Omnicare: Manual Changes and Automated Verification

The Omnicare NDC billing settlements covered a $2.24 million case over alleged manual drug-code changes and an $8 million case over automated verification that allegedly allowed the billed drug to differ from the one dispensed. One concerned employees editing rejected claims. The other concerned what the pharmacy’s verification system accepted as a match. If you worked in dispensing, billing or verification, that difference points to the decision you may have seen from inside.

Omnicare supplied medicines to patients in skilled nursing, assisted living and other institutional care facilities. These cases followed the National Drug Code from the pharmacy into government health care claims, and, in the automated matter, onto the patient’s label. The product identifier was doing more than getting a bill through.

Manual NDC Changes After Rejected Claims

The settlement announced on October 19, 2016 concerned allegations that Omnicare employees manually changed the National Drug Code on claims resubmitted to Medicare, Medicaid and TRICARE. The government alleged that employees made those changes to overcome earlier payment rejections. The covered conduct ran from January 1, 2006 through September 1, 2014, before CVS Health purchased Omnicare.

The government alleged that the pharmacy had dispensed a prescription drug, a claim had been rejected, and employees changed the product-code field when seeking payment again. An employee who knows why the code changed can explain something the final accepted claim leaves out.

We examine NDC changes and rebilling against the actual medicine supplied. In the government’s account, the payment obstacle prompted a change to the claim’s description of the product. The question for someone who handled those resubmissions is concrete: what did the new code represent, and who directed its use?

A former regional service area director at Omnicare’s pharmacy in Lodi, California brought the qui tam case.

Automated MEDID Verification and the Wrong Product

The separate settlement announced on May 16, 2017 concerned Omnicare’s automated label verification system at certain locations. The government alleged that Omnicare designed it to use MEDID, a less specific drug code, during automated Stage II pharmacist verification instead of the more specific National Drug Code. The agreement covered Medicare Part D and Medicaid claims from January 2008 through December 2014.

According to the government’s allegations in the settlement agreement, the system approved dispensing in more than two million transactions where the generic drug supplied came from a different manufacturer and had a different NDC from the drug the pharmacist initially identified. Omnicare allegedly submitted claims under the wrong NDC and dispensed drugs with patient-specific labels showing incorrect manufacturer or NDC information.

The government attributed the design to an effort to increase business efficiency and profit. We find the premise remarkable: a system meant to verify the medicine allegedly accepted a different manufacturer’s product as a match.

The whistleblowers’ allegations concerned the hub pharmacy in King of Prussia, Pennsylvania and other Omnicare hubs throughout the United States. The whistleblowers brought the case, and the government joined it for settlement.

The Mismatch Followed the Medicine to the Patient

The alleged mismatch reached patient labels and Omnicare’s electronic dispensing information. That made identifying the product a patient-safety issue as well as a billing issue. Taxpayers faced claims for a different product, while patients received labels naming the wrong manufacturer, according to the government’s allegations. The agreement states the consequence plainly:

For a pharmacist or verification employee, that is the practical importance of the manufacturer’s identity. The patient-specific record is supposed to help trace the medicine the patient received.

Two Decisions Inside the Pharmacy

The manual case turns on an employee’s edit after rejection. The automated case turns on the product comparison built into verification. We look at who controlled each decision, what information they had and how the result reached the government claim.

For manual edits, we connect the original NDC, rejection and resubmission to the dispensing record and payer’s response. An insider who knows the instructions billing staff received can help explain why a different code appeared.

For automated verification, we compare the system’s matching rule with the pharmacist’s selection, the dispensed manufacturer, the label and the submitted NDC. We bring the systems employee’s, pharmacist’s and billing employee’s knowledge together around the same prescriptions. You may have seen only one part of that process. We work with you to understand how it fits the claim.

The Records Behind the Product Code

In healthcare billing, purchase, inventory, dispensing and claim records answer different parts of the NDC question. Supplier invoices show the products purchased. Inventory movements and dispensing entries connect the stock to prescriptions. The claim history shows what the pharmacy represented to the payer and what changed after a rejection.

The quantity and days-of-supply fields answer how much medicine was supplied and how long it should last. The NDC identifies the product represented on the claim. A reversal, a rebill and a payment adjustment can each change the billing history, which is why we examine the transaction beyond its final accepted version.

Claims for medicine never dispensed raise a separate question about whether the patient received the medicine at all. Here, the alleged failure was in matching the dispensed product to its billed identity. That is the comparison we develop with an insider who knows the dispensing or billing system.

What the Settlements Allocated

The automated-verification settlement involved the federal government and 28 states. The agreement specified separate payments of $7,415,357 to the United States and $584,643 for the participating Medicaid states.

Omnicare also agreed not to resubmit previously denied claims connected to the covered conduct or pursue appeals of those denials.

Does a Settlement Headline Determine a Reward?

No. The later Omnicare announcement’s more than $2 million combined the whistleblowers’ share of the recovery with resolution of employment claims. The agreement set the federal whistleblower share at about $1.4 million and separately addressed expenses, fees and employment claims.

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

You Know Why the Code Changed

If you know who changed an NDC or why verification accepted a different manufacturer’s drug, tell our whistleblower experts what happened inside the pharmacy. We develop the case with you and bring in pharmacy fraud whistleblower lawyers who understand dispensing systems and government reimbursement. From the first conversation, we stay on your side and put that knowledge to work building your strongest pharmacy whistleblower case.