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Joshua Lichtblau Jennifer Krusa, RPh, CHC Daniel Meier, JD, CHC

Director, Medicaid Fraud Division Chief Compliance Officer Partner

New Jersey Office of State Comptroller PharmScript Benesch Law

Enforcement and Compliancefor Pharmacies

Health Care Compliance Association2020 Healthcare Enforcement Compliance Conference

Enforcement and Compliance for

PharmaciesPresented by Joshua Lichtblau

Director, Medicaid Fraud DivisionNew Jersey Office of the State Comptroller

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Goals for today

To help you better understand:

• NJ Medicaid Overview/Regulatory Framework• Medicaid Documentation Requirements• MFD’s Program Integrity Role • Pharmacy Investigations – MFD Process • Medicaid Pharmacy – FWA Obligations • Consequences for Non-Compliance

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What is Medicaid?

Medicaid is a joint Federal and State program that helps pay medical costs if individuals have limited income and resources or meet other requirements.

Medicaid is a voluntary program for providers. Providers who participate must know, accept and abide by Medicaid rules and policies.

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Compliance

Guidelines

Regulations

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New Jersey Medicaid Program – High Level

1.8 million beneficiaries $15+ billion annual spend 5 Managed Care Organizations (MCOs) cover 96% of

the beneficiaries Program administered by DMAHS, Division within

DHS OSC/MFD oversees program integrity, MCOs oversee

own spend through audits/investigations5

Administration and Oversight

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Department of Law & Public Safety

Division of Criminal Justice

Office of the Insurance Fraud Prosecutor

Medicaid Fraud Control Unit (MFCU)

Department of Human Services

Division of Medical Assistance and Health

Services (DMAHS)

Managed Care Organizations

Special Investigations Unit

Office of the State Comptroller

Medicaid Fraud Division

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Medicaid Program Oversight• The state contracts with the following MCOs:

• Aetna Better Health of New Jersey• Amerigroup New Jersey, Inc.• Horizon NJ Health• UnitedHealthcare Community Plan• WellCare Health Plans of NJ, Inc.

• DMAHS oversees the day-to-day operations of Medicaid • MFD oversees program integrity, including MCO efforts to

combat fraud, waste and abuse (FWA)7

Medicaid Program – Pharmacy Expenditures Approximately 2250+ in-state pharmacies and 1025 out of

state pharmacies with active licenses in NJ (as of 9/2020) Pharmacy expenditures – approx. $1.7 billion (2019) Billing process – (a) Encounter claims: pharmacy submits

claim = PBM pays = MCO submits payment info to DXC; (b) Fee For Service (FFS): pharmacy submits claim = DXC pays on behalf of DMAHS

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Claim Submission/Documentation

• It is the provider’s responsibility to ensure that claims submitted for payment reflect the actual service/product that was provided.

• It is incumbent upon providers to maintain accurate records that support all Medicaid claims.

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Provider Responsibilities

Are employees properly licensed?

Are any employees excluded by any state or the federal government?

Is there a registered pharmacist on duty during all working hours?

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Sources of Cases

Law enforcement and MCOs

Hotline

Data analytics – JSURS, MFD investigators, DMU referrals

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MFD Expectations:

Provider/counsel will act in good faith

Good faith includes o Responding to information requests in a timely mannero Providing accurate information in response to requesto Providing comprehensive responses

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Our Visit

MFD may:• Come unannounced • Interview the RPIC/Owner and any other

personnel • Provide document preservation letter• Request wholesaler list, prescription records

and signature logs if warranted• Review timely reversal of claims for

prescriptions not picked up13

MFD Inventory Protocol

• MFD Investigator analyzes claims reimbursed for select medications

• MFD requests wholesale invoices directly from the wholesalers for all purchases and returns made during investigation period

• The wholesale invoices are used to establish a beginning inventory

• MFD reconciles the claims data to the wholesale invoices to determine if an inventory shortage occurred during the investigation period

