Compound Supplier Medisca Pays $21.75 Million Over Inflated AWPs

The Department of Justice recently announced that Medisca Inc. will pay $21.75 million to settle allegations of fraud involving inflated Average Wholesale Prices (AWPs) for two ingredients used in compound prescriptions – resveratrol and mometasone furoate. The government alleges that the scheme caused pharmacies to submit false claims to federal healthcare programs, including TRICARE and the Department of Labor’s Office of Workers’ Compensation Programs.

Medisca reported highly inflated AWPs to price listing agencies, increasing reimbursements for its customers and creating massive profit spreads. For example:

  • Resveratrol: Purchased at $0.37/gram, sold under $2/gram, but reported an AWP of $777/gram.
  • Mometasone furoate: Purchased for less than $8/gram, sold for over $1,000/gram, but reported an AWP over $7,300/gram.

These inflated prices incentivized pharmacies to use Medisca’s ingredients, over competitor products, leading to fraudulent billing that overcharged federal programs by thousands per prescription.

The case was brought under the False Claims Act (FCA) by a qui tam relator (a Texas pharmacist) who will receive $3.4 million of the settlement. The settlement underscores the government’s commitment to combating healthcare fraud and protecting taxpayer funds.

The investigation involved collaboration between the Justice Department’s Civil Division, U.S. Attorneys’ Offices in Texas, and federal investigative agencies such as the Defense Criminal Investigative Service (DCIS) and U.S. Postal Service Office of Inspector General.

The government filed similar complaints against other compound ingredient suppliers in 2019 and 2021.

PAAS Tips:

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  • While pharmacies have no control over AWP list prices, dispensing compounds with these types of ingredients will dramatically increase audit risk and PBMs look for any reason to recoup payments
  • Pharmacies have a corresponding responsibility to detect fraud, waste, and abuse, which includes contracted business associates.

Optimizing Prescriber Statements: Best Practices and Tips

Prescriber statements have become one of the most valuable tools a pharmacy can use when needing to appeal claims found to be discrepant for a variety of reasons. They commonly take the form of a letter written by the prescriber to the PBM confirming, clarifying, or validating a prescription filled by your pharmacy. While every PBM has their own requirements, PAAS National® analysts have compiled a list of the typically required elements below.

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Prescriber statements should have all the elements of the original prescription, in statement form, and address the reason for the discrepancy:

  • Prescriber full name, address and phone number (and DEA for a controlled substance)
  • Patient name and date of birth (and address for a controlled substance)
  • Written date of prescription
  • Medication name, strength, and dosage form
  • Quantity and refills prescribed
  • Instructions for use
  • DAW code if applicable
  • Any additional information needed to clarify discrepancy flagged
  • Prescriber’s handwritten signature (electronic and stamped signatures are not accepted)
  • Date the statement was written/signed

PAAS Tips:

  • Each PBM has their own requirements for prescriber statements. Consult with a PAAS analyst to ensure your prescriber statements meet all requirements.
    • Once obtained, PAAS is happy to review, and provide feedback, on your prescriber statement(s)
    • Prescriber statements that do not meet all PBM requirements may be denied on appeal.
  • Prescriber statements MUST come from the prescriber’s office. Ensure legitimacy by having the prescriber send you the statement through fax with a cover sheet from their office, especially if it cannot be produced on their letterhead or office prescription pad.
    • Pharmacies should provide all the detailed information needed for the prescriber to be able to create the statement in their own words.
  • A prescriber’s office stamp may be used to validate a statement not written on the prescriber’s letterhead, but then the statement should be sent back to the pharmacy by fax with a cover sheet from the prescriber to further prove legitimacy and proof of origin.
  • Humana currently uses a prescriber statement template. This template will only be sufficient for Humana appeals and does NOT meet the requirements for other PBMs.
  • Remember to add the prescription number to the prescriber statement for auditor reference.

CMS Updates HIV PrEP Supply Fee Code, Effective 01/01/2025

In December 2024, PAAS National® brought you the Medicare Part B Coverage of HIV PrEP Newsline article which provided an in-depth look into appropriately billing HIV PrEP medications to Medicare Part B. The original shift from billing these medications from Medicare Part D to Part B was effective just a few months ago (September 30, 2024, to be precise), and CMS has already instituted a change to the supply fee HCPCS billing code.

