Medicare & Medicaid Audits and Compliance Programs: A Changing Landscape Angelo J. Cifaldi, R.Ph.,...

Medicare & Medicaid Audits and Compliance Programs:

A Changing Landscape Angelo J. Cifaldi, R.Ph., Esq. [email protected] V. Poondi, R.Ph., Esq. [email protected], Goldman, & Spitzer P.A.90 Woodbridge Center DriveWoodbridge, NJ 07095

3952634 * © 2012, Angelo J. Cifaldi, Esq. All rights reserved.

Ernest Mario School of Pharmacy

Objectives

• Define the terms Fraud, Waste & Abuse • Discuss New Jersey Medicaid Fraud Division’s Work

Plan • Identify key components of the Patient Protection and

Affordable Care Act (PPACA)• List the key components of Compliance Programs • Describe the changes in Medicare and Z-PIC Audits • Discuss Case Studies


Definition of Fraud

• "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.

N.J.S.A. § 30:4D-55


Definition of Waste

• 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.

N.J.S.A. § 30:4D-55


New Jersey Medicaid Fraud Division

• 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 (MFD)


New Jersey Medicaid Program Integrity and Protection Act

• 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

• The Division – 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


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, re-sources, 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.


New Jersey Medicaid Program Integrity and Protection Act - Powers• 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;

• 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;

• 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;

• 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;

• To coordinate the implementation of information technology relating to Medicaid integrity, fraud, and abuse; and

• To conduct educational programs for Medicaid providers, vendors, contractors, and recipients designed to limit Medicaid fraud and abuse.


MFD – What to Expect

• Increased Coordination with Managed Care Organizations (“MCO”) – DMAHS currently contracts with four MCOs Monthly

Meetings; Data Sharing; Data Mining

• 2011 MCO Targets– Identify Recipients with Multiple Identification Numbers – Over-payments for Newborns



• Changes to the Audit Process – MFD will review pharmacy and DME audits that will be

performed by Molina Medicaid and other contractors – Selection Criteria for Audits

• 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



• Onsite Audits – 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

• 15 days to respond with objections and supporting documents

• If no response then report becomes final



• Audit Techniques – Statistical Probability Sampling

• 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



• Recovery and Exclusion – Withholding of payments – Payment arrangements – Certificate of Debt– Exclusion

• Recovery Protocol – 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

• 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

• 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)– Maintained by OIG – http://exclusions.oig.hhs.gov/

• Excluded Party List System (EPLS)– Maintained by GSA – http://www.epls.gov/

1 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

1 See § 50.2.1.2


Medicare Exclusion List Verification (Pharmacy Personnel)

Pharmacy Personnel Pharmacy Personnel NameName

Verification Verification DateDate

Date of Date of Termination Termination


What This Means for Pharmacies

• 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

• Employment Restrictions – 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 Investigations– Staff of 20 investigators – Includes law enforcement and healthcare professionals

• Common practices investigated

– 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 will also review: – 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 physician-patient

relationship


Examples of Edits

• 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 (con’t)

• 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



• 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



• 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 verify 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



• 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.



• 2011 Fiscal Year Objectives – 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



• 2011 Fiscal Year Objectives (con’t) – Pharmacies

• Review of Purchase invoices • 1100 Pharmacy Audits/Year • 1200 DME Audits/Year• Desk and Onsite Audits • Review Pharmacy Overrides


Patient Protection and Affordable Care Act (PPACA) – Background

• 2010 Healthcare Reform Act – goes into effect on January 1, 2011 – 961 total pages of legislative text

• Portions have been challenged – Section 1501 (“Individual Mandate”)

• Section 6401 deals with fraud, waste and abuse – Amends Medicare by adding new requirements

regarding:• 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)


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.


Increased Disclosure Requirements

• 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.

Id.


Compliance Programs

• 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

• 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

• Specifically, any compliance plan should include the following elements:– Designation of a chief compliance officer responsible for the

day-to-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

• 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

1 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.


Processes a Pharmacy Should Have In Place (con’t)• 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 (con’t)• 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

1 See 42 C.F.R. §423.505(d).


• 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)

Processes a Pharmacy Should Have In Place (con’t)



• 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

• Audits should include a review of documentation including:– Prescriptions– Invoices– Pharmacy licenses– Claim transaction records– Signature logs– Purchase records– Negotiated prices


Internal Audits (con’t)

• Audits should also verify:– 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



• 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

• To monitor trends and patterns, pharmacies should generate or receive and review reports such as the following:– Payment reports– Drug Utilization Reports– Prescribing Patterns by Physician Reports– Geographic Zip Reports


Monitoring Trends

• Information may be available from – Pharmacy software – Employee Observations – Wholesalers – Government Entities (DEA, Medicaid, Medicare)


Medicare ZPIC Audits

• Zone Program Integrity Contractors (ZPIC)– 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

• progress notes, medical history, pictures of service, purchase invoices, assessment records

– 90 to 120 days waiting period • The new ZPIC covers seven zones

– As of November 2010, CMS had awarded four ZPIC contracts, with three more contracts planned.

• CMS issued lucrative contracts – Advance Med Corporation was awarded a

$107,957,737.00 five-year contract for Zone 5. (Healthcare Finance News, 9/3/2009)



• “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.



• “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 (con’t)

• The ZPIC contracts include all claim types: – 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.



• 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.



• Extrapolation of damages utilized. See Sec. 3.10.4.2 of CMS’ Medicare Program Integrity Manual

• 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



• 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

• What can you do?• Internal review of requested claims.

– 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.



• 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



• 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



• 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

• Government Action – 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• Allow access to facilities as requested

– 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



• Pharmacies have rights to appeal audit findings – 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)



• Possible Criminal Exposure – 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• 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

– 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

• 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


• 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

Pharmacy Fraud, Waste and Abuse Examples (con’t)1

See §70.1.3 of guidance


• Prescription forging or altering– Existing prescriptions are altered, by an individual without the

prescriber’s permission to increase quantity or number of refills

• Dispensing expired or adulterated prescription drugs– 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




• 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



2 TrOOP: 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– Prescriber is offered, or paid, or solicits, or receives unlawful

remuneration to induce or reward the prescriber to write prescriptions for drugs or products

• Prescription drug switching– 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



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



Medicare Beneficiary Fraud, Waste and Abuse Examples1

• Misrepresentation of status– 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.

• Identity theft– Perpetrator uses another person’s Medicare card to obtain

prescriptions. • TrOOP manipulation

– 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.



• Prescription diversion and inappropriate use– 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.

• 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

– 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.

Medicare Beneficiary Fraud, Waste and Abuse Examples1



CMS Position on Self-Reporting

“While self reporting of potential fraud is voluntary1, CMS believes that self-reporting of fraud, waste and abuse is a critical element to an effective program to control fraud, waste and abuse.”2

1 42 C.F.R. §423.504(b)(4)(vi)(H)

2 See §20 of guidelines


Useful Links• Office of the Inspector General (OIG)

– www.oig.hhs.gov• OIG Mailing List

– www.oig.hhs.gov/mailinglist.html • OIG Fraud Site

– www.oig.hhs.gov/fraud.html • OIG Exclusion Site

– www.oig.hhs.gov/fraud/exclusions.html • General services Administration (GSA)

– www.epls.gov • CMS

– www.cms.hhs.gov • CMS Medicare Learning Network (MLN)

– www.cms.hhs.gov/MLNGenInfo • CMS Mailing List

– www.cms.hhs.gov/apps/mailinglists

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