March 16, 2011
DiNapoli: Long Island Pharmacy Bilked State Out of $700,000
The New York State Health Insurance Program (NYSHIP) overpaid Kings Pharmacy of Long Beach by more than $700,000 according to an audit released by State Comptroller Thomas P. DiNapoli. Most of the overpayments DiNapoli's auditors identified were for cancer treatment prescriptions that physicians denied preparing, and auditors have concluded that signatures on certain prescriptions were forged.
The former owner of the pharmacy, Jay Kirschner, pleaded guilty to one count of healthcare fraud on March 22, 2010, and was sentenced Tuesday, March 1, to 30 months in federal prison. He was also ordered to pay $2.4 million in restitution. DiNapoli's office coordinated its work with the FBI and DEA.
"Time and again we hear about fraud and waste in the health care industry," DiNapoli said. "This kind of crime drives up health care costs for everyone. In this case, because of just one pharmacy's greed, patients and taxpayers got their pockets picked to the tune of nearly three-quarters of a million dollars. It's an outrage."
DiNapoli's auditors examined a random sample of 250 prescription claims and identified $48,078 in overpayments. An extrapolation of these overpayments to the broader population of Kings' prescriptions resulted in a projected overpayment of at least $451,817.
Auditors also identified a net overpayment of $139,382 from 19 prescriptions for treating cancer, concluding that the state overpaid Kings Pharmacy by at least $591,199 ($451,817 + $139,382). This amount is over and above $124,280 in overpayments identified by an audit of NYSHIP that was conducted by Medco Health Solutions, Inc., the State's pharmacy benefit manager. The total in overpayments between DiNapoli's and Medco's audits amounts to $715,479.
NYSHIP covers active and retired state, local government and school district employees and their dependents. The Empire Plan is the primary health benefits plan for NYSHIP and includes prescription drug coverage. The state contracts with United Health Care (UHC) to provide prescription drug coverage under the Plan. UHC subcontracted the administration of the drug program, including claim payment audits, to Medco.
DiNapoli, whose office regularly performs audits of NYSHIP payments, recommended UHC recover the overpayments, investigate and assess the factors which led to improper claim submissions, and implement policies to comprehensively review high risk claim payments. UHC generally disagreed with the audit's findings. This audit is part of DiNapoli's ongoing drive to root out health care fraud in New York State. Click here for a copy of the audit: http://osc.state.ny.us/audits/allaudits/093011/10s43.pdf.