On the heels of the largest nationwide health care fraud takedown in history announced last week, the federal government on Tuesday issued two new reports detailing what it believes to be extensive evidence of suspicious billing under Medicare Part D. The move signals that the prescription drug benefit program can expect significant enforcement actions in the near future.
I. Report #1: Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D
The first report issued by the Office of the Inspector General (“OIG”) analyzes prescription drug events (“PDE”) records from 2006 (when the Part D program began) through 2014, identifying trends in spending, specific pharmacies with questionable billing, and geographic hot spots, all of which could help root out potential fraudulent activity.
Trends in Spending: Spending on specific commonly abused opioids grew at a faster rate (156 percent from 2006-2014) than spending for all Part D drugs (136 percent during the same time period). OG believes the growth was driven by an increase in both the number of beneficiaries receiving these opioids and the average number of prescriptions per beneficiary. Such spending was highest in Alaska, Oklahoma, and Tennessee, as well as North Carolina, Alabama, and Utah.
Pharmacies with Questionable Billing: OIG identified more than 1,400 pharmacies that warrant further scrutiny (about 2 percent of retail pharmacies nationwide), located mostly in New York, Miami, Los Angeles, and Detroit. These pharmacies drew attention because, for example, they billed for extremely high numbers of prescriptions per beneficiary or billed for beneficiaries who had an unusually high average number of prescribers for commonly abused opioids.
Geographic Hot Spots: OIG identified several metropolitan areas where average Medicare payments per beneficiary for certain drugs were significantly higher than the average payments nationwide, focusing on selected noncontrolled substances that are vulnerable to fraud and abuse.
The report details OIG’s findings that prescribing patterns in the following raise questions about possible fraud: Los Angeles, CA; McAllen, TX; San Juan, PR; Miami, FL; and New York, NY. The specific drugs identified include Vascepa, Lovaza, Lidoderm, Solaraze, Nexium, and generic diclofenac potassium.
II. Report #1: Ensuring the Integrity of Medicare Part D
The second OIG report, issued in tandem with the first, purports to conclude that the Centers for Medicare & Medicaid Services (“CMS”) is missing opportunities to leverage data to identify fraud, waste, and abuse. The report explains that the underutilization of valuable data has left Part D “vulnerable to improper payments, drug diversion, overprescribing, and other quality-of-care issues.”
For example, the report identified questionable billing practices by over 700 physicians (most of whom ordered extremely high percentages of drugs with potential for abuse) and more than 1,500 beneficiaries with questionable utilization patterns for HIV drugs. Because of inadequate controls, these potentially dubious practices are going undetected, according to the report.
Other key findings in the second OIG report include concerns about paying for claims with invalid prescriber identifiers, paying for drugs prescribed by excluded health care providers, paying for refills of prescriptions for Schedule II drugs (which are prohibited from being refilled because of their potential for abuse and diversion), and continuing to pay for claims on behalf of deceased beneficiaries.
These two OIG reports, combined with last week’s largest coordinated crackdown to date on Part D abuse by the Medicare Fraud Strike Force, strongly suggest an increased and sustained scrutiny of the Medicare Part D program. Several of last week’s indictments involved allegations of Part D fraud. It is likely that these recent actions are just the beginning of a growing trend in Part D fraud and abuse enforcement actions.
The Medicare Part D data on which OIG bases many of its purported findings is publicly available, as is the Sunshine Act data on physician payments.