Fraud, Waste & Abuse

How does fraud, waste and abuse impact pharmacies?

Fraud, waste and abuse can occur in any industry, however, here is a list of potential challenges within Pharmacy, and a list of potential schemes that could result in liability:

Excessive billing of Medicaid or Medicare amounts.
Dispensing expired drugs, or drugs that have not been stored or handled in accordance with manufacturer and FDA requirements.
Submitting claims (for prescriptions or services) provided by excluded or debarred individuals.
Underfilling prescriptions, forging or altering prescriptions.
Keeping an over-payment for more than 60 days.
Fraudulent billing – billing Medicare or Medicaid for unfilled prescriptions.

Which laws should pharmacies be aware of?

The False Claims Act—This Act imposes a liability on pharmacies that present false or fraudulent claims for government payments. Any pharmacy that knowingly conceals, avoids or decreases an obligation will be fined up to three times the amount of the false claims and may be subject to imprisonment for up to 20 years.
- There is a penalty of up to $11,000 per claim.
- Note: These Penalties apply, despite the intent of the violation.
- If the violation resulted in death, the individual may be imprisoned for any terms of years or for life.
The Anti-Kickback Statute—It is illegal for a pharmacy or pharmacist to knowingly offer, pay or receive compensation on a referral bases for any services or items that are reimbursable by a federal healthcare program.
The Stark Statute – This statute prohibits a physician (or an immediate family member of such physician) from making referrals for certain healthcare services to entities in which they have:
- Ownership or investment interest
- Compensation Agreement

In summary, some of the penalties for violating FWA laws include civil monetary penalties, imprisonment, and exclusion from participation in all Federal healthcare programs.

Who oversees compliance with these laws?

The federal authority on these matters lies with the Office of the Inspector General (OIG), which falls under the Department of Health and Human Services.

The OIG maintains a database of excluded individuals and entities who have failed to comply with the law.
As a result of non-compliance, they are unable to participate in any federal health care program.

In addition to the exclusions database, the System for Award Management (SAM) contains a comprehensive list of records of disbarments, suspensions, and other disciplinary actions within all sectors of government.

Why should pharmacies check the exclusion databases?

There are several reasons why pharmacies should check the exclusion databases. However, the most important reason is because the federal government will not reimburse for any prescriptions that are prescribed or dispensed to individuals on the OIG exclusions list or the SAM database.

In addition, pharmacies can subject themselves to liabilities and penalties when hiring or contracting with individuals or entities that the employer knows, or should have known were excluded. Typically, this category includes individuals and practitioners who engaged in fraudulent or abusive behavior (i.e. knowingly submitting false claims or abusing or stealing drugs.).

Note: Pharmacies should consult legal counsel regarding how, when and who to check on the exclusion lists.

Are there any regulations to be aware of at the state level?

Some states have created their own databases, like the OIG and SAM. These databases are typically focused on anti-kickback statutes and false claims acts; however, they may also have pharmacy-specific provisions.

Example: Most states prohibit pharmacies from giving prescribers blank prescription pads that bear the name of a pharmacy.

Health Mart provides access to Bula Pharmacy Law Intelligence to help you understand and develop your pharmacy's specific regarding Fraud, Waste, & Abuse. The customizable Policy and Procedure templates are provided at no additional charge as a Health Mart Member Benefit.

Does Health Mart provide training on fraud, waste and abuse?

Yes – As a member benefit, fraud waste and abuse courses are available through Health Mart University at no additional charge.

Medicare Parts C&D and General Compliance Training
Note: The above listed course is intended for pharmacists and technicians. It contains all ACPE requirements for CE credit.
- CMS requires training for pharmacists, technicians and other pharmacy personnel on Fraud, Waste and Abuse at the following stages:
  - Initial hire.
  - When the requirements change OR when an employee works in an area that has previously faced non-compliance.
  - AND annually.