All four of the states included in our review— Arizona, Florida, Michigan, and New Jersey—had MCO arrangements in  place. About 700 of  the 5.4 million beneficiaries we reviewed received more than a 1-year  supply (a 480-day supply) of the same drug in 2011 at a cost to   About 50 of these beneficiaries  Medicaid of at least $1.6 million.received more than 2 years’ worth (a 730-day supply) of the same  drug. According to CMS data, more than 16,000 beneficiaries out  of the 5.4 million we reviewed visited five or more prescribers to  receive prescriptions for antipsychotics or respiratory medications  valued at about $33 million.15 prescribers and 10 pharmacies to obtain various antipsychotics at  a cost to Medicaid of about $23,000 in 1 year. Drug Utilization Reviews Help States Detect and Prevent Unnecessary Prescriptions, and Additional Reporting Would Help CMS Determine Whether More Guidance on Controls Is Needed

CMS monitors state Medicaid programs’ efforts to prevent and detect  instances of prescription-drug fraud in Medicaid, but we identified areas  that may require additional guidance for oversight. Required by federal  law, the Medicaid Drug Utilization Review (DUR) program is one process  states use to promote patient safety and monitor prescription-drug activity  for fraud, waste, and abuse. In the first phase (prospective DUR) the  states use tools such as point-of-sale edits, preferred-drug lists, and  eligibility screening to promote patient safety and avoid abuse. The  second phase (retrospective DUR) involves ongoing and periodic  examination of claims data to identify patterns of fraud, abuse, gross  overuse, or medically unnecessary care and implements corrective action  when needed. CMS does not collect information about lock-in programs for  noncontrolled substances or automatic refill prohibitions, despite the  concerns detailed below. Lock-In Programs (also known as Restricted Recipient  Programs). Pharmacies may automatically refill  prescriptions for certain medications without any customer action. Concerns with pharmacy  automatic refill include the potential for stockpiling, continued fill of  discontinued medications, and an increase in the cost and waste of  prescription medications. Currently, Florida and Arizona are the states in our review that do not  allow automatic refills. Lock-in  programs are an important tool that can be used to address doctor  shopping by locking beneficiaries who have abused the Medicaid  program in to one prescriber, one pharmacy, or both for receiving  prescriptions. Recommendation for Executive Action

To enhance monitoring of potentially wasteful or abusive practices in the  Medicaid program, we recommend that the Acting Administrator of CMS  require states to report to CMS whether their state has lock-in programs  for abusers of noncontrolled substances and prohibitions on pharmacy  automatic refills, and examine the results to determine whether additional  guidance is appropriate. In its written comments, HHS concurred with our recommendation and  stated that it will consider requiring states to report on lock-in programs  for abusers of noncontrolled substances and pharmacy automatic refill  policies. Appendix I: Objectives, Scope, and Methodology

In this report, we (1) evaluated the reliability of Medicaid data from the  Centers for Medicare & Medicaid (CMS) and selected states for the  purpose of identifying indicators of potential fraud or abuse; (2) identified  and analyzed indicators, if any, of potentially fraudulent or abusive  activities related to prescription drugs in Medicaid; and (3) examined the  extent to which federal and selected state oversight policies, controls, and  processes are designed to prevent and detect indicators of prescription- drug fraud in Medicaid. On the basis of our discussions with agency officials and our own  To identify indicators of potentially fraudulent or abusive activities related  to prescription drugs in Medicaid, we obtained and analyzed Medicaid  claims paid in fiscal year 2011, the most-recent period from which we  could draw reliable data, for four states: Arizona, Florida, Michigan and  New Jersey. These states accounted for about 13 percent of the federal  share of fiscal year 2011 Medicaid expenditures. These states were  selected primarily because they had consistently comparable and reliable  data and were among the states with the highest Medicaid expenditures. The results of our analysis of these states are not generalizable to other  states.
Why GAO Did This Study

Medicaid is a significant expenditure for the federal government and the states, with total federal outlays of $310 billion in fiscal year 2014. CMS reported an estimated $17.5 billion in potentially improper payments for the Medicaid program in 2014.
GAO was asked to review pharmacy-related program-integrity efforts at selected states. Among other reporting objectives, this report (1) identifies and analyzes indicators of potentially fraudulent or abusive prescribing activities in fiscal year 2011, and (2) examines the extent to which federal and state oversight policies, controls, and processes are in place to prevent and detect instances of prescription-drug fraud and abuse.
GAO analyzed Medicaid claims paid in fiscal year 2011, the most-recent reliable data available, for four states: Arizona, Florida, Michigan, and New Jersey. These states were chosen, in part, because they were among those with the highest Medicaid expenditures; the results are not generalizable to all states. GAO performed data matching with various databases to identify indicators of potential fraud, reviewed CMS and state Medicaid program-integrity policies, and interviewed CMS and state officials performing oversight functions.

What GAO Found

GAO found indicators of potential prescription-medication fraud and abuse among thousands of Medicaid beneficiaries and hundreds of prescribers during fiscal year 2011—the most-recent year for which reliable data were available in four selected states: Arizona, Florida, Michigan, and New Jersey. These states accounted for about 13 percent of all fiscal year 2011 Medicaid payments. Specifically, in these four states, GAO found the following:
More than 16,000 of the 5.4 million beneficiaries potentially engaged in “doctor shopping,” by visiting five or more doctors to receive prescriptions for antipsychotics or respiratory medications valued at about $33 million.
About 700 beneficiaries received more than a 1-year supply of the same drug in 2011 at a cost to Medicaid of at least $1.6 million. This is an indicator of diversion, which is the redirection of prescription drugs for illegitimate purposes.
As required by federal law, the Medicaid Drug Utilization Review program is a two-phase review process states use to promote safety while also monitoring prescription-drug activity for fraud. Federal law requires each state to report on the operation of its review program, a key monitoring tool that the Centers for Medicare & Medicaid Services (CMS) uses to oversee the review process in states, but GAO identified additional actions that could improve oversight. In the first phase, states use tools and eligibility screening to promote patient safety and avoid abuse before the drugs are dispensed. The second phase involves ongoing and periodic examination of claims data to identify patterns of fraud, abuse, gross overuse, or medically unnecessary care, and implement corrective action when needed.
However, GAO identified two potential controls that are not included in CMS's current reporting requirements:
Lock-in programs for noncontrolled substances. Lock-in programs address doctor shopping by restricting beneficiaries who have abused the Medicaid program to one health-care provider, one pharmacy, or both, for receiving prescriptions. Lock-in programs have typically been used on controlled substances. Expanding lock-in programs that currently focus on controlled substances to restrict abusers of noncontrolled substances, such as the human immunodeficiency virus medications Atripla and Truvada, to a single prescriber or pharmacy may help address potential fraud and abuse.
Prohibition of automatic refills. Pharmacies permitting automatic refills automatically refill prescriptions for certain medications without any customer action. Concerns with pharmacy automatic refill include the potential for stockpiling, continued fill of discontinued medications, and increased cost and waste of prescription medications. Two states GAO reviewed—Florida and Arizona—have prohibited the practice.
CMS does not collect information about lock-in programs for noncontrolled substances or automatic refill prohibitions, but doing so would help the agency determine whether additional guidance is needed.

What GAO Recommends

GAO recommends that CMS require states to report information about specific drug-utilization review controls to determine whether additional guidance is needed. The agency concurred with the recommendation and stated that it will consider requiring states to report on these areas.