Compounding pharmacies: Data analytics bull’s eye is on you.

By Shawn Stevison

The Office of Inspector General (OIG) recently completed an analysis regarding payments for DME infusion drugs, as well as an issuance in June 2016 of the “High Part D Spending on Opioids and Substantial Growth in Compounded Drugs Raise Concerns.” If you are not familiar with those two reports from HHS OIG, you should download and read them.

The OIG, in collaboration with the U.S. Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) are expanding their review of compounding pharmacies. In collaboration with Pharmacy Benefit Managers (PBMs), the federal government will be looking at prescription patterns, fill patterns, pharmacy purchase history for ingredients and dispensing patterns.

At the recent Healthcare Compliance Association (HCCA) meeting in Nashville, Tenn., a government representative indicated that the focus will be on pharmacies with the following patterns:

  • Purchase patterns which do not align to the billing patterns for ingredients utilized in the compounding of the medications.
  • Pharmacies with a limited number of prescribing physicians.
  • Pharmacies with a pattern of billing for high-dollar creams or infusion medications.

Purchase Patterns

Every pharmacy already has the tools to determine purchase patterns and billing patterns. Pharmacies should begin by summarizing their purchase history for each type of medication they dispense for a period of three months.

A summary report that details the National Drug Code (NDC) which was billed for each prescription for the same three-month period should be generated. Pharmacies can then compare the NDCs billed to all payers against the NDCs either purchased within the same time frame or in stock during that time frame. All NDCs billed should match the NDCs which were in stock or purchased within the same timeframe.

If any billing occurred of an NDC that does not match purchase history, a red flag should instantly arise. Pharmacies identifying this issue should immediately determine the timeframe during which the activity occurred, and consult with counsel to determine the most appropriate way to handle correction of the incorrect claims.

The speaker at HCCA said that, in particular, concerns were noted regarding the use of powders and behavior where claims are billed for pill or other forms. The FDA revoked the NDC codes for many powder form medications due to concerns about the efficacy of the medications. Medications in powder form, which have had the NDC revoked, should only be utilized and billed with a prior authorization from the patient’s insurance company.

Limited Number of Prescribing Physicians

The focus on prescribing physicians appears to be due to concerns about potential unjust enrichment of the physicians through relationships with the compounding pharmacies.

Pharmacy owners should evaluate any referral arrangements that exist with prescribing physicians to determine if:

  • There is any investment component to the relationship.
  • There are any sales bonuses which flow through to the ordering provider.
  • The pharmacy is obtaining sufficient support for the medical necessity of the prescribed cream or infusion medication.

Patterns of Billing

Pharmacies can expect that the focus will be on high-dollar creams or infusion medications due to the patterns noted in the OIG’s June 2016 article. Pharmacies can conduct internal monitoring on their filling patterns by reviewing for high-dollar claims, and determining whether they fall on the normative bell curve for prescriptions filled, or if they skew to the higher end of the norm.

Any analysis that shows a pattern of high-dollar creams or infusion medications may warrant further review of patient types, prescribers and medical conditions for the patients served.

Pharmacy Takeaways

While many pharmacies adhere to all the required regulations, bill compliantly and closely monitor their physician relationships, there are always a few that push the envelope. Thus, the OIG, DOJ and FBI have sharpened their focus on the industry.

Pharmacies may already be seeing some activity in this arena. If you have not, now is your opportunity to act before enforcement becomes involved.

 -Shawn Stevison, CPA, is manager of Healthcare Consulting Services at Dean Dorton in Louisville, Ky.


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