OIG: Latest audit finds Part D paid for $160M drugs hospices should have covered in latest audit

Drugs prescription pad
An audit found that Medicare Part D paid $160 million for drugs that should have been covered by hospices. Image: Getty/LIgorko

Medicare Part D paid $160 million for drugs that should have been paid for by hospice programs, a federal watchdog found.

The report released Tuesday from the Department of Health and Human Services Office of Inspector General said that the Centers for Medicare & Medicaid Services must do better in ensuring it isn’t paying twice for the same drugs as hospice coverage includes drug costs.

OIG conducted an audit examining $422.7 million in Part D costs in 2016 for prescriptions filled for beneficiaries in hospice. The goal of the audit was to follow up on a 2012 report to CMS that found Part D paid for prescription drugs that should have been paid by hospice organizations.

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Of the $422.7 million, OIG estimated Part D paid for $160.8 million for drugs hospice organizations should have paid for. 

RELATED: Study finds CMS’ nixed change to Part D could have hindered drug accessibility

Hospices told OIG they shouldn’t have paid for the remaining $261 million of the $422.7 million in total cost.

However, OIG said it conducted “a review of CMS communications with hospices and sponsors between 2012 and 2016 indicates otherwise—hospice organizations or hospice beneficiaries likely should have paid for many of these drugs, not Part D.”

OIG called on CMS to develop a strategy to ensure Part D isn’t on the hook for drugs that should be covered by hospices.

“This should include working with Part D sponsors and seeking whatever authorities are necessary to develop proper controls,” the watchdog’s report said.

The report comes as CMS has scaled back certain efforts to contain Part D drug costs.

RELATED: MedPAC executive director: Part D sponsors need stronger incentives to negotiate lower drug costs

The agency decided against a proposal that would have allowed Part D plans to drop drugs from their formularies that are part of six protected classes if the price got too high. CMS requires Part D plans to cover six classes of drugs that include antidepressants and antipsychotics.

CMS also retreated from a proposal that would have allowed Part D plans to adopt formulary management tools such as step therapy for protected class drugs.

Both proposals were widely panned by patient advocacy groups who feared they would restrict access for patients.

Health and Human Services also withdrew a proposed rule to eliminate the safe harbor for Part D drug rebates, meaning that such rebates could be prosecuted under federal antikickback laws. The rule released last year would have created a new safe harbor for drug discounts offered at the pharmacy point of sale.

But the White House pressured HHS to withdraw the rule after concerns it would raise Part D premiums on seniors.

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