Tennessee Pharmacist Conducts Multi-Million Dollar Health Care Fraud Scheme

In December 2024, a Tennessee pharmacist was arrested and charged with nine counts of Health Care Fraud and six counts of Aggravated Identity Theft for operating a health care fraud scheme that resulted in over $6 million worth of false claims being submitted to several insurers.

A federal indictment returned in late December revealed that a Tennessee pharmacist who oversaw a pharmacy with several locations in Tennessee, had been submitting false claims to Medicare, Medicaid, TRICARE, and Blue Cross Blue Shield for prescription drugs that were deemed not medically necessary, were not actually dispensed to a patient, or had no evidence of being ordered by a health care provider. In many instances, the pharmacist would use the identification of other people, without their consent, to receive reimbursement for claims submitted to a health care benefit program. The pharmacies profited from these schemes by receiving fraudulent reimbursement for personal use.

The case is being investigated by the U.S. Department of Health and Human Services, Office of Inspector General, the Tennessee Bureau of Investigation, and the Department of Defense, Office of Inspector General. If convicted, the pharmacist will face up to ten years in federal prison for each count of health care fraud, and two consecutive years in federal prison for the aggravated identity theft counts. The U.S. is also seeking a money judgement of $6,524,585.44, which represents the proceeds of the fraud scheme.

PAAS Tips:

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  • Only bill a claim pursuant to a valid prescription on file. Billing a “test” claim or “ghost” claim is prohibited by PBMs and those claims, even if reversed, are subject to audit.
    • Failure to provide a valid hardcopy can raise red flags and lead to accusations of billing false claims

Why PBMs Insist on Understanding Dispense Quantity Changes

When a pharmacy dispenses a quantity other than what was prescribed, it requires documentation. PBMs will want to know the rationale, whether the quantity was increased or decreased. There are plenty of valid reasons a pharmacy may need to change the quantity, including …

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patient requests, insurance limitations, med sync programs, or dispensing in the original container per manufacturer guidelines. Some reasons that are NOT valid include working around negative reimbursement rates, trying to collect more dispensing fees, or circumventing plan limitations. Many PBMs have a discrepancy code for lack of proper documentation to support these changes, making full recoupment possible.

Contractual obligations apply when filling prescriptions and should be considered when adjusting quantities. Opting out of extended days’ supply networks when/where possible may help alleviate some negatively reimbursed claims while still adhering to the agreement. If PBMs are notified of a pharmacy refusing to dispense a 90 days’ supply (while being contracted for extended days’ supply networks), they may issue a cease and desist letter that can result in required corrective action plans or even network termination if not corrected. One PBM in particular has language in their agreement that allows them to extend 90 days’ supply pricing to 30 days’ supply claims if the pharmacy is found to disproportionately dispense 30-day fills in comparison to peers.

Increasing the quantity dispensed requires a different set of considerations. Check your state law on whether you are allowed to increase the quantity without consulting the prescriber (i.e., accelerated refills). If so, document accordingly and ensure you are not dispensing more than the total quantity authorized on the prescription. If not allowed, contact the prescriber for approval and document a clinical note.

When a prescriber orders a quantity that is less than the smallest package size, contact the prescriber for approval to dispense a total quantity larger than originally prescribed and document a clinical note. For example, if NovoLog FlexPen® was prescribed for a written quantity of 3 mL with 2 refills, the total quantity on the prescription is only 9 mL. The pharmacy should call the prescriber to clarify the quantity and refills (to comply with FDA labeling requirements and dispense a full box of 15 mL). It’s important to include what the new quantity prescribed AND refills are to avoid any ambiguity on what the total quantity approved on the prescription is (e.g., prescriber approved increasing quantity to 15 mL with two additional refills).

PAAS Tips:

  • Always document the reason for any quantity change
  • Check your state law before increasing the quantity without prescriber approval
  • Be careful not to dispense more than was authorized on the prescription
  • Verify quantity and refills with prescriber if quantity prescribed is less than a package size
  • Do not change the quantity due to negative reimbursement, additional dispensing fees or working around plan limitations
  • Clinical notes should contain four elements:
    • Date
    • Name and title of who you spoke with
    • What was discussed
    • Your initials

Keeping the Diagnoses Straight for GLP-1 Products

The FDA recently announced that Zepbound® (tirzepatide) has been approved for the treatment of moderate to severe obstructive sleep apnea (OSA) in adults with obesity. This is the first GLP-1 indicated for OSA. The popularity of GLP-1 products has not slowed down, but with the new diagnosis for Zepbound® it is a good time to review the GLP-1 products and their FDA-approved diagnoses. 

