GAO audit uncovers prescription drug fraud by Medicare Part D beneficiaries

A recent audit by the Government Accountability Office uncovered evidence of prescription drug abuse and fraud by Medicare Part D beneficiaries.


“Medicare dollars are being used to finance prescription drug abuse in our nation,” testified Gregory Kutz, Director of GAO’s Forensic Audits and Special Investigations Unit, at a hearing before the Subcommittee on Federal Financial Management.

The GAO’s audit of Medicare Part D claims for 2008 found 170,000 Medicare beneficiaries obtained prescriptions from five or more doctors for 14 classes of frequently abused prescription drugs such as Vicodin, Ritalin, and Oxycontin. While this number represented only 1.8% of the total beneficiaries who received prescriptions for these types of drugs in 2008, these individuals have cost Medicare more than $148 million in prescription drugs during that time.

“The money lost to prescription drug fraud through the payment of unnecessary of bogus pharmacy claims is only part of the financial impact of this problem,” said Louis Saccoccio, Executive Director of the National Health Care Anti-Fraud Association. “In the process of obtaining a prescription, a patient will typically generate claims for related medical services. Insurers often find that they have paid not just for unnecessary drugs but also for related emergency room visits, in-patient hospital stays, visits to physician offices and clinics, and diagnostic testing – all based on injuries, illnesses, and conditions feigned in order to obtain a prescription.”

Medicare Part D, which went into effect in 2006, provides affordable prescription drug coverage for Medicare recipients (people 65 years or older) and eligible individuals with disabilities. Today, there are more than 3,400 Part D plans run by private companies that cover more than 29 million Medicare beneficiaries.

Although some Medicare Part D beneficiaries may have legitimate reasons for receiving prescriptions from multiple doctors, the GAO report did document 10 clear cases of “doctor shopping” and prescription fraud. Examples highlighted in Kutz’s testimony include:

“A California man received prescriptions for 1,758-day supply of fetanyl patches and pills, a powerful narcotic painkiller, from 21 different prescribers in 2008.

“A Georgia woman received a 1,679-day supply of oxycodone, also a narcotic painkiller, and other drugs from 58 prescribers and 45 different pharmacies.

“A Maryland woman received a 1,450-day supply of oxycodone from 11 different prescribers.”

In all the examples, the doctors were unaware that their patients were getting additional drugs from other doctors.

The GAO has recommended the Center for Medicare and Medicaid Services (CMS), the federal agency that oversees Medicare Part D, adopt a restricted recipient program and improve information sharing between drug plans to address doctor shopping and to prevent prescription drug abuse and fraud. “The restricted recipient program would limit known system abusers to one prescriber, one pharmacy or both. Since abusers generally face no criminal consequences and will not be removed from Part D, this “lock-in” program provides a valid mechanism to protect taxpayer interests,” said Kutz. Enhancing information sharing between Medicare Part D drug plans would prevent doctor shoppers from bypassing the restricted recipient program by simply switching plans. Currently, Medicare Part D beneficiaries can switch plans once a year.

While CMS has acknowledged that there is room for improvement to prevent doctor shopping and prescription drug fraud, the agency maintains that a restricted recipient program does not work for Medicare Part D under current federal law.

“We must also be very concerned that beneficiaries do not face undue restrictions to necessary medications. Beneficiaries seeing many doctors may have very complicated health care needs or may be victims to a dysfunctional health care delivery system,” said Jonathan Blum, Deputy Administrator of the Center for Medicare and Medicaid Services. “Any program, in our belief, to curb overuse, misuse or over-utilization must always involve strong clinical review and judgment to ensure that those in need do not go without or face arbitrary restrictions.”

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