April 10, 2008
To assess the potential impact of accelerated payment cycles on the ability of Part D plans to prevent unnecessary payments for prescription claims involving pharmacy fraud, waste, and abuse, PCMA conducted structured interviews with more than a dozen industry experts responsible for pharmacy audits, fraud investigations, payment recoveries, and pharmacy network contracts.
- Pharmacy Fraud, Waste, and Abuse Is Costly: Approximately 1 percent of prescription costs are likely due to fraud, waste, or abuse. This amounts to hundreds of millions of dollars in unnecessary costs for the Medicare Part D program and its beneficiaries.
- Part D Plans Use Advanced Techniques to Combat Fraud, Waste, and Abuse: Part D plans use sophisticated software and auditing techniques to identify problematic prescription claims. Most plans screen for fraud, waste, and abuse both before and after a claim is paid. Problem claims can often be detected automatically, but auditors must then analyze the claims and often contact the pharmacy, doctor, or patient for additional information to determine if fraud, waste, or abuse has occurred.
- Problem Claims Can Be Caught Prior to Payment: Typical examples of fraud, waste, and abuse detected prior to a claim being paid include prescription claims submitted with the improper quantity, improper days supply, improper coding, duplicative claims, and other irregularities.
- “Prompt Payment” Mandates Would Increase Costs: Accelerated payment cycles would make it difficult or impossible to complete some fraud, waste, and abuse detection efforts that currently occur prior to payments being made. While the majority of payments made on claims involving fraud, waste, or abuse can eventually be recovered, this can be difficult, time intensive, and, in some cases, impossible. This results in increased costs.
- Independent Pharmacies Tend to be More Vulnerable to Fraud than Large Chain Pharmacies: Unlike independent pharmacies, large chains have centralized billing operations with sophisticated accountability systems in place.