Mark Kunzli: Demystifying pharmacy audits

November 10, 2025 The Tablet

Mark Kunzli is a Director of the Board at the BCPhA and a pharmacist health-care consultant. He can be reached at mark.kunzli@hotmail.com.

By Mark Kunzli, BSc(Pharm), MBA, Rph
Board Director, BCPhA

Regardless of how you feel about them, PharmaCare audits are a requisite component of how the PharmaCare program ensures provider compliance with the terms of relevant acts, regulations, bylaws, policies and procedures. But without understanding the reasons why they’re done, some pharmacists might feel they are unfair.

If you’ve had a PharmaCare audit, it’s the devil you know. If you’ve only heard stories of PharmaCare audits, then what you should know is that the devil is in the details and it’s your contractual obligation to make sure you follow PharmaCare’s requirements.

In the countless pharmacies I have worked with over the years, there hasn’t been a single pharmacy where there has not been at least one process that could come back to haunt them in the case of an audit. Almost without fail, these audit risks are simply due to a lack of knowledge or awareness about requirements. In this article, I will go over common areas of concern and give some insight on the audit process itself in hopes of demystifying PharmaCare audits. (Policies change over time, so the examples and information here reflect the PharmaCare Policy Manual and guidance as of November 2025)

What can be audited?

All PharmaCare claims are subject to audit in order to ensure compliance with PharmaCare policies and procedures, as well as all applicable provincial legislation and regulations, College bylaws, and everything derived from them. However, one thing to realize is that if a claim is non-compliant, even if there is no PharmaCare payment involved, the claim can be included as part of your audit sample and subject to recovery. An example would be, if you missed an NN when billing an emergency supply, that claim may be subject to recovery.

Is that even fair?

It’s not personal. It’s part of the agreement you signed by completing the PharmaCare Provider Enrolment, which sets out terms and ongoing responsibilities for providers who wish to bill claims through PharmaCare.

In my experience, the biggest thing to realize is that it is extremely difficult to prevent all audit risks in your practice, so it is better to focus your energy on the most common sources of errors that could put you at risk of non-compliance and potential audit recovery.

What to focus on?

Frequent Dispensing Authorization forms. Review the policy requirements and ensure you comply with them. When in doubt, complete and retain the form.
Documentation is paramount. If you have adopted electronic recording keeping, scan everything and make sure it is scanned in colour. That hardcopy that you rebilled? Scan it. You don’t need to keep physical copies of everything, but you do need to keep physical copies of controlled prescription program forms and OAT witness logs. When in doubt, scan and attach to the patient file.
Run your missing image reports. Each software will have a differently formatted report, but getting in the habit of making sure you have all your prescription images and hardcopies before shredding is crucial.
Document inventory received through different channels. This could include stock transfers, manufacturer replacements for defective products, replacement goods from generic drug companies; get in the habit of documenting and saving these. Scan them to the drug file, or have a place where you keep these records.
Correct quantities. This is especially important for high-cost injectables and biologics. Even if you’re working in a pharmacy where your drug files are centrally maintained, you should be familiar with the PharmaCare webpage Correct quantities for PharmaCare claims - Province of British Columbia. B.C.’s units of measure for claim quantities for certain items may be different from other provinces. So if your head office is in another province, billing may not align with what PharmaCare requires.

If you’ve only heard stories of PharmaCare audits, then what you should know is that the devil is in the details and it’s your contractual obligation to make sure you follow PharmaCare’s requirements.

Examples of types of errors found in a PharmaCare audit:

Locum signs off on a faxed refill request for weekly blister packs

You fax a refill request to a physician for a patient’s weekly blister packs. In each sig you have “dispense weekly”.
A locum is filling in, signs off and sends back the refill request.
You do not fax a new Frequent Dispensing Authorization form to the locum, as you already have one on file for the patient’s regular prescriber who they are filling in for.
Subsequent weekly dispensing is non-compliant. Section 8.3 of the PharmaCare policy manual states that if a pharmacy transmits a refill authorization to a practitioner, the pharmacy must either ask the practitioner to provide the pharmacy with a refill authorization produced by the practitioner’s office requesting frequent dispensing, or complete a Frequent Dispensing Authorization form.
Subject to recovery. Even though you had faxed the regular prescriber a FDA form previously, you did not fax one for the new prescriber who signed off on the refill authorization form.

TIP: Ensure all staff are aware of the nuances of the Frequency of Dispensing policy when processing refill authorizations for patients on compliance packaging / blister packs.

Pre-filled syringe billed incorrectly

You purchase a 2 mL prefilled syringe that costs $1000 per syringe.
PharmaCare requires that DIN be billed as a quantity “per syringe” of 1 prefilled syringe.
Your pharmacy’s drug file is set to bill mL as the unit of
measure.
You bill 2 mL x $500/mL = $1000 total.
PharmaCare sees a total of $1000 for that DIN. It does not know the unit of measure. Because $1000 is half of what PharmaCare would expect if it assumed the claim was per syringe ($1000/unit vs $500/unit), the claim is paid with no issue.
The correct quantity for that DIN is per syringe, not per mL. Section 5.5 requires that the unit of measure for the dispensed quantity match the one recognized in PharmaNet.
Subject to recovery. The payment amount looked fine at the time, but the claim was not billed properly. The claim will be considered non-compliant even though the total dollar value was correct and the patient received the right medication.

