Required: Proof of Patient Copay Collection

All PBM agreements contain language requiring pharmacies to collect copays and be able to prove those copays were collected if audited. Copays are used by insurers to help patients understand the cost of their medications and encourage less expensive alternatives. Pharmacies who reduce or waive copays adjudicated by the PBM risk full recoupment of those claims if audited, and possible contract termination.

How do you prove a copay was collected?

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Having an integrated point of sale (POS) system tying the prescription number, date of sale, amount collected, and method of payment all together is key to passing an audit. It has become increasingly difficult for pharmacies without a POS system to prove copays were collected at the point of sale.

Other things to consider when proof of copay collection is required:

Credit card receipts should include:

  • The last four digits of the credit card number
  • The transaction authorization number
  • The merchant ID number

Payment by check may require copies of cancelled checks, front and back.

Payment by cash may require proof of cash bank deposits being made during the timeframe under audit.

Reduction of copay due to a secondary payer (coupon or secondary insurer) may also require proof including:

  • A print screen showing adjudication to the secondary insurer
  • Secondary payer plan information like the BIN, PCN, Patient ID, and group number
  • Any eVoucher data applied by the switch
  • Amount paid and any remaining out of pocket amount

If using a house charge account, you should be able to produce the following:

  • Policy and Procedure for collection of monies due on the account
  • Documented attempts to collect payment in the form of dated invoices sent to the patient and logged phone calls attempting to collect
  • Itemized Accounts Receivable report showing payment received, tying the payment back to the prescription number, and any outstanding balance remaining

If waiving a copay due to financial hardship, you will need objective evidence of that hardship, like an application, tax returns, and a formal written Policy and Procedure. It cannot be advertised or promoted, nor funded, in whole or in part, by a third party. It also must meet all requirements and restrictions of applicable law.

Non-routine, unadvertised waivers of copayments based on individualized determinations of financial need for patients with Medicaid may be acceptable without a financial hardship Policy and Procedure.

PAAS Tips:

2024 DMEPOS Series #2: Nebulizer Solutions

Many pharmacies struggle with DMEPOS audits due to the complexity in medical billing and the onerous documentation requirements. Medicare Part B suppliers need to be able to produce all the required documentation if audited, and make sure all documentation meets Medicare Part B standards. This DMEPOS series is intended to help you understand these complexities and gather the needed documents.

In particular, you should be able to show the following if audited on nebulizer solutions:

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  • Standard Written Order (SWO)
  • Medical Records
  • Nebulizer solutions are covered by part Medicare Part B only if the patient has a covered chronic pulmonary condition and administration is with a DME nebulizer device
  • Continued medical need can be verified by having a:
  • Medical record, dated within 12 months of the date of service under review, that shows usage of the item
  • Change in prescription dated within 12 months of the date of service under review
  • Refill order from the treating practitioner dated within 12 months of the date of service under review
  • Covered diagnoses can be found in the Local Coverage Determination (LCD) and Policy Article
  • Proof of Delivery
  • Proof of Refill Request and Affirmative Response
  • Required if delivered or mailed

Common reasons for Medicare B to deny a nebulizer claim include:

  1. Incomplete or invalid SWO
  2. Medical records do not indicate a covered diagnosis or contains an incorrect diagnosis for the HCPCS code/drug
  3. Medical records do not support continuous need
  4. Medical records are not signed
  5. Claims billed for more than the Medicare B allowed quantity
  6. Delivery date does not match date billed
  7. Delivery address missing for an in-store pick-up

PAAS Tips:

Caremark Notice of Breach – Aberrant Practices and Trends

PAAS National® analysts have recently assisted multiple pharmacies that received faxed notifications from Caremark that their pharmacy has “breached” the PBM Agreement by exceeding an arbitrary 25% threshold (by $ or # of claims) on the Aberrant Product List for their total claims dispensed in January 2024.

Affected pharmacies must …

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“cure the breach” by not exceeding this threshold in any subsequent month and develop and implement a written Corrective Action Plan (CAP) to support this goal. Notably, submission of the written CAP is optional. The letter includes a threat that non-compliance may result in network termination. Importantly, there is no request or requirement for pharmacies to reverse previously billed and dispensed claims.

Caremark suggests that pharmacies perform a monthly review of the most current Aberrant Product List and educate pharmacy staff about the aberrant product list, with a specific emphasis on purchasing personnel, to avoid inadvertent breaches due to unawareness.

Caremark created an Aberrant Product List in November 2019 and states that while these products are a covered benefit, pharmacies may only dispense up to (but no more than) 25% of their Caremark claims in a given month. The list has grown from 7 to 15 pages over the past 4 years and includes specific NDCs that are high cost.

