Transcript Medicare & Medicaid Home Study Power Point Presentation

Medicare & Medicaid
Audits and Compliance Programs:
A Changing Landscape
Angelo J. Cifaldi, R.Ph., Esq.
[email protected]
732-855-6096
Satish V. Poondi, R.Ph., Esq.
[email protected]
732-855-6154
Wilentz, Goldman, & Spitzer P.A.
90 Woodbridge Center Drive
Woodbridge, NJ 07095
3952634
* © 2012, Angelo J. Cifaldi, Esq. All rights reserved.
Objectives
• Define the terms Fraud, Waste & Abuse
• Discuss New Jersey Medicaid Fraud Division’s Work
Plan
• Identify key components of the Patient Protection and
Affordable Care Act (PPACA)
• List the key components of Compliance Programs
• Describe the changes in Medicare and Z-PIC Audits
• Discuss Case Studies
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Definition of Fraud
• "Fraud" means an intentional deception or
misrepresentation made by any person with the
knowledge that the deception could result in some
unauthorized benefit to that person or another
person, including any act that constitutes fraud under
applicable federal or State law.
N.J.S.A. § 30:4D-55
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Definition of Waste
• Waste, typically not a criminal or intentional act, can
be described as the over-utilization or misuse of
services
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Definition of Abuse
• "Abuse" means provider practices that are inconsistent
with sound fiscal, business, or medical practices and
result in unnecessary costs to Medicaid or in
reimbursement for services that are not medically
necessary or that fail to meet professionally recognized
standards for health care. The term also includes
recipient practices that result in unnecessary costs to
Medicaid.
N.J.S.A. § 30:4D-55
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New Jersey Medicaid Fraud Division
• The New Jersey "Medicaid Program Integrity and
Protection Act" established the Office of the Medicaid
Inspector General
• On June 29, 2010 the Office of the Medicaid Inspector
General was placed under the Office of the State
Comptroller.
• OMIG renamed Medicaid Fraud Division (MFD)
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New Jersey Medicaid Program Integrity
and Protection Act
• The State of New Jersey expends more than $ 9
billion in taxpayer funds to fund the Medicaid program
each year;
• Centralizes fraud recovery efforts and establishing an
independent Office of the Medicaid Inspector General
by statute to prevent, detect, and investigate fraud
and abuse and coordinate the anti-fraud efforts of all
State agencies funded by Medicaid
• For each fiscal year beginning after the fiscal year in
which this act takes effect, the Governor shall
recommend and the Legislature shall appropriate at
least $ 3,000,000 from the General Fund to the Office
of the Medicaid Inspector General to effectuate the
purposes of this act.
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Medicaid Fraud Division – Mission
• The Division
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Investigates fraud, waste and abuse;
Recovers Medicaid funds via audits;
Enforces Medicaid rules and regulations;
Reviews the quality of care given to Medicaid recipients;
Performs background checks on all Medicaid provider
applicants
– Excludes or terminates providers from the Medicaid
program;
– Refers criminal prosecutions to the Attorney General's
office
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New Jersey Medicaid Program Integrity
and Protection Act - Powers
• To conduct and supervise all State government
activities, except those of the Medicaid Fraud Control
Unit in the Department of Law and Public Safety,
relating to Medicaid integrity, fraud, and abuse;
• To call upon any department, office, division, or
agency of State government to provide such
information, re-sources, or other assistance as the
Medicaid Inspector General deems necessary to
discharge the duties and functions
• To direct all public or private Medicaid service
providers or recipients to cooperate with the office
and provide such information or assistance as shall be
reasonably required by the office.
