Transcript Medicare and Medicaid Fraud, Waste and Abuse

Medicare & Medicaid
Audits and Compliance
Programs:
A Changing Landscape
Angelo J. Cifaldi, R.Ph., Esq.
[email protected]
732-855-6096
Satish V. Poondi, R.Ph., Esq.
[email protected]
732-855-6154
Wilentz, Goldman, & Spitzer P.A.
90 Woodbridge Center Drive
Woodbridge, NJ 07095
3919264
* © 2011, Angelo J. Cifaldi, Esq. All rights reserved.
Objectives
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Define the terms Fraud, Waste & Abuse
New Jersey Medicaid Fraud Division’s 2011
Work Plan
Patient Protection and Affordable Care Act
(PPACA)
Compliance Programs
Update on Medicare and Z-PIC Audits
Case Studies
Definition of Fraud
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"Fraud" means an intentional
deception or misrepresentation made
by any person with the knowledge
that the deception could result in
some unauthorized benefit to that
person or another person, including
any act that constitutes fraud under
applicable federal or State law.
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N.J.S.A. § 30:4D-55
Definition of Waste
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Waste, typically not a criminal or
intentional act, can be described as the
over-utilization or misuse of services
Definition of Abuse
"Abuse" means provider practices that are
inconsistent with sound fiscal, business, or
medical practices and result in
unnecessary costs to Medicaid or in
reimbursement for services that are not
medically necessary or that fail to meet
professionally recognized standards for
health care. The term also includes
recipient practices that result in
unnecessary costs to Medicaid.
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N.J.S.A. § 30:4D-55
New Jersey Medicaid Fraud
Division
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The New Jersey "Medicaid Program
Integrity and Protection Act" established
the Office of the Medicaid Inspector
General
On June 29, 2010 the Office of the
Medicaid Inspector General was placed
under the Office of the State Comptroller.
OMIG renamed Medicaid Fraud Division
New Jersey Medicaid Program
Integrity and Protection Act
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The State of New Jersey expends more than $ 9 billion
in taxpayer funds to fund the Medicaid program each
year;
Centralizes fraud recovery efforts and establishing an
independent Office of the Medicaid Inspector General by
statute to prevent, detect, and investigate fraud and
abuse and coordinate the anti-fraud efforts of all State
agencies funded by Medicaid
For each fiscal year beginning after the fiscal year in
which this act takes effect, the Governor shall
recommend and the Legislature shall appropriate at least
$ 3,000,000 from the General Fund to the Office of the
Medicaid Inspector General to effectuate the purposes of
this act.
Medicaid Fraud Division – Mission
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The Division
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Investigates fraud, waste and abuse;
Recovers Medicaid funds via audits;
Enforces Medicaid rules and regulations;
Reviews the quality of care given to Medicaid
recipients;
Performs background checks on all Medicaid provider
applicants
Excludes or terminates providers from the Medicaid
program;
Refers criminal prosecutions to the Attorney General's
office
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New Jersey Medicaid Program
Integrity and Protection Act Powers
To conduct and supervise all State government activities,
except those of the Medicaid Fraud Control Unit in the
Department of Law and Public Safety, relating to
Medicaid integrity, fraud, and abuse;
To call upon any department, office, division, or agency
of State government to provide such information, resources, or other assistance as the Medicaid Inspector
General deems necessary to discharge the duties and
functions
To direct all public or private Medicaid service providers
or recipients to cooperate with the office and provide
such information or assistance as shall be reasonably
required by the office.
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New Jersey Medicaid Program
Integrity and Protection Act Powers
(1) To establish, in consultation with the department and the Attorney
General, guidelines under which the withholding of payments or exclusion
from Medicaid may be imposed on a provider or shall automatically be
imposed on a provider;
(2) To review the utilization of Medicaid services to ensure that Medicaid
funds, regardless of which agency administers the service, are appropriately
spent to improve the health of Medicaid recipients;
(3) To review and audit contracts, cost reports, claims, bills, and all other
expenditures of Medicaid funds to determine compliance with applicable
laws, regulations, guidelines, and standards, and enhance program
integrity;
(4) To consult with the department to optimize the Medicaid management
information system in furtherance of the mission of the office. The
department shall consult with the Medicaid Inspector General on matters
that concern the operation, upgrade and implementation of the Medicaid
management information system;
(5) To coordinate the implementation of information technology relating to
Medicaid integrity, fraud, and abuse; and
(6) To conduct educational programs for Medicaid providers, vendors,
contractors, and recipients designed to limit Medicaid fraud and abuse.
MFD – What to Expect in 2011
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Increased Coordination with Managed
Care Organizations (“MCO”)
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DMAHS currently contracts with four MCOs
Monthly Meetings; Data Sharing; Data Mining
2011 MCO Targets
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Identify Recipients with Multiple Identification
Numbers
Over-payments for Newborns
MFD – What to Expect in 2011
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Changes to the Audit Process
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MFD will review pharmacy and DME audits that will
be performed by Molina Medicaid and other
contractors
Selection Criteria for Audits
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Medicaid dollars billed on a yearly basis
provider type
Significant changes to Medicaid billings on a year to year
