It is a challenging task to open and sustain an independent, retail pharmacy business, particularly given the current landscape. However, even more challenging, is establishing a pharmacy in a “HEAT Zone.” The Health Care Fraud Prevention and Enforcement Action Team (HEAT) was formed as a joint initiative between the Office of the Inspector General (OIG), U.S. Department of Justice, and the U.S. Department of Health and Human Services to prevent and prosecute healthcare fraud, waste, and abuse. Briefly, HEAT includes the Medicare Fraud Strike Force, which combines the resources of Federal, State, and local law enforcement entities to combat healthcare fraud, waste, and abuse, and operates in and around major U.S. cities, such as Brooklyn, Chicago, Houston, Tampa Bay, etc. Many of these cities are considered “HEAT Zones,” which are designated by the Centers of Medicare and Medicaid Services (CMS) as having high rates of healthcare fraud.
If your pharmacy is located in a city identified as being a HEAT Zone, you can expect that there will be increased scrutiny on the pharmacy and its operations. For example, many Pharmacy Benefit Managers (PBMs) will require that pharmacies located in HEAT Zones undergo additional credentialing reviews in order to obtain admission into their pharmacy networks. This “enhanced” credentialing often includes an onsite audit, a detailed review of purchasing and dispensing records, and several questions regarding the pharmacy’s practices, and often causes significant delays in a PBM’s processing of a pharmacy’s credentialing application. In addition, some PBMs will require that a pharmacy be in operation for a period of time (i.e. 6 months to 2 years) prior to being eligible for application. Of note, PBMs may also extend HEAT Zone credentialing requirements to neighboring counties, such as, Essex County, New Jersey, Tarrant County, Texas, and Palm Beach County Florida. While it is extremely challenging to credential a pharmacy in a HEAT Zone, some PBMs do relax some credentialing requirements if there is another commonly-owned pharmacy that currently operates in a HEAT Zone. That said, there are several different requirements, and exceptions to those requirements, that PBMs may place on pharmacies.
How Frier Levitt Can Help
If you are looking to establish a pharmacy in a HEAT Zone or a neighboring county, contact us today to speak to an attorney and learn about the credentialing and network requirements.
