Kusserow on Compliance: OIG found Medicare continues to overpay for selected drugs

In a number of blog articles, I have reported on the ongoing interest of the HHS Office of Inspector General (OIG) in drug related issues, particularly diversion and abuse. Much of this focus has been as result of Medicare Part D drug benefits. The most recent report issued by the OIG on this subject found Medicare contractors in 13 jurisdictions overpaid providers $35.8 million for selected outpatient drugs during a three year audit period. Nearly 90 percent of the overpayments were as a result of providers billing either incorrect units of service or a combination of incorrect units of service and incorrect Healthcare Common Procedure Coding System (HCPCS) codes.

The OIG also found that the Medicare claims processing systems did not have sufficient prepayment edits in place to prevent these overpayments and cited a notable example of the Medically Unlikely Edits (MUEs), which did not address many of the HCPCS codes associated with the outpatient drugs. Additional potential overpayments were identified for outpatient drugs that were billed after the period of the audit review that could result in an additional $11.5 million in overpayments. The OIG recommended that CMS:

  • ensure Medicare contractors collect remaining overpayments identified in the reviews;
  • continue to educate providers on correct billing of outpatient drugs;
  • instruct Medicare contractors to review payments to providers for outpatient drugs billed subsequent to the period of the audit; and
  • continue to implement line item and date-of-service MUEs for additional outpatient drugs.

CMS and the Medicare contractors concurred with all of the recommendations and provided information on actions that it has taken or planned to take to address the recommendations. CMS also highlighted actions taken during and after the audit period to prevent overpayments to providers incorrectly billing for outpatient drugs. This included steps taken to educate providers on avoiding common Medicare billing errors through published articles and newsletters, as well requiring Medicare contractors to implement line item MUEs for identified HCPCS codes related to outpatient drugs. CMS also began converting some line item MUEs to date-of-service MUEs. If the Medicare contractors had these line item and date-of-service MUEs in place during the entire audit period, $23.7 million, or 66 percent, of the $35.8 million in total overpayments could have been prevented. CMS also reported that as of May 4, 2015, Medicare contractors had already recovered 63 percent of the $35.8 million in overpayments, and 10 of the 13 Medicare contractors had used the results of the OIG audit for ongoing provider education activities.

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, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.

 

Kusserow on Compliance: OIG congressional testimony on Medicare Part D fraud

Representatives from the HHS Office of Inspector General (OIG) testified at a July 14 congressional hearing about vulnerabilities of the Medicare Part D program to fraud and abuse. The program currently has more than 39 million enrollees who obtain their prescription drugs at a cost of over $120 billion a year. In the last three years, the OIG reported that its investigations related to this program resulted in 339 criminal actions, 31 civil actions, and over $720 million in investigative receivables. Serious weaknesses in controls mean that fraud and abuse vulnerabilities still exist. The evidence of this has been reflected in recently released OIG reports on the subjects of Part D integrity and questionable billing, where the agency found:

  • spending for Part D drugs increased from $51.3 billion to $121.1 billion between 2006 and 2014;
  • costs for commonly abused opioids grew from $1.5 billion to $3.9 billion, driven by increases both in the number of beneficiaries receiving these opioids and the average number of prescriptions per beneficiary;
  • 1,432 retail pharmacies had questionable billing practices, which totaled $2.3 billion billed to Part D in 2014;
  • 468 pharmacies billed for commonly abused opioids at an extremely high rate, indicating billing for medically unnecessary drugs, those used inappropriately, or those drugs diverted and resold for profit;
  • 216 pharmacies billed for beneficiaries receiving an unusually high number of commonly abused opioids, suggesting “doctor shopping” to inappropriately obtain drugs;
  • 314 pharmacies billed for a high number of different types of drugs, per beneficiary, indicating billing for drugs that were never provided or were medically unnecessary; and
  • some pharmacies billed, on average, for more than 12 different types of drugs per beneficiary, which is double the national average.

