PAAS National® analysts have repeatedly seen auditors targeting claims with potentially undocumented substitution issues. They hope to find inappropriate substitutions which may result in recoupment of the claim. To decrease the risk of these recoupments, and better understand where the issue stems, let’s start with a bit of background information.
Since 1938, when a company seeks authorization for a new (non-biologic) drug, they must compile enough evidence for the U.S. Food and Drug Administration (FDA) to determine if the product will be approved for sale in the United States—this packet of information is referred to as the New Drug Application (NDA). Generally, the drug with the NDA becomes the reference listed drug (RLD, or brand-name) product. The RLD is what other companies’ reference when seeking approval for their equivalent product (or generic) through the Abbreviated New Drug Application (ANDA). The ANDA must provide the FDA with evidence that the product is equivalent to the FDA-identified RLD and must show in vivo bioequivalence to the reference standard (RS) drug product. The FDA usually selects one RS and generally it is the RLD, but in some cases they are different. If the FDA has enough evidence to establish equivalency, when the ANDA generic is approved, it will be given an “AB” rating. Each ANDA must list a single RLD to which it is being compared and if the FDA did not set the RLD, an ANDA applicant must ask the Office of Generic Drugs to designate one. When different RLDs are utilized for the same drug product of the same strength by different companies on their ANDA, it creates the need for a three-character Therapeutic Equivalency (TE) code (e.g., AB1, AB2, AB3, etc.). Only drug products with the same three-character TE code which are listed under the same active ingredient heading can be freely substituted for each other, plus the authorized generic, unless prohibited by state regulation. Be aware that authorized generics do not appear in the Orange Book and are not evaluated by the FDA for an equivalency rating because they are the same products as their RLD, or brand-name drug, however, they do not use the brand name.
If, at this time, the FDA considers a product to not be therapeutically equivalent, it will assign it a “B” rating. Claims at risk for recoupment include those where the prescription was issued for a specific RLD (brand-name) but filled with a non-matching TE code product or those filled with a B-rated product. The FDA Orange Book can be accessed online and may be utilized to confirm equivalency for non-biologic drug products to prevent these recoupments.
Anyone unfamiliar with the Orange Book can read the Preface which contains very detailed explanations of how to use the book as well as the meaning of each code. Included is an example of the three-character TE code system using nifedipine. Adalat® CC and Procardia XL® extended-release tablets are both listed under the same active ingredient (nifedipine) heading. Adalat® CC is designated AB1 and Procardia XL® AB2. ANDA generics approved with Adalat® CC listed as the RLD would receive an AB1 rating, and those approved with the RLD Procardia XL®, AB2. To substitute an AB1-coded generic nifedipine extended-release tablet for Procardia XL® without contacting the prescriber would be inappropriate and the claim could face recoupment if audited.
Based on the observations of PAAS analysts, the following table contains the most common products incorrectly substituted with non-AB rated products, and subsequently flagged upon audit:
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| Active Ingredient Heading |
Dosage Form |
Possible Equivalency Codes |
Most Commonly Flagged Medications due to Undocumented Substitution |
PAAS Newsline Articles with Additional Info |
| Albuterol |
HFA aerosol inhaler |
AB1, AB2, BX |
Proventil®, ProAir®, Ventolin®, non-equivalent generic albuterol |
June 2020 – First AB-Rated Generic for Proventil® Approved |
| Epinephrine |
Autoinjector |
AB, BX |
EpiPen®, non-equivalent generic epinephrine |
|
| Isotretinoin |
Capsule |
AB1, AB2 |
ClaravisTM, Amnesteem®, Myorisan®, ZenataneTM, Absorica®, non-equivalent generic isotretinoin |
May 2021 – iPLEDGE® Requirements and Isotretinoin Therapeutic Equivalence Products Reminder |
| Methylphenidate |
ER tablets & ER capsules |
AB, AB1, AB2, AB3, BX |
Concerta®, Methylin ER, Ritalin LA®, Metadate CD®, Aptensio XRTM, non-equivalent generic methylphenidate ER |
November 2020 – Best Practices for Methylphenidate ER Substitution |
PAAS Tips:
- Verify equivalency at the time of dispensing to prevent recoupment for improper substitutions.
