Fraud, Waste, and Abuse of Controlled Substances in Medicaid Program in Selected States

We found tens of thousands of Medicaid beneficiaries and providers  involved in potential fraudulent, wasteful, and abusive purchases of  controlled substances through the Medicaid program in the selected states  during fiscal years 2006 and 2007. Tens of Thousands of Medicaid Beneficiaries Visit Multiple Medical Practitioners to Obtain Controlled Substances

Approximately 65,000 Medicaid beneficiaries in the five states investigated  visited six or more doctors to acquire prescriptions for the same type of  controlled substances in the selected states during fiscal years 2006 and  2007. These individuals incurred approximately $63 million in Medicaid  costs for these drugs, which were painkillers, sedatives, and stimulants. In some cases, beneficiaries may have justifiable reasons for receiving  prescriptions from multiple medical practitioners, such as visiting  specialists or several doctors in the same medical group. In these situations, Medicaid beneficiaries were  likely seeing several medical practitioners to support and disguise their  addiction or to obtain drugs to fraudulently sell. First, the total we found does not include related costs associated with  obtaining prescriptions, such as visits to the doctor’s office and emergency  room. Controlled Substances Prescribed or Filled by Banned Providers

We found that 65 medical practitioners and pharmacies in the selected  states had been barred from federal health care programs, excluded from  these programs, or both, including Medicaid, when they wrote or filled  Medicaid prescriptions for controlled substances during fiscal years 2006  and 2007. In addition, our  analysis also found that Medicaid paid about $500,000 in Medicaid claims  based on controlled substance prescriptions “written” by over 1,200  doctors after they died. Examples of Fraud, Waste, and Abuse of Controlled Substances in Medicaid

In addition to performing the aggregate-level analysis discussed above, we  also performed in-depth investigations for 25 cases of fraudulent,  improper, and abusive actions related to the prescribing and dispensing of  controlled substances through the Medicaid program in the selected  states. This included at least $2,870 for  controlled substances that he received from the pharmacies. Improved Fraud Controls Could Better Prevent Abuse and Unnecessary Medicaid Program Expenditures

		CMS Conducts Limited Oversight of Controlled Substances in Medicaid Program

Although states are primarily responsible for the fight against Medicaid  fraud and abuse, CMS is responsible for overseeing state fraud and abuse  control activities. We did not investigate these beneficiaries for fraud or abuse. In states with PDMPs, a state agency collects and  maintains data relating to dispensed controlled substance prescriptions. Conclusions

Fraud and abuse related to controlled substances paid for by Medicaid  exist in the five selected states. Recommendations for Executive Action

To establish an effective fraud prevention system for the Medicaid  program, we recommend that the Administrator of CMS evaluate our  findings and consider issuing guidance to the state programs to provide  assurance that  claims processing systems prevent the processing of claims from  providers and pharmacies debarred from federal contracts (i.e., on the  EPLS), excluded from the Medicare and Medicaid programs (i.e., on  the LEIE), or both;    DUR and restricted recipient program requirements adequately  identify and prevent doctor shopping and other abuses of controlled  substances;  effective claims processing system are in place to periodically identify  both duplicate enrollments and deaths of Medicaid beneficiaries and to  prevent the approval of claims when appropriate; and  effective claims processing systems are in place to periodically identify  deaths of Medicaid providers and prevent the approval of claims when  appropriate.
Why GAO Did This Study

One significant cost to Medicaid is prescription drugs, which accounted for over $23 billion in fiscal year (FY) 2008, or about 7 percent of total Medicaid outlays. Many of these drugs are susceptible to abuse and include pain relievers and stimulants that are on the Drug Enforcement Administration's (DEA) Schedule of Controlled Substances. As part of the American Recovery and Reinvestment Act of 2009 (ARRA), the Medicaid program will receive about $87 billion in federal assistance based on a greater federal share of Medicaid spending. GAO was asked to determine (1) whether there are indications of fraud and abuse related to controlled substances paid for by Medicaid; (2) if so, examples of fraudulent, improper, and abusive activity; and (3) the effectiveness of internal controls that the federal government and selected states have in place to prevent fraud and abuse related to controlled substances. To meet these objectives, GAO analyzed Medicaid controlled substance claims for fraud and abuse indications for FY 2006 and 2007 from five selected states. GAO also interviewed federal and state officials and performed investigations.

What GAO Found

GAO found tens of thousands of Medicaid beneficiaries and providers involved in potential fraudulent purchases of controlled substances, abusive purchases of controlled substances, or both through the Medicaid program in California, Illinois, New York, North Carolina, and Texas. About 65,000 Medicaid beneficiaries in the five selected states acquired the same type of controlled substances from six or more different medical practitioners during fiscal years 2006 and 2007 with the majority of beneficiaries visiting from 6 to 10 medical practitioners. Such activities, known as doctor shopping, resulted in about $63 million in Medicaid payments and do not include medical costs (e.g., office visits) related to getting the prescriptions. In some cases, beneficiaries may have justifiable reasons for receiving prescriptions from multiple medical practitioners, such as visiting specialists or several doctors in the same medical group. However, GAO found that other beneficiaries obtained these drugs to support their addictions or to sell on the street. In addition, GAO found that Medicaid paid over $2 million in controlled substance prescriptions during fiscal years 2006 and 2007 that were written or filled by 65 medical practitioners and pharmacies barred, excluded, or both from federal health care programs, including Medicaid, for such offenses as illegally selling controlled substances. Finally, GAO found that according to Social Security Administration data, pharmacies filled controlled substance prescriptions of over 1,800 beneficiaries who were dead at that time. GAO performed in-depth investigations on 25 Medicaid cases and found fraudulent, improper, or abusive actions related to the prescribing and dispensing of controlled substances. These investigations uncovered other issues, such as doctors overprescribing medication and writing controlled substance prescriptions without having required DEA authorization. States are primarily responsible for the fight against Medicaid fraud; however, the selected states did not have a comprehensive fraud prevention framework to prevent fraud and abuse of controlled substances. CMS is responsible for overseeing state fraud and abuse control activities but has provided limited guidance to the states to prevent fraud and abuse of controlled substances.