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The left column of the table below shows the appropriate supply fee HCPCS codes and associated descriptions which were effective September 30, 2024, through December 31, 2024. The column on the right shows the new supply fee code effective January 1, 2025. In essence, one new supply fee code replaced the five original supply fee codes. For pharmacies that utilize a third-party billing intermediary for their Medicare Part B claims, this change will undoubtedly occur in the background as the pharmacy claim date is “translated” into medical claim data by the intermediary.

Pharmacy Supply “Dispensing” Fee Through 12/31/2024 Pharmacy Supply “Dispensing” Fee Starting 01/01/2025
HCPCS CodeDescriptionHCPCS CodeDescription
Q0516   Q0517   Q0518Oral drug, per 30-days   Oral drug, per 60-days   Oral drug, per 90-days       Q0521      Supply Fee HIV PrEP FDA approved   $24 (initial supply in a 30, 60, or 90-day period)$16 (additional supply in the same 30, 60, or 90-day period)
  
Q0519   Q0520Injectable drug, per 30-days   Injectable drug, per 60-days

*Refer to PrEP for HIV & Related Preventative Services webpage under “How Do I Bill Starting January 1,2025?” for sample scenarios where billing for an additional supply fee would be appropriate

To complicate things even further, there were additional diagnosis codes approved (effective December 24, 2024) that are now accepted on Medicare Part B HIV PrEP claims which may not have been accepted previously. For more details, visit the CMS PrEP for HIV & Related Preventive Services webpage and click on the “What Diagnosis Code Can I Use?” heading.

Pharmacies that bill Medicare Part B must remain vigilant to ensure their claims will meet Medicare’s strict coverage requirements. An overview of DMEPOS claim guidance can be found within the 2024 PAAS National® DMEPOS Article Series. If you have any questions or concerns, or you have a Medicare Part B-related audit, contact PAAS! 

2024-2025 Self-Audit Series #11: Controlled Substance Prescriptions

The opioid epidemic continues to make controlled substance prescriptions an increased focus for PBM audits. The potential for fraud, diversion, overdoses, and abuse remains high and pharmacies must stay vigilant when dispensing these prescriptions.

Due to federal and state requirements, controlled substance prescriptions have an increased risk of audit discrepancies. When found discrepant, PBMs typically cite as “law violations”, which are very difficult to overturn on audit appeal. Taking time to look over controlled prescriptions closely could prevent audit recoupment. Be sure to share the following tips with your pharmacy staff:

PAAS Tips:

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  • Refer to this month’s Newsline article, Can Pharmacists Continue to Fill Controlled Substance Prescriptions that are NOT Sent Electronically
  • Federal DEA requirements:
    • Manner of issuance – As per Title Code 21 Code of Federal Regulations §1306.05(a) all controlled substance prescriptions must contain:
      • Full name and address of the patient
      • Drug name, strength, dosage form and quantity
      • Directions for use
      • Full name, address and DEA number of practitioner
      • Dated, and signed on, the day when issued
    • Issuance of multiple CII prescriptions – Title Code 21 of Federal Regulations § 1306.12
      • Must be issued on the same date (not post-dated)
      • Must be an indication of the earliest fill date on each prescription other than the first
      • Be sure to document prescriber approval to dispense early (where allowed by state law)
  • While not all inclusive, here are considerations for various State requirements:
    • Alpha-numeric quantity
    • Tamper-resistant prescription pads
    • Pre-printed DEA number
    • Quantity checkboxes
    • Pharmacist signing, defacing or initialing hard copy
    • Not combining controlled and non-controlled on same prescription
    • Include the number of medications issued on prescription blank
    • Verify what your state law allows regarding changes that can be made on Schedule II prescriptions
    • Supervising prescriber requirements for mid-level practitioner
  • Verify if any Drug Utilization Review (DUR) or Submission Clarification Codes (SCC) and document appropriately

New Tool on PAAS Portal – DMEPOS Article Series 2024

PAAS National® wrote a DMEPOS article series this year, which includes seven articles to be proactive in preventing Medicare Part B audits. We recently combined these articles into one tool for easy reference and review with your staff. The 2024 DMEPOS Article Series includes:

PAAS is continuously updating and creating new tools to help our members. Check out the Proactive Tips section of the Member Portal for a multitude of new and updated resources.

