Veteran Healthcare Defense Lawyers Assist Pharmacies Nationwide Through Routine Pharmacy Benefit Manager Audits

Pharmacies face regulation on all fronts. While most pharmacies are familiar with Medicare and Medicaid regulations, fewer are aware of the complex relationship they have with Pharmacy Benefit Managers or PBMs. However, the stakes of a PBM audit are high, and pharmacies must familiarize themselves with the audit process and how to avoid an unfavorable PBM audit.

If NGS is your PBM and you recently learned of an upcoming PBM audit, it is imperative that you reach out to an experienced NGS PBM audit attorney for assistance. The PBM audit process is complex, and while pharmacies have rights, you cannot count on NGS auditors to make them known. Additionally, as a PBM, NGS operates with little state or federal oversight, making it challenging for management teams who are unfamiliar with the process to effectively navigate an audit.

At Oberheiden, P.C., our pharmacy benefit manager audit defense attorneys have centuries of combined experience effectively representing pharmacies through PBM audits. Several of our senior attorneys were formerly employed in high-ranking positions with the federal government, including in the Drug Enforcement Administration (DEA) and the Health and Human Services Office of Inspector General (HHS-OIG). From the moment you bring Oberheiden, P.C. onto your audit defense team, we will get to work identifying all risk areas and developing a coordinated and comprehensive defense strategy to ensure the best possible audit. We can also challenge any sanctions by NGS, either through aggressive negotiation or, if necessary, legal action.

What Is National Government Services, Inc.?

National Government Services, Inc. (NGS) is a pharmacy benefit manager that administers Medicare benefits on behalf of the Centers for Medicare and Medicaid (CMS). Pharmacy benefit managers manage prescription drug plans on behalf of public and private health insurers. While the purpose of a PBM is to ensure access to necessary medication and control patient costs, PBMs have come under scrutiny as drug prices continue to rise. In response, NGS Medicare and other PBMs are taking additional steps to appear as though they are effective at controlling cost and reducing fraud and waste. This has resulted in an increase in the number of NGS Medicare audits, only some of which are justified.

While NGS is affiliated with the federal government, it is not a government entity and does not have any powers other than those conferred to the company through contract. However, under the PBM contract between a pharmacy and NGS, the company is allowed to regularly audit participating pharmacies to ensure ongoing regulatory and billing compliance. Unlike many other pharmacy benefit managers (PBMs), NGS works exclusively with the federally-funded Medicare program, resulting in increased compliance obligations and risks for pharmacies during the audit process.

NGS is one of the larger PBMs, processing more than 228 million Medicare claims in 2020, totaling over $103 billion in benefits. More specifically, the company serves as a Medicare coordinator, overseeing prescription drug plans for more than 27 million people. NGS operates in 20 states and five U.S. territories, including:

  • Alaska,
  • American Samoa,
  • Arizona,
  • California,
  • Connecticut,
  • Guam,
  • Hawaii,
  • Idaho,
  • Illinois,
  • Maine,
  • Massachusetts,
  • Michigan,
  • Minnesota,
  • Nevada,
  • New Hampshire,
  • New Jersey,
  • New York,
  • New York,
  • Northern Mariana Islands,
  • Oregon,
  • Puerto Rico and
  • Rhode Island,
  • U.S. Virgin Islands
  • Vermont,
  • Washington, and
  • Wisconsin.

What Triggers an NGS Medicare Audit?

When a pharmacy begins to work with NGS, the company requires the pharmacy to sign a contract that outlines the parties’ relationship, as well as their respective rights and obligations. Contained in this contract is a clause granting NGS the right to conduct an audit of the pharmacy. While some pharmacies go years without being the subject of a PBM audit, NGS is constantly looking for any reason to initiate an audit. This is because an audit provides NGS with an opportunity to impose financial sanctions against a pharmacy—keeping more money in the company’s pocket.

Some of the issues that may raise a red flag and can lead to a PBM 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

When auditors arrive at a pharmacy, they will typically demand access to a tremendous amount of records. However, often, an NGS auditor’s request for documentation exceeds their contractual authority. This puts pharmacies in the challenging position of either consenting to the request—which may prolong the investigation—or challenging the auditors’ request—which puts the pharmacy at risk of being found in violation of the PBM contract.

How an Experienced NGS Medicare PBM Audit Attorney Can Help Pharmacies Through the Audit Process

One of the problems pharmacies deal with when facing an NGS audit is the lack of transparency surrounding the process. PBMs are not regulated on the federal level, meaning any laws governing a PBM’s relationship with a pharmacy stem from state law. While some states provide for a more rigid relationship, others remain silent when it comes to PBMs. Thus, pharmacies frequently head into an audit not knowing what to expect or how to effectively handle the situation.

