Report: Medicare drug program vulnerable to fraud

Crooks are taking advantage of lax oversight in Medicare's Part D prescription drug program to obtain highly addictive drugs including oxycodone, Ritalin, and methadone, according to results of a federal probe.

The report by an independent inspector says Medicare can't verify all the prescriptions it pays for, leaving the system open to exploitation by criminals using fake medical ID numbers and the identities of dead doctors.

The Centers for Medicare and Medicaid Services, which administer the federally funded health insurance program, isn't adequately confirming that prescriptions are actually written by physicians, according to the investigation by the Office of the Inspector General at the Department of Health and Human Services.

Pharmacies and other Medicare contractors are supposed to enter a number that identifies prescribers. But in many cases, that information is being left blank or assigned a dummy number, last week's report found. The missing information doesn't always indicate fraud and could include clerical errors, but without prescriber identifiers, it's hard for investigators to determine.

The report showed CMS paid $20.6 million for 228,000 prescriptions for so-called schedule II drugs with invalid prescriber IDs in 2007. CMS paid for about $1.6 billion worth of schedule II drugs during that same time period. Investigators said the prescriptions with invalid IDs represented a small portion, but are alarming because schedule II drugs include heavy-duty painkillers and stimulants that are frequently trafficked.

Critics say pharmacies are getting around safeguards in the system, making it nearly impossible for federal health officials to track whether a licensed doctor prescribed the drug and in what quantities.

"It's similar to placing a combination lock on a gate to protect what's inside but then allowing any combination to open the gate," said Robert Vito, a regional inspector general for the Department of Health and Human Services, during testimony before Congress last year.

The latest report comes several months after an OIG investigation showed Medicare Part D plans paid pharmacies $1.2 billion for 18 million prescription of all drug classes in 2007 with ID numbers that had been unlisted or deactivated from federal registries.

"Just as disturbing as the potential misuse of taxpayer dollars is the threat that these vulnerabilities in the Medicare prescription drug program pose to American communities struggling with illegal drug use," said Sen. Tom Carper, D-Del., who requested the investigation.

Investigators recommended that contractors not be paid for Schedule II prescriptions that have an invalid doctor ID number, but Medicare officials worried stricter oversight could hamper legitimate patients' access to medications.

The agency later agreed to validate all provider numbers and this month will tell contractors they will be required to use a DEA number or other valid prescriber identifier, spokesman Peter Ashkenaz said. Doctors must have a DEA number to prescribe Schedule II drugs.

Federal authorities frequently review prescription data looking for aberrant patterns that indicate fraud.

"We saw weird numbers that clearly didn't look like a true DEA number and through further investigation realized you can't identify who the doctors are in these cases," said Jeff Cohen, an auditor who helped with the investigation.

The DEA number is full of data that investigators can use to detect potential fraud in the Medicare program, which experts estimate costs taxpayers $60 billion to $90 billion a year.

Officials said one of the top invalid identifiers was a number repeatedly used by Medco Health Solutions, Inc., one of the nation's largest mail order pharmacies. An attorney for the New Jersey-based company confirmed the company used dummy numbers, but said it was because the company was changing its computer system to use a different type of number requested by Medicare officials.

"We were comfortable that the script was a real script written by a real doctor ... we have a lot of other ways that we check the validity of the script," said Medco attorney Elizabeth Ferguson.

Experts say crooks can easily swipe doctors' prescriber numbers.

One Miami-area pharmacy owner charged $1.8 million in bogus Medicare claims, writing phony prescriptions by stealing the identities of two dead doctors and another who was in prison, according to court records. Renier Vicente Rodriguez Fleitas was convicted of conspiracy to commit health care fraud and sentenced to three years in prison last month.