basis
Complaints from the public
Providers subject to corrective Action Plans
Length of time since last audit/ investigation
Services billed
MFD – What to Expect in 2011
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Onsite Audits
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A letter will be sent to the provider (scope, length,
and authority for audit)
Entrance conference - meeting with each individual
provider
Exit Conference – to discuss preliminary findings
Issuance of a Draft Audit Report
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15 days to respond with objections and supporting
documents
If no response then report becomes final
MFD – What to Expect in 2011
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Audit Techniques
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Statistical Probability Sampling
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Simple Random Sampling – Random Selection
Systematic Sampling – (i.e. claims 5, 10, 15, 20 . . . .)
Stratified Sampling (grouping similar claims)
Cluster Sampling (grouping of less similar claims)
Non- Statistical Probability Sampling (by time,
auditor’s judgment, etc.)
Data Mining – Will become the primary internal
referral source for both the Audit team and
Investigations Unit
MFD – What to Expect in 2011
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Recovery and Exclusion
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Withholding of payments
Payment arrangements
Certificate of Debt
Exclusion
Recovery Protocol
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Once a final audit report is submitted, a Notice of Claim will be
issued
Provider then has 20 days to request a pre-hearing conference
to settle the matter
If no agreement, then a Notice of Demand will be issued and the
Provider has 20 days to request a hearing with the OAL
Review of Exclusions
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Excluded providers may not treat, order,
or bill for services rendered to Medicaid
recipients.
May last from 3 – 8 years, or more
If excluded provider is involved in the
treatment, MFD will seek to recoup
payment and may also seek damages and
false claims penalties from the employer
Exclusion Lists
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According to § 50.2.6.3.3, plan sponsors “should
review the HHS OIG and GSA1 exclusion lists at
least once a year, and have processes in place to
prevent the payment of claims for services
provided by excluded providers.”
List of Excluded Individuals and Entities (LEIE)
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Maintained by OIG
http://exclusions.oig.hhs.gov/
Excluded Party List System (EPLS)
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Maintained by GSA
http://www.epls.gov/
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GSA: General Services Administration
Exclusion Lists
Sponsors should require that all new and existing
employees disclose any “debarment, exclusion, or other
event that makes them ineligible to perform work related
directly or indirectly to Federal health care programs”1
 Sponsors must implement a policy to check exclusion
lists before hiring
 Sponsors should obtain certifications from pharmacies
that they will review the exclusion lists upon hiring and
annually thereafter and if an employee is found on such
lists, he/she will be immediately removed from any work
related directly or indirectly to all Federal health care
programs and the pharmacy will take appropriate
corrective actions
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1
See § 50.2.1.2
Medicare Exclusion List Verification
(Pharmacy Personnel)
Pharmacy
Personnel Name
Verification
Date
Date of
Termination
What This Means for Pharmacies
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PIC and owner should check all its
employees online at least once a year but
monthly would be better
PIC and owner should have each new
employee sign a document indicating
he/she has not been and is not debarred.
This should be recertified each year
Exclusion Lists
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Employment Restrictions
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Includes Medicare, Medicaid, & other State
Programs (PAAD, Senior Gold, etc.)
Not limited to services directly provided by
Excluded practitioner
No automatic reinstatement; must reapply
Strict time limit for appeal process
MFD – What to Expect in 2011
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MFD Investigations
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Common practices investigated
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Staff of 20 investigators
Includes law enforcement and healthcare professionals
Billing for services not rendered
Providing medically unnecessary services
Submitting duplicate claims
Upcoding
Buying back and re-dispensing medication
Drug Diversion
Will include interviews and analysis of claims data
MFD – What to Expect in 2011
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MFD will also review:
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The relationship between the ordering physician and
the pharmacy
Whether the physician is licensed at the time of
prescribing
System Edits
Organizations that use the services of excluded
providers
Providers with higher Medicaid claims than
comparable pharmacies
Whether there is evidence of a existing physicainpatient relationship
Examples of Edits
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Controls on early refills
Limits on the number of days before a refill is
permitted
Edits to prevent payment for statutorily excluded
drugs
Limits on the number of times a prescription can
be refilled
Brand name versus generic
Excessive claims for controlled substances
Step therapy edits
Examples of Edits (cont.)
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Number of prior authorizations
Real time contraindication (e.g. drug-drug
interactions)
Sex and age edits compared to the drug
prescribed
Therapeutic edits
Insufficient or excessive dosage edits
Identifying drugs provided outside of the Part D
benefit by Patient Assistance Programs
What This Means for Pharmacies
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Follow-up with patients who repeatedly
bring prescriptions in to fill too early
Do spot checks to confirm generic
