CVS Caremark: Dummy Prescriber Identifiers and the Defense Judgment

CVS Caremark won the False Claims Act case over dummy prescriber identifiers in Medicare Part D prescription data. The court held that the alleged misrepresentations did not matter to the government’s decision to pay. A field meant to identify the doctor named no one, yet Caremark won.

This pharmaceutical False Claims Act case concerned prescription drug event data submitted to the Centers for Medicare and Medicaid Services. SilverScript provided pharmacy benefit services for MCS Life Insurance Company’s Part D plan. An outside audit examined the claims and questioned the data that reached Medicare.

How the Prescriber Identifier Reached Medicare Part D

The dispensing pharmacy generated the data elements, the pharmacy benefit manager received them, and the PBM submitted them to Medicare in prescription drug event report format. The defendants admitted that path in their answer to the whistleblower’s amended complaint. They also admitted that the affected fields matched in the raw claims data supplied to SilverScript and the PDE report SilverScript sent to Medicare.

That admission gives the audit a specific connection to the government submission. The disputed information was present in the pharmacy data and in the Medicare report. Someone familiar with the pharmacy’s records could therefore be looking at the same affected field that reached the government.

The report carried prescription drug costs and payment data alongside information about who prescribed the drug. Under the agency’s 2006 instructions, field 12 was the Prescriber ID Qualifier, identifying the type of identifier used. Field 13 was the Prescriber ID, meant to contain the prescriber’s unique identification number.

The Part D reconciliation process gives the reporting its financial context. After the year ends, Medicare adjusts payments for enrollment, risk factors and allowable drug costs after rebates and other discounts. The plan’s reported costs feed the government’s final payment calculation. The identifier dispute concerned another part of the information submitted through that system.

What the Dummy Identifier Allegation Was

The allegation concerned dummy prescriber identifiers in Part D prescription drug event data. In their answer, the defendants admitted that SilverScript had processed some prescriptions with identifiers that were not associated with a particular physician or prescriber. Caremark disputed the fraud allegation.

The admitted identifiers appeared in claims from a mail-order pharmacy in Miramar, Florida that filled prescriptions for MCS plan members. SilverScript processed MCS claims from both mail-order facilities and retail pharmacies, so the audit reached beyond a single dispensing channel.

MCS retained Pharm/DUR to conduct the audit. SilverScript supplied the auditor with the plan participants’ claims data for 2006. The analysis covered retail and mail claims. Caremark disputed the auditor’s conclusions.

The audit also reached the pharmacy network. Pharm/DUR contacted network pharmacies, and Caremark sent a fax to network pharmacies serving MCS members. Caremark acknowledged sending the fax but disputed the complaint’s description of it. Alongside the claims files were the communications about them: what the auditor communicated and what Caremark told the network.

What Happens Between the Pharmacy and the Payer

Pharmacy claims pass through systems that format, check and process information before the pharmacy receives a payment response. A 2004 analysis in the American Journal of Health-System Pharmacy, Examining the Value of Pharmacy Benefit Management Companies, describes the technical and contractual layers behind that exchange.

The paper describes a switch that can adjust data formatting so pharmacy and processor software can communicate. It describes claims processors checking patient coverage, the contract price and the patient’s copayment. PBMs also connect payers to pharmacy networks and perform drug-use reviews.

The paper separates the switch’s formatting work from the processor’s payment checks. That distinction gives a pharmacy insider a more precise way to describe where information passed through the system. In Caremark’s case, the affected fields matched across the pharmacy data and the Medicare report. Their significance to payment became the deciding question.

Why CVS Caremark Won Despite the Dummy Identifiers

CVS Caremark prevailed because the Third Circuit held that the alleged misrepresentations did not matter to the government’s decision to pay. Its published decision resolved the payment question in Caremark’s favor.

SilverScript also submitted certifications to Medicare. The dispute therefore reached both the prescription data and the assurances accompanying the reporting. For an insider, the connection worth examining is how the company represented the information and how the government used it. We work through that connection with the person who understands the claims system.

Different Part D Reports, Different Allegations

The separate Rite Aid and Elixir case concerned manufacturer rebates reported as service fees. The Justice Department alleged that the companies changed how retained rebates were reported, even though manufacturers had not negotiated those fees. That reporting affected Medicare’s reconciliation of plan costs.

The comparison makes the payment question tangible. In the Elixir allegations, the disputed label concerned money received from manufacturers and how it entered the government’s cost calculation. In the CVS Caremark identifier case, the disputed field concerned who prescribed the drug. Each case requires following the particular information into the payment process.

What Evidence Is Needed to Prove Fraud?

Proving a prescription-data case means connecting the disputed information to Medicare’s payment decision and what the company knew. That is work our whistleblower experts do with you. In this case, the same affected fields appeared in pharmacy data and the Medicare submission, and an audit brought questions back to the company and its pharmacy network.

Your knowledge of the system can give those documents meaning. If you work in pharmacy operations, claims processing or plan reporting, you may know what a field was intended to contain, how it traveled and who addressed the audit findings. That is the kind of inside understanding we bring into building a pharmaceutical whistleblower case. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know the Data Behind the Report

If you know how prescription data reached Medicare and what happened when someone questioned it, talk with our whistleblower experts about what you saw. We bring in pharmaceutical fraud whistleblower lawyers who understand Part D reporting and stay beside you to build your strongest Part D whistleblower case.