‘The subjective nature of the audits makes it difficult and extremely costly for pharmacies to prove their actions or intents with any real certainty,’ says Short

Legislation to make pharmaceutical audits more fair and equitable for pharmacies unanimously passed the state House of Representatives recently.

Engrossed Substitute House Bill 1737 places sideboards on the audits conducted by the Department of Social and Health Services and provides some clarity in the definition of “technical deficiency” that auditors use to either accept or deny documentation by pharmacies.

Rep. Shelly Short, R-Addy, sponsored the measure after witnessing a local pharmacy go through the pharmaceutical audit process.  The audits are conducted on Medicaid providers to make sure the right medication got to the right person and that the appropriate payer was identified.

“While we certainly need audits to ensure there is no fraud or abuse taking place when the state pays for medication, the process that is currently in place amounts to a type of extortion on pharmacies,” Short said.  “They are demanding recoupment of payments over insignificant technical details like paperwork mistakes.  Even if the pharmacy can prove that the appropriate medication was delivered to the appropriate person and the appropriate payer was billed, the pharmacy can be punished – at great expense – for not correctly dotting the i’s and crossing the t’s.”

Short said the auditors instinctively know the areas where pharmacies are confused or most likely to make technical errors and then focus on those areas in order to maximize their recoupment.

“The people conducting the audits know where the grey areas are; where the weaknesses in their own system are – and they take advantage of this ambiguity by getting nitpicky with the documentation requirements,” Short said.  “The subjective nature of the audits makes it difficult and extremely costly for pharmacies to prove their actions or intents with any real certainty.”

The pharmacy in Short’s district that recently went through the audit process chose to shut down after spending tens of thousands of dollars on attorney fees.  The owner/pharmacist had more than 32 years of experience in the pharmaceutical industry.

“This isn’t right,” Short said.  “I’ve talked with hospitals in my district and they say if more pharmacies choose to not accept Medicaid patients or shut down completely, it will place a huge burden on all rural hospitals.  The ripple effect of these pharmacy closures would be brutal for rural areas.  Our rural pharmacies are struggling to stay afloat, yet our communities greatly depend on them.”

Short said the language in her original bill was watered down in the committee process.  However, the existing bill begins the process of providing more certainty for pharmacy owners moving forward.

“This is a step in the right direction,” Short said.  “I’m continuing to work with members from both parties to get this bill through the Senate and on to the governor’s desk for her signature.  This is something all pharmacies across the state need.”

ESHB 1737 passed the House unanimously and is now awaiting a public hearing in the Senate Health and Long-Term Care Committee.

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