Gary Cantrell, Deputy Inspector General for Investigations, and Stuart Wright, Deputy Inspector General for Evaluation and Inspections at the Office of Inspector General recently spoke before the Senate Committee on Homeland Security and Governmental Affairs. The hearing, titled, “Curbing Prescription Drug Abuse in Medicare“, addressed a topic they recently wrote about, and can be found here.
The OIG testimony specifically discussed prescription drug fraud schemes; vulnerabilities in the Medicare Part D Prescription Drug program (Part D); recommendations to protect the program against fraud, waste, and abuse; and ways to protect program beneficiaries from harmful and unsafe prescribing.
OIG: “Notably, OIG has uncovered extreme prescribing patterns by hundreds of general-care physicians and questionable billing by thousands of retail pharmacies. Moreover, in a report they are releasing today, they found that Medicare paid millions of dollars for prescriptions from unauthorized prescribers, such as massage therapists and athletic trainers.” OIG noted their investigations relating to Medicare Part D have nearly quadrupled since 2008.
Drug Diversion
OIG: “Prescription drug diversion is a complex crime that can involve many co-conspirators—drug distributors and traffickers, health care professionals, drug-seeking patients, and pharmacies may all play a role, and criminal enterprises are becoming an increasing presence in prescription drug diversion
Health care providers
OIG: “Medical doctors, physician assistants, nurse practitioners, and other health care professionals can also be involved in drug diversion. Some health care providers become so entangled in the financial gain from prescription drug diversion that their entire practices are focused on writing illicit prescriptions. Clinics or health care practices that focus primarily on prescription drug diversion are known as ‘pill mills.'”
Drug-seeking patients
OIG: “Drug-seeking patients often visit multiple health care providers and pharmacies to obtain medically unnecessary prescriptions. Some use multiple false identities and may themselves be identity thieves. Drug-seeking patients often consume the drugs, sell them on the street for profit, or both.”
Pharmacies
OIG: “Fraudulent pharmacies have been known to use patient Medicare numbers to bill for tens of thousands of dollars in unneeded prescriptions. In some fraud schemes, pharmacies stock or re-label expired and counterfeit medications and bill for them and sell them as legitimate prescriptions to unsuspecting patients. They may also bill for recurring refills that theyre never filled. Other pharmacies contribute to the fraud by filling prescriptions despite clear indicators they have been fraudulently obtained.”
Medicare Paid for Drugs Ordered by Individuals Without the Authority To Prescribe
In the OIG’s report, they found that items or services performed, provided, or prescribed theyre not always made by an appropriate medical professional. The OIG found that: “nationwide, Part D inappropriately paid $5.4 million in 2009 for 72,552 prescriptions ordered by individuals who clearly did not have the authority to prescribe. These individuals included massage therapists, athletic trainers, dental hygienists, and contractors responsible for home repairs. They even found that interpreters, lodging companies, and veterinarians ordered prescriptions.”
These findings build on earlier OIG work that found that Part D paid for prescription drugs for which the claims had invalid prescriber identifiers. OIG: “Specifically, in 2007, Part D sponsors and beneficiaries paid pharmacies $1.2 billion for claims that contained prescriber identifiers that had never been assigned or had been retired. For almost one-fifth of these claims, the prescriber identifiers did not meet the format specifications, yet sponsors’ systems did not include edits to reject or flag claims with obviously inaccurate prescriber identifiers. For example, for some claims, the prescriber identification field contained the wrong number of characters.”
However, CMS is taking several steps to address problems with invalid prescriber identifiers. OIG: “CMS now requires that sponsors ensure that prescriber identifiers on Part D claims are active and valid. Today’s report demonstrates the need for further action to ensure that each claim for a prescription contains not only a valid prescriber identifier but also one that corresponds to an authorized prescriber.”
Hundreds of Physicians Had Extreme Prescribing Patterns
OIG: “Vulnerabilities in the Part D program are not limited to unauthorized prescribers. In a report issued last theyek, OIG raised concerns about questionable prescribing patterns for 736 general- care physicians. These physicians theyre extreme outliers and prescribed very differently than their peers—they ordered an extremely high number of drugs per beneficiary; they had prescriptions filled at an extremely high number of pharmacies; some may have ordered extremely high percentages of brand-name drugs; or they ordered extremely high percentages of Schedule II or Schedule III drugs, which have the potential for abuse.”
