Medicare Part D fraud reporting and cost trends

Medicare Part D fraud and spending trends made news last week in a trio of articles focusing on whistleblowing targets and program cost containment.   

Whistleblower complaints related to Part D are moving beyond drug companies. The new trend is that "all parties that stand between a pharmaceutical manufacturer and a patient should expect increased scrutiny under a variety of federal and state laws and regulations," according to JDSupra Business Advisor. Medicare Part D plan sponsors, pharmacy benefits managers and pharmacies are being investigated more often under the False Claims Act and Medicare regulations.

"The complexity of the program and the various certifications that plan sponsors must submit to CMS create many opportunities for things to go wrong," the article noted. Specifically, Medicare regulations touch each link in the pharmacy transactions chain, from sponsor bids for Part D business, to pharmacies' collection of copayments, to Part D reporting and reconciliation with the Centers for Medicare & Medicaid Services, the article noted. Errors in these activities create grist for the whistleblowing mill.

Besides being whistleblower targets, drug companies have also been blamed for wasteful Part D spending. Patient advocates say taxpayers could save $141 billion in 10 years by resurrecting a program letting Medicare negotiate drug prices with pharmaceutical manufacturers just as Medicaid and the Veterans Administration now do, the Center for Public Integrity reported. Bowing to pressure from drug company lobbyists, Congress ended that program when Part D debuted in 2003. Drug companies' profits climbed 34 percent in the program's first year, the Center noted.

Finally, a recent Congressional Budget Office (CBO) report described how capitalizing on competition has cut Medicare prescription drug spending. The CBO found that the more Part D sponsors there are in a given region, the more the government saves in drug costs as a result of lower bids. Moreover, overall use of generic drugs in Part D jumped from 67 percent to 78 percent between 2007 and 2010, the report noted. This decrease may be due to the influence of pharmacy benefits managers, according to an RX Observer blog post.       

For more:
- read the JD Supra article
- see the Center for Public Integrity piece
- view the CBO report (.pdf)
- here's the RX Observer blog post