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The OIG Urges CMS to Implement Solutions to Reduce Fraud in Medicare Part C and Part D

Recently, the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) issued its 2019 “Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs: Top Unimplemented Recommendations.”  The OIG releases a version of this report each year outlining its top 25 unimplemented recommendations to reduce fraud, waste, and abuse (“FWA”) among HHS programs.  This blog post focuses on those recommendations specific to Medicare Part C and Part D for 2019.

The OIG makes the following recommendations to reduce FWA under the Medicare Part C and Part D programs:

  • CMS should collect comprehensive data from plan sponsors, including data on potential fraud and abuse, to improve its oversight of their efforts to identify and investigate potential fraud and abuse.  Since 2008, the OIG has issued six reports related to Part D plan (“PDP”) and Medicare Advantage (“MA”) investigating and reporting of potential fraud to CMS.  Currently, PDP and MA plans are not required to report potential fraud and abuse by pharmacies and providers to CMS, but plans may voluntarily do so through CMS' system.  In 2017, only 60 percent of PDPs and MA plan sponsors requested access to this system to report fraud to CMS.  The OIG recommends that CMS do a better job collecting data to identify and investigating potential fraud and abuse.  In response to this recommendation, CMS stated that it intends to require PDPs and MA plan sponsors to report data on potential fraud and abuse and corrective actions through rulemaking in the near future.
  • CMS should require Medicare Advantage plans to include ordering and referring provider identifiers in their encounter data. In 2018, the OIG conducted an audit of CMS encounter data to determine the extent to which the data was complete, valid, and timely.  The OIG found that ordering and referring provider identifiers, which could assist in data integrity processes, are not always required and were frequently missing from encounter data. The OIG recommends that CMS require MA plans to include this information as part of their encounter data reporting.  Although the OIG made this recommendation to CMS in 2018, CMS has not taken action to implement this recommendation.
  • CMS should strengthen oversight of Part D payments for compounded topical drugs to prevent fraud, waste, and abuse while maintaining appropriate access. The OIG issued two reports identifying significant increases in Part D spending for compounded drugs, noting that spending increased from $13.2 million in 2010 to $232.5 million in 2016.  As a result, the OIG recommended that CMS should strengthen oversight of compounded drugs.  In response, CMS issued a HPMS memorandum reminding PDPs of Part D policies for coverage of compounded topical drugs and use of utilization management tools. However, the OIG does not believe it is sufficient, as CMS has not yet completed follow-up on the pharmacies identified by OIG. 

With these recommendations, PDP and MA plans may expect new regulations and guidance requiring reporting of potential fraud by network providers and updates to encounter reporting requirements. 

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Lauren advises pharmacies, PBMs, managed care organizations, and other payors on transactional, regulatory, and fraud and abuse matters, drawing upon her experience working for the Federal Coordinated Health Care Office.