All Pharmacies Face Medicare Part A vs Part D Billing Risks, Especially Combo Shops

Pharmacies that service long-term care (LTC) and assisted living facilities (ALF) as well as retail patients, known as “Combo Shops”, may not be aware of the potential recoupment risks from Medicare. PAAS National® wants to inform our members of these risks and how to best avoid them.

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Many times, patients residing in long-term care or assisted living facilities have a temporary stay under Medicare Part A. A change in Medicare coverage status is typically linked to the patient’s admission and discharge dates from a hospital or skilled nursing facility (SNF) stay.

When a patient is covered under Part A, the facility providing the stay is paid for the medications, supplies, and services during the coverage period. This means Medicare Part D will not be responsible for claims billed during that time (Medicare won’t pay under Part A and Part D at the same time). CMS provides Part D sponsors a Long-Term Institutionalized (LTI) report on a quarterly basis. This information is utilized by the plan to identify any misbilled claims due to overlapping Part A coverage. Unfortunately, PBMs do not have the information at the point-of-sale to stop these claims from being billed inappropriately.

It is vital that pharmacies stay in constant contact with facilities prior to billing and delivering prescriptions to ensure there has not been any changes in patients’ Medicare coverage due to an admission. Medications that are delivered to facilities when a patient is “in-patient” (under a Part A stay) should be returned to the pharmacy until the Part A stay has ended. Claims can be billed once again to Part D the day after the last covered day of the Part A stay. Any sooner and the claim would face full recoupment – even if there’s only one day of overlap!

LTC and ALF claims are not the only ones at risk. Prescriptions billed for patients that are on a Part A stay (for use at home) would also fall under this risk. Families and facilities frequently request pharmacies to fill prescriptions in anticipation of discharge. This in theory is a great idea; however, if Part A has already paid for that patient on that day(s), Part D will not pay for duplicate coverage. While difficult to catch, imagine the scenario of a husband being in the hospital (under Part A) and the wife presenting to the pharmacy for prescriptions. Even if the prescriptions are routine refills, they are subject to full recoupment! If the spouse (or an authorized representative) mentions that the patient is in the hospital right now, and they’re on Medicare, you will want to ask more questions before dispensing.

PAAS Tips:

  • Work with facilities to have process in place for them to notify you of a patient’s Medicare status change
  • Have an agreement in place with the facilities you service on how payments can be settled if claims were incorrectly billed to Medicare Part D and subsequently recouped
  • Stay informed for delays of patient discharge and reverse and rebill for appropriate date of dispensing
  • Long-term or Post-acute Care patients’ medications may need to be split-billed when patient is moved from Medicare Part A to Part D
    • Using submission clarification code 19 (Split-Billing) indicates the remainder of the claim being billed is no longer eligible under Medicare Part A stay. This code should only be used in a long-term care setting.
  • Questions asked during medication pick up may assist pharmacies on knowing if, or when, the patient will be discharged
  • See the September 2022 Newsline article, Medicare Part D Long-Term Institutionalized (LTI) Resident Report
  • If you receive a notice from Medicare D for incorrect billing due to Medicare Part A stay, send it to PAAS for information and guidance.

Best Practices for Financial Hardship Waivers

PAAS National® analysts have noticed an increase in PBM audits focusing on copay collection. These audits requested a copy of the pharmacies’ policies and procedures addressing copay collection and financial hardship.

In general, PBMs require that pharmacies collect copays at the point of sale and retain a “financial paper trail” to prove such collection took place. Pharmacies will be asked to provide check copies (front and back), credit card receipts with authorization numbers and bank deposit slips as evidence of receiving cash from patients. Pharmacies may also be required to provide Accounts Receivable balances and Coordination of Benefits billing information, where applicable.

If patients are unable to pay their copay and the pharmacy waives or discounts the copay due to financial hardship, then you must have a robust written policy explaining the details on how such a policy is operated.

