Authorized Distributors of OTC Diabetic Test Devices

Most pharmacies are familiar with the basic requirements of the Drug Supply Chain Security Act (DSCSA), including the requirement to purchase prescription products from authorized suppliers. However, one important caveat of the DSCSA is that it does not apply to OTC products (such as diabetic test strips). Because of this, OTC wholesalers and distributors do not have to maintain or provide track and trace information (pedigree) to confirm the authenticity of these products. This makes it difficult for pharmacies to determine if they are purchasing from an appropriate source and if the low prices offered are for legitimate product.

During a PBM invoice audit, purchases made from suppliers that are not identified as “authorized” may not be accepted and you may be found to have a shortage leading to significant financial recoupments and possible network termination.

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  • Both Express Scripts and Caremark have required pharmacies to purchase test strips from “authorized distributors” of the manufacturer since 2016
  • OptumRx requires pharmacies purchase from suppliers that are licensed wholesalers and have NABP Drug Distributor Accreditation (DDA) formerly known as VAWD
  • Note that VAWD/DDA is not synonymous with “authorized distributor” status
    • For example, Masters Pharmaceutical has NABP DDA status but is NOT an authorized distributor of diabetic test strips
    • Some pharmacies have made the mistake of seeing “McKesson” on authorized distributor list and assumed that a subsidiary such as “Masters” is also authorized, even though not explicitly listed as such – if not explicitly listed, then confirm before purchasing
  • See August 2021 article Invoice Audit Pitfalls – Are Your Wholesalers Legitimate? for additional invoice audit considerations

Product Substitution Best Practices

Consider a scenario where your pharmacy has been dispensing a product for years and you find that the product is being discontinued, requiring a product substitution. What steps should be taken to ensure your pharmacy is protected in case of an audit?

Most recently, this has been the case for pharmacies dispensing ProAir® HFA. Since it now has been discontinued and supplanted with ProAir RespiClick®, can the product be substituted without needing to contact the prescriber?

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Before automatically substituting, it would be wise to review a product’s therapeutic equivalence. Drugs approved under a New Drug Application (NDA), or Abbreviated New Drug Application (ANDA), will be found in the FDA Orange book and use Therapeutic Equivalency (TE) Codes to establish equivalency ratings. Biologics, on the other hand, are approved under a Biologic License Application (BLA) and will be found in the FDA Purple Book. The Purple Book does not use TE codes, but rather matching color cards and category headers to indicate biosimilars and interchangeable biosimilars.

Beyond the TE Codes (primarily used to identify generic equivalents), compare the original product’s NDA to the NDA of the product you are looking to substitute. To continue with the ProAir® example, consider the NDA of both ProAir® HFA and ProAir RespiClick®:

Since the NDA numbers do not match, it would be appropriate to obtain prescriber approval and document authorization to substitute the ProAir RespiClick® for the ProAir® HFA. When requesting the change, consider obtaining a new order to help mitigate audit risk. Substituting the RespiClick on the same Rx Number has a higher likelihood to flag for potential audit.

PAAS Tips:

NCPDP Modified Section 11.15 of the Emergency Preparedness Guidance Document – COVID-19 Oral Antivirals Billing

NCPDP Emergency Preparedness Guidance document version 1.15 was published in August 2022. PAAS would like to point out some of the updates and additions to section 11.15 of the document Billing of a Self-Administered Free COVID-19 Oral Antiviral During an Emergency.

