CMS Under Increased Pressure to Make Accurate Payments for Prescription Drugs

The Office of Inspector General has called upon of the Centers for Medicare & Medicaid Services to make the reduction of improper payments for prescription drugs a priority in 2015.

As total payments from the Centers for Medicare & Medicaid Services (CMS) for prescription drugs approach $90 billion per year and show no immediate signs of decreasing, both the Medicare and Medicaid programs find themselves under increasing pressure from oversight bodies to ensure that only appropriate payments are made. The Office of Inspector General (OIG) has issued a series of reports critical of Medicare spending on prescription drugs, which emphasizes the need for increased scrutiny of claims and payments. Additionally, the OIG identified the need to reduce improper payments as a main challenge for CMS in 2015. OIG stated that maintaining the integrity of Medicare payments for prescription drugs is critical to safeguard patient safety, quality of care, and taxpayer money.

Tools exist to aid with the detection, prevention, monitoring, and recovery of inappropriate payments. Each tool plays a unique role in helping to assure that CMS is able to effectively identify and prevent inaccurate payments. Tools used to validate claims and verify the accuracy of payments include both prepayment and post payment medical reviews. Trained clinical staff review services against guidelines to determine whether the service was medically reasonable and necessary given the patient’s unique medical condition.

Employing full-time medical staff to perform manual medical reviews is expensive and time consuming. In an effort to leverage the enormous amount of data that comes from Medicare claims, CMS has partnered with a series of specialty contractors to better identify those services that are most likely to result in abusive or fraudulent claims. In addition to the tools deployed by local contractors, Medicare Recovery Audit Contractors and Medicare Drug Integrity Contractors are used to tap CMS’s “big data” and to perform targeted and intensive reviews of claims that are deemed to be at high risk for abuse.

Identifying aberrant claims after they have been submitted is less efficient than preventing them from being submitted, so CMS has long sought ways to educate providers on appropriate billing in order to prevent inaccurate claims submission. CMS and its contractors employ a variety of techniques to push information to providers, including maintaining a database of local and national coverage policies, regularly issuing provider bulletins and educational articles, and holding regular Open Door Forums with CMS staff to discuss policy changes.

Unlike the Medicare Part A (hospitals) and Part B (physician) programs, the Medicare Prescription Drug program (Part D) has additional tools it can deploy to help prevent inappropriate billings. Part D program sponsors can develop and use prescription drug formularies, subject to CMS approval, in order to help control utilization of and program spending on certain groups of prescription drugs. Many Part D plans also deploy prior authorization programs to identify and prevent inappropriate utilization and billing of certain prescription drugs. But even the most sophisticated tools are not without problems.

Recently, CMS stated that it would be reviewing plan benefit designs on the federally facilitated marketplaces to respond to concerns that some plans are designed in such a way as to discriminate against certain classes of high-risk patients. Plans have been accused of disallowing coverage for HIV drugs or of establishing unreasonably high beneficiary co-payments in an effort to avoid paying for prescription drugs. This comes on top of the OIG’s own call that Medicare may have spent nearly $32 million on unnecessary HIV drugs in 2012 alone.

CMS also threatened that plans that use prior authorization tools could be found guilty of discrimination if those tools are used to restrict access to classes of drugs. Plans have been accused of discrimination by requiring all prescriptions and refills to undergo prior authorization before payment is made. Despite these claims of inherent discrimination, the US Government Accountability Office has noted that CMS could do more to encourage plans to better monitor their claims for fraudulent or abusive utilization.

At the same time, health care providers find themselves under increased scrutiny. The release of physician-level data has made it easier to identify individual provider prescribing patterns. While it is unclear precisely how CMS or its contractors will use these data, it is clear that the data can identify outliers. CMS wants providers to self-monitor their own practices and use comparative data to assess whether their practice patterns are in line with those of their peers.

CMS now faces the difficult task of balancing the responsibility of preventing inappropriate payments with the need to ensure that beneficiaries have access to the types and levels of care they need. Additionally, CMS must respond to sometimes conflicting messages from Congress and oversight bodies that often demand strict oversight as they level criticism of unfair review practices.

All providers need to be aware that CMS is deploying numerous tools and significant resources to identify and combat inappropriate billing. Providers must keep abreast of the various ways in which CMS reviews billing trends and should take advantage of opportunities to compare their own practice patterns to those of peers. Identifying potential audit or review triggers in advance will help to better position prescribers to address CMS concerns. SPT

About the Author

John Warren is the senior director for health policy at McDermottPlus Consulting, a wholly owned subsidiary of McDermott, Will & Emery. McDermottPlus Consulting assists clients throughout the health care spectrum with Medicare-related lobbying, data analytics and modeling, and policy advice. Before joining McDermott, Warren spent 22 years with the Centers for Medicare & Medicaid Services and directed the operation of the average sales price program from 2005 to 2012.