Management Forum

Watching for Money Problems with Medicaid and Medicare

As American society continues to search for solutions to its health care financing problem, attention has pointedly focused on deficiencies in the Medicaid and Medicare systems during the past few months. A report issued by the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services in January outlined four approaches to containing spending for prescription drugs in Medicare Part B, all of which could affect pharmacists in all settings. And, increasingly, fraud cases are being pursued against health care providers, with some cases achieving national prominence.

Rapid Jumps in Medicare Spending Attract Feds' Eye

A 100% jump in spending for prescription drugs under Medicare Part B between 1992 and 1994 led to an analysis by the Office of the Inspector General within the Department of HHS. Among the conclusions reached in the recently issued report are these:

• Establish a drug rebate program.
• Revise or improve payment methods.
• Improve the coding system.
• Establish competitive bidding among pharmacies.

Drugs covered by Medicare Part B include those used in conjunction with durable medical equipment (such as parenteral nutrition or nebulizers), dialysis and transplantation agents, chemotherapy agents and other drugs for cancer patients, and certain vaccines. OIG believes that it could save up to $211 million through a manufacturer rebate program. Better coding systems would allow accurate tracking of rebates.

Better payment methods would focus on acquisition costs, rather than allowing pharmacies to use AWP. Competitive bidding could further lower pharmacy costs, OIG believes.

Black Eyes for Health Care

Many fraud cases are popping up against pharmacists and other health care providers. Some states have established special task forces to focus on the problem.

A recent search of the news articles available through America Online revealed several cases that have been picked up in the national media. In quoting articles from the Miami Herald, the Associated Press reported filing of a civil suit against a south Florida pharmacy alleging it defrauded Medicare of $25million to $50 million.

Other recent reports involved the following:

• Blue Cross and Blue Shield of Michigan said that its health care fraud investigation unit saved or recovered more than $20 million in 1996. Cases included a podiatrist who was required to publish an article about his fraud experience in the Kalamazoo Gazette and the Michigan Podiatric Journal; a dentist who paid $2,200 in fines and was ordered to not practice dentistry (he retired); and two pharmacy owners from whom Blue Cross recovered or saved $3 million.
• Meris Laboratories paid $5.2 million to settle charges it filed false claims for laboratory tests under Medicare and Medicaid.

Where to Find Help

With this wave of consternation sweeping over a major source of reimbursement for pharmacy services, managers may find help in a book released in February. The National Health Lawyers Association (NHLA) has published the second edition of Legal Issues in Healthcare Fraud and Abuse: Navigating the Uncertainties.

Lawyers Carrie Valiant and David E. Matyas look at the government's efforts to combat fraud and abuse in the nation's health care system. This 400-page edition introduces and provides an overview of the key federal, state, and private players in health care fraud enforcement. Readers will also find in-depth coverage pertaining to the Medicare/ Medicaid anti-kickback statute, federal physician self-referral proscriptions, false claims and other fraudulent billing activities, fraud and abuse issues that arise in managed care, state and private health care fraud initiatives, patient transfers/antidumping, and procedural issues in health care fraud investigations and enforcement. The authors devote particular attention to the antifraud issues of the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191), as well as the fraud and abuse issues regarding the managed care industry.

Prices of the book are $60 for NHLA members and $75 for nonmembers. To order, call Membership Services at 202-833-1100.

L. Michael Posey, Academics Editor