Diagnosis Restricted? Documentation Required!

PAAS National® is starting to see more audit recoupments on claims where a diagnosis code was required at adjudication but there was no documentation on the hardcopy to support the diagnosis code billed. PBMs may prompt pharmacies to enter a diagnosis code on claims when the medication billed is only covered for certain indications, helping to take the guesswork out of coverage limitations.

Become an audit assistance member today to continue reading this article. As a member, you’ll have access to hundreds of articles and receive our monthly proactive newsletter!

Common diagnosis restricted drugs include GLP-1 (e.g. Trulicity®, Ozempic® and Mounjaro®), Nuedexta®, stimulants/ADHD medications, and Naltrexone. It is important to ensure the diagnosis code is present on the prescription or verified with the prescriber and a clinical note added to the prescription if you are prompted to enter a diagnosis code during claim adjudication. Do not process prescription claims for an assumed diagnosis code. Without any documentation to support the diagnosis code entered, the claim is likely to be flagged for recoupment if audited. Repeat prescriptions with a prior diagnosis code can likely be deferred to professional judgment but should have the diagnosis code (with a clinical note) transferred onto the new hardcopy to avoid audit trouble.

PAAS Tips:

  • Ensure diagnosis codes are properly documented on a prescription if entering them during claim adjudication
  • Entering a diagnosis code during adjudication, without PBM promoting, does not guarantee that a diagnosis is covered
    • In other words, PBMs ignore the diagnosis code field unless the PBM/Plan Sponsor requires it
  • Clinical notes should contain the date, name and title of who you spoke with at the prescriber’s office, a summary of the discussion, and your initials
  • Send all audit notices to PAAS for expert assistance. Pharmacies can securely upload files on the Member Portal under “Access Services

2024 DMEPOS Series #4: Surgical Dressings

Many pharmacies struggle with DMEPOS audits due to the complexity in medical billing and the onerous documentation requirements. Medicare Part B suppliers need to be able to produce all the required documentation if audited, and make sure all documentation meets Medicare Part B standards. This DMEPOS series is intended to help you understand these complexities and gather the needed documents.

In particular, you should be able to show the following if audited on surgical dressings:

Become an audit assistance member today to continue reading this article. As a member, you’ll have access to hundreds of articles and receive our monthly proactive newsletter!

  • Standard Written Order (SWO)
    • A new order is required every 3 months for each qualified dressing dispensed, or sooner if the quantity required increases
  • Medical Records must support the surgical dressings are required for one of the following:
    • Treatment of a wound caused by, or treated by, a surgical procedure, or used after debridement of a wound
    • Initial wound evaluation must include:
      • Type, location, number, and size of qualifying wounds (L x W and depth)
      • Amount of drainage
      • Frequency of dressing change
    • Ongoing wound evaluation (weekly or monthly)
    • Specific dressing coverage criteria (in addition to meeting the criteria for qualifying wound)
    • Covered diagnoses can be found in the Local Coverage Determination (LCD) and Policy Article
  • Proof of Delivery
  • Proof of Refill Request and Affirmative Response
    • Required if delivered or mailed

PAAS Tips:

PAAS Audit Assistance members can search the Newsline archive for keyword “DMEPOS series” to read previous articles in this series. If you have any questions on accessing the Member Portal, or need help adding employees so they have access, please contact us at (608) 873-1342 or info@paasnational.com and our staff can assist you.

Do I Need to Consider Beyond Use Dating for Multi-dose Vial Medication?

The answer is YES! Multi-Dose Vials (MDV) for injection have Beyond Use Dates (BUD) that need to be followed. The beyond-use-date refers to the date after which an opened multi-dose vial should not be used. The manufacturer’s expiration date refers to the date after which an unopened multi-dose vial should not be used. The beyond-use-date should never exceed the manufacturer’s original expiration date. Medication vials should always be discarded whenever sterility is compromised or cannot be confirmed.

