Palmetto Audit

Experienced Pharmacy Audit Defense Lawyers Work Closely with Pharmacies Subject to a Palmetto PBM Audit

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

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

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

Working with Palmetto or another PBM is often seen as one of the “necessary evils” of the pharmacy business. PBMs, or pharmacy benefit managers, are independent companies that act as the middleman between the insurance company and the pharmacy. Originally created in the 1960s to assist with claims processing, PBMs have taken on a much larger role in recent years. One significant role PBMs have assumed more recently is conducting audits of participating pharmacies. The main focus of a Palmetto audit is to ensure that the pharmacy is properly billing the insurance company for all claims. However, because Palmetto and other PBMs are not subject to significant regulation, these audits are often conducted in a black box.

If Palmetto is your pharmacy benefit manager and you received word that a Palmetto audit is imminent, it is imperative that you reach out to a dedicated PBM audit attorney. At Oberheiden, P.C., we have significant experience handling all types of PBM audits, including Palmetto audits. Many of our senior attorneys were formerly employed by the Drug Enforcement Administration and the Health and Human Services Office of Inspector General, giving us unrivaled knowledge and experience in pharmacy regulations. With our help, you can ensure that your interests are protected throughout the PBM audit process.

What Can Lead to a Palmetto Audit?

Palmetto and other pharmacy benefit managers are paid by the insurance company. They will also negotiate rebates with drug companies, often by including certain medications on a plan’s formulary list. The result is that the loyalty of Palmetto does not lie with the pharmacy.

PBMs consider several factors when deciding whether to conduct an audit. Some of the most common reasons why a pharmacy may be subject to a Palmetto audit include:

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

These are just a few of the issues that can give rise to an audit; there are many others. At Oberheiden, P.C., our dedicated Palmetto audit attorneys routinely work with pharmacies throughout the PBM audit process to ensure their rights are protected and that Palmetto auditors do not overstep their authority under a PBM contract.

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)

Palmetto Has an Advantage Over Pharmacies

As a leading pharmacy benefit manager, Palmetto enjoys numerous benefits that can make negotiation challenging for pharmacies undergoing an audit. For example, PBMs have a great deal of authority with little federal oversight. While some state lawmakers have taken steps to limit the authority of Palmetto and other PBMs, any proposed law is almost immediately challenged by the PBMs. And given that PBMs have been around for decades, their role has become accepted, making it that much more difficult to challenge the status quo.

PBMs also have a tremendous amount of capital, which they use to leverage their position over pharmacies. If a pharmacy disagrees with a PBMs determination or the methodology auditors used, the PBM often ignores the pharmacy’s plea, essentially challenging them to pursue legal action.

Finally, PBMs are responsible for the distribution of funds to pharmacies. In other words, if you are subject to a PBM audit, PBM holds the money, which it will only release if the company agrees that you are in full compliance. This leaves pharmacies who disagree with the result of a PBM audit little option but to take the PBM to court.

At Oberheiden, P.C., we help pharmacies level the playing field when undergoing a Palmetto audit. Our attorneys are highly experienced in handling PBM audits. Over this time, we’ve developed a deep understanding of the common mistakes auditors make and how to effectively protect the interests of pharmacies throughout the audit process.

How a Palmetto PBM Audit Attorney Can Help Audited Pharmacies

Pharmacy benefit manager audits are notorious for being less than transparent. Often, Palmetto approaches an audit with a “take it or leave it” mentality, giving the illusion that pharmacies have no right to challenge any aspect of the audit. However, this is not the case.

The relationship between Palmetto and your pharmacy is governed by the PBM contract. While the terms of each individual contract will vary based on the PBM company, the individual pharmacy, and state law, typically pharmacies have at least the following rights:

The right to reasonable notice of the audit;
The right to a limited and clearly defined look-back period;
The right to reimbursement for improperly denied claims;
The right to receive timely notice of the results of the audit; and
The right to a clear explanation for any demand for recoupment.

At Oberheiden, P.C., our PBM audit lawyers can get involved early in the process, protecting pharmacies at every stage of the audit. Some of the pharmacy audit defense services we provide to our clients include:

A Pre-Audit Evaluation of Pharmacy Practices

As soon as you bring Oberheiden, P.C. onto your audit team, we will immediately schedule a time to meet with you to go over all areas of potential compliance risk. This will give you a better idea of what to expect during the audit. We will also reach out to Palmetto, letting them know that you have secured counsel. Often, the mere knowledge that a pharmacy is represented by an attorney will give auditors pause and may impact the nature of the audit.

