Novitas Audit

Knowledgeable PBM Audit Attorneys Defend and Advise Pharmacies Undergoing a Novitas Audit

**Attorney Lynette Byrd**
Novitas Audit Team Lead
Contact Lynette

envelope icon — **Attorney Lynette Byrd**
Novitas Audit Team Lead
Contact Lynette

**Deborah Zarifian**
Novitas Audit Team Consultant
Former FBI Special Agent
Registered Pharmacist (CT)

Novitas is a pharmacy benefit management company (PBM) that administers government-sponsored health care programs on behalf of the federal government. Unlike some other PBMs, Novitas works exclusively with ferally subsidized benefits programs. This can raise additional concerns for pharmacies subject to a PBM audit. While there is always a risk of a PBM discovering an alleged violation, due to the company’s relationship with the federal government, Novita auditors may be more likely to refer any violations for civil or criminal enforcement action.

If Novitas is your PBM and you recently learned that your pharmacy will be subject to a PBM audit, it is crucial that you reach out to an experienced pharmacy audit defense law firm as soon as possible. PBM auditors, including those employed by Novitas, operate with little oversight. At the same time, auditors routinely make unreasonable demands, rely on flawed methodologies, or make incorrect assumptions which may lead to the withholding of funds or even termination of a pharmacy’s contract.

At Oberheiden, P.C., our Novitas audit defense lawyers have notable experience helping independent pharmacies navigate PBM audits. Many of our senior-level attorneys formerly worked for the federal government, including several who held high-ranking positions within the Drug Enforcement Administration and the Health and Human Services Office of Inspector General. We can help explain the PBM process and identify any potential compliance concerns in advance of the audit so you can be prepared. We have also had success challenging the determinations of Novitas’ auditors after an unfavorable audit.

Novitas’ Relationship with Pharmacies

As a PBM, Novitas contracts with federally-sponsored health insurance programs to administer the plan’s prescription drug benefits. In exchange for the fee Novitas charges the government, it handles almost all aspects of the process. For example, Novitas sets the co-pay amounts that patients must pay and determines how much pharmacies get from each prescription they fill. PBMs are also responsible for developing and maintaining the list of covered medications under a prescription benefit plan. In some cases, a PBM will provide a pharmacy will less money than the pharmacy paid for the medication, forcing the pharmacy to fill the prescription at a loss. However, working with Novitas is not an option for most pharmacies that wish to accept the benefits under the corresponding policies.

Additionally, Novitas and other PBMs regularly engage in audits of pharmacies. While Novitas works closely with the federal government, the company is not a government entity. Thus, the level of oversight Novitas auditors face is minimal. As a result, there is no certain way of knowing what factors Novitas relies upon when determining which pharmacies to audit. However, based on previous audits, the following are some of the most common issues Novitas auditors are looking for when auditing a pharmacy:

Accepting prescriptions written by excluded providers
Billing for unapproved drugs
Compound drug issues
Failure to create or maintain records
Falsification of records
Filling illegitimate prescriptions
Intentional and unintentional billing and coding errors
Invoice shortages
Licensing violations
PBM contract fraud
Telemedicine violations

When Novitas decides to audit a pharmacy, auditors generally walk in like they own the place. Auditors will likely ask to review all prescription records and may request—or demand—additional documentation. For the independent pharmacy, it’s not always clear whether an auditor’s request is reasonable and what can be done to limit the scope of an audit.

At Oberheiden, P.C., our dedicated team of Novitas PBM audit attorneys are available to get involved in the audit process immediately. While nothing can guarantee a favorable audit, having an attorney’s assistance will provide you with confidence that you can effectively deal with any issues uncovered by the audit.

Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester

Former U.S. Attorney

Hon. Kevin McCarthy

55th Speaker, U.S. House of Representatives (ret.)

Government Consultant

Mike Pompeo

Of Counsel

Former U.S. Secretary of State

John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara

Federal Appeals Attorney

Nicholas B. Johnson

Former Prosecutor

Roger Bach

Former Special Agent (DOJ)

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen

Former Supervisory Special Agent (FBI)

How to Make it Through a Novitas Audit

If you have not been through a PBM audit, consider yourself fortunate. However, most independent pharmacies will eventually be the subject of an audit. Thus, there are some important steps to take before being audited that can make the process much smoother.

1. Keep Precise and Detailed Records

When Novitas auditors arrive to perform an audit, they will ask to review prescription records. It is imperative that you are prepared for the auditors’ arrival and have everything the auditors may need within reach. Not only will this save valuable time (meaning the auditors will leave sooner), but it also gives off a good first impression. The last thing you want is for it to appear as though you are unorganized, as poor recordkeeping may raise auditors’ suspicions.

Any prescription can become the focus of auditors’ attention. However, auditors will often focus on prescriptions involving high-cost drugs. Thus, when it comes to high-cost drugs, it is especially important to maintain accurate and detailed records of everything.

2. Rely on Standard Operation Procedures

Simply put, auditors will be looking for any mistakes. And unless you are always the one filling prescriptions, the outcome of an audit can hinge on an employee’s work. Thus, creating standard operating procedures that ensure certain tasks are carried out the same way every time is a good way to avoid inconsistency—and, more importantly, mistakes. If auditors notice inconsistency in how processes are performed, it may result in the auditors taking a closer look across the board.

