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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.