ESI / TRICARE Re-Initiating Recoupment Actions

2020-09-17T11:26:53-05:00September 17th, 2020|Categories: Compliance, News Release, Regulatory Issues|Tags: , , |

from ACA Corporate Member, Frier Levitt, Attorneys at Law

Express Scripts, Inc. (“ESI”), following a period of stay in its April 7, 2020 recoupment action, has resumed its efforts to recover funds from certain pharmacies who submitted claims to TRICARE in 2015, this time, with no indication of slowing down. Specifically, compounding pharmacies subject to this recoupment action begun to receive letters dated September 1, 2020 resuming the recoupment action, specifying that ESI must receive the appeal and all supporting documentation within 90 days from the September 1, 2020 date, by November 30, 2020. However, the Defense Health Agency (“DHA”) expressed a shift in focus from its original focus on allegations pertaining to lack of patient/prescriber relationship to those pertaining to a lack of medical necessity for the claims at issue. While the focus has shifted slightly, the strategy to appeal such determinations has remained largely the same. The clock has begun ticking and DHA has made it clear that refunds to pharmacies for moneys already withheld will only be adjusted if and when the Pharmacy appeals the action, and, even then, only if the appeal is successful. It is clear that DHA and ESI are not backing away from this recoupment action and are prepared to press on, full steam ahead.

ESI Re-Initiates Recoupment Action

After a two month stay on the recoupment actions, Express Scripts, Inc. (“ESI”) began sending out letters dated September 1, 2020 stating that the new appeal deadline is set 90 days from the date of the letter, such that the appeal and all supporting documentation is now due November 30, 2020. This recoupment action was initiated by ESI on April 7, 2020 when some pharmacies received the letter recouping on claims submitted in 2015 for TRICARE beneficiaries (read more here). By mid-June, several hundred pharmacies received the same letter initiating a recoupment with a letter dated April 7, 2020. Finally, at the direction on the Defense Health Agency (“DHA”), ESI stayed the recoupment action effective June 25, 2020 until further notice (read more here).

After ESI’s letter temporarily halting the recoupment action, no further information was provided to pharmacies until August 23, 2020 when DHA responded to a series of questions sent in July by Pharmacy Audit Assistance Services National (“PAAS”). Within their responses, DHA has implemented several changes to how the recoupment action was to proceed. None of these changes, however, indicate that the allegations set forth within the initial recoupment action will be retracted – only that they have been slightly modified – nor that the moneys previously recouped will be refunded to the pharmacies. Moreover, DHA and ESI have made it clear that neither DHA nor ESI were planning to refund pharmacies for the recouped amounts unless and until the applicable pharmacy submits an appeal which successfully counters DHA and ESI’s allegations. ESI and DHI have expressed that, only then, will any adjustments be made to the moneys already withheld.

Instead, DHA re-instated the original recoupment action and switched gears from focusing on the patient-prescriber relation to focusing on the medical necessity of the claims at issue itemized within the original ESI recoupment letter dated April 7, 2020. However, this shift in focus is still grounded in DHA’s internal investigation which found that the corresponding prescribers to the prescriptions at issue allegedly did not bill TRICARE for a corresponding patient visit. While the allegation that there was a lack of medical necessity indicates a slight shift from the original recoupment allegation, ultimately the issues facing pharmacies in seeking medical records from prescribers to combat the allegations remain the same.

Amongst the documentation to be provided to refute the allegation that the prescription s were not medically necessary, DHA additionally stated in its August 23, 2020 letter that prescriber attestations, which ESI previously indicated would be insufficient to respond to the appeal, may be accepted to support the medical necessity of the prescription if the attestations clearly identify the specific patient, prescription, date of service and medical necessity of the prescription as originally prescribed. In addition to the attestations, medical records and pharmacy records will also be accepted in order to support the medical necessity of the prescriptions.

Pharmacies who have received either the initial recoupment letter or the letter suspending the recoupment action should be on the lookout for the latest correspondence from ESI dated September 1, 2020 and should use the time before the appeal deadline to gather documentation in order to support the medical necessity as well as the patient prescriber relationship. While ESI is moving forward with a recoupment action, if ESI makes the determination that claims were submitted for prescriptions lacking the requisite medical necessity, ESI may proceed to terminate the pharmacy from its network and pharmacies must be mindful of potential False Claims Act exposure because the claims at issue are claims submitted to TRICARE, a federal payor (read more here). As a result, it is of utmost important that the allegations are appealed in a timely manner.

