Experienced PBM Audit Attorneys Work Closely with Pharmacies Undergoing an ESI PBM Audit

Express Scripts, Inc. (“ESI”) is a pharmacy benefit manager responsible for overseeing the prescription drug benefits portion of participating insurance plans. Working with ESI or another PBM is considered one of the “necessary evils” of the pharmacy business. PBMs are independent companies that act as the intermediary between an insurance company and the pharmacy. Originally created in the 1960s to assist with claims processing, PBMs have more recently taken on a more significant role. For example, ESI and other PBMs are currently conducting audits of participating pharmacies to ensure they are compliant. The main focus of an ESI audit is to ensure that the pharmacy is properly billing the insurance company for all claims. However, because ESI is not subject to federal regulation, and a pharmacy’s rights are generally governed by the contract between the parties, these audits often proceed in a black box.

If ESI is your pharmacy benefit manager and you received word of an ESI audit, it is essential that you reach out to a dedicated PBM audit attorney. At Oberheiden, P.C., we have significant experience handling all ESI audits nationwide. Many of our senior attorneys were formerly employed by the Drug Enforcement Administration (“DEA”) and the Health and Human Services Office of Inspector General (“HHS-OIG”), giving us advanced knowledge and hands-on experience. With our help, you can ensure that your interests are protected throughout the PBM audit process and reduce the risk of incurring significant penalties.

What Can Lead to an ESI Audit?

ESI and other pharmacy benefit managers are paid by the insurance company. These companies also negotiate rebates with drug companies, often by including certain medications on a plan’s formulary list. Thus, given the business interests involved, ESI’s loyalty does not lie with a pharmacy.

When ESI conducts a PBM audit, auditors are looking for any signs of noncompliance that may justify the imposition of a sanction. ESI auditors review many aspects of a pharmacy’s practice during an audit; however, some of the most common reasons why a pharmacy may find itself facing an ESI PBM audit include:

  • Accepting prescriptions from excluded providers;
  • Billing for unapproved drugs;
  • Compound drug billing issues;
  • Failure to generate or maintain records;
  • Falsifying records;
  • Filling illegitimate prescriptions;
  • Intentional and unintentional billing and coding errors;
  • Invoice shortages;
  • Licensing violations;
  • PBM contract fraud; and
  • Telemedicine violations.

At Oberheiden, P.C., our knowledgeable ESI audit attorneys work closely with pharmacies and pharmacists in charge throughout the PBM audit process to ensure their rights are protected.

What Is at Stake in an ESI Audit?

As is the case with any pharmacy audit, an ESI audit present substantial risks for unprepared pharmacies. Pharmacies must take a proactive, comprehensive, and detail-oriented approach when preparing for an audit; otherwise, ESI may impost harsh sanctions, including

Recoupments – Recoupments are among ESI’s most common and most effective enforcement tools. If a pharmacy is accused of overbilling as the result of an audit, ESI can immediately recoup funds in order to recover your pharmacy’s alleged billing errors.

Denial of Pending Claims – In the wake of a violation, ESI can deny pending claims for reimbursement. If a substantial volume of claims is pending, this may present a significant risk to a pharmacy’s cash flow.

Pre–Payment Review – If the nature of the discovered violations causes ESI concern over future billing activity, ESI may implement pre-payment review. This results in heightened oversight for all submitting claims and often leads to more claims being denied. It also means that pharmacies will see a significant delay in receiving the payments they are due.

Termination of PBM Contract – If ESI auditors determine that there is significant evidence of billing fraud, the company may terminate the subject pharmacy’s PBM contract.

Referral for Federal Investigation – If ESI’s auditors uncover evidence of large-scale billing fraud or other compliance issues, the company may refer the pharmacy to the DEA or another federal agency for investigation. In addition to utilizing any information obtained by ESI during its audit, federal agencies such as the DEA can collect evidence through various other means as well. If these efforts uncover evidence of statutory violations, a federal investigation could lead to civil or criminal pharmacy fraud charges.

While ESI is not a government agency, the company occupies a position of power over pharmacies, making it difficult for pharmacies to challenge auditors’ methods and conclusions. However, at Oberheiden, P.C., we have extensive experience helping pharmacies prepare for ESI audits as well as advocating on their behalf in the event of an unfavorable audit.

How a Pharmacy Audit Attorney Can Help Pharmacies Survive an ESI Audit

Given the lack of federal oversight and the scattered approach taken by many states, ESI audits are notorious for being less than transparent. What is known is that ESI approaches an audit with the intention of finding anything that even remotely resembles a violation. However, auditors’ aggressive tactics may exceed the scope of their authority under the PBM contract.

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:

Engaging with ESI Auditors – Our attorneys and pharmacy compliance consultants will immediately engage with ESI’s auditors on your behalf. In this way, we ensure that all communications are conducted with our attorneys and consultants. This is essential in that it creates a single point of contact with ESI auditors.

