Health law is the federal, state, and local law, rules, regulations and other jurisprudence among providers, payers and vendors to the healthcare industry and its patient and delivery of health care services; all with an emphasis on operations, regulatory and transactional legal issues.
Today’s Topic: Did you know the DOJ never tires of chasing the bad guys?
If a pharmacy is going to engage in nefarious activities, it should expect to get caught. Fraud in these cases is generally easy to prove. Simply verifying inventory, orders and dispensing records yields incredible data that when combined with comparative data from peer pharmacies can be used by law enforcement to establish that fraud has been committed.
Latest Enforcement Activity
On April 13, 2022, the U.S. Department of Justice (DOJ) announced a 78-month prison sentence imposed against a 37-year-old owner/operator of several pharmacies in New York, Aleah Mohammed (Mohammed). The sentence was as a result of guilty plea entered by Mohammed in April 2021 for charges of mail fraud, health care fraud and conspiracy to commit health care fraud. As part of her guilty plea, Mohammed agreed to forfeit $5.1 million and pay $6.5 in restitution.
During the course of her criminal conduct, Mohammed engaged in multiple schemes to defraud health care programs, including obtaining more than $6.5 million from Medicare Part D Plans and Medicaid drug plans. Over a five-year period, Mohammed submitted fraudulent claims to Medicare and Medicaid for prescription drugs that were:
not prescribed as claimed;
not medically necessary;
dispensed during a time when one or more of the pharmacies she operated was no longer registered with the State of New York; and
often for expensive prescription drugs to treat HIV.
Adding to the mounting evidence against her, Mohammed led a lavish lifestyle and purchased luxury items such a Porsche and jewelry.
It seems that criminals never learn. They think that they are smarter than law enforcement and will never get caught. But rarely do those criminals win in the end. It is basic accounting and law enforcement knows how to do that. Law enforcement mines each pharmacy’s data and looks for outlier information as compared to peer pharmacies as well as inventory data. So what information did the DOJ have at its disposal in this case?
On hand inventory. As with any payer audit, the payer (and law enforcement) can obtain information concerning inventory on hand. If the pharmacy never had the inventory, it could not sell the drug.
Drug purchasing records. Again, unless a pharmacy had the drug in inventory or purchased the drug through one of its wholesalers, it is hard for the pharmacy to defend against fraud charges when it is filing a claim for drugs never in its inventory.
Dispensing records. Dispensing records also reveal information essential to determining what was in inventory, what was purchased and what was dispensed.
Comparative data concerning dispensing of high-cost drugs as a proportion of other drugs sold.
Comparative data looking at peer pharmacies for dispensing trends.
Collectively, the data and these records make it easy for law enforcement to identify and prosecute fraudulent claims. Even so, criminals seemingly are undeterred, and schemes like this one are repeated time and again.
Simply put, crime does not pay. It does not matter whether it is in the pharmacy industry or elsewhere, when government funds are involved, law enforcement will surely be looking for wrongdoers. This probably is not the last case of its kind this year, so expect to see more news of pharmacies/pharmacists behaving badly.
In my last couple of articles, I’ve focused on the controls necessary to safely operate a pharmacy and dispense appropriate prescribed medications, including controlled substances. And those of you who heed that kind of advice are likely to avoid the unwanted attention of law enforcement. However, for those who continue to think they can operate with impunity, heads’ up: the war against opioids in the U.S. is ongoing and enforcement activities are not slowing down. Below is an article about this recent case out of Texas and some lessons we can all take away from what was reported.
In this most recent case, a federal jury in Texas convicted a Texas pharmacy owner (Carr) on March 7 of one count of conspiracy to unlawfully distribute and dispense controlled substances, four counts of unlawfully distributing and dispensing controlled substances, one count of conspiracy to launder money, and two counts of engaging in transactions in property obtained from the illicit activity. Carr now faces up to 140 years in prison, among other consequences. read more
Many DME providers have had tremendous hurdles to overcome this year, from the implementation of a new round of Medicare’s Competitive Bidding Program through continued impacts of COVID-19. Mergers and acquisitions are through the roof as a result, as are continued compliance concerns that plague the industry.
Let’s dive into some of the major DME related matters & issues that have come across my desk this year, and what to be on the lookout for in the next.
Competitive Bidding Impacts
After much uncertainty about what DME products would actually be included upon its implementation, Round 2021 of Medicare’s Competitive Bidding Program (“CBP”) kicked off at the beginning of this year.
With off-the-shelf knee and lumbar braces (HCPCS Code OR03) included in Round 2021 of the CBP – and thus ability to supply such devices to beneficiaries in competitive bid areas restricted to bid-winners – non bid-winning DME providers have been scrambling to find new revenue streams to fill the void. Unfortunately, many are doing so in a non-compliant manner. read more
Telemedicine pharmacy arrangements continue to be of significant interest to fraud enforcement. A 2018 case in which four individuals and seven companies were indicted ended in a month-long jury trial of one of the individuals, a Florida pharmacy owner. The federal jury trial in the billion-dollar telehealth pharmacy fraud scheme resulted in conviction on 22 counts of mail fraud, conspiracy to commit health care fraud and introduction of misbranded drugs into interstate commerce. Sentencing in the case is set for May of 2022. Other co-conspirators entered plea agreements along the way, pleading guilty to various charges including felony conspiracy to commit health care fraud, felony misbranding, conspiracy to commit wire fraud, and fraudulent telemarketing of dietary supplements, skin creams and testosterone. Many of these are still awaiting sentencing, also expected to be scheduled sometime in 2022.