How Frier Levitt Can Help

Frier Levitt understands the intricacies and the variety of issues that pharmacies face with these recoupment actions. If you have received an initial letter dated April 7, 2020, a suspension letter dated June 25, 2020, or a renewal letter dated September 1, 2020, we can assist you in appealing this recoupment action on behalf of your pharmacy.

Jonathan E. Levitt, Esq.
Co-Founding Member
Frier Levitt, LLC


Update on ESI/TRICARE Clawbacks

2020-07-09T09:35:49-05:00July 9th, 2020|Categories: Compliance, News Release, Regulatory Issues|Tags: , , |

from ACA Corporate Member, Frier Levitt, Attorneys at Law

Beginning early this year, at the request of the Defense Health Agency (“DHA”), Express Scripts, Inc. (“ESI”) sent the first wave of letters to some of the pharmacies within its network recouping on claims that had been submitted to TRICARE during the 2015 year. These letters are particularly notable, as they focus on the results of a DHA investigation – as distinct from an audit – a particularly powerful tool that permits ESI an enlargement of the limited lookback period on claims permitted in audits. In the vast majority of instances, the discrepant claims ESI has identified relate to claims submitted for compounded drugs. Though ESI’s letters reference a host of potential reasons for the recoupments, ESI’s chief concern appears to be based in allegations that medications were dispensed to patients in instances in which the requisite prescriber patient relationship did not exist.

What constitutes a valid prescriber patient relationship often varies from state to state and is very heavily dependent on the fact. Several factors can be viewed as “red flags” when assessing whether an prescriber patient relationship exists, including the location of the patient relevant to his or her prescriber, telemedicine arrangements, certain marketing arrangements, or that the prescriber did not submit claims for a patient visit on or around the time the prescription was written.

Between late May and early June, ESI sent out another wave of letters – which were dated April 7, 2020, but were not received until several weeks thereafter – initiating recoupment actions to pharmacies based on allegations of lack of prescriber patient relationship. As with the first wave of ESI letters, the letters received by pharmacies in late May and early June related to claims submitted to Tricare during the 2015 year and generally identified claims for recoupment related to compounded medications. Each of these letters broadly alleged that prescriptions had been dispensed absent a valid prescriber patient relationship; these letters provided no additional information as to the basis for these allegations, or what methodology had been employed to derive those findings.

In instances where pharmacies have formally requested administrative review, ESI has responded with another form letter, providing somewhat confusing and vague statements about what documents would be required in order to validate the prescriber patient relationship. While ESI’s response letters explicitly requested “detailed substantiation that a prescriber patient relationship existed within the 365-day period prior to the date the claim(s) were filled,” the undertones of the letters suggested that mere attestations from prescribers would not be enough to validate the prescriber patient relationship. ESI also requested that if the pharmacies were to provide medical records to demonstrate the existence of a prescriber patient relationship, they would need to additionally provide metadata or similar validating facts that substantiate the records’ creation date. In addition to this metadata request, ESI stated in the form letters that it is requiring an affidavit from prescribers and the pharmacy attesting that they understand that they are subject to criminal prosecution under federal and State law for providing false statements and medical records, a tactic we believe to be particularly abusive given the incentive it provides for prescribers – the individuals in possession of the relevant documentation – to refrain from providing any statements or information to pharmacies in need of assistance.

ESI’s most recent blast correspondence, dated June 25, 2020, states that, under the direction of DHA, ESI has suspended all further recoupment actions which were based on the lack of a prescriber patient relationship as initiated in the letters dated April 7, 2020 (but, as outlined in the letter, were intended to be dated June 1, 2020) until further notice. Via additional correspondence with our office, ESI clarified that, due to DHA’s direction to ESI to suspend the recoupment action, the 90-day time period by which to appeal the recoupment action is being stayed as of June 23, 2020 until further notice. This most recent correspondence from ESI additionally states that ESI will be “unable to answer any questions regarding this matter until DHA provides further information which will be coming in the next few weeks.”

While these new suspension letters may provide some relief to pharmacies, they leave a lot of uncertainty as to when and if the recoupment actions and the offsets will resume. Specifically, we view the statements contained within the June 25th letter, when considered in conjunction with ESI’s past actions, as a “slow down” of ESI’s recoupment efforts, tied primarily to procedural defects, rather than an abandonment or withdrawal of those efforts.