substitution is being carried out as per
state law
Do spot checks on CDS usage by patients
to detected abuse patterns. Consider CDS
class, addictive properties, street value,
and geographic abuse patterns
MFD – What to Expect in 2011
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The new mantra: “Becoming a Medicaid provider
is a privilege, not a right”
Increased scrutiny of Provider Applications
It is not a defense to say that the submission of
a false application was unintentional. See Mi
Farmacia v. DMAHS, HMA 9969-06 (April 20,
2008).
Failure to investigate and verfy information
equivalent to a willful failure to provide truthful
response. See Surgi-Med v. DMAHS, HMA
036365-06 (August 25, 2006).
Questions on application increasingly complex
MFD – What to Expect in 2011
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As of January 1, 2011, MFD will perform a
pre-enrollment site visit for new
applicants.
New Providers will be subject to enhanced
oversight, such as prepayment review and
payment caps.
MFD – What to Expect in 2011
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2011 Fiscal Year Objectives
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Addiction Services
Adult Medical Day Care Services
Charity Care
Child Behavioral Health Services
DME Providers
Home Health Services
Laboratory Services
Lock-in Program
Medi-Medi Project
MFD – What to Expect in 2011
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2011 Fiscal Year Objectives, cont.
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Pharmacies
Review of Purchase invoices
 1100 pharmacy audits/ year
 1200 DME audits/ year
 Desk and onsite audits
 Review Pharmacy Overrides
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Patient Protection and Affordable
Care Act (PPACA) – Background
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2010 Healthcare Reform Act – goes into effect on
January 1, 2011
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961 total pages of legislative text
Portions have been challenged – Section 1501
(“Individual Mandate”)
Section 6401 deals with fraud, waste and abuse
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Amends Medicare by adding new requirements regarding:
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Screening of providers and suppliers;
A provisional period of enhanced oversight;
Disclosure requirements;
Payment adjustments;
Temporary enrollment moratoria;
Compliance programs; and
Related Fees
Screening of Providers
Licensure check
 Criminal background check
 Fingerprinting;
 Unscheduled and unannounced site visits,
including pre-enrollment site visits
 Database checks (including such checks across
States); and
 Such other screening as the Secretary
determines appropriate.
PPACA (Pub. L. 111-48), Sec. 6401(a)(3)(B)
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Provisional Period of Enhanced
Oversight
The Secretary shall establish procedures to
provide for a provisional period of not less than
30 days and not more than 1 year during which
new providers of medical or other items or
services and suppliers, as the Secretary
determines appropriate, including categories of
providers or suppliers, would be subject to
enhanced oversight, such as prepayment review
and payment caps
Id.
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Increased Disclosure
Requirements
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Id.
A provider of medical or other items or services or
supplier who submits an application for enrollment or
revalidation of enrollment in the program . . . shall
disclose (in a form and manner and at such time as
determined by the Secretary) any current or previous
affiliation (directly or indirectly) with a provider of
medical or other items or services or supplier that has
uncollected debt, has been or is subject to a payment
suspension under a Federal health care program (as
defined in section 1128B(f)), has been excluded from
participation under the program under this title, the
Medicaid program under title XIX, or the CHIP program
under title XXI, or has had its billing privileges denied or
revoked.
Compliance Programs
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Regulations not yet written but PPACA
requires Secretary to establish core
elements.
MFD: strongly encourages providers
whose payments from the Medicaid
program exceed $100,000 per year to
implement a compliance program.
Compliance Programs
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Compliance programs need to encompass
billings, payments, medical necessity,
quality of care, governance, credentialing
and other risk areas that a provider, with
due diligence, identifies.
Compliance Programs
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Specifically, any compliance plan should include the following
elements:
 Designation of a chief compliance officer responsible for the dayto-day operation of the compliance program.
 Training and education of all affected employees and persons
 Training should occur periodically and should be made a part
of the orientation of new employees A communication
process for the reporting of compliance issues;
 Disciplinary policies and standards that are distributed to all
employees including policies
 Failing to report suspected problems;
 Engaging in non-compliant behavior;
 Encouraging, directing, facilitating or permitting either
actively or passively non-compliant behavior.
 A system for routine identification of compliance risk areas
including but not limited to internal audits and external audits,
http://nj.gov/njomig/compliance/
Processes a Pharmacy Should
Have In Place
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Procedure to respond to data requests by CMS, MEDICs,
and law enforcement, or their designees in a timely
manner
Process to find overpayments and underpayments and
properly report and repay
Process to identify improper coverage determinations,
services, or enrollment and properly report and repay
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MEDICs: Medicare Drug Integrity Contractor – An organization that CMS has contracted with
to perform specific program integrity functions for Part D under the Medicare Integrity
Program. The MEDIC is CMS’ designee to manage CMS’s audit, oversight, and anti-fraud and
abuse efforts in the Part D benefit.