- If you are unsure of the equivalency of two products, utilize the FDA Orange Book (for non-biologic drug products). Guidance on how to use the Orange book can be found in the Orange Book Preface.
- Obtain the prescriber’s approval prior to substituting non-equivalent products with the same active ingredient, formulation and strength
- Additional details regarding authorized generics can be found in the April 2019 Newsline article Authorized Generic vs. ANDA Generic
- Due to regulatory changes in 2020, biologic agents (such as insulin and pancreatic enzyme products) are managed under a separate application process. For details regarding biologic agents refer to the FDA Purple Book and the following Newsline articles:
- When confronted with a substitution question you cannot solve, contact PAAS for additional assistance at (608) 873-1342 or info@paasnational.com
Transfer Prescriptions Continue to Be Targeted
Transferred prescriptions remain a common audit target, and pharmacies are facing recoupments due to missing information. Without having all required elements set in place by your state’s Board of Pharmacy, these claims are at risk of full recoupment by PBMs. Transferred prescriptions are easily identified and audited by the PBM due to the origin code.
Pharmacies receiving a faxed document from another pharmacy for a transfer must ensure all transfer requirements are included. If any requirements are missing (e.g., including the word “transfer” in some cases), the pharmacy must verify and add the information. Relying on another pharmacy to include all transfer requirements is extremely risky and could result in audit recoupments. Be aware, some states require transferred prescriptions be “reduced to writing.” PBMs like Humana have recouped claims in these states when a faxed form was used.
When PBMs like Humana, OptumRx, and Elixir flag a transferred prescription discrepant, they not only go after that claim, but all the refills under that prescription as well. Very quickly a small error can result in thousands of dollars facing recoupment.
Another way transferred prescriptions present audit risk is the invalid entry of the written date. If the receiving pharmacy fails to enter the actual written date of the prescription, the pharmacy could potentially refill past expiration. Make sure your staff is aware of the importance of entering accurate dates. PBMs are also flagging transferred insulin prescriptions if the quantity does not indicate a unit of measure (i.e., mL, pens, boxes or units).
PAAS Tips:
Self-Audit Series #12: Invoice Audits
PBMs have dramatically increased the number of invoice audits conducted and some pharmacies continue to be at risk for significant financial recoupments and contract terminations. It is not uncommon for invoice audit results to exceed six figures. To reduce the risk of your pharmacy having problems during a PBM invoice audit, consider performing a mock audit on your practice. The PBM is simply comparing the “ins” and “outs” of your pharmacy inventory for a specific period. If your “ins” are less than your “outs” for the PBM auditing, they conclude you have a shortage and will initiate recoupment. The “ins” are your acquisitions, or purchases, from wholesalers, manufacturers, trade shows or other pharmacies (note: there is no accounting for inventory on-hand). The “outs” are the claims that you billed to the PBM conducting the audit as well as any returns. The PBM already has the billed claims for the defined window, so when they initiate the invoice audit, they’re typically just in need of your purchasing history. Several PBMs, including OptumRx®, Elixir®, and Express Scripts® may even require the pharmacy to submit a full dispensing history for further reconciliation. Follow the tips below to reduce the risk of your pharmacy having problems during a PBM invoice audit.
PAAS Tips:
Common Claim Denials for Medicare Part B
In the PAAS National® August 2019 Newsline article, Medicare Part B/DMEPOS Audits – Who are All These Contractors?, we explained that Medicare and Medicaid use a number of audit contractors to perform medical review audits on pharmacies. The three main contractors PAAS sees carrying out these audits are: DME Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs) and Supplemental Medical Review Contractors (SMRCs).