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  • Like the COVID-19 vaccines, oral therapeutics are currently purchased by the federal/state government and must be dispensed with no cost to the patient
  • Before a pharmacist prescribes an oral antiviral to treat COVID-19 under the EUA, they must make an assessment and determine if the patient meets the criteria
  • When billing a claim for a no-cost product, the claim request uses standard fields with applicable pricing and professional service identifiers
  • Section 11.15.1 is now titled Free Product Dispensing with Unique Dispensing Requirements, (e.g., patient education/counseling for the Dispensed Medication)
    • Added diagnosis code and prescriber ID bullets
    • Professional service code – removed “AS” and modified the “PE” description – (Patient Education (PE) should be submitted on the claim to identify the unique dispensing requirements)
    • Modified the incentive amount submitted descriptions
    • Updated the example table
      • Added insurance segment, origin code segment, and prescriber segment
      • Changed the DUR/PPS segment professional service code value to PE – patient education
      • Added an entire claim response to the example
    • To help standardize how these claims are processed, NCPDP recommends billing separate claims for the following:
      • Product dispensing (B1 claim) See section 11.15.1 for correct claims processing
      • Patient assessment (S1 or B1 with the 11-digit EUA patient assessment product/service ID)
        • Once an assessment is complete, it could be determined the patient does not meet the criteria – pharmacy should bill a patient assessment only claim – see link to section 11.16 below
      • If a completed assessment results in the product being prescribed, the pharmacy may need to submit the claim for the patient assessment to one payer and the claim for the product to another payer
    • Inserted new section 11.16, Billing of Patient Assessment, Professional Services Associated to EUA COVID-19 Oral Antiviral Pharmacist Prescriptive Authority

Review February 2022 Newsline, COVID-19 Oral Therapeutics Antiviral Billing Guidance for more information on billing guidance from NCPDP

Tips for Tackling PBM Audits—Together

Published November 8, 2022 by Miranda Hester on Drug Topics

Working collaboratively can be key to either avoiding a PBM audit altogether or making the process as painless as possible.

They nearly always cost pharmacies money and require a lot of work to complete, but pharmacy benefit manager (PBM) audits are an unfortunate fact of life. At the National Community Pharmacists Association 2022 Annual Convention & Expo, presenters shared their insights into how pharmacists can tackle these audits in the most effective way possible.

Curious why audits happen? It’s as simple as rising health care costs and improvements in data analytics that find outliers more easily, according to Dana Westberg, CPhT, analyist at Pharmacy Audit Assistance Service (PAAS), to say nothing of the revenue generated by them, as one of the most common penalties is financial recovery. Bad actors also make PBM audits necessary: Westberg cited 2 cases, one involving a pharmacy in Texas that had $10 million in dispensing expenses and another involving pharmacy owner/accountant who was indicted for a $1.5 million scam.

Trent Thiede, PharmD, MBA, PAAS president, cited his own examples of bad actors, including one case of a pharmacist who billed products that were never dispensed over a period of time that netted $7.2 million, another about a group of ghost pharmacies in Miami that billed for products for pharmacies that did not exist, purchased no prescription drugs, had no real customers, and performed no actual pharmacy business.

Those bad actors have led to a 50% increase in audits over 5 years. Desktop audits remain the most common form. Onsite audits decreased with the onset of COVID-19, but were replaced by virtual audits, which “tend to be very large, very time consuming and you also have a phone interview with the auditor,” according to Westberg.

Westberg shared 4 strategy elements to prevent audits, which include…

DMEPOS Mini-Series #7 – Immunosuppressive Drugs for Transplant

This month, we continue with our DMEPOS mini-series by discussing yet another challenging category –  immunosuppressive drugs for a transplant. Immunosuppressive drugs are only covered under Part B to maintain an organ transplant that was Medicare eligible. Immunosuppressives used for other diagnoses or indications that are not a transplant would not be covered under Part B and should be billed to Part D. Prescription Drugs used in immunosuppressive therapy are only covered if all the following five criteria are met:

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  1. Must be used for a covered transplant:
    1. Kidney, heart, liver, bone marrow/stem cell, lung, or intestinal
    2. Pancreas, in limited situations – See the Local Coverage Determination (LCD) link under PAAS tips for detailed requirements
  2. The transplant was performed at a Medicare-approved facility
  3. The beneficiary was enrolled in Part A at the time of the transplant
  4. The beneficiary was enrolled in Part B at the time the drugs were dispensed
  5. Delivery requirements – See the LCD link under PAAS tips for detailed requirements

Documentation needed upon an audit on immunosuppressive drugs for a transplant:

