Medicare changes payment plan to fight drug fraud

ByABC News
December 13, 2011, 8:10 PM

WASHINGTON -- Medicare will not pay prescription-drug bills if officials see evidence of fraud, which will let them avoid chasing down money after it has been paid out, Vice President Biden announced Tuesday.

The move, Biden said, demonstrates "the administration's continued commitment to cutting waste and protecting taxpayers."

The Justice Department recovered $5.6 billion from fraud in 2011, and $2.9 billion was for health care fraud, Biden said. Some of the money was recovered because officials spotted the fraud before Medicare paid a bill.

Tuesday's move means Medicare can now stop payment when fraud is first detected in the Part D prescription-drug program instead of waiting until after a claim is paid. Under the old "pay and chase" scenario, Medicare sometimes paid money to operations posing as a pharmacy and officials then learned after the fact that the pharmacy had disappeared or that a Medicare recipient didn't have the money to repay the government.

Painkiller abuse has risen; 12 million Americans said they were using opium-based pain relievers without a prescription in 2010, according to the Centers for Disease Control and Prevention.

The announcement was long needed, medical experts say.

"We need to stop money from going out the door in the first place," said Louis Saccoccio, executive director of the National Health Care Anti-Fraud Association, at a health care forum last week. Now, the government has 14 days to pay a pharmacy bill, which, he said, doesn't leave a lot of time for investigation.

Medicare officials have been mining statistics to spot patterns of pharmacy fraud, said John Spiegel, director of the Centers for Medicare and Medicaid Services' program integrity group. For example, Spiegel cited the "Miles Too Far" program that targets pharmacies that bill patients who live too far away from the pharmacy to use it plausibly or spots patients who are billed for using pharmacies located 500 miles from each other in one day.

Other data can show Medicare recipients receiving lethal amounts of prescription painkillers, which could mean a patient isn't receiving the drugs or that they're being sold illegally. In 2008, one Medicare beneficiary received 3,655 oxycodone pills from 58 prescribers, according to the Government Accountability Office.

Electronic records could also spot fraud by eliminating the need for paper prescriptons, said Joshua Stein, senior vice president for OptumRx. Stolen prescription pads are often used in fraud, he said, and electronic records can spot "doctor shopping" by showing who had prescribed what medication and when for a patient.

Medicare and private insurers should share more information, Saccoccio said, so they reduce fraud together. Insurers have also tried to limit patients to one pharmacy rather than allowing them to fill prescriptions at several stores.