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Many PBMs DO NOT require a diagnosis code to be on the prescription or to submit the diagnosis code at the time of adjudication. However, it is important that the correct product is being dispensed for the proper diagnosis.

In the December 2023 Newsline, Zepbound® (tirzepatide) Means Decreased Audit Risk…Right?, off-label uses of GLP-1 products were discussed. Medicare part D plans require that drugs are prescribed for medically accepted indications. Other PBMs have language in the Provider Manuals that define “clean claims” as one that is used for a medically accepted indication or outlines “appropriate dispensing practices”.  The chart below summarizes the current diagnoses for the approved GLP-1 products.

GLP-1 generic nameGLP-1 brand nameApproved indication(s)
LiraglutideVictoza®Type 2 diabetes in adults and children 10 years or olderType 2 diabetes in adults with known heart disease
Saxenda®Weight loss in adults and children 12 years or older
 
DulaglutideTrulicity®Type 2 diabetes in adults and children 10 years or olderReduce cardiovascular events in adults with type 2 diabetes with established cardiovascular disease or multiple risk factors
 
SemaglutideOzempic®Improve glucose in adults with type 2 diabetesReduce risk of cardiovascular events in adults with type 2 diabetes with known heart disease
Wegovy®Reduce risk of cardiovascular events in adults with type 2 diabetes with known heart disease AND either obesity or overweightAdults and children 12 and older with obesityOverweight adults who have weight-related medical problems
 
TirzepatideMounjaro®Adults with type 2 diabetes to improve blood sugar
Zepbound®Moderate-to-severe obstructive sleep apnea in adults with obesityObesity in adultsOverweight adults who have at least 1 weight-related comorbid condition

PAAS Tips:

Top Ten Newsline Articles for 2024

In today’s fast-paced world, it’s crucial to stay informed with the latest insights to avoid putting your pharmacy at risk. For all pharmacy staff, continuous education is key. Mailed to pharmacies with the January Newsline, this article reviews the top ten PAAS National® Newsline articles from 2024 that were the most read tips and trends to help be proactive in preventing audits.

  1. Be Conscientious When Refusing to Dispense (or Bill Insurance)…
  2. Insulin Substitution Review: Understanding Purple Book Terminology
  3. PBM Audits on Ozempic®: 5 Common Discrepancies Revealed
  4. New Dispense As Written (DAW) Code Revealed
  5. OptumRx Continues to Cause Headaches!
  6. Best Practices for DAW Billing in Pharmacies
  7. Continuous Glucose Monitor (CGM) Billing and Supply Allowance
  8. Major PBMs Announce “Cost Plus” Pharmacy Networks
  9. OptumRx Targeting Medications Requiring Dispensing in Original Containers
  10. Commercial Claims Reimbursed Through Embedded GoodRx® Discount Cards

In addition, below are the top articles that are available only on the Member Portal.

  1. Days’ Supply Considerations for Eye Medications
  2. Required: Proof of Patient Copay Collection
  3. Painful Lessons: What You Should Know About Return to Stock Timeframes
  4. Transfer Tragedy: A Timeworn PBM Target
  5. Addressing “Weird” Days’ Supply
  6. Metformin HCL ER – Audit Considerations
  7. Pharmacy Owner’s Involvement in Fraud Scheme Leads to 4-Year Prison Sentence

When using the PAAS eNewsline on the Member Portal, you are able to search the Newsline Archive via keyword. Let the knowledge from these articles fuel your journey toward improved operations and a more engaged pharmacy staff.

Access these popular articles via the links above or you can print the Top 10 Articles of 2024 resource for a quick read.

Unique Eyedrop Calculation Challenges

Pharmacy social media platforms host passionate discussions on the correct way to bill days’ supply for eyedrops almost every week. Do you use 15 drops/mL, 20 drops/mL, or something else? As it turns out, the “right answer”  depends on the PBM you are billing and if the eyedrop is a solution or a suspension. Sound complicated? PAAS National® has a one-page chart and an app for that!

To make matters worse, there are some unique situations where using the PBM guidance is not relevant.

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For example, some manufacturers have specific guidance for drops/mL due to a viscosity and drop size difference (e.g., Miebo® [272 drops/3 mL], Vevye® [200 drops/2 mL], and Vyzulta® [81 drops/2.5 mL]), and you should calculate the days’ supply based on the manufacturers’ guidance.

Additionally, some eyedrops have a specific beyond use date in Section 16 Storage and Handling of the product labeling (e.g., AzaSite® [14 days], Rocklatan® [42 days], Rhopressa® [42 days], Vyzulta® [56 days], Xalatan® [42 days]) and cannot have a days’ supply greater than the beyond use date. Do not assume that all eyedrops have a beyond use date of 28 days. This is NOT true in most cases.

