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By KENNETH H. SCHELL, Pharm.D, chief compliance officer and vice president, quality assurance and compliance, at Prescription Solutions/UnitedHealth Group

Once considered a white-collar crime, prescription drug fraud is becoming increasingly dangerous and costly as organized crime moves in. For criminals, prescription drug fraud--especially Medicare schemes--typically may offer a greater payoff and carry much shorter prison sentences than offenses such as drug trafficking or armed robbery.

You don't have to look hard to find other real-life examples of fraud and improper payments.

-- In May 2009, seven men were arrested after trying to acquire nearly 2,600 doses of Oxycodone, Percocet and Xanax through 18 different prescriptions at a pharmacy in Fredericksburg, Va. The street value was approximately $63,000. The men called attention to themselves after paying cash for the $200 to $400 prescriptions.

-- Two pharmacists in the Pittsburgh, Pa., area were accused of fabricating insurance claims in April 2009 for nearly $1 million worth of prescription drugs never given to patients. The men submitted false Medicaid claims to private health insurers and the Pennsylvania Medicaid program for drugs never prescribed by physicians or not dispensed to patients.

-- According to Associated Press reports, 11 members of a New York organized crime family were indicted in May in a Medicare fraud scheme in South Florida. They were accused of stealing patients' Medicare numbers and using them to submit false claims. Other allegations included identity theft and conspiring to commit murder.

An audit report released by the Government Accountability Office (GAO) in late September 2009 found five states--California, Illinois, New York, North Carolina and Texas--responsible for over 65,000 cases of Medicaid prescription drug fraud. These cases, which totaled more than $65 million dollars in fraud, included prescriptions written for dead patients or prescriptions written by physicians previously banned from practicing.

HIGH-STAKES GAME

Plan sponsors that partner with their pharmacy benefits manager (PBM) to take a multifaceted approach to detecting and preventing fraud and billing errors within their provider networks are reaping savings in the millions of dollars, to the benefit of their bottom line, their members and government payors.

This collaboration can stop both common billing mistakes and opportunistic fraud. At the same time, error detection and subsequent education of legitimate physicians and pharmacies on improved dispensing and safety measures add another layer of cost savings and improved safety.

Undoubtedly, the most effective step that can be taken to maximize fraud detection is implementing an aggressive audit program that offers added protection. Maintaining a standard of auditing 100 percent of pharmacy provider prescription claims submissions is recommended, using a three-tiered approach--real time, desktop and on-site audits--and an outside pharmacy audit vendor or internal source.

PBMs typically have the right to audit contracted pharmacy providers, and a pharmacy provider's failure to comply with an audit limits disclosure of information and should be considered a "red-flag" for potential fraudulent activity.

THE THREE TIERS

Here's a brief look at a three-tiered approach designed to maximize fraud detection:

Tier One: Data mining and Analytics in "Real Time": The first defense against fraud is sophisticated software to do across-the-board audits that occur immediately when a claim is submitted and to detect and identify aberrant qualities to claims.

Using the automated pharmacy claims processing system, 100 percent of claims are scrubbed through filters and sophisticated algorithms in real time. High-audit-potential claims are flagged, immediately placed in a queue and ranked by a scoring technology.

High-fraud-risk claims or those with suspicious patterns move to the next stage of review. Unlike retrospective auditing, which results in reversing or adjusting charges in a different accounting cycle from which they occurred (usually much later), auditing in real time often corrects mistakes prior to payment.

Tier Two: Desktop Audit: Flagged claims are assessed by the PBM's highly trained pharmacy investigators who perform desktop audits to identity factors that technology can't. The investigators--licensed pharmacists or pharmacy technicians who are trained specifically to understand medications and how they are normally dispensed--drill down to find out what's going on by contacting the pharmacies and even physicians and patients if necessary.

This combination of high-tech data mining and real-time review by a strong team of investigators is highly effective in ferreting out fraud and fraudulent schemes.

Tier Three: On-site Audit: Many PBMs also conduct on-site audits at network pharmacies on a routine basis, absent any specific indication of fraud or abuse. This offers specific advantages by having direct access to information that could result in potential fraud. On-site audits are also used to validate issues identified in the other tiers.

It is not often necessary to conduct this type of audit as the evidence many times is profound enough to act without being on-site. However, if there appears to be a problem, but the PBM needs validation, auditors go on-site at the pharmacy to collect data and further investigate.

THE SENTINEL EFFECT

An added benefit to the real-time adjudication process is that it actually deters fraud via the so-called "sentinel" effect. The impact of being contacted on the same day an "incorrect" claim is submitted is a powerful deterrent for those on the outer edges of integrity. For legitimate mistakes, this three-tiered approach provides an opportunity for in-the-moment education and training, which results in fewer future errors.

Any single "tier" used by itself has strengths and weaknesses. When added together and using all three approaches, plan sponsors and their PBMs have a much more effective program. The biggest advantage of the three-tier approach is the speed with which a PBM can identify and mitigate fraudulent activity versus technical errors.

The cumulative impact of an effective anti-fraud program has a positive "spill over" on all plan sponsors by finding and stopping fraud schemes that, if unimpeded, could continue to leach money from the entire healthcare system.

November 1, 2009

Copyright 2009© LRP Publications