OIG: Questionable Part D Billing Practices In More Than 2,600 Pharmacies in 2009

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OIG Report on Questionable Pharmacy Billing  

Key Finding: More than 2,600 retail pharmacies engaged in questionable Medicare Part D billing practices in 2009.

Next Steps: OIG recommends that CMS strengthen its oversight of pharmacy billing and take action regarding pharmacies with questionable billing.

More than 2,600 retail pharmacies exhibited questionable Medicare Part D billing patterns in 2009, including elevated average billing amounts per beneficiary, according to a report from the Department of Health and Human Services Office of Inspector General released May 10.

The 2,637 pharmacies, representing 4 percent of all Medicare Part D retail pharmacies, billed $5.6 billion to the program in 2009, OIG said. “While some of this billing may be legitimate, all pharmacies that bill for such extremely high amounts warrant further scrutiny,” the report, Retail Pharmacies With Questionable Part D Billing (OEI-02-09-00600), said.

The report determined that 778 of the pharmacies billed Medicare Part D on average more than $4,000 per beneficiary, compared with the national average of $1,600.

“Although some of this billing may be legitimate, billing high dollar amounts per beneficiary or for a high number of prescriptions per beneficiary could mean that a pharmacy is billing for drugs that were not medically necessary or were never provided to the beneficiary,” the report said.

The report also discovered that 850 pharmacies billed on average more than $6,000 per prescribing doctor, compared with the national average of $1,800.

Independent pharmacies were much more likely than chains to have questionable billing practices, the report said. Of the 2,637 pharmacies with questionable billing, 2,120, or 80 percent, were independent, it said.

Billing Practices by Region.

The report also looked at questionable billing practices by geographic region. It found that six metropolitan areas (Miami, Detroit, Los Angeles, New York, Baltimore, and Tampa, Fla.) accounted for roughly 28 percent of all pharmacies with questionable billing in 2009.

For example, 19 percent of Miami pharmacies had questionable billing practices in 2009, with 10 pharmacies billing on average $8,000 or more per beneficiary. In Los Angeles, 12 percent of pharmacies had questionable billing practices, followed by 11 percent in Detroit, 10 percent in Baltimore, 9 percent in New York, and 9 percent in Tampa, Fla.


OIG evaluated pharmacy billing practices based on eight factors:

• average amount billed per beneficiary;

• average number of prescriptions per beneficiary;

• average amount billed per prescriber;

• average number of prescriptions per prescriber;

• percentage of prescriptions that were for Schedule II drugs (controlled substances with a high potential for abuse, such as oxycodone and morphine);

• percentage of prescriptions that were for Schedule III drugs (controlled substances that also have a high potential for abuse, such as anabolic steroids and barbiturates;

• percentage of prescriptions that were for brand-name drugs; and

• percentage of prescriptions that were for refills.

Pharmacies that exceeded the threshold for one or more factors were considered to have questionable billing practices.

OIG Recommendations.

OIG recommended that the Centers for Medicare & Medicaid Services strengthen the oversight role of the two Medicare Drug Integrity Contractors (MEDICs) and work with them and Medicare Part D plan sponsors to develop risk scores for pharmacies.

CMS also should provide additional guidance to Medicare Part D plan sponsors on their role in monitoring pharmacies; require them to inform CMS of potential fraudulent incidents; and strengthen audits of sponsors' compliance plans.

OIG also said CMS should contact the pharmacies identified as having questionable billing practices and take appropriate action.

CMS agreed with the recommendations on contacting the pharmacies with questionable billing; strengthening the MEDICs program; providing plan sponsor guidance; and improving compliance plan audits.

The agency partially agreed with the other two OIG recommendations, saying it would explore the options of requiring plan sponsors to refer potential fraud, as well as implementing pharmacy risk scores.

The OIG report is at http://oig.hhs.gov/oei/reports/oei-02-09-00600.pdf.