The MDVs typically contain an antimicrobial preservative to help limit the growth of bacteria; however, over time, sterility can be impacted. All MDVs for injection will have a beyond use date – in some cases it is specifically identified in manufacturer labeling, in other cases it is not specified. If not specified, pharmacies will need to refer to The Joint Commission guidelines to assign BUD for multi-dose vials (explained below). Pharmacies should use the shorter date (beyond use OR days’ supply calculated per the instructions) when considering what days’ supply to submit (and corresponding refill intervals). Refer to the latest PAAS National® Insulin Medication chart for BUD information for various insulin vials. Remember that each insulin vial has its own BUD!

Example 1: Lantus® vial, 10 mL: Inject 20 units q HS = 1000 ÷ 20 = 50-day supply but should be discarded 28 days after opening (first needle puncture)

Example 2: Levemir®, 10 mL: Inject 20 units q HS = 1000 ÷ 20 = 50-day supply but should be discarded 42 days after opening (first needle puncture)

Here are a few common questions & answers that may assist your pharmacy in filling and billing MDVs accurately:

Become an audit assistance member today to continue reading this article. As a member, you’ll have access to hundreds of articles and receive our monthly proactive newsletter!

Q: Do I have to bill the correct days’ supply if it pushes the patient into a 2-month copay?

A: Most likely yes; if you are contracted for an extended days’ supply plan you must bill an accurate days’ supply. If the patient isn’t happy about their copay, pharmacy staff, or the patient, could try to call customer service in an attempt to obtain a copay override (since they are not getting a full 2 months). The pharmacy must submit the days’ supply as supported by the instructions for use and beyond use dating unless given specific approval in advance from the PBM help desk. Don’t forget to document any help desk calls using the 4-element clinical note format on the prescription hardcopy.

Q: When should multi-dose vials be discarded?

A: Medication vials should always be discarded whenever stability or sterility is compromised or cannot be confirmed. In addition, The Joint Commission recommends the following for multi-dose vials of sterile pharmaceuticals:

  • If a multi-dose has been opened or accessed (e.g., needle-punctured) the vial should be dated and discarded within 28 days unless the manufacturer specifies a different (shorter or longer) date for that opened vial
  • If a multi-dose vial has not been opened or accessed (e.g., tab removed, needle-punctured), it should be discarded according to the manufacturer’s expiration date

PAAS Tips:

  • Always bill for the exact days’ supply as many plans have days’ supply overrides built in for certain medications
  • If no override is available, bill for the plan limit and document ILQ (Insurance Limits Quantity) – see Proactive Tips Can You Bill It as 30 Days on the PAAS Member Portalunder ‘Proactive Tips’
  • Document on hard copy – billed as 28-day supply due to The Joint Commission guidelines (when appropriate)
  • Counsel patient on the BUD – put BUD on patient label

Why You Should Care About PBM Provider Manuals (and Where to Find Them)

Whether your pharmacy contracts directly with a PBM or the agreements are negotiated through a Pharmacy Services Administrative Organization (PSAO), the terms and conditions within the agreements are just the beginning of a pharmacy’s obligations. Additional expectations for the pharmacy are laid out in the PBM’s Provider Manual. Understanding and following the stipulations contained therein can help decrease your risk of audit recoupments and keep the pharmacy in good standing. However, these manuals vary significantly by PBM, often exceed 150 pages, and can get updated multiple times throughout the year – making it impossible for pharmacies to keep up with all the requirements. Making matters worse, PBMs do not accept a plea of ignorance and violating the provider manual can lead to claim recoupment, accusations of fraud, waste, or abuse, and even contract termination!

Through our Newsline and audit assistance, PAAS National® helps pharmacies stay abreast of these changing requirements as they relate to audits. To access the Provider Manuals directly, follow the links below: 

Become an audit assistance member today to continue reading this article. As a member, you’ll have access to hundreds of articles and receive our monthly proactive newsletter!

