Section 7.0 Compound Pharmacy Fraud – An Outlier in 2015
Beginning in calendar year 2015, DHA identified a significant increase in compounding pharmaceutical
costs to the Program. A review of the increased cost revealed a pattern where TRICARE was targeted,
largely through organized marketing campaigns, by individuals pursuing potentially fraudulent schemes.
In general, these campaigns involved direct marketing of high cost compound medications to
beneficiaries, typically to sell anesthetic or cosmetic creams. Prescriptions were often written by
physicians who had never seen or communicated with the beneficiary and failed to establish a valid
patient physician relationship. The prescriptions were written primarily for financial gain. Many
prescribing physicians practiced telemedicine, but did not follow TRICARE’s policy and or state licensure
rules making the prescriptions invalid. Often these schemes involved illegal kickbacks.
In many cases the medications provided had not been proven safe or effective. In May 2015, TRICARE adopted strict screening procedures that reduced spending to sustainable levels while ensuring that beneficiaries who require safe and effective compounds received them. The screening procedures have been successful in controlling costs and deterring fraud. DHA is engaged with DCIS, DOJ, and other law enforcement partners in pursuing pharmacies and physicians involved in fraudulent activities. Thus far civil and criminal enforcement efforts have resulted in significant collection or avoidance of payments. Several pharmacies have gone out of business as the result of these collection efforts and State Medical Boards have been notified of physicians who participated in the illegal activity. Criminal prosecutions are now moving forward to enhance efforts to deter these fraud schemes. These efforts will take some time, but initial successes and the strict screening program indicate that the DHA is making strides in controlling the problem and DHA is successfully receiving civil settlements, claim reversals8 from pharmacies, and recouping tax payer dollars due to fraudulent activities that had targeted the TRICARE
***
On July 15, 2015 the U.S. Attorney’s Office, Middle District of Florida and Blanding Health Mart Pharmacy (Blanding), settled allegations that the Jacksonville-based compounding pharmacy knowingly billed the government for improper and medically unnecessary compounding pain prescriptions. The allegations resolved included liability under the False Claims Act. From February 9, 2015, to April 13, 2015, Blanding sought reimbursement for compounding pharmaceutical prescriptions that were not medically necessary and were written by physicians that had never actually seen the patients. TRICARE restitution was $8,441,107.
Case Study: U.S. v. Kevin Powers and QMedRX– Waiver of CoPays and Non-Covered Services On December 4, 2016, Kevin Powers, former co-owner and CEO of Home Care Solutions d/b/a compounding pharmacy QMedRx, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. The allegations were that QMedRx waived patient copays and sought reimbursement from TRICARE for compound drug prescriptions delivered to states QMedRx was not licensed to operate. Additionally, from January 1, 2013, and January 22, 2014, QMedRX submitted claims for compounded prescriptions that violated the Anti‐Kickback Statute because the marketers who obtained the prescriptions from physicians were paid through improper and illegal incentive compensation arrangements. Kevin Powers will pay TRICARE restitution in the amount of $6,529,077.
Case Study: U.S. v. MedMatch Pharmacy – Non-covered Services and Kickbacks On October 23, 2015, MedMatch Pharmacy, a compounding pharmacy in Jacksonville, Florida, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. The allegations were that MedMatch Pharmacy entered into kickback arrangements with marketing company Rx LLC, mailed prescriptions to beneficiaries in Alabama, a state MedMatch Pharmacy was not licensed to operate, and sought reimbursement from TRICARE for compound drug prescriptions written by Dr. Saman Soleymani, a Jacksonville physician. The USAO contended that MedMatch Pharmacy knew or should have known Dr. Soleymani did not have a bona fide patient/physician relationship as the sheer magnitude and volume of Dr. Soleymani’s prescriptions was far in excess of any provider and because the prescriptions were for the same compound prescription substance, despite the patient’s age, condition, or health record. TRICARE restitution was $4,736,134.
Case Study: U.S. v. OHM Pharmacy – Excessive Billings and Non-Covered Services On October 16, 2015, OHM Pharmacy, a compounding pharmacy, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. It was alleged that OHM Pharmacy sought reimbursement for medically unnecessary compound drug prescriptions that it knew, or should have known, that it was filling prescriptions from a doctor who was writing them outside the ordinary course of practice. OHM Pharmacy knew, or should have known, this because the sheer magnitude and volume of prescriptions exceeded any other provider. In addition, the prescriptions were for the same compounded prescription substance, despite the patient’s age, condition, or health record. TRICARE restitution was $3,465,232.
