Long Term Care Pharmacy Contracts & OIG Audit Readiness: How RFPs Can Help

Key Takeaways

• A well-documented RFP can help long-term care facilities show how pharmacy vendors were compared, evaluated, and selected using consistent criteria.
• Price should not be the only consideration. Clinical support, service levels, compliance controls, technology, staffing, and contract terms can all affect the strength of a pharmacy arrangement.
• Free or below-market pharmacy services deserve careful review because OIG has historically identified these arrangements as carrying heightened fraud-and-abuse risk.
• Fair market value can reduce compliance risk, but OIG states that it does not, by itself, guarantee an arrangement complies with the Federal Anti-Kickback Statute.
• Audit readiness continues after the contract is signed. Facilities should retain procurement records and periodically review whether the pharmacy is delivering services according to the agreement.

Selecting a long-term care pharmacy is not simply a purchasing decision. The relationship can affect medication access, consultant pharmacy services, resident safety, controlled-substance procedures, operating costs, and the financial arrangements between a facility and an outside healthcare vendor.

That makes the selection process increasingly important from a compliance perspective. In 2026, the Office of Inspector General launched an audit examining whether nursing homes have effective pharmacy-service controls to prevent opioid overuse, misuse, and diversion. OIG notes that state survey agencies had cited almost half of nursing homes nationwide for pharmaceutical-services deficiencies during recent complaint and standard health inspections.

For long-term care operators reviewing or renewing pharmacy contracts, a request for proposal can therefore serve a purpose beyond comparing vendors. And, as LTCRFP, an independent pharmacy RFP consultancy based in Vestal, New York explains, used thoughtfully, an RFP can create a documented record showing what the facility considered, how competing proposals were evaluated, and why a particular pharmacy was selected.

That record can support audit readiness, although it should not be mistaken for proof that an arrangement complies with every applicable fraud-and-abuse law.

Why Long-Term Care Pharmacy Contracts Deserve Compliance Scrutiny

Long-term care pharmacy arrangements sit at the intersection of clinical care and commercial relationships.

A pharmacy may provide dispensing services, consultant pharmacist support, emergency medication access, packaging, medication reviews, technology, data reporting, staff education, and other operational assistance.

Those services can be valuable, but they may also create financial relationships that deserve careful scrutiny.

OIG has specifically warned nursing facilities receiving consultant pharmacist services from long-term care pharmacies to be mindful of free services or services offered below fair market value, particularly when the parties are actual or potential referral sources. OIG has described those situations as carrying heightened fraud-and-abuse risk.

The concern is not that every discounted service is improper. The issue is whether something of value could influence referrals, purchasing decisions, utilization, or other activity involving Federal healthcare programs.

That makes transparency particularly important when facilities compare pharmacy proposals.

How Can An RFP Support OIG Audit Readiness?

A carefully designed RFP creates a consistent framework for comparing vendors. Instead of relying on informal conversations or choosing a provider based primarily on an existing relationship, the facility can establish its requirements before proposals arrive and ask each pharmacy to respond to the same questions.

The resulting file can show which vendors were considered, what they offered, how pricing differed, which compliance concerns were reviewed, who participated in the decision, and why the successful pharmacy was selected.

That documentation can become valuable if the arrangement is later questioned. For example, if one vendor offered significantly lower pricing or additional services at no charge, the procurement record can show whether those benefits were identified, valued, and reviewed before the contract was approved.

An RFP cannot determine whether an arrangement is legal. What it can do is make the decision-making process easier to reconstruct and explain.

What Should A Long-Term Care Pharmacy RFP Include?

A useful RFP should capture enough information to compare both the economic and operational substance of each proposal.

Pricing is an obvious starting point. Facilities may want vendors to explain dispensing charges, pricing methodologies, credits, service fees, transition expenses, and any other financial terms that could affect the total cost of the arrangement.

The same level of detail should apply to services that appear to be included at no additional charge. Consultant pharmacist services, for example, should be described clearly enough for reviewers to understand what the facility is receiving, how frequently the service will be performed, and whether separate compensation applies.

The RFP should also examine medication-management capabilities, including drug-regimen reviews, emergency medication access, controlled-substance procedures, after-hours support, and documentation expectations.

Technology deserves similar attention. EHR and eMAR compatibility, reporting capabilities, data ownership, cybersecurity responsibilities, system downtime procedures, and access to historical records can all become important once a contract is operational.

Finally, pharmacies should be asked about licensing, exclusion screening, staff training, compliance policies, audit rights, and their procedures for identifying or reporting potential regulatory problems.

The objective is not to create the longest RFP possible but to obtain enough comparable information to understand what each vendor is proposing and what risks may therefore accompany the arrangement.

Why “Free” Pharmacy Services Need A Closer Look

Free services can make one proposal look particularly attractive. A pharmacy might offer software, equipment, consultant support, training, administrative assistance, or other benefits without charging an obvious separate fee.