1
Processes a Pharmacy Should
Have In Place (cont.)
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Process to identify claims submitted for drugs
that were prescribed by excluded or deceased
physicians and report and repay
Policies that stress confidentiality, anonymity,
and non-retaliation for compliance related
questions or reports of potential non-compliance
Procedures to correct underlying problems that
produce Medicare Part D violations and prevent
future misconduct.
Processes a Pharmacy Should
Have In Place (cont.)
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Procedures to keep records that document any
and all corrective actions and follow-up
compliance reviews for future health oversight
purposes and/or referral to law enforcement, if
necessary
Process to comply with the ten-year record
retention requirement1
A commitment to Pharmacy & Therapeutic
Committee decisions made by considering clinical
efficacy and appropriateness of formulary drugs
over cost
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1
See 42 C.F.R. §423.505(d).
Processes a Pharmacy Should
Have In Place (cont.)
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A bay audit program in which the pharmacy’s
dispensing area is divided into 4 separate
sections and audit one section every week
Process to purge Will Call Bin of all prescriptions
greater than 14 days old (Contact patient and
remind them to pick up prescription, and if
patient declines to pick up prescription, return it
to stock and reverse the claim)
What This Means for Pharmacies
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Keep a complete back up of all the pharmacy’s
files off site on a daily or weekly basis
Review RAS promptly and correct all issues
Repay promptly prescriptions not picked up by a
patient or not authorized by a physician
Report any issue regarding irregular
prescriptions promptly
Create a policy assuring a 10 year record
retention policy
Internal Audits
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Audits should include a review of
documentation including:
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Prescriptions
Invoices
Pharmacy licenses
Claim transaction records
Signature logs
Purchase records
Negotiated prices
Internal Audits, Cont.
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Audits should also verify:
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That pharmacies are in compliance with minimum
state pharmacy practice standards
That pharmacies post or distribute notices to patients
to contact their plans if they want to question
coverage information provided by pharmacists
Contracts with pharmacies and rebate and discount
agreements
Chief Compliance Officer should also conduct
interviews with the pharmacy staff to gauge
whether applicable Medicaid and Part D
requirements are being followed
What This Means for Pharmacies
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Do self monitoring audits on a regular basis so
potential issues can be dealt with before a
formal audit
Do spot checks on inventories to make sure they
match up with purchases
Do spot checks to verify proper NDC numbers
are being used
Do spot checks to verify prescriptions comply in
all respects with Federal and State law
Monitoring Trends
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To monitor trends and patterns,
pharmacies should generate or receive
and review reports such as the following:
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Payment reports
Drug Utilization Reports
Prescribing Patterns by Physician Reports
Geographic Zip Reports
Monitoring Trends
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Information may be available from
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Pharmacy software
Employee Observations
Wholesalers
Government Entities (DEA, Medicaid,
Medicare)
Medicare ZPIC Audits
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Zone Program Integrity Contractors (ZPIC)
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Conduct post and prepay audits as a way of curbing improper
Medicare payments
Burden of proof shifted to provider who must provide documents
before getting paid
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90 to 120 days waiting period
The new ZPIC covers seven zones
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progress notes, medical history, pictures of service, purchase
invoices, assessment records
As of November 2010, CMS had awarded four ZPIC contracts,
with three more contracts planned.
CMS issued lucrative contracts
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AdvanceMed Corporation was awarded a $107,957,737.00 fiveyear contract for Zone 5. (Healthcare Finance News, 9/3/2009)
Medicare ZPIC Audits
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“CMS pays 4.8 million Medicare claims each day,
approximately 1.2 billion Medicare claims each
year. Nevertheless, with the new tools provided to CMS
under the Affordable Care Act, we are steadily working
to better incorporate fraud prevention activities into our
claims payment and provider enrollment processes
where appropriate. . . All of these new authorities and
analytical tools will help move CMS away from its
historical “pay and chase” mode towards a closer
alignment with strong fraud deterrents and increased
enrollment screenings, new disclosure and transparency
guidelines, and early identification of high-risk providers
and suppliers.” - Dr. Peter Budetti, JD, Deputy
Administrator and Director, Center for Program Integrity,
Testimony before Congress, September 22, 2010.
Medicare ZPIC Audits
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“Five ZPICs will concentrate on fraud ‘hot
spots’ in FL, IL, TX, NY and CA where we
know the program has the greatest
vulnerabilities.” - Deborah Taylor, Acting
Director and Chief Financial Officer,
Testimony before Congress, April 22,
2009.
ZPIC Audits Continued
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The ZPIC contracts include all claim types:
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Part A, Home Health, Hospice, Part B, Durable
Medical Equipment, Prosthetics, Orthotics, and
Supplies (DMEPOS), Managed Care (Part C), Part D
Medicare Prescription Drug, and Medicare and
Medicaid Data Matching.
Target both the medical necessity of a claim
