OIG: CMS Spent $160.8 Million on Duplicate Medicare Spending

August 29, 2019 - The Office of Inspector General (OIG) audited Medicare spending and found that CMS spent $160.8 million paying for drugs that should have been covered by hospices. This data follows a 2012 OIG report indicating CMS was issuing erroneous Medicare payments for certain Part A drugs.

“Although we acknowledge CMS’s efforts after our 2012 report, we disagree that they will adequately address the issue because the duplicate Medicare payments persist,” OIG said. “We continue to recommend that CMS develop controls to stop the duplicate hospice drug payments.”

The August 2019 audit sought to determine whether the unnecessary costs from 2009, covered in the 2012 report, were still occurring and found that, despite CMS’s actions since the previous audit, duplicate Medicare payments remained a problem.

OIG reviewed a total Part D expenditure of $422,693,830 for 6,689,255 prescription drug events (PDEs) from 2016.

Of the over six million PDEs, the watchdog used a stratified random sample of 200 PDEs, amounting to a cost of $397,121, to question the hospices and determine whether the payments were correct.

READ MORE: OIG: Medicare Could Save $367M by Auditing Improper Payments

The hospices’ answers indicated that 86—or 43 percent—should have been covered by the hospice, not by Part D.

Of the remaining 114 cases, the hospices told OIG that 108 should have been covered by Part D but in many of these PDEs the OIG disagrees with the hospices, stating that the hospices should have paid for more PDEs than they said.

Thirty of the PDEs sampled were common end-of-life drugs, thirty were chemotherapy, and 140 were categorized as “everything else,” which encompasses Alzheimer’s, COPD, and other mainly chronic treatments. The “everything else” category is a new addition from the last audit.

In most of these situations, the hospices had no knowledge that the beneficiary had been prescribed the drug because it was filled out by a pharmacy that had no connection with the hospice. OIG believes this demonstrates a breakdown of communication that is against CMS principles and good medical practice.

With OIG’s data indicating that Medicare may have payed over four times as much in duplicate Medicare payments in 2016 as it did in 2009, the stakes could be high.

READ MORE: Medicare Part D Premiums Continue to Decrease, CMS Says

“CMS must do more to avoid paying twice for the same drugs,” OIG pressed.

OIG reiterated its previous recommendation that CMS should collaborate with hospices to stem the issue. Furthermore, CMS should implement contingencies to prevent Part D payments from being applied to drugs covered under Part A.

As opposed to the previous audit, CMS expressed more confidence in OIG’s conclusion this year. However, the agency responded that it is already acting to control duplicate Medicare spending.

At present, CMS pointed out, the agency supports hospices in making beneficiaries aware of what benefits cover their treatments. It also educates Part D plan sponsors about prior authorization criteria and encourages collaboration between the sponsors and hospices to reduce duplicate Medicare payments. Earlier this month, the agency also announced that it successfully lowered Part D premiums again.

As noted above, this latest OIG report was a follow-up to one issued in 2012, during which OIG found that Medicare Part D paid out $33.6 million and hospice members paid $3.8 million to cover prescription drug costs in 2009. These were all payments that should be covered under Medicare Part A, the hospice benefit. Based on this possibility, OIG made three major recommendations.

READ MORE: CMS Finalizes Medicare Advantage, Part D Payment Policies

The watchdog suggested that CMS increase providers’ and pharmacies’ awareness about applying Part D coverage to hospice care. CMS should increase oversight over Part D payments to make sure they are not going to beneficiaries whose hospice organizations have already covered their prescription under a per diem payment. Finally, OIG said that sponsors of Part D plans should have constraints set in place so that they do not pay for drugs that per diem payments cover.

At the time, CMS found that OIG did not have decisive evidence they’d been paying double for some prescriptions and dismissed OIG’s second suggestion on that basis. CMS said it would delve deeper into this issue with a more decisive method.

In the 2012 report, OIG’s approach focused more on the drugs for which CMS had been paying double. The audit looked at the most common end-of-life drugs for its analyses. Additionally, the watchdog chose to observe COPD and ALS drugs for more detailed study.

OIG also interviewed five Part D sponsors to discover their process for determining what drugs they should cover, as opposed to the hospice.

Between 2012 and 2019, OIG continued to bring up the matter and related payment issues to CMS. OIG alerted CMS to other unnecessary payments made to Colorado in 2016. In March 2018, the watchdog found that CMS’s auditing system had improperly audited Medicare payments to outpatient physical therapy claims worthy about $367 million.

While CMS accepts this year’s audit’s conclusions, the agency believes that it is on the right track to solve the issue with its current initiatives.