NHCAA Board Chair Testifies Before Senate Committee on Prescription Drug Fraud

On Monday, June 24, NHCAA Board of Directors Chair Alanna Lavelle (WellPoint) testified before the Senate Homeland Security & Government Affairs Committee. Ms. Lavelle was among five witnesses testifying at the nearly two-hour hearing titled "Curbing Prescription Drug Abuse in Medicare."

The witness panel included (in the order in which they testified):

Joseph T. Rannazzisi
Deputy Assistant Administrator, Office of Diversion Control
Drug Enforcement Administration
U.S. Department of Justice

Jonathan Blum
Acting Principal Deputy Administrator and Director of the Center for Medicare
Centers for Medicare and Medicaid Services
U.S. Department of Health and Human Services

Gary L. Cantrell
Deputy Inspector General for Investigations
Office of Inspector General
U.S. Department of Health and Human Services

Stuart E. Wright
Deputy Inspector General for Evaluation and Inspections
Office of Inspector General
U.S. Department of Health and Human Services

Alanna Lavelle
Director of Special Investigations
WellPoint, Inc.

In her testimony, Ms. Lavelle offered several recommendations including:

  • Give CMS the authority to establish a restricted recipient or "lock-in" program in Medicare Part D for those beneficiaries displaying a pattern of misutilization.
  • Require that dual eligible beneficiaries (Medi-Medi) with evidence of drug-seeking behavior ("doctor shoppers") be locked into one managed care plan, rather than continue to be allowed to switch plans on a monthly basis to evade detection (HIPAA requirements prohibit the sharing of this information from plan to plan).
  • Improve coordination and cooperation among CMS, DOJ, and all stakeholders-the Healthcare Fraud Prevention Partnership (HFPP) is an optimistic step toward realizing this vision.
  • Revise the medical loss ratio (MLR) requirements that currently fail to acknowledge the health care quality-improving aspects of anti-fraud work and discourage investment in anti-fraud resources. Currently, the MLR rules offer only a limited credit-the lesser of fraud recoveries or the resources spent pursuing those recoveries. Private health insurers and Medicare Part C & D plans must include as administrative costs, all other anti-fraud expenses including those dedicated to fraud prevention.

Chair of the Homeland Security Committee, Senator Thomas Carper (D-DE) had Ms. Lavelle repeat each of her recommendations and requested that the other witnesses respond to them. Mr. Blum, the representative from CMS indicated that the agency would be encouraging of any legislative and regulatory changes that might be necessary to implement a lock-in program for Medicare Part D. He also stated a commitment to better information-sharing among stakeholders.

Rather than embrace Ms. Lavelle's recommendation that doctor shoppers be locked into a single health care plan, Senator Tom Coburn, M.D. (R-OK) asked Mr. Blum if CMS would be agreeable to adjustments to HIPAA privacy requirements that would allow limited sharing of some information (such as drug-seeking behaviors of Medi-Medi beneficiaries). Again, Mr. Blum responded yes.

As for the recommendation to revise MLR requirements, CMS did not agree.

The two representatives from HHS-OIG, Mr. Cantrell and Mr. Wright offered testimony that highlighted recent work by that office on the issue of prescription drug fraud. In addition, the hearing coincided with the release of a new IG report titled, "Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority," along with an IG-sponsored Spotlight and Podcast on the topic of drug diversion. The Podcast is an interview with Jennifer Trussell, Special Agent in Charge in the Office of Investigations and member of the NHCAA Board of Directors.

During the hearing, Senator Carper made the point repeatedly that prescription drug abuse is a growing and dangerous public health epidemic that must be addressed. He stressed that parents must understand the seriousness of the problem. At this, Ms. Lavelle offered a personal insight, explaining that when her sophomore daughter tore her ACL and was prescribed Oxycodone several classmates approached her offering to buy her medication. "It's in our backyard," Ms. Lavelle said in reference to the pervasiveness of prescription drug abuse.

Based on the comments relating to "legislative fixes," we can likely anticipate proposed legislation. NHCAA will continue to monitor developments that may occur as a result of this important hearing.

To watch the hearing in its entirety or to read witness testimony or Committee Member statements, visit the hearing website.

The PRIME Act Introduced in the House and Senate

New federal anti-fraud legislation titled, "The Preventing and Reducing Improper Medicare and Medicaid Expenditures Act of 2013," was introduced in both the House and Senate on June 10. Dubbed the PRIME Act, it is a bi-partisan measure-the Senate bill (S. 1123) is sponsored by Senator Thomas Carper (D-DE) along with 15 co-sponsors, the House bill (H.R. 2305) is sponsored by Congressman Peter Roskam (R-IL) along with 10 co-sponsors.

The bill focuses on two areas:

  • Curbing Improper Payments
  • Improving Data Sharing

With regard to curbing improper payments the PRIME Act:

  • Would require valid prescriber National Provider Identifiers (NPI) on pharmacy claims (for PDP sponsors under Part D).
  • Aims to reform how CMS tracks and corrects vulnerabilities identified by Recovery Audit Contractors (RACs).
  • Would improve Senior Medicare Patrol (SMP) and fraud reporting rewards (HHS shall develop a plan to revise its incentive program aimed at collecting information on fraud and abuse).
  • Aims to strengthen Medicaid Program integrity through flexibility.
  • Would establish Medicare administrative contractor error reduction incentives (sliding scale of bonus payments, etc.).
  • Would strengthen penalties for the illegal distribution of a Medicare, Medicaid, or CHIP beneficiary identification or billing privileges (prison sentence of up to 10 years; $500,000 fine).

With regard to improving data sharing, legislative provisions address:

  • Access to the National Directory of New Hires (Administrator of CMS and the IG shall have access to the Directory for eligibility determinations under Medicare or state subsidy programs and for program integrity purposes)
  • Improving the sharing of data between the Federal Government and State Medicaid programs (Medi-Medi Data Match Program)
  • Improving claims processing and detection of fraud within the Medicaid and CHIP programs.

To read S. 1123 in its introduced version, click here.

To read H.R. 2305 in its introduced version, click here.

NHCAA will continue to track this legislation and keep the Membership informed. If you have any questions, contact Leigh McKenna at lmckenna@nhcaa.org.