Ask a PAAS Expert

While PAAS National® prides itself on being audit experts, audit assistance is more than just reactive support when an audit notice arrives. PAAS works tirelessly to provide pharmacies with tools and resources to reduce their audit risk and lessen the chances of being audited. Moreover, PAAS serves as a guiding light for community pharmacies with day to day pharmacy audit questions. Get expert answers to your questions on:

  • Days’ supply calculations
  • Drug substitutions
  • Billing practices
  • Required documentation
  • Record retention
  • Internal audit procedures

As a trusted partner, we provide tailored guidance to help you prevent audits. Remember, the prescription claims you submit today are the audits of the future.

Work to audit-proof your pharmacy today, do it right, and avoid future recoupments. Contact us to submit a question or complete the form on the Member Portal.

Best Practices for Proactively Preventing PBM Audit Issues | NCPA 2024

Pharmacy Benefit Managers (PBMs) routinely conduct audits on independent pharmacies with the stated goal of preventing fraud, waste, and abuse in medication dispensing. However, PBM audits often lack clear metrics and can include certain requirements without an explicit reason why. As these audits increase—in 2023 they shot up by as much as 29%1—many pharmacists who have failed them cite it as the primary reason why they can’t stay in business.2

Click here to continue to read the complete article at DrugTopics.com

2024 Self-Audit Series #9: Eye Drop Days’ Supply

Billing the accurate days’ supply for eye drops can be challenging. Despite what is drilled into pharmacists during schooling, there is no industry standard for drops/mL, and PBMs often use their own specific conversion factors. This variability adds complexity to accurately determining the appropriate days’ supply.” The PAAS National® Eye Drop Guidance chart has been created for our members to have the most up to date information from the major PBM provider manuals to assist them with this process. 

Pharmacies must also take into consideration several eye drops that do not fall under the typical drops/mL conversion due to beyond use dating, single use vials, or atypical drop size. Recognizing these extra billing considerations is imperative to avoid potential audit issues.

Please refer to the following Newsline articles for information on some of these specific eye drops:

PAAS Tips:

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  • Verify the prescription has mathematical instructions for use and clarify any ambiguous directions
  • Download the PAAS National® Rx Days’ Supply Calculator app
  • Do not assume the days’ supply indicated on electronic prescriptions is correct, always calculate days’ supply according to instructions for use
  • Best practice is for quantity prescribed to include a unit of measure; however, if written for a quantity of “1 bottle”, it should be interpreted as the smallest package size
  • When billing a PBM not listed on the Eye Drop Guidance, PAAS recommends using 15 drops/mL for suspensions or emulsions, and 20 drops/mL for solutions, unless otherwise specified by the manufacturer
  • Billing eye drops for LTC patients carries the same audit risk, refer to the following June 2022 Newsline article, Beyond-Use Date vs. Nursing Home Storage Policy – Avoid this Recoupment Trap
  • Prescriptions with a treatment duration (e.g., “use for 10 days”) that is less than calculated days’ supply, should still be submitted per calculation

PAAS Audit Assistance members can search the Newsline archive for keyword “2024 self-audit” 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.

Hundreds of Patient Information Requests for Medicare: What This Means for Your Pharmacy

Pharmacy personnel are all tasked with keeping patient protected health information (PHI) secure. When a request to access or release PHI is received by the pharmacy, panic may ensue if staff are not well versed in how to handle the requests to be compliant with 45 CFR §164.524.

First, a patient must …

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be granted access to their own medical records (unless otherwise indicated as per 45 CFR §164.524(a)(2) or (a)(3)) whether they are asking for a copy to be provided to them personally or directed to another entity. The Office for Civil Rights [OCR] takes a patient’s right to access their records very seriously and will investigate [and potentially assess a monetary penalty] when a covered entity is found to not be appropriately following HIPAA Privacy Rules. The covered entity is encouraged to respond as soon as possible but must respond no later than 30 calendar days from the date of the request. If the covered entity is unable to comply with the request within 30 calendar days, they can be granted a one-time 30-day extension to their deadline, but they must notify the individual (in writing) of the reason for the delay and provide the date by which they will provide the records (refer to 45 CFR §164.524(b)(2) for additional information). Note some state privacy laws may be more stringent (e.g., Texas).

