Senator seeks deadline for Medicare to prevent prescription drug fraud

Introduction

Taxpayer-funded Medicare recently spent more than $1 billion on drug prescriptions missing a valid doctor identification number and a Senate Democrat is demanding that the government stop ignoring the problem and create a plan this month to fix it.

To prevent fraud, pharmacies are required to submit physician ID numbers to health plans that contract with the Centers for Medicare and Medicaid Services (CMS) to provide Medicare Part D prescription drug benefits. But the Office of Inspector General for the Health and Human Services Department says the CMS lacks a system to verify the ID numbers.

In 2007, Medicare Part D plans paid pharmacies $1.2 billion for 18 million prescription drug claims with ID numbers that were deactivated, retired, or not listed in federal registries. Out of almost 528,000 invalid prescriber ID numbers, 17 percent did not follow the correct numeric format, according to the watchdog’s June report. And a single invalid ID number — AA0000000 — accounted for almost $105 million in drug payments.

“Without a valid identifier, we cannot even be sure that the actual practicing physician prescribed the drug, much less determine the physician’s name, verify the physician was appropriately licensed, or identify questionable prescribing patterns,” Robert Vito, an acting assistant inspector general at Health and Human Services Department, told a July Senate hearing.

Vito compared the invalid prescriber ID problem for prescription drugs to a similar issue that left Medicare vulnerable to rampant fraud and abuse for wheelchairs, diabetic supplies, and other durable medical equipment. It is “similar to placing a combination lock on a gate to protect what’s inside, but then allowing any combination to open the gate,” he said.

Democratic Sen. Tom Carper of Delaware is demanding that the CMS set a time line of specific actions it will take to fix the problem and detail its plan to him by August 16. Carper is chairman of the Senate subcommittee on federal financial management, which held the July hearing.

“This raises serious concerns about the potential misuse of taxpayer funds, let alone the public health concerns due to the diversion of medications that are controlled substances,” Carper said in a statement last week after sending a letter to CMS.

CMS Will Hire Contractor

In a written response to Center for Public Integrity questions, CMS spokesman Peter Ashkenaz said the agency will hire a contractor to study data and issue guidance to Medicare Part D plans based on the findings. Asked if CMS had developed a timeline for the fix, Ashkenaz wrote, “not yet.”

Medicare is the U.S. government’s $520 billion annual health insurance plan for about 47 million elderly or disabled Americans, and its Part D program provides subsidized prescription drug coverage. Medicare fraud costs taxpayers an estimated $60 billion each year.

The watchdog’s recent report is not the first time invalid prescriber IDs with Medicare Part D payments have come to light. Health plans that contract with Medicare found problems with invalid IDs on claims in 2007 and 2008, according to the inspector general. Another investigation is currently underway by the inspector general into invalid prescriber ID numbers for drug prescriptions with a high street value, including Oxycontin.

Deborah Taylor, chief financial officer at CMS, said the agency will not advise contracting health plans to deny payment for drugs with invalid prescriber IDs. “We don’t want beneficiaries standing in front of the drug counter not being able to get needed and necessary drugs,” Taylor told the Senate hearing. “We always weigh that balance, making sure we get valid information on claims but not holding up beneficiaries from getting needed drugs.”

Taylor also suggested the problem may be less severe than the watchdog report said. In 2007, prescribers were using three separate ID systems with claims. Since then, Taylor said most health care providers have started to use a single national ID number.

In addition, she said some pharmacies used dummy prescriber ID numbers in the beginning of the program in order to keep valid numbers secure. “Some sponsors told us they just put in fictitious numbers rather than putting in the actual number,” Taylor said.

Vito, however, said the effect of the move to a single provider number on invalid entries remains unclear: “Just because they are moving to a system where it is one uniform identifier that does not mean that there might not be these problems still.”