Those offers should not automatically be treated as additional value for the facility. The reason is, long-term care pharmacies and facilities may have referral or purchasing relationships involving federally reimbursed care, free or below-market benefits that can raise questions under Federal fraud-and-abuse laws.

That is why the RFP should require vendors to identify included services clearly, even when those services do not appear as a separate invoice item. Doing so gives compliance and legal reviewers a better opportunity to assess the complete economic relationship instead of looking only at the contract’s headline price.

Does Fair Market Value Make A Pharmacy Arrangement Compliant?

Fair market value is important, but it is not the end of the analysis. In updated guidance issued in April 2026, OIG stated that keeping remuneration consistent with fair market value is a useful practice that may reduce fraud-and-abuse risk. However, OIG also made clear that fair market value alone does not guarantee compliance with the Federal Anti-Kickback Statute. The facts, circumstances, and intent behind an arrangement still matter.

That means a facility should avoid treating a market-rate determination as an automatic safe harbor.

OIG has identified several questions that can help organizations think about potentially problematic arrangements, including whether the arrangement could interfere with clinical decision-making, increase Federal healthcare program costs, encourage inappropriate utilization, create patient-safety concerns, or steer patients or providers toward particular services.

An RFP can help surface those issues early, while there is still an opportunity to reconsider or restructure problematic terms.

Build The Scoring System Before Opening Proposals

One of the simplest ways to strengthen an RFP process is to decide how proposals will be evaluated before seeing them.

The facility might consider pricing alongside clinical support, service reliability, compliance controls, technology, transition planning, staffing, and relevant performance history.

The exact weighting will depend on the organization. What matters is establishing the framework in advance.

Doing so helps demonstrate that the selection process was driven by defined business and care requirements and not altered afterward to favor a particular pharmacy.

The final scoring sheets should also be retained, along with comments explaining significant differences between proposals.

Document Who Made The Decision

The people participating in the pharmacy selection process are another important part of the record.

A facility should be able to identify who reviewed the proposals, who scored them, who approved the final selection, and whether any participant disclosed a financial, personal, or other relationship with one of the vendors.

OIG’s broader nursing-facility compliance guidance emphasizes written policies, appropriate oversight, and attention to financial arrangements with outside contractors as elements of an effective compliance program.

Documenting the procurement team and any relevant conflicts helps connect the RFP process to that wider compliance framework.

What Records Should Be Kept For An Audit?

Once the selection is complete, the facility should preserve enough information to reconstruct the process later.

That may include the final RFP, the list of vendors invited to participate, submitted proposals, vendor questions and clarifications, scoring sheets, pricing analyses, meeting notes, conflict disclosures, compliance reviews, approval records, and the executed agreement.

Contract amendments and renewal documents should be retained as well. This is particularly important because a pharmacy relationship may continue for years. Staff members who negotiated the original agreement may no longer be available when an auditor, buyer, regulator, or new compliance officer eventually asks why certain terms were accepted.

A well-maintained procurement file allows the records to answer that question.

Audit Readiness Does Not End When The Contract Is Signed

A careful procurement process can lose much of its value if the resulting contract is never monitored.

Services may change over time. New benefits may be added informally. Pricing may drift from the original terms, or responsibilities described in the agreement may no longer reflect how the pharmacy relationship actually operates.

Facilities should therefore compare actual performance with the contract periodically. That can include checking whether agreed service levels are being met, whether pricing matches contractual terms, whether compliance certifications remain current, and whether any new free or discounted services have appeared.

Pharmacy controls also deserve ongoing attention from a resident-care perspective. OIG’s current audit work is examining whether nursing homes have adequate pharmacy-service controls to prevent opioid overuse, misuse, and diversion, reinforcing the connection between pharmacy oversight and broader quality and compliance responsibilities.

Use The RFP As Part Of A Broader Compliance Process

An RFP should ultimately be viewed as one component of pharmacy oversight, not as a standalone compliance solution.

OIG’s Nursing Facility Industry Segment-Specific Compliance Program Guidance encourages facilities to identify their particular risks and build compliance and quality systems capable of addressing them. Its wider guidance emphasizes written policies, responsible oversight, training, reporting mechanisms, auditing, and ongoing risk evaluation.

A disciplined pharmacy RFP fits naturally into that framework. It gives the facility an opportunity to ask difficult questions before committing to a vendor, compare proposals against consistent criteria, document financial and service arrangements, and preserve the reasoning behind the final decision.

That cannot guarantee a favorable result in an OIG audit or eliminate the need for qualified legal and compliance review. What it can do is leave the organization better prepared to explain how its pharmacy arrangement was evaluated, why the vendor was selected, and how the relationship has been monitored since the contract was signed.

For long-term care operators, that documented decision trail may ultimately be one of the most valuable outcomes of the RFP process.

LTCRFP
assist@ltcrfp.com

117 Rano Blvd
Suite 58
Vestal
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13850
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