All employees can be granted access to the Member Portal to view these tools, along with the electronic Newsline. This also allows employees to send filling and billing questions to PAAS without having to call. If you have questions about permissions and website access visit the ‘Member Portal User Guide’ located under ‘Help’ in the left-hand navigation, or simply contact PAAS.

Reap the Benefits of the PAAS National® Newsline Archive

Did you know that you can save time by searching past Newsline articles to find answers to your common questions? In fact, the Newsline archive offers articles going back to 2016! The search feature makes it simple to find that one article you know you read a while ago, but can’t seem to remember what it said. 

When using the PAAS eNewsline on the Member Portal, you are able to search the Newsline Archive by date or by using a keyword. All the articles with that keyword will pop up for you. This is a convenient feature when looking for a quick answer to your question!

Some of the top Newsline articles used by PAAS analysts to answer questions are:

  1. Prescriber Statements for Successful Appeal (January 2024)
  2. Auditors Are Drawn to Santyl® Like Moths to a Flame (July 2024)
  3. Miebo™ Eye Drops – What is the Days’ Supply? (March 2024)

Try it out by looking up any keyword or you can try these below:

  1. Dexcom
  2. EpiPen
  3. Migraine Medication
  4. Vaginal Creams
  5. Jublia

You can always contact us for assistance on using the Newsline search feature.

PAAS Tips:

  • Log in to the Member Portal and explore the Newsline articles for answers on certain topics or medications by typing in a keyword
  • If you can’t find your answer by searching the eNewsline, go to Access Services and submit your question on the portal via the Ask a PAAS Expert! (or give us a call)
  • Be sure to add all employees to the Member Portal and give them permission to view the Newsline articles (on by default), so they can keep up to date on current topics and search for answers
  • Refer to the February 2019 Newsline article on how to add your employees (or watch this video) to the Member Portal and set their audit assistance permissions

Adjusting Quantity or Days’ Supply Disproportionately Will Cost You!

PAAS National® wants to emphasize the importance of submitting the correct days’ supply on claims. We see many audit results that could have been avoided had the pharmacy addressed the initial rejection and not bypassed the plan limit. A prevention strategy is important because these discrepancies are often difficult to appeal successfully. Pharmacy employees should be taught that a paid claim [at adjudication] may not remain paid [upon audit] and is no substitute for a claim that is billed accurately.

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Plan limit rejections are intended to help control costs, provide clinical edits, and assist pharmacies in ensuring patient safety. When you bill a claim for the calculated days’ supply [based on the quantity and directions] and receive a rejection, you must identify and address the underlying rejection message. Paying attention to these rejection messages is key to avoiding audit recoupments. Here are a few examples: 

  1. “Exceeds maximum daily dose, prior authorization required”

Prescription: Insulin Aspart FlexPen, 45 mL

Sig: Inject 40 units before breakfast, lunch, and supper plus correction scale. Max daily dose of 185 units.

Days’ Supply Calculation: 4500 units/185 units per day = 24 days’ supply

Initial Rejection with accurate days’ supply: “Exceeds maximum daily dose, prior authorization required”

Pharmacy Action: Rebilled the days’ supply for 30.

Audit Discrepancy: The claim was flagged as an incorrect days’ supply indicating a prior authorization (PA) is required for the dose prescribed

Potential Recoupment: full claim amount

Recommended Action Upon Initial Rejection: pursue prior authorization. Most limits are based on typical clinical use and/or FDA approved dosing.

  • “Plan limit exceeded”

Prescription: Oxycontin 80 mg, #90 tablets

Sig: One tablet three times a day

Days’ Supply Calculation: 90 tablets/3 tablets per day = 30 days’ supply

Initial Rejection with accurate days’ supply: “Plan limit exceeded. Maximum two tablets per day.”

Pharmacy Action: Rebilled the claim for #60 for 30 days

Audit Discrepancy: The claim was flagged as an incorrect days’ supply indicating a prior authorization (PA) is required for the dose prescribed

Potential Recoupment: full claim amount

Recommended Action Upon Initial Rejection: pursue prior authorization. Bypassing these edits for opioids can lead to overdoses or diversion. Especially for controlled substances, pharmacists have a corresponding responsibility to ensure that prescriptions are for a legitimate medical purpose 21 CFR 1306.04(a). The prescriber should obtain a prior authorization, change the dose or prescribe an alternative medication.