The request for PHI can be harder to validate when it is not coming from the patient for their own records. Recently, Anthem has been requesting information from numerous pharmacies across the United States. Each request has been issued by Episource, Datavant, or Cotiviti, purportedly on behalf of Anthem, Healthy Blue, or Wellpoint, and the request has been for patient information from January 2023 through current and can range from one patient to several dozen.

The request likely stems from recent investigations with the Office of Inspector General (OIG) looking into numerous Medicare Advantage plans which have uncovered an overabundance of up-coded claims with unsupported diagnosis codes. In an OIG report posted September 25, 2024, they describe selecting one Medicare Advantage organization (Humana) and “focused on eight groups of high-risk diagnosis code (high-risk groups). Our objective was to determine whether Humana’s submission of selected diagnosis codes to CMS, for use in CMS’s risk adjustment program, complied with Federal requirements.”

The results were astonishing! “For the eight high-risk groups covered by our audit, most of Humana’s submission of the selected diagnosis codes to CMS for use in CMS’s risk adjustment program did not comply with Federal requirements. Specifically, for 202 of the 240 sampled enrollee-years, the diagnosis codes that Humana submitted to CMS were not supported by the medical records and resulted in $497,225 in overpayments.” They go on to say, “On the basis of our sample results, we estimated that Humana received at least $13.1 million in overpayments for 2017 and 2018.”

Moreover, in October, OIG issued a report: Medicare Advantage: Questionable Use of Health Risk Assessments Continues to Drive Up Payments to Plans by Billions. It is likely that Medicare Advantage plans are fearful that their claims are up for review next. With such a large potential for CMS overpayment, it is probable that OIG will continue to investigate and try to put a stop to this inappropriate spending.

If your pharmacy receives one of these requests, it should be given to your pharmacy’s Privacy Officer for further evaluation and action. For PAAS Fraud, Waste and Abuse and HIPAA Compliance members, send us a copy of the request and we will walk you through considerations to facilitate your validation of the PHI request and potential documentation requirements.

PAAS Tips:

  • Pharmacies are allowed to disclose PHI for the purposes of payment, treatment or healthcare operations (PTO)
  • For non-PTO authorized disclosures, document all HIPAA requests to access or release PHI; PAAS FWA and HIPAA Compliance members can use the Request to Access or Release Protected Health Information form from Appendix B in your Policy & Procedure Manual
  • All HIPAA-related documents must be maintained for a minimum of six years after the last effective date
  • For additional guidance on grounds to deny the release of PHI, refer to 45 CFR §164.524(a)(2) and (a)(3); PAAS FWA and HIPAA Compliance members can review Sections 10.4 through 10.5.3 of your Policy & Procedure Manual for additional information

If you are not a PAAS FWA/HIPAA Compliance member and you are interested in adding this service or learning more, please contact us at (608) 873-1342 or email info@paasnational.com

Avoid This Billing Pitfall with Your Medicare Part B Nebulizer Solution Claims

Correctly billing Medicare Part B can be tough. The Local Coverage Determinations and associated Policy Articles for each DMEPOS category, along with the Standard Documentation Requirements for All Claims Submitted to DME MACs, are filled with billing and documentation guidelines which suppliers must fully comprehend and follow to avoid claim chargeback. The PAAS National® 2024 DMEPOS Newsline Series is a great starting point for pharmacies to building their comprehension of these unique requirements. Simply keyword search “DMEPOS series” to read these articles in the archives.

A general overview of billing DMEPOS nebulizer solutions can be found in the April Newsline article, 2024 DMEPOS Series #2: Nebulizer Solutions. During recent Targeted Probe and Educate (TPE) audits from DME MAC CGS, PAAS analysts have seen an uptick in discrepant claims due to billing a larger amount than allowed as medically necessary.

