Suspicious Billing Patterns Suggest Large Scale Medicare Fraud at Pharmacies

A report by the Health and Human Services (HHS) inspector general has revealed that $5.6 billion in Medicare funds have been paid out to 2,600 pharmacies that show suspicious billing patterns. For example, a single Kansas pharmacy billed Medicare for over 1,000 prescriptions each for just two patients in one year.

The report provides the first comprehensive investigation into Medicare billing practices among the nation’s pharmacies, according to the Huffington Post. The report does not prove that Medicare fraud is going on or identify what pharmacies are engaged in fraud, but the some of the billing patterns found in the investigation are, to say the least, questionable. Further scrutiny of pharmacy billing is expected to follow.

In building the report, the HHS analyzed every single claim submitted to Medicare in 2009 by all 59,000 retail pharmacies in the U.S. The total was almost 1 billion prescriptions. Statistical analysis was used to distinguish what appeared to be normal business from what looks like potential false claims against Medicare.

Medicare administrator Marilyn Tavenner claims that Medicare has its own anti-fraud watch dogs, and she points out that the report does not prove that fraud has occurred. The report only reveals suspicious billing practices. Nevertheless, the inspector general’s office stresses that the report’s findings are troubling and that the office will share the names of 2,637 pharmacies whose billing practices call for further scrutiny.

While only 4.4% of pharmacies engaged in questionable billing practices, that small percentage was not spread evenly over the country. For example, in Miami, Florida almost 20% of pharmacies are on the list for further scrutiny. Twelve percent of pharmacies in Los Angeles, California made the list, where a single pharmacy billed Medicare more than $8.4 million, or nine times the average pharmacy billing. This pharmacy billed an average of 116 prescriptions per Medicare beneficiary in 2009.

The report identifies eight strong indicators for identifying potential fraud, some of which are included below.

• Billing hundreds of prescriptions for a single Medicare beneficiary is obviously suspicious.
• Billing a high percentage of brand-name drugs may indicate the pharmacy is dispensing generic medications and billing for more expensive name brand drugs.
• Billing for an unusually high percentage of prescription refills may indicate that patients did not request or pick up the refills, but they were billed to Medicare and restocked on pharmacy shelves.

Waters & Kraus is a national firm with highly skilled lawyers practicing qui tam litigation in four offices, including Dallas, Los Angeles, San Francisco, and Baltimore. Our attorneys have decades of experience successfully representing whistleblowers in a variety of fraud cases. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.