In my last post, I covered a recent settlement of $2.75 mil where an LTC pharmacy – AlixaRx – was allegedly improperly filling “emergency” scripts for LTC patients. A part of this settlement also included an allegation that AlixaRx billed Medicare Part D for claims that had already been reimbursed through claims paid to long-term care facilities under Medicare Part A. Today, I want to elaborate on this issue and touch on the proper billing practices when a pharmacy works with hospice or skilled nursing facilities.

A rule of thumb: federal law requires hospices to provide drugs related to the palliation and management of the terminal illness. Medicare Part A pays for these drugs. Therefore, for medications covered under Part A (hospice benefit), the pharmacy negotiates a fee with the hospice. For medications unrelated to the treatment of the terminal illness, the pharmacy bills Part D. Likewise, Part A applies to skilled nursing claims for certain condition and under certain circumstances. Pharmaceutical care provided to qualifying patients should be billed through Part A.

Sounds pretty straightforward? As AlixaRx case illustrates, it is not all that simple.

Hospice claims: The CMS has determined that the following categories of drugs are generally payable under Medicare Part A when prescribed to patients that have elected hospice: laxatives, antiemetics, antianxiety agents, and analgesics (nonnarcotic, opioid, and anti-inflammatory). However, if the hospice or non-hospice prescriber determines that a drug within one of these four categories is unrelated to the terminal illness, the drug would be eligible for coverage under Medicare Part D. In this case, a prior authorization (submitted by hospice) is required.

Skilled Nursing Facility coverage: it applies to newly admitted or re-admitted patients who are coming for a hospital stay of at least three days. Part A pays up to 100 days of coverage for prescription drugs.

While pharmacies are ultimately responsible for ensuring that claims eligible for coverage under Part A or Part B are not adjudicated under Part D, the responsibility for proper claim classification should be on the hospice/facility provider. Therefore, your contract with the facility should expressly states that the facility shall designate claims as not covered by part A and indemnify the pharmacy in case of a retroactive audit and chargeback identifying discrepant claims. And – what I see as often missing – there should be a provision allowing you to renegotiate your fee if Part A fees have increased. For example, this year Medicare increased hospice payment rates by 2.4% but I don’t think many pharmacies increased their rates under hospice contracts.

If a pharmacy erroneously bills Part D for a drug where coverage is available under Part A or Part B, PBMs will recoup any money incorrectly paid through the pharmacy audit process. The PBM may refer the case to the government for further investigation (if the discrepant amount is substantial).

In the case of AlixaRx, the complaint alleged that it submitted Part A claims to Part D, which warranted investigations by the OIG and FBI.  The complaint explains that Medicare Part A “SNF coverage applies to newly admitted or re-admitted beneficiaries who are coming for a hospital stay of at least three days… and provides 100 days of coverage for prescription drugs…” But AlixaRx allegedly assigned such claims a Part D status.

To recap and to give you some food for thought: (1) ensure that hospice and LTC claims are properly billed; (2) your contracts with the facilities should shift the billing responsibility to the facility and properly protect you; (3) and such contracts should be timely updated and revised (and rates renegotiated).