A Physical Presence During the Audit

Without the assistance of a PBM audit attorney, pharmacy operators are often left shrugging their shoulders during the audit process. Palmetto auditors will show up as though they work for the federal government, making demands and determinations without any input from the pharmacy. However, Palmettos auditors are limited in what they can ask for. At Oberheiden, P.C., we will arrange to be present during the audit to ensure that auditors follow the appropriate methodology and do not make any incorrect assumptions. We will also be there to challenge any unreasonable demands made by auditors.

Post-Audit Representation

The nature of the Palmettos audit process is such that these audits often uncover violations—whether they are based in fact or not. At the conclusion of the audit, Palmetto auditors may demand a recoupment or, in more severe situations, announce the termination of the contract. While auditors state their findings as fact, Palmetto is not the federal government, and the determinations of the company’s auditors do not carry the force of law without judicial intervention. This gives our PBM audit attorneys an opportunity to negotiate with Palmetto, potentially resulting in the reduction or removal of sanctions.

Challenging Auditors’ Determinations in Court

Most issues that come up during a PBM audit can be effectively resolved out of court. However, in some cases, litigation is necessary. As a team of experienced pharmacy defense litigation attorneys, Oberheiden, P.C., stands ready to challenge any unfavorable audit in a court of law. PBM companies prefer to avoid litigation, however, and knowing that the possibility of a lawsuit is on the table often persuades them to reconsider their position.

Compliance Consultations

While much of our practice is focused on assisting with the audit process, Oberheiden, P.C. pharmacy audit defense attorneys also work hand-in-hand with pharmacies to develop comprehensive compliance programs that can decrease the likelihood of an audit in the first instance.

Frequently Asked Questions:

What is at stake in a Palmetto Audit?

The purpose of Palmetto audits is to ensure that pharmacies have not improperly billed the insurance company. If during the audit, significant violations are uncovered, Palmetto may implement a variety of sanctions against the pharmacy. For example, Palmetto may demand a recoupment or could even terminate the contract with the pharmacy. Additionally, auditors may also refer the case to state or federal law enforcement agencies in the event they discover evidence of what they believe to be healthcare fraud. Given this reality, the stakes of a Palmetto audit are very high, and any pharmacy subject to a Palmetto audit should not delay in protecting their interests by reaching out to a knowledgeable PBM audit attorney.

Do I need to comply with every request for documentation made by a Palmetto Auditor?

Not necessarily. The authority of Palmetto’s auditors stems from the PBM contract you signed at the beginning of your relationship with the company. This contract outlines the scope of documentation that auditors can demand during an audit. If you refuse to provide documentation covered under the PBM contract, Palmetto could terminate the contract or impose other sanctions. On the other hand, Palmettos auditors cannot enforce production requests that lie outside the scope of the PBM contract. Of course, PBM auditors are not going to provide you with this information and will present any requests as demands that must be complied with. An experienced Palmetto PMB audit attorney with Oberheiden, P.C. can help you keep auditors in line by enforcing your rights under the PBM contract.

What can I do if Palmetto refuses to reimburse my pharmacy for dispensed medication?

If an audit ends unfavorably, one of the sanctions Palmetto can impose is a recoupment. Essentially, this is Palmetto’s refusal to issue payment for prescriptions that have already been filled. While pharmacies can always take Palmetto to court over withheld funds, at Oberheiden, P.C., we’ve had success negotiating with PBMs to reduce or remove recoupments. PBMs, like any large business, prefer to avoid litigation. Once Palmetto realizes that your pharmacy is represented by a skilled PBM audit defense firm, Palmetto will be faced with a choice: engage in fair negotiations or risk the filing of a lawsuit that could end up costing the company much more. If you believe that Palmetto improperly demanded a recoupment or is otherwise withholding funds, contact Oberheiden, P.C. to discuss your options.

Contact the Palmetto PBM Audit Lawyers at Oberheiden, P.C. Today

If Palmetto recently informed you that it will be auditing your pharmacy, the knowledgeable pharmacy audit defense lawyers at Oberheiden, P.C. are here to help you through the process. We have senior attorneys standing by, ready to discuss your situation and offer our reasoned advice. If you decide to bring us onto your audit defense team, we will immediately get started developing a strategic plan to effectively and efficiently resolve the audit. 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.