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Hard Copy Wholesale Invoice

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Inventory Reconciliation Detail Report –Completed Example

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Clm ICN IdnClm

Source Code

Clm Drug Label Name

Clm Service

Date

Clm Svc

Units

Drug Form Desc

Clm Payment Amount

Wholesaler Name

Drug Label NameInvoice

Date

Inventory Analysis

Pack SizeQty

Inventory Purchased

Inventory Change

Inventory Balance

TOBRADEX EYE OINTMENT12/06/13 McKesson TOBRADEX EYE OINTMENT12/09/13 4 1 4 4 4

201334150013097 FFS TOBRADEX EYE OINTMENT12/07/13 4 GM (SOLIDS)$166.29 (4) 0

201007250018920 FFS TRUVADA 200 MG-300 MG TABLET03/13/10 30 EACH (TABLETS)$981.99 (30) (30)

TRUVADA 200 MG-300 MG TABLET03/14/10 McKesson TRUVADA 200 MG-300 MG TABLET03/17/10 30 1 30 30 30


201009650032949 FFS TRUVADA 200 MG-300 MG TABLET04/06/10 30 EACH (TABLETS)$1,049.49 (30) 30








201015350039161 FFS TRUVADA 200 MG-300 MG TABLET06/02/10 30 EACH (TABLETS)$1,049.49 (30) (30)






201018750316241 FFS TRUVADA 200 MG-300 MG TABLET07/06/10 30 EACH (TABLETS)$989.73 (30) 0



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Compliance

• Ensure that a claim is submitted for the actual NDC of the product dispensed

• Quantity and days supply must reflect the prescriber’s order

• Bill Medicaid as payer of last resort• Due diligence

• Keep all prescription files/signature logs organized and complete

• Reverse payment for prescriptions not picked up• DOCUMENT!

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Investigation – Next Steps

MFD completes investigation and provides Notice of Intent (NOI) to recover

Provider has opportunity to submit information/rebuttal

MFD considers provider submission and issues Notice of Claim (NOC)/Certificate of Debt (COD)

At same time as NOC/COD – MFD initiates withhold of Medicaid payments

Provider can settle with MFD through Settlement Agreement

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Possible Outcomes

• Pay amount identified in NOI• Resolve through Settlement Agreement

• Recovery• Corrective Action Plan• Possible penalty

• Litigate in Office of Administrative Law• Refer for criminal investigation – MFCU• Refer to NJ Board of Pharmacy

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Post Settlement Compliance• Address areas identified through investigation• Improve new employee screening/background checks, and

regular re-screening• Institute training; develop P & Ps• Implement improved inventory controls• Retain a monitor who is required to provide MFD with

reports on required issues• MFD may re-investigate at a later date depending on the

significance of the initial findings• Second findings more likely to result in penalties/possible

exclusion action

• Document, document, document!20

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Enforcement and Compliance for Pharmacies: How To Prepare Now

PRESENTATION PREPARED FOR:

Healthcare Enforcement Compliance Conference

November 16 -18, 2020

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The picture can't be displayed. Presenter Views for Education Purposes Only

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Any views or advice offered in thispresentation are those of its authorsand should not be construed as theposition of PharmScript.

This presentation is provided withthe understanding that thepresenter is not engaged in legal orother professional services.

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Benjamin Franklin famously advised fire-threatened Philadelphians in 1736 that

“An ounce of prevention is worth a pound of cure.” Clearly, preventing fires is better than

fighting them.

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Best Practice Suggestions

KNOW

when an audit occurs

DESIGNATE

response team

INFORM

legal counsel

CONTACT

auditor

ORGANIZE

documents

REVIEW

documents prior to submission

IDENTIFY

process deficiencies

DEVELOP

corrective action plans

NOTIFY

stakeholders of

audit results

SUBMIT

audit response timely

AUDIT/MONITOR corrective action plans

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know

• Plan ahead during provider application process.

