Just days after agreeing to pay a modest $5 million fine to settle federal charges of misrepresenting prices in the Medicare Part D program for seniors (see this), CVS Caremark is now being accused by a former auditor of defrauding various federal healthcare programs by failing to submit accurate and complete data used to obtain lucrative reimbursements.

The charges were made by Anthony Spay, a former pharmacist and managed care consultant whose auditing firm, Pharm/DUR, was hired several years ago by CVS Caremark to review internal records. However, he claims to have uncovered numerous instances in which the big pharmacy benefit manager and retail pharmacy chain deliberately submitted false data to the Centers for Medicare & Medicaid Services.

Basically, Spay claims to have pulled back the curtain on the complicated, behind-the-scenes transactions in which various CVS Caremark entities allegedly monkeyed with prescription data involving Medicare Part D sponsors with which its PBM unit had provided various services. The infractions mentioned in the lawsuit include data about expired drugs; drug utilization reviews; dispensing drugs covered by Medicare and Medicaid; prior authorization, and national drug code submissions.

He notes that CVS Caremark stood to profit considerably from adjudicating Part D claims and dispensing Part D drugs. These included administrative or processing fees of 20 cents for each paid retail or mail order claim, and there was 80 cents for each on-line claim). But as Spay pointed out, CVS Caremark did not receive a processing fee when claims were rejected, which is why, he alleges, inaccurate data was submitted for some claims. “These fees are significant in light of the fact that the Caremark defendants’ PBMs process hundreds of millions of prescriptions each year,” the lawsuit states.

His lawsuit goes on to say that CVS Caremark also received incentives to process, not reject, Part D claims because - under one PBM agreement he cites - the company collected a dispensing fee of $3.00 for each retail prescription and $1.48 for mail order prescriptions, but only if the prescription was billed and “dispensed to the Part D participant through Caremark’s retail pharmacy network,” according to the lawsuit. Again, fees were earned only for dispensed prescriptions.

And there was yet another incentive, he charged. Through the retail and mail-order pharmacies, CVS Caremark earned still more funds paid that were paid to the dispensing pharmacy, including drug costs and a pharmacy’s share of dispensing fees. Spay notes that these fees were not earned unless a Part D claim was paid. “These incentives are significant in light of the hundreds of millions of prescriptions dispensed through CVS Caremark pharmacies each year,” the lawsuit charges.

At one point, he contends that CVS Caremark sent letters to pharmacies, which were serving a Medicare Part D Plan sponsor that had contracted with its PBM unit, and instructed them not to provide any information to Pharm/DUR. Spay refers to this as an “intentional disruption” with the audit process and contradicted statements in the CVS Caremark fraud and abuse training manual, which states that network pharmacies have a responsibility to cooperate with Part D audits.

The lawsuit and exhibits indicate that more than $4 million in Part D claims should not have been submitted for reimbursement. We have asked CVS Caremark for a comment and will update you accordingly. The US Department of Justice, by the way, chose not to intervene, or join, the lawsuit, which was filed last August, but was unsealed last month (you can read the lawsuit and the interesting exhibits that contain all sorts of details here and here).

[UPDATE: At 3:30 pm ET, a CVS Caremark spokeswoman wrote us this: "We have recently learned that a suit has been filed but we have not yet been served. As such, we are unable at this time to comment specifically on any claims that have been asserted... CVS Caremark is confident in our Medicare Part D business practices and will vigorously defend this matter, should the plaintiff opt to pursue it."]