Medicare Prescription Drug Benefit Program Integrity

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Medicare Prescription Drug Benefit Program
Integrity

• Presented by
• Jolie Crowder
• Co-Director
• National Consumer Protection Technical Resource
  Center
• jcrowder_at_smpresource.org

This presentation was supported in part by grant
No. 90AM2806, from the Administration on Aging,
Department of Health Human Services. Grantees
undertaking technical resource center grants
under government sponsorship are encouraged to
express freely their findings conclusions.
Therefore, points of view or opinions do not
necessarily represent official Administration on
Aging policy.
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Objectives

• Identify Potential Rx Program Fraud and Abuses
  Issues Beginning Jan 1st
• Summarize research findings from two CMS special
  studies

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Famous Bank Robber Slick Willie Sutton

• Why do you rob banks?
• Because thats where the money is.
• Medicare Prescription Drug Program 29 million
  people, 720 billion in first decade

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Why is the Rx program so vulnerable?

• BIG, new, expensive program
• Short timeframe to implement
• Complex benefit
• Complex structure
• Complex new systems to manage, measure, detect
  and monitor the program
• Small number of very smart, very dishonest people
  with a LOT of experience defrauding the system

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The most effective approaches to combat fraud,
waste and abuse use a combination of prevention,
detection and correction strategies

• The best fraud and abuse compliance programs
  include active collaboration with internal and
  external entities, including law enforcement,
  other health plans and government auditors

Detection
Prevention
Correction
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Benefit
Beneficiary pays an estimated 396 in premiums
(32.20 monthly)
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Cast of Characters

• Medicare/ Medicaid (Federal Level)
• States
• PBMs Manufacturers
• PDPs and MA-PDPs
• Practitioner/ Providers
• Pharmacy
• Consumers
• Non-affiliated Companies

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The Structure
Health Care Practitioner
RX refills, brand/generic, interactions
Writes/ refills prescriptions
Dispensed Drug
Medicare Beneficiary
Co-Pay and Deductible
Retail or Mail Order Pharmacy
Market meds, provide research and education
grants
State - Medicaid
Insurance Coverage Premiums
Payment for eligible prescription filled
Purchase
Product
Insurance Premium Subsidy payments
Wholesaler (PBMs)
Prescription Drug Plan
CMS
Payment of Dispensing based Rebates
Submit supporting documentation (to be determined
by CMS) to support subsidy payments
Purchase
Product
Submission of Rebate Request
Manufacturer

• Key Points
• PDP will become at risk for the cost of the
  prescription drug benefit and will be developing
  benefit programs based on government guidelines
• PDP will negotiate with the retail pharmacy for
  the reimbursement of prescription drugs filled to
  Medicare Beneficiaries
• PDP will use the Insurance coverage premiums,
  subsidies from the government and rebates
  received from the manufacturer to cover the costs
  paid to the retail pharmacies for prescriptions
  filled to Medicare Beneficiaries

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• the work of guarding the henhouse has been
  subcontracted, in large measure, to foxes. Forbes

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What Weve Seen

• Fraud and waste perpetrated (and convicted) by
  every type entity involved in the program
  structure

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Consumer Fraud, Waste Abuse
Members of prescription drug benefit programs may
perpetrate fraud by falsifying personal or
prescription information
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Consumer Fraud, Waste Abuse
Members can obtain large quantities of drugs
either to sustain an abusive habit or to minimize
out-of-pocket costs (shoot the TrOOP)
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Providers may commit fraud by falsifying
prescription information for financial gain
Provider Fraud, Waste Abuse
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Waste and abuse can be caused by excessive
dispensation of prescriptions or lack of adequate
controls in the physician office
Provider Fraud, Waste Abuse
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Pharmacy Fraud, Waste Abuse
Pharmacy fraud arises from inappropriate billing
and dispensing practices that result in improper
reimbursement
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PBMs that are involved in fraudulent schemes such
as prescription drug switching have significant
potential to benefit financially
PBM Fraud, Waste Abuse
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PBMs may fail to establish adequate controls
leading to wasteful expenditure on prescription
drugs
PBM Fraud, Waste Abuse
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PBMs can control pricing and formulary decisions
in order to increase their financial gains
PBM Fraud, Waste Abuse
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Integriguard High Priority Threats

• Identity Theft
• Forged Prescriptions
• Voluntary and Involuntary Disenrollment
• Point of Sale Edits
• Shoot through the TrOOP
• Kickbacks
• Bait Switch
• Summary of high priority threats from
  Integriguard Report

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OIG High Priority Threats

• Construction of the formularies
• False statements
• Price manipulation
• E-prescription and encryption
• Off label use promotions by drug manufacturers
• Billing for services not rendered

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Conflicts for SMPs and Aging Services Personnel

• Partnerships with plans- esp. SHIPs
• Long list of program vulnerabilities that can and
  will be perpetrated by consumers
• Desire to represent the interests of consumers
  and help them maximize their benefits