May 16, 2012

Expect More Scrutiny of Part D Claims After OIG Report

Washington, D.C.More than 59,307 retail pharmacies billed Medicare Part D in 2009 for 873.3 million prescriptions for 24.4 million beneficiaries, and Part D paid $56.9 billion for those prescriptions, according to a recent Office of Inspector General (OIG) report to the Centers for Medicaid & Medicare Services (CMS).

Because of contentions that Part D does not have enough safeguards in place to prevent fraud, the OIG developed eight measures to scrutinize Part D billing and ferret out pharmacies with questionable practices.

Investigators identified 2,600 pharmacies for further scrutiny based on one of the measures. An example would be a pharmacy that billed extremely high dollar amounts or number of prescription per beneficiary or prescriber.

“Although some of this billing may be legitimate, pharmacies that bill for extremely high amounts warrant further scrutiny,” the report noted.

Independent pharmacies made up 34% of all retail pharmacies that billed Part D, but they accounted for 80% of the 2,637 pharmacies with questionable billing. The most likely areas for questionable billing were found to be Miami, Los Angeles, and Detroit. On average, retail pharmacies billed almost $1 million each for Part D prescriptions in 2009, which worked out to about $1,500 per beneficiary and $1,800 per prescriber. The IG report noted that half of pharmacies billed more than $750,000, while 10% billed more than $1.8 million.

Just 20 drugs accounted for one-third all Part D prescriptions filled, led by simvastatin, lisinopril, and hydrocondone-acetaminophen. Almost one-third of the overall prescriptions were for brand-name drugs, such as Lipitor, Plavix, Nexium, and Diovan.

In comments on the draft report, CMS agreed that it would:

· Strengthen monitoring by the Medicare Drug Integrity Contractors (MEDIC) of pharmacies and the ability to identify pharmacies for further review;
· Provide additional guidance to the private insurance companies it contracts with as sponsors on monitoring pharmacy billing, stating that it has already issued guidance and will issue additional guidance in the 2013 Parts C and D Call Letter.
· Insist that an effective compliance program include the use of data analysis to detect potential fraud, waste, and abuse.
· Follow up on the pharmacies identified as having questionable billing, stating that the MEDIC will review the cases referred by OIG and conduct peer-to-peer comparisons and other analysis.

The agency also said it would explore options to require sponsors to refer potential fraud and abuse incidents that may warrant further investigations and develop risk scores for pharmacies to be shared with sponsors.

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