  1. Standard Written Order
    1. See our April 2021 Newsline, DMEPOS Documentation Requirements
  2. Medical Records
    1. Must indicate the date and location where the transplant occurred
    2. These records can be obtained from the original hospital discharge after the transplant or a current visit as long as the date and location are mentioned
    3. Pharmacies should maintain these records in the patient’s file for any future audits
    4. Continued need and use of immunosuppressive medication is established at the time of the transplant pending it continues to function successfully
  3. Proof of Refill Request (PORR – requirement if delivered or mailed) must contain:
    1. Name of the beneficiary, date of the request, description of item, quantity remaining or proof of exhaustion
    2. PORR may not be obtained more than 14 days before exhaustion of current supply or delivered/mailed to the patient more than 10 days before exhaustion
  4. Proof of Delivery
    1. See our June 2021 Newsline, DMEPOS Proof of Delivery and Refill Request Requirements

PAAS Tips:

  • Medicare limits the quantity on immunosuppressive drugs dispensed to a 30-day supply
  • Auto-immune disorders like arthritis, lupus and psoriasis can be treated with immunosuppressives
    • Medicare Part B does not pay for immunosuppressives for beneficiaries who do not meet the transplant coverage criteria, bill Medicare Part D instead
    • Document a diagnosis code on immunosuppressives that are being used for non-transplant indications when billing for Part D
  • See the LCD, checklists and other helpful forms and billing guidance under your DME MAC

OIG Telehealth Fraud Concerns

In September 2022, the U.S. Department of Health and Human Services Office of Inspector General (OIG) put out a report on program integrity risks concerning Medicare telehealth services during the first year of the COVID-19 pandemic. The OIG states that in the first year of the pandemic, more than 28 million Medicare beneficiaries (roughly 2 in 5) used telehealth – amounting to a dramatic 88-fold increase from the previous year. Because of this, the OIG wanted to find out if providers were appropriately billing telehealth services, while looking to identify the best way to further protect the Medicare program and beneficiaries from fraud, waste, and abuse (FWA).

The OIG did some brief data analysis of telehealth claims from March 1, 2020 through February 28, 2021 of 742,000 providers. They found that 1,714 providers posed a high risk to Medicare due to concerning billing practices like; billing for services that were not medically necessary or that were never provided. Other reasons for scrutiny included being in the same medical practice as another provider who engaged in high-risk billing practices (i.e., guilt by association).

High risk providers were identified by the OIG when they billed:

  • Both a telehealth service and a facility fee for most visits
  • Telehealth services at the highest, most expensive level every time
  • Telehealth services for a high number of days in a year
  • Both Medicare fee-for-service and a Medicare Advantage plan for the same service for a high proportion of services
  • A high average number of hours of telehealth services per visit
  • Telehealth services for a high number of beneficiaries
  • For a telehealth service and ordering medical equipment for a high proportion of beneficiaries

The OIG’s recommendations to CMS included strengthening target oversight and monitoring of telehealth services, providing education on appropriate billing for providers, improving transparency, identifying companies who provide telehealth to Medicare beneficiaries, and following up with providers identified in the OIG report as high risk.

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Missing DUR and SCC Documentation Can Lead to Recoupment!

Many pharmacy teams are overwhelmed with the increasing daily workload. This can result in data entry staff creating shortcuts, like entering override codes to get claims processed. PAAS National® wants to remind pharmacies that lack of documentation to support clinical drug utilization review (DUR) or submission clarification codes (SCC) can put claims at risk of audit recoupment.

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In particular, Express Scripts® and Prime Therapeutics® audit for DUR and SCC documentation. High dollar claims submitted with override codes are frequently flagged for audit. The Express Scripts® Provider Manual addresses Prospective/Concurrent Drug Utilization Alerts and the mitigating DUR override codes. The guidance compels the dispensing pharmacist to document the rationale for the override on the prescription.

Pharmacists must be made aware of DUR messages at point-of-sale and use professional judgement before proceeding with dispensing. These DUR rejects are in place to prevent potential harm to patients. Allowing these claims to automatically be overridden without pharmacist review goes against the PBM Provider Manual, risks patient safety and can lead to claim recoupment.

