CVS Caremark reported $56.6 billion in prescription sales last year, about… (Eliot J. Schechter, Bloomberg )
The U.S. Justice Department's civil fraud division is investigating claims that CVS Caremark wrongly refilled prescriptions and billed insurers without the knowledge or the approval of its customers.
The probe will focus primarily on allegations of Medicare fraud, said Shana T. Mintz, an assistant U.S. attorney in the division's Los Angeles office.
The investigation also will look into whether CVS violated a $17.5-million settlement reached with federal authorities last year over allegedly falsified claims to Medicaid programs in California and nine other states, Mintz said.
CVS has denied doing anything wrong.
The Justice Department will be working with the U.S. Department of Health and Human Services, which late last week launched its own investigation. California and New Jersey regulators also are probing CVS' refill practices.
Mintz said that her office has contacted CVS and that the nation's biggest provider of prescription drugs is prepared to cooperate.
A key issue is whether CVS pressured pharmacists to increase refills — and hence revenue — through use of internal quotas that made pharmacists' pay and bonuses contingent on how many patients they could enroll in the company's automatic ReadyFill program.
Company spokesman Mike DeAngelis said the drugstore chain uses so-called performance metrics to improve operations, not to determine employees' compensation.
"These metrics are among the numerous factors used to measure the effectiveness of our pharmacy services, and it would be inaccurate to describe them as quotas that put pressure on individuals," he said.
But 16 current and former CVS pharmacists, all of whom requested anonymity because of fear they could lose their jobs at the company or at other pharmacies, said this simply wasn't true.
One pharmacist described a "never-ending cycle of frustration" resulting from patients receiving automated calls about refills of prescriptions, or scripts, they never ordered.
"We have to pretend that we have no idea how it happened," the pharmacist said. "Everyone involved knows what this really is: a way to fill more scripts and make more money for the company."
The company reported $56.6 billion in prescription sales last year, about half its total revenue, from its store and its online pharmacy operations. Walgreen, by comparison, garnered $45.1 billion in prescription revenue last year, or about 62% of its total sales, according to market research firm Pembroke Consulting.
Virginia Herold, executive officer of the California Board of Pharmacy, said state officials have received numerous complaints about Californians being enrolled in CVS' ReadyFill program without their approval.
Documents for a meeting of CVS pharmacists in May outline what the company calls its "key business metrics." They show the targets that pharmacists are expected to reach for a variety of activities. The Times obtained the documents from two company pharmacists.
CVS tells pharmacists that they're expected to enroll at least 40% of patients into ReadyFill.
Document: What CVS pharmacists were told
In an earlier column, I quoted an email from a CVS supervisor in New Jersey who warned pharmacists that "each of you owns scripts and has an obligation to meet your weekly script budget; this is one of the areas you'll be evaluated on come review time."
The documents from the May meeting provide CVS employees with examples of how a "high performer" thinks, compared with an "average performer."
The high performer, according to the documents, understands that "ReadyFill is the key to my store's success. If we get ReadyFill right, everything else will follow."
The average performer, the documents noted, says that "we automatically enroll patients in ReadyFill for maintenance meds. It helps our score."
By CVS' standards, therefore, an average pharmacist automatically refills people's prescriptions regardless of whether they ask for it.
The documents also detail "enhancements" to what CVS calls its Patient Care Queue, a computer system that contains information about every patient and the medications they're taking. The enhancements include "opportunities" to refill outstanding prescriptions.
The system tracks the percentage of patients not on ReadyFill and those who are.
Document: CVS Pharmacy Business Metrics
To be sure, some people may fail to take their medications regularly, and that can have serious healthcare repercussions. CVS and other pharmacies are behaving responsibly when they take the initiative in encouraging compliance with doctors' orders, which might include automatic refills.
But CVS seems to have taken this objective to a different level by creating metrics that measure nearly every activity undertaken by a pharmacist.