Key takeaways:
On-site insurance audits are usually scheduled in advance, giving pharmacies time to prepare.
You can prepare by organizing required documentation, notifying supervisors, and possibly arranging extra staffing.
Effective preparation makes audits quicker and smoother, minimizing disruption.
On-site insurance audits are a normal part of community pharmacy operations. Unlike Board of Pharmacy inspections, which typically happen without notice, insurance audits are usually scheduled in advance. This advance notice provides a helpful opportunity to get organized, allowing your pharmacy to have a smoother audit experience.
Let’s explore what typically happens during an audit and some steps you can take to prepare effectively.
What happens during an on-site audit?
During an on-site audit, a representative from the insurance company, Pharmacy Benefit Manager (PBM), or government agency, visits your pharmacy with specific prescription numbers and required documents they need to review. If you’re well prepared and easily able to provide all the information, the audit can take just 1 to 2 hours.
Pharmacies typically receive audit notices about 2 to 3 weeks in advance, though the exact process can vary by payer. The notice usually includes either specific prescription numbers or ranges, which allows you to locate prescriptions easily. While rare, sometimes auditors may arrive without notice. This can be tough, but it’s one more reason to invest in a computer system that will store images of the prescriptions.
Auditors are generally there to complete their checklist rather than find faults. Being well-prepared helps them do their job quickly, benefiting both parties.
After the auditor completes their review, pharmacies usually receive results within 30 to 45 days. Results may indicate no issues or detail any discrepancies found. Pharmacies can respond with additional documentation if necessary. And there’s typically an opportunity to appeal if disagreements persist.
What’s requested during an audit?
The general documents may include:
Copies of pharmacy licenses
General and professional liability insurance
Purchase invoices
Staff training documentation
Prescription-specific documents often include:
Copies of the prescriptions (scanned images, copies, or printouts of electronic prescriptions)
Prescriber notes
Proof of prescription pickup, including signature and date/time stamp
Additional documentation, such pharmacist notes with date/time stamps
Pass with flying colors: Follow these tips for acing a Board of Pharmacy inspection.
Latest news: Get up to speed on notable new medications that the FDA has approved in 2025.
Treatments on deck: Many medications are slated for approval in 2025 and beyond. Here’s a preview of highly anticipated treatments that are pending approval.
For more detail about a specific payer’s requirements during an on-site audit, you can review provider manuals and other resources. Humana and OptumRx are two examples with readily available information on their websites.
What about HIPAA and patient privacy compliance?
During an on-site insurance audit, it’s important to safeguard patient privacy and comply with HIPAA regulations at every step. Only provide the auditor with copies of requested documents, and ensure that all protected health information (PHI) is handled with care. Auditors should not have access to patient records or pharmacy systems that are not necessary for the audit to minimize accidental disclosure.
Make sure your pharmacy’s Notice of Privacy Practices is clearly displayed, and that all staff are up to date on HIPAA training. Dispose of any PHI securely after the audit using approved methods. This will help ensure patient confidentiality is maintained throughout the audit process.
What can you do to prepare?
In addition to gathering general documents in advance, pharmacists can also prepare by:
Organizing a documentation folder: Use the audit notification letter as a checklist. Make copies of all required documents and place them neatly in a folder ready to hand to the auditor upon arrival. This can set a positive, efficient tone for the audit.
Gathering prescription records in advance: If your pharmacy’s system stores digital prescription images, ensure they’re readily accessible. Otherwise, proactively locate and prepare physical prescription books or printouts ahead of time.
Arranging additional staffing: Consider scheduling extra help on audit day. Even brief audits can disrupt normal pharmacy operations. Extra staff ensures you can focus fully on the audit’s requirements.
Training all staff on what to do during an audit: Brief your staff on audit protocols, including greeting auditors, verifying credentials, and referring all questions to the designated team member.
Providing a designated space for the auditor: Arranging a quiet or private space can help speed up the audit process and protect privacy.
Notifying your supervisor: It’s a good idea (even for a pharmacy manager) to let your supervisor know of the upcoming audit, whether that is the owner in the case of a smaller independent, or the regional director. At the very least, they will want to be aware of it, and some companies prefer to maintain central records of all audits and inspections.
The bottom line
On-site audits don’t need to be intimidating, time-consuming, or difficult. Good billing practices and thorough preparation will ensure your pharmacy successfully navigates its next insurance audit.
Why trust our experts?
References
Academy of Managed Care Pharmacy. (2012). Model audit guidelines for pharmacy claims.
Optum. (n.d.). OptumRx provider manual.
Humana. (n.d.) Pharmacy manuals and forms.
