Pharmacy Claims Audit Uncovers PBM Errors Impacting 12,500+ Prescriptions
Plan sponsors have many responsibilities, including a duty to monitor the performance of their pharmacy benefit manager (PBM). This is not a one-time effort; it is a continuous task. ERISA requires all plan fiduciaries to monitor the performance of their service providers; failure to do so can result in legal action. A prescription drug claims audit sheds light on issues that have not yet been detected. In turn, by conducting a pharmacy claims audit, plans are reducing their exposure to ERISA violations.
National Electronics Company Evaluates PBM Performance
A nationally recognized electronics and technology company engaged BMI Audit Services to perform a healthcare claims audit of their prescription drug plan and PBM. The goal was to ensure claims were processed accurately, reduce unnecessary healthcare costs, and confirm compliance with plan rules and ERISA fiduciary responsibilities.
Audit Methodology
In addition to BMI’s expert team of auditors, the best way to tackle these objectives was to conduct a comprehensive prescription drug claims audit, covering a 12-month period, utilizing a focused approach. This methodology combines a powerful electronic analysis of 100% of claims data followed by a manual review of carefully selected samples.
The best way to tackle these objectives was to conduct a comprehensive prescription drug claims audit, covering a 12-month period, utilizing a focused approach. This methodology combines a powerful electronic analysis of 100% of claims data followed by a manual review of carefully selected samples, carefully chosen by BMI’s expert auditors.
300 claims were selected for review with the PBM
These samples represented $518,195.48 out of a total annual spend of over $50M
Areas of focus included: copays, deductibles, eligibility, and overall PBM performance
Findings
The pharmacy audit uncovered systemic PBM errors as well as some isolated discrepancies:
Key audit findings included:
Confirmed Systemic Error: The PBM failed to apply specific copays across various brand-name drugs that impacted over 12,500 prescriptions filled by members.
Gaps in Eligibility: Claims were paid for ineligible members and post-termination coverage, resulting in roughly $165,000 in avoidable plan expenses.
Non-Compliance with Plan Design: It was revealed that the PBM was not following the proper step therapy process for certain drugs, as outlined in the plan language.
Fraud, Waste, and Abuse Risks: Medications were being filled too early, leading to concerns about unnecessary medication accumulation. This could cost the plan if the member were to change medications or be terminated from the plan.
Audit Outcome
As a result of BMI’s PBM audit findings, the plan and its members achieved significant financial recovery:
$267,290 was credited back to the plan after it was determined that an incorrect PBM setup was the root cause of the identified systemic issue.
$185,725 was reimbursed to 820 members impacted by claim errors.
PBM agreed to reverse and reprocess impacted claims, improving accuracy in pharmacy benefit administration and compliance.
Recommendations and Next Steps
To strengthen long-term healthcare claims compliance and protect against wasteful spending, BMI provided the following targeted recommendations:
Implement corrections to copay configurations and
Review and improve eligibility notification processes.
Conduct a one-year follow-up audit to confirm that corrections to copay configurations are operating as planned.
Consider running a Dependent Eligibility Verification for all enrolled dependents. On average, 4-10% of dependents enrolled in coverage are ineligible. This opens the plan up to ERISA compliance risks and exposes them to unnecessary expenses.
Conclusion
A pharmacy claims audit is a low-effort, high-impact tool that can be used to not only reduce current costs but also prevent the plan from wasteful spending in the future. Ultimately, demonstrating compliance with ERISA by protecting the plan and its members.