Many of the denied claims are due to not meeting medical necessity, frequency limitations, lacking supporting medical records and even basic coding mistakes. See PAAS Tips for links on billing specific DMEPOS items and required documentation for Medicare Part B claims.
PAAS Tips:
Manipulating Quantity or Days’ Supply to Bypass Plan Limits Will Cost You
Plan limit rejections are intended to help control costs, provide clinical edits, and assist pharmacies in ensuring patient safety. When an initial claim adjudication is rejected for exceeding plan limits (e.g., Max Quantity Limit or Quantity vs Time Limit), pharmacies need to proceed with caution. An order entry technician that subsequently rebills for a different quantity [and same days’ supply] or the same quantity [and different days’ supply] than originally submitted, is asking for that prescription to be audited. PBM analytics assume the original adjudication was submitted and rejected [accurately] and when a subsequent claim [typically within seconds] has an altered quantity or days’ supply, it’s suspected that the manipulation was done [inappropriately] to get a paid claim. How should pharmacies proceed?
When rejections like these happen, pharmacies need to pay close attention to any messages given on how to resolve the rejection, including calling the PBM help desk for an override or getting a prior authorization started with the prescriber. The prescriber could also decide to change the dose or prescribe an alternative medication.
Some examples of the INCORRECT way to handle rejections that have led to audits and recoupments:
What happens if a prescriber refuses to obtain a prior authorization or change the prescription to a clinically appropriate dose? Can the claim be split-billed? PAAS National® recommends against split billing or processing a claim as cash to circumvent a plan limit or prior authorization requirement. A doctor who refuses to obtain a prior authorization or change the dose could be a red flag for diversion with controlled substances. Remember that most plan limits are put in place based on appropriate clinical use and bypassing them can lead to overdoses, diversion, and/or death. Pharmacists have a corresponding responsibility to ensure that prescriptions are for legitimate medical purposes, especially for controlled substances (21 CFR 1306.04(a)).
PAAS Tips:
Bill It Right: V-Go® Insulin Delivery Device and Rapid Acting Insulin Vials
The Valeritas V-Go® Insulin Delivery Device (V-Go®), a disposable insulin delivery device, can be challenging to bill properly. Filling an order for V-Go® requires two separate prescriptions – the V-Go® delivery device and the rapid-acting insulin to be used within the V-Go® system.
Each box of V-Go® contains 30 single-use devices, each to be used over a 24-hour period and subsequently disposed of. Therefore, a single box should be billed as “30 each” for a 30-day supply. Due to the device being single-use only, it does not meet the Medicare Part B DME requirement of ability for repeated use and therefore should be billed as part of a patient’s Medicare Part D plan. V-Go® is a basal-bolus insulin delivery device, meaning it is able to deliver both a continuous basal level of insulin over a 24-hour period in addition to bolus dosing for meals. It comes in three dosing selections based off the basal level of insulin the patient requires – 20 units/24 hours (V-Go® 20), 30 units/24 hours (V-Go® 30), and 40 units/24 hours (V-Go® 40) – plus a maximum of an additional 36 units to be used for bolus dosing, dosed in 2-unit increments. In addition, the manufacturer requires each V-Go® be filled to capacity and after 24 hours what insulin is left in the device must be disposed of. Due to the maximum amount of units each device can hold and the inability to salvage any leftover insulin in the V-Go® delivery system after 24 hours, it calls for the prescriber to meticulously determine which V-Go® device is most appropriate for the patient.
