Don't get caught in the feds' fraud and abuse dragnets

There has been an "explosion in interest" in pharmacy fraud and abuse (F&A) over the past few months.


Why the sudden interest? As spending for Medicaid and Medicare has increased dramatically, government agencies have been given more financial, human, and computational resources to scrutinize F&A. For example, the Deficit Reduction Act allocated $75 million for 2008 to the Medicaid Integrity Program specifically to fight F&A. Many other F&A programs exist in other government agencies, including the Office of Inspector General, the Centers for Medicare & Medicaid Services, and the Department of Justice (DOJ).

In human resources, for example, DOJ has added 140 more assistant U.S. attorneys trained specifically in healthcare fraud detection, and CMS has added 100 new employees just to combat F&A. In addition, the government is taking advantage of advances in computer technology. There has been an expansion of the Medicare-Medicaid Data Match Program, which can detect double billing by data mining. CMS is now using private contractors called Medicare Drug Integrity Contractors (MEDICs), whose compensation is based on how much F&A they find.

Bell said the most significant new rule is a training requirement for all pharmacists and other pharmacy personnel involved with Medicare Part D programs. As of January 2009, Medicare Part D sponsors must include F&A training as part of their compliance programs. Another new requirement is that Part D plan records must be kept for 10 years.

The consequences of getting caught defrauding Medicare or Medicaid are severe and include steep fines, lengthy prison terms, and exclusion from working in Medicare and Medicaid. One woman in Texas was sentenced to 63 years in prison for Medicaid fraud, but sentences for healthcare fraud are more commonly five to 10 years. Fines can be in the hundreds of millions of dollars. Filing false claims, the most common way pharmacists get into trouble, carries a penalty of $5,000 to $10,000 for each claim plus three times the damages suffered by the government plus exclusion from Medicare and Medicaid.

Given the severe penalties and the efficiency of governmental agencies at detecting and prosecuting F&A, pharmacists will want to obey all relevant laws and follow CMS requirements and recommendations. They can consult a guidance provided by CMS to help pharmacists comply with the regulations regarding waste, fraud, and abuse. It is available at

This document describes the provisions of the False Claims Act and the Anti-Kickback Law and also provides guidelines for Part D sponsors on how to establish a comprehensive program to detect and eliminate F&A. It includes both requirements and recommendations. Bell pointed out that most plans are following the recommendations and implied they are wise to do so.

One of those recommendations will become a requirement in January 2009, when Part D plans will be required to give pharmacists F&A training upon hire, annually, and when problems arise. An appropriate training program, written by Bell, is available at the NACDS Web site at

Bell pointed out that there is another requirement, in effect now, that some people don't know about. As of January 2007, pharmacies and other providers that receive over $5 million annually in Medicaid revenues must include in their pharmacy employee handbooks descriptions of F&A laws, whistleblower protections, and the employer's F&A policies. Bell also emphasized that it is important for pharmacies and plans to monitor exclusion lists, prepare for audits, and consider implementing compliance programs.

THE AUTHOR is a writer based in San Diego.