The Vocabulary of Healthcare Defense

The federal drug discount program requiring manufacturers to sell outpatient drugs at discounted prices to safety-net providers (FQHCs, DSH hospitals, Ryan White grantees, Critical Access Hospitals).

The two compounding regulatory pathways created by the Drug Quality and Security Act of 2013: state-licensed pharmacy compounding (503A) and FDA-registered outsourcing facility (503B).

The federal criminal statute (42 USC 1320a-7b) that prohibits remuneration to induce or reward referrals for items or services payable by a federal healthcare program.

The procedural mechanism for challenging PBM or Medicare contractor audit findings, running through Level 1, Level 2, and in some matters federal court or the 5-level Medicare appeals track.

The published pharmaceutical pricing benchmark used as the reference point for pharmacy reimbursement formulas. Subject of extensive historical litigation and regulatory adjustment.

The date or time after which a compounded preparation may not be used, calculated under USP 797 (sterile) or USP 795 (non-sterile) by category and storage conditions.

FDA's 503A and 503B bulks lists name the drug substances 503A pharmacies and 503B outsourcing facilities may compound from, with shortage-list interactions.

FDA current Good Manufacturing Practice at 21 CFR Parts 210 and 211, the regulatory framework that governs drug manufacturing facilities including 503B outsourcing facilities.

The DOJ pre-suit investigative tool under 31 USC 3733 that compels production of documents, written interrogatories, or testimony in False Claims Act matters.

The 5-year compliance framework HHS-OIG negotiates with a healthcare entity in lieu of permissive exclusion, typically following a False Claims Act settlement.

NCPDP codes (0 through 9) that indicate whether a dispensed drug was brand, generic, or substitution-exception. DAW 1 and DAW 2 are the most-audited categories.

The DEA administrative proceeding under 21 USC 824 that can revoke, suspend, or refuse to renew a pharmacy or practitioner DEA registration.

The removal of dead or damaged tissue from a wound, billed under CPT 11042-11047 (surgical) or 97597-97598 (selective). Central to wound care enforcement.

The DOJ resolution mechanism under which charges are filed (and later dismissed) in exchange for defined compliance, cooperation, and penalty obligations.

Direct and Indirect Remuneration fees that PBMs and Medicare Part D plan sponsors collect from network pharmacies; moved to point of sale by the 2024 CMS rule.

The Drug Quality and Security Act of 2013: the federal statute that codified section 503A and added section 503B to the Federal Food, Drug, and Cosmetic Act, plus the DSCSA supply chain framework.

A contractual PBM provision guaranteeing an average reimbursement rate across the pharmacy's generic or brand book, reconciled annually or quarterly.

The PBM or contractor technique of applying sample-claim findings across the full lookback period, converting a handful of disputed claims into a six- or seven-figure recoupment demand.

The federal civil statute (31 USC 3729-3733) that imposes treble damages and per-claim penalties for knowingly submitting false claims for federal payment, including via qui tam.

The public FDA correspondence notifying a regulated entity of significant violations and demanding corrective action within 15 business days.

The FDA inspectional observations document issued at the close of an inspection, listing conditions that may violate the FD&C Act and triggering a 15-business-day response window.

The PBM-published list of covered drugs organized into tiers that drive patient cost-sharing, prior authorization, step therapy, and quantity limit rules.

GLP-1 receptor agonists: semaglutide (Ozempic, Wegovy), tirzepatide (Mounjaro, Zepbound), dulaglutide, and liraglutide. Central to 2024-2026 FDA, PBM, and state board enforcement.

A compulsory order issued by a federal grand jury in connection with a criminal investigation. Service signals an active criminal track with constitutional protections in play.

A DEA emergency action under 21 USC 824(d) that suspends a DEA registration immediately on service, stopping controlled substance handling within 24 hours pending the OSC proceeding.

The audit technique that compares a pharmacy's dispensing records to its wholesaler purchase records over a defined lookback, treating unexplained variance as evidence of billing inaccuracy or diversion.

A prescription drug whose manufacturer restricts dispensing to a defined network of authorized specialty pharmacies, often through REMS programs or commercial distribution arrangements.

