25 arrested for fraud related to TRICARE and compound drugs

TWenty-five people were arrested in June, accused of committing fraud against TRICARE, the health plan for 9.4 million military service members, retirees, their families and survivors. The arrests were associated with $47 million in fraudulent compound drug claims paid by TRICARE in recent years.

The arrests were part of a major health care fraud prosecution announced in June by the U.S. Department of Justice (DOJ), U.S. Department of Health and Human Services, the Defense Criminal Investigative Service and other agencies.

TRICARE officials have praised DOJ, DCIS and other agencies for their relentless pursuit of those accused of perpetrating fraud.

“Such widespread and blatant fraud threatens the integrity of the TRICARE benefit,” said Mr. John Marchlowska, chief of the DHA Program Integrity Division. “Our beneficiaries have a right to know that the medications we cover are safe and effective, and that we are spending money wisely. This announcement shows that our enforcement actions are effective. To date, TRICARE has recovered approximately $235 million related to compound drugs, and we will continue pursuing cases like this.”

The arrests relating to fraud against TRICARE included four doctors, one physician’s assistant, four pharmacists and sixteen people involved in selling or marketing compound products to TRICARE beneficiaries. The complaints allege various types of wrongdoing, including kickback schemes, the writing of prescriptions without a doctor/patient relationship, and misuse of patients’ personal health data.

The investigations stem from dozens of complaints filed by TRICARE beneficiaries who noticed suspicious charges from compound pharmacists. The DHA Pharmacy Operation Division and the DHA Program Integrity Office also reported suspicious cases to DCIS for further investigation.

TRICARE experienced a massive surge in the claims for unnecessary and costly compound drugs in 2014 and the first half of 2015. In 2004, TRICARE spent a total of $5 million for compound drugs. In 2014, that number increased to $514 million, and spiked to over $1 billion in just the first four months of 2015. Compound drugs accounted for only 0.5% of the volume of drugs provided by TRICARE, but made up more than 20% of the cost. Many compound products were of dubious or no clinical value, and some may have been dangerous.

In May 2015, the Defense Health Agency (DHA) took action to implement an ingredient screen to make sure that all TRICARE covered compound drugs are safe, clinically necessary and cost effective. Since then, TRICARE’s monthly cost for compound drugs has stabilized under $10 million, close to the level in 2008. The DHA has realized more than $1 billion in cost avoidance since implementing the screening.

If you think you are the victim of TRICARE related fraud, you can report it to the Defense Health Agency. You can also report cases where you think someone is trying to defraud TRICARE. For example, if your TRICARE explanation of benefits shows a bill for something you didn’t get, tell your TRICARE Regional Contractor.