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Medicare Part D Audits – What You Need to Know How to Avoid
Presented by:
H. Edward Heckman, R.Ph., PAAS National
7:45 a.m. - 9:15 a.m., Sunday, October 8, 2006 Las Vegas, Nevada
Evaluation # 06-137
This program is approved by NCPA for 0.15 CEUs (1.5 contact hours) of continuing education credit. NCPA is approved by the Accreditation Council for Pharmacy Education as a provider of continuing pharmacy education.
H. Edward Heckman
PAAS National® President, H. Edward Heckman, RPh. Is dedicated to providing Expert Third
Party Audit and Contract Assistance to community pharmacists across the country.
Mr. Heckman has over 30 years of diversified retail drug experience. As a prior independent
drug store owner, Mr. Heckman became acutely aware of the challenges that community
pharmacists encounter when dealing with Third Party Audits and Contracts. In addition to
store ownership, Mr. Heckman was an Executive Vice President with Perry Drug Stores from
1973 to 1987.
Acknowledged as an expert in his field, Mr. Heckman also serves as a litigation consultant in
court cases.
Educational Objectives
Presentation Title: Medicare Part D Audits – What You Need To Know Name of Presenter: H. Edward Heckman
1. To understand the background, rationale and ramifications of third party audits. 2. To review the impact of Medicare Part D and the increased level of risk for
community pharmacists. 3. Identify procedural changes for your specific practice setting to improve safety
and compliance in light of new Medicare Part D Fraud, Waste and Abuse government guidelines.
4. Training your employees to audit proof your pharmacy. 5. To understand your rights and responsibilities as a pharmacy provider in a third
party audit.
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Medicare Part D Audits –What You Need To Know
Edward Heckman, R.Ph.October 9th, 2006
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Audits
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Predictions
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Predictions
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Predictions
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Federal Laws
• HIPPA 96- Health Care Fraud Statute
• Medicare & Medicaid Patient Protection Act 97
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Federal Laws• False Claim Act 1986
–FCA—Civil Anti-Fraud Statute–Violation = Felony–Very Broad–CMPs—Treble Damages–Whistle Blower Provisions
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Federal Laws• FCA Whistle Blowers
–Qui Tam “A Person who sues for the King as well as himself.”
–Individuals w/Evidence of Fraud File Suit
–Whistle Blower = Relator–Awards up to 30% of Settlement
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Department of Justice FCA Qui Tam Cases 1987-2005
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1987 1987 –– 20052005
> $15 Billion Recovered> $15 Billion Recovered
64% Cases Qui Tam64% Cases Qui Tam
$13.0 Million Average Settlement$13.0 Million Average Settlement
$2.2 Million Whistle Blower $2.2 Million Whistle Blower AwardAward
3 to 15 Years Litigation3 to 15 Years Litigation
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Federal Laws• False Statements Act• Mail Fraud• Wire Fraud• Health Care Fraud and Abuse
Control Program HCFAC
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Federal Laws• Anti-Kick Back
–Criminal Penalties–Safe Harbors
• Deficit Reduction Act–Expand Medicaid Fraud–Induce States to pass FCAs
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The National Association of Medicaid The National Association of Medicaid Fraud Control Units (NAMFCU) works to Fraud Control Units (NAMFCU) works to foster the interstate cooperation on law foster the interstate cooperation on law
enforcement and federal issues; to enforcement and federal issues; to improve the quality of Medicaid fraud improve the quality of Medicaid fraud
investigations and prosecutions by all 48 investigations and prosecutions by all 48 MFCUsMFCUs that comprise the Association.that comprise the Association.
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• Government Prosecutions-Missouri Pharmacist Sentenced for Medicaid Fraud to 4 years in Prison and $1.1 million in Fines and Penalties.
• California Pharmacy Owner Indicted for $11 million in Insurance Fraud—24 Counts Mail Fraud, 3 Counts Money Laundering.
Prosecutions
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Ripe for ScamstersRx For Fraud?• “the work of guarding the
hen-house has been subcontracted, in large measure, to foxes. . . Private middlemen—chiefly HMOs and PBMs with assists from pharmaceutical companies”
Nathan VardiForbes 6/20/2005
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CMS Under Gun!