  • Caremark produces (and mails) a biennial version to all contracted pharmacies on even years and supplements on odd years. An electronic copy can also be found on the pharmacy provider website (log in required).
  • Express Scripts tends to update their manual periodically throughout the year and they post the newest version online in the Pharmacist Resource Center (log in required) along with an itemized list of updates. Reviewing the itemized updates is an efficient way to stay on top of the changes Express Scripts implements.
  • Humana publicly posts their provider manual online on the Pharmacy Manuals and Forms page of their website.
  • OptumRx updates their provider manual several times throughout the year and has a copy publicly available under the Manuals and Guides section of their Health Care Professionals website.

PAAS Tips:

  • Be proactive and read PAAS’ Newsline in its entirety each month
    • The paper Newsline only contains half the content that PAAS produces each month – be sure to log-in to the PAAS Portal to view additional articles and PAAS Tips
    • Add additional employees to the PAAS Portal to increase eNewsline readership and ensure that small details don’t get missed
  • Have questions about a specific topic and don’t know where to start? PAAS analysts can guide you through the PBM requirements and refer you to appropriate sections of the PBM’s provider manual, when applicable

OptumRx Auditing for Medical Supplies Billed Under Medicare Part D

In March 2024, PAAS National® analyst assisted nearly 100 pharmacies with desk audits from OptumRx requesting documentation related to claims for medical supplies (primarily alcohol swabs) that were processed by OptumRx under the Medicare Part D benefit. OptumRx asked pharmacies to provide copies of insulin prescriptions as well as the associated fill histories, signature logs and explanation of payment for these insulin prescriptions dispensed between July 2019 and June 2023.

Become an audit assistance member today to continue reading this article. As a member, you’ll have access to hundreds of articles and receive our monthly proactive newsletter!

Most pharmacies report dispensing no insulin to the patients in question and explained that the alcohol swabs were being used in conjunction with diabetes testing supplies (test strips, lancets) that were also billed to OptumRx. Since OptumRx covered the cost for diabetes testing supplies, it would suggest that patients were enrolled in a Medicare Advantage (MAPD) plan and OptumRx incorrectly categorized the alcohol swab claims as “Part D” when they should have categorized as “Part B”. The OptumRx audits seem to stem directly from a nationwide CMS audit of Plan Sponsors initiated in December 2023. During this audit, CMS scrutinized Part D claims for medical supplies, such as alcohol swabs, in cases where patients lacked any claim history for insulin use.

The coverage of insulin and its related supplies may vary depending on the Medicare benefit type and the intended use of the item. Specifically, insulin vials and alcohol swabs could be eligible for coverage under either Medicare Part B or Part D.

Keep in mind that Medicare patients could have prescription and medical benefits that are separate or combined.

  • Separate: standalone medical benefit Fee-for-Service (FFS), also known as “Original Medicare” + stand-alone pharmacy benefit through a Part D Plan (PDP)
  • Combined: medical and pharmacy benefit under one roof (sometimes called Medicare Part C) through Medicare Advantage (MAPD) Plan

Here is a chart to help you identify the correct payer depending on the type of Medicare benefit and the item in question.

  Pharmacy Medical Combined
Medicare Part D (PDP) Original FFS Medicare

(Part B/DMEPOS)

Medicare Advantage

(MAPD)

Insulin supplies
Insulin pen Yes No Yes
Insulin vial for self-administration Yes No Yes
Insulin vial for DURABLE pump1 No Yes Yes
Insulin vial for DISPOSABLE pump2 Yes No Yes
Insulin syringes Yes No Yes
Alcohol Swabs for Part D insulin3 Yes No Yes
Alcohol Swabs for glucose testing No Yes Yes
Alcohol Swabs for any other use No No No
Testing Supplies
Test Strips No Yes Yes
Lancets No Yes Yes

A few nuances to keep in mind:

  1. Generally, insulin used in a DURABLE pump is covered under Medicare Part B, unless patient does not meet coverage criteria. See PAAS Newsline article, Billing Insulin for a Pump is Tricky, Especially for Medicare Patients for more details.
  2. Insulin used in a DISPOSABLE pump such as V-Go® or Omnipod®
  3. Alcohol swabs are only covered under Part D when used for the injection of insulin according to Section 10.5 from Chapter 6 of the Medicare Prescription Drug Benefit Manual. Additionally, PBMs are likely to audit for high AWP alcohol swabs or when used in excess (i.e., if patient is to use both “before and after” injection). See PAAS Newsline article, Why Would Anyone Audit Alcohol Swabs? For more details.