In general, financial hardship policies should include the following:

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  1. A written policy, with clear guidelines on application process, required documentation to establish patient eligibility and standard benchmarks of need.
  2. Patients must complete a written application and sign/date as confirmation of truthfulness and accuracy.
  3. Patients must provide objective documentation to substantiate their need is legitimate (possibly from all earners in the household). Examples may include monthly income documentation such as pay stubs, social security checks, unemployment checks, and pension distributions as well as assessments of other assets.
  4. Pharmacies must use a standard benchmark to determine financial need such as a multiple of the HHS Poverty Guidelines, which are updated annually, take into account the number of persons in household, and vary between Alaska/Hawaii and the 48 contiguous states.
  5. Pharmacies must reassess eligibility at a designated frequency (e.g., annually).
  6. Pharmacies must not advertise the availability their financial hardship program and should use as a last resort only after considering alternative options such as therapeutic alternatives that may be less expensive for the patient and/or a monthly payment plan (via an Accounts Receivable or “house charge”).

Be aware that insufficient copay collection (or evidence thereof) is one of the leading causes of network pharmacy termination.

PAAS Tips:

  • Caremark provides the most explicit expectations for pharmacy financial hardship programs in section 3.03.09 of their Network Pharmacy Provider Manual.
  • PAAS National® FWA/HIPAA compliance members can provide section 4.1.5 Copay Collection in their FWA/HIPAA Policy & Procedure Manual.
  • Patients who qualify for Medicaid and Medicare Part D Low Income Subsidy have already provided financial documentation to government agencies and proven their financial need.
  • Federal laws prohibit pharmacies from denying service to Medicaid patients who cannot pay 

PBM Audits: Letters to Patients for Prescription Verification

Pharmacies often see PBM audit letters requesting documentation to validate paid claims, but not very many see letters sent to their patients.

PBMs have increasingly conducted patient (and prescriber) verifications, in the form of letters sent, to validate claims billed by your pharmacy. These letters are often initiated as part of a PBM investigation where they are searching for fraud, waste, or abuse– if there are inconsistencies between the information provided by the pharmacy, patient, and prescriber this can be a sticky situation.

Letters to patients typically consistent of basic questions like:

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  1. Have you received prescriptions from XYZ pharmacy? If yes, by what method? (in-store pickup, mail, home delivery by pharmacy employee)
  2. Have you been treated by XYZ prescriber? If yes, by what method? (virtual, phone, in-person)

Letters often include an itemized list of claims billed by the pharmacy where the questions may include:

  1. Did you request the pharmacy to fill this prescription?
  2. Did you receive this prescription?
  3. Did you pay the copay amount listed?

Patients may fail to respond to these letters for a variety of reasons, including: not recognizing the PBM name (and afraid of a scam), not remembering the details (and are afraid to answer incorrectly) or not being able to respond (e.g., literacy issues or changes in address).

PAAS National® has received audits where PBMs will issue audit results to the pharmacy that include recoupments for patient denials of receipt or paying copay where the pharmacy has never been asked to provide signature logs or proof of copay collection – these unfair conclusions are drawn before the pharmacy has had a chance to provide objective evidence to defend themselves.

PAAS Tips:

  • If your patients are in receipt of a PBM letter, encourage them to respond
    • PBMs have been known to interpret a non-response as a “denial”
  • Providing copies of the original documentation may be enough to overturn the findings; however, certain situations dictate signed affidavits
  • See our April 2022 Newsline article, Prescriber Denial of Prior Authorization Can Lead to Recoupment for additional insight on letters to prescribers

Avoid the Creon® Chargeback Catastrophe by Following THIS Billing Rule

Creon® is indicated for the treatment of exocrine pancreatic insufficiency due to cystic fibrosis, chronic pancreatitis, pancreatectomy, or other conditions. Claims for these pancreatic enzymes find themselves on audits year after year, and the audit risk has just increased as …

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ALL strengths of Creon® are now required to be stored and dispensed in the original container. This change was published in the FDA product label, updated October 12, 2023. The previous package insert (effective June 2, 2022) only required the 3,000 USP units of lipase to be stored and dispensed in the original container.

