Medicaid drug fraud targeted by government watchdog group

Some physicians are concerned that increased scrutiny of the prescribing process for controlled substances could hurt legitimate care.

By Amy Lynn Sorrel — Posted Oct. 12, 2009

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A recent Government Accountability Office report calling on state and federal health officials to ramp up their efforts against fraud and abuse of controlled substances in the Medicaid program raises the potential for increased scrutiny of physician prescribing, experts said.

A Senate subcommittee held a hearing on the issue on Sept. 30, the day of the report's release. It discussed findings that over two years, 65,000 beneficiaries, in five states alone, illegally acquired controlled drugs through multiple physicians -- a tactic known as doctor shopping -- resulting in $63 million in fraudulent Medicaid payments.

The report, which looked at claims in the five states for fiscal 2006-07, also found another $2.3 million in payments for prescriptions authorized by physicians or pharmacies that were barred from participating in federal health care programs. Other drug orders were approved using names of dead beneficiaries or dead physicians. The investigations of Medicaid programs in California, Illinois, New York, North Carolina and Texas targeted fraud and abuse of pain medications, anti-anxiety drugs and stimulants.

"It is clear that the Centers for Medicare & Medicaid Services need to do a better job of providing guidance and regulatory enforcement to the states. At the same time, states need to take greater responsibility for preventing and rooting out fraud, waste and abuse from their own backyards," said Sen. Thomas Carper (D, Del.), chair of the Homeland Security and Governmental Affairs subcommittee on federal financial management. "We can go a long way in paying for health care reform by eliminating [this] sort of abuse."

Carper and the GAO acknowledged that legitimate medical reasons exist for some suspect prescriptions, such as patients needing to see multiple specialists for the treatment of chronic conditions. But they highlighted ongoing problems with doctor shopping and potential overprescribing.

Gregory D. Kutz, a GAO managing director, said the report likely underestimated the costs associated with such fraud because it did not account for office or emergency department visits. He also noted inconsistencies in state anti-fraud controls, such as the types of drugs that require preauthorization, as well as limited law enforcement activities.

The GAO recommended that CMS work with states to implement more comprehensive fraud prevention programs -- a move some observers said could invite unwarranted, additional regulatory burdens on physicians and patient care.

Protecting legitimate care

States have long worked to prevent doctor shopping and overprescribing using such tools as prescription drug monitoring programs, electronic prescribing and medical board guidance, said Julia Krebs-Markrich, former counsel to the Virginia Medicaid program and a partner in Reed Smith's Falls Church, Va., office.

The statistics cited in the report represent a small portion of Medicaid participation and expenditures, "and my concern is, on the basis of these numbers, [the government] would overreact and impose additional penalties on doctors when they are not the problem," she said. "So many other things are being done, and the real issue is [the government] hasn't given states enough money" to get the technology and staffing they need to maximize existing efforts.

Scott Fishman, MD, past president of the American Academy of Pain Medicine, expressed concern that enhanced anti-fraud efforts, if not crafted carefully, could undermine patient care further. For example, existing programs already have the potential to snare physicians who treat large Medicaid patient populations with a real need for certain medications, he said.

"We know [drug diversion] happens, and we need strategies. But we need strategies that are going to arm doctors with the information they need to make good choices, so legitimate patients are treated appropriately, and those who use [controlled drugs] for illegitimate purposes are discovered," Dr. Fishman said. For example, California recently started allowing doctors to link electronically to its prescription drug monitoring program so they can make informed decisions at the time of treatment.

"The mistake we want to avoid is using tools that make doctors more afraid to prescribe, instead of more confident," he said.

Ann C. Kohler, director of the National Assn. of State Medicaid Directors, echoed those concerns in her testimony to the Senate subcommittee, noting that many states are restricted by tight budgets and a lack of information sharing between Medicare and Medicaid programs. States "must balance activities to identify fraudulent behavior with the need to ensure that the vast majority of honest providers and beneficiaries receive necessary services," she said.

Due diligence

Because the government has the ability to cast the net wide in such fraud investigations, Los Angeles-area health care attorney Wayne J. Miller recommended that physicians practice their own due diligence to avoid getting swept in. For example, they should check available state prescription drug databases regularly to avoid inadvertently aiding in illegal doctor shopping, he said.

Only 33 states have such resources, according to the GAO report. In the five states studied, the agency found low physician participation.

Routine face-to-face exams also are important to make sure patients are still alive and have conditions that require ongoing medication, said Miller, a partner with the Compliance Law Group PLC, which specializes in health care regulatory compliance. "In a practice with a high volume of patients, this may go by the wayside, so doctors should require that, no matter the condition, after a few refills there needs to be some exam."

Staying directly involved in the prescribing and billing processes also will prevent misuse of physician information, he added.

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Finding fraud

The Government Accountability Office in a recent report chastised state and federal health officials for lax protections against prescription drug fraud and abuse in the Medicaid program. The agency recommended that the Centers for Medicare & Medicaid Services provide further guidance to help states ensure that:

  • Claims processing systems detect and prevent filings from physicians and pharmacies barred and/or excluded from federal health programs.
  • Drug utilization and review programs adequately identify and prevent doctor-shopping and other methods to divert controlled substances.
  • Effective claims processing systems periodically check for duplicate enrollments and deaths of Medicaid beneficiaries, as well as deaths of physicians.

Source: Government Accountability Office, September (link)

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