On November 14, 2011, the Department of Health & Human Services, Office of Inspector General (OIG) issued a memorandum on the ability of Prescription Drug Plan (PDP) sponsors to ensure Medicare Part D reimbursement is limited to drugs provided for medically accepted indications.  In drafting its memorandum, OIG interviewed three large PDP sponsors representing more than 30 percent of the beneficiaries enrolled in Part D plans.

Based on the interviews, OIG found the selected PDP sponsors could not systematically ensure that Part D reimbursement is limited to drugs provided for medically accepted indications that are either approved by the Food and Drug Administration (FDA) or supported for off-label uses by at least one of the three compendia cited in the Social Security Act.

OIG concluded that PDP sponsors do not receive the diagnosis information necessary to check for medically accepted indications, and PDPs also lack access to historical versions of the compendia in order to check for changes in off-label listings over time.  OIG noted it will continue to monitor Part D claims for accuracy, and also encouraged CMS to work with PDPs on improving Part D reimbursement.

In its own comments about the OIG memorandum, CMS responded that it lacks statutory authority to mandate that diagnosis information be included in prescriptions.  Further, CMS pointed out that diagnosis information by itself can still lack the “level of granularity” needed to meet accepted off-label listings in one of the compendia.  CMS concluded that the “appropriate balance” for PDPs is to continue current efforts seeking prior authorization, where appropriate, to target drugs at high risk for being prescribed without a medically accepted indication.

More information regarding the OIG memorandum and CMS response is available by clicking here. A copy of OIG's memorandum is available by clicking here.