Part D Fraud

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Until the Medicare Part D benefit was implemented in 2006, Medicare beneficiaries had access to a limited number of prescription drugs through the Medicare Part B benefit. Part B drugs are restricted to certain cancer, immunologic dialysis, and other therapies provided incident to a physician’s direct care, often by injection or infusion.

With Medicare Part D, all Medicare beneficiaries have access to the Medicare drug benefit through private plans approved by the federal government. The drug benefit is offered through stand-alone prescription drug plans (PDPs) and Medicare Advantage prescription drug (MA-PD) plans. Part D is a market model, transferring risk to private plan sponsors, which then act as the insurers for Part D benefits.

Prior to implementing the Part D benefit, CMS developed a strategy (Medicare Drug Integrity Contractors, or “MEDICs”) to investigate and recommend prosecution for Part D fraud and abuse. National Benefit Integrity is the current Medicare Drug Integrity Contractor.

MEDICs’ responsibilities include, but are not limited to: fulfilling requests for information from law enforcement agencies; investigating potential Part D fraud and abuse; referring cases and making immediate advisements regarding potential Part C and Part D fraud and abuse to the Office of Inspector General (OIG); recommending appropriate administrative actions to CMS; identifying program vulnerabilities; and auditing the fraud waste and abuse programs that are part of plan sponsors’ compliance plans.

Potential Part D False Claims Act violations for whistleblower exposure include: Billing for drugs not provided; billing for brand name drugs when generics are dispensed; billing for non-covered drugs as covered; billing multiple payers for the same prescription (except as required for coordination of benefit transactions); splitting prescriptions to receive additional fees; failure to apply “maximum allowable cost” pricing to drugs, submitting claims for drugs that have expired National Drug Code identifiers; billing for prescriptions with false physician identifiers; billing for drugs dispensed drugs without prior authorization; submitting claims for brand-name drugs when generics were dispensed; splitting prescriptions; and submitting claims for quantities of drugs over approved limits.

Manufacturer Part D fraud can take the form of unlawful kickbacks to either the dispensing provider or the Part D Plan, or the submission of false information in connection with its obligation under the Discount Program Agreement.