Challenging Flawed Audit Practices – Throughout the audit process, our pharmacy audit attorneys will meticulously review the procedures employed by ESI’s auditors. We will also ensure that the scope of the audit is appropriate under the terms of the PBM contract. If we believe that auditors are making flawed assumptions or using improper methodologies, we can take immediate corrective action to decrease the chances of an unfavorable audit.

Ensuring Application of Current Billing Rules and Regulations – In some situations, pharmacies face sanctions for failing to follow rules and regulations that are outdated. With our attorneys’ and pharmacy compliance consultants’ in-depth knowledge of the federal requirements and ESI’s PBM contractual terms, we ensure that our pharmacy clients are held to the correct rules and regulations.

Proactively Addressing Any Compliance Issues – While pharmacies do their best to remain in compliance, mistakes happen. If a pharmacy is not in full compliance, Oberheiden, P.C. pharmacy audit lawyers can assess the potential implications of a violation and proactively address these concerns before auditors arrive. By taking a proactive approach, we can significantly reduce the likelihood of a violation and the severity of the penalties imposed.

Preparing for Subsequent Legal Action – From appealing the outcome of a pharmacy’s ESI audit to defending against a DEA or other federal law enforcement agency investigation, the experienced PBM audit lawyers at Oberheiden, P.C. can advise and represent a pharmacy in any subsequent legal action. This includes seeking an injunction to prevent the enforcement of a proposed sanction or to compel ESI to release withheld funds.

Frequently Asked Questions:

Why don’t we call ourselves the “best ESI pharmacy audit” lawyers?


At Oberheiden, P.C., we believe that our firm contains some of the best pharmacy audit attorneys in the country; however, we do not market ourselves this way for a few reasons. First, we represent sophisticated clients who are not likely to be persuaded by marketing gimmicks and making a conclusory statement without support is not how we want to generate business. Second, we feel that the term “best” is subjective and potentially misleading, and because we take out ethical obligations seriously, we do everything possible to avoid making any misleading statements. Regardless, for those looking for the best ESI audit attorneys; our track record speaks for itself.

Do I need to comply with all ESI Auditor requests?


In many cases, ESI auditors request information they are entitled to review. However, it is also common that an auditor’s request exceeds the scope of the PBM contract. The authority of ESI’s auditors comes from the PBM contract between the pharmacy and ESI. This contract outlines the scope of documentation that auditors can demand during an audit, as well as a pharmacy’s rights to challenge requests for documentation. If you refuse to provide documentation covered under the PBM contract, ESI could impose sanctions, up to and including termination of the PBM contract. However, ESI auditors cannot enforce production requests that lie outside the scope of the PBM contract. An experienced ESI 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 ESI refuses to reimburse my pharmacy for dispensed medication?


If an audit ends unfavorably, one of the sanctions ESI can impose is a recoupment. Essentially, this is ESI’s refusal to issue payment for prescriptions that have already been filled. While pharmacies can always take ESI 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 ESI realizes that your pharmacy is represented by a skilled PBM audit defense firm, ESI 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 ESI improperly demanded a recoupment or is otherwise withholding funds, contact Oberheiden, P.C. to discuss your options.

What are a pharmacy’s rights when undergoing an ESI audit?


Pharmacies have important rights when facing an ESI audit. However, the rights a particular pharmacy enjoys depends on the state in which the pharmacy operates as well as the terms of the PBM contract. The relationship between a pharmacy and ESI is strictly contractual. When a pharmacy begins its relationship with ESI, the company requires the pharmacy to sign a PBM contract. This agreement outlines both parties’ rights and obligations. While a pharmacy’s rights during an ESI audit vary depending on the circumstances, generally, pharmacies have the following rights:

  • ESI must provide reasonable notice of the audit;
  • ESI must rely on a limited and clearly defined look-back period;
  • ESI must reimburse a pharmacy for claims that were improperly denied;
  • ESI must provide a pharmacy with timely notice of the audit results; and
  • ESI must provide explanations of any demand for recoupment.

Additionally, both auditors’ findings and any sanctions proposed by ESI in the wake of an audit may be challenged under the terms of the PBM contract. At Oberheiden, P.C., we help pharmacies familiarize themselves with the full extent of their rights so their interests are protected throughout the PBM audit process. 

Schedule a Free Consultation and ESI Audit Assessment with PBM Audit Lawyers at Oberheiden, P.C.

Is ESI auditing your pharmacy? The knowledgeable pharmacy audit defense lawyers at Oberheiden, P.C. are here to help you through the process. We have senior lawyers standing by, ready to assess your compliance risks and offer our reasoned advice. If you decide to bring us onto your audit defense team, we will immediately get started creating a strategic plan to effectively and efficiently resolve the audit. You can reach Oberheiden, P.C. 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.