CVS Health will pay $37.76 million to settle claims that it dispensed too many insulin pens to patients, and got improper reimbursements from Medicare, Medicaid and other government healthcare programs. CVS CVS allegedly told its pharmacy staff to report the maximum days-of-supply allowed when dispensing full insulin pen cartons, to ensure it could fill prescriptions as quickly as possible and that reimbursement claims would be approved.
Under the settlement approved by U.S. District Judge John G. Koeltl, CVS agreed to pay a total sum of $37.76 million, with $24,446,240 to be paid to the United States and the remainder to be paid to various states. As part of the settlement, CVS also admitted and accepted responsibility for certain conduct alleged by the Government in its complaint, including that GHPs paid CVS substantial amounts for insulin pen refills that were ineligible for reimbursement and CVS pharmacies dispensed more insulin to GHP beneficiaries than they needed. “CVS engaged in a decade-long practice of repeatedly prematurely refilling insulin prescriptions for patients and improperly billing government healthcare programs for more insulin than patients needed,” said U.S. Attorney Jay Clayton. “These programs rely on pharmacies to follow appropriate refill schedules and to accurately report the amount of medicine dispensed, which CVS pharmacies frequently failed to do. This settlement reflects our continued commitment to holding pharmacies to account, enforcing rules designed to keep costs down, and protecting taxpayer dollars.”
Insulin pens (hard plastic, pen-shaped cases containing syringes filled with insulin solution) are a common way for diabetic patients to self-administer insulin. During the relevant period, manufacturers frequently distributed insulin pens in five-pen cartons with each pen containing 300 units (3 mL) of insulin solution. Insulin prescriptions must set forth the “directions for use,” which typically designate both how much insulin to administer and the frequency and/or timing of when to administer it. When pharmacies seek reimbursement from GHPs for insulin pens, they are required to report, among other data, the “quantity dispensed” and the “days-of-supply.” The “quantity dispensed” means the total amount of medication dispensed to a patient when the pharmacy fills the prescription, and the “days-of-supply” refers to the number of days that the quantity dispensed is expected to last if taken as directed by the prescriber. Typically, pharmacists calculate days-of-supply by dividing the total quantity of medication dispensed by the patient’s “daily dose,” i.e., the amount of medication that the prescriber directs the patient to use each day. GHP plans, and pharmacy benefit managers (“PBMs”) working on their behalf, typically set limits on the days-of-supply that a pharmacy may dispense when filling prescriptions (such as a 30-day supply), and reject reimbursement claims for fills that exceed those limits.
GHPs and PBMs also deny reimbursement for prematurely refilled prescriptions—refills dispensed before the beneficiary would have consumed a substantial portion of the previously-dispensed quantity of medication if taken as prescribed. PBMs use automated processes to review claims for reimbursement submitted by pharmacies and deny claims that are submitted too far in advance of the expected refill date. The ability of PBMs to detect and reject reimbursement claims for premature refills depends on pharmacies complying with their obligations to accurately report days-of-supply data.
Dispensing insulin in full cartons containing five pens can exceed applicable days-of-supply limits, resulting in claim rejections. PBMs developed rules to address reimbursement when dispensing medications like insulin in the smallest commercially-available container would exceed the days-of-supply limit. Some PBMs required pharmacies to seek an override of the limit and then to resubmit the claim reporting the accurate days-of-supply actually dispensed so the PBM could verify when the next refill would be needed. Other PBMs permitted pharmacies to submit claims reporting the maximum days-of-supply allowed, even if that number was lower than the actual supply dispensed. Importantly, however, those PBMs still required pharmacies to track and use the actual days-of-supply dispensed to determine when patients would actually need a refill. All PBMs prohibited pharmacies from seeking reimbursement for premature refills, regardless of container size.
From January 1, 2010, through December 31, 2020 (the “Covered Period”), CVS violated the FCA by knowingly submitting, or causing to be submitted, false claims to GHPs for reimbursement for insulin pens where CVS: dispensed more insulin to GHP beneficiaries than was specified by their prescriptions and refilled GHP beneficiary prescriptions substantially before GHP beneficiaries needed the refills; falsely under-reported the days-of-supply for the insulin refills, which often prevented PBMs from detecting that the refills were premature; and failed to comply with applicable rules when refilling insulin prescriptions requiring pharmacies to calculate refill dates using the actual days-of-supply dispensed. To fill insulin prescriptions as quickly as possible and to ensure that reimbursement claims for insulin pens were not rejected, CVS instructed its pharmacy staff simply to report the maximum days-of-supply allowed under the beneficiary’s plan when dispensing full insulin pen cartons, which was often lower than the actual days-of-supply dispensed. Many CVS pharmacies did not internally document and use the actual days-of-supply dispensed to determine when patients could next refill their prescription. To the contrary, CVS’ dispensing software calculated refill dates automatically based on inaccurate days-of-supply data reported to the PBM. As a result, CVS pharmacy staff repeatedly refilled prescriptions prematurely, dispensing substantially more insulin to GHP beneficiaries than they actually needed and substantially sooner than they needed it according to their prescriptions. As a result, some GHP beneficiaries accumulated large quantities of unused insulin, which was both wasteful and potentially dangerous as insulin can expire.
Under the settlement, CVS admitted, among other things, that:
- During much of the covered period, many CVS pharmacies did not break open insulin pen cartons when dispensing insulin pens. As a result, at times, CVS pharmacies dispensed amounts of insulin that exceeded applicable days-of-supply limits. When a claim for reimbursement was rejected for exceeding the limit, some CVS pharmacies did not obtain overrides and re-submit the claim listing the actual days-of-supply dispensed as required by some PBMs. Instead, CVS pharmacies often reported the maximum days-of-supply allowed under the beneficiary’s insurance plan for insulin pens when resubmitting the claim, which was lower than the actual days-of-supply dispensed. While certain PBMs allowed this practice because the carton was the smallest commercially-available container for the medication, CVS pharmacies at times did not adhere to the appropriate refill intervals for patients that were to be based on the actual days-of-supply dispensed.
- During much of the covered period, CVS customers with insulin-pen prescriptions who enrolled in CVS’ optional auto-refill program received automatic prompts notifying them that their refilled prescriptions were available to be picked up. CVS’ auto-refill logic calculated prescription refill dates based on the days-of-supply data recorded by pharmacy staff and sent customers refill notifications based on those dates. When pharmacy staff recorded days-of-supply numbers that were lower than the actual days-of-supply dispensed, the system would at times calculate refill dates for patients that were premature. As a result, some CVS pharmacies dispensed insulin pen refills to GHP beneficiaries before the beneficiaries needed more insulin and before the GHP plan or PBM would have approved such refills for reimbursement.
- At times during the covered period, GHPs and the payors working on their behalf paid CVS substantial amounts for insulin pen refills that were ineligible for reimbursement, and CVS pharmacies dispensed more insulin to GHP beneficiaries than they needed.
Jeffrey Newman is a whistleblower lawyer, whose law firm represents whistleblowers revealing violations of export controls, tariff evasions, money laundering, healthcare fraud and other kinds of WB cases. The firm represents individuals both in the United States and other countries. Mr. Newman and his firm also represent physicians and other healthcare providers who become whistleblowers in healthcare fraud cases. Whistleblower laws in the U.S. allow individuals anywhere with information about export control violations or tariff fraud to reveal the information under The False Claims act or through the Securities and Exchange Commission’s Whistleblower Program. The Firm’s website is at www.JeffNewmanLaw.com and attorney Newman can be reached at Jeff@Jeffnewmanlaw.com or at 978-880-4758
