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Phantom Pharmacies, Real Fraud

June 07, 2013

Only a few years ago, identifying pharmacy fraud, waste and abuse (FWA) meant having technicians and data researchers look at patterns of billing to identify outliers. Was a pharmacy dispensing too many of certain kinds of drugs? Were the reversal rates for prescription refills too high or too low? Put in too many parameters and you get false positives. Not enough of the right parameters, and the work is for naught.

Continuing improvements in our understanding of what and who to look for helped our FWA team save clients more than $63 million last year.

Express Scripts today has the industry's most advanced, proprietary analytic tools used to identify errors or patterns of fraud and abuse. A new anti-fraud analytics tool for the Department of Defense is in development. The company also just launched FWA programs in Medicaid and workers' compensation, both firsts of their kind in the industry.

Auditing pharmacies looks at bad billing practices, faulty record keeping and unintentional errors. Fraud is a bit more self-explanatory.

"The difference between the two is intent," says Michael Testa, senior manager of fraud investigations. "Fraud looks for intentional wrongdoing."

For many years, both aspects were investigated only as they related to pharmacies in the Express Scripts network. As the team learned from their experiences, they recognized new trends.

"For example, we found that there is a lot of fraud in New York around high-cost, single-source medications such as Abilify or Seroquel," says Jeff Brown, senior manager, Program Integrity. "In Florida, we find a lot of phantom pharmacies — ones that set up shop, bill as much as they can for as long as they can and then disappear, and we see false billing schemes around the country."

In 2006, Medicare Part D put in new requirements for pharmacy benefit managers to identify and investigate member/physician-related fraud. The team found they had to quickly learn to adapt and apply lessons from their experiences on the pharmacy side to the new requirements.

"No one had done this before. We were all learning and everything was a fire drill," Michael says. "And we were trying to interpret and implement the rules at the same time as we were trying to identify cases."

Based on the team's ability to learn quickly, the company introduced a commercial program as well, says Jo-Ellen Abou Nader, senior director, Program Integrity, who leads the fraud and network audit teams at Express Scripts.

As of December, the commercial member/physician fraud program had 106 clients. The team triaged more than 1,700 calls to the fraud tip hotline and referred 391 cases to various law enforcement agencies or clients. In 2011, the audit team recovered more than $63 million for clients based on 5,650 discrepancies.

The 75 people on the FWA team are accountants, nurses, pharmacists, pharmacy techs, former law enforcement agents and operational specialists. With the addition of the 45 members from legacy Medco, the FWA team is set to grow some more.

As the two teams integrate, Jo-Ellen says, the goal is to combine the strengths and best practices of both organizations to strengthen our FWA efforts even further.


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