PAAS Tips:

  • See Caremark’s Pharmacy Portal https://rxservices.cvscaremark.com/ > Document Library > Audit (login required) to find the most current Aberrant Product List
  • The 25% threshold is based on dollar value or number of claims for aberrant products (against Caremark’s book of business), making the calculation slightly complex
    • Most pharmacies will trigger based on the dollar value of aberrant product claims
  • See January 2023 Newsline article, Essential Elements of Corrective Action Plans for suggestions on how to document a CAP
  • Notify PAAS National® at (608) 873-1342, if you are in receipt of a letter so that we can support you in developing a response

High AWP Omeprazole leads to $2.3M Medicaid Fraud Case

An Ohio pharmacist and owner of four pharmacies, along with a technician, have been found guilty by a federal jury for Medicaid fraud to the tune of $2.3M dollars. The recent announcement by the Department of Justice states each were convicted on one count of conspiracy to commit health care fraud and two counts of defrauding Medicaid. Each guilty count carries a maximum of 10 years in prison – they are currently awaiting sentencing.

Investigators discovered the pharmacist and technician conspired a plan to bill Medicaid for the highest reimbursed NDC for omeprazole but dispense over-the-counter product. The discovery was made when inventory purchases for the NDC billed fell short of the number of units billed to Medicaid. Upon further investigation, it was found the product dispensed for these claims was purchased over-the-counter at a big box store. The pharmacy also billed Medicaid for omeprazole when no prescriptions existed. The submission of these claims was cited as false and fraudulent, leading to the charges and conviction.

Ensure your pharmacy has internal controls in place to avoid potential invoice shortage issues (e.g., NDC scanners at the filling station). Pharmacy staff must be trained to understand the importance of billing, filling, and purchasing the correct NDCs.

More than just training, PAAS’ FWA/HIPAA compliance program can help pharmacies prevent and detect potential FWA in the workplace.

2024 Self-Audit Series #2: DAW Codes

Prescriptions flagged for incorrect or invalid DAW codes is a discrepancy we have seen increase notably on PBM audit results. Pharmacy reimbursement and/or patient copay may be influenced by the DAW code billed providing another reason PBMs scrutinize so closely.

Auditors will look for …

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documentation to support any DAW code billed other than DAW 0. Prescriptions without appropriate documentation may be at risk of full recoupment. Understanding the significance of billing the correct code is something all pharmacy staff should be aware of.

PAAS National®®  has created the: DAW Codes Explained chart with the NCPDP list of codes and their description.

PAAS Tips:

  • Print and post the DAW Codes Explained chart for easy reference.
  • Avoid having pharmacy software default the DAW field, as this may allow an incorrect code to be used.
  • Follow state specific laws and Medicaid requirements for DAW 1 format requirements.
  • Patients requesting brand name medication must be notated on the prescription or in your electronic notes field. Be sure this information is readily retrievable for audit purposes.
  • Do not assume the same DAW billed on past prescriptions is accurate for the current prescription.
  • DAW 0 would be appropriate for generics, single-source drug products, brand or reference products (without an available equivalent).
  • Follow plan reject messages when brand name is the plan’s formulary choice; use DAW 9 when plan indicates – do not assume.
  • Self-audit prescriptions on a weekly/monthly basis using internal software reports to confirm claims were billed with correct DAW codes and have supporting documentation.
  • Consider these additional references:

Numerous Sumatriptan Formulations Cause Headaches for Pharmacies, & Potential Recoupments

Sumatriptan is FDA approved for the acute treatment of migraine headaches, with or without aura. It is available in numerous formulations and strengths which can cause confusion during the filling and billing process. To decrease your risk of audit, and recoupment, be sure staff are aware of the nuances of sumatriptan and follow the guidance below.

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Formulation Strength Available package size NCPDP Billing Units
Auto-Injector 4 mg/0.5 mL

6 mg/0.5 mL

 2 syringes/box  1 mL
Nasal solution 5 mg/actuation

20 mg/actuation

 6 nasal inhalers/box 6 EA
Oral tablets 25 mg

50 mg

100 mg

 Unit of use boxes with 9 or 27 tablets or bottles with various quantities # EA
Pen kit with cartridges 4 mg/0.5 mL

6 mg/0.5 mL

 2 cartridges/box 1 mL
Refill cartridges for use with pen kit 4 mg/0.5 mL

6 mg/0.5 mL

 2 cartridges/box 1 mL
Single use vial 6 mg/0.5 mL Carton with 1 vial, 5 vials, or 25 vials 0.5 mL, 2.5 mL, 12.5 mL (respectively)
Lesser Known Formulations
Zembrace® SymTouch® Auto-Injector 3 mg/0.5 mL 4 pens/carton 2 mL
Onzetra® Xsail® Nasal powder 11 mg/nosepiece (using two nosepieces [22 mg] per administration) 8 dose kit (8 pouches containing 2 nosepieces per pouch) 16 EA