Thousands of Retail Pharmacies Billed Far Outside the Norm
OIG: “Our prior analysis of Part D data also uncovered billing patterns by some pharmacies. When they examined the records for Part D drugs, they found that 2,637 retail pharmacies nationwide had billing patterns far outside the norm. These pharmacies billed extremely high numbers of drugs per beneficiary or per prescriber or billed extremely high percentages of Schedule II or Schedule III drugs, brand-name drugs, or refills relative to other pharmacies. While some pharmacies with questionable billing may be billing these amounts for legitimate reasons, this type of billing warrants further scrutiny. Medicare paid these pharmacies a total of $5.6 billion in 2009.”
Medicare Paid for Schedule II Drugs Billed as Refills, Which Are Prohibited by Federal Law
OIG: “In another review, they found that Medicare Part D may have inappropriately paid $25 million for Schedule II drugs billed as refills in 2009. Sponsors should not have paid for these drugs because Federal law prohibits the refilling of Schedule II controlled substances.”
Oversight and Monitoring by CMS, Plan Sponsors, and CMS’s Contractor Are Limited
OIG: “OIG’s findings of claims for questionable, inappropriate, and potentially dangerous Part D drugs indicate that safeguards should be strengthened to better protect the program and beneficiaries. In addition to analyzing these claims, they have examined Part D oversight and the systems in place to protect program integrity. These reviews have focused on CMS’s oversight functions; plan sponsors’ identification of fraud and abuse; and the MEDIC’s abilities to detect, investigate, and refer fraud in the Part D program.”
OIG Recommends Improvements in Part D Oversight and Monitoring
OIG: “Taken together, OIG’s findings consistently demonstrate the need for CMS to strengthen Part D monitoring and oversight. OIG has recommended numerous improvements to more effectively safeguard the Part D program from fraud, waste, and abuse. HHS OIG has recommended that CMS:
• Require sponsors to verify that prescribers have the authority to prescribe drugs.
• Strengthen the MEDIC’s monitoring of prescribers and pharmacies so that it systematically monitors them using measures such as the ones used by OIG and identifies the prescribers and pharmacies with questionable patterns.
• Strengthen sponsors’ monitoring of prescribers and pharmacies by providing additional guidance on effective monitoring methods, emphasizing the importance of data analysis, and recommending that sponsors routinely generate and review reports on billing.
• Ensure that Part D does not pay for refills of Schedule II drugs, as such refills are prohibited by Federal law. CMS should exclude these drugs when calculating its final payments to sponsors at the end of each year.
• Require sponsors to refer potential fraud and abuse incidents that may warrant further investigation to CMS and other appropriate entities, instead of relying on sponsors to voluntarily report.
• Develop and implement an administrative mechanism to recover payments from plan sponsors for inappropriate Part D claims. CMS currently does not have such a mechanism to help safeguard Medicare funds.
• Clarify its policy and instruct the MEDIC regarding the circumstances under which it may share specific information with other entities, including State agencies. This would improve the MEDIC’s ability to effectively identify and investigate potential fraud and abuse.
• Facilitate access to information necessary to ensure accurate coverage and reimbursement determinations. Requiring diagnosis codes on Part D claims could help plan sponsors and CMS determine whether a drug is covered under Medicare.
• Amend regulations to authorize the MEDIC to obtain information directly from entities such as pharmacies, physicians, and pharmacy benefit managers.
• Provide education and training for prescribers, including issuing reports similar to Comparable Billing Reports issued for other services, such as those provided under Part B. These reports would provide prescribers with important educational information and insight about their prescribing patterns.
CMS has agreed with many of our recommendations and it has taken some steps to strengthen Part D monitoring.”
Conclusion: More Needs To Be Done To Safeguard the Program and Protect Patient Safety
OIG: “The Part D program provides outpatient prescription drug coverage for 37 million Medicare beneficiaries at a cost of almost $67 billion. Numerous health care fraud investigations involving Part D and drug diversion have revealed complex crimes, some involving sophisticated criminal enterprises. Ineffective or nonexistent program controls can cost beneficiaries and taxpayers millions of dollars. In addition, serious health consequences can result from inappropriate prescription drug use. Effective monitoring and oversight are essential to ensuring patient safety and preventing fraud, waste, and abuse.”