February 27, 2013
(Washington, DC)— As the U.S. House of Representatives Energy and Commerce Subcommittee on Health examines preventing waste, fraud, and abuse in the health care system during a Congressional hearing today, the independent drugstore lobby is continuing to promote an agenda that seeks to ban tools that detect pharmacy fraud, waste, and abuse. This special interest agenda runs counter to the goals of payers, unions, and a bipartisan chorus of policymakers who want to reduce wasteful spending by demanding more accountability in the health care system.
Independent Drugstores vs. the Anti-Fraud Community. In the last Congress, independent drugstores were the driving force behind legislation (H.R. 1971/S. 1058 and H.R. 4125) which would have limited the use of audits and other tools used to uncover fraud in the pharmacy setting.
Fraud and abuse costs Americans up to $234 billion a year, according to the National Health Care Anti-Fraud Association (NHCAA). A recent report examined how recent Congressional hearings and government investigations have raised serious questions about opaque business practices and pricing strategies within the independent drugstore industry, which now generates $93 billion in annual sales from 23,000 stores nationwide and ranks among America’s most profitable small business sectors.
At independent drugstores, the owner, cashier, and book keeper are often one and the same. These factors make independent drugstores more susceptible to irregularities and make oversight more challenging. The report highlighted three basic questions policymakers are asking of independent drugstores:
- Why are independent drugstores eight times more likely than other pharmacies to submit questionable bills to Medicare?
- Are independent drugstores exploiting the drug shortage crisis?
- Why are independent drugstores fighting bipartisan efforts to reduce drug diversion?
A white paper published by NHCAA also raised serious questions about the kind of legislative proposals promoted by the independent drugstore lobby. The policies and specific NHCAA concerns include:
- 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.”
- 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.”