and coding errors.
ZPICS look at billing trends and patterns,
focusing on providers whose billings for
Medicare services are higher than the majority
of providers in the community.
ZPIC Audits Continued
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Auditors can arrive unannounced, demand
medical/ prescription records, and
interview both providers and beneficiaries.
Conduct pre-payment and post-payment
reviews.
They can be disruptive, time consuming
and expensive.
ZPIC Audits Continued
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Extrapolation of damages utilized.
See Sec. 3.10.4.2 of
CMS’ Medicare Program Integrity Manual
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Chaves County Home Health Services v. Sullivan,
931 F.2d 914 (D.C. Cir. 1991),
Before an auditor can employ extrapolation,
there must be either a determination of a
sustained or high level of payment error,
or documentation that educational intervention
has failed to correct the payment error. Sec 935 of
the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003
ZPIC Audits Continued
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Cases of potential fraud will be referred to
the Office of Inspector General (OIG) for
consideration and possible initiation of
criminal or civil prosecution, civil monetary
penalty, or administrative sanction actions.
Responding to a ZPIC Audit
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What can you do?
Internal review of requested claims.
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The value of internal analysis vs. risk of creating a
non-privileged paper trail of identified problems.
Review past claims audits
Review the reasons given for each denial.
Has the contractor correctly cited Medicare
policy?
Appeals must be filed in a timely fashion.
Responding to a ZPIC Audit
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If a provider is the target of ZPIC medical
review, it should be assumed that it has been
specifically targeted and the audit is not random
This influences the manner in which a ZPIC
request for records should be received and
evaluated by the provider
Review may include investigative techniques in
addition to data analytics and claims review
Responding to a ZPIC Audit
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Stamp Date and Time Received
Train staff on identity of contractors
Ensure that staff are aware of deadlines to
submit records
Ensure contractor is sending to the correct
person/ address
Send certified mail
Keep originals of documents
ZPIC Audits Continued
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The PSC or ZPIC BI [Benefit Integrity] unit or the contractor MR
[Medical Review] unit shall identify the source of the random
numbers used to select the individual sampling units. The PSC or
ZPIC BI unit or the contractor MR unit shall also document the
program and its algorithm or table that is used; this
documentation becomes part of the record of the sampling
and must be available for review.” (emphasis added)
“The PSC or ZPIC BI units or the contractor MR units shall
document all steps taken in the random selection process
exactly as done to ensure that the necessary information is
available for anyone attempting to replicate the sample
selection.” (emphasis added)
Section 3.10.4.2 of CMS’ Medicare Program Integrity Manual
Audits by Government
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Government Action
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Prepayment Monitoring/ Withholding of funds
42 C.F.R. 455.23 and N.J.A.C. 10:49-9.10(d)
Reliable evidence of fraud or willful
misrepresentation by a provider
Right to submit written evidence for
consideration
Right to a hearing
Pharmacist Obligations in a
Government Audit
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Allow access to facilities as requested
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Failure to do so may result in corrective
actions (including intermediate sanctioning in
line with 42 C.F.R. Subpart O)
Allow access to records associated with
Part D program for 10 years
What This Means for Pharmacies
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Pharmacies have rights to appeal audit
findings
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Hearings, Fair Hearings, Due Process Hearings
Limited time to appeal
Importance of Preserving Documents &
Communications
Hearings can be in front of an Administrative
Law Judge (ALJ)
What This Means for Pharmacies
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Possible Criminal Exposure
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Healthcare Fraud and Medicaid Fraud are
crimes potentially punishable by jail time
Each fraudulent claim can be a separate
offense
Civil fines and remuneration can accompany
criminal charges
Sponsor Fraud, Waste and Abuse
Examples
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Payments for excluded drugs
Multiple billing
Payments for Part D drugs that are not for a
“medically acceptable indication”
Inappropriate formulary decisions
False information given to CMS
Bait and switch pricing
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Beneficiary is led to believe that a drug will cost one
price, but at the point of sale is charged a higher
price
Inducing beneficiaries to sign up for specific drugs on
formulary that are later removed
Pharmacy Fraud, Waste and Abuse
Examples1
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Inappropriate billing practices
Incorrectly billing for secondary payers to receive increased
reimbursement
 Billing for non-existent prescriptions
 Billing multiple payers for the same prescriptions, except as required for
coordination of benefit transactions
 Billing for brand when generics are dispensed
 Billing for non-covered prescriptions as covered items
 Billing for prescriptions that are never picked up (i.e., not reversing
claims that are processed when prescriptions are filled by never picked
up)
 Billing based on “gang visits,” e.g., a pharmacist visits a nursing home
and bills for numerous pharmaceutical prescriptions without furnishing
any specific service to individual patients
 Inappropriate use of dispense as written (“DAW”) codes
 Prescription splitting to receive additional dispensing fees
 Drug diversion
__________________________________

