City Of Fort Worth: How Fort Worth Saved Millions By Cracking Down On Pharmacy Fraud

Press release from City of Fort Worth:

November 09, 2021

The City of Fort Worth presents a textbook case study for the pervasiveness of pharmacy fraud hidden in health care claims and the action required to combat the ever-evolving abuse.

In 2017, the city was $15.2 million overbudget on employee health care spending. With just shy of 7,000 employees, benefit costs are a significant portion of the city’s budget. To address the rising costs, officials took innovative steps to reduce spending, including working with an accountable care organization, opening three clinics exclusively for city employees, and bringing in a third party to analyze and review its employee health care claims for fraud, waste and abuse.

By 2019, the city saw nearly $11 million in health care savings due to these combined efforts.

Like most municipalities and businesses, the city continues to battle the rising cost of health care, and in 2020-21 found pharmacy fraud was beginning to eat away at its savings. Working with a new focus on actively reviewing employee health care claims with the help of an independent partner, the city began to identify and remove all types of fraud, waste and abuse. The partnership has produced more than $2.3 million in realized savings back to the plan.

Focus on eliminating the identified fraudulent and abusive pharmacy spending was the next step.

Nathan Gregory, deputy director of the Human Resources Department, was aware of pharmacy fraud and knew situations existed where unscrupulous actors obtained member health care information and used it to bill health plans for nonexistent or fraudulent prescriptions. However, he was not aware to what extent it existed in the city’s health plan. A focused look at the data provided the insight.

Asha George is the CEO and co-founder of SmartLight Analytics, which partners with Fort Worth to analyze claims for wasteful spending. Her team began to see patterns in Fort Worth’s health care claims data indicating suspect billing of likely fake prescriptions.

“The patterns indicating abusive billing were clear. Members were being prescribed broadly available creams and ointments by physicians that they hadn’t seen, and the prescriptions were filled at pharmacies hundreds of miles away from their home,” George said. Working with Fort Worth’s pharmacy benefits manager, a plan was developed to suspend payments to pharmacies where clear abusive patterns were noted in the data while investigations were pursued.

Using this process, the city has now suspended claims to 17 suspect pharmacies, preventing an estimated $844,657 in fraudulent payments.

The findings and actions have not been disruptive for Fort Worth’s members. To date, no member complaints have been received, further confirming the members were not aware these prescriptions were being filled under their pharmacy benefits.

“Whenever we find waste, fraud or abuse for obvious reasons, we want to stop that as quickly as possible. Everything we do within our health fund, we do with an awareness that ultimately, we are dealing with taxpayer funds. It’s our responsibility to provide good benefits to our employees, but also in a sustainable manner so that our health plan is sustainable in the long term,” Gregory said.

The City of Fort Worth has now suspended 17 suspect pharmacies from billing its employee health plan, preventing $844,675 in fraudulent payments to date. A total of $1,731,168 in savings have been identified.

Pharmacy fraud, waste and abuse schemes operate by telemarketing companies generating prepopulated prescription forms for drugs, dosages and quantities set, regardless of the patient or condition. This results in each patient receiving identical fills of medically unnecessary medications, regardless of their ages, medical histories or other individual factors.

The prescriptions are then sent to a medical practitioner in the telemarketing companies’ network for authorization, which is typically not the member’s primary care physician or any other physician treating the member. Once the prescription is signed, it is sent to a partner pharmacy that is cooperating in the scheme, again typically not the member’s regular pharmacy.

 “We only recommend stopping claim payment in situations where it’s obvious it’s fraudulent,” Gregory said. “The health care system is still like the Wild West at times. As much as the government has tried to put regulations in place, there are still multiple loopholes for providers and, in this case, pharmacies to fraudulently work the system. We believe this (continual claims review for fraud, waste and abuse) is a permanent part of how we have to operate.”

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This press release was produced by City of Fort Worth. The views expressed here are the author’s own.