Practical Tips You Should Follow When Submitting A Medicaid Application

As the national health care system evolves, controlling costs and abuses takes on greater significance in the federal health programs such as Medicare and Medicaid. The federal Department of Health and Human Services (DHHS) and its State counterparts have increasingly scrutinized Pharmacy applications seeking to provide (or continue to provide) prescription drug benefits to Medicaid recipients. This article addresses some common pitfalls.

A pharmacy does not have a legal right to participate in the Medicaid program. Moreover, because the Medicaid program is designed and operated for the benefit of the recipients of medical assistance, and not for the benefit of providers, courts throughout the United States have strictly construed statutes and regulations governing the Medicaid application process against providers. You must be diligent in ensuring compliance with Medicaid regulations, otherwise you risk having your pharmacy’s Medicaid provider number revoked.

In order to give your pharmacy the best chance of obtaining and maintaining its Medicaid provider number, two basic rules should be followed. First, be sure to err on the side of complete and honest disclosure in your Medicaid provider application/renewal application (the “Disclosure Rule). Second, be diligent in confirming and periodically re-confirming that your pharmacy is not associating with a person or entity that has been excluded from participation in any federal health program such as Medicaid or Medicare (“Non-Association Rule”).

Regarding the Disclosure Rule, federal and state regulations require that a pharmacy make numerous disclosures regarding not only its business operations, but also the backgrounds of any of its owners, employees and agents. If complete and honest disclosures are not made in a Medicaid application, there is a substantial risk that your pharmacy’s application will be denied. By way of example, the New Jersey Medicaid provider application requires all applicants to disclose whether any persons (e.g., owners, officers, employees, etc.) identified in the application have “ever been the subject of any past or pending license suspension, revocation or other adverse licensure action in this State or any other jurisdiction.” This question is deliberately broad and requires the applicant to disclose all such adverse licensure actions regardless of whether it was 15 years ago or yesterday. Thus, it is very important that a pharmacy investigate and completely disclose any such adverse licensure action.

Regarding the Non-Association Rule, if your pharmacy employs or does business with a person or entity that has been excluded from participation in any federal health program, your Medicaid application will be denied, or to the extent you have already obtained a provider number, it will be revoked. Since the list of excluded persons and entities changes on a regular basis, your pharmacy must be diligent in periodically confirming that it is not associating with an excluded person/entity. One way to carry out your diligence with respect to employees is to perform a background check on the employee and obtain an affidavit from the employee confirming that he/she is not an excluded person. In addition, the federal and state governments maintain online lists of excluded persons which you should periodically check to ensure that, for example, your pharmacy is not employing an excluded person or the prescriptions of an excluded physician.