The second prescription to consider is the insulin to be used along with the V-Go® system. Both insulin lispro injection (Humalog® U-100) and insulin aspart injection (Novolog® 100 units/mL) have been tested and approved for use within V-Go® delivery devices. Note that concentrated insulins and insulin pens are not designed for use with the V-Go® delivery system. As previously stated, each of the three V-Go® dosing selections have different maximum insulin units the device can provide each day, and since the reservoir must be filled to its maximum capacity, that maximum number of units should be used in calculating the correct days’ supply. For example, 1 vial of insulin (1000 units) used in a V-Go® 20 device, divided by a maximum 56 units per day (1000/56), equates to a 17 days’ supply. The chart below depicts additional device and vial combinations:
When determining the proper amount of vials to dispense, follow the guidance provided in the Can You Bill It As 30 Days? and Diabetic Injectables FAQ documents, found on PAAS Member Portal located on the Tools and Aids page, to ensure proper billing practices in case of audit.
PAAS Tips:
Top Medications Flagged for Unauthorized Substitutions
PAAS National® analysts have repeatedly seen auditors targeting claims with potentially undocumented substitution issues. They hope to find inappropriate substitutions which may result in recoupment of the claim. To decrease the risk of these recoupments, and better understand where the issue stems, let’s start with a bit of background information.
Since 1938, when a company seeks authorization for a new (non-biologic) drug, they must compile enough evidence for the U.S. Food and Drug Administration (FDA) to determine if the product will be approved for sale in the United States—this packet of information is referred to as the New Drug Application (NDA). Generally, the drug with the NDA becomes the reference listed drug (RLD, or brand-name) product. The RLD is what other companies’ reference when seeking approval for their equivalent product (or generic) through the Abbreviated New Drug Application (ANDA). The ANDA must provide the FDA with evidence that the product is equivalent to the FDA-identified RLD and must show in vivo bioequivalence to the reference standard (RS) drug product. The FDA usually selects one RS and generally it is the RLD, but in some cases they are different. If the FDA has enough evidence to establish equivalency, when the ANDA generic is approved, it will be given an “AB” rating. Each ANDA must list a single RLD to which it is being compared and if the FDA did not set the RLD, an ANDA applicant must ask the Office of Generic Drugs to designate one. When different RLDs are utilized for the same drug product of the same strength by different companies on their ANDA, it creates the need for a three-character Therapeutic Equivalency (TE) code (e.g., AB1, AB2, AB3, etc.). Only drug products with the same three-character TE code which are listed under the same active ingredient heading can be freely substituted for each other, plus the authorized generic, unless prohibited by state regulation. Be aware that authorized generics do not appear in the Orange Book and are not evaluated by the FDA for an equivalency rating because they are the same products as their RLD, or brand-name drug, however, they do not use the brand name.
If, at this time, the FDA considers a product to not be therapeutically equivalent, it will assign it a “B” rating. Claims at risk for recoupment include those where the prescription was issued for a specific RLD (brand-name) but filled with a non-matching TE code product or those filled with a B-rated product. The FDA Orange Book can be accessed online and may be utilized to confirm equivalency for non-biologic drug products to prevent these recoupments.
Anyone unfamiliar with the Orange Book can read the Preface which contains very detailed explanations of how to use the book as well as the meaning of each code. Included is an example of the three-character TE code system using nifedipine. Adalat® CC and Procardia XL® extended-release tablets are both listed under the same active ingredient (nifedipine) heading. Adalat® CC is designated AB1 and Procardia XL® AB2. ANDA generics approved with Adalat® CC listed as the RLD would receive an AB1 rating, and those approved with the RLD Procardia XL®, AB2. To substitute an AB1-coded generic nifedipine extended-release tablet for Procardia XL® without contacting the prescriber would be inappropriate and the claim could face recoupment if audited.
Based on the observations of PAAS analysts, the following table contains the most common products incorrectly substituted with non-AB rated products, and subsequently flagged upon audit:
PAAS Tips:
Would Your Spravato® Documentation PAAS an Audit?