If a prescriber indicates that patient should discard the eyedrop after using it for ’X’ number of days, this must be explicitly spelled out in the directions to the patient. For example, eye drops that are to be used in the right eye for two weeks after surgery then discarded for a new bottle to be used for the left eye should clearly indicate this in the directions before billing a 14-day supply. If multiple package sizes of the product exist, use the smallest bottle closest to the treatment duration as possible. The PBM will not pay for a patient to discard the remainder of a 15 mL bottle when a 5 mL bottle would have sufficed.

PAAS Tips:

  • There is no industry accepted conversion for Gel or Ointment products
  • Follow the individual PBM published guidelines when billing days’ supply
  • OptumRx is the only PBM the explicitly states you may use treatment duration (e.g., “Use for ten days”) as the days’ supply
  • The quantity prescribed should contain a unit of measure that corresponds to the billing unit; however, if written for a quantity of “1 bottle”, it should be interpreted as the smallest package size
  • Login to the Member Portal under “Days’ Supply Charts” to find the most current version of PAAS’ Eye Drop Chart with major PBM drops per mL ratios
  • Download the PAAS National® Rx Days’ Supply Calculator from the App Store or Google Play
  • Review the November 2024 article, 2024 Self-Audit Series #9: Eye Drop Days’ Supply for additional guidance

Best Practices for Out-of-Stock Medications

PAAS National® analysts continue to see pharmacies struggle with invoice audits, which are most frequently performed by Caremark® and OptumRx®.

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Most PBMs perform invoice audits on an aggregated basis and total all claims billed to their particular PBM over an entire date range (e.g. 12 months). The totals of each NDC billed are then compared against the pharmacy’s purchases from authorized wholesalers over a similar period. If a pharmacy has an “inventory shortage”, it is commonly explained by a missing wholesaler purchase file, wrong NDC billed, purchases from an unauthorized wholesaler, or even product on the shelf prior to the date range.

Occasionally, pharmacies have shortages due to a claim being billed at the end of an audit date range for a medication that the pharmacy has not ordered/stocked before. If this out-of-stock claim falls inside the audit date range but the date of invoice falls outside (after) the date range, this can create a mathematical shortage. These situations are generally rare but can create issues for pharmacies undergoing an invoice audit.

Most PBMs have language that states the date of service must reflect the date the prescription is “prepared/readied for dispensing”, which they can argue isn’t possible without the drug on-hand. OptumRx, Horizon NJ Health, and NJ Medicaid take the language in their Provider Manuals (or Agreements) even further, indicating that pharmacies are required to have product in stock prior to even submitting a claim for the drug product. This requirement is highly impractical as pharmacies cannot afford to stock every medication that exists and do not know if a prescribed medication is even covered (or if patient even wants it) until after the claim is billed. Pharmacies should consider reversing claims for high cost, out-of-stock medications and rebilling them after the product has been ordered and is on-hand to reduce audit liability.

PAAS Tips:

If you’re not a member of PAAS’ FWA/HIPAA compliance program, contact us today at (608) 873-1342 or info@paasnational.com to add the program for a discounted rate.

Oral-Only ESRD Drugs Removed from Medicare Part D Coverage in 2025

Starting January 1, 2025, Medicare Part D no longer covers “oral-only” medications used for patients with end-stage renal disease (ESRD) undergoing dialysis treatment. This mainly impacts payment of phosphate binders such as PhosLo® (calcium acetate) and Renvela® (sevelamer carbonate), as well as Xphozah® (tenapor).

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When used for ESRD patients, these oral-only medications will now be covered by Medicare Part B under the ESRD Prospective Payment System (PPS) bundled payment to dialysis facilities and should NOT be billed by pharmacies to a Medicare patient’s Part D plan (pharmacies will also not be able to bill Medicare B). If pharmacies are looking to continuing dispensing these medications, advanced coordination with dialysis facilities will be required to ensure pharmacies receive reimbursement.

Part D claims may reject with the following NCPDP reject codes:

  • 75>Prior Authorization Required
  • 569>Provide Notice: Medicare Prescription Drug Coverage and Your Rights
  • A4>This product may be covered under the Medicare-B Bundled Payment to an ESRD Dialysis Facility

If Part D claims do not reject and pharmacy bills Part D incorrectly, then there will likely be future coordination of benefit (COB) “audits” where the Part D plan recoups the pharmacy payment, leaving the pharmacy to reconcile with the dialysis facility after the fact. PAAS National® already sees these types of retroactive, COB audits when claims were billed to Part D but “should have” been billed to Part A for patients residing in a nursing home on a covered stay.