TIP Review the drug files for the injectables listed by PharmaCare. Disable/delete any incorrect pack sizes if the option is available. If third-party insurance plans require a different billing unit, ensure the PharmaCare quantity is correct, and program the drug file to convert the quantity for the third-party plan, not the other way around.

What happens during an on-site PharmaCare audit?

Typically you will be notified of an upcoming audit and may be given the date range of the investigation. Your first step should be to retrieve all the relevant documents for this time period, if you are still retaining physical hardcopies, or be ready to produce the electronic documentation upon request. The audit date range is normally sometime in the previous two to four years. While on-site, the audit sample gathering process may be done over the course of several days if the sample size is large. If you haven’t already done it, this is the time to start hunting for everything you can find. Provide them with everything you have, and take note of anything you can’t find. If you find anything after the on-site audit, you may have the opportunity submit it for consideration.

Draft Audit Report

You will likely be waiting for six to 12 months for your draft audit report, during which, they will summarize the audit findings and the alleged non-compliant claims. Receiving a draft audit report with hundreds of thousands of dollars in potential recovery can be very intimidating, but it is important to focus on the claims where you can prove compliance. Keep in mind, for prescription verification, every prescription is included in determining your error rate, which is extrapolated over your total billings for the audit period, so demonstrating the validity of even one prescription is a valuable exercise and could reduce the audit recovery by a significant amount of money.

TIP: Did you process a brand change for a prescription or rebill it? If your pharmacy uses electronic recordkeeping and you are unable to locate the original prescription, look through your local software’s cancelled transactions to see if the image is attached to the cancelled claim.

If you need more time, ask for it. Extensions may be granted for reasonable requests at PharmaCare Audit’s discretion, so ask before the deadline and propose a realistic date. It is important to understand that you only get one chance to provide a response to the draft audit, it is not a process with ongoing discussion, so ensure that you provide all your evidence and arguments in your response to the Draft Audit Report.

You may want to consider a lawyer at this stage to assist in drafting your response to the Draft Audit Report to help ensure your draft audit response will be consistent with any further arguments or negotiations later. (Note: the BC Pharmacy Association recommends involving a lawyer if the audit amount exceeds $250,000.)

If you receive notice of a PharmaCare audit, consider phoning a friend. Find someone who has been through an audit before. Do not be ashamed, an audit does not mean you did something wrong. It is part of maintaining accountability and ensuring the sustainability of our health-care system.

Audit Report

You will likely wait a few more months for your final Audit Report. This report will take into account what you have submitted in response to the Draft Audit Report and indicate what was accepted, and what was not. You will then receive a revised audit total. You may still be able to respond to new matters raised in the reply to your previous submission, if you are able to find documentation that supports the claims, however this is at the discretion of the auditors, which is why all evidence should be provided as part of the Draft Audit response.

Keep in mind, everything you have submitted to date will be considered when determining a final recovery amount. If you’ve already argued against recovery for a claim in a previous response, you don’t need to argue again, unless you are presenting new information. It can be helpful to consider a lawyer at this stage, since you are now making the case for the appropriateness of the recovery amount.

TIP: If you still can’t find a prescription, and the prescriber uses an EMR, see if they can send a copy of the prescription. PharmaCare does not accept documentation created or obtained after the audit, so the claims will remain in error for your final audit report, but this can be helpful when making the case for appropriateness of the recovery amount.

Decision

The PharmaCare Secretariat will issue a decision on reconsideration and repayment. There may be opportunity for further negotiation of the recovery amount, but this is at PharmaCare Audit’s discretion and may vary from audit to audit.

Things to Consider

Phone a friend. Find someone who has been through an audit before. Do not be ashamed, an audit does not mean you did something wrong. It is part of maintaining accountability and ensuring the sustainability of our health-care system.
Take lawyer costs and your audit recovery amount into consideration when deciding whether to retain legal representation to ensure you are not throwing good money after bad. When you receive your Draft Audit Report, the recovery amount listed there is the amount you will be required to pay if you do nothing. Typically, a thoughtful and thorough response to the Draft Audit Report can reduce the recovery amount. Legal representation, while expensive, may be helpful with their experience in handling audits, and may be able to assist with further negotiating the amount seeking to be recovered post-Audit Report.
Don’t hesitate to ask the auditors for more information. If you have trouble understanding what something means, ask for clarification. If you want additional context beyond what’s provided in the summary reports, ask for it.
When talking to the auditors, be professional. They are not the ones deciding whether the claims are compliant. They are identifying where documentation is missing or incomplete. Make your case for whether the recovery is appropriate, but do not take it personally.

Closing Thoughts

The goal of an audit is not to catch you doing something wrong. It is to make sure the system works the way it should, and to keep it working for everyone. Be professional, stay organized, and remember that good documentation and staying up to date on PharmaCare policies and College standards is your best defence.

This article is featured in The Tablet. The Tablet features pharmacy and industry news, profiles on B.C. pharmacists, information on research developments and new products.

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