CMS Could Improve Efforts To Prevent Waste, Fraud in Medicaid, GAO Report Says
CMS could do more to help states prevent waste and fraud in Medicaid, according to a Government Accountability Office report, the AP/Las Vegas Sun reports (Freking, AP/Las Vegas Sun, 6/28). The Senate Finance Committee on Tuesday began a two-day hearing on Medicaid (CQ HealthBeat, 6/28).
Leslie Aronovitz, director of health care for GAO, said during the hearing that CMS has only eight full-time employees who oversee antifraud efforts for Medicaid and the agency makes only seven or eight onsite visits annually to check up on states (AP/Las Vegas Sun, 6/28). Aronovitz also questioned a potential funding reduction for a pilot program that examines Medicaid billing by providers who have defrauded Medicare (CQ HealthBeat, 6/28). Aronovitz said, "We don't think that commitment to fraud and abuse control, in terms of helping the states, is there" (AP/Las Vegas Sun, 6/28).
Nicholas Messuri, president of the National Association of Medicaid Fraud Control Units, said, "You can't have two or three people thinking about these problems."
But CMS Medicaid Director Dennis Smith questioned the GAO view of the agency's oversight, adding, "I want to assure you our commitment to assuring the integrity of the Medicaid program is strong." He noted that the agency has 97 staff members onsite in each state to review potential fraud and in the last year reduced the number of states using improper tactics to boost federal Medicaid payments (CQ HealthBeat, 6/28).
Sen. Ron Wyden (D-Ore.) said, "What I want to see is a much more strategic approach to rooting out this fraud than such a reactive approach" (AP/Las Vegas Sun, 6/28).
Senate Finance Committee Chair Chuck Grassley (R-Iowa) on Tuesday said he will offer a proposal to improve oversight of Medicaid. Grassley said efforts must be made to end fraud such as "phantom stores delivering phantom services and goods all paid for with Medicaid dollars," in addition to stopping questionable accounting tactics used by states to gain extra federal dollars.
Grassley said he will send letters to governors warning about "Medicaid-maximization" tactics used by some consultants to gain extra Medicaid dollars. Grassley added that antifraud efforts could be improved by having CMS calculate an "improper payment rate" in Medicaid each year (CQ HealthBeat, 6/28).
Medicaid substantially overpays for prescription drugs, possibly by billions of dollars each year, according to reports by the HHS Office of Inspector General to be released Wednesday at a Senate Finance Committee hearing, the Los Angeles Times reports. The reports found that government pricing formulas intended to control prescription drug costs "have had the opposite effect," according to the Times.
For one of the reports, auditors examined the 20 generic drugs on which Medicaid spent the most in 2004. Between July and September last year, Medicaid spent about $141 million on the drugs. The auditors found that even if Medicaid had paid 50% more than the market price, it would have saved more than half of the $141 million in costs. One of the reports estimated that eliminating overpayments for generic drugs could save as much as $1.2 billion annually.
Auditors also compared the listed wholesale prices for thousands of drugs with actual market prices paid by wholesalers to pharmacies, and they found that Medicaid payments were higher than average market prices that drug makers received from wholesalers 98% of the time. The median market price for generic drugs was 70% lower than prices used by Medicaid to calculate its repayment, and the median market price for brand-name drugs was 23% lower.
Congressional staff members said the total cost to Medicaid for prescription drug overpayments could not be determined because federal oversight of the program is insufficient (Alonso-Zaldivar, Los Angeles Times, 6/29).
The reports provide "fresh support" for legislators who wish to "change the way those drug prices are set," the Journal reports (Lueck, Wall Street Journal, 6/29).
Grassley on Tuesday said Medicaid could save $4 billion over five years if the drug payment formula was based on published price lists instead of market rates. Grassley added, "We should be able to find savings in the Medicaid program without affecting coverage. We know we're overpaying for drugs."
Smith in written testimony said that manufacturers keep their list prices artificially inflated to attract pharmacies to stock their drugs. Smith said, "Pharmacies will stock and fill generic prescriptions with products that have the widest spread, thus resulting in the greatest profit" (Los Angeles Times, 6/29).
John Coster, vice president of policy for the National Association of Chain Drug Stores, said Congress should not reduce incentives for pharmacists to dispense generic drugs because greater use of brand-name drugs would be more costly to Medicaid. Coster said the inspector general "doesn't necessarily consider those factors," adding that the inspector general "would do a better service to Congress by looking at total reimbursement" (Wall Street Journal, 6/29).
Ken Johnson, senior vice president of communications for the Pharmaceutical Research and Manufacturers of America, said, "The cost of prescription drugs to the system is grossly exaggerated" (Los Angeles Times, 6/29).
In related news, KPCC's "AirTalk" on Tuesday included a discussion of Gov. Arnold Schwarzenegger's (R) administration's announcement last week of an agreement with the federal government that would increase federal matching funds for Medi-Cal by as much as $3.3 billion over five years and enroll about 500,000 beneficiaries in managed care plans.
Guests on the program included Marilyn Holle, senior attorney at Protection & Advocacy, Inc.; Dr. Brian Johnston, trustee of the California Medical Association; Howard Kahn, CEO of L.A. Care Health Plan; and Stan Rosenstein, deputy director of the Department of Health Services (Beaupre, "AirTalk," KPCC, 6/28). The complete segment is available online in RealPlayer.