Pharmacy Fraud, Part Two

Pharmacy auditors and fraud examiners for insurance companies and pharmacy benefit managers battle multi-million dollar fraud schemes that affect all of us. Learn how they construct their anti-fraud programs, specific procedures they use to develop their cases, and laws they deal with that could hinder their work.

Shirley was suspicious. As a “prior authorization (PA) representative” for a pharmacy benefit management (PBM) company, Shirley evaluates the dispensing of certain drugs based on patient history, payer requirements, and other criteria. She’s trained to be skeptical, so when a pharmacy called to request a PA for Synagis, an expensive medication prescribed almost exclusively for premature babies, she put a red flag on it and sent it upstairs. Good thing she did.

The claim was ultimately denied through the PA process because it wasn’t medically necessary based on the provided diagnosis code. But the pharmacy played an end-run and resubmitted the claim later with a different diagnosis code as though it were new. The claim still required a PA and this time it was approved.

But Shirley wasn’t satisfied. She tracked the submissions, documented the pattern, and gave it to her supervisor. The supervisor forwarded the info to the PBM’s Special Investigative Unit, which quickly built a strong multi-million dollar fraud case that was referred to federal and state authorities.