A joint federal and state investigation, stemming from a whistleblower complaint, has recently resolved resulting in a $10 million civil fine for a New York specialty pharmacy for submitting false information to obtain prior authorization for specialty medications, among other alleged fraudulent activity.
Some insurance companies require a prior authorization before covering certain medication. Some medications that require prior authorizations include:
- Specialty or high-cost medications
- Brand name medicines that have a generic available
- Medicines with high risk side effects
- Medications used for cosmetic purposes
- Medications that may not be medically necessary
- Medication not typically covered by an insurance plan
- High dosage prescriptions, among others
Pharmacies, specialty or otherwise, must take special care when completing the prior authorization process. Overall, the prior authorization process requires additional information from the pharmacy and often the prescribing physician before the medication is covered by the insurance company. The process is complex, time consuming, and often requires multiple correspondences between stakeholders. Any false information provided in the prior authorization process can lead to criminal or civil penalties under various state and federal laws.
A New York specialty pharmacy made two settlement agreements, one with the federal government through United States Attorney for the Southern District of New York and the second with the New York Attorney General. The pharmacy agreed to pay $9,534,577 to the Federal government, and $846,224 to the New York State Medicaid to settle fraudulent billing and civil fraud claims.
As part of the settlement agreement with the state of New York, the pharmacy admitted to fraudulent activity during the prior authorization process. This included pharmacy staff falsely stating they were calling from the prescribing physician’s office and submitting fraudulent clinical information based on their understanding of the prior authorization criteria for the particular drug. The Pharmacy should have obtained patients’ actual clinical information from the prescribing physicians and conveyed that information to the State. The pharmacy admitted to failing to adequately oversee and train staff responsible for the prior authorization process, inadequate internal billing and auditing procedures/processes to ensure claims were reversed when medications went unfilled or returned to the pharmacy.
Overall, pharmacies must take special care when completing the prior authorization process. Failure to provide truthful and accurate information can expose pharmacies to not only termination by PBMs, but also severe civil and criminal penalties. Further, pharmacies are liable for the actions of their employees and must provide adequate training to ensure proper procedures are in place and being followed by all staff. As a law firm that focuses on services to specialty pharmacies and other healthcare providers, Frier Levitt can help assess your prior authorization practices, training and standard operating procedures to ensure they are in full compliance with all Medicare and Medicaid laws, and implement best practices to avoid the risk of whistleblowers and federal investigation. Contact us to speak to an attorney.