1 See
§70.1.3 of guidance
Pharmacy Fraud, Waste and
Abuse Examples (cont.)1

Prescription drug shorting



Pharmacist provides less than the prescribed quantity and
intentionally does not inform the patient or make arrangements
to provide the balance but bills for the fully-prescribed amount
If there is insufficient quantity of medication to completely fill
the prescription, should the fill the prescription as “cash” and
dispense a three day supply at no charge. When a sufficient
quantity of the medication is received, reverse the “cash”
prescription and re-bill at the full amount and supply the
difference between prescription full quantity and the amount
given
Prescription refill errors

A pharmacist provides the incorrect number of refills prescribed by the
provider
__________________________________
1 See
§70.1.3 of guidance
Pharmacy Fraud, Waste and
Abuse Examples (cont.)1

Prescription forging or altering


Dispensing expired or adulterated prescription drugs


Existing prescriptions are altered, by an individual without the
prescriber’s permission to increase quantity or number of refills
Pharmacies dispense drugs that are expired, or have not been stored or
handled in accordance with manufacturer and FDA requirements
Bait and switch pricing


A beneficiary is led to believe that a drug will cost one price, but
at the point of sale the beneficiary is charged a higher amount
$4.00 Generic Program: Must make generic listing available for
review and if a generic is no longer available for $4.00, it must
be immediately removed from the list and patient must be
informed of the change before dispensing
__________________________________
1 See
§70.1.3 of guidance
Pharmacy Fraud, Waste and
Abuse Examples (cont.)1




Illegal remuneration schemes
 Pharmacy is offered, or paid, or solicits unlawful remuneration to
induce or reward the pharmacy to switch patients to different
drugs, influence prescribers to prescribe different drugs, or steer
patients to plans
TrOOP2 manipulation
When a pharmacy manipulates TrOOP to either push a beneficiary
through the coverage gap, so the beneficiary can reach catastrophic
coverage before they are eligible, or manipulates TrOOP to keep a
beneficiary in the coverage gap so that catastrophic coverage is never
realized
Failure to offer negotiated prices
 A pharmacy does not offer a beneficiary the negotiated price of a
Part D drug
__________________________________
1
See §70.1.3 of guidance
2TrOOP:
True Out of Pocket Costs: The amount a beneficiary must spend on Part D covered
drugs to reach catastrophic coverage
Prescriber Fraud, Waste and Abuse
Examples1