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New Jersey Medicaid Program Integrity
and Protection Act - Powers
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To establish, in consultation with the department and the Attorney
General, guidelines under which the withholding of payments or
exclusion from Medicaid may be imposed on a provider or shall
automatically be imposed on a provider;
To review the utilization of Medicaid services to ensure that Medicaid
funds, regardless of which agency administers the service, are
appropriately spent to improve the health of Medicaid recipients;
To review and audit contracts, cost reports, claims, bills, and all other
expenditures of Medicaid funds to determine compliance with
applicable laws, regulations, guidelines, and standards, and enhance
program integrity;
To consult with the department to optimize the Medicaid management
information system in furtherance of the mission of the office. The
department shall consult with the Medicaid Inspector General on
matters that concern the operation, upgrade and implementation of
the Medicaid management information system;
To coordinate the implementation of information technology relating
to Medicaid integrity, fraud, and abuse; and
To conduct educational programs for Medicaid providers, vendors,
contractors, and recipients designed to limit Medicaid fraud and
abuse.
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MFD – What to Expect
• Increased Coordination with Managed Care
Organizations (“MCO”)
– DMAHS currently contracts with four MCOs Monthly
Meetings; Data Sharing; Data Mining
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2011 MCO Targets
– Identify Recipients with Multiple Identification Numbers
– Over-payments for Newborns
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MFD – What to Expect
• Changes to the Audit Process
– MFD will review pharmacy and DME audits that will be
performed by Molina Medicaid and other contractors
– Selection Criteria for Audits
• Medicaid dollars billed on a yearly basis
• Provider type
• Significant changes to Medicaid billings on a year to year
basis
• Complaints from the public
• Providers subject to corrective Action Plans
• Length of time since last audit/ investigation
• Services billed
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MFD – What to Expect
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Onsite Audits
– A letter will be sent to the provider (scope, length, and
authority for audit)
– Entrance conference - meeting with each individual
provider
– Exit Conference – to discuss preliminary findings
– Issuance of a Draft Audit Report
• 15 days to respond with objections and supporting
documents
• If no response then report becomes final
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MFD – What to Expect
• Audit Techniques
– Statistical Probability Sampling
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Simple Random Sampling – Random Selection
Systematic Sampling – (i.e. claims 5, 10, 15, 20 . . . .)
Stratified Sampling (grouping similar claims)
Cluster Sampling (grouping of less similar claims)
– Non- Statistical Probability Sampling (by time, auditor’s
judgment, etc.)
– Data Mining – Will become the primary internal referral
source for both the Audit team and Investigations Unit
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MFD – What to Expect
• Recovery and Exclusion
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Withholding of payments
Payment arrangements
Certificate of Debt
Exclusion
• Recovery Protocol
– Once a final audit report is submitted, a Notice of Claim
will be issued
– Provider then has 20 days to request a pre-hearing
conference to settle the matter
– If no agreement, then a Notice of Demand will be issued
and the Provider has 20 days to request a hearing with
the OAL
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Review of Exclusions
• Excluded providers may not treat, order, or bill for
services rendered to Medicaid recipients.
• May last from 3 – 8 years, or more
• If excluded provider is involved in the treatment, MFD
will seek to recoup payment and may also seek
damages and false claims penalties from the employer
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Exclusion Lists
• According to § 50.2.6.3.3, plan sponsors “should
review the HHS OIG and GSA1 exclusion lists at least
once a year, and have processes in place to prevent
the payment of claims for services provided by
excluded providers.”
• List of Excluded Individuals and Entities (LEIE)
– Maintained by OIG
– http://exclusions.oig.hhs.gov/
• Excluded Party List System (EPLS)
– Maintained by GSA
– http://www.epls.gov/
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GSA: General Services Administration
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Exclusion Lists
• Sponsors should require that all new and existing
employees disclose any “debarment, exclusion, or other
event that makes them ineligible to perform work related
directly or indirectly to Federal health care programs”1
• Sponsors must implement a policy to check exclusion lists
before hiring
• Sponsors should obtain certifications from pharmacies that
they will review the exclusion lists upon hiring and annually
thereafter and if an employee is found on such lists, he/she
will be immediately removed from any work related directly
or indirectly to all Federal health care programs and the
pharmacy will take appropriate corrective actions
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See § 50.2.1.2
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Medicare Exclusion List Verification
(Pharmacy Personnel)
Pharmacy Personnel
Name
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Verification
Date
Date of
Termination
What This Means for Pharmacies
• PIC and owner should check all its employees online
at least once a year but monthly would be better
• PIC and owner should have each new employee sign a
document indicating he/she has not been and is not
debarred. This should be recertified each year
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Exclusion Lists
• Employment Restrictions
– Includes Medicare, Medicaid, & other State Programs
(PAAD, Senior Gold, etc.)
– Not limited to services directly provided by Excluded
practitioner
– No automatic reinstatement; must reapply
– Strict time limit for appeal process
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MFD – What to Expect
• MFD Investigations
– Staff of 20 investigators
– Includes law enforcement and healthcare professionals
• Common practices investigated
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Billing for services not rendered
Providing medically unnecessary services
Submitting duplicate claims
Upcoding
Buying back and re-dispensing medication
Drug Diversion
Will include interviews and analysis of claims data
Ernest Mario School of Pharmacy
MFD – What to Expect
• MFD will also review:
– The relationship between the ordering physician and the
pharmacy
– Whether the physician is licensed at the time of
prescribing
– System Edits
– Organizations that use the services of excluded
providers
– Providers with higher Medicaid claims than comparable
pharmacies
– Whether there is evidence of a existing physician-patient
relationship
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Examples of Edits
• Controls on early refills
• Limits on the number of days before a refill is
permitted
• Edits to prevent payment for statutorily excluded
drugs
• Limits on the number of times a prescription can be
refilled
• Brand name versus generic
• Excessive claims for controlled substances
• Step therapy edits
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Examples of Edits (con’t)
• Number of prior authorizations
• Real time contraindication (e.g. drug-drug
interactions)
• Sex and age edits compared to the drug prescribed
• Therapeutic edits
• Insufficient or excessive dosage edits
• Identifying drugs provided outside of the Part D
benefit by Patient Assistance Programs
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What This Means for Pharmacies
• Follow-up with patients who repeatedly bring
prescriptions in to fill too early
• Do spot checks to confirm generic substitution is
being carried out as per state law
• Do spot checks on CDS usage by patients to detected
abuse patterns. Consider CDS class, addictive
properties, street value, and geographic abuse
patterns
Ernest Mario School of Pharmacy
MFD – What to Expect
• The new mantra: “Becoming a Medicaid provider is a
privilege, not a right”
• Increased scrutiny of Provider Applications
• It is not a defense to say that the submission of a
false application was unintentional. See Mi Farmacia
v. DMAHS, HMA 9969-06 (April 20, 2008).
• Failure to investigate and verify information
equivalent to a willful failure to provide truthful
response. See Surgi-Med v. DMAHS, HMA 036365-06
(August 25, 2006).
• Questions on application increasingly complex
Ernest Mario School of Pharmacy
MFD – What to Expect
• As of January 1, 2011, MFD will perform a preenrollment site visit for new applicants.
• New Providers will be subject to enhanced oversight,
such as prepayment review and payment caps.
Ernest Mario School of Pharmacy
MFD – What to Expect
• 2011 Fiscal Year Objectives
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Addiction Services
Adult Medical Day Care Services
Charity Care
Child Behavioral Health Services
DME Providers
Home Health Services
Laboratory Services
Lock-In Program
Medi-Medi Project
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MFD – What to Expect
• 2011 Fiscal Year Objectives (con’t)
– Pharmacies
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Review of Purchase invoices
1100 Pharmacy Audits/Year
1200 DME Audits/Year
Desk and Onsite Audits
Review Pharmacy Overrides
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Patient Protection and Affordable Care Act
(PPACA) – Background
• 2010 Healthcare Reform Act – goes into effect on
January 1, 2011
– 961 total pages of legislative text
• Portions have been challenged – Section 1501
(“Individual Mandate”)
• Section 6401 deals with fraud, waste and abuse
– Amends Medicare by adding new requirements
regarding:
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Screening of providers and suppliers
A provisional period of enhanced oversight
Disclosure requirements
Payment adjustments
Temporary enrollment moratoria
Compliance programs and
Related Fees
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Screening of Providers
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Licensure check
Criminal background check
Fingerprinting
Unscheduled and unannounced site visits, including
pre-enrollment site visits
• Database checks (including such checks across
States) and
• Such other screening as the Secretary determines
appropriate
PPACA (Pub. L. 111-48), Sec. 6401(a)(3)(B)
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Provisional Period of Enhanced Oversight
• The Secretary shall establish procedures to provide
for a provisional period of not less than 30 days and
not more than 1 year during which new providers of
medical or other items or services and suppliers, as
the Secretary determines appropriate, including
categories of providers or suppliers, would be subject
to enhanced oversight, such as prepayment review
and payment caps.
Id.
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Increased Disclosure Requirements
• A provider of medical or other items or services or
supplier who submits an application for enrollment or
revalidation of enrollment in the program . . . shall
disclose (in a form and manner and at such time as
determined by the Secretary) any current or previous
affiliation (directly or indirectly) with a provider of
medical or other items or services or supplier that has
uncollected debt, has been or is subject to a payment
suspension under a Federal health care program (as
defined in section 1128B(f)), has been excluded from
participation under the program under this title, the
Medicaid program under title XIX, or the CHIP
program under title XXI, or has had its billing
privileges denied or revoked.
Id.
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Compliance Programs
• Regulations not yet written but PPACA requires
Secretary to establish core elements.
• MFD: strongly encourages providers whose payments
from the Medicaid program exceed $100,000 per year
to implement a compliance program.
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Compliance Programs
• Compliance programs need to encompass billings,
payments, medical necessity, quality of care,
governance, credentialing and other risk areas that a
provider, with due diligence, identifies.
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Compliance Programs
• Specifically, any compliance plan should include the
following elements:
– Designation of a chief compliance officer responsible for the
day-to-day operation of the compliance program.
– Training and education of all affected employees and persons
• Training should occur periodically and should be made a part of
the orientation of new employees A communication process for the
reporting of compliance issues;
– Disciplinary policies and standards that are distributed to all
employees including policies
• Failing to report suspected problems;
• Engaging in non-compliant behavior;
• Encouraging, directing, facilitating or permitting either actively or
passively non-compliant behavior.
– A system for routine identification of compliance risk areas
including but not limited to internal audits and external audits
http://nj.gov/njomig/compliance/
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Processes a Pharmacy Should Have In
Place
• Procedure to respond to data requests by CMS, MEDICs,
and law enforcement, or their designees in a timely
manner
• Process to find overpayments and underpayments and
properly report and repay
• Process to identify improper coverage determinations,
services, or enrollment and properly report and repay
MEDICs: Medicare Drug Integrity Contractor – An organization that CMS has
contracted with to perform specific program integrity functions for Part D under the
Medicare Integrity Program. The MEDIC is CMS’ designee to manage CMS’s audit,
oversight, and anti-fraud and abuse efforts in the Part D benefit.
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Processes a Pharmacy Should Have In
Place (con’t)
• Process to identify claims submitted for drugs that
were prescribed by excluded or deceased physicians
and report and repay
• Policies that stress confidentiality, anonymity, and
non-retaliation for compliance related questions or
reports of potential non-compliance
• Procedures to correct underlying problems that
produce Medicare Part D violations and prevent future
misconduct.
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Processes a Pharmacy Should Have In
Place (con’t)
• Procedures to keep records that document any and all
corrective actions and follow-up compliance reviews for
future health oversight purposes and/or referral to law
enforcement, if necessary
• Process to comply with the ten-year record retention
requirement1
• A commitment to Pharmacy & Therapeutic Committee
decisions made by considering clinical efficacy and
appropriateness of formulary drugs over cost
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See 42 C.F.R. §423.505(d).
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Processes a Pharmacy Should Have In
Place (con’t)
• A bay audit program in which the pharmacy’s
dispensing area is divided into 4 separate sections
and audit one section every week
• Process to purge Will Call Bin of all prescriptions
greater than 14 days old (Contact patient and remind
them to pick up prescription, and if patient declines to
pick up prescription, return it to stock and reverse the
claim)
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What This Means for Pharmacies
• Keep a complete back up of all the pharmacy’s files
off site on a daily or weekly basis
• Review RAS promptly and correct all issues
• Repay promptly prescriptions not picked up by a
patient or not authorized by a physician
• Report any issue regarding irregular prescriptions
promptly
• Create a policy assuring a 10 year record retention
policy
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Internal Audits
• Audits should include a review of documentation
including:
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Prescriptions
Invoices
Pharmacy licenses
Claim transaction records
Signature logs
Purchase records
Negotiated prices
Ernest Mario School of Pharmacy
Internal Audits (con’t)
• Audits should also verify:
– That pharmacies are in compliance with minimum state
pharmacy practice standards
– That pharmacies post or distribute notices to patients to
contact their plans if they want to question coverage
information provided by pharmacists
– Contracts with pharmacies and rebate and discount
agreements
• Chief Compliance Officer should also conduct
interviews with the pharmacy staff to gauge whether
applicable Medicaid and Part D requirements are being
followed
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What This Means for Pharmacies
• Do self monitoring audits on a regular basis so
potential issues can be dealt with before a formal
audit
• Do spot checks on inventories to make sure they
match up with purchases
• Do spot checks to verify proper NDC numbers are
being used
• Do spot checks to verify prescriptions comply in all
respects with Federal and State law
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Monitoring Trends
• To monitor trends and patterns, pharmacies should
generate or receive and review reports such as the
following:
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Payment reports
Drug Utilization Reports
Prescribing Patterns by Physician Reports
Geographic Zip Reports
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Monitoring Trends
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Information may be available from
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Pharmacy software
Employee Observations
Wholesalers
Government Entities (DEA, Medicaid, Medicare)
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Medicare ZPIC Audits
• Zone Program Integrity Contractors (ZPIC)
– Conduct post and prepay audits as a way of curbing
improper Medicare payments
– Burden of proof shifted to provider who must provide
documents before getting paid
• progress notes, medical history, pictures of service,
purchase invoices, assessment records
– 90 to 120 days waiting period
• The new ZPIC covers seven zones
– As of November 2010, CMS had awarded four ZPIC
contracts, with three more contracts planned.
• CMS issued lucrative contracts
– Advance Med Corporation was awarded a
$107,957,737.00 five-year contract for Zone 5.
(Healthcare Finance News, 9/3/2009)
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Medicare ZPIC Audits
• “CMS pays 4.8 million Medicare claims each day,
approximately 1.2 billion Medicare claims each
year. Nevertheless, with the new tools provided to
CMS under the Affordable Care Act, we are steadily
working to better incorporate fraud prevention
activities into our claims payment and provider
enrollment processes where appropriate. . . All of
these new authorities and analytical tools will help
move CMS away from its historical “pay and chase”
mode towards a closer alignment with strong fraud
deterrents and increased enrollment screenings, new
disclosure and transparency guidelines, and early
identification of high-risk providers and suppliers.” Dr. Peter Budetti, JD, Deputy Administrator and
Director, Center for Program Integrity, Testimony
before Congress, September 22, 2010.
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Medicare ZPIC Audits
• “Five ZPICs will concentrate on fraud ‘hot spots’ in FL,
IL, TX, NY and CA where we know the program has
the greatest vulnerabilities.” - Deborah Taylor, Acting
Director and Chief Financial Officer, Testimony before
Congress, April 22, 2009.
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ZPIC Audits (con’t)
• The ZPIC contracts include all claim types:
– Part A, Home Health, Hospice, Part B, Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS), Managed Care (Part C), Part D Medicare
Prescription Drug, and Medicare and Medicaid Data
Matching.
• Target both the medical necessity of a claim and
coding errors.
• ZPICS look at billing trends and patterns, focusing on
providers whose billings for Medicare services are
higher than the majority of providers in the
community.
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ZPIC Audits (con’t)
• Auditors can arrive unannounced, demand medical/
prescription records, and interview both providers and
beneficiaries.
• Conduct pre-payment and post-payment reviews.
• They can be disruptive, time consuming and
expensive.
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ZPIC Audits (con’t)
• Extrapolation of damages utilized. See Sec. 3.10.4.2
of CMS’ Medicare Program Integrity Manual
• Chaves County Home Health Services v. Sullivan, 931
F.2d 914 (D.C. Cir. 1991),
• Before an auditor can employ extrapolation, there
must be either a determination of a sustained or high
level of payment error, or documentation that
educational intervention has failed to correct the
payment error. Sec 935 of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003
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ZPIC Audits (con’t)
• Cases of potential fraud will be referred to the Office
of Inspector General (OIG) for consideration and
possible initiation of criminal or civil prosecution, civil
monetary penalty, or administrative sanction actions.
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Responding to a ZPIC Audit
• What can you do?
• Internal review of requested claims.
– The value of internal analysis vs. risk of creating a nonprivileged paper trail of identified problems. Review past
claims audits
• Review the reasons given for each denial.
• Has the contractor correctly cited Medicare policy?
• Appeals must be filed in a timely fashion.
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Responding to a ZPIC Audit
• If a provider is the target of ZPIC medical review, it
should be assumed that it has been specifically
targeted and the audit is not random
• This influences the manner in which a ZPIC request
for records should be received and evaluated by the
provider
• Review may include investigative techniques in
addition to data analytics and claims review
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Responding to a ZPIC Audit
• Stamp Date and Time Received
• Train staff on identity of contractors
• Ensure that staff are aware of deadlines to submit
records
• Ensure contractor is sending to the correct person/
address
• Send certified mail
• Keep originals of documents
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ZPIC Audits (con’t)
• The PSC or ZPIC BI [Benefit Integrity] unit or the
contractor MR [Medical Review] unit shall identify the
source of the random numbers used to select the individual
sampling units. The PSC or ZPIC BI unit or the contractor
MR unit shall also document the program and its algorithm
or table that is used; this documentation becomes part of
the record of the sampling and must be available for
review.” (emphasis added)
• “The PSC or ZPIC BI units or the contractor MR units shall
document all steps taken in the random selection process
exactly as done to ensure that the necessary information is
available for anyone attempting to replicate the sample
selection.” (emphasis added)
• Section 3.10.4.2 of CMS’ Medicare Program Integrity
Manual
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Audits by Government
• Government Action
– Prepayment Monitoring/ Withholding of funds
– 42 C.F.R. 455.23 and N.J.A.C. 10:49-9.10(d)
– Reliable evidence of fraud or willful misrepresentation by
a provider
– Right to submit written evidence for consideration
– Right to a hearing
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Pharmacist Obligations in a Government
Audit
• Allow access to facilities as requested
– Failure to do so may result in corrective actions
(including intermediate sanctioning in line with 42 C.F.R.
Subpart O)
• Allow access to records associated with Part D
program for 10 years
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What This Means for Pharmacies
• Pharmacies have rights to appeal audit findings
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Hearings, Fair Hearings, Due Process Hearings
Limited time to appeal
Importance of Preserving Documents & Communications
Hearings can be in front of an Administrative Law Judge
(ALJ)
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What This Means for Pharmacies
• Possible Criminal Exposure
– Healthcare Fraud and Medicaid Fraud are crimes
potentially punishable by jail time
– Each fraudulent claim can be a separate offense
– Civil fines and remuneration can accompany criminal
charges
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Sponsor Fraud, Waste and Abuse
Examples
• Payments for excluded drugs
• Multiple billing
• Payments for Part D drugs that are not for a
“medically acceptable indication”
• Inappropriate formulary decisions
• False information given to CMS
• Bait and switch pricing
– Beneficiary is led to believe that a drug will cost one
price, but at the point of sale is charged a higher price
– Inducing beneficiaries to sign up for specific drugs on
formulary that are later removed
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Pharmacy Fraud, Waste and Abuse
Examples1
• Inappropriate billing practices
– Incorrectly billing for secondary payers to receive increased
reimbursement
– Billing for non-existent prescriptions
– Billing multiple payers for the same prescriptions, except as
required for coordination of benefit transactions
– Billing for brand when generics are dispensed
– Billing for non-covered prescriptions as covered items
– Billing for prescriptions that are never picked up (i.e., not
reversing claims that are processed when prescriptions are filled
by never picked up)
– Billing based on “gang visits,” e.g., a pharmacist visits a nursing
home and bills for numerous pharmaceutical prescriptions without
furnishing any specific service to individual patients
– Inappropriate use of dispense as written (“DAW”) codes
– Prescription splitting to receive additional dispensing fees
– Drug diversion
1 See
§70.1.3 of guidance
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Pharmacy Fraud, Waste and Abuse
Examples (con’t)1
• Prescription drug shorting
– Pharmacist provides less than the prescribed quantity and
intentionally does not inform the patient or make
arrangements to provide the balance but bills for the fullyprescribed amount
– If there is insufficient quantity of medication to completely fill
the prescription, should the fill the prescription as “cash” and
dispense a three day supply at no charge. When a sufficient
quantity of the medication is received, reverse the “cash”
prescription and re-bill at the full amount and supply the
difference between prescription full quantity and the amount
given
• Prescription refill errors
– A pharmacist provides the incorrect number of refills
prescribed by the provider
See §70.1.3 of guidance
Ernest Mario School of Pharmacy
Pharmacy Fraud, Waste and Abuse
Examples (con’t)1
• Prescription forging or altering
– Existing prescriptions are altered, by an individual without the
prescriber’s permission to increase quantity or number of
refills
• Dispensing expired or adulterated prescription drugs
– Pharmacies dispense drugs that are expired, or have not been
stored or handled in accordance with manufacturer and FDA
requirements
• Bait and switch pricing
– A beneficiary is led to believe that a drug will cost one price,
but at the point of sale the beneficiary is charged a higher
amount
– $4.00 Generic Program: Must make generic listing available for
review and if a generic is no longer available for $4.00, it must
be immediately removed from the list and patient must be
informed of the change before dispensing
1 See
§70.1.3 of guidance
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Pharmacy Fraud, Waste and Abuse
Examples (con’t)1
• Illegal remuneration schemes
– Pharmacy is offered, or paid, or solicits unlawful remuneration to
induce or reward the pharmacy to switch patients to different
drugs, influence prescribers to prescribe different drugs, or steer
patients to plans
• TrOOP2 manipulation
• When a pharmacy manipulates TrOOP to either push a beneficiary
through the coverage gap, so the beneficiary can reach catastrophic
coverage before they are eligible, or manipulates TrOOP to keep a
beneficiary in the coverage gap so that catastrophic coverage is
never realized
• Failure to offer negotiated prices
– A pharmacy does not offer a beneficiary the negotiated price of a