As a result the OIG has been raising concerns about adequacy of oversight and made a number of recommendations to CMS to better safeguard the program and protect beneficiaries. Although, the OIG credited CMS with some progress, it called for CMS, its National Benefit Integrity Medicare Drug Integrity Contractor (MEDIC), and Part D plan sponsors to do more to protect the program. The OIG recommendations center around two themes: (1) leveraging Part D data to identify vulnerabilities; and (2) employing additional tools to enhance the oversight of the Part D program. The OIG called upon CMS to take action on certain unimplemented recommendations. In support of that recommendation, the OIG specifically stated that:

  • CMS needs to require plan sponsors to report the number of instances of potential fraud, waste, and abuse identified, or the actions taken to address these instances. Without this information, it is impossible for CMS to review the effectiveness of plan sponsors’ fraud detection programs.
  • CMS and plan sponsors need to monitor beneficiary utilization for a wider range of drugs susceptible to abuse than it currently does. This includes a recommendation to expand sponsors’ and CMS’s drug utilization review to cover certain non-controlled substances.
  • The MEDIC integrity contractor for Part D, which was found to only use proactive data analysis to initiate a small percentage of investigations and case referrals and to rely on external sources to identify most incidents of potential fraud abuse, should be more thoroughly investigating potential fraud and abuse.
  • CMS must exercise better oversight of both the plan sponsors and the MEDIC to ensure it is reducing the program’s vulnerability to fraud, waste, and abuse.
  • CMS, the MEDIC, and plan sponsors need to strengthen program oversight by employing additional tools, as the current tools are insufficient to meet the needs of the program.
  • Plan sponsors do not have adequate controls to prevent improper payments and CMS has not exercised sufficient oversight of them to prevent improper payments for drugs that are not covered by Part D.
  • CMS needs to provide additional oversight of plan sponsors to ensure effective implementation of compliance programs, one of the primary tools for Part D program integrity.
  • The MEDIC currently does not have administrative authority to recommend recoupment of payments for inappropriate services and CMS needs to establish a mechanism to allow them to do this in cases that have been declined by law enforcement agencies.
  • The law should be changed to more effectively deal with beneficiaries who may be abusing the program or inflicting harm on themselves by overutilizing drugs.
  • Beneficiaries should be restricted to a limited number of pharmacists or prescribers. This program, referred to as “lock-in,” has been successfully used by state Medicaid programs.

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, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: OIG warns Medicare Part D fraud and drug diversion is growing

The Office of Inspector General (OIG) reported that prescription drug abuse continues to grow in this country, to the point of being an epidemic problem. The OIG stated that improper use of pharmaceuticals and overuse of opioids has resulted in over 1.4 million emergency department visits and 700,000 inpatient hospital stays a year, much of which is a result of drug diversion.

The OIG report recapped problems identified with drug abuse and diversion in Medicare Part D since its inception in 2006. Between 2006 and 2014, spending for commonly abused opioids grew from $1.5 billion to $3.9 billion, an increase of 156 percent. Growth in spending for these opioids outpaced both the growth in spending for all Part D drugs (which grew 136 percent) and the growth in the number of beneficiaries receiving Part D drugs (which grew 68 percent). The OIG highlighted ongoing concerns about the levels of abuse and diversion of Part D drugs and uncovered significant levels of questionable billing associated with pharmacies, prescribers, and beneficiaries involving both controlled and non-controlled substances. This, in turn, raises concerns about the adequacy of oversight of the Part D Program. This report was issued tandem with a portfolio, Ensuring the Integrity of Medicare Part D (OEI-03-15-00180), which summarizes the OIG’s body of work and provides an update on CMS’ efforts to address the weaknesses in Part D program integrity identified by the OIG.

The OIG has made a variety of recommendations to better safeguard the program and protect beneficiaries, many of which have not yet been implemented. As such, issues with fraud and abuse continue to exist in Part D. They relate to both controlled substances, such as commonly abused opioids, and non-controlled substances. The diversion of non-controlled substances from legitimate to illegal purposes is becoming more common and fraud related to these drugs can present a significant financial loss to Medicare. Examples of non-controlled drugs include respiratory and antipsychotic medications.