• Centralize your incoming methods/pathways for receiving audit communications.

• Train your pharmacy managers/Pharmacists-in-Charge to prioritize and escalate audit requests.

How will your organization know when an audit is scheduled or about to happen.

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designate

• Assign knowledgeable subject matter expert to lead response effort.

• Allocate resources to assist in response effort.

• Audit lead must track/log all audit requests, results, outcomes, etc.

• Past performance dictates future outcomes.

Who in your organization will lead the audit response effort.

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inform• Inform legal counsel of audit request.

• Discuss audit response plan.

• Determine advice needed if audit request is unclear.

• Involve counsel in corrective action planning.

Involve and engage legal counsel.

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contact

• Assess response due date for realistic timely completion.

• Acknowledge receipt of audit.

• Negotiate an extension if needed.

• Determine/discuss logistics for providing audit response documents to auditor.

• Demonstrate partnership/positive attitude.

• Provide company point-of-contact.

• Document all communications with auditor.Once an audit request is received, contact auditor to acknowledge receipt and request extension if needed.

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organize

• Compile documents and records in the same sequence/order of items requested in the audit.

• Use the same naming convention written in the audit request or by the auditor.

• Prepare and label documents in easily understood format when compared to the audit’s request.

• For on-site audits, schedule appropriate lead to participate and set aside a separate room/conference room.

Compile documents for audit submission in an easy-to-follow format.

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review

• Review final packet of documents prepared for submission.

• Confirm packet is organized and easy-to-follow.

• Perform mock audit to predict auditor’s probable findings.

• Make copies (paper or electronic) of all documents to be submitted, including cover letter.

Conduct assessment of final documents prepared for submission.

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identify and

develop

• Own your deficiencies.

• Determine scope of deficiencies (isolated, pattern, widespread).

• Develop corrective action plans now and implement.

• Involve legal counsel to assist in well written corrective action plans.

Identify deficiencies and develop proactive corrective action plans.

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notify• Determine stakeholders requiring awareness.

Most likely will be corrective action plan owners/sponsors.

• Provide metrics and scope of audit deficiencies.

• Communicate identified problems (deficiencies) and recommend solutions (corrective action plans).

Notify stakeholders of audit results.

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submit • Be on time, better yet, be early.

• If you need more time, contact the auditor in advance.

Timely submit audit response, preferably before deadline.

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audit and monitor

• Effective compliance programs develop auditing and monitoring strategies.

• Engage internal audit team.

• Do not become an ongoing target for repeat audits.

Maintain ongoing auditing and monitoring of corrective action plans.

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THANK YOU

Jennifer Krusa, RPh, CHCChief Compliance Officer

[email protected]

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www.beneschlaw.com

Daniel M. Meier, Esq.Benesch, Friedlander, Coplan & Aronoff LLP

Enforcement and Compliance for Pharmacies Part 3: Resolution – Counsel’s Role

Health Care Compliance Association2020 Healthcare Enforcement Compliance Conference

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Goals• Understanding the roles of the Compliance

Officer (“CO”) and Legal Counsel• Understand how to maximize the

relationship between the CO and Legal Counsel

• Know when to handle matters internally and when to seek outside help (counsel / consultant)

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Roles – Compliance Officer• Compliance Officer - Duties

– Develop and implement the elements of an effective compliance program– Generate policies and programs related to compliance issues– Develop and implement education and training programs– Conduct internal audits and compliance reviews– Report on the progress of the compliance program– Investigate and develop CAPs– Coordinate with HR– Assess the effectiveness of the compliance program and revise as necessary

• Sources for Compliance Officer Responsibilities– OIG Compliance Program Guidance – Federal Sentencing Guidelines, §8B2.1(b)(2)(C)– Practical Guidance for Health Care Governing Boards on Compliance

Oversight, 2015

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Roles – Legal Counsel• Legal Responsibilities

– Interpret rules and law– Respond to regulatory inquiries– Advise organization

• Compliance Functions– Privileged communications

• Sources– “The legal function advises the organization on the legal and regulatory risks

of its business strategies, providing advice and counsel to management and the Board about relevant laws and regulations that govern, relate to, or impact the organization. The function also defends the organization in legal proceedings and initiates legal proceedings against other parties if such action is warranted.”