At Oberheiden, P.C., our pharmacy defense lawyers ensure our pharmacy clients understand the process, what is at stake, and what they can do to ensure a favorable outcome. Some of the services we provide include:

Pre-Audit Evaluation of All Compliance Risks

As soon as you bring Oberheiden, P.C. onto your PBM audit defense team, we will immediately schedule a time to meet with you to go over all areas of potential compliance risk. This gives you a better idea of what to expect during the audit and what issues may arise. We will also reach out to NGS, informing the company 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

When you retain the services of our NGS Medicare audit attorneys, we send a team of lawyers to your pharmacy. Our lawyers will review all documentation before auditors arrive, and when an NGS auditor makes a demand for documentation, we assess the validity of the request and will be the ones to communicate with them. If necessary, our attorneys will explain to auditors why the request falls outside the scope of reviewable documents under your PBM contract. We will also ensure that auditors follow the appropriate processes and do not make any incorrect assumptions that may lead to a prolonged investigation or adverse findings.

Post-Audit Representation

The goal of an NGS pharmacy audit is always the same: to make it through the process without a single violation. However, auditors will be looking for anything that resembles a violation with a fine-tooth comb, so it is common for them to identify various alleged violations. While it is up to NGS to initially come up with potential sanctions, these are not beyond challenge. However, to enforce your contractual rights, you may need to take NGS to court. Oberheiden, P.C., lawyers will represent you in negotiations with NGS in hopes of resolving any alleged violations without the need for judicial intervention. However, as experienced litigators, we are prepared to file for an injunction or request other legal relief, as necessary.

Pharmacy Billing Compliance Consulting

In addition to representation pharmacies during a PBM audit, our healthcare compliance team also provides pharmacies with the development and implementation of comprehensive pharmacy compliance programs designed to prevent PBM audits and to protect your pharmacy in the event of an audit.

Frequently Asked Questions:

Why don’t we call ourselves the “best NGS Medicare pharmacy audit” attorneys?


While we consider ourselves some of the best pharmacy audit lawyers in the country, we refrain from labeling ourselves as such for a few reasons. First, we recognize that we deal with sophisticated clients, and merely calling ourselves the best is not likely to persuade anyone. Second, we also understand that the term “best” is subjective, and what makes an attorney the best in one client’s eyes may not be as important to another client. In this way, using phrases like the “best pharmacy audit lawyer” is misleading. And, under the Model Rules of Professional Conduct that govern all attorney communications with prospective clients, attorneys cannot make misleading statements to the public. Regardless, the bottom line is that we don’t need to claim we’re the best NGS Medicare audit attorneys because our track record speaks for itself.

What is at stake in an NGS Medicare Audit?


The purpose of a PBM audit is to ensure that a pharmacy has not misbilled the insurance company or committed other violations of state or federal law. If auditors discover violations, NGS has a variety of tools at its disposal. Most often, NGS will simply demand a recoupment, meaning the company will withhold money that would otherwise be payable to the pharmacy. However, NGS may also seek to terminate the contract with the pharmacy if the violations are serious. Given the relationship between NGS and the CMS, auditors may also refer a case to state or federal law enforcement agencies in the event they discover potential evidence of healthcare fraud. Given the stakes involved, any pharmacy subject to an NGS Medicare audit should immediately protect its interests by reaching out to a knowledgeable PBM audit attorney.

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


If an audit ends with a finding of one or more violations, one of the sanctions NGS can impose is a recoupment. Essentially, this is NGS’s refusal to issue payment for prescriptions that the pharmacy has already filled. Of course, pharmacies can take NGS to court over withheld funds; however, this is generally a last resort. At Oberheiden, P.C., we’ve had success negotiating with PBMs to reduce or remove recoupments. NGS and other PGMs prefer to avoid litigation whenever possible. And while a pharmacy’s complaint about a sanction may not put NGS in fear of litigation, it is a different story once they realize you are represented by counsel. Once NGS realizes that your pharmacy is represented by a skilled PBM audit defense firm, NGS must make 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 NGFS improperly demanded a recoupment or is otherwise withholding funds, contact Oberheiden, P.C. to discuss your options.

Schedule a Free and Confidential Consultation with an NGS Medicare Audit Defense Attorney at Oberheiden, P.C.

If you would like more information about Oberheiden, P.C and our pharmacy audit defense practice, please contact us to arrange a confidential consultation with one of our senior attorneys or pharmacy compliance consultants. We have centuries of combined experience helping pharmacies deal with the myriad issues that come up during a PBM 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.