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Watchdog Urges More Effective Oversight of Medicare Part D

A prominent feature of the Medicare fraud sweep announced last week was Medicare Part D, with 44 of the 243 indicted pharmacists, doctors and other individuals cited for prescription drug fraud. This week, two reports just released by the Health and Human Services (HHS) Office of Inspector General (OIG) take the Center for Medicare and Medicaid Services (CMS) to task for failing to stem the tide of fraud, waste and abuse in this fastest-growing component of the Medicare program.

The reports detail the nature and extent of Part D fraud — heightened billings of commonly abused opioids, questionable pharmacy billing practices and the existence of open and notorious fraud hotspots – as evidence of failed oversight, and also detail steps federal regulators should take to stop the illegal practices. As of May 2015, the OIG, an internal watchdog that evaluates HHS programs and investigates wrongdoing, had 540 pending complaints and cases involving Part D, a 134% increase over five years, according to the report.

Medicare Part D provides drug coverage for 39 million seniors and disabled people, at a cost of $121 billion in 2014. Part D is administered by health insurers under contract with the federal government, but CMS is responsible for overseeing it.

One of the OIG reports found 1,432 pharmacies with questionable billing patterns in 2014, including extremely high numbers of prescriptions per patient, substantially increased billings for a high proportion of narcotic controlled substances and multiple prescribers for commonly abused opioids per beneficiary receiving opioids. Collectively, these pharmacies wrote $2.3 billion in Part D prescriptions in 201

The report also found that prescriptions for commonly abused opioids continue to rise. Between 2006 and 2014, Medicare spending on these drugs grew to $3.9 billion from $1.5 billion, a 156 percent increase.

The report also identified a number of geographic fraud and abuse “hotspots” — Los Angeles, New York, McAllen, Texas, Miami and San Juan — where average Medicare payments per beneficiary for selected non-controlled drugs are significantly higher than national averages.

Together, these findings indicate that vulnerabilities in Part D program integrity have been allowed to flourish under CMS’s watch, leading to drug diversion, overprescribing, and other quality-of-care issues. Specifically, the OIG identified two issues at the heart of improving program oversight: (1) data collection and analysis “to proactively identify and resolve program vulnerabilities and prevent fraud, waste, and abuse before it occurs”; and (2) the need for more robust oversight “to ensure proper payments, prevent fraud, and protect beneficiaries.”

In its second report, the OIG detailed the reforms it believes Medicare needs, reforms that it said have been resisted so far. Prominent among the reform is the necessity of requiring rather than simply encouraging sponsoring health plans to report all potential fraud and abuse to CMS and its fraud monitoring contractors. Last year, the OIG found that less than half of Part D insurers voluntarily reported data on potential fraud and abuse.

The OIG also called for expanding reviews for questionable drug prescribing beyond controlled substances to other commonly abused drugs, including antipsychotic medications, respiratory drugs and those for HIV, and for restricting patients suspected of doctor shopping, seeking controlled substance prescriptions from multiple doctors.

Last year, CMS announced that it was granting itself potent new authority to expel physicians from Medicare if they are found to prescribe drugs in abusive ways. The agency also said it would compel health providers to enroll in Medicare to order medications for patients covered by Part D. The changes were supposed to take effect on June 1, but have since been delayed twice, most recently until January 1, 2016.

It seems clear that addressing Medicare Part D fraud has become a top government priority. Based on last week’s sweeps and OIG’s recommendations to CMS to increase and improve its oversight, greater enforcement appears to be in the offing.

Under federal law, individuals who report fraud to the government are sometimes entitled to monetary awards. If you are aware of wrongdoing and would like to know more about your rights, please click here.

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