Compounding Pharmacy Shells Out $3.775 Mil to Settle False Claims Suit

bonus calculationA Jacksonville compounding pharmacy has agreed to pay $3.775 million to settle false claims allegations that it defrauded TRICARE. MediMix Specialty Pharmacy billed TRICARE for compounding pain prescriptions that came from an improper referral source. MediMix’s top-prescriber over a period of five years was also married to one of MediMix’s senior vice presidents. MediMix itself was one of TRICARE’s top billers for compounded pain medications.

Since the federal law limiting physician self-referrals, 42 U.S.C. 1395nn (more commonly called the “Stark law”) does not apply to TRICARE, the government proceeded under a law entitled Administrative Remedies for Fraud, Abuse, and Conflict of Interest, 32 C.F.R. 199.9, which is applicable for claims submitted to CHAMPUS and TRICARE. This law is much more broad than the Stark law. While the Stark law contains specific exceptions, this law does not.

Administrative Remedies for Fraud, Abuse, and Conflict of Interest defines the terms “abuse”, “fraud” and “conflict of interest” expansively, giving examples of each type of conduct. In the MediMix litigation, the US Attorney’s Office used one of the definitions of “fraud” against MediMix. In that example, fraud is described as “[a]rrangements by providers with employees, independent contractors, suppliers, or others which appear to be designed primarily to overcharge the [TRICARE program] through various means used to divert or conceal improper or unnecessary costs or profits.”

Below, for your education, we have provided a few examples of “abuse,” “fraud” and “conflict of interest” in the CHAMPUS and TRICARE programs, as those are proscribed by the law:

 Charging CHAMPUS or TRICARE beneficiaries rates in excess of those routinely charged to other payors;
 Billing in excess of customary or reasonable charges;
 Patterns of waiving patient’s co-pays or deductibles;
 Submitting claims for payment that are not medically necessary;
 Failing to maintain accurate medical or financial records; or
 Providing inferior care that does not meet accepted standards of care.

 Submitting claims when no services were actually provided to the patient;
 Billing for non-covered or non-chargeable claims;
 Billing beneficiaries for more amounts which exceed determined allowable charges or costs;
 Over-utilizing medical care or services without proper regard for a patient’s particular needs; or
 Reciprocal billing.

Conflict of Interest:
 Any situation where an active duty member of the military or civilian employee of the United States Government, through an official federal position has the apparent or actual opportunity to exert any influence on the referral of patient to himself/herself or others with some potential for personal gain or the appearance of impropriety.

If your business submits claims for payment to CHAMPUS or TRICARE, you are well-served to review your policies and procures regarding medical necessity and billing in order to confirm that you are in compliance with the law.

3 thoughts on “Compounding Pharmacy Shells Out $3.775 Mil to Settle False Claims Suit

  1. Pingback: Provider Credit Balances Result in $6.8 Million Settlement | Florida Healthcare Law Firm Blog

  2. Pingback: Provider Credit Balances Result in $6.8 Million Overpayment Settlement | Payer Provider Hub Blog

  3. Pingback: Recent Governmental Enforcement and Regulatory Developments | Florida Healthcare Law Firm Blog

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