Kusserow’s Corner: OIG Congressional Hearing on Prescriptive Drug Fraud and Abuse

In the past week, I reported in blog articles a couple of examples of Department of Justice (DOJ) enforcement actions related to prescription drug cases.  This is an area that is often overlooked in ongoing monitoring and auditing of high risks. Now this week the DHHS Office of Inspector General (OIG) testified on “Curbing Prescription Drug Abuse” before the Senate Committee on Homeland Security.  It released a report at the hearing where it found millions of dollars by unauthorized prescribers, such as massage therapists and athletic trainers.

The OIG focused on the Medicare Part D drug benefits program that has over 37 million beneficiaries enrolled and involves approximately $67 billion in expenditures. Curbing abuses in this program is a major priority of the OIG and CMS, which is responsible for overseeing this program.  CMS has contracted with the Medicare Drug Integrity Contractor (MEDIC) and Part D plan sponsors.  Other agencies supporting this effort include the Drug Enforcement Administration (DEA), Medicaid Agencies, and state and local law enforcement.  Examples of these partners in action included the $81 settlement by the DOJ that was the largest such case in the history of the DEA.  Following that, the DOJ took action on behalf of FDA.

The OIG reported at the hearing that it has expended considerable energy in providing monitoring and oversight of the effectiveness of controls to prevent fraud and abuse in the program.  It reported finding significant limitations on program safeguards.  It cited extreme prescribing patterns by hundreds of physicians and questionable billing by thousands of pharmacies (note this was the case of the DEA case cited above).  It reported that the number of investigations in this area have quadrupled since 2008.

In its testimony, the OIG reported that drug diversion has proven to be a complex problem that involves many co-conspirators, including distributors and traffickers, as wells as physicians, nurses, and pharmacies.  It noted the rise of significant criminal enterprises getting involved in these practices. The major abuses among prescriptive drugs revolve around addictive drugs.  Many cases have involved individuals who profit by writing illicit prescriptions that are filled by “Pill Mills.”  On the other side of the equation are drug-seeking patients who make their rounds to obtain prescriptions and provide the market for prescription drug sellers.

The OIG cited “phantom pharmacies” that exist solely to run out illicit prescriptions and then disappear before the authorities arrive.  Several examples of cases prosecuted were presented to the Committee.  The OIG tied these abuses to Medicare by noting that it has found many examples of payments being made as result of prescription by parties not authorized to make them.  It conducted Part D reviews in 10 states and found tens of millions of dollars expended to pay for prescriptions ordered by counselors, social workers, chiropractors, nurses, physical therapists, occupational therapists, and speech language pathologists.   It also found tens of thousands of improper prescriptions for controlled substances.

The OIG further cited that Part D in 2007 alone paid $1.2 billion for claims for improper prescribers.  The edits and controls did not catch these improper claims. Since then, CMS has moved to correct these control deficiencies.

The OIG noted that it had identified 736 general care physicians that had questionable prescribing patterns, by ordering an extreme number of prescriptions per beneficiary, including controlled access drugs under Schedule II or III, particularly oxycodone and morphine.  A number of specific cases were presented to the Committee as examples of such cases.  The OIG also focused on retail pharmacies with billing patterns far out of the norm.  Some 2,637 pharmacies fell into this pattern and Medicare paid these pharmacies $5.6 billion.  The recent Walgreens case mentioned in an earlier blog is a good example of this.

Richard P. Kusserow served as DHHS Inspector General for 11 years.  He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters.  The SM sister company, Compliance Resource Center (CRC), provides a wide range of compliance tools, including sanction-screening. 

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