While we have recently seen OptumRx® be more aggressive with pharmacies “willfully” bypassing plan limits, all PBMs can easily identify when a claim rejected and was then immediately rebilled for the same quantity but different days’ supply or different quantity but same days’ supply (i.e., the quantity/day ratio change from the initial adjudication to a subsequent adjudication). This raises a red flag and is an easy audit target for PBMs.

PAAS Tips:

  • Always bill for the accurate days’ supply based on the quantity and the directions given on the prescription
  • Educate all pharmacy staff to identify rejection messages, how to properly resolve them, and avoid inputting an incorrect days’ supply or quantity to get a paid claim
  • Check with the PBM help desk for guidance on rejects that are vague or unclear
  • Do not split bill rejected claims
    • Charging the patient cash often leads to complaints (from the patient to an employer or PBM) and can be considered non-compliance with the provider manual and lead to remediation, cease and desist letters, or even network termination
    • If you have exhausted all plan options (including pursuing a PA or alternative therapy) and the patient insists on paying cash for the full prescription, be sure that you document authorization from the patient that they desired to pay the full cost and did not want to wait for the proper channels, and they will not seek reimbursement from the insurance
  • If the prescriber does not follow through on obtaining a PA, enlist the patient to help. The patient could contact the prescriber and/or file a complaint with their insurance which may speed up the process
  • See the following Newsline articles for more information on claim rejections

New Year, New Insurance, New Formularies!

With the new year approaching fast, many pharmacies are about to face the tedious task of getting patients’ new insurance cards (and dealing with changing formularies, copays and deductibles). As onerous as that can be, your pharmacy should consider …

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the opportunity to also ensure profile accuracy when adjusting the patients’ billing information. Is the patient’s address and phone number up to date? Do they have any allergies you may not have listed? Since a pharmacy employee is already in their profile adjusting the insurance information, it may be beneficial to verify that the demographics on file are still accurate.

While it is important to have current information for purposes of patient safety and accuracy, it’s also a requirement for some PBMs. Section 10.08 of Caremark’s Provider Manual highlights this requirement for maintaining up to date Part D patient information on their profiles. Often during an on-site visit, Caremark auditors will ask to see a covered Part D patient’s profile, looking specifically for patient demographics and allergy information. While PAAS National® has not seen any significant recourse due to missing information on Part D patient profiles, consider validating these elements when updating insurance information.  

New Year also means new formularies! Be cautious of incoming refills utilizing a DAW 9 as a new formulary could require the generic or a different drug entirely. PAAS suggests challenging a historical DAW 9 (by trying to bill the claim with the generic) with any new plan year, change in insurance or new prescription being authorized.

PAAS Tips:

  • Be on the lookout for person codes or insurance cards with patient specific ID numbers
  • If a claim is rejected due to a mismatch in the patient’s date of birth submitted on the claim (versus the date of birth on file with the insurance company), call the patient to verify the correct date of birth.
    • If your system is correct and the insurance plan has documented the incorrect date of birth, be sure the patient contacts their plan (or Human Resources Department for employee-sponsored plans) and updates their information.
    • Changing the date of birth in your system to be incorrect (but match the PBM) is not advisable and can lead to dispensing errors and future claim issues.
  • If you see a blank field in the allergies section of a patient’s profile, confirm allergy information with the patient and update their file accordingly.
  • If your system has “no known allergies” listed for a patient, periodically verify that this is still accurate, as some patients develop allergies and sensitivities to medications, ingredients and foods as they age.
  • Be sure to include not only food allergies, but allergies to dyes as well. Some examples are as follows:
    • Progesterone capsules can be made using peanut oil
    • Some flu shots may not be appropriate for patients with egg allergies
    • Many medications have dyes in them to produce their coloring
    • Gelatin allergy is crucial to document on a patient’s file, as many capsules are composed of gelatin

International Crime Ring Fraudulently Bills Insurers for Over $1 Billion in Telehealth Scheme

In a fraud scheme that could be straight out of a made-for-TV movie, a U.S. citizen, acting as the ringleader in Russia, orchestrated a complex fraud using multiple accomplices. The operation defrauded private insurers by submitting fraudulent prescriptions through purported telemedicine visits.

