Med-Fast and Iserve: The Medication Supplied and the Product Billed

The Med-Fast and Iserve fraud case involved recycled-drug and diabetes-strip billing allegations and a civil settlement requiring Iserve to pay $1,555,000 to reimburse Medicare and Medicaid for overbilling. The government alleged that patients received cheaper mail-order packages while Medicare and Medicaid were billed for the retail version. Taxpayers were being asked to pay for something other than what patients received. If you worked with returned medication, dispensing or claims, you may know where those accounts stopped matching.

Med-Fast Pharmacy’s institutional pharmacy served long-term-care facilities. Iserve Technologies operated from the same premises as Med-Fast. Two whistleblower lawsuits brought the civil allegations to federal court in Pittsburgh. The nursing home pharmacy billing allegations reached both medication recycled from those facilities and claims for a more expensive package than the one patients received.

Returned Nursing Home Drugs and the Later Medicare Claim

The government alleged that Med-Fast distributed medication recycled from long-term-care facilities it served and submitted claims to Medicare for that medication. The civil allegations also covered medication that differed from the drugs identified in the claims.

For someone inside the pharmacy, those are concrete comparisons. Returned stock has a history before it reaches another prescription. A dispensing record describes what went out, while a claim describes what the pharmacy asked the payer to cover.

That comparison also reaches the financial treatment of the return. We examine any credit or reversal alongside the later dispensing and claim records to understand what the payer ultimately paid. Your knowledge of how returned stock moved through the pharmacy can explain a connection that a billing description alone leaves out.

Which Is an Example of Billing Fraud?

Billing for retail-packaged diabetes testing strips while supplying the cheaper mail-order-packaged version was the other civil billing allegation against Med-Fast. The government said Med-Fast sought reimbursement from Medicare and Pennsylvania Medicaid for the retail version while patients received the mail-order version of the same strips.

The name of the strip could match across the paperwork while the package did not. The government identified the package as the difference between the product supplied and the reimbursement sought.

For this part of a pharmacy healthcare fraud case, we compare the package purchased and supplied with the package described in the claim. Purchase records, product descriptions, dispensing information and billing files answer different parts of that question. An employee who knows which packages the pharmacy actually stocked may recognize a mismatch that is invisible to someone reading only the claim.

What Evidence Is Needed to Prove Fraud?

The useful evidence connects the medication or package actually supplied to the government claim and the decisions behind it. We work with you on the connection between the underlying service and the bill, using your knowledge of the pharmacy to explain how the discrepancy arose.

A person handling returns may know where stock came from without seeing the final reimbursement request. Someone in billing may see the package description without seeing the box. We bring those accounts together around the same prescription or supply transaction, so the claim can be compared with the product it describes.

The Pharmacy Supplies the Drug, but Who Pays?

Medicare generally includes drugs in its payment to the facility for a covered Part A skilled nursing stay. Under Medicare’s consolidated-billing framework, an outside supplier generally cannot bill Medicare separately for a service already included in that payment.

The facility’s contract determines what it pays the outside supplier, as the Medicare claims manual explains. The pharmacy’s customer and the government program funding the care can sit on different sides of that arrangement. For an insider trying to explain a billing discrepancy, the supplier contract helps connect the product delivered to the payment sought.

The California Research Bureau’s 1997 report on the health care market described why those business relationships matter:

That perspective helps explain why we look beyond the dispensing counter. The person buying a product, the facility receiving it and the organization submitting a claim may each hold a different part of the transaction. We connect those roles to the payment at issue, so the nursing home’s account and the pharmacy’s account can be understood together. In Med-Fast’s civil case, the government’s allegations specifically concerned claims to Medicare for recycled or different medication and claims to Medicare and Pennsylvania Medicaid for the testing strips.

The Civil Settlement and Whistleblower Rewards

The civil settlement resolved the allegations in both whistleblower cases. In 2017, Med-Fast and its owner also agreed to civil payments alongside Iserve’s obligation. The resolution reached both the returned-medication allegations and the testing-strip claims, connecting what happened inside the pharmacy to the requests for government payment.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When a Rejected Drug Claim Comes Back Changed

A separate Omnicare case shows why the history of a claim matters alongside the dispensing record. In its Lodi pharmacy case, Omnicare reached a $2.24 million combined federal and state settlement, announced on October 19, 2016. The government alleged that employees changed the National Drug Code field on rejected claims resubmitted to Medicare, Medicaid and TRICARE.

The comparison with Med-Fast is the description sent to the payer. A rejected claim and its resubmission let us examine what changed in the request for payment. The dispensing information supplies the comparison with what the pharmacy actually provided.

You Saw the Stock Behind the Bill

If you know how returned drugs or cheaper packages became claims for something else, speak to one of our whistleblower experts about how those claims were built. We build the case with you and bring in pharmacy billing whistleblower lawyers who understand nursing-home drug supply and government health care reimbursement. We stay beside you throughout that work to build your strongest pharmacy whistleblower case.