April 10, 2008

Approximately 1 percent of prescription drug costs result from fraud, waste, and abuse. This amounts to hundreds of millions of dollars in costs unnecessary costs for health care payors such as Medicare Part D. Wasteful pharmacy billing errors account for most of these costs, however fraud is present in a distinct minority of cases.

To find the “bad apples,” pharmacy benefit managers (PBMs) use advanced computer algorithms and auditing techniques to detect problem claims. Accelerated payment cycles would require that PBMs shift some detection and prevention efforts now accomplished prior to claims payment until after claims payment, which would make it more difficult to prevent unnecessary costs due to fraud, waste, and abuse. When a PBM detects a likely case of fraud, it will refer the issue to law enforcement authorities for further investigation and prosecution.

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