In July 2015, the U.S. Government Accountability Office (GAO) issued a report concerning Medicaid pharmacy-related program integrity efforts.  GAO explained that this review was pursued due to the substantial amount of funds that are expended in the Medicaid program and its prior work detailing potential fraudulent or abusive practices with respect to prescription drugs.  The GAO recommended that CMS consider the expansion of lock-out programs limiting certain Medicaid beneficiaries to the use of one pharmacy and/or one prescriber and prohibiting automatic refills.

GAO analyzed: 

1. The reliability of Medicaid data from CMS and selected states for the purpose of identifying indicators of potential fraud or abuse;
2. Indicators, if any, of potentially fraudulent or abusive activities related to prescription drugs in Medicaid; and
3. The extent to which federal and selected state oversight policies, controls, and processes are designed to prevent and detect instances of prescription drug fraud in Medicaid.

Medicaid Prescription Drug Fraud Findings

According to the GAO Report, GAO identified indicators of potential prescription drug fraud and abuse among thousands of Medicaid beneficiaries and hundreds of prescribers during FY 2011.  Although GAO’s analysis included eleven states, according to GAO, four states (Arizona, Florida, Michigan, and New Jersey) had more reliable claims data and these four states accounted for about 13 percent of all FY 2011 Medicaid payments.  In these four states, GAO found the following:

• More than 16,000 of the 5.4 million Medicaid beneficiaries potentially engaged in “doctor shopping,” by visiting five or more doctors to receive prescriptions for antipsychotics or respiratory medications valued at about $33 million.
• About 700 beneficiaries received more than a 1-year supply of the same drug in 2011 at a cost to Medicaid of at least $1.6 million. This is an indicator of diversion, which is the redirection of prescription drugs for illegitimate purposes.

Analysis of Pharmacy-Related Program Integrity Efforts

States are required to maintain a two-phase Medicaid Drug Utilization Review Program, which is designed to promote patient safety while also monitoring prescription drug activity for fraud and abuse.  Each state must then report to CMS on the operation of its Review Program.  In the first phase of the Review Program, states utilize tools and eligibility screening to promote patient safety and avoid abuse before the drugs are dispensed.  The second phase of the Review Program involves ongoing and periodic examination of claims data to “identify patterns of fraud, abuse, gross overuse, or medically unnecessary care, and implement corrective action when needed.”  The Review Program is a key monitoring tool used by CMS to oversee state pharmacy-related program integrity efforts. 

GAO identified areas for CMS to enhance its oversight capabilities.  Specifically, GAO recommends the following:

• Lock-in programs for non-controlled substances.  Lock-in programs address doctor shopping by restricting beneficiaries who have abused the Medicaid program to one healthcare provider, one pharmacy, or both, for receiving prescriptions. Lock-in programs have typically been used on controlled substances.  Expanding lock-in programs that currently focus on controlled substances to restrict abusers of non-controlled substances, such as the HIV medications, Atripl and Truvada, to a single prescriber or pharmacy may help address potential fraud and abuse.
• Prohibition of automatic refills.  Pharmacies permitting automatic refills automatically refill prescriptions for certain medications without any customer action.  Concerns with pharmacy automatic refill include the potential for stockpiling, continued fill of discontinued medications, and increased cost and waste of prescription medications.  GAO notes that two of the states included in its review (Florida and Arizona) have prohibited this practice.

GAO recommends that CMS collect information about lock-in programs for non-controlled substances and automatic refill prohibitions.  CMS concurred with the GAO recommendations and stated that it will consider requiring states to report on these two areas.

To view the GAO Report, click here. 

Reporter, Stephanie F. Johnson, Atlanta, (404) 572-4629, sfjohnson@kslaw.com.