Why This is Happening

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Claims are flagged because a beneficiary is on either albuterol, albuterol/ipratropium combination, levalbuterol, or metaproterenol as a rescue or supplemental medication in addition to either formoterol or arformoterol. The presence of formoterol or arformoterol as an active medication for the beneficiary triggers a lower monthly maximum milligrams/month policy limit on the rescue or supplemental medication (i.e., albuterol, albuterol/ipratropium combination, levalbuterol, or metaproterenol).

Inhalation Drugs and SolutionsStandard MaximumReduced Maximum When Beneficiary is Also on Formoterol or Arformoterol
Albuterol465 mg/month78 mg/month
Albuterol/Ipratropium combination186 units/month31 units/month
Levalbuterol232.5 mg/month – 465 units/month39 mg/month – 78 units/month
Metaproterenol2800 mg/month – 280 units/month470 mg/month – 47 units/month

How to Avoid This Pitfall

Pharmacies supplying any one of these four inhalation drugs in the table above should be reviewing all evidence prior to billing the claim to Part B to verify which monthly limit is applicable for the claim; here are several considerations:

  • Review the patient’s medication profile at your pharmacy to see if they are getting any medication with formoterol (e.g., formoterol nebulizer solution [Perforomist®]; budesonide and formoterol inhaler [Symbicort®, BreynaTM]; glycopyrrolate and formoterol inhaler [Bevespi Aerosphere®]; budesonide, glycopyrrolate, and formoterol [Breztri Aerosphere®]; mometasone and formoterol [Dulera®]; etc.) or arformoterol [Brovana®] nebulizer solution
  • Obtain medical records from the prescriber’s office from within 12 months prior to the date of the claim and review the records for any active formoterol or arformoterol
  • Ask the patient or their representative if they are using any prescription products with formoterol or arformoterol

If the investigation to any of the above considerations shows active formoterol or arformoterol, be sure:

  1. The order being billed for one of the four inhalation drugs in the table above falls within the reduced maximum supply limit, or
  2. Contact the prescriber to adjust the order to be within the reduced maximum policy limit, or
  3. Complete an Advanced Beneficiary Notice of Non-Coverage (ABN) prior to dispensing because the claim is not expected to be covered.

PAAS Tips:

  • Refer to the December 2021 Newsline article, Advanced Beneficiary Notice of Non-coverage Changes, for more information about the use of an ABN
  • The Same and Similar tool on the DME MAC website may not be helpful as some of the formoterol-containing items would not be billed to Medicare Part B (but instead, Part D) and because suppliers have 12 months to file a Part B claim, meaning the data may not be up to date

Third Amendment to the PREP Act Expiring Soon!

As previously discussed in the April 2024 Newsline article, New COVID-19 Booster Dose & The Final Frontier of the PREP Act, the Public Readiness and Emergency Preparedness Act (PREP Act) will expire as of December 31st, 2024, meaning the liability protections that enabled pharmacists, pharmacy interns, and pharmacy technicians to independently administer vaccines by means of the PREP Act will no longer exist. The following is an excerpt from the article:  

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As stated on the Administration for Strategic Preparedness & Response’s (ASPR) PREP Act Questions & Answers webpage, the amended PREP Act “authorize[s] pharmacists to continue to administer COVID-19 and seasonal influenza vaccines to individuals aged three and above and order and administer COVID-19 tests in accordance with an FDA license, approval, or authorization through December 31, 2024.”

With the end of the year’s quick approach, this leaves pharmacies not only confirming employees are compliant with annual federal obligations (see this month’s Newsline article, The Clock is Ticking: Complete Your Annual Training!), but also ensuring they are safeguarded, from both liability and audit risks, to continue to administer vaccines in the new year.

In the September 2024 Newsline article, Flu Shot Season – Are You Prepared?, the requisites of an audited vaccine prescription are discussed. Fittingly, the first requirement listed is “authority to administer”. Pharmacies need to either have a signed order from an authorized prescriber or have a signed protocol or collaborative practice agreement (CPA) that lists the specific vaccinations that can be administered. In some cases, this may require the pharmacy pursue an amended protocol/CPA with the supervising prescriber that includes COVID-19 vaccines or conduct a staff meeting to re-educate the team on the state regulations surrounding vaccine administration, such as age requirements and which staff members are allowed to administer COVID-19 and influenza vaccines.

