The Department of Health and Human Services Office of Inspector General ("OIG") issued a report in June1 that is the equivalent of a "strongly worded letter" to the Centers for Medicare & Medicaid Services ("CMS") for not implementing OIG's past recommendations to prevent and combat fraud in the Medicare Part D Program ("Program").  In July, Ann Maxwell, Assistant Inspector General, provided testimony to Congress on these same issues and stated, "OIG has made stopping Part D fraud a top priority. "2  Although OIG pointed out where progress to protect the integrity of the Program has been made, it also pointed out certain shortfalls.  Pharmacies should be aware of steps that CMS and OIG are already taking to combat fraud, waste and abuse to ensure its compliance plans are up to date and should also be aware of potentially additional audits and investigations. 

Detailed Analysis

OIG made the following observations regarding progress that has been made to combat Program fraud, waste and abuse as well as areas still in need of improvement.

Sponsor Reporting.  OIG found that some progress is being made as CMS is starting to send Program plan sponsors' ("Sponsors") voluntarily reported fraud data to the Medicare Drug Integrity Contractor ("MEDIC"), which contracts with CMS to detect and prevent fraud.  However, OIG urges CMS to require Sponsors to report such information to CMS or the MEDIC.  Currently, Sponsors have the option to report such information; therefore, not many do, and for those that do, the information has been inconsistent.  OIG views this as a missed opportunity for CMS to use data to identify fraud.  If CMS implements OIG's recommendation, pharmacies should expect an uptick in Sponsors' and CMS's efforts to prevent and detect fraud. 

Data/Claims Analysis.  OIG acknowledged that CMS and MEDIC created a pharmacy risk assessment that Sponsors could use to more carefully analyze Program claims.  The MEDIC also reviewed OIG-identified pharmacies that, in the past, had questionable billing practices to determine what next steps should be taken.  However, the MEDIC does not  proactively analyze the data it does have.  When OIG has analyzed claims data, it has found potentially concerning patterns, which causes OIG to conclude that more improper billing could be identified.  Specifically, OIG considers beneficiaries who use a lot of prescribers or pharmacies to indicate a possibility of fraud or inappropriate use of drugs.  OIG suggests:  (1) that the additional drugs could be added to the utilization review program; and (2) that CMS could identify beneficiaries with atypical drug use and, further, change the law to permit CMS to limit certain such beneficiaries to a set number of pharmacies or prescribers, as certain Medicaid programs have done.

Insufficient Oversight.  OIG identified several points of progress in CMS's oversight of claims payments as well as potential shortfalls.  Specifically:

  • Sponsors are now required to identify invalid prescribers, and only claims with valid prescriber identifiers may be submitted to CMS.  Additional monitoring is now occurring to identify prescriptions issued by individuals without prescriptive authority.  OIG will be evaluating whether such controls are effective.
  • Sponsors now have data to help them identify excluded prescribers, and CMS has audited this.  However, there is still not a claims edit to detect and deny claims for prescriptions issued by excluded prescribers.
  • CMS has provided guidance regarding proper billing for Schedule II drugs, and Sponsors have reportedly improved their oversight of this.  CMS has audited refills of controlled substances.  At this time, CMS has not withheld payments to Sponsors related to refills of controlled substances.
  • Some money has been repaid for claims made after beneficiaries' death.  CMS will create processes to eliminate Program payments made for claims on behalf of deceased beneficiaries.

Sponsors' Compliance Plans.  Although CMS has instructed Sponsors to assess their compliance plans, OIG does not believe that CMS is adequately overseeing such assessments.  OIG has determined that CMS could audit this matter to improve compliance.

What Should Pharmacies Be Doing? 

If your pharmacy is not doing the following at this time, consider beginning to do so.

  • Have controls in place to:
    • Ensure that only claims are submitted for medications prescribed by an individual who has prescriptive authority;
    • Ensure that only Program claims are submitted that reflect valid prescriber identifiers;
    • Reduce the risk of submitting claims for prescriptions issued by excluded prescribers; and
    • Avoid refilling Schedule II prescriptions and submitting claims for such refills. 
  • Be aware that some criminals obtain prescription drugs on behalf of deceased beneficiaries and watch for suspicious activity.
  • Periodically review your compliance program and update it as appropriate to ensure that you have controls in place to comply with applicable laws and regulations.  Part of this process should include a pharmacy's self-audit of the risks identified above.  As Sponsors strengthen their compliance programs, pharmacies' programs will similarly need to be strengthened.

There is a very high likelihood that the following will happen at some point in the future, although the timing is uncertain.  Pharmacies should expect:

  • Greater scrutiny of Program billings, particularly by Sponsors;
  • Additional drugs to be added to the Program's utilization review program; and
  • The potential that, in the future, certain beneficiaries could be limited to use a set number of pharmacies and/or prescribers.  (This would likely require a change in the law, so it's likely not imminent.)

This article was initially published by Indiana Pharmacist Alliance, is educational in nature and is not intended as legal advice.