Combating Fraud, Waste and Abuse – Are You Compliant?

Fraud and abuse cost our nation billions in wasteful payments. 1 They drain resources from care for the needy (e.g., elderly and indigent beneficiaries of government programs), contribute to rising health care costs and compromise the integrity of the Medicare and Medicaid programs. In 1977, Congress enacted the Medicare-Medicaid Anti-Fraud and Abuse Amendments (P.L. 95-142) and provided funding for the establishment of Medicaid Fraud Control Units (MFCU). In l995, Federal law began requiring each state to have a MFCU unless the state could demonstrate that it had a minimum amount of Medicaid fraud and that Medicaid beneficiaries were protected from abuse and neglect.2 Over the years, various legislation including the Medicare Modernization Act of 2003 and the Affordable Care Act of 2010 have reinforced the focus and the ability to combat fraud, waste and abuse (FWA).
Consistent with the government’s concern for program integrity and beneficiary protection, the Centers for Medicare & Medicaid Services (CMS) requires plan sponsors to have comprehensive compliance measures to safeguard the Part C and Part D programs from FWA.  The requirements are spelled out in Chapter 9 of the Prescription Drug Benefit Manual and Chapter 21 of the Medicare Managed Care Manual:
• Monitor and audit your first tier, downstream and related entities (FDRs));
• Analyze data to detect and prevent potential fraud, waste, and abuse; and
• Have a unit, such as a Special Investigation Unit (SIU), specifically tasked with identifying and addressing fraud, waste, and abuse, or ensure that the responsibilities generally conducted by an SIU are conducted by a plan sponsor’s compliance department.
Fraud is not easy to prove due to the time required to investigate and because intent has to be demonstrated..  For instance, even when one discovers a physician ownership of a pharmacy located adjacent to the physician’s practice, self-referral has to be evident to invoke the Stark law.  Waste and abuse practices are easier to discern by scanning data.  Examples are aplenty:
1. Double billing of a drug in a medical claim and drug claim: drugs administered in the provider’s office are submitted in CMS 1500 using a HCPCS 3code (or J code) or X12 837 electronic file. Due to the time lag between an office visit for administration of the drug and the submission of the claim and the different processes of adjudicating medical and drug claims, one has to be looking for these duplications through analytics. Injections such as DMARDs 4 are at risk for double billing.
2. Days’ supply of drugs – the number of days’ supply is often a calculated number input by the pharmacy; for a maintenance drug, the quantity and the days can be calculated based on usual dosing.  For “as needed” drugs, the days’ supply can be nebulous.  By entering a number that can bypass the maximum daily dose or the refill threshold adjudication edit, more refills than clinically warranted may result.  For instance, a 75% refill threshold allows refills every 22 days or 15+ refills in 12 months.  By consistently submitting claims one day above the threshold, a member could receive refills in 12 months.  But did the member actually receive 15 refills or was it a scam by the pharmacy?  This can be prevalent with auto-fill practices of a pharmacy; the “tickler” system automatically processes the refills and the drug is not returned to stock even when the member did not pick up the supply.  Such a pattern of potential abuse can only be detected through analytics.
3. The CMS 4159 F2 final rule is requiring pro-ration of dispensing fee for members in a skilled nursing facility (patient residence code 03/09). Some LTC pharmacies (pharmacy service type 05) would charge the payer the full dispensing fee even for less than 31 days or 14-days supply for generic and brand drugs, respectively.  If one looks, one would find that the dispensing fee is higher than the ingredient cost of a generic drug when supply is less than 31 days.
4. Compound drugs have become the poster child of waste and abuse. Different ingredients, including extended release formulations of oral drugs mixed with topical anesthetic ointment or cream, are favorites of compound pharmacies. Not only is the efficacy of such concoctions not evidence-based but the costs of the compound far exceed the U&C 5 costs of the individual ingredients. Even implementing a cost edit for compound code 02 cannot prevent pharmacies from submitting the ingredients separately, thus circumventing the compound cost edit.
The list of waste and abusive patterns for drug claims goes on and on. Their detection and prevention requires trained eyes and advanced analytics. We, at Medicare Compliance Solutions, have the clinical and analytical expertise to help your health plan combat FWA. Unnecessary or unsafe usage of drugs or medical services hinder quality of care and derail program integrity. It is everybody’s responsibility, consumers included, to be on guard for FWA in medical and pharmacy claims.

1 Estimates by the National Health Care Anti-Fraud Association and the Government Accounting Office
2 North Dakota and the District of Columbia do not have MFCU
3 Healthcare Common Procedure Coding System
4 Disease Modifying Anti-Rheumatic Drugs
5 Usual and Customary

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