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Prescription Drug Payments Still Going to Dead People, Watchdog Finds

CMS struggles to enforce pharmacy reporting deadlines on HIV treatments.

The Medicare program’s bookkeepers have come up short in efforts to curb reimbursements for prescription drugs for patients who are no longer living, said an inspector general’s report released Friday.

Because sponsoring pharmacies working with Medicare Part D too often submit payment reports outside the 32-day window following a patient’s death, the Centers for Medicare and Medicaid Services paid for HIV drugs for more than 150 deceased beneficiaries, according to the review by the Health and Human Services Department’s inspector general.

Though the study focused only on drugs for treatment of HIV, which can lead to the AIDS virus, the watchdog noted that its lessons could apply to all Medicare Part D drugs because of the high risk of fraud.

Using prescription drug purchases in 2012 and cross-checking them against the Beneficiary Enrollment Database and the Social Security Administration’s Death Master File, the IG found that Medicare paid for 348 HIV drugs for 158 deceased beneficiaries serviced by 124 pharmacies—at a total cost of $292,381.

Medicare Part D is used by 37 million Americans, and past studies have put the government’s losses in payments to the deceased in the millions of dollars. 

CMS had previously put in place “editing” procedures designed to reconcile annual payments from plan sponsors—81 percent of which are retail pharmacies—who submit claims that vary by the patient’s income level and insurance coverage. The editing steps are designed to flag claims that came in after 32 days, but CMS acknowledges the system needs fine-tuning.

CMS acknowledged that delays in receiving death information might cause its system to accept a claim with a date after the 32-day window, which is why it is performing additional analysis of how to identify such claims.

The IG recommended that CMS shorten or eliminate the 32-day window, and CMS agreed.

“After reviewing this report, wrote Administrator Marilyn Tavenner, “CMS has had preliminary discussions with the industry to revisit the need for a 32-day window, which was instituted because the date of service in some pharmacies reflects the date the prescription was filled, not the date the prescription was dispensed.” Discussions with industry will continue, she said.

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