Illegal remuneration schemes


Prescription drug switching


Prescriber is offered, or paid, or solicits, or receives unlawful
remuneration to induce or reward the prescriber to write
prescriptions for drugs or products
Offers of cash payments or other benefits to a prescriber to
induce the prescriber to prescribe certain medications rather
than others
Script mills

Provider writes prescriptions for drugs that are not medically
necessary, often in mass quantities, and often for patients that
are not theirs. These scripts are usually written, but not always,
for controlled drugs for sale on the black market, and might
include improper payments to the provider
__________________________________
1 See
§70.1.4 of guidance
Prescriber Fraud, Waste and Abuse
Examples1

Provision of false information


Prescriber falsifies information (not consistent with medical
record) submitted through a prior authorization or other
formulary oversight mechanism in order to justify coverage.
Prescriber misrepresents the dates, descriptions of prescriptions
or other services furnished, or the identity of the individual who
furnished the services
Theft of prescriber’s DEA number or prescription pad

This information could illegally be used to write prescriptions for
controlled substances or other medications often sold on the
black market. In the context of e-prescribing, includes the theft
of the provider’s authentication (log in) information
__________________________________
1 See
§70.1.4 of guidance
Medicare Beneficiary Fraud, Waste
and Abuse Examples1

Misrepresentation of status


Identity theft


Perpetrator uses another person’s Medicare card to obtain prescriptions.
TrOOP manipulation


A Medicare beneficiary misrepresents personal information, such as
identity, eligibility, or medical condition in order to illegally receive the
drug benefit. Enrollees who are no longer covered under a drug benefit
plan may still attempt to use their identity card to obtain prescriptions.
A beneficiary manipulates TrOOP to push through the coverage gap, so
the beneficiary can reach catastrophic coverage before they are eligible.
Prescription forging or altering

Where prescriptions are altered, by someone other than the prescriber
or pharmacist with prescriber approval, to increase quantity or number
of refills.
__________________________________
1 See
§70.1.7 of guidance
Medicare Beneficiary Fraud,
Waste and Abuse Examples1

Prescription diversion and inappropriate use


Resale of drugs on black market


Beneficiary falsely reports loss or theft of drugs or feign illness to obtain drugs
for resale on the black market.
Prescription stockpiling


Beneficiaries obtain prescription drugs from a provider, possibly for a condition
from which they do not suffer, and gives or sells this medication to someone
else. Also can include the inappropriate consumption or distribution of a
beneficiary’s medications by a caregiver or anyone else.
Beneficiary attempts to “game” their drug coverage by obtaining and storing
large quantities of drugs to avoid out-of-pocket costs, to protect against periods
of non-coverage (i.e., by purchasing a large amount of prescription drugs and
then disenrolling), or for purposes of resale on the black market.
Doctor shopping

Beneficiary or other individual consults a number of doctors for the purpose of
inappropriately obtaining multiple prescriptions for narcotic painkillers or other
drugs. Doctor shopping might be indicative of an underlying scheme, such as
stockpiling or resale on the black market.
__________________________________
1 See
§70.1.7 of guidance
CMS Position on Self-Reporting
“While self reporting of potential fraud is
voluntary1, CMS believes that selfreporting of fraud, waste and abuse is a
critical element to an effective program to
control fraud, waste and abuse.”2
__________________________________
1 42
2
C.F.R. §423.504(b)(4)(vi)(H)
See §20 of guidelines
Useful Links

Office of the Inspector General (OIG)


OIG Mailing List


www.cms.hhs.gov
CMS Medicare Learning Network (MLN)


www.epls.gov
CMS


www.oig.hhs.gov/fraud/exclusions.html
General services Administration (GSA)


www.oig.hhs.gov/fraud.html
OIG Exclusion Site


www.oig.hhs.gov/mailinglist.html
OIG Fraud Site


www.oig.hhs.gov
www.cms.hhs.gov/MLNGenInfo
CMS Mailing List

www.cms.hhs.gov/apps/mailinglists