(Washington, DC)—As payers, unions, and a bipartisan chorus of policymakers look to reduce wasteful spending by demanding more accountability in the health care system, the independent drugstore lobby is moving in the opposite direction, seeking to ban tools that detect pharmacy fraud, waste, and abuse. The Pharmaceutical Care Management Association (PCMA) today launched a campaign opposing the drugstore lobby’s attempt to win a “free pass” in the fight against wasteful health care spending.

“The drugstore lobby wants to undermine employers’ ability to root out wasteful spending on prescription drugs. That would make it harder for businesses to reduce health care costs and protect the benefits of their employees,” said PCMA President and CEO Mark Merritt.

Health care fraud, waste, and abuse costs Americans up to $234 billion a year, according to the National Health Care Anti-Fraud Association (NHCAA). PCMA’s campaign opposing H.R. 1971/S. 1058 includes a new report that provides an update on the fight against pharmacy fraud and the countervailing effort by the drugstore lobby to drive legislation that would undermine that fight.

Recent headlines across the country have exposed pharmacy fraud running the gamut from false claims to double billing. Yesterday, the owner and controller of 26 pharmacies in Michigan was indicted in a U.S. District Court, alleged to have been the center of a health care scam “going back to 2006, during which he distributed painkillers valued at more than $57 million and fraudulently billed Medicare, Medicaid and private insurance carriers.”

 

Examples of pharmacy fraud, waste, and abuse that can be detected include:

  • Phantom Prescriptions: Getting paid for prescriptions that are not dispensed;
  • Phantom Pharmacies: Fraudulent operations which are not pharmacies, but submit claims to payers;
  • Diversions: Diverting narcotics prescriptions for sale in the illegal drug market;
  • Overcharging: Charging payers for higher cost drugs when lower cost drugs are dispensed; and
  • Coding: Manipulating the coding and payment system to receive higher reimbursements.

Independent Drugstores vs. the Anti-Fraud Community

In an effort to carve drugstores out of the national fight against health care fraud, independent drugstores are demanding new laws (The Pharmacy Competition and Consumer Choice Act of 2011, H.R. 1971/S. 1058) to limit the use of audits and other tools used to detect pharmacy fraud. A white paper published by NHCAA raises serious questions about the kind of legislative proposals promoted by the independent drugstore lobby, including:

  • Policies that undermine payers’ ability to audit independent pharmacies suspected of fraud (“Audit Reform” policies). NHCAA supports measures that would “protect the integrity of health care audits by giving auditors more discretion and flexibility to perform their duties” and notes that “on-site audits have revealed indications of fraud such as nonexistent pharmacies, unexplained stockpiles of controlled substances, mismatches between inventories and prescriptions and other discrepancies.” NHCAA also warns that “proposed federal and state legislation that would require payers to provide providers advance warning of an audit – even in cases when fraud is suspected – would give suspects time to tamper with evidence and evade authorities altogether.”

Unfortunately, legislation championed by the independent drugstore lobby would grant pharmacies (even those with wasteful or abusive practices) an advance notice “heads up” before being audited.

  • Policies that undermine authority across Medicare to suspend payments when there is suspicion of fraud. The ability to stop fraud before paying a claim is more effective and more efficient than relying on paying first and then chasing after claims that are later found to be fraudulent. Congress should extend to Medicare Part D the recently enacted statutory authority Congress provided in Medicare Parts A and B to suspend payment to health care providers upon a credible allegation of fraud, waste, or abuse.
  • Policies that reduce payers’ time to verify pharmacy claims before payment (“Prompt Pay” policies). NHCAA states: “if claims are not rushed through the payment process, auditors and investigators will have more opportunities to detect attempts at fraud before they come to fruition.” So-called “prompt pay” laws in Medicare Part D that mandate rapid payment to independent pharmacies reduce the time available to detect pharmacy fraud, waste, and abuse.
  • Policies that make payers partner with pharmacies that are banned from federal programs (“Any Willing Pharmacy” policies). Legislation that would force plans to include in their networks pharmacies that have been banned from federal programs “runs counter” to preventing fraud, according to NHCAA. This “low standard of admission could allow for the participation in employer networks of pharmacists who have been suspended from government programs. Even if they have records of harmful prescription errors or a high number of consumer complaints, they would still be potentially eligible in the absence of a criminal conviction.”