DUR codes can be found as follows:

  1. Reason for Service Code (NCPDP 439-E4)
  2. Professional Service Code (NCPDP 440-E5)
  3. Result of Service Code (NCPDP 441-E6)

Pharmacists must review each Service Code and, using professional judgement, submit the appropriate Professional Service Code and Results of Service Code. Simply documenting the override codes utilized does not provide the auditor with explanation of why it was appropriate to use the code; be sure to have a full clinical note explaining the situation. This documentation must be accessible for auditor’s review.

Claims billed with SCC codes also require documentation. Remember, the PBM can see the initial claim rejection and resubmission with an override code. This second claim is an easy target for audit.

Here is a short list of commonly used SCC codes as defined by NCPDP:

  • Vacation Supply (SCC 03): The pharmacist is indicating that the cardholder has requested a vacation supply of the medicine
  • Lost Prescription (SCC 04): The pharmacist is indicating the cardholder has requested a replacement of medication that has been lost
  • Therapy Change (SCC 05): The pharmacist is indicating the prescriber has determined that a change in therapy was required; either that the medication was used faster than expected, or a different dosage form is needed, etc.

PAAS Tips:

  • Professional Service Code “M0” will require consultation with prescriber
  • Consider other Professional Service Codes if “M0” is not applicable
  • All clinical notations whether manual or electronic should have all four elements:
    • Date
    • Name and title of person you spoke with
    • What was discussed
    • Initials of who made the call
  • Clinical notations from previous prescriptions must be carried forward to current prescription if referenced to support override
  • Professional judgment should be used to periodically consult with prescribers to ensure continued accuracy of DUR code submitted, and updated, when appropriate
  • LTC pharmacies can find additional information for documenting overrides in our December 2020Newsline article, Appropriate Documentation for LTC Overrides Explained
  • When using SCC 03 or SCC 04 overrides pharmacies should include the following documentation
    • Date of request
    • Reason for request
    • Vacation requests should include timeframe patient will be gone

Akorn Agrees to Pay Nearly $8 Million to Settle False Claims Allegations

Akorn Operating Company LLC (Akorn) has agreed to pay $7.9 million for allegedly violating the False Claims Act causing Medicare to pay for invalid prescription drugs according to a recent Department of Justice press release. The pharmaceutical manufacturer was cited for causing the submission of false claims to Medicare Part D by continuing to sell generic drugs under “prescription only” (Rx-only) labeling after the brand name drugs were converted to OTC products. Medicare Part D does not reimburse for OTC drugs.

Brand name Rx-only drugs can be converted to OTC with FDA approval. Manufacturers of generic equivalents must then either seek approval for converting their product to OTC or seek withdrawal of their generic’s Rx-only approval and stop distribution.

The generic drugs in question are diclofenac sodium 1% gel, olopatadine hydrocholoride 0.1% and 0.2% eye drops, and azelastine hydrochloride 0.15% nasal spray. Diclofenac and olopatadine converted from Rx-to-OTC in February 2020 and azelastine converted in June 2021.

Instead of pursing approval or withdrawal of their own generics, Akorn admittedly continued to manufacture and sell these products with Rx-only labeling to increase profit for the company, even after learning of the Rx-to-OTC switch of the brand name drugs. Eventually, Akorn applied for OTC conversion with the FDA for olopatadine in January 2021 and diclofenac in March 2021. For azelastine, they applied for withdrawal rather than conversion in January 2022. FDA approved this withdrawal in February 2022.

Whistleblowers in this case under qui tam provisions will receive approximately $946,000 of the recovery.

Yes, LTC Delivery Manifests ARE Needed!

PAAS National® analysts often see LTC pharmacies struggle with providing sufficient documentation to satisfy proof of dispensing for an audit. Below are a few commonly asked questions and answers about LTC delivery manifests – follow the advice below to decrease your risk of recoupment.

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Do LTC pharmacies have to maintain proof of delivery?

Yes! If audited, LTC pharmacies must have proof that the medications billed were indeed dispensed, and if you are dispensing a 28-day cycle in 7-day increments, you should have four manifests for each cycle. Proof of dispensing should be readily retrievable for the same length of time as your prescription records. The longest record retention requirement is usually for Medicare and is 10 years plus the current contract year.