• The Finger Pointing has Started– Senators Grassley (D-IA), Barcus (R-MT)
Challenge CMS/MEDICs– OIG Critizes CMS F-W-A– OIG 2006-2007 Work Plan
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CMS Anti-Fraud Program
• CMS Anti—Fraud, Waste & Abuse Program• 3-Pronged Approach
– MEDICs—Medicare Rx Integrity ContractorsSpecialize in Fraud, Waste and Abuse
– Outreach—Law Enforcement, PDPs, Consumer GroupsProtect Consumers, Part D Enforce Rules
– Self-Protection—Basic Tips to Consumers
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MEDICs
• MEDICs Contractors– Delmarva Foundation for Medical Care, Inc.– EDS (Electronic Data Systems Corporation)
– IntegriGuard, LLC– Livanta, LLC– Maximus Federal Services, Inc.– NDC Health– Perot Systems Government Services, Inc.– SAIC (Science Applications International Corporation)
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MEDICs
• MEDICs Contractors Specialties– Analyze Data to ID Potential Fraud
• Investigate Potential Fraud– Enrollment, Eligibility, PDP Benefit
• Investigate Unusual Activities• Conduct Fraud Complaint Investigations• Develop & Refer Cases to Law
Enforcement
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Consumers
• Consumer Help– 800-MEDICARE– SHIP (State Health Insurance Assistance Program)
– Local Law Enforcement– CMS’s “Quick Facts about Medicare
Prescription Drug Coverage and Protecting Your Personal Information”
– www.medicare.gove/Publications/Pubs/pdf/11147.pdf
– FTC ID Theft Hotline: 877-438-4338
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Sponsor Responsibility
• F-W-A Sponsor Programs – Written Policies & Procedures– Compliance Officer & Committee– Effective Training & Education– Effective Lines of Communication– Well Publicized Disciplinary
Guidelines– Monitoring & Auditing– Prompt Responses to FWA
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Sponsor FWA Programs
• Incorrect 2° Payor• Phantom Rxs• Multi-Payor Rxs• Brand for Generic• NonCovered Drugs• Rx Reversals• DAW Codes• Splitting Rx Qty
• Drug Diversion• Shorting/IOUs• Bait & Switch• Rx Forgeries• Refill Errors• Illegal Schemes• TrOOP Scams• Negotiated Price
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Quality Assurance
• 42CFR 423.153(c)(1)
• Sponsors must establish Quality Assurance— Systems and Measures that – Reduce Medication Errors– Reduce Adverse Drug Interactions
• Download Responsibility to Provider
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Other Audit Issues
• Operation CYBERx– DEA Multi-faceted Drug Enforcement
Task Force– Detect Rouge Internet Pharmacies
• Are You Hooked on Fulfillment?
• PERM
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The Audit Reflex
If You Have Been Audited—Your Reaction“I’m not going to let that happen again!”
• Retrospective: Command & Control-or-
• Prospective: Coaching & Training“If we don’t change direction we might end up where we
are headed!”
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Audit-Proof Game Plan
• Put Together a Game-Plan for your Store Team
• Empower Your Store Team• Make Employees Key Elements
• BEST in Class PRACTICES
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Refill-Too-Soon
“Prescription Refilled Early & Pharmacy Uses Override Codes to Adjudicate”
TIP 1Use Correct Reason
Code & Document on Hard Copy Rx
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Exceeds Plan Limits
“Amount Dispensed Exceeds Plan Limits”• Occurs with U.D. Prescriptions and/or
Dispensing Pattern is a 2 or 3 month Cycle• Glaucoma Drops
PCS Chart, 15 or 20 Drops/ml• Inhalers
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Exceeds Plan Limits
TIP 2 WATCH: Insulin, Syringes, Inhalers, Glaucoma Drops
“U.D.” Prescriptions Require Definition
TIP 3
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Missing Prescription
“The Hard Copy Prescription . . . MIA”• Common Audit Category• Can be Resolved with
Post Audit Documentation
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Missing Prescription
TIP 4
TIP 5
QC Prescriptions Before Filing Away
Pre-Audit—Find, Organize all Hard Copy
Prescriptions
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Signature Log Missing
“The Signature Could Not be Found for the Prescription Dispensed.”
• Very Common Discrepancy• Purpose: Verify Delivery of Services• HIPAA Concerns
TIP 6Treat Sig Logs Same As Hard-Copy Rxs
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PAAS Sig Log
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DAW 1
“DAW Code Billed Different From Documentation on Rx”
• Former #1 Audit Recoupment Category• Documentation
– State Law– Pharmacy Contract
• No Second Chances
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DAW 1
TIP 7
TIP 8
Do Not Bill Patient DAWs as DAW 1
Study State Laws and Learn Exact DAW
Requirements
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Unauthorized Refill
“Refill exceeds number on the Hard Copy Prescription.”
• Authorization Updated on Computer ONLY=BAD!
TIP 9 Make a New Prescription
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Invalid Prescriber ID
• Dummy DEA Number– “DEA Numbers For Dummys”
• Hospital DEA Number• National Provider ID Numbers
Transmit Correct Dr. DEA/ID NumbersTIP 10
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Days Supply
“Prescription Transmitted with Incorrect Days Supply”
• 30–Day Supply Trap• Top 2nd or 3rd Discrepancy
TIP 11Fill & Bill as Written With Correct Days
Supply
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Dispensed Less Than Prescribed
• “Quantity Decrease Not Authorized”• A.k.a. Rx Splitting, Cut Quantity
Fill & Bill as Written or Make a New RxTIP 12
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Dispensed Greater Than Prescribed
“Pharmacy Dispenses a Quantity Greater Than Written.”
