March 31, 2021
When someone walks through your pharmacy door and says they are there to conduct an inspection, a hundred questions might fly through your head. Where are they from? What are they going to look for? And where did I put those OIG exclusion verifications?
Pharmacies have to abide by so many rules from so many different organizations, the thought of getting inspected is enough to make a pharmacist’s palms sweat. Jeff Hedges, president and CEO of R.J. Hedges & Associates, knows just how hard it is to stay on top of every regulation and rule from every organization that might conduct an inspection. ″There was hardly anything going on from a regulatory point of view when we started in 2006,″ he said. ″Now everything from the time pharmacies open their door to the time they close is regulated by someone.″
But an inspector’s arrival doesn’t mean you should bring your pharmacy up to DEFCON 1. If you spend a little time preparing, you’ll know exactly what to expect and an inspection will be a non-event.
The most challenging part of inspections is the number of different inspecting bodies that are all checking for different things. Among them are the Drug Enforcement Administration (DEA), the Centers for Medicare and Medicaid Services (CMS), the Office of Civil Rights, PBMs, and the state boards of pharmacy.
″The most common inspection is the state board of pharmacy inspection,″ Hedges said. Every year, the state board of pharmacy inspector will verify that your licenses are current and posted. They will also check security measures to make sure patients can’t access anything behind the counter or see what’s on computer monitors.
The DEA is another common inspector. They typically look for criminal background checks on staff members who handle controlled substances and check for DEA Form 222s. The challenge with the DEA, Hedges points out, is the requirement for paper copies. ″Pharmacies still have to maintain paper copies and initial each line item, then date them with the quantity received and attach it to the wholesaler receipt,″ he explained.
To make sure you are meeting HIPAA compliance requirements, the Office of Civil Rights may come to inspect your pharmacy. They will ask your staff about your risk management plans, your risk analysis, your contingency or disaster recovery plans, and your privacy practices. Based on your staff’s answers, they may decide they need to stay and assess the pharmacy more thoroughly.
And then there is the notorious PBM auditor. They will check to verify you’re meeting federal requirements around Medicare Part D and will verify that you are maintaining OIG exclusion verifications. They will check your licenses and audit your prescription files. Although some PBM audits are done online, other times auditors will just show up.
If your pharmacy is accredited, you will also be subject to an accreditation survey, which will feel similar to inspections. ″The difference is that you are paying the accreditation body for the surveyor to come in, and their primary requirement is to make sure you are doing everything correctly, and then you can make corrections to receive your accreditations,″ Hedges said.
Whether it’s a scheduled visit or a surprise pop-in, inspections are nerve-wracking. But if you get to
know who the inspectors are and what they expect when they visit, the experience can be a breeze. Here are some of the inspecting bodies that could visit your pharmacy:
To prepare for a pharmacy inspection, Hedges recommends starting with your policies and procedures. ″You go back 10 or 15 years, and most people had simple standard operating procedures written out on a piece of paper and it was not a big deal,″ he said. ″Now it’s a bigger deal. Especially on the federal side, you don’t get dinged because you violated a rule, you get dinged because you didn’t follow your policies and procedures.″
Because following procedures is of the utmost importance, training your staff so they all know the processes in place is crucial. Hedges recommends spacing out the training sessions. ″If you do everything at one time, everybody glazes over after about two sessions and it becomes a requirement that you have to suffer through,″ he said. ″If you schedule them throughout the year, you’re constantly being reminded of all these compliance rules. Plus, your training is a lot shorter and doesn’t disrupt pharmacy operations.″
After that, the biggest challenge is simply knowing what the rules are that you need to follow. ″Every day, something changes,″ Hedges said. ″You have to have the time to understand what’s happening and how to comply with it. Sometimes it’s very simple and other times it’s very complicated.″ If that sounds impossible, it is a task that can be outsourced. For example, R.J. Hedges & Associates writes all the policies and procedures for their clients, provides training to their staff, and stays on top of all current requirements. When an inspector walks in with their checklist, the pharmacy has the exact same checklist and will know exactly what the inspector is going to ask of them.
