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IG INVESTIGATING "EXTENSIVE" PHARMACY MEDICAID FRAUD IN THE SOUTHEAST

Executive Summary

IG INVESTIGATING "EXTENSIVE" PHARMACY MEDICAID FRAUD IN THE SOUTHEAST, according to the HHS Inspector General's Office FY 1991-1992 work plan, expected to be released in mid-February. "Suspected violations include (but are not limited to) fraudulent overbillings for prescriptions; illegal dispensing and fraudulent billing of 'sample' drugs labeled 'not for resale'; billing Medicaid at a higher cost than the general public is charged; shorting the number of pills dispensed; and billing for brandname drugs when generics were actually dispensed." The ongoing investigation is aimed at obtaining convictions, civil monetary penalties and repayment of Medicaid funds, the report says. At the Health Care Financing Administration's request, the IG will review states' implementation of the 1987 Medicaid regulations setting aggregate upper payment limits for specific multiple source drugs. HCFA requested that we review the states' implementation . . . to determine whether the savings are being achieved," the report states. In addition, the IG will undertake a study to "identify additional multiple-source drugs that can be placed on the HCFA upper limits listing," and also consider the impact of the 1990 Medicaid drug prudent purchasing act on this regulation. The Inspector General's Office plans to continue its comparision of Canadian and U.S. drug prices and drug purchasing systems. Data from that study led the IG to suggest in September that Medicaid could save $ 474 mil. annually if it obtained brandname drugs at Canadian prices. During debate on the Medicaid rebate legislation, the IG recommended that as one strategy, HCFA set Medicaid drug expenditure targets using comparisions with national and international price data ("The Pink Sheet" Sept. 24, p. 9). The 1991-1992 work plan says the IG will "describe the limitations in the current U.S. system for analyzing and monitoring drug prices, and comparing and contrasting those with the Canadian provinces and European countries." In Medicare, the IG will continue to monitor reimbursement of Amgen's Epogen (erythropoietin) for renal dialysis patients. Beginning Jan. 1, 1991, payments for EPO are set at no more than $ 11 per 1,000-units of the amount of the drug actually used by a patient ("The Pink Sheet" Nov. 5, p. 20). Previously, Medicare paid a flat $ 40 per treatment, but found that the average patient received only $ 28 worth of the drug ("The Pink Sheet" Oct. 15, T&G-1). The work plan says the IG's followup study will "examine profit margins and changes in utilization and patient administration resulting from legislative changes."
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