PAAS Tips:

  • Verify all sumatriptan prescriptions contain the dosage, formulation, quantity, and directions
  • Vague instructions for use such as “Use as Directed” and “as needed” should always be clarified. Obtaining the estimated number of headaches per week or per month from the prescriber (particularly if dispensing >1 package) allows the pharmacy, and auditor, to estimate an accurate days’ supply Remember to update the hardcopy with a clinical note and update the patient label to include the additional instructions
  • A complete clinical note should include:
    • Date (and preferably time)
    • Name and title of individual providing information
    • Specific information provided
    • Pharmacy staff initials

Announcing the PAAS Rx Days’ Supply Calculator App

Pharmacy staff face numerous challenges in managing prescriptions effectively. Manually calculating the appropriate quantity or days’ supply of medications can be time-consuming and prone to errors, creating the potential for PBM audits. We are thrilled to announce the launch of the Rx Days’ Supply Calculator app, a revolutionary tool designed to simplify calculations for pharmacists and pharmacy technicians. Developed by PAAS National®, this innovative app aims to enhance accuracy and offer guidance on dispense quantities and billable days’ supply.

The PAAS Rx Days’ Supply Calculator offers a user-friendly interface designed to enhance efficiency and empower pharmacy staff with confidence:

  • Accurate Calculations: Incorrect days’ supply calculations can lead to a myriad of issues – from patients receiving the wrong amount of medication to claim rejections and audit triggers. The app provides precise calculations for dispense quantities and billable days’ supply, tailored to various dosage forms, including insulin, topical creams and ointments, Santyl® dosing, and eye drops.
  • Billing Guidance: Billing complexities often pose challenges, but our easy-to-use calculator tool offers guidance on dispense quantities and billable days’ supply.
  • Seamless Recordkeeping: The app generates PDF documents with additional PAAS billing guidance, facilitating seamless recordkeeping processes for pharmacies. This feature enhances efficiency, minimizes errors, and elevates your pharmacy operations – because accuracy matters.

We invite you to be proactive and experience the benefits of the PAAS Rx Days’ Supply Calculator today. Download the app for a free 7-day trial ($5.99/year thereafter) by visiting the Apple App Store or Android Google Play Store, or check out the website at PAASNational.com/app.

NDC Numbers: Not a Guarantee of FDA Approval

A common misconception that pharmacies have is that if a product has an NDC (National Drug Code) number that means it is approved by the FDA – unfortunately, this is not the case.

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In fact, the FDA does not assign the NDC number. The company making a product must register with the FDA to obtain a “labeler code” (the first set of numbers in the NDC); these companies may be the manufacturer, a repackager or a distributor. Once they have obtained a labeler code, the company then assigns the product code (middle set of numbers in the NDC) and the package code (the last set of numbers in the NDC) and submits the final NDC to the FDA to have their product added to FDA’s NDC SPL Data Elements File (NSDE).

Products billed to Medicare and/or Medicaid that are not FDA approved are subject to recoupment. Examples include:

  • Unapproved drug other (example Anucort-HC Rectal Suppository NDC 00713-0503-12)
  • Dietary supplements – (example WellPro 31 NDC 71741-0376-30)

PAAS Tips:

  • Do not assume that a product is “FDA approved” just because it has an NDC number
  • Medicare gives preference to a “pay and chase” model when it comes to claims – they want beneficiaries to receive needed medications and will pay the claim at point-of-sale assuming the medication is being used in an FDA approved manner
  • Caremark prohibits the use of ANY coupon for non-FDA approved products
    • As defined in the current Provider Manual: “Pharmaceutical Manufacturer Coupon” means any item or mechanism, including but not limited to, paper coupons, copay cards, e-vouchers, mail-in rebates, and electronic coupon codes funded by a manufacturer, repackager, or supplier of pharmaceutical, chemical, or compounding products, that reduces the portion of the Patient Pay Amount that an Eligible Person is required to pay for a Covered Item
  • Be cautious about billing products that are not FDA approved
  • Consider checking the following to determine FDA approval and marketing status
    • Your wholesaler database
    • Your software vendor drug file
    • FDA Orange Book: https://www.accessdata.fda.gov/scripts/cder/ob/index.cfm
    • FDA Purple Book: https://purplebooksearch.fda.gov/
    • DailyMed: https://dailymed.nlm.nih.gov/dailymed/index.cfm
    • NSDE: https://www.fda.gov/industry/structured-product-labeling-resources/nsde
  • The FDA states the following regarding the NDC (National Drug Code) Database:
    • “The inclusion of a firm or its products in the NDC directory does not denote approval by the FDA of the firm or any of its marketed products, nor is it a determination that a product is a drug as defined by the act, nor does it denote that a product is covered by or eligible for reimbursement by Medicare, Medicaid, or other payers.”
  • If you are ever in doubt about a product, call PAAS at (608) 873-1342 so that we can help you identify whether it may be a problem