While the Department of Justice announced charges against the defendants last November, seven defendants have now pleaded guilty. The perpetrators purchased pharmacies to leverage existing contracts with private health insurance companies across the country, leading to over $1.7 billion in fraudulent prescription claims. Over a 5-year period, call centers in the U.S. and other countries targeted beneficiaries, offering prescription medications without the required medical exams. The acquisition of brick-and-mortar pharmacies in various states, along with encrypted communications, allowed them to conceal the illicit activities. 

Once acquired, new pharmacy management software systems were implemented to facilitate remote billing. Teams of international “billers” then submitted $1.7 billion in reimbursement claims from over 50 pharmacies across the US, resulting in private insurers paying over $500 million. In many cases, the beneficiaries never actually received the prescriptions. 

The defendants, hailing from both the United States and Russia, are facing prison sentences ranging from 10 to 30 years, along with potential restitution of hundreds of millions. The ringleader of the operation, Brian Sutton, is currently at large in Russia.

Although this scheme was meticulously plotted and actions were woefully deliberate, the fact is auditors may approach well-meaning pharmacies with a dose of skepticism due to these “bad actors”.

Prior to this case, PAAS wrote a November 2021 Newsline article Telemedicine Audits: Are Your Prescriptions Legitimate? cautioning that telemedicine has become a prominent avenue for false claims to be submitted (see also November 2022 OIG Telehealth Fraud Concerns). Pharmacies need to have their own level of skepticism when filling and billing prescriptions that come as a result of a telemedicine visit. In addition to telemedicine fraud concerns, this case also highlights why it is important that signature logs are readily available and reflect an accurate signature of the patient. In its absence, there may be a question about whether the patient truly received their prescription. PAAS often sees PBMs reach out to patients directly to confirm that they not only requested a medication be filled, but also received it. Review our July article: Ensuring Audit Readiness: What PBMs Look For in Signature Logs and Proof of Delivery to help your pharmacy stay compliant.

Matching NDCs Help Keep the Audits at Bay

Billing the wrong NDC can correlate to potential audit issues, ranging from recoupments on claims to risking contract termination. In fact, poor performance on invoice audits due to the pharmacy billing the incorrect NDC (in relation to the NDC dispensed), is a leading reason pharmacy contracts get terminated. This issue can be mitigated by …

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billing and dispensing the same NDC, down to the correct package size.  

Unit-of-use packages like test strips, inhalers, and topical medications are some of the biggest culprits. PBMs flag claims for these products when the billed quantity is not divisible by the package size billed, making them low-hanging fruit to PBMs looking for recoupments. Pharmacies also need to be cautious of dispensing multiples of smaller package sizes when a larger package size is available on the market.

On desk or onsite audits where the auditor is conducting prescription reviews, recoupment for these claims can vary depending on the PBM and situation. Some scenarios might call for a partial recoupment with the PBM indicating they will pay for the correct package size. However, more precarious situations could seek full recoupment with little room for appeal. Listed below are common scenarios to be on the lookout for:

  • Billing 28 g on a topical with a package size of 30 g
  • Dispensing two 30 g tubes when a 60 g package size is available
  • Billing an NDC for a 100-count box of test strips with a quantity of 150
  • Billing the institutional NDC for Symbicort® with a quantity of 10.2 g

In the case of invoice audits, the auditor will be looking at the pharmacy’s invoices to ensure the exact NDC # that was billed matches what NDC # was received by the pharmacy as reflected on the wholesaler invoice. PAAS National® has many Newsline articles to help your pharmacy be prepared for an invoice audit, the most recent article being part of the Self-Audit Series.    

PAAS Tips:

  • Implement barcode scanner technology for product verification to prevent misfills and ensure filling/billing accuracy
  • Verify the quantity billed matches tube size dispensed for topical medications (when feasible and appropriate). Often, the last 2 digits of the NDC match the package size
  • If you need to dispense two smaller package sizes because the larger package size is unavailable/backordered, document accordingly (e.g., urgent clinical need or proof from your wholesaler that the larger package size was unavailable and attach it to the prescription)
    • Alternatively, contact the prescriber to modify the quantity prescribed and refills to match available package sizes
  • Flag shelves for medications with multiple package sizes to remind staff to doublecheck the NDC