Medicare Part D fraud fastest growing component of program

When the Department of Justice earlier this month announced the arrest of 243 people for Medicare fraud, it noted that 50 of the defendants were charged with crimes related to the Medicare prescription drug benefit program known as Part D.

Prescription drug fraud has become the fastest-growing component of the Medicare program overall, and is ripe for fraud, as evidenced not only by those arrests, but also by two new reports from the U.S. Department of Health & Human Services Office of the Inspector General (OIG).

The first report notes that since the program went into effect in 2006, the OIG has had ongoing concerns about abuse and diversion of Part D drugs. “OIG reviews have revealed questionable billing associated with pharmacies, prescribers, and beneficiaries involving both controlled and non-controlled substances,” the report states. Schemes include drug diversion, billing for drugs not dispensed and kickbacks.

Among OIG’s findings:

  • More than 1,400 pharmacies that participated in the Medicare Part D program had questionable billing practices in 2014. Some billed for extremely high numbers of prescriptions per patient while others billed for a high proportion of narcotic controlled substances. The 1,432 pharmacies reviewed represent 2 percent of retail pharmacies nationwide and together billed $2.3 billion to Part D in 2014. Not surprisingly, the pharmacies were more likely to be independently owned and located in New York, Miami, Los Angeles and Detroit.
  • Of those 1,432 pharmacies reviewed, 403 billed for an extremely high number of prescriptions per beneficiary – averaging at least 62 prescriptions per beneficiary – or nearly three times the national average.
  • A total of 468 pharmacies reviewed billed for commonly abused opioids in at least 17 percent of its Part D prescriptions. That’s three times the national average. This may indicate that the pharmacy is billing for medically unnecessary drugs or they are being diverted and resold for a profit.
  • A total of 314 pharmacies billed on average, for more than 12 different types of drugs for each beneficiary in 2014. This was double the national average of six different types of drugs. In one example, a Miami-area pharmacy billed for an average of 23 different drugs for each of its beneficiaries. In total, it billed Medicare Part D almost $2 million for drugs for just 143 beneficiaries.

OIG issued the aforementioned report in conjunction with a second report titled “Ensuring the Integrity of Medicare Part D, which summarizes the OIG’s efforts and provides an update on the Centers for Medicare and Medicaid’s efforts to put a stop to fraud. Although CMS is responsible for overseeing the program, it is run by private insurance companies.

In the past, as with this latest report, the OIG has been critical of CMS’ efforts. It notes that, “CMS is missing opportunities to leverage data to identify fraud, waste and abuse.” In particular the OIG criticizes CMS for failing to make it mandatory for plan sponsors to report information on fraud.

CMS contracts with a private company to serve as the Medicare Drug Integrity Contractor (MEDIC), to detect and prevent fraud, waste and abuse in Part D. However, OIG said that rather than being proactive in detecting fraud through the use of its own data, MEDIC is relying on “external sources” i.e. whistleblowers, to identify fraud and abuse. OIG’s recommendation: Require plan sponsors to report all potential fraud and abuse to CMS and/or the MEDIC

Among other findings:

  • More than $1 billion in Part D payments were made for drug claims with invalid prescriber identifiers. OIG found that plan sponsors and CMS did not institute adequate procedures or oversight to identify claims with invalid prescriber identifiers.
  • Excluded providers have continued to prescribed Part D drugs. CMS accepted PDE data from plan sponsors with gross drug costs totaling $15 million over a 3-year period for prescriptions written by excluded providers, contrary to Federal law
  • Part D inappropriately paid for Schedule II drugs billed as refills, presenting a risk for drug diversion and abuse. CMS’s oversight also has not been sufficient to prevent these potentially inappropriate payments.
  • Payments after beneficiaries’ death make Part D vulnerable to fraud. Between 2006 and 2007, CMS paid approximately $3.6 million on behalf of deceased beneficiaries. After CMS reported implementing an automated process to prevent these payments, it still allowed Part D payments on behalf of 5,101 deceased beneficiaries in 2011.

Earlier this year, as part of its data transparency initiative, CMS released detailed data on nearly 1.4 billion prescriptions dispensed to senior citizens and disabled people in the Medicare program in 2013.

The latest reports, coupled with the recent crackdown on Medicare fraud by the feds, is one more indicator that feds are turning up the heat up on Part D fraud.

The Health Law Offices of Anthony C. Vitale stand ready to assist those who find themselves swept up into the government’s intensified efforts in the healthcare fraud arena. Our firm represents healthcare professionals in state and federal court who are charged with fraudulent billing, kickbacks, Medicare, Part D and Medicaid fraud and false claims, among others. Our team of highly skilled attorneys and consultants are here to help you before you become the focus of an investigation and will aggressively defend you should you become the target of one.

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The Health Law Offices of Anthony C. Vitale

The Health Law Offices of Anthony C. Vitale