The OIG analysis of prescription drug event (PDE) records from 2006 to 2014 has evidenced trends in spending for Part D drugs. Further, the report noted that geographic hotspots for specific non-controlled drugs vulnerable to fraud and abuse exist. The report identified a number of retail pharmacies with questionable billing practices, including:

  • 1,432 facilities that billed extremely high amounts for at least one of five measures reviewed in the report;
  • 292 facilities that billed extremely high amounts for multiple measures;
  • 403 facilities that billed an extremely high number of prescriptions per beneficiary (for example, over 62 prescriptions per beneficiary in one case);
  • 468 facilities that billed commonly abused opioids in an extremely high percentage of their prescriptions;
  • 216 facilities that billed beneficiaries who averaged at least four prescribers for commonly abused opioids;
  • 314 facilities that billed a high number of different types of drugs per beneficiary; and
  • 332 facilities that billed high proportions of beneficiaries who received excessive supplies of at least one Part D drug in a single year.

The report credited CMS with making progress in its Part D program integrity efforts, however evidence of its reviews demonstrate that more needs to be done to address fraud and abuse. A program expanding at the rate of Part D requires continuous development and refining of methods to uncover, address, and prevent fraudulent activity. The OIG noted that its commitment is to continue monitoring pharmacy billing and conducting investigations of questionable billing, however it also called upon CMS to employ all of the tools at its disposal to more effectively identify and fight fraud, waste, and abuse in the program. The OIG states that this requires CMS to take action and fully implement the OIG’s previous recommendations.

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, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2015 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: OIG reports investigative results for first half of 2015

The Office of Inspector General (OIG) mission is to provide independent and objective oversight that promotes economy, efficiency, and effectiveness in the programs and operations of HHS. It investigates allegations of fraud, waste, and abuse in all of the Department’s programs and is mandated to report to Congress semi-annually on the progress of meeting these mission goals. On June 1, 2015, the OIG released its first half of fiscal year (FY) 2015’s report, which included the following statistical results from investigations:

• Expected recoveries of over $1.8 billion ($544.7 million in audit receivables and $1.26 billion in investigative receivables that includes $142 million in areas such as the states’ shares of Medicaid restitution);
• 486 criminal actions against individuals/entities engaged in crimes against HHS programs;
• 326 civil actions, civil monetary penalties settlements, and administrative recoveries related to provider self-disclosure matters;
• 1,735 individuals and entities excluded from participation in federal health care programs.

The largest body of work in the report involved the investigation of matters related to the Medicare and Medicaid programs, such as: (1) patient harm; (2) billing for services not rendered, medically unnecessary services, or services more extensive than those actually provided; (3) illegal billing, sale, diversion, and off-label marketing of prescription drugs; and (4) solicitation and receipt of kickbacks, including illegal payments to patients for involvement in fraud schemes and illegal referral arrangements between physicians and medical companies. The OIG also investigated cases involving organized criminal activity, medical identity theft, and fraudulent medical schemes that are established for the sole purpose of stealing Medicare dollars. Those who participate in these schemes may face heavy fines, jail time, and exclusion from participating in federal health care programs. The OIG took special note to highlight common criminal fraud scheme case types that occurred in the following areas:

• controlled and non-controlled prescription drugs;
• home health agencies and personal care services;
• ambulance transportation;
• durable medical equipment (DME); and
• diagnostic radiology and laboratory testing.

It also cited the results from the Health Care Fraud Prevention and Enforcement Action Team (HEAT) started in 2009 by HHS and the Department of Justice (DOJ) to strengthen programs and invest in new resources and technologies to prevent and combat health care fraud, waste, and abuse. HEAT continued to identify those who seek to defraud Medicare and Medicaid. The Medicare Fraud Strike Force, which operates in nine major cities and is a key component of HEAT, coordinates law enforcement operations conducted jointly by federal, state, and local law enforcement entities that prosecute health care fraud. During the first half of FY 2015, the efforts of this team resulted in the filing of charges against 69 individuals or entities, 124 criminal actions, and $163 million in investigative receivables. As part of the endeavors, the team refers credible allegations of fraud to CMS so that it can suspend payments to the suspected perpetrators, thereby immediately preventing losses from claims by Strike Force targets.

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, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2015 Strategic Management Services, LLC. Published with permission.