Ask most pharma teams if they are doing “copay audits” today and most will say they are. Most don’t realize there are two different types of copay related audits. A copay vendor audit is the one everyone is most familiar with and is most often performed by one of the major auditing firms. A copay claims audit is the other type of audit, and it is the most important one you can perform right now.
The copay vendor audits look at copay from the operational perspective (if your copay vendors are properly paying out and billing correctly, and if they are properly reporting and handling adverse events reported by patients). These audits are very common in today’s environment, but they overlook the single biggest area for potential savings and net margin improvement…identifying incorrectly processed claims which can be found via a copay claims audit.
Big accounting firms are often chosen to perform copay vendor audits. While they are the perfect choice for doing a copay vendor audit, they don’t have the experience to do a copay claims fraud audit. For these very specific audits a detailed knowledge of how the NCPDP system works is needed, as well as what to be looking for in the claims data to identify both incorrectly processed claims and outright fraudulent activity.
Both audit types are essential, but the copay claims audit is where you will find savings. You might feel good about conducting a copay vendor audit, but your focus needs to be on pharmacies which is where much of the savings will be found.
Did you know?
- There can be “fake” pharmacies and patients – A copay claim can be submitted by a pharmacy without product ever being purchased. A record of the sale does not need to be submitted to receive payment on a claim
- 1% of pharmacy claims produce approximately 25% of your program’s cost (these are the claims most likely to be fraudulent)
- Even though many companies have eliminated copay offers for “cash” paying patients, almost every brand is still paying on cash claims cleverly disguised as commercial claims
- If your brand has a cash offer which is the same as the commercial offer, there is a high likelihood that some commercial patients are being run as cash claims, increasing the cost to the brand
- Pharmacy claims are paid within two weeks of being submitted, so having the right audit partner can help you recover some of what you have lost and recommend potential solutions going forward to stop these issues from continuing to happen
- The overwhelming majority of claims processing errors examined benefit the pharmacy not the brand…so are they really “errors”?
The real savings comes from examining the actions at the pharmacy level. This is where mistakes are made (incorrectly processed claims as well as fraud) and substantial savings can be found. Making sure the business rules of your program were adhered to by the pharmacies, finding savings and then having a plan to help reduce your program issues ongoing takes real skill and experience with these programs and this data.
In the hands of the correct vendor, copay claims pharmacy audits are inexpensive and can generate ROI’s far in excess of $10 of return for every $1 spent. The issue is finding the right partner to perform the audits. A big accounting firm that doesn’t know the copay process in-depth with its very tricky business rules, all the nuances of different types of programs and delivery vehicles, the NCPDP system and its “holes”, as well as the trends for pharmacy processing issues, is just not going to find much. You need a vendor that knows the “tricks of the trade” and the rocks to look under.
As the old saying goes: “Don’t expect what you don’t inspect”. If you have not done a copay claims audit at the pharmacy level, you need to do one now. A correctly executed pharmacy claims audit can deliver real improvements to your net margin.