The Woonsocket-based pharmacy giant denies any wrongdoing, saying that the issue arose from shortcomings in MassHealth's online claim-processing system.

01:00 AM EDT on Tuesday, July 26, 2005

BY TIMOTHY C. BARMANN
Journal Staff Writer

CVS Corp. has agreed to pay $895,000 to the Massachusetts Medicaid program to settle claims that the pharmacy giant did not return reimbursements for prescriptions that were ordered but never picked up.

CVS, based in Woonsocket, agreed to pay $812,807, plus $82,240 in interest, to settle its liability, according to a statement issued by Massachusetts Attorney General Tom Reilly.

The case involves prescription orders made by recipients of MassHealth between 1996 and this year. MassHealth is Massachusetts' Medicaid program.

When MassHealth prescriptions are filled by a pharmacist, a claim for reimbursement is usually sent to Medicaid at the same time.

If the prescription is not picked up, the pharmacy is required to return the payment to Medicaid within 60 days of receipt.

An investigation by the attorney general's Medicaid Fraud Control Unit found that CVS had not been returning money to Medicaid on some MassHealth prescriptions that were not picked up, said David Marks, deputy chief of the fraud unit.

A similar problem was the subject of an earlier investigation, Marks said, in which CVS was not properly returning MassHealth claims for partially-filled prescriptions. In those instances, a customer picked up only part of a prescription and CVS had received payment for the entire prescription, Marks said.

In 1998, CVS and Reilly's office reached a settlement in which CVS agreed to procedures for returning the money to Medicaid for the partially-filled prescriptions.

CVS "proceeded not to comply with that 1998 agreement because it was too difficult," Marks said. "They felt that the procedures they agreed to were too cumbersome, so they didn't do it."

CVS denied any wrongdoing, and said that the issue was a billing problem arising from shortcomings in in MassHealth's online claim-processing system, said Eileen Dunn, vice president of corporate communications for CVS.

MassHealth's system was not able to electronically reverse some prescription claims, she said.

"This is about the method by which the state was willing to receive or accept payments from CVS with regard to routine cancellation of prescription claims," Dunn said.

The company tried to resolve the issue in 2002, she said, by issuing a check to MassHealth for about $789,000.

That check was never cashed, she said, because MassHealth had difficulty verifying the overpayments the payment represented.

Between 1998 and 2002, CVS and MassHealth negotiated, but could not come to an agreement, according to Marks.

The two parties then agreed to take the matter to the attorney general's Medicaid Fraud Control Unit.

Dunn said that almost all of the claims at issue were for prescriptions issued before 2001. MassHealth and CVS have updated their computer systems, and since 2002, MassHealth can reverse claims electronically, Dunn said.

Timothy C. Barmann covers energy issues, utilities and technology. He can be reached at tbarmann [at] projo.com