With this change to the package labeling, pharmacies MUST be sure to bill and dispense all strengths of Creon® in quantities that correspond with a full bottle, or multiples of a full bottle. Claims billed for quantities not evenly divisible by the quantity in a full bottle are easy for a PBM’s algorithm to flag for audit. If audited, these claims will likely face a partial or full recoupment with very little chance of a successful appeal. One example of language explaining this discrepancy can be found in the Fourth Edition (Version 4.1) of the 2023 OptumRx® Provider Manual, which reads “OptumRx reserves the right to recover payment for claims dispensed outside the manufacturer’s FDA-approved storage and dispensing recommendations. Claims for products where the manufacturer’s original package is designed and intended to be dispensed to patients without repackaging due to stability and patient safety concerns, may be subject to review and recovery. Pharmacies are advised to follow FDA requirements.”

Claims billed for LTC patients or patients enrolled in a medication synchronization or medication packaging program are NOT EXEMPT from the FDA rules to store and dispense medications in their original containers. In other words, these medications should NOT be put in bubble packs, blister cards, BINGO cards, strip packaging, medication boxes, or other compliance packaging and must only be dispensed by the pharmacy in their original containers.

PAAS Tips:

  • Dispense ALL strengths of Creon® in their original container
  • Print and display an updated copy of the Dispense in Original Container Chart
  • Confirm the prescription has calculable directions, such as the number of meals AND number of snacks, OR the total number of capsules per day the patient can take and contact the prescriber for clarification if the prescription is received with insufficient directions
    • Remember to document the clarification with a clinical note including the date of the call, the name and title of whom you spoke with, the clarification, and your initials
    • Be sure clinical note is retrievable and visible to the reviewer during an audit
    • Ensure the patient’s label is updated with the more specific directions prior to dispensing
  • If a prescription is received for a quantity LESS THAN what is in a full bottle:
    • Contact the prescriber or their agent to update the written quantity on the prescription to 70, 100, or 250 capsules (as applicable) and document with a clinical note
    • Or increase the dispensed amount to a sufficient quantity by borrowing capsules from an authorized refill; this is only an option in states where pharmacists have the legal authority to consolidate refills

The Power of Clearly Communicated Sanction Policies in HIPAA Compliance

Sanctions were the focus of the October 2023 Office for Civil Rights Cybersecurity Newsletter. The article states, “An organization’s sanction policies can be an important tool for supporting accountability and improving cybersecurity and data protection. Sanction policies can be used to address the intentional actions of malicious insiders, such as the stealing of data by identity-theft rings, as well as workforce member failure to comply with policies and procedures, such as failing to secure data on a network server or investigate a potential security incident.”

Adequate and thorough training is an essential component to all employee on-boarding and continued employment. One critical topic to discuss is sanctions, because the HIPAA Privacy and Security Rules both require sanction policies. Talking to employees about sanctions, or penalties for not following state, federal, or local laws or pharmacy-specific rules, helps to reinforce an employee’s understanding of the importance of taking their training seriously and understanding the consequences of non-adherence.

PAAS Tips:

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  • The HIPAA Privacy and Security Rules were designed to allow for flexibility in implementation methods depending on the size, resources, and relative risk of the covered entity; this flexibility extends to sanction polices so be sure to tailor your policy to your pharmacy’s specific needs
  • Sanctions must be handed out in a consistent manner to demonstrate equitable punishment across all levels of staff; inequitable punishments could weaken the integrity of the pharmacy’s compliance program
  • Current PAAS National® FWA/HIPAA Compliance Program members can refer to Sections 8, 10.12, and 11.3.3 in their Policy & Procedure Manual for more information on sanctions, violations, disciplinary actions, and corrective actions
  • Maintain all HIPAA-related documentation for a minimum of six years after the last effective date

Potential HIPAA Violations Lead to $1.3 Million Settlement

According to a September 11, 2023 news release from the U.S. Department of Health and Human Services (HHS), “L.A. Care, the largest publicly operated health plan in the country paid $1,300,000 to settle” potential HIPAA Security Rule violations. The settlement comes at the end of two Office for Civil Rights (OCR) investigations into L.A. Care Health Plan (“LACHP”). One of the investigations was due to a large data breach resulting from a mailing error which caused member identification cards to be mailed to the wrong members. The other investigation stemmed from a processing error which allowed L.A. Care covered members to log into the LACHP payment portal where they could potentially view the name, address, and member identification number of another LACHP member.

