…and why claims adjudication matters more than ever

Recent developments in the long-term care (LTC) pharmacy landscape have exposed the challenges that pharmacies and facilities face when relying on outdated billing processes or delayed claims adjudication. 

Claims validated late increase regulatory exposure, clawback risk, and the potential for significant financial liability. 

This creates a systemic vulnerability that opens the door to regulatory exposure, clawback risk, and significant financial liability. 

For every large-volume pharmacy and skilled nursing operator, the message is clear: compliant processes need to be worked into everyday workflows.

A Lesson in What to Avoid

Recently, several large organizations in the LTC pharmacy industry were found liable for submitting millions of invalid prescription claims to Medicare, Medicaid, and other federal payers, resulting in hundreds of millions of dollars in damages and statutory penalties.

At the core of the case:

• Medications dispensed without valid, up-to-date prescriptions

• Billing that failed to account for payer changes or ended coverage periods

• Inadequate systems for verifying patient eligibility, payer status, or prescription validity before dispensing

The breakdown of essential safeguards, unfortunately, points to systemic issues that go beyond just pharmacy operations. 

Many skilled nursing facilities (SNFs) and LTC pharmacies still operate under batch-based billing and adjudication processes that leave room for human error, delayed payer updates, and noncompliance with evolving regulatory requirements.

When medication billing occurs in such an environment, the consequences can be severe: unintended “clawbacks,” demand for repayment of past reimbursements, audits, and even litigation.

Many Risks are Structural—Not One-Off Issues

In most cases, the root cause is structural, not individual misconduct. These structural issues can be grouped into three main themes: 

• Coverage data often lags behind reality. When payer status changes mid-stay (e.g., transitioning off Medicare Part A), many EHR and pharmacy systems fail to sync immediately. This causes medications to be billed incorrectly.

• Batch billing and reconciliation come too late. By the time bills are audited, claims may already have been submitted and paid, making corrections complicated or impossible.

• Manual workflows for prescription validation and billing are error-prone. Without timely checks, errors compound over time, and facilities remain exposed.

Relying on end-of-month audits or manual reconciliation leaves the door open to financial risk. Timelines have to be built into these workflows that allow for the inevitable reality: staff don’t have hours of uninterrupted time to comb through pharmacy bills.

A New Era Demanding Better Operations

LTC pharmacy audits have marked a turning point in industry norms—retroactive corrections aren’t enough to meet regulators’ expectations. 

Enforcement agencies are shifting from case-by-case reviews to broader scrutiny.

Several trends define this new era:

• Higher exposure for operational errors 

• Expanded joint liability

• Downstream risk for SNFs and ALFs

• Manufacturer and PBM audits rising in parallel

Pharmacies are seeing more retrospective rebate and claims audits from manufacturers and benefit managers, often tied to the same documentation standards regulators use.

The combination of these forces is reshaping what it means to run a compliant LTC pharmacy.

Pharmacies Should Expect Clawbacks

“The industry has seen a surge in clawbacks recently. This is the process by which manufacturers and PBMs recoup rebates or reimbursements once claims are deemed ineligible,” explains VistaRx President Tripp Harper. 

“These are a major headache for LTC pharmacies and SNFs. It takes a lot of time, paperwork, and money—sometimes money these operations don’t have on hand—to pay back these rebates.” 

Harper adds, “They’re nothing new. They tend to come in waves, and we’re expecting this one to continue as manufacturers and PBMs assess the broad implications of recent cases.”

Improving Adjudication for the New Compliance Standard

Traditional batch adjudication processes take in large volumes of pharmacy claims on a monthly, recurring basis, but rarely are these validated using an NCPDP-compliant adjudication system. 

Spreadsheet-based validation (batch adjudication) does not produce an audit-ready record and consistently fails under scrutiny. 

This creates a material compliance gap that is often discovered only after financial exposure has already occurred. 

In contrast, VistaRx adjudicates pharmacy claims in shorter timeframes using custom rules and EHR-integrated validation to ensure every claim meets eligibility and documentation standards before submission.

How Claims Adjudication Prevents Audit Risk

• Early Eligibility Verification: Confirms accurate coverage and payer alignment at the point of dispensing.

• Automated Documentation Capture: Attaches prescriber orders and facility authorizations directly to each claim record.

• Preventive Logic: Flags anomalies, such as refills beyond authorization, or mismatched payer IDs, before billing occurs or shortly after bills are submitted.

• Immutable Audit Trail: Maintains a timestamped record that can be presented during audits.

These capabilities aren’t a few steps forward in better compliance. They’re essential infrastructure. Pharmacies that can demonstrate better control over claims data stand apart from those who rely on reconstructing compliance after the fact.

From Risk to Readiness: What Pharmacies Should Do Now

Pharmacies that hope to stay ahead of the next LTC pharmacy audit should:

• Implement adjudication systems like Clean Bill and Focus to validate every claim before submission.

• Conduct mock audits or hire partners to do them and stress-test documentation and data integrity.

• Audit-proof every rebate by maintaining complete, shareable proof of eligibility.

• Strengthen partnerships with SNFs by aligning on documentation and compliance workflows.

Audit readiness is both a compliance strategy and a revenue strategy. Pharmacies that can verify claim validity and maintain clean documentation protect rebate income, avoid clawbacks, and preserve payer relationships.

Moving Forward With a New Standard

The LTC pharmacy industry is entering a new phase of accountability. Regulators, payers, and manufacturers are all converging on one requirement: demonstrable accuracy.

Pharmacies running outdated systems are assuming unnecessary risk.

Those investing in timely claims adjudication are protecting themselves from clawbacks and positioning compliance as a competitive advantage. Partner facilities and other providers will appreciate the convenience and efficiency wins that come with it. 

This capability set has long been the standard for commercial PBMs. VistaRx is making it accessible for LTC pharmacies, SNFs, and specialty providers as well.

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