PAAS National® is unable to forecast how PBMs will react to the conclusion of the PREP Act; however, our guidance is to ensure proper compliance is in place by the start of the new year to ward off preventable recoupments due to nonadherence of vaccination requirements.

PAAS Tips:

  • Be sure to follow your state’s laws in relation to what ages can be vaccinated or tested.
  • Follow your state specific laws and guidelines when determining who in the pharmacy can vaccinate and administer COVID-19 testing. 
  • Prior to sending PBMs audit responses that include vaccinations, reach out to PAAS National® to ensure all required paperwork is sent with the initial submission, alleviating subsequent work that needs to be done on appeal

Understanding Biologic Substitutions – New Tool Available!

Our PAAS National® analyst team developed a new tool to assist pharmacies with biologic substitutions. Understanding when to substitute and what to substitute with can be complicated. This new tool, Understanding Biologic Substitutions, will help you understand the biologic terminology and simplify the substitution process at your pharmacy. The resource also includes a chart (with reference NDCs) for the most confusing biologic substitution drug category – insulin.

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The FDA publishes two lists of approved drugs:

  • The Orange Book – Approved Drug Products with Therapeutic Equivalence Evaluations
  • The Purple Book – Approved Biological Products including Biosimilar and Interchangeable products

Biologic products are found in the Purple Book and are not described in familiar terms like “brand“, “generic”, or “AB rated” as found in the Orange Book. The FDA’s Purple Book lists each product as a Reference Product, Biosimilar, or Interchangeable. Review the Purple Book terminology below:

Reference Product is the original biological product approved through a 351(a) BLA (Biologic Licensing Application)

  • Think of these products like brand drugs in the FDA Orange Book
  • Cannot be substituted for other Reference Products without prescriber approval

Biosimilar products are approved through an abbreviated 351(k) BLA

  • Think of these products like B-rated generic drugs in the FDA Orange Book
  • Cannot be substituted for Reference Products without prescriber approval

Interchangeable products have been deemed interchangeable with a reference product after going through additional switching studies and approved under a 351(k) BLA

  • Think of these products like A-rated generic drugs in the Orange Book
  • CAN be substituted for respective Reference Products without contacting the prescriber if state law permits

Unbranded biologic products are approved under the Reference Product’s 351(a) BLA

  • Think of these products like authorized generics in the Orange Book
    • CAN be substituted for the Reference Product without prescriber approval or regard to state law
    • Considered by the FDA to be equivalent to its brand name biological product because it is the same product as the brand name under the same BLA, just with a different label
    • Is not different in strength, dosage form, route of administration, or presentation
    • NOT separately identified in the Purple Book

PAAS Tips:

  • Pharmacy level substitution of a reference product is only allowed if one of the following scenarios is applicable:
  • identified as interchangeable AND your state pharmacy practice law allows
    • Ex: Semglee® can be substituted for Lantus® due to 351k interchangeable status
  • an unbranded biologic with the same BLA number as the reference product
    • Ex: Semglee® (BLA 761201) can be freely substituted with its unbranded biologic Insulin glargine-yfgn (BLA 761201)
  • an unbranded biologic with the same BLA number as an interchangeable biosimilar
    • Ex: Insulin glargine-yfgn (BLA 761201), an unbranded biologic of Semglee® (BLA 761201), can be substituted for Lantus (BLA 021081) because Semglee® has 351(k) interchangeable status to Lantus and therefore its unbranded biologic (insulin glargine-yfgn) can also be freely substituted
  • See FDA Purple Book to determine interchangeability status of a particular biologic drug
    • FDA has more detailed definitions on the Purple Book website.
    • There is also a frequently asked question section that discusses unbranded biologics (FAQ #11).
  • State pharmacy laws may limit biologic interchangeability, but this does not apply to unbranded biologics. Review your state laws (reference) or  contact your state Board of Pharmacy.
  • If you are ever in doubt about whether products may be substituted
  • Review the September 2022 Newsline article, NCPDP Updates DAW Code Definitions to Encompass Interchangeable Biosimilars
  • Review the FDA’s Curriculum Materials for Health Care Degree Programs | Biosimilars