In addition to the $1.3 million dollar settlement, LACHP has agreed to a comprehensive corrective action plan and three years of monitoring from OCR. They must develop and distribute HIPAA compliance policies and procedures for performing a risk analysis and risk management plan. Additionally, they must implement and adhere to their new policies and procedures.

As quoted in the HHS release, OCR Director Melanie Fontes Rainer aptly stated, “Breaches of protected health information by a HIPAA-regulated entity often reveal systemic, noncompliance with the HIPAA Rules.” She goes on to advise, “HIPAA-regulated entities need to be proactive in ensuring their compliance with the HIPAA Rules, and not wait for OCR to reveal long-standing HIPAA deficiencies.”

Follow the advice of our PAAS analyst team (and the advice of the OCR Director!), and proactively review your HIPAA program to ensure you are compliant with all the Rules before you potentially find yourself at the very expensive end of an OCR investigation.

Those of you with the PAAS National® Fraud, Waste and Abuse (FWA) & HIPAA Compliance Membership have a wealth of knowledge available at your fingertips in your Policy & Procedure (P&P) Manual. This manual is automatically generated after the Risk Analysis and P&P Questionnaire have been completed. Account administrators or officers can download a full copy of the P&P Manual for further review. Highly trained PAAS analysts are also here to answer HIPAA questions, discuss HIPAA concerns, guide you through the intricacies of breach notifications (if a breach occurs), and so much more.

If your pharmacy does not currently have the PAAS FWA & HIPAA Compliance Membership, we suggest scheduling a services overview to obtain additional information about this one-of-a-kind, customizable FWA & HIPAA program! PAAS National® – helping community pharmacies gain confidence and peace of mind. Be Proactive. Be Prepared. Be Protected.®

Calculating Days’ Supply – Pancreatic Enzymes

Auditors target pancreatic enzyme prescriptions like Creon® and Zenpep® due to high cost and ambiguous directions.

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Directions are often vague and only indicate how many capsules to be taken with meals and snacks. Pharmacies can generally assume three meals, but if the prescription does not specify how many snacks a patient is allowed, or the maximum number of capsules per day, an auditor will look to recoup for “non-specific directions.”

The solution to this problem is contacting the prescriber at the time of fill to clarify the number of snacks or the maximum daily dose and make a clinical note on the prescription. This information must also be added to the patient label to avoid possible recoupment for a “misfill” on audit.

PAAS Tips:

Albuterol HFA Inhaler Substitution Refresh

There have been many new albuterol HFA NDCs released since the June 2020 article, First AB-Rated Generic for Proventil® HFA Approved, and since albuterol inhaler substitutions require an extra level of consideration due to not all NDCs being equivalent, a refreshed chart was in order.

The chart below shows albuterol products grouped into their respective Therapeutic Equivalence (TE) Code category – AB1, AB2, or BX. As a reminder, substitution can occur at the pharmacy level if the substitution involves two therapeutically equivalent products and is allowed per state law.

Example: AB1 inhaler 6.7 gm Proventil® would be able to be substituted for AB1 inhaler 6.7 gm Sandoz albuterol HFA. 

If a substitution to a non-equivalent is required, it would be necessary to contact the prescriber and make a corresponding clinical note documenting the conversation.

Example: Prescription written for AB1 inhaler 6.7 gm Proventil® but PBM rejects claim stating an AB2 inhaler such as 8.5 gm Lupin Pharmaceuticals albuterol HFA is required. 

Refer to the article linked above for examples of how to handle substitutions based on how a prescription is written.