3. Consult with a PBM Audit Attorney

While running a pharmacy is your expertise, handling a Novitas audit is a different story. If you have any suspicion that your pharmacy may be out of compliance, reach out to a PBM compliance attorney for help. At Oberheiden, P.C., our pharmacy audit defense attorneys also counsel and advise pharmacies on compliance matters. We can review your existing protocols and determine if they are placing you at unnecessary risk of an audit. From there, we will work closely with you to develop a comprehensive compliance program that will decrease the likelihood of an audit and protect you in the event Novitas decides to audit your pharmacy.

How Can Oberheiden, P.C. Help Pharmacies Through a Novitas Audit?

Have you been flagged for an audit by Novitas? If you are like most pharmacy owners, you have little to no idea what to expect from the audit process. Thankfully, this is not something you need to go through alone. At Oberheiden, P.C, we help independent pharmacies navigate the complexities of PBM audit. Regardless of the issues your pharmacy faces or the stage in the process you are in, there are numerous ways we may be able to help. Some of the pharmacy audit defense services we provide include:

Pre-Audit Consultations

As soon as you learn of an upcoming Novitas audit, Oberheiden, P.C. lawyers are ready to meet with you in advance of the audit to conduct an internal review of all policies to identify any potential risk areas. This will enable us to work together to address these areas before auditors show up. Additionally, we make it known to Novitas that you are represented by a pharmacy audit defense firm. Often, letting the PBM know you have an attorney in your corner influences how the auditors carry out their role.

Audit Intervention

Once the audit begins, Oberheiden, P.C. PBM audit attorneys will be there to ensure that Novitas auditors stay within their bounds and follow the correct protocol. We will also be able to intervene to correct incorrect assumptions or flawed methodologies used by the auditors. If Novitas auditors make an unreasonable demand for documentation that falls outside the scope of the PBM contract, we will explain to the auditors why the demand is not appropriate. While this can help reduce or even eliminate all issues, in the event your pharmacy is out of compliance, we will devise legal defenses to mitigate any liability.

Post-Audit Representation and Negotiation

In the event of an unfavorable audit, it is important to keep in mind that Novitas is not a government agency. Thus, any sanction imposed does not carry the force of law. Of course, PBMs can pursue contractual enforcement in court; however, this will be at significant expense, and Novitas is often willing to negotiate. In many situations, this means negotiating with the PBM to reduce or remove any recoupments or other sanctions.

Pharmacy Audit Litigation

Most of the issues that come up in a PBM audit can be effectively resolved without the need for litigation. However, pharmacies may need to seek an injunction or other legal relief in the face of an unfavorable audit. The pharmacy audit defense attorneys at Oberheiden, P.C. are prepared to pursue legal action against Novitas if it is unwilling to play by the rules.

These are just a few of the common PBM audit issues our pharmacy benefit manager audit lawyers handle on behalf of independent pharmacies. We also work with pharmacies to develop robust compliance strategies that can reduce the chances of an audit in the first place.

Frequently Asked Questions:

Do I have to comply with a Novitas auditor’s demands?

Yes and no. Under the terms of the PBM contract you signed with Novitas at the beginning of your relationship with the company, you are contractually obligated to provide certain documentation upon request. However, auditors cannot demand any and all documentation; there are limits. When auditors’ demands exceed the scope of their authority, you do not need to comply. That said, it is important to be cautious when refusing to comply with a Novitas auditor’s request, as they can recommend termination of your contract. The best option is to reach out to the Novitas audit lawyers with Oberheiden, P.C., so we can handle communications with the auditors.

What are a pharmacies’ rights related to a Novitas audit?

Novitas is a pharmacy benefit manager and is not acting on behalf of the government, although it administers government-funded health benefits programs. Thus, a pharmacy’s rights related to a PBM audit are contractually defined, as written in the PBM contract. To a large degree, a pharmacy’s rights depend on the laws of the state where the pharmacy is located, as there is no federal regulation of PBM companies. However, in general, pharmacies have the following rights during a PBM audit:

Reasonable notice of the audit;
A limited and clearly defined look-back period;
Reimbursement for claims that were improperly denied;
Timely notice of the results of the audit; and
Clear and documented explanations of any demand for recoupment.

To learn more about your rights when undergoing a Novitas audit, reach out to the PBM audit attorneys at Oberheiden, P.C.

Can I Challenge an Auditor’s Determinations?

Yes. However, doing so can be challenging because PBMs like Novitas are not subject to federal regulation. And while some states impose regulations on PBMs, many do not. Thus, these entities are used to operating according to their own terms. If a pharmacy doesn’t like the outcome of an audit, the PBM may ignore all complaints, assuming that the pharmacy will not pursue legal action. However, pharmacies have the right to challenge the outcome of the audit, as well as any sanctions imposed due to an unfavorable audit. However, keep in mind that Novitas and its team of lawyers regularly occupy this space and are familiar with the laws and regulations governing the industry. Thus, it is crucial that you also have lawyers in your corner who are equally knowledgeable.

Take Control of the PBM Audit Process by Reaching Out to the Novitas Audit Attorneys at Oberheiden, P.C.

If you recently learned of an upcoming Novitas audit, it is imperative that you protect your interests by reaching out to the knowledgeable PBM audit attorneys at Oberheiden, P.C. With notable experience defending and counseling pharmacies in all types of enforcement and compliance matters, we have the knowledge, skill and resources necessary to resolve your audit as quickly and favorably as possible. You can reach the firm by calling 888-680-1745 to schedule an appointment. You can also complete our online contact form, and one of our lawyers will reach out to you shortly.