A Medicare Administrative Contractor published coverage policy defining whether a specific service is covered in the MAC's jurisdiction, including medical necessity criteria and documentation requirements.

Maximum Allowable Cost: the PBM's reimbursement ceiling for generic drugs, set on proprietary lists the PBM updates at its discretion. State MAC transparency laws govern disclosure and appeal rights.

The FDA-assigned 10-digit identifier (expressed as 11 digits in pharmacy billing) that uniquely identifies a drug product. Central to pharmacy claim adjudication and audit verification.

The PBM action of removing a pharmacy from its network, often following an audit finding or pattern review. The most existential outcome in PBM enforcement.

The HHS-OIG administrative action under 42 USC 1320a-7 that bars an individual or entity from all federal healthcare programs. Mandatory after certain convictions; permissive on other grounds.

The HHS-OIG Self-Disclosure Protocol for voluntarily disclosing conduct potentially violating federal healthcare program rules, typically resolving at a lower multiplier than FCA trial exposure.

The PBM pricing model where plan sponsors pay the PBM exactly what the PBM pays the pharmacy plus a disclosed admin fee. The structural alternative to spread pricing.

A review by a pharmacy benefit manager of a pharmacy's dispensing records, documentation, and billing patterns, ranging from a desk audit to an on-site inspection to an investigative audit.

The PBM or health plan pre-approval process for designated drugs, including ePA platforms (CoverMyMeds, Surescripts). Frequent audit target.

The PBM's operational document setting the day-to-day rules pharmacies must follow, incorporated by reference into the network contract and updated unilaterally by the PBM.

The False Claims Act whistleblower provision (31 USC 3730) that allows a private relator to file suit on behalf of the United States and share in any recovery.

The Recovery Audit Contractor that conducts postpayment-only Medicare audits on a contingency-fee basis. Current RACs: Performant Recovery, Cotiviti, HMS Federal Solutions.

The dollar demand a PBM or contractor makes after audit findings, typically recovered by offsetting against future reimbursements rather than through a separate invoice.

Risk Evaluation and Mitigation Strategy: the FDA safety program framework under 21 USC 355-1 that imposes prescriber, pharmacy, and patient enrollment and dispensing restrictions on certain drugs.

The pharmacy's record showing patient receipt of dispensed prescriptions. One of the most-audited PBM and Medicare audit categories.

Cellular and tissue-based products used in wound care, billed using Q-series HCPCS codes. Center of post-Apex Medical FCA enforcement.

A pharmacy dispensing high-cost specialty drugs (oncology, biologics, rare disease, REMS-restricted preparations, GLP-1s) under distinct network contracts and audit profiles.

The PBM practice of charging plan sponsors more than the PBM pays the dispensing pharmacy and keeping the difference. The target of state PBM reform across 25+ states.

The federal civil statute (42 USC 1395nn) that prohibits physician self-referrals for designated health services to entities with which the physician has a financial relationship, except as permitted by exception.

The PBM utilization management protocol requiring patients to try (and document failure of) a preferred lower-cost drug before approving a non-preferred higher-cost drug.

The compulsory legal order requiring document production, testimony, or both. In healthcare matters, issued by grand juries, U.S. Attorneys, HHS-OIG, and state authorities.

The DEA-required program controlled substance manufacturers and distributors operate under 21 USC 832 to identify, halt, and report suspicious orders. Major opioid-enforcement focus.

The written notification from a U.S. Attorney's Office that the recipient is a target of a federal grand jury investigation, i.e., a putative defendant.

A Unified Program Integrity Contractor: the CMS contractor (SafeGuard, Qlarant, AdvanceMed) that conducts Medicare and Medicaid program integrity audits across defined geographic jurisdictions.

USP General Chapter 797 (sterile compounding) and USP General Chapter 800 (hazardous drug handling) set practice standards for compounding pharmacies and outsourcing facilities. The November 2023 USP 797 revision is the current operative version.

CMS's Wasteful and Inappropriate Service Reduction Model: an AI-driven prepayment review framework launched 2026 for skin substitutes and selected wound care services in six pilot states.