Purpose

To determine whether Medicaid made proper payments to Joia Pharmacy, Inc. (Joia) and a related prescriber (herein referred to as “the Doctor”) in compliance with applicable Medicaid laws and regulations as well as the rules and policies set forth by the Department of Health (Department) and the State Education Department. Our audit covered the period January 1, 2008 through December 31, 2012. Note: During the course of the audit, the audit fieldwork was temporarily suspended to avoid interfering with a review by other external oversight authorities of some of the matters addressed in this report. Subsequent to that review, we provided the Department with updated audit findings pertaining to matters addressing the Doctor’s prescribing activity for the period January 1, 2013 through June 30, 2016.

Background

The Department is responsible for administering New York State’s Medicaid program. Medicaid is a federal, state, and locally funded program that provides a wide range of medical services to those who are economically disadvantaged and/or have special health care needs. For the State fiscal year ended March 31, 2016, New York’s Medicaid program had approximately 7.4 million enrollees and Medicaid claim costs totaled about $56 billion.

Prescription drugs can be dispensed to Medicaid beneficiaries by licensed pharmacists who work at pharmacies that are enrolled in the Medicaid program. During the audit period, Joia, doing business as Soho Pharmacy, was a privately owned pharmacy located in Lower Manhattan. Soho Pharmacy was still in business at the time of this report; however, it has operated under different corporate ownership since 2014. For the period January 1, 2008 through December 31, 2012, the Department paid Joia more than $7.7 million for 50,060 claims on behalf of 706 recipients. The Doctor was listed as the prescriber on 31,351 (63 percent) of the 50,060 claims.

Key Findings

• Based on a statistical projection of our audit sample results, we found that the Department overpaid Joia $1,485,121 for improper pharmacy claims. Disallowances included:
  • Claims billed for excess quantities of drugs (for instance, quantities billed exceeded quantities prescribed);
  • Claims for drugs in which the prescriptions were missing or invalid;
  • Claims in which the medication dispensing labels contained inaccurate instructions for use;
  • Claims wherein the drug and drug strength were different from what the physician prescribed; and
  • Claims for unauthorized and inappropriate refills.
• Our audit also identified a range of practices by both Joia and the Doctor that warrant further review. For example, we found:
  • The Doctor was listed as the prescriber on 63 percent of Joia’s claims; among these claims, we found high volumes of prescriptions for individual patients on single days, and instances of drug conflicts and prescriptions that exceeded utilization limits – some of which appeared potentially dangerous;
  • Instances where Joia did not dispense controlled substances in compliance with New York State Controlled Substances Act requirements, which increases the risk that these drugs could have been diverted for inappropriate, unauthorized, or illegal use;
  • Three claims, totaling $485, for medications for a recipient who was deceased at the time the pharmacy claims were processed;
  • Over 71 percent of Medicaid’s payments to Joia were for patients who lived approximately one hour away (one way); and
  • 134 of the 270 claims in the statistical sample had questionable patient signatures denoting prescription pick-ups (e.g., the signatures looked identical for different patients).

Key Recommendations

• Review the Medicaid payments made to Joia and recover any improper payments, as warranted.
• Formally review and assess the factors that led to Joia’s submission of the improper claims. Take actions, as warranted, to remediate any improper policies and practices that are identified. Such a review should include determining whether the pharmacy – under the new ownership – and its employees have corrected any such deficiencies.
• Follow up on all other matters identified in this report, including having a Department physician review the issues involving the Doctor, and take appropriate action, as warranted.
• Assess the appropriateness of the providers’ (pharmacists and physicians) future participation in the Medicaid program. This assessment should also address the propriety of referring the providers to the State Education Department’s Office of the Professions.

Other Related Audits/Reports of Interest

Department of Health: Improper Payments for Controlled Substances That Exceed Allowed Dispensing Limits (2013-S-59)
Department of Health: Optimizing Medicaid Drug Rebates (2015-S-1)