Case Study: U.S. v. Topical Specialist, LLC – Services Not Provided and Excessive Billing, Kickbacks 12 On Dec 30, 2015, Topical Specialist, LLC, a pharmacy in Jacksonville, Florida, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. The settlement was a result of allegations that Topical Specialist caused compounding pharmacy WELL Health Pharmacy to submit claims and seek reimbursement for compound drug prescriptions written by referral sources which had a financial interest in the prescriptions. It was also contended that Topical Specialist paid indirectly, through a third party company, remunerations in the form of research fees that exceeded fair market value, to several referring physicians who prescribed compound prescription medications through Tropical Specialist. TRICARE restitution was $2,243,509.
Case Study: U.S. v. Durbin Pharmacy – Improper Billings, Kickbacks and Non-Covered Services On October 14, 2015, Durbin Pharmacy, a compounding pharmacy in Jacksonville, Florida, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. The allegations are Durbin Pharmacy entered into kickback arrangements with various marketing companies, and sought reimbursement from TRICARE for compound drug prescriptions written by multiple prescribing providers. The USAO contends Durbin Pharmacy knew or should have known the prescribing providers did not have a bona fide patient/physician relationship as the sheer magnitude and volume of prescriptions was far in excess of any provider and because the prescriptions were for the same compound prescription substance, despite the patient’s age, condition, or health record. TRICARE restitution was $2,100,000.
Case Study: U.S. v. WELL Health Pharmacy – Kickbacks, Services Not Provided, Excessive Billing, and Kickbacks On November 25, 2015, WELL Health, a compounding pharmacy in Jacksonville, Florida, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. The allegations are WELL Health sought reimbursement for compound pharmaceutical prescriptions written by referral sources which had a financial interest in the prescriptions. The USAO contends WELL Health filled prescriptions from an affiliated pharmacy that paid indirectly, through a third party company, remuneration in the form of research fees that exceeded fair market value, to several referring physicians. TRICARE restitution was $1,881,565.
Case Study: U.S. v. Ageless Men’s Health, LLC – Medically Unnecessary Evaluation and Management Services On February 4, 2015, the U.S. Attorney’s Office, Western District of Tennesse entered into a civil settlement with Ageless Men’s Health, LLC (AMH) and agreed to pay $1,600,000 to resolve allegations that it billed Medicare and TRICARE for medically unnecessary office visits while administering testosterone replacement therapy shots. In addition to the payment, AMH entered into a Corporate Integrity Agreement which requires enhanced accountability and monitoring activities to be conducted by both internal and independent external reviewers. Total Settlement was $1,600,000. TRICARE restitution was $210,128.
Quoted from 2015 Annual Fraud and Abuse Report - Health.mil www.health.mil/.../2015-Annual-Fraud-and-Abus... Military Health System 19 hours ago - Compound Pharmacy Fraud – An Outlier in 2015. 9 .
In many cases the medications provided had not been proven safe or effective. In May 2015, TRICARE adopted strict screening procedures that reduced spending to sustainable levels while ensuring that beneficiaries who require safe and effective compounds received them. The screening procedures have been successful in controlling costs and deterring fraud. DHA is engaged with DCIS, DOJ, and other law enforcement partners in pursuing pharmacies and physicians involved in fraudulent activities. Thus far civil and criminal enforcement efforts have resulted in significant collection or avoidance of payments. Several pharmacies have gone out of business as the result of these collection efforts and State Medical Boards have been notified of physicians who participated in the illegal activity. Criminal prosecutions are now moving forward to enhance efforts to deter these fraud schemes. These efforts will take some time, but initial successes and the strict screening program indicate that the DHA is making strides in controlling the problem and DHA is successfully receiving civil settlements, claim reversals8 from pharmacies, and recouping tax payer dollars due to fraudulent activities that had targeted the TRICARE
***
On July 15, 2015 the U.S. Attorney’s Office, Middle District of Florida and Blanding Health Mart Pharmacy (Blanding), settled allegations that the Jacksonville-based compounding pharmacy knowingly billed the government for improper and medically unnecessary compounding pain prescriptions. The allegations resolved included liability under the False Claims Act. From February 9, 2015, to April 13, 2015, Blanding sought reimbursement for compounding pharmaceutical prescriptions that were not medically necessary and were written by physicians that had never actually seen the patients. TRICARE restitution was $8,441,107.
Case Study: U.S. v. Kevin Powers and QMedRX– Waiver of CoPays and Non-Covered Services On December 4, 2016, Kevin Powers, former co-owner and CEO of Home Care Solutions d/b/a compounding pharmacy QMedRx, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. The allegations were that QMedRx waived patient copays and sought reimbursement from TRICARE for compound drug prescriptions delivered to states QMedRx was not licensed to operate. Additionally, from January 1, 2013, and January 22, 2014, QMedRX submitted claims for compounded prescriptions that violated the Anti‐Kickback Statute because the marketers who obtained the prescriptions from physicians were paid through improper and illegal incentive compensation arrangements. Kevin Powers will pay TRICARE restitution in the amount of $6,529,077.
