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DCH Recoups Millions From Chain Pharmacies: Are The Independents Next?

The Department of Community Health (“DCH”) is in the midst of recouping millions of dollars from Georgia’s chain pharmacies for use of Dummy Doctor Numbers. Proposed recoupment from a single chain has run as high as $54 million. Every indication is that DCH next plans to pursue recoupment against independent pharmacies.

What are Dummy Doctor Numbers?

DCH’s policies and procedures require that each pharmacy claim billed to DCH contain the prescribing physician’s medical license number. The Dummy Numbers were created by DCH as a means of replacing the actual physician numbers when, for various reasons, the prescribing physician’s actual license number is not entered into DCH’s claim database and is unavailable on the Medical Board’s Web site.

There are several other situations where usage of the Dummy Number is appropriate, such as when a physician’s signature is illegible and there is no other way to identify the prescriber, when a prescription is written in the emergency room, or for a prescription written by a resident.

Pharmacy providers across the state have been using DCH approved Dummy Doctor Numbers for years. However, DCH thinks that pharmacies are abusing the Dummy Numbers and is using this type of recoupment action as a means of enforcing compliance with DCH policies.

How Does DCH Target Providers?

In deciding which pharmacies to target for recoupment, DCH identifies providers who use the Dummy Numbers for more than 20 percent of their Medicaid claims. On the face of DCH’s recoupment letter it is unclear how it arrived at the 20 percent threshold.

Through discussions with DCH, we have learned that the 20 percent threshold represents the average use per pharmacy of the Dummy Number with a margin for error built into the calculation. However, most providers are shocked to hear that DCH is not just trying to recoup reimbursement for Dummy Number claims over the 20 percent threshold, but is seeking recoupment for all of the provider’s Dummy Number usage including the original 20 percent!

What Do You Do if You Receive a Recoupment Letter?

Faced with huge recoupment amounts, most of the chain pharmacies have negotiated settlements with DCH. If your pharmacy receives such a recoupment letter you should obtain legal representation immediately, even if you plan on negotiating a settlement.

DCH’s case has significant constitutional, statutory and contractual weaknesses that can factor into an improved settlement for the provider. It is vital to have legal representation before the administrative review period. If the case proceeds to hearing, providers are limited to the arguments presented in its administrative review request. Therefore, to take advantage of the weaknesses in DCH’s case, legal arguments must be made and preserved in the administrative review request.

Remember, just because DCH asks for a large amount of money back it does not mean that it is what the provider owes. Know your rights and investigate your particular situation with the aid of experienced counsel.

This article is presented for educational and informational purposes only and is not intended to constitute legal advice.

About the Author

D.J. Jeyaram is the founder of Jeyaram & Associates and has represented more than 70 pharmacies in Dummy Number cases. Jeyaram is a former in-house counsel for DCH and an Administrative Law Judge. Jeyaram can be reached at or 404.995.6792.

Federal Deadline for Pharmacy Compliance Plan Approaching – Are You Ready?

In an effort to contain the skyrocketing costs of the Medicaid and Medicare programs, the federal government enacted the Deficit Reduction Act of 2006. The Act is a sweeping cost cutting measure that will trim 11 billion dollars for the Medicaid and Medicare Programs over the next five years.

Buried amongst these cost cutting measures are new requirements for healthcare providers to enact Medicaid Compliance Plans. Though pharmacies are not traditionally thought of as “healthcare providers,” Section 6032 of the Act extend the Compliance Plan requirement to any entities receiving annual Medicaid payments of at least 5 million dollars.

Many independent and chain pharmacies are unaware that the Act requires that Compliance Plans be in place by January 1, 2007, and are not prepared to meet this statutory deadline. The Act requires any entity that meets the criteria to adopt policies and procedures and educate their employees, contractors and agents on various aspects of healthcare fraud enforcement. Included in these educational requirements are:

  • The federal False Claims Act;
  • administrative remedies for false statements under federal law;
  • any state laws establishing civil or criminal penalties for false claims or statements;
  • whistle blower protections under any applicable state or federal law;
  • the roles of such laws in preventing and detecting fraud, waste and abuse in federal healthcare programs;
  • the entities internal policies and procedures for detecting and preventing fraud, waste and abuse;
  • the entity’s Employee Handbook is required to contain specific discussion of the federal and state laws described above, the rights of employees to be protected as whistle blowers, and the entity’s internal policies and procedures for detecting and preventing fraud, waste and abuse.

For pharmacies chains with locations in multiple states, the employee and contractor education must be specific to the laws of every state the pharmacy is located.

It is important that Medicaid providers begin to review and revise their current compliance plans and policies including employees handbooks, to ensure that these documents meet the Act’s requirements.

Jeyaram & Associates can help you comply with these new federal mandates by integrating information into your existing compliance plan or by creating a new comprehensive compliance plan tailored to meet your needs. Contact us for a free consultation at 404.995.6792 or at

This article is presented for educational and informational purposes only and is not intended to constitute legal advice.

About the Author

Deepak (“D.J.”) Jeyaram is the founder of Jeyaram & Associates, a full service health law firm. He represents a wide variety of healthcare providers including hospitals, nursing homes and physician group practices. He concentrates his practice in healthcare regulatory matters, primarily in administrative appeals and Medicare and Medicaid reimbursement.

His prior experience includes working in-house with Georgia Medicaid, rising to the position of Deputy Director of Legal Services. Later in his career, Jeyaram was an Administrative Law Judge who presided over disputes between the Georgia Department of Community Health and Medicaid providers on issues involving reimbursement, utilization review and provider termination. Jeyaram received his bachelor’s degree, cum laude, from Boston University and his law degree from Emory University.