Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D

WHY WE DID THIS STUDY

Since 2006, OIG has had ongoing concerns about drug abuse and diversion in Medicare Part D. Past OIG reviews have revealed questionable billing associated with pharmacies, prescribers, and beneficiaries. Those reviews have also raised concerns about oversight of Part D and made a variety of recommendations to better safeguard the program and protect beneficiaries.

Issues with fraud and abuse continue to exist in Part D. They are related both to controlled substances, such as commonly abused opioids, and noncontrolled substances. The diversion of noncontrolled substances-i.e., the redirection of these drugs for an illegal purpose-is becoming more common, and fraud related to these drugs can present a significant financial loss to Medicare. Examples of noncontrolled drugs include respiratory and antipsychotic medications.

HOW WE DID THIS STUDY

We based this data brief on an analysis of prescription drug event (PDE) records from 2006 to 2014. We described trends in spending for Part D drugs and identified pharmacies with questionable billing. Each of these pharmacies billed extremely high amounts for at least one measure that could indicate potentially fraudulent activity. We also identified geographic hotspots for specific noncontrolled drugs that are vulnerable to fraud and abuse.

WHAT WE FOUND

• Since 2006, Medicare spending for commonly abused opioids has grown faster than spending for all Part D drugs.
• Pharmacies with questionable billing raise concerns about pharmacy-related fraud schemes.
• Geographic hotspots for certain noncontrolled drugs point to possible fraud and abuse.

WHAT WE CONCLUDE

CMS has made progress in its Part D program integrity efforts. However, the findings in this data brief and in previous OIG work demonstrate that more needs to be done to address fraud and abuse. A program as expansive as Part D requires CMS to remain vigilant and to continually develop and refine methods to uncover, address, and prevent fraudulent activity.

OIG is committed to continuing to conduct investigations of pharmacies with questionable billing when warranted and to monitor pharmacy billing. At the same time, CMS must also use all of the tools at its disposal to more effectively identify and fight fraud, waste, and abuse in Part D. This requires CMS to take action and fully implement OIG's previous recommendations.

OIG is issuing this data brief in tandem with a portfolio— (OEI-03-15-00180)—that summarizes OIG's body of work and provides an update on CMS's efforts to address the weaknesses in Part D program integrity that OIG has identified.