Caremark Invoice Audits – Purchases from Other Pharmacies

Caremark invoice audits continue to plague many pharmacies and often result in substantial audit findings and, occasionally, network termination.

Inventory acquired from other pharmacies frequently causes problems, whether purchased directly from another pharmacy or indirectly through an online marketplace such as RxeedTM or MatchRX.

Caremark has a very rigid policy for these pharmacy purchases and will only give credit for such purchases if the purchasing pharmacy has sufficient documentation.

Section 8.05 of the Caremark Provider Manual outlines the following requirements:

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For those Covered Items for which a Transaction Statement, Transaction History, and Transaction Information are not required by the DSCSA, Provider must maintain records of the exact quantities purchased, name of the Authorized Trading Partner, Covered Item name(s), NDC(s), date(s) of purchase, and proof of payment [e.g., copies of credit card receipts, canceled checks (front AND back)] (collectively “Documentation”). For those Covered Items received from other pharmacies, Provider must obtain and maintain the entire Transaction Statement, Transaction History, and Transaction Information from the selling entities.

For context, the Drug Supply Chain Security Act (DSCSA) allows such sales between pharmacies and requires that these transactions include the pedigree (aka Transaction Statement, Transaction History, and Transaction Information or “3Ts”) if they are for general stock replenishment. The DSCSA exempts transactions that are for a specific patient need and does not require the pedigree to be communicated, but Caremark seems unwavering.

PAAS National® has seen Caremark auditors request copies of the transferring pharmacy’s license and original invoices (and/or pedigree information) from the transferring pharmacy’s wholesaler. While PAAS strongly opposes Caremark’s policy and enforcement efforts, they hold an upper hand in an audit situation and consider the Provider Manual an extension of the contract.

RxeedTM recently filed a tortious interference lawsuit against Caremark in the District of NJ for their aggressive policies that is deterring pharmacies from using their platform. PAAS has also seen MatchRx contact selling pharmacies to obtain the wholesaler invoice based on an audit at the purchasing pharmacy (pursuant to the MatchRx User Agreement, section 2.5).

PAAS Tips:

  • Pharmacies should carefully weigh the pros and cons of purchasing inventory from other pharmacies (whether directly or indirectly)
  • If you choose to purchase inventory from another pharmacy, make sure you have full details of the transaction, including:
    • Pharmacy name, address, and NCPDP number transferring from
    • Drug name, quantity, lot number, expiration date, and NDC number
    • Date of transfer and date of receipt of drug
    • Reason for transfer to prove specific patient need exemption (e.g., complete Rx #1234)
    • Method or proof of payment (check # or credit card receipt)
    • Copy of transferring pharmacy license
    • Copy of invoices from transferring pharmacy to validate that they purchased from a licensed wholesaler
  • See previous Newsline article from December 2022 Pharmacy to Pharmacy Inventory Transfers – Buyer Beware! for additional discussion about pharmacy marketplace purchases

Best Practices When Filling & Billing Afrezza®

Afrezza®, a rapid-acting insulin human inhalation powder for adults with either type 1 or type 2 diabetes mellitus, can cause confusion for prescribers, pharmacies, and patients alike.

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Fortunately, the Afrezza® website has numerous tools and resources that can assist in proper filling and billing practices.

  • Prior Authorization Checklist – provides pharmacies and prescribers a clear and concise list of information to be submitted to insurance when requesting a prior authorization.
  • Product Reference Guide – a compilation of NDC’s for both combination and single box options. In addition, the guide gives total insulin units, total cartridges, and max total daily dose which can be used when determining how many boxes to dispense to satisfy a 30 days’ supply.
  • Afrezza Dosing Calculator – a tool that can be used to assist pharmacies in choosing the most appropriate NDC to use to fill the prescription

Afrezza® is only available in specific unit cartridges – 4 units, 8 units, and 12 units. In instances where a patient requires a dose greater than 12 units, the patient will need to use additional cartridges to obtain the correct dose. Prior to filling the prescription, ensure the dose prescribed for the patient is obtainable. If the dose is not feasible, the prescription is at a high risk of recoupment on audit.