Case Study: U.S. v. MedMatch Pharmacy – Non-covered Services and Kickbacks On October 23, 2015, MedMatch Pharmacy, a compounding pharmacy in Jacksonville, Florida, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. The allegations were that MedMatch Pharmacy entered into kickback arrangements with marketing company Rx LLC, mailed prescriptions to beneficiaries in Alabama, a state MedMatch Pharmacy was not licensed to operate, and sought reimbursement from TRICARE for compound drug prescriptions written by Dr. Saman Soleymani, a Jacksonville physician. The USAO contended that MedMatch Pharmacy knew or should have known Dr. Soleymani did not have a bona fide patient/physician relationship as the sheer magnitude and volume of Dr. Soleymani’s prescriptions was far in excess of any provider and because the prescriptions were for the same compound prescription substance, despite the patient’s age, condition, or health record. TRICARE restitution was $4,736,134.
Case Study: U.S. v. OHM Pharmacy – Excessive Billings and Non-Covered Services On October 16, 2015, OHM Pharmacy, a compounding pharmacy, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. It was alleged that OHM Pharmacy sought reimbursement for medically unnecessary compound drug prescriptions that it knew, or should have known, that it was filling prescriptions from a doctor who was writing them outside the ordinary course of practice. OHM Pharmacy knew, or should have known, this because the sheer magnitude and volume of prescriptions exceeded any other provider. In addition, the prescriptions were for the same compounded prescription substance, despite the patient’s age, condition, or health record. TRICARE restitution was $3,465,232.
Case Study: U.S. v. Topical Specialist, LLC – Services Not Provided and Excessive Billing, Kickbacks 12 On Dec 30, 2015, Topical Specialist, LLC, a pharmacy in Jacksonville, Florida, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. The settlement was a result of allegations that Topical Specialist caused compounding pharmacy WELL Health Pharmacy to submit claims and seek reimbursement for compound drug prescriptions written by referral sources which had a financial interest in the prescriptions. It was also contended that Topical Specialist paid indirectly, through a third party company, remunerations in the form of research fees that exceeded fair market value, to several referring physicians who prescribed compound prescription medications through Tropical Specialist. TRICARE restitution was $2,243,509.
Case Study: U.S. v. Durbin Pharmacy – Improper Billings, Kickbacks and Non-Covered Services On October 14, 2015, Durbin Pharmacy, a compounding pharmacy in Jacksonville, Florida, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. The allegations are Durbin Pharmacy entered into kickback arrangements with various marketing companies, and sought reimbursement from TRICARE for compound drug prescriptions written by multiple prescribing providers. The USAO contends Durbin Pharmacy knew or should have known the prescribing providers did not have a bona fide patient/physician relationship as the sheer magnitude and volume of prescriptions was far in excess of any provider and because the prescriptions were for the same compound prescription substance, despite the patient’s age, condition, or health record. TRICARE restitution was $2,100,000.
Case Study: U.S. v. WELL Health Pharmacy – Kickbacks, Services Not Provided, Excessive Billing, and Kickbacks On November 25, 2015, WELL Health, a compounding pharmacy in Jacksonville, Florida, entered into a settlement agreement with the U.S. Attorney’s Office, Middle District of Florida. The allegations are WELL Health sought reimbursement for compound pharmaceutical prescriptions written by referral sources which had a financial interest in the prescriptions. The USAO contends WELL Health filled prescriptions from an affiliated pharmacy that paid indirectly, through a third party company, remuneration in the form of research fees that exceeded fair market value, to several referring physicians. TRICARE restitution was $1,881,565.
Case Study: U.S. v. Ageless Men’s Health, LLC – Medically Unnecessary Evaluation and Management Services On February 4, 2015, the U.S. Attorney’s Office, Western District of Tennesse entered into a civil settlement with Ageless Men’s Health, LLC (AMH) and agreed to pay $1,600,000 to resolve allegations that it billed Medicare and TRICARE for medically unnecessary office visits while administering testosterone replacement therapy shots. In addition to the payment, AMH entered into a Corporate Integrity Agreement which requires enhanced accountability and monitoring activities to be conducted by both internal and independent external reviewers. Total Settlement was $1,600,000. TRICARE restitution was $210,128.
Quoted from 2015 Annual Fraud and Abuse Report - Health.mil www.health.mil/.../2015-Annual-Fraud-and-Abus... Military Health System 19 hours ago - Compound Pharmacy Fraud – An Outlier in 2015. 9 .
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