Do the PBM return-to-stock (RTS) time frames apply to LTC medications?

Yes! LTC pharmacies must abide by RTS time frames. Though LTC pharmacies generally require additional time from when a claim is billed to when it is delivered to appropriately package and verify medications for facilities, the medications must still be dispensed within the RTS limit. Upon audit, claims found to be dispensed outside the RTS limit will be subject to full recoupment with a difficult appeal pathway. Refer to the PAAS Return to Stock tool found under the ‘Days Supply Charts’ in the left navigation on the PAAS Member Portal for the RTS limit of over a dozen PBMs. Also, medications delivered before they are billed are at risk for full recoupment so be sure the delivery date is on/after the date of service billed. If your pharmacy routinely sets claims for future adjudication, be cognizant of the delivery date to avoid this pitfall.

What elements should be on a LTC delivery manifest?

Humana publishes the most comprehensive guidelines for LTC audit documentation requirements and their guidelines are conservative enough to satisfy most, if not all, PBMs. According to Humana, a signature log for LTC requires:

a. Patient name

b. Date of service

c. Prescription number(s)

d. Facility name

e. Date of delivery to facility

f. Signature of individual who accepted delivery at the facility

The auditor did not accept my delivery manifest because the delivery date was missing, but the manifest date was printed on our papers – why was it not accepted?

Auditors require handwritten delivery dates on LTC signature logs to show the true dispensing date. A pre-printed date on the manifest is a function of when the manifest was created. Without the handwritten date, there is no way to prove that medication was dispensed on the same date the manifest was printed, therefore, pre-printed dates are generally not accepted by auditors.

Are there any waivers in place due to the COVID-19 public health emergency?

The COVID-19 Public Health Emergency (PHE) was renewed again by the Secretary of Health and Human Services on October 13th which extended the “end date” an additional 90 days. Most PBMs have their signature waivers tied to the PHE and will accept other forms of documentation in lieu of an actual signature. While these waivers are in place, it is important to note that proof of dispensing is still mandatory! The best practice is to document “COVID-19 delivery” with the date and time along with the name or initials of the delivery person, plus the name of the person receiving the medication. It should be noted, however, that a few state Medicaid programs have reinstated the signature requirement. Refer to the PAAS COVID-19 PBM Concessions document for additional details.

“Unauthorized Refills” Audit Discrepancies; How Does This Happen?

Audit results flagging “unauthorized refills” or “overbilled quantity,” can lead to big recoupments. These discrepancies can take significant time and effort for pharmacies to appeal. PAAS National® wants to help educate pharmacies on why this might be happening on your claims, and how to prevent recoupments.

Many states allow pharmacists to increase the dispensed quantity on a prescription without contacting the prescriber for authorization (check with your state’s allowances to ensure you are complying appropriately). Having documentation to support the reason the dispensed quantity changed from the written quantity is recommended to avoid audit issues. See last month’s Newsline article, Quantity Changes Require Documentation.

Consider the FDA guidance for dispensing insulin pens in the unopened (sealed) carton. Pharmacies can fall into the trap of over dispensing what the prescriber has approved. While this is the appropriate way to dispense insulin pens, pharmacies must be aware how over dispensing can happen. PBM auditors are looking at the total quantity prescribed on the prescription. When a prescription is written for a quantity less than the package size, any increased amount must be authorized by the prescriber or be taken out of the total refill quantity (in states that allow accelerated/consolidated refills).

Here is an example:

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Lantus Solostar® written for 9 mL with 3 refills

  1. Pharmacy dispenses a full box (15 mL) to follow FDA guidelines
  2. Prescription is refilled 3 additional times
  3. Total amount prescribed is 9 mL x 4 = 36 mL
  4. Total amount dispensed is 15 mL x 4 = 60 mL
  5. Without a clinical note authorizing the increase in quantity prescribed, the pharmacy over dispensed by 24 mL

Insulin pens are not the only prescriptions to watch, other medications that are dispensed according to package size can also be at risk. Software systems should track this information for you, but only if the data has been entered correctly.

PAAS Tips: