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PharMerica Agrees to Pay $31.5M Over False Claims Act Violations

Thursday, May 28th, 2015

On May 14, 2015, PharMerica Corp. agreed to pay $31.5 million to resolve a False Claims Act and Controlled Substances Act lawsuit alleging that the company had dispensed Schedule II controlled drugs without valid prescriptions and then billed Medicare for the improperly dispensed drugs.

PharMerica, a long-term care pharmacy that dispenses medications to residents of long-term care facilities, often fills prescriptions for controlled substances listed in Schedule II under the Controlled Substances Act. The lawsuit alleged that PharMercia pharmacies throughout the country routinely dispensed these Schedule II controlled drugs in non-emergency situations without first obtaining a written prescription. According to the complaint, PharMerica violated the Controlled Substances Act by enabling nursing home staff to order narcotics, and pharmacists to dispense them, without confirming that a physician had determined whether the narcotics were medically necessary. PharMerica agreed to pay $8 million to resolve those allegations.

The lawsuit also alleged that PharMerica violated the False Claims Act by knowingly causing the submission of false claims to Medicare Part D for improperly dispensed Schedule II drugs, including oxycodone and fentanyl. PharMerica agreed to pay $23.5 million to resolve those allegations. The whistleblower who brought these allegations to the attention of the government, Jennifer Buth, will receive $4.3 million for her efforts. As part of the settlement, PharMerica also agreed to enter into a corporate integrity agreement with the HHS-OIG, which obligates the company to undertake substantial internal compliance reforms and to submit federal health care program claims for an independent review for the next five years.

PharMerica to Pay $31.5 Million to Settle False Claims Act and Controlled Substances Act Lawsuit

Tuesday, May 26th, 2015

The United States Department of Justice (“DOJ”) recently announced that PharMerica Corp. will pay $31.5 million, including more than $4 million to a whistleblower, to settle alleged violations of the Controlled Substances Act (“CSA”) and False Claims Act (“FCA”) related to the company’s improper dispensing of narcotics and submission of false claims to Medicare Part D.

PharMerica is a long-term care pharmacy that dispenses drugs to residents in nursing homes and other long-term care facilities.  The government alleged that PharMerica dispensed controlled substances listed in Schedule II of the CSA, including oxycodone and morphine, in non-emergency situations based solely on requests from the long-term facility rather than a valid prescription from a practitioner.  Schedule II narcotics were thus allegedly dispensed without physician confirmation that they were necessary and should be administered to the resident.  Under the settlement, PharMerica has agreed to pay $8 million to resolve these allegations.

The complaint also alleged that PharMerica violated the FCA by knowingly causing the submission of false claims to Medicare Part D for these improperly dispensed Schedule II drugs.  The FCA imposes treble damages and penalties for the knowing submission of false claims for federal funds.  PharMerica has agreed to pay $23.5 million to resolve its alleged FCA violations.

The FCA claims resolved by Thursday’s settlement were originally brought by Jennifer Denk, a pharmacist formerly employed by PharMerica, under the whistleblower provisions of the act, which authorize private parties to sue on behalf of the United States and to receive a portion of any recovery.  The act permits the United States to intervene and take over the lawsuit, as it did in this case with respect to some of Ms. Denk’s allegations.  Ms. Denk will receive $4.3 million as her share of the settlement.

PharMerica’s agreement with the United States includes not only a settlement with DOJ but a five-year Corporate Integrity Agreement with the Department of Health and Human Services – Office of the Inspector General as well.  The Corporate Integrity Agreement calls for the appointment of an official compliance officer, the establishment of a compliance committee, and the submission of federal health care program claims for independent review for the next five years, among other reforms.

HHS Announces Goal to Tie More Medicare Payments to Quality

Tuesday, March 10th, 2015

On January 26, 2015, the U.S. Department of Health and Human Services (HHS) announced an initiative to base more Medicare provider payments on the quality of care provided.  HHS has set goals for the use of alternative payment models in the next three years.

Medicare payments have traditionally been based on a fee-for-service where providers receive payment for each individual health care service provided.  Some feel this method encourages high volume care rather than high value or coordinated care.  Conversely, alternative payment models such as accountable care organizations (ACOs), primary care medical homes, or bundled payments for episodes of care endeavor to link provider payments to quality of care and encourage providers to be more cost-efficient.

In the announcement, HHS established goals both for alternative payment models and for tying payments to quality or value generally.  HHS’ goal is to 30 percent of fee-for-service Medicare payments to quality or value through alternative payment models by the end of 2016 and to tie 50 percent of fee-for-service payments to alternative payment models by the end of 2018.  Generally, the agency aims to tie 85 percent of all traditional Medicare payments to quality or value by 2016 and to tie 90 percent of all Medicare payments to quality or value through programs such as Hospital-Based Purchasing and Hospital Readiness Reduction Program.

Additionally, the agency is creating a Health Care Payment Learning and Action Network to expand the use of alternative payment models beyond Medicare.  Through this network HHS will work with private payers, employers, consumers, providers, states, state Medicaid programs and other partners.

The announcement came after a meeting with health care leaders including representatives from health insurance companies, CVS health, and organizations such as the AMA, American Hospital Association, and the National Partnership for Women and Families.

The AMA issued its own press release in support of the initiative.  “Patients benefit when physicians have the flexibility and resources to redesign care, and when payers provide new payment models that can support physician efforts to improve patient care and lower health care costs over the long-term” said AMA President Robert M. Wah.

Two current alternative payment models are the Medicare Shared Savings Program and the Bundled Payments for Care Improvement Initiative.  Under the Medicare Shared Savings Program, providers participate by joining an ACO.  ACOs are generally groups of health care providers that share financial incentives to improve the quality and efficiency of care provided to a population of patients.  With Bundled Payments for Care Improvement Initiative, organizations must meet financial and performance goals for episodes of care.

The AMA notes that ACOs incur costs for care management, consultation between different physicians, and other services not reimbursed by Medicare fee-for-service payments.  In order to remove these financial barriers, the AMA recommends that CMS provide monthly care management payments; provide partial capitation payments; and establish low-cost or federally guaranteed loan programs.

Physicians considering involvement with and ACO or any other alternative payment model, should consider the investment required to join and the overall financial and organizational risk of the arrangement.

Medicare, Part D, Full of Fraud Due to Lack of Oversight

Wednesday, February 25th, 2015

Medicare, Part D began in 2006 as a program to get much needed medication to more than 36 million senior citizens and people with disabilities.  Billions of needless expense has been added to the program due to lack of oversight and doctors prescribing name brand medications instead of generics.  Moreover, ProPublica has reviewed Medicare’s data and found that many doctor’s patterns of prescribing were fraudulent.  Some doctors blame this on identity theft claiming their identities were stolen.  One doctor, Ernest Bagner, III, made this claim.  Nevertheless, law enforcement, fraud units of at least two insurers and Medicare’s fraud contractor never blocked his national provider ID, which is needed to fill prescriptions.  Bagner had the highest total of money paid by Medicare for prescriptions by 2010.  Bagner claimed that the prescriptions were not his.  He stated, “These people make more money off of my name than I do.”  Some investigating his case do not believe he is being completely truthful.

There are many schemes that are constantly developing to loot the Medicare program.  Many foreign, aging, poor or disabled doctors are hired at small pharmacies and their ID’s are used to write thousands of fraudulent prescriptions for patients whose identities make also have been bought or stolen.  After dispensing, the drugs can be relabeled then sold to wholesalers or other pharmacies.  Other schemes include willing doctors who bill Medicare for the same prescriptions many times over that are never filled.  Not all prescriptions are for pain killers so law enforcement may overlook them.

In Los Angeles, Sheriff’s Sargent Steve Opferman heads LA County’s Health Authority Law Enforcement Task Force.  This is a hot spot of Medicare fraud and he spends much his time running down Part D scams.  Sgt. Opferman stated that most of the scams are related to Armenian organized crime rings. The scams depend upon a large group of doctors who are either unaware or dishonest.  Once the doctors are under law enforcement radar, the crime ring merely finds another doctor.  Opferman stated that Medicare is short of help and investigations can take “months or years” to get basic prescription or billing data.  He stated, “It’s like pulling teeth.”  Opferman said that if Medicare would ensure that doctors and pharmacies are legitimate and if they would shut down ID’s quickly when fraud is suspected, Medicare could stop much of the fraud.

Investigators from many agencies are involved in fraud cases and many times fall short of the goal line so justice is rarely swift.  Part D is run by private insurance companies unlike other parts of Medicare.  Insurers are supposed to look for fraud.  Typically the beginnings of cases investigated by insurers are once they notice a spike in a doctor’s prescribing or when tipped off by a patient.  Medicare does not require insurers to notify its Part D fraud contractor, only encourages reporting.  Insurers are not allowed to block a suspected doctor’s prescriptions.  Furthermore, insurers can only see a portion of the doctor’s prescribing record and they have no insight into the prescribing patterns   that are sent to other companies.  Contractors must get the patient’s chart from the insurers, who suspect fraud, to determine if the patient actually saw the doctor or was prescribed the correct medication.  This is usually where the investigation comes to a dead end.  Part D competes with other areas of Medicare fraud, such as kickbacks.  Only a small percentage is referred for prosecution.  Most are dropped due to “lack of resources or insufficient evidence,” states a 2012 report from the Government Accountability Office.

For more information, please click here.

Federal Ruling: CVS Must Produce Documents Related To Alleged False Claims

Friday, September 6th, 2013

A federal judge ruled that CVS subsidiary Caremark Rx (revenue of $123 billion in 2012) must produce documents related to its alleged practices of submitting fraudulent Medicare claims.  CVS and the second largest health administration, Medical Card System (MCS) had an agreement dating back to June 2003.  Another CVS subsidiary, Silverscript, agreed to provide a Medicare Part D voluntary prescription drug benefit program three years later. 

The Medicare Part D retail and mail order pharmacy claims paid by MCS between January 1 and December 31, 2006 were audited by Pharm/Dur, per MCS, in February 2007.  Pharm/Dur found 48,702 Medicare Part D claims that Caremark falsely paid for a total cost of approximately $4.3 million to MCS.  They were all given to the Centers for Medicare and Medicaid Services for payment.

Anthony Spay, licensed physician and owner of Pharm/Dur, filed suit in the Eastern District of Pennsylvania, alleging violations of the False Claims Act.  Furthermore, due to contract disputes between MCS and Caremark, litigation ensued in the U.S. District Court of Puerto Rico.  After the defendants moved to dismiss on April 23, 2012, the government filed a statement of interest on September 11, 2012.  CVS’ motion was denied on December 20, 2012.  The government then served the defendants 60 separate requests for document production in March.

On a June 4, 2012 teleconference, Caremark refused to withdraw their objections, but did agree to submit additional documents dating back to January 1, 2008.  The government then filed a Motion to Compel on July 2, 2013 and the motion was partially granted last week.  The ruling states that Spay’s claim that CVS continued to submit fraudulent claims from 2006 to the present does not validate expansion of discovery.  Senior U.S. District Judge Ronald Buckwalter wrote, “Although plaintiff was free to plead with requisite Rule 9(b) specificity that the other practices at issue – failure to review for over-utilization, failure to ensure prior authorizations, and failure to apply negotiated MAC (Medicare Administrative Contractors) pricing – were committed on a nationwide basis, he neglected to do so.”

The rule also states discovery may be pursued by the government on the nationwide claims in Puerto Rico, New York, Ohio, Pennsylvania, Illinois and Florida.

For more information, please see:
http://www.courthousenews.com/2013/09/04/60844.htm

 

 
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