Phosphate binders remain coverable under Part D for other medically accepted indications for patients not on dialysis for ESRD. Pharmacies may want to obtain (and document) diagnosis codes to support these claims.

Numerous organizations, including NCPA, the American Society of Consultant Pharmacists (ASCP), and the American Society of Nephrology (ASN) provided feedback to CMS that this change in payment policy will negatively affect patients as many dialysis facilities do not have an in-house pharmacy and may supply these medications without the expertise of a pharmacist.

PAAS Tips:

  • Educate billing staff about the likely rejects for phosphate binder medications for Part D patients
  • Coordinate with dialysis facilities to ensure continuity of patient care and payment for pharmacy services

The HIPAA Hot Seat: What You Need to Know About the “2024 Privacy Rule” and Reproductive Health Care

The 2022 Dobbs v. Jackson Women’s Health Organization ruling, which overturned Roe V. Wade, prompted modifications to the Privacy Rule (45 CFR Parts 160 and 164). The Biden-Harris administration, partially through President Biden’s Executive Order (EO) 14076, aimed to better protect information related to reproductive health care, to bolster patient-provider confidentiality, and promote trust between patients and their health care providers. Subsequent to EO 14076, the HIPAA Privacy Rule was updated to limit the circumstances in which the use or disclosure of PHI related to reproductive health care is permitted. The final rule (“2024 Privacy Rule”) became effective June 25, 2024, with compliance enforcement effective December 23, 2024; except for the requirement to update the covered entity’s Notice of Privacy Practices which is delayed until February 16, 2026.

The 2024 Privacy Rule strengthens privacy protections by prohibiting the use or disclosure of PHI by a covered entity (e.g., pharmacy), or business associate, for either of the following activities:

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  1. To conduct a criminal, civil, or administrative investigation into any person for the mere act of seeking, obtaining, providing, or facilitating lawful reproductive health care.
  2. To impose criminal, civil, or administrative liability on any person for the mere act of seeking, obtaining, providing, or facilitating lawful reproductive health care.
  3. To identify any person for any purpose described in (1) or (2).

Under this rule, the prohibition applies where a covered entity or business associate has reasonably determined that one or more of the conditions exists:

  • The reproductive health care is lawful under the law of the state in which such health care is provided under the circumstances in which it is provided.
  • The reproductive health care is protected, required, or authorized by Federal law, including the U.S. Constitution, regardless of the state in which such health care is provided.
  • The reproductive health care was provided by a person other than the covered entity (e.g., pharmacy), or business associate, that receives the request for PHI and the presumption described below applies.

The Final Rule includes a presumption that the reproductive health care provided by a person other than the covered entity (e.g., pharmacy), or business associate, receiving the request was lawful. In such cases, the reproductive health care is presumed to be lawful under the circumstances in which it was provided unless one of the following conditions are met:

  • The covered health care provider, health plan, or clearinghouse (or business associates) has actual knowledge that the reproductive health care was not lawful under the circumstances in which it was provided.
  • The covered health care provider (e.g., pharmacy), health plan, or health care clearinghouse (or business associates) receives factual information from the person making the request for the use or disclosure of PHI that demonstrates a substantial factual basis that the reproductive health care was not lawful under the circumstances in which it was provided. (For example, a law enforcement official provides a pharmacy with evidence that the information being requested is reproductive health care that was provided by an unlicensed person where the law requires that such health care be provided by a licensed health care provider.)

To implement the prohibition, the Final Rule requires a covered entity (e.g., pharmacy), or business associate, when it receives a request for PHI potentially related to reproductive health care, to obtain a signed attestation that the use or disclosure is not for a prohibited purpose. This attestation requirement applies when the request is for PHI for any of the following:

  • Health oversight activities
  • Judicial and administrative proceedings
  • Law enforcement purposes
  • Disclosures to coroners and medical examiner

The requirement to obtain a signed attestation gives a covered entity (e.g., pharmacy), or business associate, a way of obtaining written representations from persons requesting PHI that their requests are not for a prohibited purpose. Additionally, the attestation includes language that federal law prohibits any individual from improperly obtaining PHI and that knowingly, and in violation of HIPAA, obtaining PHI under false pretenses or disclosing the PHI to another person can result in criminal penalties. A covered entity receiving a PHI request related to reproductive health care should evaluate the request and all available data and circumstances surrounding the request to make a reasonable determination to substantiate the validity of the request.