• Practical Guidance for Health Care Governing Boards on Compliance Oversight, 2015

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• Factors to consider to determine relationship• Compliance Officer as General Counsel?• Collaboration, not Cohabitation

– Examples• Policies• Facts• Analysis

• Cost considerations– Acceptable risk levels – not all risks are equal– Legally sufficient versus best practices

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Relationship Between Legal & Compliance

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• Secure Attorney-Client Privilege– Internal Investigation

• Upjohn Co. v. United States, 449 U.S. 383 (1981)• In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014)

– Confidential information between company and counsel– Legal advice versus business advice

• Anaya v. CBS Broad., Inc., 251 F.R.D. 645 (D.N.M. 2007)• United States ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, 2012 WL 5415108 (M.D.

Fla. Nov. 6, 2012)• TVT Records v. Island Def Jam Music Group, 214 F.R.D 143 (S.D.N.Y. 2003) • Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 220 F. Supp. 2d 283 (S.D.N.Y. 2002)

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When to Bring in an Attorney?

– In-house legal versus external legal– Compliance matters to be covered by A-C privilege– Proper protections to ensure A-C privilege– U.S. ex rel. Gale v. Omnicare, Inc., No. 1:10–CV–00127 (N.D. Ohio Oct. 4,

2013) • Finding that business communications made in business meetings when an

attorney is present are not protected from disclosure• Holding that the A-C privilege did not apply to documents drafted by a compliance

officer just because general counsel and other attorneys may have also received these documents

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– Prepared in Anticipation of Litigation• U.S. v. Adlman, 134 F.3d 1194 (2d Cir. 1998)

– Test: “in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.”

– Conclusion: attorney would not have prepared this analysis without the looming threat of possible litigation in the event that the proposed transaction was consummated.

– If documents “would have been created in essentially similar form irrespective of litigation,” it cannot be said that they meet the “because of” standard.

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Hypotheticals: (1) Customer Complaint(2) Regulatory Inquiry• Who gets involved?• Roles

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Hypothetical: Customer Complaint• Who gets involved?

– Compliance response team – In-house counsel– General counsel– Consultant

• Roles– Fact gathering– Legal analysis– Response to complaint– Reporting obligations– Trending

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Hypothetical: Regulatory Inquiry• Considerations:

– Was inquiry routine as part of business process or from enforcement agency?– Is the issue serious?– Involve novel interpretations of the law, rules or policies?

• Who gets involved?– Compliance

• Routine business inquiry– Legal

• Provide buffer for compliance• Maintain privilege• Evaluate risk• Report to firm management

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Don’t pretend you don’t have a problem if you do…

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If you become the target of an investigation…

• The Government will often initiate an investigation by issuing a document request.

• It could take the form of an audit, a subpoena, or a civil investigative demand.

• Know how you would (should) respond to any such request.

• They also might pay you (or one of your people) a personal visit…

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Launching an Investigation

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So what do I do when they come to interview me?!?!?!!?It could take the form of an audit, a subpoena, or a civil investigative demand.

There really is no polite way to say this…

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• Have appropriate protocols in place…• Coordinate with legal counsel ASAP• Remember, the government will have spent months gathering evidence

about your billing practices before they come knocking• Make sure your key people know how to respond• Whatever ‘first story’ you give is your story – or there are consequences to

changing it

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Don’t make the mistakes that create their own problems…Don’t lie to government investigators.

Don’t destroy or alter documents.

Don’t try to figure it out by yourself.

They know more than you think… don’t see what you can get away with.

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• Don’t make the Government’s job easy• Have policies, implement them, check for compliance and effectiveness;• Keep detailed, accurate patient records;• If it seems too good to be true...• Stay advised of trends (both good and bad).