U.S. Government Alleges Counterfeit HIV Drugs Hiding in Pharmacy-to-Pharmacy Purchases

PAAS National® previously alerted pharmacies to a large-scale counterfeit HIV medication scam in our April 2022 article Know Your Distributors: Gilead Confiscates Phony HIV Medication where criminal enterprises routed black market and counterfeit HIV medications through the secondary wholesaler market (the 2022 Gilead lawsuit is referred to as Gilead I).

In a new lawsuit filed by Gilead in June 2024 (referred to as Gilead II), the U.S. Government alleges that the criminals changed their strategy to route diverted medications through pharmacies that were “in on the conspiracy” who would then sell the counterfeit products to other, unsuspecting, pharmacies through “pharmacy to pharmacy” purchases. The scheme involves …

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criminals buying back empty manufacturer bottles from patients, removing pharmacy labels with lighter fluid, refilling the bottles with cheap medication or counterfeit tablets made to look like the real thing, and then selling them to cooperating pharmacies that are in on the scheme. The participating pharmacies then either dispensed the medications to patients (after billing insurance) or further distributed the drugs to unsuspecting pharmacies through online marketplaces where Drug Supply Chain Security Act (DSCSA) integrity can be compromised.

The DSCSA permits pharmacies (called “dispensers” under the law) to purchase drugs from other pharmacies – to conform to the law, these purchases must be accompanied by the pedigree to ensure that the “track and trace” paper trail remains intact. A notable exception to the DSCSA is that pharmacies may purchase drugs and do NOT have to obtain the pedigree IF the purchase is for a “specific patient need” (further discussed in December 2022 article Pharmacy to Pharmacy Inventory Transfers – Buyer Beware!)

Due to systemic underpayments by PBMs, many pharmacies have been forced to hunt for savings outside of their primary wholesaler agreement which has led to the proliferation of “pharmacy to pharmacy” purchases, resulting in routine purchases from marketplaces because products are cheaper than from regular wholesalers (despite widespread availability). The criminals know that pharmacies run on tight margins and are often desperate to find savings. These fraudsters are also smart enough to discount prices just enough to get pharmacies to buy the products, but not discount them too much as to tip off the fraud (i.e., a 5% discount is more believable than a 30% discount).

PAAS has worked with numerous pharmacies that have run into significant invoice audit problems based on large volumes of pharmacy-to-pharmacy purchases that occurred through online marketplaces. Due to these large volumes, the PBMs (mainly Caremark and OptumRx) are challenging the claim that the purchases fall under DSCSA exception and demand that pharmacies provide evidence of specific patient need, copies of selling pharmacy licenses, and copies of wholesaler invoices showing where the selling pharmacies obtained the drugs. Because of the arms-length transaction facilitated through the online marketplace, the selling pharmacies are typically not interested in getting involved. In the absence of these supporting documents to prove that the pharmacy is “innocent”, and the products are legitimate, the PBMs have presumed products are counterfeit or diverted, resulting in them seeking full recoupments (often 6- and 7-figures) from independent pharmacies!

Additionally, in the last few weeks, PAAS has seen several subpoenas being issued to independent pharmacies pursuant to Gilead II’s pending case in the U.S. District Court for the Eastern District of New York.

The DSCSA is designed to keep counterfeit and diverted medications out of the U.S. supply chain and keep patients safe. While the full implementation of electronic interoperability will not be enforced until November 27, 2026 (2 year exemption for “small dispensers”) pharmacies are still required to comply with many aspects of DSCSA including: ensuring that you purchase drugs from authorized trading partners, receive/store/provide product tracing information, and quarantine/investigate suspect and illegitimate drugs.