PAAS Tips:

  • PAAS Fraud, Waste & Abuse and HIPAA Compliance members can:
    • Locate the Request to Access or Release Protected Health Information Potentially Related to Reproductive Health Care form in Appendix B which has been designed to meet the requirements of the “2024 Privacy Rule”.
    • Find information about the “2024 Privacy Rule” in your Policy & Procedure Manual under Section 10.5.4 Purposed-based Prohibition Against Certain Uses and Disclosures Related to Reproductive Health Care

If you’re not a member of PAAS’ FWA/HIPAA compliance program, contact us today at (608) 873-1342 or info@paasnational.com to add the program for a discounted rate.

2024-2025 Self-Audit Series #12: Electronic Prescriptions

This month’s article will wrap up the 2024-2025 Self-Audit Series. Our focus for this article is electronic prescriptions and their potential audit risks. Electronic prescriptions have solved some problems (e.g., indecipherable handwriting), but have also created new problems. By focusing on the following tips when reviewing your electronic prescriptions, you can help prevent significant recoupments.

Be sure any clarifications are clearly documented with these four elements: date, name and title of who you spoke with, what was clarified, initials of who made the call. This information must be accessible to the auditor upon audit.

PAAS Tips:

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  • Quantity: Unclear quantities and/or missing clear units of measure should be clarified with the prescriber’s office. Auditors look for mL, pens, boxes, or units, especially with highly targeted injectables. In addition, the quantity of “1” cannot be assumed when multiple package sizes are available.
  • NDC: The NDC reflected on an electronic prescription is considered “representative” according to NCPDP.  The Representative NDC Use in Electronic Prescribing Fact Sheet indicates “The representative NDCis not intended to infer specificity or preference to the embedded manufacturer/labeler”; therefore, determining which product to dispense cannot be solely based on the representative NDC, if present.
  • Instructions for Use
    • Ambiguous instructions should be clarified
    • Clarify when prescription appears to have two conflicting instructions
    • Check for “calculable” instructions; must be able to accurately calculate days’ supply based off instructions
    • Instructions, including clarifications, must be reflected accurately on the patient label prior to dispensing
  • Days’ Supply
    • Auditors will generally not consider the days’ supply field on electronic prescriptions
    • Pharmacy must calculate days’ supply based on quantity and instructions for use
    • Use caution with a software’s default field for days’ supply as this information is frequently incorrect
    • Day’s supply must be billed accurately, bypassing days’ supply plan limits puts claims at risk of full recoupment
  • DAW
    • Have documentation to support DAW codes billed other than “0”
    • Recommend confirming DAW 1 with prescriber when medication is new to patient
    • Check your state’s (and Medicaid’s) specific requirements for DAW 1 prescriptions
    • Brand name single source medications should not be billed with DAW 1 as this may increase audit risk
  • Notes Field
    • Conflicting information in notes field should be clarified with the prescriber’s office
    • Be sure any additional instructions from the notes field are included on the patient label
  • Failover Electronic Prescriptions
    • When electronic prescriptions fail to be transmitted, they may come through to the pharmacy’s fax machine
    • Confirm your state’s specific requirements for faxed prescriptions and call for verbal authorization, and document, when necessary

Caremark Bulk Purchase Notification

Did you make any “bulk purchases” of inventory in December 2024? If so, then you must act now to protect against a Caremark invoice audit that could happen in 2026!

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Remember that a future invoice audit from Caremark could cover purchases made between 02/01/2025 – 01/31/2026 which means that any purchases made during December 2024 will NOT be credited unless you provide notification to Caremark within 21 days after the purchase.

Section 8.05 of the Caremark Provider Manual outlines the requirement to provide notification of these bulk purchases for audit purposes – you must notify Caremark via mail or email as outlined below:

  1. Pharmacy NCPDP
  2. Contact email address
  3. Drug name
  4. NDC
  5. Total quantity purchased
  6. Name of wholesaler used

Email:   PharmacyAudit@CVSHealth.com

Mail:    

CVS Caremark
Attn: Bulk Purchase Notification, MC 020
9501 E. Shea Boulevard
Scottsdale, AZ 85260

Pharmacies do not need to include cost information when submitting. Some pharmacies have received a notification back stating that their purchase was “routine in nature” and would not be considered a bulk purchase, but PAAS would encourage pharmacies to continually inundated/notify Caremark and document these responses as they could become relevant (and useful) in an audit situation.

PAAS Tips:

  • PAAS National®® recommends keeping record of both your submission and any responses received from Caremark in the event of a future audit.
  • Watch the June 15, 2022 on-demand webinar Caremark’s Bulk Purchasing Requirements for more background information