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• The easiest way to avoid accusations of healthcare fraud is to keep careful watch of relevant laws, monitor your billing practices, and take immediate corrective action when errors are discovered during routine audits

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Oh… and don’t commit fraud!

What are the options after issues are identified?• Payback to MAC• OIG Self-Disclosure Protocol• SRDP Self-Disclosure Protocol

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Next Steps

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The path of least resistance

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Payback to MAC

• OIG Provider Self Disclosure Protocol – Procedure for health care providers to voluntarily identify, disclose, and resolve

instances of potential fraud involving Federal health care programs– Avoid cost and disruption associated with a government investigation and litigation

• Self disclosure must:– Specify the laws that were potentially violated– Waive any statute of limitations defense – Ensure that corrective actions are in place and misconduct has ceased – Be made within the later of 60 days after any overpayment is identified or the date

the next applicable cost report is due

• Timeline for investigation completion – Disclosing party must complete investigation within 90 days of the date of its initial

disclosure submission

OIG Self-Disclosure Protocol

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• Self disclosure protocol provides detailed instructions for disclosures related to – Erroneous billing– Excluded individuals– Anti-kickback and Stark violations

• Sets a minimum settlement for non-Anti-Kickback Statute violations

• Coordination between agencies pursuing enforcement action (CMS, DOJ, OIG)

• Online submission tool available at the OIG website

OIG Self-Disclosure Protocol

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• Cooperation among the OIG & DOJ • CMS only accepts violations or potential violations of self-referral law. • If additional violations or potential violations of other criminal, civil, and

administrative laws send to OIG. • Cannot submit disclosure concurrently under SRDP and OIG’s Self-

Disclosure Protocol. • Coordination with Law Enforcement. • Corporate Integrity Agreements. • http://www.cms.gov/Medicare/Fraud-and-

Abuse/PhysicianSelfReferral/Self_Referral_Disclosure_Protocol.html

Self-Referral Disclosure Protocol (SRDP)

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Factors considered in compromising overpayments • Nature and extent of the improper or illegal practice • Timeliness of the self-disclosure • Cooperation in providing additional information • Litigation risk to CMS • Ability to pay

Self-Referral Disclosure Protocol (SRDP)

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Disclosure Protocols OIG Provider Self Disclosure Protocol (SDP). The SDPprovides guidance on how to investigate conduct,quantify damages, and report the conduct to the OIG toresolve the potential liability under the OIG’s civilmonetary penalty authorities. The SDP is not availablefor disclosure of an arrangement that involves onlyliability under the Stark Law, without accompanyingpotential liability under the AKS for the samearrangement.

Use of the SDP will suspend the 60-day time periodpursuant to which reporting and repayment of anoverpayment must be made to avoid FCA liability.

CMS Self-Referral Disclosure Protocol (SRDP). The SRDP isintended to facilitate the resolution of only matters that, in thedisclosing party’s reasonable assessment, are actually orpotential violations of the Stark Law.

Use of the SRDP will suspend the 60-day time periodpursuant to which reporting and repayment of anoverpayment must be made to avoid FCA liability.

OIG Self-Disclosure Protocol vs Self-Referral Disclosure Protocol

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Daniel Meier, JC, CHCPartner

Benesch, Friedlander Coplan & Aronoff LLP

[email protected]

411 Hackensack Avenue, 3rd FloorHackensack, NJ 07601-6323

and

39 Broadway, 25th FloorNew York, NY 10006

www.beneschlaw.com

Questions or Comments

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Thank you!New Jersey Office of State Comptroller

Joshua LichtblauDirector, Medicaid Fraud Division

[email protected]

PharmScriptJennifer Krusa, RPh, CHC

Chief Compliance [email protected]

732-853-8423

Benesch, Friedlander Coplan & Aronoff LLPDaniel Meier, JD, CHC

[email protected]

201-488-1013

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