Pharmacies who have received initial recoupment letters should be on the lookout for the referenced June 25, 2020 suspension letter and should utilize this period of “stay” of the recoupment action to continue to vigilantly prepare appeals and gather the relevant documentation to combat ESI’s allegations. Moreover, ESI has, in some instances, already begun its offset for pharmacies who continue to submit claims to ESI. In many instances, this offset began before the applicable pharmacies had received ESI’s original letter initiating recoupment. We urge pharmacies to continue to monitor their remittances to determine whether the recoupment process has actually been suspended.

While these letters dated April 7, 2020 are recoupment actions, if ESI makes a determination that a prescriber patient relationship is lacking, ESI may also proceed to terminate the pharmacy from its network, which may have implications for future credentialing with pharmacy benefit managers other than ESI. Moreover, because ESI’s investigation pertains to claims submitted to TRICARE, a federal payor, pharmacies must also be mindful of the potential for False Claims Act exposure. As a result, it is of utmost important that these findings are appealed in a timely manner.


Four Things You Need to Know About the ESI/Tricare Clawback

2020-07-30T15:55:32-05:00June 29th, 2020|Categories: Compliance, Regulatory Issues|Tags: , , |

By Ernest P. Gates Jr., Dennis Lyons, Gary McCrory and Paul O’Connor

[ June 29, 2020] Compounding pharmacies across our nation have opened their mail this month to find an unpleasant surprise: Express Scripts, Inc. (ESI), on behalf of the Department of Defense and Tricare, the health care program for the military, is seeking to recoup claims it paid for certain compounded medications provided to its members in 2015 – yes, that is five years ago.

ESI is specifically interested in claims for compounded medications prescribed by physicians when there is no record that the patient had an office visit with the physician.  Tricare was the subject over the last several years of substantial fraud driven by illegal marketing enterprises that sent compounded medications to veterans who never requested them, and billed the insurer many millions of dollars for these unwanted and unneeded medications.

Tricare is clearly trying to clean up its operations and recoup payments made to these criminal enterprises, however, this effort is also impacting hard-working compounding pharmacists who make an honest living serving patients with needs that cannot be met by commercially manufactured preparations.

If you have received the ESI letter, here are four important things to know:

  1. Take the letter seriously.  We have heard from several pharmacists who were not planning to respond, and we have told them to not respond would be a mistake.  Their thinking was that they did nothing wrong and to respond would create a precedent that would mean responding to an avalanche of subsequent requests from ESI and other PBMs.  A non-response will only result in further efforts by ESI to recoup the funds and could create unwanted legal problems and even the possibility of a criminal investigation or prosecution.
  1. You need help.  This effort by ESI is not the place where you quickly compose an email, count to three, and hit “send.”  Unfortunately, we are hearing of cases where this has happened.  We advise all of our clients to engage an attorney to draft the response and to consider using a consultant to not only review the calculations, but to work collaboratively with your attorney to provide a comprehensive and forceful response.  To do otherwise might be like trying to put toothpaste back into the tube.
  1. Scrutinize ESI’s math.  It would be wrong to assume that ESI’s calculations are correct.   ESI may be including the copayment in their calculations or recovering “spread pricing” – the difference between what the pharmacy is paid and the actual amount billed to their clients.  Each prescription’s paid amount should be reviewed.  Your submission and payment records are the best resource to validate your submission.  Prescription records should be thoroughly reviewed. For instance, if a key element was left off of the face of the prescription, such as the prescriber’s DEA number, but the script was prescribed by a physician known to the patient, ESI may include the prescription in its recoupment.
  1. This is not an audit; it is an investigation.  It is important to not think of this process as an audit.  Audits are relatively routine matters: records are reviewed and reconciled, findings are presented and then you respond and potentially reach a resolution.  ESI has made clear that this is an investigation that could lead to criminal charges.  Tricare is operated with public funds, so charges will carry additional weight and will be harder to defend.  America’s active military and veterans rightfully hold an exalted place in our national firmament and those alleged to be profiting from their service will confront major challenges.

The ESI clawback is only for 2015 and only for Tricare claims, and it is quite possible – likely, even – that ESI will also undertake recovery processes for claims paid between 2016 and today and claims paid on behalf of other ESI clients, and it is important to get this response right.

ESI has set a response deadline of June 30 to those pharmacies it is targeting.  There is no time to waste.

Ernest P. Gates Jr. is a pharmacist and is president & CEO of Gates Healthcare Associates, a consulting firm with expertise in pharmacy operations, audits and regulations, as well as PBM operations. Dennis Lyons, Gary McCrory and Paul O’Connor are associates at the firm.  Gates Healthcare Associates is not a law firm and does not provide legal representation.

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