Reducing Fraud, Waste, and Abuse in Small Health Insurance Plans

San Francisco—Efforts to reduce fraud, waste, and abuse (FWA) in the US healthcare system are getting a boost from the federal government under the Patient Protection and Affordable Care Act that is allotting $350 million over the next 10 years to ramp up anti-fraud efforts. Along with putting more money in the hands of Medicare and Medicaid to fight fraud, the Centers for Medicare & Medicaid Services (CMS) will be able to strengthen controls to prevent prescription drug fraud and abuse in Part D programs.

The need to address FWA is highlighted by estimates by the National Healthcare Anti-Fraud Association that 3% of healthcare expenditures are fraudulent, and by other government and law enforcement agencies that as much as 10% of the entire health outlay in the US is fraudulent.

For insurers, the impact of FWA is substantial. It is estimated that drug diversion cost to insurers is as much as $72.5 billion each year. What can insurers do to combat FWA?

Daniel Weaver, PharmD, MBA, clinical program manager, MedImpact Healthcare Systems, Inc., San Diego, California, provided some guidance on answering this question at the AMCP meeting in a Contemporary Issues session titled Preserving Limited Health Resources and Driving Cost Savings: Combating Prescription Drug Fraud, Waste, and Abuse. He directed most of his remarks at smaller health plans that attempt to handle FWA in house, unlike many large health plans that typically rely on Special Investigative Units or FWA departments to manage FWA.

Dr. Weaver listed a number of areas that need to be considered if handling FWA in house, including biologics, almost any costly medication, recently identified fraud with HIV infusion, and narcotic medications. He suggested concentrating on narcotics first as FWA of this class of prescriptions is costly, and provider or physician shopping constitutes the largest form of diversion and accounts for the largest financial toll.

He also said that FWA of narcotics is fairly easy to identify and requires only limited resources. One way to identify FWA of narcotics is to look for member reports that show a combination of a number of narcotic prescriptions, multiple prescribers, and multiple pharmacies. In identifying these member reports, Dr. Weaver emphasized the importance of putting the information in the context of the member’s diagnosis, physician specialty, and location and type of pharmacies. A clinical review of the member profile is required along with an evaluation of whether the number of narcotic medications prescribed is appropriate for the diagnosis. “If medical data are not available,” he said, “the diagnosis of the member should be inferred from the medications.”

Another strategy to identify and track FWA is to setup easy ways for FWA to be reported such as through fraud hotlines, web reporting portals, wallet cards for employees, and posters hung at key locations.

In addition, insurers can develop and implement a narcotics control program. Such a program could limit members to a 1-month supply of narcotic medications over a 6-month period, and require prior authorization (PA) for any additional requests in that time period. Dr. Weaver said that this kind of program works well with Medicaid programs and can also be applied to commercial plans. He stipulated that oncology patients and physicians would not be included in such a program.

“The benefit of such a program,” he said, “is to confer strict quantity and time limits on narcotic prescriptions that will subsequently decrease utilization and cost.” However, he also mentioned that implementing this type of program can be disruptive to members and physicians and can increase, initially, the workload for the PA department.

For insurers who decide to implement a narcotics control program, he suggested that physicians, pharmacies, and members be given advance notice of about 3 months before implementation.

Along with identifying FWA by reviewing member reports, Dr. Weaver also said it may be useful to look at other reports such as high dollar reports and high number of narcotics reports. Along with identifying members who may be candidates for case management, these reports can identify pharmacies that are processing prescriptions without a member’s knowledge as well as members who are using their prescriptions to obtain medications for uninsured friends or family.

An additional report that may provide information on FWA is a high narcotic prescription physician report, which may identify physicians who write a high number of narcotics or who are operating prescription mills. This report may also identify a pharmacy that is using physician identification numbers to process narcotic prescriptions for diversion, or physicians who have had a prescription pad stolen.