Improper Part D Payments Due to Inadequate Controls

For calendar years (CYs) 2006 through 2008, of approximately $185 billion in gross drug costs, CMS accepted prescription drug event (PDE) data submitted by prescription drug plan (PDP) sponsors with gross drug costs totaling $15,079,608 million for prescriptions written by excluded providers, according to an Office of Inspector General (OIG) review of excluded providers in the Medicare Part D Voluntary Prescription Drug Program.

Prescriptions Written by Excluded Providers

OIG found that CMS accepted some PDE data submitted by PDP sponsors for prescriptions written under the Part D program by excluded providers and used these PDE data to adjust Medicare Part D payments to sponsors at the end of the plan year. Social Security Act §1862(e)(1) and federal regulations at 42 C.F.R. §1001.1901 (b)(1) prohibit payment under Medicare, Medicaid, and other federal health care programs for prescriptions written by physicians or other health care professionals who are excluded from federal health care programs when the person dispensing the prescription knows or has reason to know of the exclusion until these providers are reinstated.

OIG recommended that CMS resolve improper Part D payments made for prescriptions written by excluded providers by reopening and revising CYs 2006 through 2008 final payment determinations to remove prescriptions written by excluded providers.

Inadequate Internal Controls

OIG determined that CMS accepted PDE data submitted by sponsors for prescriptions written by excluded providers because it had inadequate internal controls in place during its review. First, OIG found that CMS allowed sponsors to use state license numbers in the PDE data. CMS accepted PDE data with gross drug costs totaling an additional $1,985,315 for prescriptions that may have been written by excluded providers. The PDE records for these prescriptions contained state license numbers as prescriber identifiers but, according to the OIG, state license numbers are not unique identifiers and may be duplicated from one state to another. Therefore, OIG said that state license numbers cannot reliably verify that a provider is not excluded.

In addition, CMS did not provide sponsors with access to its database of excluded providers, the Medicare Exclusion Database (MED) to  identify excluded providers. CMS uses OIG’s database of all currently excluded providers (List of Excluded Individuals/Entities (LEIE)) to maintain the MED. The MED was developed by CMS to store and allow the retrieval of information that helps Medicare ensure that payments are not made to excluded providers for services furnished during their exclusion periods. The MED identifies the same excluded providers as the LEIE, however, it contains additional identifying information, such as an excluded provider’s national provider identifier (NPI) or the prescription identifiers that are generally used in Medicare Part D. CMS provides the MED files to various entities, including Medicare administrative contractors, intermediaries, and Medicaid state agencies; however, CMS does not provide this information to sponsors.

OIG explained that because the LEIE does not currently contain the prescriber identifiers that are generally used in Medicare Part D, sponsors that checked the LEIE may not have been able to identify prescriptions written by excluded providers as quickly as they could have if they had access to the MED. OIG also noted that state license numbers are not listed on the LEIE or in the MED in the prescriber identifier data field of PDE records.

Finally, CMS did not have an edit in place to reject PDE data submitted by sponsors for prescriptions written by excluded providers. Without an edit, CMS had to rely on sponsors to identify and deny claims for prescriptions written by excluded providers.

OIG recommended that CMS strengthen internal controls to ensure that, in accordance with federal regulations, prescriptions written by excluded providers are not paid under the Part D program. Specifically, OIG stated that CMS’ internal controls could be strengthened and be more effective by:

  • researching, identifying, and incorporating into the MED all of the provider identifiers that CMS allows sponsors to use,
  • providing sponsors access to the MED to more effectively identify excluded providers and requiring them to use the MED to ensure that prescriptions written by excluded providers are not accepted,
  • prohibiting sponsors from using state license numbers in the prescriber identifier field of PDE records, and
  • establishing an edit that would reject any PDE data submitted by sponsors for prescriptions written by excluded providers.

Although OIG only recommended access to the MED to PDP sponsors, would access to the MED be helpful to other providers?

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