 PAAS Tips:

  • If you are unsure about a patient’s Medicare coverage (PDP vs MAPD), then ask to see a copy of their card and look for “MAPD” or “Medicare Advantage” wording, or call the patient help desk if needed
  • If a Medicare patient presents a prescription for insulin vials, clarify if self-administered or used in a pump

Philadelphia Pharmacy Employees Charged for Drug Diversion and Fraudulent Billing Practices

A years-long investigation of the top retail pharmacy purchasing oxycodone in Pennsylvania has come to resolution.

The pharmacy engaged in reckless controlled substance dispensing, ignoring signs of diversion (i.e., accepting blatantly forged prescriptions and sizable amounts of cash payments for drugs) and dispensing opioids in extreme doses or in combination with other “cocktail” drugs.  In addition, the pharmacy took part in an extensive health care fraud scheme. The pharmacy would fraudulently bill for drugs that were not intended to be dispensed. A hallmark part of the scheme involves employees using the code “BBDF” or “Bill But Don’t Fill” in their computer system to communicate the prescriptions that were merely to be billed without dispensing medication to the patient as a means to further their profits.

The owner pled guilty and was sentenced to 42 months in prison for his role. He also plead guilty to having conspired with others to ultimately engage in this health care fraud scheme and illegally dispensing oxycodone. The owner and his business agreed to pay $4.1 million to resolve the company’s civil liability. In addition, the company will not be permitted to dispense any controlled substances in the future and will be unable to bill federally-funded programs for 22 years.

Two former employees of the pharmacy also plead guilty to charges alleging they knowingly dispensed oxycodone without a valid prescription, resulting in 3 months and 4 months in prison, respectively. In addition, they each agreed to pay the United States in order to resolve civil allegations and committed to never dispense any controlled substances going forward.

Although the pharmacy’s motives were blatant violations of the Controlled Substance Act and False Claims Act, that is not always the case. Ensure your pharmacy staff has a good grasp on proper billing habits and a policy manual for preventing, detecting and report Fraud, Waste and Abuse. See PAAS National®’s compliance program for more information or call us at 608-873-1342.

Does My Pharmacy Really Need Cultural Competency Training?

Pharmacies are no stranger to the requirements of completing annual Medicare Fraud, Waste, and Abuse training, which is a very clear requirement created by Medicare Part D and MAPD statutes. Because CMS holds PDPs and MAPDs responsible, PBMs often ask for the pharmacy’s FWA training during onsite audits. On the contrary, cultural competency training isn’t something PBMs regularly ask for. In a world where pharmacy employees are already spread thin, is completing cultural competency training truly necessary?

As of April 2021, NCPDP required pharmacies to indicate if they train their staff on cultural competency and maintain evidence of such training, when going through the pharmacy’s annual NCPDP profile credentialing. Since adding this question, PBMs have decreased the number of direct attestations required of community pharmacies. However, indicating ‘no’ in NCPDP is not without potential repercussions as PBMs may exclude you from provider listings of culturally competent care, as this was required for Medicaid managed care plan directories. Additionally, there are federal requirements that have been in place for many decades.

Through many federal laws and regulations related to discrimination and cultural competence comes the requirement that all healthcare professionals, including pharmacies, must take “reasonable steps” to provide equal access to care across all patient populations. It cannot be expected that a pharmacy would be able to meet the standards if there is a lack of knowledge on what the legal requirements are or what is expected of your pharmacy staff to meet these federal regulations. For this reason alone, training your staff on cultural competency is a must.

