Pharmacy and PBMs

Pharmacy benefit managers administer prescription-drug benefits on behalf of Medicaid agencies and managed care plans. Audit work considers contracting, pricing practices, claims administration, transparency, and oversight of pharmacy vendors.

Complex payment flows between agencies, health plans, benefit managers, and pharmacies can make the final cost of a prescription difficult to trace. Auditors examine whether contract terms protect Medicaid funds and whether reported pharmacy expenses reflect the amounts actually paid.

1. Improper Payments for Inpatient, Referred Ambulatory, and Clinic Claims: $222,220 in overpayments across 1 inpatient, 9 referred ambulatory, and 6 clinic claims due to billing errors, including a per diem misbilling for a hospital stay, incomplete records for four claims, practitioner-administered drugs billed above cost, and duplicate claims; some adjustments were made totaling $1,426 in savings, but $220,794 remains unresolved as of fieldwork end.

   Medicaid Program: Claims Processing Activity April 1, 2024 Through September 30, 2024 · Office of the New York State Comptroller, Division of State Government Accountability · Jun 18, 2025

2. Finding 1 – DHS did not effectively monitor pharmacy drug claims which resulted in undisclosed spread pricing, overstated pharmacy data, and a lack of transparency.

   Performance Audit Report: Pharmacy Benefit Manager Services for the Physical HealthChoices Medicaid Program in Pennsylvania · Pennsylvania Department of the Auditor General · Aug 21, 2024

3. Finding 1 – The Medical Care Programs Administration did not ensure manually processed Maryland Medicaid Pharmacy Program (MMPP) claims were proper, resulting in overpayments of approximately $397,000 related to 11 of the 15 claims tested.

   Maryland Department Of Health Pharmacy Services Audit Report · Maryland Office of Legislative Audits · Aug 9, 2024

1. Update instructions to disallow non-medical costs of third-party vendors, including PBMs.

   Oregon Medicaid Managed Care Medical Loss Ratio Audit · Centers for Medicare & Medicaid Services · Mar 1, 2023

2. Implement its performance audit plan, including audits of pharmacy benefit managers.

   Medicaid Managed Care Contract Processes at the Health and Human Services Commission · Texas State Auditor's Office · Jan 19, 2019

3. Recommendation 7: Review the $394,898 in pharmacy payments and make recoveries, as appropriate.

   Medicaid Program: Claims Processing Activity October 1, 2023 Through March 31, 2024 · Office of the New York State Comptroller, Division of State Government Accountability · Feb 2024

• Medicaid Program: Claims Processing Activity April 1, 2024 Through September 30, 2024
• Performance Audit Report: Pharmacy Benefit Manager Services for the Physical HealthChoices Medicaid Program in Pennsylvania
• Maryland Department Of Health Pharmacy Services Audit Report
• Medicaid Program: Claims Processing Activity October 1, 2023 Through March 31, 2024
• Poor Accountability and Transparency Harm Medicaid Patients and Independent Pharmacies
• Medicaid Program: Maximizing Drug Rebates Under the Federal Medicaid Drug Rebate Program
• Oregon Medicaid Managed Care Medical Loss Ratio Audit
• An Audit Report on Cook Children’s Health Plan, a Managed Care Organization
• An Audit Report on Blue Cross Blue Shield of Texas, a Managed Care Organization
• Medicaid Program: Improper Medicaid Payments for Individuals Receiving Hospice Services Covered by Medicare
• Analysis of Selected Medicaid Claims Data
• An Audit Report on Medicaid Managed Care Contract Processes at the Health and Human Services Commission
• Medicaid Managed Care Contract Processes at the Health and Human Services Commission
• Department of Social Services Prescription Drug Oversight