Diversion and Duplicate Discount Violations in Contract Pharmacies
Definition
Covered entities and retail contract pharmacies risk fraud/abuse through diversion of 340B drugs to non-patients or duplicate discounts when 340B drugs are billed to insurance yielding additional rebates. This is a core prohibition enforced via audits, leading to financial repayments. Recurring due to enforcement focus and software reliance.[1][3]
Key Findings
- Financial Impact: $Repayment of discounts to manufacturers per violation
- Frequency: Ongoing - identified in regular HRSA audits
- Root Cause: Insufficient tracking systems to prevent ineligible dispensing and poor visibility into claims at point-of-sale
Why This Matters
This pain point represents a significant opportunity for B2B solutions targeting Retail Pharmacies.
Affected Stakeholders
Contract pharmacy staff, TPA operators, Covered entity auditors
Deep Analysis (Premium)
Financial Impact
$1,000-$5,000 (patient co-pay mismatches, incorrect billing) • $10,000-$100,000+ annually (overpayment for 340B drugs due to incorrect pricing) • $10,000-$50,000 (duplicate discount risk if Part D rebate applied to 340B drugs)
Current Workarounds
Billing Specialist manually checks if drug is 340B-covered; verbally alerts Insurance Billing team; claims routed via email before submission • Billing Specialist manually identifies 340B drugs in batch; contacts pharmacy to verify eligibility; reprocesses claims via email hold • Billing staff manually cross-reference patient record with 340B eligibility list kept in shared drive or email
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Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Related Business Risks
Failure to Receive 340B Ceiling Prices from Manufacturers
HRSA Audit Failures and Required Repayments for Diversion/Duplicate Discounts
Medicare Fraud Risk from Unbilled Parallel MTM Services
Incorrect MTM Billing Codes Leading to Zero Reimbursement
Denied MTM Claims Due to New vs Established Patient Coding Errors
Overcharging MTM Services Beyond State-Regulated Amounts
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