1. What are the latest expectations on Audits ?

2. Why do they Audit? In one PBM’s own words… “We want to provide the best network of retail pharmacies for our clients” “Clients want to pay for the correct amount of medication for the correct days supply. Risk(s) to client if patient receives too much medication or the claim was submitted inaccurately include: Change in therapy; therapy discontinued Plan design change Change in employer Medicare Part D star Ratings may be negatively impacted if the clinical programs designed to increase patient adherence, is not matching what was submitted.”

3. Audit Triggers, an illustration Automated Review Next Day Claims Audit Historical Claims Audit On-site Audit High Ingredient Cost Quantity vs Day Supply Compounds Reversal Rates Controlled Substances Other Analytics

4. How Auditing Agencies Define Types of Audits Automated Review: involves a continuous, automated review of the submitted claims, identifying outlier claims and pharmacies. Next Day In-House Audits: allows for a high-volume review of the claims submitted by pharmacies for review and correction prior to claim billing and reimbursement. Historical In-House Audits: allows for claims review from the claims data warehouse that may be selected for audit outside of the Next Day process. On-site Audits: process includes a detailed review of claims and compliance documentation performed on-site at the network pharmacy locations. Investigations: combination of historical in-house and on-site based on specific tips or aberrant trends

5. Common Audit Methods (formerly referred to as audit types) Desk Audits  Can be both next day and historical  Notification is received via fax, email or USPS. On-site Audits FWA Investigations  Are conducted when suspicion of Fraud, Waste or Abuse.  Additional information may be required in instances where fraud tips, news articles, suspected fraud, aberrant claim patterns or member/client complaints are received.  Typically, investigations consist of a closer review of claim elements, including, but not limited to:  Patient confirmation  Prescriber confirmation  Invoice/Purchase verification  Potential on-site review

6. Other Models of Auditing Medicare Part D Data Validation Audits Claims, credentialing, etc.  These audits are triggered by Centers for Medicare and Medicaid Services  The purpose of these audits is to validate that the underlying data is correct  PBMs and Processors have little control over the quantity of information requested and the turn around time for these audits (which tends to be no longer than 72 hours) Client Audits – based on client requests usually for specific claims Recovery HIPAA Inspections  Pharmacies and downstream entities can expect to be inspected for HIPAA compliance after September 23 rd, 2013.  Pharmacies will not be able to say they did not know they had to comply with these regulations, especially since they have had to have policies and procedures since 2007.

7. Other Models of Auditing Drug Supply Chain Security Act Went into effect for dispensers on July 1, 2015 Enforcement postponed for four (4) months while a review occurs Already transforming Inventory Audits Audit contractor (RAC) Audits – outside vendors No surprise – this project is not going to end. CMS plans to update the Statement of Work and release new Requests for Proposals soon. In the meantime, the current Recovery Auditors will continue active recovery auditing through at least December 31, 2015. DME, LTC, etc. Audits Continuing to see more of these and expect these, along with 340B to become more prolific in the next year or two. Compounds Will continue to be heavily scrutinized. PBMs and plans are reducing the amount of products/ingredients that are covered

8. The Changing Environment STAR Ratings CMS Star Ratings were initially designed to improve reimbursement for Medicare Part D plans, not network pharmacies. High performing pharmacies drive bonus payments for MPD plans and have the potential to impact Star Rating Measures. PBM’s and Plans are going to want those high performers and will begin scoring and driving pharmacies out of networks, even more than preferred networks have done. Audits one probable means to that end. More Diverse types of inspections Types of audits will transition from “pay and chase” to more compliancy type. Example: HIPAA Inspections authorized September 23, 2013. Treatment guidelines, MTM, Drug Adherence, Intervention, and Compliance programs will become a new frontier for review.

9. Retroactive audits will never go away as long as claims fields, benefit design, regulations, laws, eligibility, etc. continue to change.  This is where states have created and passed legislation to help pharmacies defend audits Auditors and PBMs are pushing the boundries and challenging legislation. Ex: Limited number of unique prescriptions Frequency of audits Pharmacies are not informed/versed of the legislation enough to defend against audits.

10. Questions ?