RxAmerica and CVS: Certified Prices and Later Claims

In the RxAmerica and CVS Plan Finder settlement case, RxAmerica agreed to pay $5.25 million to resolve allegations that it submitted false generic-drug prices for Medicare’s plan-comparison tool while later claims sometimes used significantly higher prices. A pricing or claims employee may recognize the split immediately: the data used to attract an enrollee and the data used when the prescription reaches the payment system.

RxAmerica was a wholly owned subsidiary of CVS Caremark and provided prescription drug benefits through a Medicare Part D plan. The Justice Department announced the civil settlement on October 15, 2012. A separate Federal Trade Commission agreement with CVS addressed compensation for beneficiaries affected by the Plan Finder submissions.

Plan Finder Prices Shaped the Choice of a Medicare Plan

Plan Finder let Medicare beneficiaries compare estimated prescription prices before choosing a Part D plan. The Centers for Medicare & Medicaid Services obtained those prices from the plan sponsors themselves. A government comparison tool depended on information supplied by the businesses competing for the enrollment.

That mattered because Part D plans differed in the drugs they covered, the amounts they reimbursed, and the deductibles and copays their members paid. The agency offered Plan Finder to help people choose a plan that minimized their out-of-pocket costs. The price attached to a person’s medicines helped turn a menu of health care plans into a financial choice.

We see the problem in that arrangement when a sponsor supplies false prices: the tool built to help patients choose can become the means of misleading them. The government alleged that RxAmerica’s submissions did just that. The alleged mismatch reached both the beneficiary choosing coverage and Medicare paying for the drugs afterward. Some comparison shopping.

The Certified Prices and Later Claims

The government’s allegations covered January 1, 2007 through December 31, 2008. RxAmerica had certified to the Centers for Medicare & Medicaid Services that it would submit accurate Plan Finder pricing data. According to the Justice Department, it nevertheless submitted false prices for certain generic prescription drugs.

The government then connected those submissions to Medicare Part D payments RxAmerica received for claims involving the covered drugs. In some cases, the claim prices were significantly higher than the prices RxAmerica had supplied for Plan Finder. As alleged, the low price helped sell the plan. The higher price reached Medicare.

The certification gives an insider a specific promise to examine. What pricing data supported the submission, who approved it, and what did those people know about the prices used in subsequent claims? Those connections are where we focus a pricing case: the representation, the decisions behind it and the money that followed.

Inside the Price and Claim Files

For this kind of allegation, we compare the submitted price and its certification with the underlying pricing files, later claims and final payments. The pharmacy benefit manager and plan-sponsor employees who work with those systems may see different parts of that comparison. Submission staff may know which price file went to Medicare’s administrators. Claims and reconciliation staff may know which amounts reached the pharmacy, the sponsor and the federal report.

Matching a Price to Its Prescription

The federal data dictionary ties a reported price to a particular plan and prescription event. Matching that event to the price shown before enrollment gives the comparison its meaning.

We examine the contract’s pricing terms alongside the claim and final remittance. The patient payment, pharmacy reimbursement and sponsor payment each answer a different question. The claim history can show how the amount changed inside the system.

The Federal Report Has Its Own History

The Centers for Medicare & Medicaid Services’ guide to prescription drug event data explains that these records are summary extracts prepared by the Part D sponsor for payment reconciliation. The original pharmacy claim and the report sent to CMS occupy different places in that process. Comparing them lets us follow what the sponsor changed before submitting the federal report.

The guide contains a detail that matters to anyone reading a claims export: an adjusted prescription drug event can retain the date the plan originally paid the pharmacy. A separate adjustment or deletion field distinguishes the original record from its later versions.

That is why our review follows audit findings and pharmacy payment adjustments through to the reporting side. We follow the claim from the pharmacy to the final federal reconciliation. An insider who knows why a price changed can explain a connection that the final file leaves out.

The Civil Settlement and the Beneficiary Relief

RxAmerica’s civil agreement resolved the government’s False Claims Act allegations. Under the separate Federal Trade Commission agreement, CVS agreed to pay $5 million over allegations concerning inaccurate Plan Finder submissions from late 2007 through 2008. The Justice Department said the FTC settlement was being used to compensate beneficiaries.

Medicare paid the claims, and beneficiaries had chosen coverage using the submitted prices. We see a familiar bargain in the civil settlement: pay to resolve the allegations, admit no liability for the prices patients relied on.

The same split between a price shown and a price billed appears in the Kmart usual-and-customary pricing settlement, which included a $32.3 million federal agreement within a $59 million settlement that also covered the states. The government alleged that Kmart omitted broadly available discounted generic cash prices from its reporting to Medicare Part D, Medicaid and TRICARE.

Kmart’s alleged comparison was between the cash price available to customers and the price reported for reimbursement. RxAmerica’s was between the price submitted to help beneficiaries choose a plan and the price used in subsequent claims. In each, the useful question for an insider is which price the company represented to someone else, and how that representation affected payment.

The Whistleblower Cases Behind the Agreement

Two qui tam complaints brought by whistleblowers under the False Claims Act led to the RxAmerica resolution. The investigation was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of New York, HHS-OIG and the Centers for Medicare & Medicaid Services.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For a healthcare insider who knows how the submitted prices and paid claims diverged, that knowledge is the starting point for a conversation with our whistleblower experts.

You Know Which Price Went Where

If you worked on Plan Finder submissions, pricing certifications or the claims that followed, speak to one of our Whistleblower Experts about what the files showed. We connect your knowledge of the pricing decisions to the government payments, build the case with you and bring in PBM fraud whistleblower lawyers who understand Medicare Part D reporting. From the first comparison through the pursuit of a recovery, we stay beside you.