Pharmacy Benefit Managers (“PBMs”) act as the intermediary between insurance companies and pharmacies. PBMs contract with insurance companies on one hand and with pharmacies on the other, connecting the two so that an insured’s pharmaceutical claims may be processed at the rates set forth in the agreement between the PBM and supplying pharmacy. PBMs are paid on both sides of this transaction – by the insurance company for managing their insureds’ benefits – and by the pharmacy for processing the claims that are submitted. Processing claims for private, state, and federally funded insurance programs, PBMs play an integral role in vast majority of prescription drugs dispensed in the United States.
Part of a PBMs function is to audit a pharmacy’s claims to ensure that the claims submitted are in compliance with the PBM and insurance companies’ requirements.
Typical audits come primarily in two forms (1) desktop audit; and (2) field/on-site audit. A selected pharmacy usually will receive a letter or fax from the PBM informing an audit will be taking place.
The Drug Enforcement Administration (DEA) is responsible for the monitoring of all manufacturing and distribution of controlled substances in the country. Pharmacies, medical providers (i.e., who either administer, prescribe or dispense), and distributors and manufacturers of controlled substances are required to register with the DEA. The DEA’s Diversion Control Division is tasked with reviewing applications of potential registrants and monitoring existing registrants through audits and investigations. However, the question on many registrants’ minds is what happens if violations or deficiencies are discovered? The answer is it depends. The consequences will vary based on the level of noncompliance. Thus, it is essential to be familiar with the laws that apply and most importantly, have a full understanding of the administrative process in order to act quickly to minimize potential adverse action if noncompliance is found.
A Jacksonville compounding pharmacy has agreed to pay $3.775 million to settle false claims allegations that it defrauded TRICARE. MediMix Specialty Pharmacy billed TRICARE for compounding pain prescriptions that came from an improper referral source. MediMix’s top-prescriber over a period of five years was also married to one of MediMix’s senior vice presidents. MediMix itself was one of TRICARE’s top billers for compounded pain medications.
Since the federal law limiting physician self-referrals, 42 U.S.C. 1395nn (more commonly called the “Stark law”) does not apply to TRICARE, the government proceeded under a law entitled Administrative Remedies for Fraud, Abuse, and Conflict of Interest, 32 C.F.R. 199.9, which is applicable for claims submitted to CHAMPUS and TRICARE. This law is much more broad than the Stark law. While the Stark law contains specific exceptions, this law does not.
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.