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Product NDC Labeler Package Size FDA Application Number Brand or Generic TE Code
Proventil® HFA 66758-0959-85 Sandoz 6.7 gm N020503 Brand AB1
Albuterol sulfate HFA 00054-0742-87 Hikma Pharm. A207085 ANDA Generic
Albuterol sulfate HFA 00781-7296-85 Sandoz N020503 NDA Authorized Generic
Albuterol sulfate HFA 69097-0142-60 Cipla A209959 Generic
Albuterol sulfate HFA 72572-0014-01 Civica A209959 Generic
Albuterol sulfate HFA 76282-0679-42 Exelan Pharm. A209959 Generic
ProAir® HFA 59310-0579-22 Teva Resp. 8.5 gm N021457 Inactive; manufacturing ceased Oct. 2022 AB2
Albuterol sulfate HFA 00093-3174-31 Teva Pharm. N021457 NDA Authorized Generic
Albuterol sulfate HFA 45802-0088-01 Padagis A203760 Generic
Albuterol sulfate HFA 68180-0963-01 Lupin Pharm. A209954 Generic
Ventolin® HFA 00173-0682-20 GSK 18 gm N020983 Brand BX
Albuterol sulfate HFA 66993-0019-68 Prasco Labs N020983 NDA Authorized Generic
ProAir RespiClick® 59310-0580-20 Teva Resp. 1 EA N205636 Single Source Brand
ProAir® Digihaler® 59310-0117-20 Teva Resp. N205636 Single Source Brand

USP 800 – The Struggle is Real…

Are you compliant with USP 800? While USP 800 became official on December 1, 2019, it was informational only and not compendially applicable. With the recent updates to USP 795, Nonsterile Compounding and USP 797, Sterile Compounding in November 2022, USP 800 was effective as of November 1, 2023.

USP 800 is not just for compounding pharmacies as it defines the quality standards for the safe handling of hazardous drugs in all healthcare settings, with the goal to minimize exposure to healthcare personnel, the patients in your pharmacy, and to the environment.

You might still be asking, does my pharmacy need a USP 800 program?

The answer is yes! All healthcare settings, including community pharmacies, should now have a “handling of hazardous drugs” program in place and while, USP itself is not an auditing entity, there are other agencies that may audit including OSHA, EPA and most likely State Boards of Pharmacy, many of which have already committed to doing so. The safe handling of hazardous drugs is now considered a “standard of practice” so implementation is essential to protect the health and safety of your employees.

Are you struggling with the multitude of requirements?

This isn’t one of those “throw it together in an afternoon” type of programs. PAAS can help! PAAS’ customized USP 800 Compliance Program provides:

  • A detailed Program Guide walking you through everything from the why to the how
  • Annual web-based training to keep the team up to date including a quiz to assess competency
  • A USP 800 Compliance Program Policy & Procedure manual tailored to the unique needs of your pharmacy with minimum interruption to workflow
  • An easy-to-use Assessment of Risk (AoR) tool to help you create custom containment strategies for each drug and its unique dosage form.

Call (608) 873-1342 to sign up for PAAS’ USP 800 Compliance Program and you can immediately get started on setting up your program in hours, not days!

Specialty Pharmacy Paying the Price: $20 Million Settlement for Kickbacks and Copay Waivers

A September 30, 2023, Department of Justice press release outlined a recent settlement between the U.S. government and a specialty pharmacy based in Delaware. The pharmacy agreed to pay a settlement of $20 million to resolve allegations that they violated the False Claims Act and the Anti-Kickback Statute by paying kickbacks to patients in the form of routinely waived copayments and to physicians in exchange for providing patient referrals.

The government alleged that from August 2015 through May 2020, the pharmacy routinely waived copays for Medicare and TRICARE patients, regardless of any financial hardship need, to induce them to fill prescriptions at the pharmacy. Additional allegations include kickbacks to prescribers such as gifts, dinners, and free administrative and clinical support services to induce patient referrals to the pharmacy. The prescribers involved knowingly solicited and accepted the remuneration and have settled separately.

Two former employees, who acted as whistleblowers under a qui tam lawsuit to report these abuses to the government, will receive over $4 million as part of the settlement.

Make sure your pharmacy staff has implemented a robust set of FWA policies and procedures, including discussion of Anti-Kickback Statute, and are completing annual training on healthcare fraud, waste, and abuse. Protect your pharmacy by enrolling in the PAAS National® FWA/HIPAA Compliance Program today. Call us at (608) 873-1342 to get started.