October 22, 2012

CVS Sub Caught Duping Consumers in Prescription Drug Purchases

By Marlene Koury

In one of the first False Claims Act settlements involving Medicare’s “Part D” prescription drug program, CVS Caremark subsidiary, RxAmerica, agreed to pony up $5.25 million to resolve charges that it submitted false pricing information to the Centers for Medicare & Medicaid Services (CMS).  This is the government body that oversees the Medicare and Medicaid programs.  It also makes available the Internet-based tool called Plan Finder which allows Medicare beneficiaries to compare various Part D plans to find the one that works best for them.  The settlement resolves allegations against RxAmerica that were made in two separate False Claims Act casesClick here to see a copy of the DOJ press release announcing the settlement. 

RxAmerica is one of numerous providers of prescription drug benefit plans under Medicare Part D.   The plans vary by provider in terms of what drugs are covered, the amounts reimbursed and the amount of any required co-pays or monthly premiums.  To assist Part D beneficiaries in selecting the plan that is most cost effective, the CMS Plan Finder provides the tools to select the plan that will cover their estimated prescription drug needs at the lowest possible cost.  Picking the right plan is crucial because once the allotted Part D benefits are exhausted, the individual is responsible for 100 percent of the cost of the prescription drugs.  But Plan Finder is only as useful as the information it provides is accurate and for this the CMS relies on the providers, such as RxAmerica. 

That is where the government’s action against RxAmerica comes in.  Apparently, RxAmerica did not hold up its end of the bargain.  According to the government, during the period of January 1, 2007 to December 31, 2008, RxAmerica provided CMS with inaccurate pricing information to make its offering appear more attractive to Part D beneficiaries.  It did this while certifying that the information was accurate.  By misrepresenting the cost of certain drugs, RxAmerica induced Part D enrollees into selecting RxAmerica’s plan over its competitors.  Once they signed up, RxAmerica  then charged its enrollees more money than it had estimated for various prescriptions, causing many enrollees’ Part D benefits to run out. 

The government is hoping that this well-publicized settlement will serve as a warning shot to others who may be considering a similar type of bait-and-switch.  After all, without accurate pricing information, the Plan Finder serves no purpose at all.  Even worse, it could cause Part D recipients to spend more money than they might have without resorting to the Tool at all.

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