Walmart and Sam’s Club have agreed to pay $825,000 to resolve allegations that they have violated the False Claims Act by automatically refilling Medicaid prescriptions. The allegations came from the state of Minnesota, which – as many other states – does not allow automatic refill of Medicaid prescriptions without an explicit request from the beneficiary for each refill.
According to the allegations, Walmart and Sam’s Club pharmacies routinely enrolled Medicaid beneficiaries in their auto-refill program, and billed the state for prescriptions in violation of state rules and regulations. In addition – according to the allegations – pharmacy employees reported the violation to company managers, yet Walmart and Sam’s Club continued to automatically refill Medicaid prescriptions.
The case originally was brought by a whistleblower under the qui tam provisions. Both state and federal government were involved in litigation. Under the settlement agreement, Walmart and Sam’s Club will pay $412,500 to the federal government and $412,500 to the State of Minnesota to settle the claims.
There were several other federal and state-level investigations of auto-refill programs of large chain pharmacies. For example, a few years ago, The U.S. Department of Justice’s Civil Fraud Division, California Department of Health & Human Services, and the California State Board of Pharmacy investigated claims that CVS Caremark wrongly refilled prescriptions and billed California Medicaid program without the knowledge or the approval of its customers.
A key issue in this case was whether CVS pressured pharmacists to increase refills — and hence revenue — through use of internal quotas that made pharmacists’ pay and bonuses contingent on how many patients they could enroll in the company’s automatic ReadyFill program. CVS’s internal memorandum produced during the investigation, which were issued by CVS management to the pharmacists confirmed that the pharmacists were expected to enroll at least 40% of patients into ReadyFill.
Likewise – under Medicare – pharmacists are required to obtain patient consent to deliver a prescription (new or refill) prior to each delivery. Under CMS’s guidance, PBMs contracting with the pharmacies must assure this compliance through periodic audits. This is specifically relevant and applies for mail-order pharmacies.
Many private payors also prohibit automatic refills as it presents waste of the resources (if shipped and refused – as with mail orders – medication cannot be put back into stock and a claim cannot be reversed). Therefore, before you auto-ship that refill, consider confirming that the patient still needs it.