Feds Sue CVS, Omnicare Over Allegations of Fraudulent Long-Term Care Pharmacy Billing

The federal government on Tuesday announced a civil lawsuit against long-term care pharmacy heavyweight Omnicare, Inc. and its parent, CVS Health (NYSE: CVS), over allegations of widespread billing fraud.

The Department of Health and Human Services (HHS), through its Office of the Inspector General (OIG) watchdog arm, accused Omnicare and CVS of illegally “rolling over” prescriptions without the approval of doctors.

Instead of consulting with a physician when a specific patient’s prescription expired or ran out of refills, the government claims, Omnicare staff simply assigned a new number to the order and continued filling the prescriptions — sometimes for months or years.

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Because Omnicare — which operates 160 pharmacies across 47 states — serves patients covered by Medicare, Medicaid, and Tricare, the suit alleges that the pharmacy company violated the False Claims Act by billing the government for the extended prescriptions.

Omnicare’s “rollover” practices occurred at assisted living facilities and other non-skilled long-term care sites between 2010 and 2018, according to the government, and affected prescriptions for drugs including antidepressants and antipsychotics. The practice continued, the feds allege, even after internal compliance staff flagged the problem in 2015.

“A pharmacy’s fundamental obligation is to ensure that drugs are dispensed only under the supervision of treating doctors who monitor patients’ drug therapies,” Geoffrey Berman, the U.S. attorney for Manhattan, said in a statement. “Omnicare blatantly ignored this obligation in favor of pushing drugs out the door as quickly as possible to make more money. This office will continue to hold accountable those who put at risk people’s health and safety just to turn a profit.”

Omnicare denied the allegations in a statement provided to Skilled Nursing News and our sister site, Senior Housing News.

“We do not believe there is merit to these claims, and we intend to vigorously defend the matter in court,” a CVS spokesman said via e-mail. “We are confident that Omnicare’s dispensing practices will be found to be consistent with state requirements and industry-accepted practices.”

The Woonsocket, R.I.-based CVS Health purchased Omnicare for $12.9 billion in 2015, though headwinds in the skilled nursing space have complicated the marriage: CVS took a $2.2 billion impairment charge on its fourth-quarter 2018 earnings, which it blamed on the bankruptcies of several skilled nursing customers.

“The growth opportunity with Omnicare was always focused on the independent and assisted living spaces,” president and CEO Larry Merlo said during a call with investors and analysts. “And those opportunities still exist.”

Tim Mullaney contributed reporting to this story.

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