In addition, there have been real world examples of pharmacies being subpoenaed and sanctions being placed on pharmacies due to the Department of Justice (DOJ) determining there was a lack of “reasonable steps” being taken to ensure equal access to care, one being Rite Aid. In November 2021, the Justice Department and the U.S. Attorney’s Office for the Middle District of Pennsylvania reached a settlement agreement with Rite Aid Corporation in the matter of people with disabilities having difficulty accessing information about the COVID-19 vaccinations and booking vaccination appointments online. Specifically, Rite Aid’s COVID-19 registration portal was not compatible with screen reader software used by some patients with disabilities. In addition, those who have issues using a mouse were unable to use the tab key in its place when filling out the consent form. Therefore, it was determined there was not equal access to care and Rite Aid had 30 days to correct their online COVID-19 vaccine content to industry guidelines that allows accessibility for users with disabilities. In addition, Rite Aid was ordered to regularly test and correct any issues with its COVID-19 Registration Portal for a 30-month duration.

PAAS National® understands that your time is valuable. Therefore, we condensed more than three hours of content into (less than) one hour of training, making it practical and tailored to the independent pharmacy setting. Our efficient training covers federal requirements, including linguistically appropriate services, and concludes with a certificate of completion.

PAAS Tips:

  • Make sure your NCPDP profile is up to date! PBMs now utilize the pharmacy’s NCPDP profile to pull information in regard to cultural competency training instead of having pharmacies directly attest to each individual PBM.
    • Humana still requires a direct attestation and additional training in select states
  • Watch our On-Demand Webinar “Does My Pharmacy Really Need Cultural Competency Training?”

OptumRx Targeting Medications Requiring Dispensing in Original Containers

Recent audit results coming into PAAS National® are showing OptumRx auditors have their sights set on several medications that are required to be dispensed in the original container.

PAAS has notified members of common medications (e.g., Creon® and Linzess®) being targeted for recoupment on audits when dispensed outside manufacturer guidelines. However, several new medications have been added to their target list …

Become an audit assistance member today to continue reading this article. As a member, you’ll have access to hundreds of articles and receive our monthly proactive newsletter!

– numerous HIV medications, Carafate® (sucralfate) suspension, Effient® (prasugrel) and Tekturna HCT® are just some of the recent medications flagged.

Please visit the Member Portal for the most current Dispense in Original Container Chart, that is updated as information is available.

Without PBM hard stops in place at claim adjudication (which is complete malarky), the burden falls on the pharmacy to ensure FDA dispensing requirements are met. Don’t fall into the trap and face recoupment because you billed a claim that was not divisible by the package size (e.g., dispensing 28 tablets with a 30-count bottle size – only billed in multiples of 30).

Pharmacies that service long-term care and assisted living facilities, or provide special packaging for patients on a sync program, tend to be at the highest risk for billing these claims incorrectly. Often, the manufacturer has not provided any stability information that supports breaking the stock bottle, therefore this medication should not be dispensed using special packaging.

PAAS Tips:

  • Post the Dispense in Original Container for staff to utilize at data entry and filling stations
  • When receiving a prescription for a quantity less than the package size of these medications, contact the prescriber and inform them of the dispensing requirements and request authorization to increase the quantity and document with a clinical note
  • Communicate with facilities and patients, who utilize special packaging, on the requirements for dispensing full bottles with certain medications
  • Contact your pharmacy’s software vendor to see if NDCs can be flagged with alerts at data entry to ensure the quantity billed matches the package size
    • Alternatively, consider flagging inventory shelves for medications with special packaging/dispensing requirements
  • Self-audit claims on a weekly or monthly bases to ensure appropriate dispensing

2024 Self-Audit Series #3: Invoice Audits

The number of invoice audits continues to rise from Medicaid, and PBMs, across the board. This investigational audit is a way to potentially identify false or phantom claims. Auditors will reconcile the claims billed by a pharmacy during a certain timeframe, with the purchases made. This process ensures the pharmacy had inventory on hand to dispense for the claims they billed. Many PBMs, including OptumRx®, Elixir®, and Express Scripts® request pharmacies provide a full dispensing history for further reconciliation.

