	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. Second, the selected states did not identify the prescriber for many  Medicaid claims submitted to CMS. Controlled Substances Prescribed or Filled by Banned Providers

We found 65 medical practitioners and pharmacies in the selected states  had been barred or excluded from federal health care programs, including  Medicaid, when they wrote or filled Medicaid prescriptions for controlled  substances during fiscal years 2006 and 2007. Nevertheless, Medicaid  approved the claims at a cost of approximately $2.3 million. The offenses  that led to their exclusion from federal health programs included Medicaid  fraud and illegal diversion of controlled substances. Medicaid Paid for Controlled Substance Prescriptions Filled for Dead Beneficiaries or “Written” by Dead Doctors

Our analysis of matching Medicaid claims in the selected states with SSA’s  DMF found that controlled substance prescription claims to over 1,800  beneficiaries were filled after they died. Even though the selected state  programs stated that beneficiaries were promptly removed from Medicaid  following their deaths based on either SSA DMF matches or third party  information, these same state programs paid over $200,000 for controlled  substances during fiscal years 2006 and 2007 for postdeath controlled  substance prescription claims. 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 or  abusive actions related to the prescribing and dispensing of controlled  substances through the Medicaid program in the selected states. We have  referred certain cases to DEA and the selected states for further  investigation. CMS has provided limited guidance to the states on how  to improve the state’s control measures to prevent fraud and abuse of  controlled substances in the Medicaid program. Selected States Lack Comprehensive Fraud Prevention Framework for Controlled Substances

The selected states did not have a comprehensive fraud prevention  framework to prevent fraud and abuse of controlled substances paid for  by Medicaid. The establishment of effective fraud prevention controls by  the selected states is critical because the very nature of a beneficiary’s  medical need—to quickly obtain controlled substances to alleviate pain or  treat a serious medical condition—makes the Medicaid program  vulnerable to those attempting to obtain money or drugs they are not  entitled to receive. Preventive Controls: Fraud prevention is the most efficient and effective  means to minimize fraud, waste, and abuse. Thus, controls that prevent  fraudulent health care providers and individuals from entering the  Medicaid program or submitting claims are the most important element in  an effective fraud prevention program. Effective fraud prevention controls  require that where appropriate, organizations enter into data-sharing  arrangements with organizations to perform validation. System edit  checks (i.e., built-in electronic controls) are also crucial in identifying and  rejecting fraudulent enrollment applications or claims before payments  are disbursed. Specifically, we  recommended that the Administrator evaluate our findings and consider  issuing guidance to the state programs to provide assurance on the  following: (1) effective claims processing systems prevent the processing  of claims of all prescribing providers and dispensing pharmacies debarred  from federal contracts (i.e., EPLS) or excluded from the Medicare and  Medicaid programs (LEIE); (2) DUR and restricted recipient program  requirements adequately identify and prevent doctor shopping and other  abuses of controlled substances; (3) effective claims processing system  are in place to periodically identify both duplicate enrollments and deaths  of Medicaid beneficiaries and prevent the approval of claims when  appropriate; and (4) effective claims processing systems are in place to  periodically identify deaths of Medicaid providers and prevent the  approval of claims when appropriate. Thank you for the  opportunity to testify before the Subcommittee on some of the issues  addressed in our report on continuing indications of fraud and abuse  related to controlled substances paid for by Medicaid.
Why GAO Did This Study

This testimony discusses (1) continuing indications of fraud and abuse related to controlled substances paid for by Medicaid; (2) specific case study examples of fraudulent, improper, or abusive controlled substance activity; and (3) the effectiveness of internal controls that the federal government and selected states have in place to prevent and detect fraud and abuse related to controlled substances. To identify whether there are continuing indications of fraud and abuse related to controlled substances paid for by Medicaid, we obtained and analyzed Medicaid claims paid in fiscal years 2006 and 2007 from five states: California, Illinois, New York, North Carolina, and Texas. To identify indications of fraud and abuse related to controlled substances paid for by Medicaid, we obtained and analyzed Medicaid prescription claims data for these five states from the Centers for Medicare & Medicaid Services (CMS). To identify other potential fraud and improper payments, we compared the beneficiary and prescriber shown on the Medicaid claims to the Death Master Files (DMF) from the Social Security Administration (SSA) to identify deceased beneficiaries and prescribers. To identify claims that were improperly processed and paid by the Medicaid program because the federal government banned these prescribers and pharmacies from prescribing or dispensing to Medicaid beneficiaries, we compared the Medicaid prescription claims to the exclusion and debarment files from the Department of Health and Human Services Office of Inspector General (HHS OIG) and the General Services Administration (GSA). To develop specific case study examples in selected states, we identified 25 cases that illustrate the types of fraudulent, improper, or abusive controlled substance activity we found in the Medicaid program. To develop these cases, we interviewed pharmacies, prescribers, law enforcement officials, and beneficiaries, as appropriate, and also obtained and reviewed registration and enforcement action reports from the Drug Enforcement Administration (DEA) and HHS. To identify the effectiveness of internal controls that the federal government and selected states have in place to prevent and detect fraud and abuse related to controlled substances, we interviewed Medicaid officials from the selected state offices and CMS. More details on our scope and methodology can be found in our report that we issued today. We conducted this forensic audit from July 2008 to September 2009, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We conducted our related investigative work in accordance with standards prescribed by the Council of the Inspectors General on Integrity and Efficiency (CIGIE).

What GAO Found

We found 65 medical practitioners and pharmacies in the selected states had been barred or excluded from federal health care programs, including Medicaid, when they wrote or filled Medicaid prescriptions for controlled substances during fiscal years 2006 and 2007. Nevertheless, Medicaid approved the claims at a cost of approximately $2.3 million. The offenses that led to their exclusion from federal health programs included Medicaid fraud and illegal diversion of controlled substances. Our analysis of matching Medicaid claims in the selected states with SSA's DMF found that controlled substance prescription claims to over 1,800 beneficiaries were filled after they died. Even though the selected state programs stated that beneficiaries were promptly removed from Medicaid following their deaths based on either SSA DMF matches or third party information, these same state programs paid over $200,000 for controlled substances during fiscal years 2006 and 2007 for postdeath controlled substance prescription claims. 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. In addition to performing the aggregate-level analysis discussed above, we also performed in-depth investigations for 25 cases of fraudulent or abusive actions related to the prescribing and dispensing of controlled substances through the Medicaid program in the selected states. We have referred certain cases to DEA and the selected states for further investigation. The selected states did not have a comprehensive fraud prevention framework to prevent fraud and abuse of controlled substances paid for by Medicaid. The establishment of effective fraud prevention controls by the selected states is critical because the very nature of a beneficiary's medical need--to quickly obtain controlled substances to alleviate pain or treat a serious medical condition--makes the Medicaid program vulnerable to those attempting to obtain money or drugs they are not entitled to receive. Fraud prevention is the most efficient and effective means to minimize fraud, waste, and abuse. Thus, controls that prevent fraudulent health care providers and individuals from entering the Medicaid program or submitting claims are the most important element in an effective fraud prevention program. Effective fraud prevention controls require that where appropriate, organizations enter into data-sharing arrangements with organizations to perform validation. System edit checks (i.e., built-in electronic controls) are also crucial in identifying and rejecting fraudulent enrollment applications or claims before payments are disbursed.