CVS to pay $17.5 million penalty for over billing

April 16–Woonsocket-based CVS Pharmacy has agreed to pay $17.5 million to the federal government and 10 states, including Rhode Island, for over billing of prescriptions dispensed to Medicaid beneficiaries. The U.S. Justice Department announced the settlement Friday. The settlement resolves civil allegations that CVS, which operates more than 7,000 retail drugstores across the country, billed the wrong amount to Medicaid for Medicaid beneficiaries who also have prescription drug coverage other than Medicare. By Tracy Breton, The Providence Journal, R.I.

April 16–Woonsocket-based CVS Pharmacy has agreed to pay $17.5 million to the federal government and 10 states, including Rhode Island, for over billing of prescriptions dispensed to Medicaid beneficiaries.

The U.S. Justice Department announced the settlement Friday. Rhode Island will get almost $559,000 of the $17.5 million, according to state Attorney General Peter F. Kilmartin. Other states that will share in the proceeds are Massachusetts, New Hampshire, Florida, Alabama, California, Indiana, Michigan, Minnesota and Nevada.

The settlement resolves civil allegations that CVS, which operates more than 7,000 retail drugstores across the country, billed the wrong amount to Medicaid for Medicaid beneficiaries who also have prescription drug coverage other than Medicare. Pharmacies must bill third-party insurers first and then submit a claim to Medicaid for only the remaining liability, usually the co-pay. The investigation by the Justice Department showed that CVS billed more than the allowed amount for certain dual-eligible claims, which resulted in the pharmacy chain getting excessive reimbursements.

CVS, in a news release, denied “engaging in any wrongful conduct” and says it settled the matter “to avoid the expense and uncertainty of protracted litigation.”

“CVS did not intentionally overcharge any state Medicaid program,” said the nation’s largest pharmacy chain. “Dual eligible patients with third party insurance coverage comprise a small percentage of the Medicaid patient population and this matter involves only certain state Medicaid programs.”

CVS said the billing processes for dual eligible patients are “complicated” and vary based on each state’s Medicaid program. It said it’s continuing to work with the government “to ensure compliance with reimbursement regulations” and “is committed to ensuring its business operations are in compliance with the law and adhere to the highest ethical standards.”

The Justice Department built its False Claims Act case on information furnished by a whistleblower who was a CVS pharmacist in St. Paul, Minn. The whistleblower, Stephani LeFlore, will receive $2,595,460 of the settlement.

“This case is an example of the government’s strong commitment to pursue companies that overcharge our federal health programs by submitting false claims,” said Tony West, assistant attorney general for the Justice Department’s Civil Division.

Daniel R. Levinson, inspector general of the U.S. Department of Health & Human Services, which helped investigate the case, added: “Medicaid covers the poorest, most vulnerable people in American society. Overcharging this needed government program for prescriptions is a disservice to everyone and won’t be tolerated.”

This is the third time since 2008 that CVS has been required to make substantial settlements as a result of wrongdoing. The company agreed in October 2010 to pay $77.6 million as a result of lax controls on the sale of pseudoephredrine. In 2008, CVS Caremark, the pharmacy division’s parent company, agreed to settle for $36.7 million Medicaid fraud allegations in a drug-switching case involving generic Zantac. That was also a pharmacist-whistleblower case.

Kilmartin’s office said that as part of Friday’s settlement, an existing Corporate Integrity Agreement will be amended to require CVS to implement correct billing procedures and train employees. An independent review organization will regularly audit payments and issue reports on CVS’ compliance.”

It’s unclear how much money in total CVS over billed in the case. Kilmartin said the excess amount billed for Rhode Island Medicaid beneficiaries to the state and federal governments was $1,012,028. Rhode Island will recoup $558,884.41.

This article is from the The Providence Journal