PBM Auditing Beyond Just Claims Data – A Valuable Approach.
Audit Issue
Our client engaged us to conduct an audit of their pharmacy benefit manager (PBM) and Rx plan benefits which included a thorough analysis and testing of relevant ASO contract language stipulations related to several financial and performance guarantees.
Audit Finding
During the course of carefully evaluating the administrator services agreement (ASO) and auditing the discount guarantees, it was discovered that contract language existed which allowed the PBM to realize a higher average wholesale price (AWP) discount guarantee by using a lower maximum allowable cost (MAC) price, while processing the claim using a higher AWP price.
As a result, the PBM was able to achieve a more favorable discount but did not pass on the lower cost to the plan and/or member when the drug claim was adjudicated. In addition, the PBM was able to keep the ‘spread’, or difference in price, between the lower MAC cost and the higher AWP price.
Third-Party Administrator/Carrier Response
The PBM confirmed the relevant contract language which allowed this practice and acknowledged our finding.
Financial Error
This audit finding identified over $80,000 in plan and/or member overpayments as a result of contract language written to benefit the PBM rather than the plan sponsor and members. BMI recommended that contract amendments be executed as soon as possible that would correct this unfavorable financial outcome for the client.
Explore All Blog Categories
- ASO
- AUDiT iQ
- Affordable Care Act
- Audit Finding of the M...
- BMI Audit Services
- CPT code
- Dependent Eligibility ...
- ERISA
- Ineligible Dependent A...
- Medical Claims Audits
- Sarbanes-Oxley
- Self-Insurance Programs
- Smart Business
- Spousal surcharge audit
- TPA audit
- Third-Party Administrator
- Uncategorized
- Value Forward
- audit samples
- claim audit
- claims administrator
- claims audit
- claims data
- cost-containment solution
- dependent audit
- dependent verification...
- drug exclusion
- duplicate payments
- durable medical equpment
- eligibility
- eligible dependent
- enrollment
- financial guarantee audit
- health care benefits a...
- health care claims
- health plan audit
- internal audit department
- medical and prescripti...
- on-site rebate audit
- ongoing dependent elig...
- payment errors
- pbm
- pharmacy benefits manager
- plan eligibility
- pre-implementation audit
- prescription drug clai...
- prior authorization
- re-enrollment audit
- retrospective audit
- routine pregnancy