PAAS Tips:

  • Procuring medications outside of DSCSA “Authorized Trading Partners” puts pharmacies and patients at great risk
  • See this information sheet from the Partnership for Safe Medicines to help educate your staff
  • See Newsline article from April 2024, Caremark Invoice Audits – Purchases from Other Pharmacies for a list of data points to record if you purchase inventory from another pharmacy

Walgreens $107 Million Settlement for False Claims Act Violations

A recent Department of Justice press release outlined a settlement with Walgreens for nearly $107 million for False Claims Act violations related to claims billed to government programs that were never dispensed. The government alleges that from 2009-2020, Walgreens restocked thousands of prescriptions billed to Medicare and Medicaid and resold the same medication, effectively collecting payment twice on the same medications.

The underlying cause of the systematic overbilling was related to a feature in Walgreens’ pharmacy management software (Intercom Plus, IC+) where prescriptions which were billed but not sold were removed from the local IC+ servers after 29 days (to save space) and moved into an “Unaccounted-For Status” on the central IC+ server. Pharmacists in the stores could no longer see these prescriptions in the local IC+ work queue and there was no back-end process to reverse the paid claims that were moved into the Unaccounted-For Status. Essentially thousands of billed prescriptions “got lost” and Walgreens received payment for items never dispensed.

In January 2020, Walgreens self-disclosed the systematic error, began to implement corrective actions to resolve the problem, and fully cooperated with the government to settle the overpayments.

Two separate qui tam relators brought this systemic problem to the government’s attention and will receive $14.9 and $1.6 million dollars, respectively.

PAAS Tips:

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  • PAAS suggests that pharmacies perform Return to Stock for any claims not picked up within 10 days of billing
  • PAAS FWA and HIPAA Compliance members can find information about unclaimed prescriptions in section 4.1.1 of their Policy & Procedure Manual
  • Pharmacies with an integrated point-of-sale system should periodically run reports to looking for paid claims that have not been sold to ensure that there are no prescription claims that are “lost” and may result in inappropriate overpayments

Download PAAS’ Return to Stock Chart for detail on PBM specific requirements

FDA Proposed Guidance for Biosimilar Updates

Over the last 10 years, biologics have transformed the treatment of many illnesses like chronic bowel disease, kidney disease, arthritis and cancer and they are the fastest growing class of medications in the United States. The FDA has gained valuable scientific information in reviewing both biosimilar and interchangeable biosimilar medications. They both meet the same high FDA standards and are as safe and effective as the reference product. When the FDA designates a biosimilar product as “interchangeable,” a pharmacist may substitute that product for a biologic without contacting the physician (predicated on state law). This pharmacy-level substitution provides increased access to treatments and cost savings for patients.

However, many pharmacies struggle to understand which biosimilar products can be substituted for the reference product. Consider the following definitions from the FDA:

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  • A biosimilar is a biologic that is highly similar to and has no clinically meaningful difference from an existing FDA-approved biological medication, called a reference product.
  • A reference product is approved in a standalone application that must contain all data and information necessary to demonstrate the product’s safety and effectiveness.

Newly proposed FDA guidance may alleviate this confusion of biosimilar interchangeability.

On June 20, 2024, the FDA issued a draft guidance for industry Considerations for Demonstrating Interchangeability With a Reference Product: Update. The recommendations in the draft guidance would provide clarity and transparency regarding the FDA’s review and approval process for biosimilars. 

The draft guidance eliminates the requirement that biosimilars produce clinical data to show they are interchangeable with their reference product. These clinical trials (switching studies) add time and expense to the development of a biosimilar and delay them from reaching patients.

This update would allow manufacturers who are interested in obtaining a Biologic License Application (BLA) for a biosimilar with a review for interchangeability status to either:

  1. Submit clinical trial data or
  2. Provide a statement indicating why the data in the BLA already demonstrates switching safety
    1. Any other information relevant to support the risk, in terms of safety and diminished efficacy, from alternating or switching between the reference product and proposed biosimilar is not greater than the risk of using the reference product without a clinical trial

Companies with pending BLAs can also submit an amendment to their application including the above information.

While biologic substitution is regulated at the state level, the FDA could broadly increase the number of biologics categorized as interchangeable biosimilars with this draft guidance, making pharmacist driven substitutions more commonplace. PAAS will keep you informed as we await Final Guidance from the FDA.