Some inventory audits are frequently combined with a desk audit. PBMs like Caremark request a high number of prescriptions, signature logs, and proof of copay collection. The amount of data a pharmacy is required to provide can be very overwhelming and time consuming. Performing internal, “mock audits” may help you be better prepared when receiving an invoice audit request.

Pharmacies must be diligent in following PBM requirements for purchasing. Audit recoupments can easily reach hundreds of thousands of dollars when invalid purchases are not accepted.

PAAS Tips:

Become an audit assistance member today to continue reading this article. As a member, you’ll have access to hundreds of articles and receive our monthly proactive newsletter!

  •  Wholesaler:
    • Keep a running list of wholesalers you are purchasing prescription and over-the-counter (OTC) items billed as prescriptions
    • Vet each wholesaler to ensure they meet PBM requirements and can provide pedigrees in accordance with FDA Track and Trace Law
    • Each wholesaler must meet state licensing requirements
  • PBM Specific:
    • OptumRx requires National Association of Boards of Pharmacy (NABP) Drug Distributer Accreditation, formerly known as VAWD
    • Caremark and Express Scripts require all diabetic supplies be purchased from an “authorized distributor”
    • Caremark requires notification and approval of any bulk purchasing the pharmacy makes
    • Caremark auditors now require original invoices for any pharmacy-to-pharmacy transfer, including MatchRx and Rxeed
    • General:
      • Keep copies of all invoices and proof of purchases for 10 years as required by Medicare Part D retention requirements
      • Adhere to Return to Stock policy and be sure claims are reversed appropriately
      • Be sure the NDC you billed is the same as the NDC you are dispensing
      • For tips on performing a self-audit, see our January 2020 Newsline, Self-Audit Series #12: Invoice Audits

2024 DMEPOS Series #3: Ostomy Supplies

Many pharmacies struggle with DMEPOS audits due to the complexity in medical billing and the onerous documentation requirements. Medicare Part B suppliers need to be able to produce all the required documentation if audited, and make sure all documentation meets Medicare Part B standards. This DMEPOS series is intended to help you understand these complexities and gather the needed documents.

In particular, you should be able to show the following if audited on ostomy supplies:

Become an audit assistance member today to continue reading this article. As a member, you’ll have access to hundreds of articles and receive our monthly proactive newsletter!

  • Standard Written Order (SWO)
  • Medical Records
    • Beneficiary must have a surgical created opening (stoma) to divert urine or fecal matter outside the body
    • The location, construction and skin condition surrounding the stoma must be discussed in the medical record
    • Diagnosis must be documented in the medical record as well as submitted on the claim for coverage consideration
    • Diagnosis driven by the type of ostomy the beneficiary has:
      • Colostomy – opening into the colon (large intestine)
      • Ileostomy – opening into abdominal wall (small intestine)
      • Urostomy – opening into abdominal wall that connects to urinary tract
    • Continued medical need can be verified by:
      • Initial medical need being met, the ongoing need for ostomy supplies is assumed to be met.
      • The beneficiary meeting the medical guidelines, no further documentation is required
    • Covered diagnoses can be found in the Local Coverage Determination (LCD) and Policy Article
  • Proof of Delivery
  • Proof of Refill Request and Affirmative Response
    • Required if delivered or mailed

Other considerations include:

  • Ostomy supplies are not separately payable when in a covered home health stay
  • Barrier (also known as a Wafer or Faceplate) – protects skin from stoma output and keeps the pouch in place
    • Solid barrier
    • Liquid barrier – liquid OR spray and individual wipes OR swabs may be used but not both
  • Pouches – can be one-piece or two-piece
  • Tape and adhesive – an AU (Item furnished in conjunction with a urological, ostomy, or tracheostomy supply) modifier code must be billed for tape and adhesive
  • If a continent stoma:
    • use only one type of supply per day
    • can be a stoma cap, stoma plug, stoma absorptive cover or gauze pads
  • Quantity of supplies needed depends on the type of stoma, condition of skin surface, location, and construction

PAAS Tips: