California Pharmacy Charged in $300 Million Medicaid Fraud Scheme
The US Attorney’s Office for the Central District of California recently issued a press release outlining charges against a pharmacist for the submission of more than $300 million in fraudulent claims to the state Medicaid Program (Medi-Cal) for medications that were not medically necessary, where drugs were not dispensed to patients, and where prescriptions were obtained through illegal kickbacks.
Reportedly, the pharmacy exploited a loophole in Medi-Cal’s claim adjudication process starting in 2022 when Medi-Cal suspended Prior Authorization requirements during a transition to a new payment system. When the pharmacy found this loophole, they began billing for “tens of millions of dollars per month for dispensing high-reimbursement, non-contracted, generic drugs” through the pharmacy claim system. The pharmacy obtained prescriptions through illegal kickbacks and frequently did not even order or dispense the medications involved.
Consequently, it seems Medi-Cal has followed up on this fraudulent activity with more pharmacies receiving extensive invoice audit letters in late July 2024 requesting over three years of invoice records, in addition to dispensing history and financial records (e.g., income statements and balance sheets).
Fraudulent activity from one provider gives payors and PBMs justification to perform additional audits looking for other criminals. Invoice audits often uncover honest billing and documentation errors that can cost you big money – see the tips section below to protect yourself from losses in an invoice audit.
PAAS Tips:
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- Only purchase drugs from authorized suppliers (Rx and OTC)
- Remember that OTC diabetic test strips have a unique distribution channel, see July 2024 Newsline article, Diabetic Test Strip Authorized Distributors
- Remember that OptumRx® requires use of NABP Drug Distributor Accreditation wholesalers
- Maintain a comprehensive list of your suppliers
- Ensure that your staff is billing the correct NDC (all 11 digits matter)
- Reverse prescriptions timely when they are not picked up (return to stock)
I obtained my PharmD from the University of Wisconsin-Madison School of Pharmacy and worked for a major chain as well as various LTC and independent pharmacies, before coming to PAAS.
I am passionate about learning and teaching. I strive to learn something new about PBM audits every day, so that PAAS can be more knowledgeable to better serve our members! In 2018, I started traveling to state pharmacy conferences to present audit seminars and meet our wonderful members in person.
- California Pharmacy Charged in $300 Million Medicaid Fraud Scheme - October 17, 2024
- Rethink Corrective Action Plans - September 19, 2024
- Audit Risk: Prescriber Scope of Practice and Treating Self or Family - August 22, 2024