Part D drug
1 See
§70.1.3 of guidance
2 TrOOP:
True Out of Pocket Costs: The amount a beneficiary must spend on Part D covered
drugs to reach catastrophic coverage
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Prescriber Fraud, Waste and Abuse
Examples1
• Illegal remuneration schemes
– Prescriber is offered, or paid, or solicits, or receives unlawful
remuneration to induce or reward the prescriber to write
prescriptions for drugs or products
• Prescription drug switching
– Offers of cash payments or other benefits to a prescriber to
induce the prescriber to prescribe certain medications rather
than others
• Script mills
– Provider writes prescriptions for drugs that are not medically
necessary, often in mass quantities, and often for patients that
are not theirs. These scripts are usually written, but not
always, for controlled drugs for sale on the black market, and
might include improper payments to the provider
1 See
§70.1.4 of guidance
Ernest Mario School of Pharmacy
Prescriber Fraud, Waste and Abuse
Examples1
• Provision of false information
– Prescriber falsifies information (not consistent with
medical record) submitted through a prior authorization
or other formulary oversight mechanism in order to
justify coverage. Prescriber misrepresents the dates,
descriptions of prescriptions or other services furnished,
or the identity of the individual who furnished the
services
• Theft of prescriber’s DEA number or prescription pad
– This information could illegally be used to write
prescriptions for controlled substances or other
medications often sold on the black market. In the
context of e-prescribing, includes the theft of the
provider’s authentication (log in) information
1 See
§70.1.4 of guidance
Ernest Mario School of Pharmacy
Medicare Beneficiary Fraud, Waste and
Abuse Examples1
• Misrepresentation of status
– A Medicare beneficiary misrepresents personal information,
such as identity, eligibility, or medical condition in order to
illegally receive the drug benefit. Enrollees who are no longer
covered under a drug benefit plan may still attempt to use
their identity card to obtain prescriptions.
• Identity theft
– Perpetrator uses another person’s Medicare card to obtain
prescriptions.
• TrOOP manipulation
– A beneficiary manipulates TrOOP to push through the coverage
gap, so the beneficiary can reach catastrophic coverage before
they are eligible.
• Prescription forging or altering
– Where prescriptions are altered, by someone other than the
prescriber or pharmacist with prescriber approval, to increase
quantity or number of refills.
1 See
§70.1.7 of guidance
Ernest Mario School of Pharmacy
Medicare Beneficiary Fraud, Waste and Abuse
Examples1
• Prescription diversion and inappropriate use
– Beneficiaries obtain prescription drugs from a provider, possibly for a
condition from which they do not suffer, and gives or sells this
medication to someone else. Also can include the inappropriate
consumption or distribution of a beneficiary’s medications by a
caregiver or anyone else.
• Resale of drugs on black market
– Beneficiary falsely reports loss or theft of drugs or feign illness to
obtain drugs for resale on the black market.
• Prescription stockpiling
– Beneficiary attempts to “game” their drug coverage by obtaining and
storing large quantities of drugs to avoid out-of-pocket costs, to
protect against periods of non-coverage (i.e., by purchasing a large
amount of prescription drugs and then disenrolling), or for purposes of
resale on the black market.
• Doctor shopping
– Beneficiary or other individual consults a number of doctors for the
purpose of inappropriately obtaining multiple prescriptions for narcotic
painkillers or other drugs. Doctor shopping might be indicative of an
underlying scheme, such as stockpiling or resale on the black market.
1
See §70.1.7 of guidance
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CMS Position on Self-Reporting
“While self reporting of potential fraud is voluntary1,
CMS believes that self-reporting of fraud, waste and
abuse is a critical element to an effective program to
control fraud, waste and abuse.”2
1 42
2
C.F.R. §423.504(b)(4)(vi)(H)
See §20 of guidelines
Ernest Mario School of Pharmacy
Useful Links
• Office of the Inspector General (OIG)
– www.oig.hhs.gov
• OIG Mailing List
– www.oig.hhs.gov/mailinglist.html
• OIG Fraud Site
– www.oig.hhs.gov/fraud.html
• OIG Exclusion Site
– www.oig.hhs.gov/fraud/exclusions.html
• General services Administration (GSA)
– www.epls.gov
• CMS
– www.cms.hhs.gov
• CMS Medicare Learning Network (MLN)
– www.cms.hhs.gov/MLNGenInfo
• CMS Mailing List
– www.cms.hhs.gov/apps/mailinglists
Ernest Mario School of Pharmacy