare provider, they're also offered the protections, uh, of a, of being in any willing provider state. 

Mike Koelzer, Host: Let's say you have a client that reached out originally and you helped set up their pharmacy and so on. Would they reach out to you with every audit or do some They just write a letter on their own?

On average. 

Harini Bupathi, Attorney: I think it depends on the pharmacy, depends on the discrepancies, uh, that they're facing. I don't know. It's hard to put a specific dollar value or an average dollar amount because audits just range and the actions that we see PBMs take. On audits and those associated dollar amounts just range too.

We'll see it. We'll see a PBM try to terminate a pharmacy over a $3,000 audit, and we've seen them terminate over a $3 million audit. It it depends on, on the discrepancies 

Mike Koelzer, Host: themselves, it wouldn't be overkill. Maybe not when the audits are happening, but it wouldn't be overkill when the discrepancies come in to put something on your letterhead and say, We don't agree with these.

Seven findings at Totaled, you know, $832 because that might be worth that letter from your office just to let 'em know that they're not gonna lie down for the pbm. Should another audit come, or should they start thinking that that's one of the pharmacies that they just don't want in their network anymore.

Harini Bupathi, Attorney: Yep, exactly. You'd have to look at the underlying issues, right? The $830 audit could be over something like inventory shortfalls. And if a PBM thinks that a pharmacy doesn't have sufficient inventory, could mean that they're not dispensing medications to patients. It just kind of, you know, goes into a spiral for the pbm.

Mm-hmm. . And then PBM of course, reserves it in their contract to say, Hey, we can terminate you basically for any reason. So $830 might be enough for. 

Mike Koelzer, Host: A pharmacist is pulling up to their pharmacy after listening to this, and let's say they have three minutes while this episode is still on their mind. What would you tell a pharmacist who's got a million things going on and audits, maybe the last thing on their mind?

What could they do in three minutes to make a forward movement to protect themself or to improve their lot? 

Dae Lee, PharmD, Atty: Our PBM team published a PBM audit checklist. So I would recommend, you know, a pharmacy to, uh, download it and then start going through the list and then to, um, better prepare for 

Mike Koelzer, Host: the audit. I'll put a link to that in the notes to that checklist.

That would be a good first thing to be looking at. Yeah, that's 

Harini Bupathi, Attorney: helpful. And I think that on top of everything pharmacies already have to do, it's important for them to. Up to date with any sort of addendums or new terms that PBMs send out to them. Sometimes, PBMs will fax it over to them in a pharmacy.

Might just say, Okay, I'll look at it later. It might not get round to it, but those updates can be very important. 

Mike Koelzer, Host: Well, day and Harini. Thanks for letting us check in with you. You're always the bearer of glad tidings. It seems . Well, that's the nature of the business. I had a friend in high school that went to Notre Dame for law, and he was in it for like two years and it was too much conflict.

He ended up getting an elementary. Education degree so he could be a teacher and deal with all the crazy parents who think their kid's gonna be the next president of the us. So . I'm thinking that after these years with all this, uh, pandemic, that he might go back to be a, a lawyer just so he can screw his head on straight


Harini Bupathi, Attorney: funny. I mean, I think sometimes we're like teachers, right? I mean, Yeah, I feel like we might take on that role sometimes too, so. 

Mike Koelzer, Host: Yeah. Well, I think a big part of this is that pharmacists feel so pushed down. Your legal service is there. But also when they can depend on someone that's just gonna say, Look, let me walk you through this.

Is, you know, it's gonna be okay, or it's, you know, ultimately it's gonna be [00:40:00] okay, Whatever okay means. But we will hold your hand and at least walk you through. At least you have a friend going through these Valley of Tears. 

Harini Bupathi, Attorney: Yeah, exactly. We can be lawyers and 

Mike Koelzer, Host: therapists. All right, you guys. Nice to see you again.

Day and Harini, nice talking to you, and we'll do this again. Thanks for having us, Mike. Yeah, thanks 

Dae Lee, PharmD, Atty: for having us. All 

Mike Koelzer, Host: right, Thanks guys. Talk to you again.

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