Another critical part of being prepared is staying on top of your documentation. When the pharmacy gets busy, keeping up with manual copies and making sure everything is up to date can fall by the wayside, but that can come back to bite you. ″A good example is the OIG exclusion verification,″ Hedges said. ″PBMs will pick a month and say, ‘I want to see your OIG exclusion verifications for March 2019,’ and you have to produce it!″
One mistake to avoid is relying on other pharmacists to give you accurate information on what is important. ″I talk to a lot of pharmacies, and they will be told by another colleague that you don’t need to do this or you don’t need to worry about that,″ Hedges said. ″It’s easy to follow why, but a lot of times people have old rules or they interpret them incorrectly.″ Hedges added, ″When the inspector is there, you don’t want to be in the back room calling a colleague and saying, ‘I don’t have this policy thing? Can you fax it over?’ It’s not a good thing to do.″
When the inspector shows up at your pharmacy, no matter what agency or regulatory body they are from, Hedges gives the same advice: don’t panic. This goes hand in hand with his second piece of advice: listen before you speak. ″Listen to the questions being asked and provide exactly what is being asked for,″ he said. ″Don’t give the inspector too much information, because that can open up Pandora’s box.″
He points out that some agencies use contractors to complete their inspections, and these contractors aren’t necessarily experts in how a pharmacy should be run. They rely on a checklist to tell them what they should look for, so by talking too much and giving out too much information, you may raise a red flag that would have otherwise gone unseen.
If you have your documentation ready and your staff members are well-trained, an inspection doesn’t have to be a painful experience, Hedges said. ″For example, when the Office of Civil Rights comes in for a HIPAA inspection, they ask for four things. If your clerk is able to answer the questions and provide all of that, the inspector is going to look at it, say, ‘Great job, thank you very much,’ and walk out the door.″ On the other hand, if your clerk fumbles and has to ask the manager about whether the pharmacy has the requested documents, the inspector could decide to spend all day with you, giving them more opportunities to catch errors and violations.
When PBMs began auditing pharmacies, one item they required was comprehensive documentation of policies and procedures. Now, other regulatory bodies will check for that documentation, too. Below are some items you should include in your pharmacy’s policies and procedures:
After an inspection, if things have gone smoothly, you can go back to your usual work. But if you receive a citation or deficiency, Hedges said, ″You have to remedy that action immediately.″ Just like the inspection itself, the consequences for falling short depend on which party is doing the inspection. ″You may get a deficiency letter from an inspector and have X number of days or hours to respond,″ Hedges said. ″For CMS, you have 48 hours if you miss anything. Depending on the deficiency, state boards may come back in 30 days to verify it’s been corrected.″
But it’s not always as simple as demonstrating you’ve fixed the problem. If you miss something on a DEA inspection, you will find yourself facing a fine of $14,000 per line item. And PBMs have a lot of power to wreak havoc on your pharmacy if you fail to meet their expectations in an audit. One measure they might take is to cancel your contract, eliminating your access to patients. If they come in and ask for a certain month’s OIG exclusion verification that you can’t produce, they can stop all reimbursement for Medicare, Medicaid, and Tricare. ″Then they notify everybody else—all the other PBMs—so everybody is coming to pull back their money because you’re in violation,″ Hedges said.
If you’re given instructions to correct something, take action quickly, because failing to respond can create even more consequences. ″If you don’t respond to CMS when they request documentation, they can revoke your PTAN number,″ Hedges explained. ″Now, that’s for a 10-year period, so the pharmacy owner can’t open up another pharmacy or DME during that 10-year revocation period, or read a PTAN. Future PTANs are blocked by CMS during this period.″
The most important thing you can do is learn from your mistakes. Get your documentation organized so it’s easily accessible the next time an inspector pops in. Conduct training with your staff to make sure they know where things went wrong. And set expectations for what they need to know and how they should behave during future inspections. When it comes to avoiding citations and passing your inspections with flying colors, the best defense is a good offense.
This article was published in our quarterly print magazine, which covers relevant topics in greater depth featuring leading experts in the industry. Subscribe to receive the quarterly print issue in your mailbox. All registered independent pharmacies in the U.S. are eligible to receive a free subscription.
More articles from the March 2021 issue:
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