Fraud, waste, and abuse in the Medicare Part D prescription drug program continue to threaten the integrity of the program and pose challenges to the federal agencies charged with its administration and oversight.  Earlier this month, the Federal Department of Health and Human Services Office of Inspector General (“OIG”) published a portfolio entitled “Ensuring the Integrity of Medicare Part D”[1] and an accompanying data brief entitled “Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D.”[2] The portfolio and brief address weaknesses in the integrity of Medicare Part D, specifically, issues relating to trends in billing and spending, systemic vulnerabilities, and the need to enhance enforcement efforts. Particular attention is given to the inappropriate dispensing, reimbursement, and diversion of Schedule II and III controlled substances, namely, opioid analgesics, better known as prescription painkillers.

OIG reports that spending for Part D drugs more than doubled between 2006 and 2014, from $51.3 billion to $121.1 billion. Six percent of Part D spending in 2014 was for controlled substances—drugs regulated pursuant to the Federal Controlled Substances Act. According to OIG, “[c]ontrolled substances of particular concern are Schedule II and III opioids,” and “[t]he increase in spending for commonly abused opioids appears to have been driven by an increase both in the number of beneficiaries receiving these opioids and in the average number of prescriptions per beneficiary.”[3] Indeed, Part D spending on generic and brand-name opioid analgesics, e.g., OxyContin, fentanyl, and morphine sulfate grew faster than spending for all other Part D drugs with spending per beneficiary highest in Alaska, Oklahoma, and Tennessee, followed by other “geographic hotspots.” OIG attributed inappropriate Part D payments for controlled substances to insufficient oversight of Part D plan sponsors and the Medicare Drug Integrity Contractors (“MEDICs”)[4] by the Federal Centers for Medicare & Medicaid Services (“CMS”) and the failure of plan sponsors to implement adequate controls to prevent improper payments and report data on incidents of potential fraud and abuse.

OIG also discussed the roles of prescribers, pharmacies, and Part D beneficiaries in fraud schemes involving controlled drugs. Questionable billing patterns by physicians and pharmacies in extremely high dollar amounts or numbers of prescriptions per beneficiary or per prescriber or billing for non-rendered services frequently involve commonly abused opioids.[5] “Billing for commonly abused opioids in a high percentage of prescriptions may indicate that a pharmacy is billing for medically unnecessary drugs that may be used inappropriately or diverted and resold for a profit.”[6]

To strengthen Part D program integrity, OIG identified several findings and recommendations made in a series of OIG reports[7] published following the creation of the Part D drug benefit in 2006, pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003:

The findings and recommendations developed through this body of work have led OIG to conclude that Part D’s underlying vulnerabilities cluster around two issues involving all three levels of program oversight (plan sponsors, the MEDIC, and CMS): (1) the need to more effectively collect and analyze program data to proactively identify and resolve program vulnerabilities and prevent fraud, waste, and abuse before it occurs; and (2) the need to more fully implement robust oversight designed to ensure proper payments, prevent fraud, and protect beneficiaries.[8]

The OIG portfolio and data brief were issued within days of a Medicare fraud takedown in 17 districts led by the Medicare Fraud Strike Force.[9] The nationwide sweep resulted in charges against 243 individuals, including 46 doctors, nurses, and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $712 million in false billings.[10]

Notes:

[1] (June 22, 2015), https://oig.hhs.gov/oei/reports/oei-03-15-00180.pdf.

[2] (June 22, 2015), https://oig.hhs.gov/oei/reports/oei-02-15-00190.pdf.

[3] Id. at 2, 3.

[4] MEDICs are Medicare contractors retained by CMS to identify and investigate potential Part D fraud and abuse incidents. 

[5] A total of 468 pharmacies billed for commonly abused opioids in an extremely high percentage of their prescriptions.... [E]ach of these 468 pharmacies billed for commonly abused opioids in at least 17 percent of its Part D prescriptions—nearly three times the national average.... A total of 216 pharmacies billed for beneficiaries who, on average, had at least 4 prescribers for commonly abused opioids. In comparison, the national average was two prescribers per beneficiary for these drugs.
See note 2, supra, at 5-6.

[6] Id. at 6.

[7] See note 1, supra, at 19-20.

[8] Id. at 3.

[9] National Medicare Fraud Takedown Results in Charges Against 243 Individuals for Approximately $712 Million in False Billing, Dep’t of Justice, Office of Pub. Affairs (June 18, 2015), http://www.justice.gov/opa/pr/national-medicare-fraud-takedown-results-charges-against-243-individuals-approximately-712.

[10] Id.