Tricare fraud related to compounding pharmacies is on the rise. Attorney Andrew S. Feldman was recently quoted in Florida Record discussing the uptick in Tricare fraud and compounding pharmacies:
ORLANDO — A Florida compound pharmacy owner is the latest proprietor in an ongoing probe to agree to reimburse the federal government millions of dollars in fines over alleged billing violations of the Department of Defense’s TRICARE program.
QMedRx co-owner Mark Gilmore’s sworn arrangement to pay back $4.25 million in fines over abuses to the military health care program makes him at least the fourth partial owner of the Maitland-based operation to agree to a multimillion-dollar settlement and brings to $20 million the overall amount that government officials have negotiated to collect from company owners.
In all, the U.S. District Court for the Middle District of Florida has recovered nearly $70 million in fines and penalties from owners across the region accused of such overbilling practices during the past 18 months.
Compounded medicines are typically used for patients requiring liquid formulations because of difficulty in swallowing pills.
Nationally, TRICARE paid $1.75 billion for these medicines during fiscal year 2015, an increase reported to be at least 18 times the amount paid in 2012. Overall, the cost for the medicines accounted for nearly 20 percent of Tricare’s estimated $9.14 billion prescription drug budget in 2015.
In the case of QMedRx, company officials are alleged to have systematically charged federal health care programs fees that are not covered under any plan for a yearlong period commencing in January 2013.
Other QmedRx owners who have also reached settlement agreements with the government include Andy Miller and Tracy Miller who, along with the Hallmark Investment Trust, have arranged to pay back $7.75 million.
“The government has been investigating TRICARE fraud for some time and how they were being reimbursed at astronomical rates for nonsterile compounds,” Andrew S. Feldman, managing member of the Feldman Firm that represents individuals and criminals in white collar crimes, told the Florida Record.
Doing business under the name Home Care Solution, QMedRx operates as a compounding pharmacy that serves doctors and patients alike. The company specializes in the kind of therapy that offers relief for pain, scar and wound care through the primary use of transdermal creams and gels that range in price from $600 to $1,500 per unit.
The announced settlement was brokered by the Health Care Fraud Prevention and Enforcement Action Team (HEAT), which was launched by the government in 2009 to root out such corruption. Since then the U.S. Justice Department has recovered nearly $31 billion through False Claims Act cases, well more than half that amount stemming from fraud against federal health care programs.
“The government targets industries where it sees large change in terms of where the money is going,” added Feldman alluding to all the increased scrutiny in the compounds’ industry. “All of a sudden there was a large change in reimbursements for TRICARE.”
With prescription drug costs at an all-time high, the government estimates federal agencies have recently paid out as much as $2 billion for tainted and unnecessary compound prescriptions.
Thus far, U.S. Air Force reserve member Randy John Papanek is the only person in the QMedRx case charged in a criminal indictment, which seeks a judgement against him of $87,500.
Papanek, who has already pleaded guilty to charges of conspiring to accept and pay bribes, is scheduled to go before U.S. District Judge Roy B. Dalton Jr. for sentencing Dec. 12 in Orlando.
In exchange for various forms of kickbacks over a two-year period starting in 2013, Papanek is said to have recruited people covered by TRICARE and steered them into seeking prescriptions only from QMedRx doctors.
As a Tricare beneficiary, he is also accused of receiving payments for receiving his own prescriptions from those same doctors.
“It’s going to continue,” Feldman predicted of the TRICARE government crackdown. “Those who are serious about being in the non-sterile compounds industry will find a way to make the necessary changes to be compliant.”
The Government has continued to aggressively investigate TriCare fraud. Tricare is one of the government programs which reimburses compounding pharmacies for dispensing compounded medications. From 2013- 2015, TriCare reimbursements for expensive medications made by compounding pharmacies, typically pain and scar creams, rose drastically. Certain medications made by compounding pharmacies were reimbursed by Tricare at a rate of $25,000.00 per medication or prescription.
Beginning in May of 2015, Tricare, through their pharmacy benefit manager, Express Scrips, attempted to clamp down on unscrupulous providers seeking to obtain reimbursements for medications from compounding pharmacies and implemented a more rigorous process for submitting claims to TriCare for compounded medications. Similarly, since 2015, the Department of Justice has launched investigations relating to Tricare fraud and abuse and violations of the Anti Kickback Statute in the compounding pharmacy industry. Many of these investigations and prosecutions relate to the dispensing of compounded medications without a valid patient-doctor relationship, manipulation of the average wholesale price, claims for medically unnecessary active ingredients in compounded medications, and/or compensation arrangements involving the marketing of compounded medications.
It is anticipated the Department of Justice in coordination with the OIG-HHS, Department of Defense, and the FBI, will continue to crackdown on compounding pharmacies if the Government discovers evidence of fraud and abuse or violations of the Anti Kickback statute.