Fighting Medicare Part D Fraud

Cincinnati—Since the Patient Protection and Affordable Care Act (ACA) passed in 2010, federal and local governments have gained power to deal with an issue that has been plaguing healthcare for a long time: Medicare fraud.

Illegal pharmacies have become more common, and more people are attempting to manipulate the system. Health plans, in particular, face a significant financial risk when dealing with fraudulent pharmacies.

At the AMCP meeting, 3 speakers involved closely with identifying and fighting fraud discussed the increasing prevalence of and implications associated with fraud during a contemporary issues session. They suggested insurers monitor data and documents to help identify fraud before it happens and help investigators look into the claims.

James Scott, president and chief executive officer of Applied Policy, L.L.C., said Medicare Part D fraud is a major public health issue and is wasteful for health plans and the Centers for Medicare & Medicaid Services (CMS), the administrator of the program. Complicated to detect, fraud is widespread, affecting consumers, health plans, pharmacy benefit managers, retail and mail-order pharmacies, drug manufacturers, and drug wholesalers and distributors.

“There is a need to fight fraud in this area,” Mr. Scott said.

For Medicare Parts A and B, the federal government created the Medicare Fraud Strike Force as part of the ACA. The Department of Justice (DOJ) and Department of Health and Human Services (DHHS) lead efforts, in which federal, state, and local investigators and prosecutors work together and utilize data analysis techniques to combat the fraud.

The Medicare Fraud Strike Force is part of an initiative DOJ and DHHS began in May 2009 called the Health Care Fraud Prevention and Enforcement Action Team, which now has units in 9 cities. Mr. Scott said payers might suspend claims payments if fraud is suspected. So far, the initiative has saved billions of dollars, according to the government.

However, the same rules do not apply for Medicare Part D. Mr. Scott said providers are expected to receive prompt payments for Medicare Part D services, and payers do not have the authority to suspend payments if they detect possible fraud. AMCP has said Part D plan sponsors face stringent network requirements and has asked Congress to “adequately fund” the CMS Center for Program Integrity, which is designed to identify Medicare and Medicaid fraud.

Mr. Scott said AMCP supports the Medicare Prescription Drug Anti-Fraud Act, pending legislation that would allow prescription drug plan sponsors to report credible allegations of fraud to DHHS. In turn, DHHS would allow sponsors to suspend payments while it investigates the claims. The law would allow sponsors to supersede prompt pay and “any willing pharmacy” contracting requirements.

Current Environment

Mr. Scott and Tim Mangan, assistant US attorney for the southern district of Ohio, followed with an overview of common fraud schemes. Recently, pill mills have generated a lot of attention throughout the United States. They are pain clinics run by pharmacies or prescribing physicians that dispense illegal drugs, particularly pain medications such as oxycodone, which are potentially addictive.

Other scams include manufacturers manipulating drug rebates; pharmacies undertaking kickback schemes; supply chain initiatives such as drug adulteration and remarketing; beneficiaries, pharmacies, prescribing physicians, and organized crime diverting expensive drugs such as controlled substances to make money; and independent brokers and agents committing health plan marketing violations, including deceptive marketing and forged Medicare Part D applications.

If health plans suspect fraud, Mr. Mangan said they should contact the DHHS Office of the Inspector General (OIG), DOJ, or the National Benefit Integrity Medicare Drug Integrity Contractors (MEDIC). The responsibilities of MEDIC include identifying and investigating Part D fraud and abuse, fulfilling requests for information from law enforcement agencies, and auditing fraud, waste, and abuse programs that are part of a plan sponsor’s compliance plan.

CMS has not defined a credible allegation of fraud, but Mr. Mangan said plans can identify fraud through an employee or patient, reports to the OIG’s fraud hotline, claims data mining, and patterns identified through audits.

“The bottom line is, when you see something, say something,” Mr. Scott said.

CMS Programs

Linda Cortese, RPh, MS, consultant at Rainmakers Strategic Solutions, LLC, finished with a look at online resources, which can be used to fight Medicare Advantage or Part D fraud, available to healthcare professionals.

In 2010, CMS established the Center for Program Integrity to handle all of its fraud, waste, and abuse activities. Ms. Cortese said the program increased the attention paid to the problems, led to stronger industry partnerships on antifraud collaborations, and contributed to better data sharing.

As part of the Center for Program Integrity, the Division of Plan Oversight and Accountability is focused on fighting Medicare Part C and D fraud. The division works closely with MEDIC personnel and Medicare recovery audit contractors (RAC).

Ms. Cortese said the National Benefit Integrity MEDIC hears complaints, investigates and audits claims, collaborates with law enforcement, performs data analysis, and gets referrals from and provides assistance to sponsoring organizations. Meanwhile, the outreach and education arm of MEDIC conducts outreach activities, provides education and training, maintains the MEDIC website, and oversees quarterly fraud workshops. The RAC employees determine if a payment is improper and review overpayments made due to prescriptions written by excluded providers or filled at excluded pharmacies.