The scheme involved several individuals, compounding pharmacies and telemarketers engaged in a conspiracy to commit health care fraud, mail fraud and introducing misbranded drugs into interstate commerce. Peter Bolos, along with two other co-conspirators, owned and operated Synergy Pharmacy in Palm Harbor, Florida. Working with HealthRight, a telemarketer, the co-conspirators generated prescriptions for drugs such as pain creams, scar creams, and vitamins. Using the HealthRight telemarketing platform, they would call consumers and deceive them into providing their personal insurance information and accept the drugs. HealthRight then communicated the prescription requests to physicians who authorized the prescriptions without ever interacting with the patients, and paid those physicians for issuance of the prescriptions. Through this scheme, the co-conspirators were able to solicitate insurance coverage information from consumers across the county for prescription pain creams, fraudulently obtain prescriptions, mark up the prices of the drugs and bill private insurance carriers. read more
Compounding pharmacies are more and more frequently being called upon to provide specific versions of drugs that are not commercially available.
According to the Alliance for Pharmacy Compounding (formerly International Academy of Compounding Pharmacists), there are about 56,000 community pharmacies in the country and only about 7,500 offer compounding services.
Because they are more frequently relied upon by patients, it is essential that they remain up-to-date on regulatory law.
What Is a Compounding Pharmacy?
A compounding pharmacy creates unique versions of drugs for patients who cannot take the commercially produced option. It can be lifesaving for patients, but strict regulations must be followed.
What Do Compounding Pharmacies Do?
A compounding pharmacy can create a liquid version of a drug that only comes in pill form, create a child’s dose from a medication that is commercially made for adults, or reformulate some prescriptions to remove a substance that may cause an allergic reaction in a patient.
Essentially, a compounding pharmacy can help patients access medications they need but are not able to take in their commercial forms.
What Types of Pharmacies Will Perform Sterile Compounding?
Any pharmacy that performs compounding must do so in a safe and sterile environment. If drugs are not handled safely, the medications can become contaminated and potentially cause serious issues in patients.
Who Regulates Compounding Pharmacies?
There are three agencies responsible for regulating compounding pharmacies: the Food and Drug Administration (FDA), a state board of pharmacy, and the Drug Enforcement Administration (DEA). The FDA regulates the ingredients used to make the drugs; state boards of pharmacy ensure that the company is following state regulations for pharmacy practice; and the DEA makes sure that pharmacies manage controlled substances properly.
If there are any gaps in compounding pharmacy processes and procedures, it could mean huge legal complications, including shutdowns and fines.
Making sure that your pharmacy or the pharmacy your business works with is in compliance is a key part of legal protection in Florida. Contact Florida Healthcare Law Firm today to set up a consultation to get started.
Yet again, the fraud enforcement arm of the DOJ strikes out against fraud in the pharmacy industry. Two new cases shed continuing light on the ongoing fraud.
Announced last week by the DOJ, the owner/operator of five pharmacies in New York pled guilty to charges stemming from a scheme to defraud Medicare and Medicaid by billing for prescription drugs that were not dispensed, not prescribed, not medically necessary or dispensed when the pharmacy had no authority to dispense the prescription drugs. This blatant disregard for the law was magnified when the owner/operator used the ill-gotten gains of her scheme to purchase luxury items like cars and jewelry. Nothing screams “come and get me” like openly flaunting the money taken from the government. read more
In today’s practices there are many circumstances that call for the discarding of unused portion of drugs, and because of this drug waste can be a big-money issue for many practices. A perfect example is Botox which must be used within five hours of reconstitution, and if it is not used within that timeframe the only option a provider has is to discard the unused supply. What many providers may not be aware of though is that money can be recouped for drugs that have been discarded. The aim of this article is to educate providers that when applicable they may report drug waste in addition to the drug and its administration for Medicare Part B claim reimbursement.
How to Properly Report
For a provider to recoup and report the drug waste they must report the administered drug using the appropriate HCPCS Level II supply code, and the correct number of units in box24D of the CMS-1500 form. As a second line-item providers will want to enter all of the wasted units. It is very important to ensure that the provider documentation verifies the exact dosage of the drug injected, and the exact amount of and any reason for waste. Be aware If the provider did not assume the cost of the drug or administer the drug to the patient they may not bill for the unused portion.
In addition to listing the wasted units as a second line-item certain local contractors may require you to use the modifier JW Drug amount discarded/not administered to any patient to identify an unused drug from single-use vials or single-use packages that are appropriately discarded. Be aware that is inappropriate to use the modifier JW with an unlisted drug code. Therefore, it is imperative to be aware of the local contractor requirements, and appropriate drug codes. read more
Healthcare fraud continues to be a significant priority for the U.S. Department of Justice. On February 24, 2021, the DOJ’s Criminal Division Fraud Section published its annual “Fraud Section Year in Review 2020.” While the Fraud Section has three separate enforcement units, the Health Care Fraud (HCF) Unit is responsible for all enforcement activities in the health care industry. The Unit’s focus is to protect against fraud and abuse in federal health care programs and recoup illicit gains.
During 2020, the HCF Unit operated 15 strike forces in 24 federal judicial districts throughout the U.S. The efforts of these strike forces led to charges against 167 individuals alleging $3.77 billion in fraudulent charges for health care paid for by federal and state programs. This should cause any health care provider to stand up and take notice. And enforcement in the health care industry is not likely to go away soon with so many schemes ripe for the government’s picking and generating recoupment on behalf of the federal health care programs.
Here are couple of the latest schemes that have landed pharmacies, pharmacists and other health care professionals squarely in the crosshairs of federal enforcement:
This individual spearheaded a scheme involving kickbacks to marketers and prescribers to defraud TRICARE and other healthcare programs by submitting claims for unnecessary compounded medications, which also involved routine waiver of patient financial responsibility. read more