TIP 13 Fill & Bill as Written or Make a New Rx
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IOUs/Short Fills
• Potential Trouble• Qui Tam Suits • Policy & Procedure
TIP 14 Bill Claim When Rx Completed
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NDC Discrepancies
“NDC Billed is Different from the NDC Dispensed”
• Different Generic Manufacturer• Package- Size Billing
Key NDC from Package Actually DispensedTIP 15
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Patient Contests Receiving
“A Prescription is Billed by Pharmacy but Patient Doesn’t Acknowledge Receipt.”
• Mail Audits to Patients• Patient Affidavits.
Extra Care & Diligence with Sig Logs Saves $TIP 16
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Doctor Contests Prescribing
“A Prescription is dispensed but Doctor denies prescribing.”
• TPA Phone Calls to Doctors to Verify Rx• Confirming Letters from Doctors
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Other Discrepancies
• Incorrect Drug• Wrong Patient• Invalid Rx • Duplicate Prescription• No Diagnosis
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No Financial Consequence
“Claim has Imperfection that has NO Financial Impact”
• Not all Discrepancies Affect Payments, Co-pay’s, Etc.
• 10-Day Antibiotic Billed as 30-Days
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You Have RIGHTS
Plum Creek Pharmaceuticalsvs.Caremark Rx. Inc• September 2005
ArbitrationDallas, Tx
• $170,000 Award to Plum Creek
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“They aren’t coming to give money back”
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Call PAAS
• If Notified of an Audit:CALL PAAS 888-870-PAAS
• 13th Year7,400 AuditsOver $31.5 Million Saved
• TPA Tracking Down to Auditor
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YOUR Help is Here!
PAAS National®– MORE EXPERIENCE– MORE AUDITS– MORE SUCCESS
$269.00/YEAR
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Good Luck!
Thank You Very Much!
Ed Heckman888-870- PAAS (7227)
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Compounding Pharmacies
• Trick or Trap?• Vague Guidelines• Special Annuity Program• On-Line Adjudication = Contract?• Plum Creek v. Caremark• NCPDP v 5.1
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Long-Term Care
• Auditors Not Schooled in LTC Pharmacy• Special Medicare Part D Requirements• Retrospective v Prospective Claims
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Measure of Success?
• Your Audit Grade—The Measure of Success
“A Passing Grade is not a Game of Luck!”
Today's Prescriptions Are Next Year’s Audit
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What are the Big Guys Doing?
• Caremark• Medco Health• Express Scripts• WellPoint• Med Impact• Aetna
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• Very Aggressive• Comprehensive Audits• Interest in Compounds• Invoice Desk Audits• Glaucoma Drops
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• Most Aggressive PBM– More Audits– More Discrepancies– More Money
• Comprehensive Audits• How do you Spell Trouble—
C-O-M-P-O-U-N-D• Idiosyncrasies
Health Solutions
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• How do you Spell Trouble?
Health Solutions
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• 1.4 Compounds“Pharmacy will be reimbursed based on the cost .
. .each ingredient . . . Plus professional fee. . . Additional charges for . . . supplies, equipment and Labor are not eligible . . .”
Pharmacy Services Manual
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• Changes– Attempted to Nix Separate Compounding Pharmacies
• Pharmacy Standards of Practice
“Pharmacy shall not undermine Usual & Customary or compound pricing . . . (1) owning, operating or affiliating a non-participating Pharmacy . . .”
Pharmacy Services Manual
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• Idiosyncrasies– Metric Decimal Rounding– Package Size—Diabetic Strips– Insulin, Inhalers, Glaucoma Drops– Dispense Greater Than Rx– Exceed Plan Limits– Overqualified Dispensing– Many More
Health Solutions
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• Vastly Increased Audit Department and Activity
• Kept NPA Auditors• Glaucoma Drops• Invalid Prescriber ID• Non-Cooperation Results in Retribution
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• Subcontract with Pharm Dur• Tough Audits• Intimidate
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• DAW 1 Trigger• Methodology—Very Consistent• Extrapolation and Compliance
Percentage—the 5% Factor• DAW 1 Claims
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• Prudent Rx Out!• Audits In-House CPhT• Developing their Curve
Learning Assessment Questions
Presentation Title: Medicare Part D Audits – What You Need To Know Name of Presenter: H. Edward Heckman
T F 1. Medicare Part D will increase the number of audits of community pharmacies. T F 2. When audit-proofing you pharmacy, you should remember to include the
closets and bathrooms. T F 3. Competent prescription filling and billing procedures reduce the risk of recoupment and reimbursement penalties from audits. T F 4. Most Third-Party plans require pharmacies to charge the lower of the plan
formula or the pharmacy’s Usual & Customary price.
T F 5. Signature logs are the only method to verify the patient’s receipt of services.
Learning Assessment Answers
Presentation Title: Medicare Part D Audits – What You Need To Know Name of Presenter: H. Edward Heckman
Answers: 1. True 2. False 3. True 4. True 5. False