Client Alert – Express Scripts and Defense Health Agency Initiate Recoupment on Compound Medication Payments

Jun 10, 2020
  • FisherBroyles News

In the last two days a number of independent compounding pharmacies have received letters dated as far back as April 7, 2020, from the Program Integrity team at Express Scripts, Inc. (ESI) advising the pharmacies  that recoupment actions have been initiated at the request of the Defense Health Agency, Office of Program Integrity (DHA-PI). The recoupments appear to revolve around alleged findings by DHA-PI that compound drugs were dispensed to TRICARE patients based upon prescriptions written by physicians in 2015, which TRICARE is claiming five years later that the TRICARE beneficiary had not developed a physician-patient relationship with the physician. In such cases, DHA-PI claims the prescriptions are considered invalid for TRICARE coverage.


Pharmacies that have received such communications from ESI must act quickly. What is perhaps most alarming, the letters backdated to April 7, 2020, are in many instances just being received over the last few days. Further, the recoupment actions relate to drugs dispensed as long ago as 2014 and 2015—just on the edge of the statute of limitations for recoupment and records retention requirements. As a remedy, ESI plans to offset any discrepancies against amounts currently owing to the pharmacy, or, in the event an offset is not available, ESI will reach out to collect any remaining balances.


Pharmacies do have a right to administrative review of the alleged indebtedness as set forth in Chapter 10.1.4 of the ESI Provider Manual. Any Pharmacy that has received this notice should contact legal counsel as soon as possible for assistance in challenging the recoupment actions and reserving all appeal rights within 30 days of receipt of the notice.


The FisherBroyles Pharmacy and Health Care Law team is pleased to keep those in the industry updated on topics of interest. Questions related to the subject matter of this alert may be directed to any of the following attorneys:

Brian E. Dickerson    202.570.0248

Anthony J. Calamunci   419.376.1776

Nicole Hughes Waid   202.906.9572

Amy L. Butler   419.340.8466


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