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June 24, 2020

Express Scripts, Tricare Engage in Retroactive Recoupments Against Independent Pharmacies

No notice. No due process. Retroactive. In an unprecedented wave of unilateral recoupments against compounding pharmacies, Express Scripts Incorporated (ESI) just helped itself to your pharmacy’s current remittance for Tricare claims. With no notice, they took back large amounts, including the entire drug cost—for claims that are, in some cases, five years old. How could this happen? What can you do? Do you still have time to appeal?

Abusive, overreaching audits by pharmacy benefit managers (PBMs) is not breaking news, but this sweeping, national onslaught of ESI recoupments is as bold as it is unprecedented. The full recoupments followed letters sent by ESI in June to independent pharmacies (back-dated to April) stating the recoupment actions were initiated at the request of the Defense Health Agency Office of Program Integrity (DHA-PI). Just as these letters were being received by pharmacies, ESI was simultaneously recouping against current funds due and owed to the pharmacy. Remarkably, the recoupments occurred without any supporting audit findings or opportunities to provide documentation prior to the sudden recoupment.

The recoupments revolve around alleged findings by the DHA-PI concerning Tricare patients based upon prescriptions written by prescribers in 2015. The allegation is that the patient did not have a “valid” patient relationship with the prescriber and, therefore, the claims are now being considered invalid. The move follows reports of criticism of ESI by Tricare that it failed to properly police prescriber utilization of expensive compounded medications.

While ESI is allowing an administrative, post-recoupment review of the claims pursuant to the current provider manual, it is not considering prescriber or patient attestations validating the patient-prescriber relationship to support the claims and counter the findings. Instead, ESI, acting five years after the orders were approved and paid, is demanding “contemporaneous” records from five years ago, as shown by metadata. This extreme position is further complicated by the practical fact that there has never been any requirement to maintain documentation validating a patient’s “relationship” with a prescriber when a proper order was presented. The overreaching, blunderbuss nature of the en masse recoupments is further underscored by the fact that many of the charts attached to the letters contained erroneous and inaccurate information.

Apart from the obvious impacts of the recoupments themselves, affected pharmacies need to be aware that these draconian recoupments could trigger a termination from ESI and exclusion from Tricare for 10 years unless they are challenged. Moreover, unchallenged findings of fraud, waste, and abuse could be reportable to other PBMs and health plans, causing a potential cascade of network challenges. It could also lead to investigations by other enforcement agencies. Pharmacies that received these letters should take immediate action to protect their interests. Our pharmacy audit team is at the ready to assist you.

If you have any questions regarding the content of this alert, please contact Linda Clark, Health Care Controversies Team leader, at; Brad Gallagher, counsel, at; or another member of the firm’s Health Care Controversies Team.

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