Fraud involving pharmaceutical manufacturers’ patient co-pay and voucher programs is on the rise.

“If pharmacy fraud is happening in Medicare and Medicaid, then it’s happening with your co-pay programs,” says Tim Ogren, SVP, products. “It’s far easier for a licensed pharmacist to get his or her hands on a co-pay card than it is to get admitted into a Medicare network.”

“At TrialCard, we define pharmacy fraud as the submission of a claim that will result in payment, where there’s no intent to deliver a product to a patient,” explains Ogren.

Pharmacy fraud within a patient affordability program follows a different trajectory than Medicare fraud, he explained. It doesn’t involveillegal kickbacks, pricing fraud, drug diversion, or auto refilling schemes. It typically doesn’t involve the healthcare provider.

Ogren cites examples pulled from the headlines to describe the two types of pharmacy fraud that are most prevalent. In the first iteration, the pharmacy is designed to swindle manufacturers from the get-go. These “pop-up” pharmacies receive a license from their respective State Board of Pharmacy. There’s an immediate ramp up. They push through a massive amount of claims – all fake. There is a large amount of money in play. And they typically close soon after being reimbursed by the pharma manufacturer, disappearing into the ether.

The second type of fraud, while not as common, can be more difficult to ferret out. It typically involves a legitimate pharmacy. In these cases, the owner intersperses fake claims among the real ones.

“That’s one of the things that makes this difficult to find,” Ogren says. “A pharmacy can operate as a legitimate concern for eight, 10, 12 months, fall on hard times, and then submit a fraudulent claim.”

Catching the fakes

To protect its clients from this type of financial exposure, employees of TrialCard who experience in law enforcement and analytics created the Enhanced Pharmacy Fraud Monitoring Service.

“Although it’s a tough conversation to have as a service provider, we want to erase the stigma around pharmacy fraud and jumpstart the discussion to stop it from happening,”  Ogren says.

The five-part Enhanced Pharmacy Fraud Monitoring Service includes credentialing, monitoring, investigating, auditing, and refunding.

1. Credential

The company’s multi-tier approach begins with credentialing, which happens at the network administration level, explains Ogren. The two processors TrialCard uses to maintain the networks thoroughly vet new pharmacies prior to allowing claims to be submitted to manufacturers’ co-pay programs.

“Our clients benefit from having these large networks, because the access is better and there are more pharmacies in the network,” says Ogren. “Last I looked there were nearly 78,000 pharmacies that are set up with the NCPDP (National Council for Prescription Drug Programs). TrialCard’s network has data on 72,0000 of those, and that’s because of the contracts and relationships we have with our processors.”

2. Monitor

TrialCard’s RxSpotlight monitoring tool applies proprietary algorithms to flag possible fraud as early as possible. “Spotlight’s algorithms are based on proven statistical principles,” said Ogren. “When you conduct a statistical run, outliers are going to show up, which is what we look for.”

Spotlight leverages claim data combined with data from external resources to draw “confidence conclusions” that allow the investigator to uncover connections to other pharmacies and establish patterns.  Confidence ratings are also assigned to every pharmacy within TrialCard’s network, and help prompt investigators to take a closer look at pharmacies that may pose a risk.

Results of investigations are calculated and updated daily in Spotlight, which ensures that processors are receiving the most current and accurate information.

3. Investigate

TrialCard’s dedicated fraud investigator validates claim data with prescribers. “We validate activity both at the script and patient level,” Ogren says. “Before we go back to the processors with our findings, we call prescribers and pharmacies to help build a case.”

TrialCard personnel with in-depth industry experience follow law enforcement protocol to create a “findings of facts”. These set in motion the immediate removal of the pharmacy from the network and suspension of payments to the pharmacy.

“The level of detailed investigation is what sets us apart,” reports Ogren. “Our investigative reports demonstrate facts and conclusions, and these findings of facts give our processors a level of surety that the software’s done the work, so if necessary we can withhold the money.”

4. Audit

Pharmacies with a high likelihood of fraudulent activity are referred to TrialCard’s processors for a formal audit, which are guided by contractual relationships between the processor and the pharmacy. The ultimate intent is to confirm the “findings of facts” from the investigations and to form a conclusion.

“The processor will then send some information to the pharmacy and say ‘hey, this looks a little suspect,’” explains Ogren. “Then they will give the pharmacy some time to respond.”

5. Refund

If fraudulent activity is found as a result of the audit, any unpaid funds are returned to TrialCard’s impacted customers. Funds are held in escrow until the audit is complete.

“Our goal is to stop the money from going out the door,” Ogren says. “ I don’t want to pay the pharmacy $1 million and then ask my client to sue them for the money, which at that point is the only way to get the money back.”

TrialCard has initiated 94 investigations in 2019 to date. As of March 31, 83 investigations were completed, which resulted in the removal of 33 pharmacies from the network. “This means we validated at the script level that these were fraudulent,” explained Ogren. “Forty-eight pharmacies were declared not suspicious. We put them on a list for 18 months and then won’t look at them anymore. Two pharmacies were placed on our watch list. While there was really nothing there that showed they were involved with fraud, there was some connection with another pharmacy that led us to believe that there was a decent potential that they may start committing some fraud in the future.”

Last year, Spotlight identified four Michigan pharmacies that processed nearly 200 claims totaling more than $600,000 over a three-month period. “Our algorithm caught them at the end of the second month, when the claim volume really began to uptick,” explained Ogren.

TrialCard’s investigative process confirmed the fraud and prevented additional claims early in the third month. Based on the findings, TrialCard was able to withhold $582,000 out of the $600,000 in claims the pharmacies pushed through.

For more information about TrialCard’s Enhanced Pharmacy Fraud Monitoring Service, please contact: Tim Ogren, SVP, products at tim.ogren@trialcard. com

This article has been updated to clarify that the standard-setting organization for electronic claims processing is NCPDP – National Council for Prescription Drug Programs – not NABP.