Spravato® is a Schedule III controlled substance intranasal spray used in conjunction with an oral antidepressant for treatment-resistant depression in adults. It is part of the Risk Evaluation and Mitigation Strategy (REMS) Program and can only be dispensed and administered to patients in a REMS certified healthcare setting due to the risks of sedation, misuse, and abuse. PAAS National® alerted members in a February 2021 Newsline article How to Avoid Spravato® Audit Recoupments that we have seen attempted audit recoupments for Spravato® due to the pharmacy being unable to provide record of shipment received and dispensing information (including patient name, dose, number of devices, and date dispensed) per REMS guidelines. PBMs currently auditing Spravato® prescriptions include Elixir, MedImpact, Humana and Pharmacy Data Management, Inc. (PDMI.)
PAAS Tips:Join today!
- Pharmacies that dispense Spravato® must:
- Become certified: Have an authorized representative complete the certification process and monitor compliance with the REMS Program
- Have policies and procedures in place to verify that a healthcare setting is also certified in the REMS Program prior to dispensing Spravato®
- Be sure to train pharmacy staff that Spravato® can only be dispensed to a certified healthcare setting
- Maintain records for proof of pharmacy employee training and that policies and procedures are in place and being followed
- Maintain records of all shipments of Spravato® received and dispensing information including patient name, dose, number of devices dispensed and the date of the dispensing
- Ensure proper documentation of dispensing to a certified healthcare setting occurs:
- Need the name, address, and phone number of the doctor’s office
- Need the printed name, title, signature, and date of the representative receiving the order
- Need patient name, dose, number of devices dispensed and the date of the dispensing
- Maintain records of all deliveries of Spravato®
- Spravato® is intended for the patient to administer under the supervision of a healthcare professional
- See our November 2019 Newsline article, Spravato® – Watch the Billing!, for proper billing information, including package size and billing units
Webinar: PBM FWA Trends and COVID-19 Vaccine Audit Risks
On November 18, 2021 PAAS National® hosted PBM FWA Trends and COVID-19 Vaccine Audit Risks webinar. PAAS Audit Assistance members have access to the recorded webinar, in addition to many other tools and resources on the PAAS Portal.
This webinar reviews:
Don’t Jump the Gun: Refill Too Soon Recoupments
Pharmacies know the importance of billing accurate days’ supply on prescriptions; however, there may be circumstances that can make this challenging. Medications that only come in one size or an unbreakable package may exceed what the patient will use during the plan limit timeframe. Claims dispensed for a plan limit, but the true day’s supply is greater, are an easy target for refilling too soon.
Pharmacies must be diligent in monitoring refills for claims submitted for a plan limit but will last the patient longer. The PBM only sees the days’ supply submitted on the claim. Once a prescription is audited, the directions for use will reveal the true days’ supply.
These claims are an easy target for audit as the PBM already received the initial/rejected claim days’ supply (suspected as the true days’ supply) and a subsequent claim with a shortened days’ supply (to meet plan limits). Based on this information, the PBM will audit subsequent refill too soon occurrences with a high margin of success.
Examples of prescriptions that pharmacies may need to dispense over the plan limit
Here is an example of a pharmacy putting claims at risk for refilling too soon:
As you can see, adjusting the days’ supply by 4 days (to meet the plan limit) put a claim in jeopardy of refilling too soon.
PAAS Tips:
Beware: Same Ingredients, Different FDA Indications
Ozempic® is an injectable diabetic medicine used to improve glycemic control in adults for type 2 diabetes management. Please see our May 2021 Newsline New Package Size Available for Ozempic® for reference on how to bill for Ozempic®. On June 4, 2021, the FDA approved a new drug treatment for chronic weight management called Wegovy™ which has the exact same ingredient – semaglutide.
Similarly, Victoza® is also used to improve glycemic control in patients 10 years and older for type 2 diabetes and is composed of an ingredient called liraglutide. Saxenda® also contains liraglutide but is used for chronic weight management. Pharmacies need to be aware that there is an audit risk if the prescriber is ordering for off-label use.
PAAS Tips: