[Senate Hearing 113-244]
[From the U.S. Government Publishing Office]
S. Hrg. 113-244
CURBING PRESCRIPTION DRUG ABUSE IN MEDICARE
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HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
JUNE 24, 2013
__________
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota JEFF CHIESA, New Jersey
Richard J. Kessler, Staff Director
John P. Kilvington, Deputy Staff Director
Peter P. Tyler, Senior Professional Staff Member
Walter S. Ochinko, GAO Detailee
Keith B. Ashdown, Minority Staff Director
Christopher J. Barkley, Minority Deputy Staff Director
Josh Trent, Health Policy Advisor, Office of Senator Coburn
Trina D. Shiffman, Chief Clerk
Laura W. Kilbride, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Carper............................................... 1
Senator Coburn............................................... 3
Senator Chisea............................................... 4
Prepared statements:
Senator Carper............................................... 37
WITNESSES
Monday, June 24, 2013
Joseph T. Rannazzisi, Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration, U.S.
Department of Justice.......................................... 6
Jonathan Blum, Acting Principal Deputy Administrator and Director
of the Center for Medicare, Centers for Medicare and Medicaid
Services, U.S. Department of Health and Human Services......... 8
Gary Cantrell, Deputy Inspector General for Investigations,
Office of Inspector General, U.S. Department of Health and
Human Services; and Stuart Wright, Deputy Inspector General for
Evaluation and Inspections, Office of Inspector General, U.S.
Department of Health and Human Services........................ 10
Alanna M. Lavelle, Director, Special Investigations, WellPoint,
Inc............................................................ 12
Alphabetical List of Witnesses
Blum, Jonathan:
Testimony.................................................... 8
Prepared statement........................................... 56
Cantrell, Gary:
Testimony.................................................... 10
Prepared statement........................................... 72
Lavelle, Alanna M.:
Testimony.................................................... 12
Prepared statement........................................... 82
Rannazzisi, Joseph T.:
Testimony.................................................... 6
Prepared statement........................................... 43
Wright, Stuart:
Testimony.................................................... 10
Prepared statement........................................... 72
APPENDIX
List referenced by Senator Carper................................ 41
Statement of the National Community Pharmacists Association...... 97
Responses to post-hearing questions for the Record:
Mr. Rannazzisi............................................... 100
Mr. Blum..................................................... 103
Mr. Cantrell and Mr. Wright.................................. 117
Ms. Lavelle.................................................. 123
CURBING PRESCRIPTION DRUG ABUSE IN MEDICARE
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MONDAY, JUNE 24, 2013
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 3:08 p.m., in
room SD-342, Dirksen Senate Office Building, Hon. Thomas R.
Carper, Chairman of the Committee, presiding.
Present: Senators Carper, Coburn, and Chiesa.
OPENING STATEMENT OF CHAIRMAN CARPER
Chairman Carper. Well, a room as quiet as this one probably
does not need me to call everyone to order, but this hearing
will come to order, and I want to welcome our witnesses. I
apologize for running a few minutes late, but thank you for
being here and for your preparation and attendance today for an
important hearing.
Our colleagues are coming in from across the country this
afternoon, and we will be joined by a number of them as this
hearing proceeds.
Today we are going to hear from several witnesses about the
Medicare Prescription Drug Program and its vulnerability to
waste, to fraud, and to abuse.
Medicare, as we all know, is a critical component of health
care in our Nation, and the Prescription Drug Program, which we
know as Part D, began about 7 years ago, in 2006. We are now in
its seventh year. The overall reviews of the program have been
generally positive, more than 31 million seniors participating.
The lion's share of them like the program. However, Congress
must ensure that the $60 billion a year program works
effectively and efficiently. Unfortunately, Medicare, including
Part D, is not as effective or efficient as it could or should
be when it comes to preventing waste and fraud.
Each year, the Federal Government lists the estimates of
overpayments, underpayments, undocumented expenditures, and
other kinds of mistakes made by each agency. The total for
fiscal year (FY) 2012 was more than $100 billion. Medicare has
the largest reported share of that total at $44.3 billion, and
the amount wasted in Medicare's Prescription Drug Program alone
is approaching $1.6 billion.
In addition, health care is too often the focus of
criminals who wish to take advantage of the system. Whether the
care is provided through government programs or the private
sector, attempts to defraud the health care system are on the
rise. There are estimates for Medicare fraud in the tens of
billions of dollars.
We cannot afford to tolerate these levels of waste and
fraud in our health care programs. As everyone in this room
knows, we have faced record budget deficits in recent years,
and while they are coming down, they are still way too large.
Given the debt and deficit problems that our country faces and
the tough work ahead of us as we attempt to address those
challenges, we need to focus like a laser on the avoidable,
expensive, and, frankly, unacceptable issues we will be
discussing here today.
During a Subcommittee hearing that I chaired in the fall of
2011--and I might be mistaken, but I think Dr. Coburn was there
as well. I am not positive. I think you were, because of your
great interest. But the Government Accountability Office (GAO)
that day testified that they identified about 170,000
beneficiaries who acquired the same class of frequently abused
drugs, primarily hydrocodone and oxycodone, from five or more
medical practitioners at a taxpayer cost of almost $150
million. In two egregious examples, individuals received
prescriptions from 87 and 58 different medical practitioners.
This followed a similar study by the GAO in 2009 showing the
same problem in Medicaid.
This fraud technique, called ``doctor shopping,'' involves
recipients going to multiple doctors for the same type of drug.
In these cases, beneficiaries are almost always either feeding
an addiction or selling the drugs they do not use on the
street. Drug dealers make the profits while the Federal
Government foots the bill.
But the problem of prescription drug fraud is about more
than just a loss of taxpayer dollars. It is also about the toll
that drug abuse takes on people. It is of great concern that
one out of seven high school seniors in America has abused, or
is abusing, prescription drugs. In fact, more Americans abuse
prescription drugs than the number who abuse cocaine, heroin,
hallucinogens, Ecstasy, and inhalants combined.
The Department of--do we have a chart here anywhere?
The Department of Health and Human Services (HHS),
specifically the Centers for Medicare & Medicaid Services
(CMS), has established a set of oversight procedures to protect
the Medicare Prescription Drug Program and its beneficiaries
from fraud and waste. This is a team effort involving Medicare
officials, law enforcement at the Federal, the State, and the
local level, the Medicare prescription drug plans (PDPs),
pharmacies and doctors, and the beneficiaries themselves.
Unfortunately, based on today's testimony by the Health and
Human Services Office of Inspector General (HHS OIG), there is
still a lot more work to do.
On Thursday of last week, the Inspector General (IG)
released a report detailing over 700 general care practitioners
who had questionable Medicare Part D prescribing patterns. For
example, while prescription drugs with a high abuse potential
constitute on average only 2 percent of most general
practitioners' prescriptions, they constituted 78 percent for
one general practitioner identified in the report.
This physician prescribed a year's supply of three
painkillers, such as morphine and codeine, for just one
Medicare beneficiary. Another general practitioner's
prescriptions were filled at 872 pharmacies in 47 States,
including Guam.
Today we will learn about an even more clear failure of
oversight. The Inspector General is reporting that Medicare is
paying for prescription drugs prescribed not by physicians or
others authorized to prescribe those drugs, but by people with
no authority to prescribe at all. Apparently, 400,000
prescriptions totaling some $31.6 million were prescribed by
individuals who appear to be massage therapists, interpreters,
music and art therapists, and contractors who perform health
care-related home repairs. And you see the list\1\ there to my
left.
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\1\ List referenced by Senator Carper appears in the Appendix on
page 41.
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The most disturbing finding in the Inspector General's
report is that 29,000 of the prescriptions were for controlled
substances, including drugs with a high potential for abuse,
such as oxycodone. One contractor alone wrote 79 prescriptions
for commonly abused painkillers.
Obviously, these numbers and examples show clear indication
of abuse and fraud. As a recovering Governor, I understand the
unique challenges that come along with running a major program
like Medicare. However, we simply have to do a better job in
overseeing the Medicare Prescription Drug Program.
I will continue to work with Dr. Coburn and with our
colleagues and the Administration to ensure that programs
across the Federal Government are improving management
functions, monitoring results, and finding ways to do more with
less in almost everything that we do. A key part of these
efforts will involve program managers sharpening their pencils
and, in conjunction with our private sector partners,
preventing expensive and harmful waste and fraud. We must use
every tool available to make sure that our health care programs
help those who need medications rather than feed drug
addictions or fraudulent profiteering. By working together on
this latest in a series of commonsense initiatives, we can take
another important step forward in earning their trust once
again.
And with that, let me turn to our Ranking Member, Dr.
Coburn, for any comments he might like to make. Dr. Coburn,
welcome.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. Thank you, Senator Carper. Welcome to each
of you.
This IG report is pretty revealing, and I am sitting here
thinking about what we will be doing next year on the basis of
the recommendations not being followed in the IG report,
because that seems to be the case most often with CMS. And so
my question is not is it happening. It is: What is wrong with
the recommendations that the IG is making in this? It fits with
common sense. And if we come back a year from now, Chairman
Carper, and this stuff has not been done and the contractor is
not either fired or made to do what they are supposed to do,
what we ought to do is see about cleaning house everywhere at
CMS. This is just another layer in a continuing saga of not
applying common sense and OIG recommendations to fix problems.
And so I look forward to hearing the testimony. The problem
is real. It is not just a problem of wasted dollars. It is
wasted lives that Medicare is allowing through CMS, and the
fact that people have identification in Medicare and we have a
contractor that is not catching the fraud, not revealing the
fraud, not prosecuting the fraud just says that we are wasting
that contract money based on what we have seen in the IG report
versus what the contractor has done.
So my hope is that we are not back here in a year, that we
can say, ``Way to go, CMS, you actually followed what the IG
did, recommended,'' and they actually put it into action and we
will not see this happening again.
Chairman Carper. We have a new member on board. This is the
first hearing he has joined us. He comes from the State of New
Jersey. He is my neighbor across the Delaware River. Jeff, we
are honored to have you join us here in the U.S. Senate and
delighted that you have ended up on our Committee. Normally
only the Chair and Ranking Member give an opening statement,
but since this is a special day for you. And you come to it I
think as the Attorney General of your State, if I am not
mistaken. Is that correct?
Senator Chiesa. Yes, it is.
Chairman Carper. If you would like to make just a brief
statement, please feel free. We are happy to see you and happy
to have you on our team.
OPENING STATEMENT OF SENATOR CHIESA
Senator Chiesa. Well, thank you so much for that warm
welcome, Mr. Chairman. I would just say that we took a lot of
steps in New Jersey because we recognize how catastrophic the
prescription drug issue is.
I think the Chairman talked about the fact that we think
about heroin and we think about cocaine as things that kill
people, and we are realizing now that prescription drug abuse
is killing more people than those drugs are. So while we live
in a State that tells us that these drugs are safe, they are
only safe if we use them exactly as we are supposed to and if
the people that are giving us the drugs are doing it for the
right reasons.
So I also look forward to this conversation today, a
continuing conversation that is incredibly important to the
safety of everybody who lives here.
Thank you, Mr. Chairman.
Chairman Carper. Thank you very much. And, again, a warm
welcome.
Our first witness is a witness whose name is probably
frequently butchered, and I am going to try not to do it today,
but is it ``Rannazzisi''?
Mr. Rannazzisi. That would be perfect.
Chairman Carper. OK. I am not often perfect. Joseph T.
Rannazzisi, Drug----
Senator Coburn. I second that.
Chairman Carper. Pardon?
Senator Coburn. I second that.
Chairman Carper. Dr. Coburn said he can second that. He
sure can. [Laughter.]
Drug Enforcement Administration (DEA), Deputy Assistant
Administrator of the Office of Diversion Control at the Drug
Enforcement Administration. As the Deputy Assistant
Administrator, he is responsible for overseeing and
coordinating major diversion investigations, drafting and
promulgating regulations, and working with the pharmaceutical
industry, international governments, State governments and
other Federal agencies, and with local law enforcement. He
holds a B.S. degree in pharmacy from Butler University and a
J.D. from the Detroit College of Law at Michigan State
University. We are delighted to see you today. Thanks for
joining us.
Jonathan Blum very nice to see you--Acting Principal Deputy
Administrator and Director of the Center for Medicare at the
Centers for Medicare & Medicaid Services. He is responsible for
overseeing the regulations and payment of Medicare providers
and plans, including the private plans that participate in the
Medicare Prescription Drug Program. During the development of
the Medicare prescription drug benefit, Mr. Blum was an adviser
to the Senate Finance Committee working on prescription drugs
and other Medicare policies. He was also a Medicare program
analyst at the Office of Management and Budget (OMB). He has
testified before this Committee before, as well as the Finance
Committee before, and we welcome your appearance and testimony
today.
I think I have to introduce the two OIG witnesses together,
and I believe you are going to be splitting your testimony
time. One is Gary Cantrell, Mr. Cantrell, nice to see you, and
the other is Stuart Wright. We welcome both of you. They are
from the Health and Human Services Office of Inspector General,
where Mr. Cantrell serves as the Deputy Inspector General for
Investigations. Mr. Cantrell has served in various leadership
positions within the Office of Investigations where he advanced
the office's use of data analysis in health care fraud
detections. Mr. Cantrell has B.A.s in criminal justice from
Georgia State and in computer and information science from the
University of Maryland (UMD).
Mr. Wright is the Deputy Inspector General for Evaluations
and Inspections. Mr. Wright joined the Office of Inspector
General in 1987 and has held a variety of positions, including
Chief of Medicare and Medicaid Branch and Director of the
Program Evaluation Division, and is a graduate of the
University of Rochester where he earned a B.S. in economics and
political science and a master's in public policy. Thank you
both for joining us today.
Finally, Alanna Lavelle from WellPoint is the last witness,
Director of Special Investigations for WellPoint, a large
health care company that also participates in the Medicare
Prescription Drug Program. She joined WellPoint in 2004 after
24 months of service with the Federal Bureau of Investigations
(FBI)--no, I am just kidding. [Laughter.]
Twenty five years of service with the FBI, including
experience fighting health care fraud and bioterrorism. In
addition to her duties at WellPoint, she also serves as the
Chair of the National Health Care Anti-Fraud Association, which
brings together the private and public sectors. Her resume
suggests that she is eminently well qualified to testify, and
we are grateful to you for being here today.
With that having been said, others of our panel are going
to join us here throughout the afternoon. We start voting at
5:30. I expect we will be done by then. We appreciate your
being here.
I am going to ask you to take about 5 minutes to summarize
your testimony. If you want to go a little beyond that, that is
OK. If you go way beyond that, it is not. So please proceed,
Mr. Rannazzisi.
TESTIMONY OF JOSEPH T. RANNAZZISI,\1\ DEPUTY ASSISTANT
ADMINISTRATOR, OFFICE OF DIVERSION CONTROL, DRUG ENFORCEMENT
ADMINISTRATION, U.S. DEPARTMENT OF JUSTICE
Mr. Rannazzisi. Good afternoon, Chairman Carper, Ranking
Member Coburn, Senator Chiesa. On behalf of Administrator
Michele Leonhart and the men and women of the Drug Enforcement
Administration, thank you for the opportunity to appear today
to discuss the epidemic of pharmaceutical controlled substance
abuse and the diversion of pharmaceutical controlled
substances.
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\1\ The prepared statement of Mr. Rannazzisi appears in the
Appendix on page 43.
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The abuse of prescription drugs continues to plague the
Nation at an alarming rate, crossing all age, gender, race, and
socioeconomic boundaries. Studies show substantially high
levels in the abuse of these drugs and the adverse consequences
resulting from abuse. According to the most recent National
Survey on Drug Use and Health (NSDUH), in 2011 there were
approximately 6.1 million people over the age of 12 who used
prescription-type psychotherapeutic drugs for non-medical
reasons during the past month. The devastating effects of this
statistic can be demonstrated by a report released in 2013 by
the Drug Abuse Warning Network, which revealed a 153-percent
increase in emergency room (ER) visits from 2004 to 2011
attributable to narcotic pain relievers. Oxycodone and
hydrocodone were the two opiates most frequently implicated in
these ER visits.
As these substances are increasingly diverted and abused,
the number of pharmaceutical overdose deaths has
correspondingly increased. A Centers for Disease Control (CDC)
analysis revealed 38,329 people died from a drug overdose in
the United States in 2010. Nearly 60 percent of the drug
overdose deaths involved pharmaceuticals. Again, opioid
analgesics, oxycodone, hydrocodone, and methadone were involved
in about three of every four pharmaceutical overdose deaths.
Oxycodone and hydrocodone, by the way, are the top two diverted
drugs in the United States.
The diversion and abuse of pharmaceutical controlled
substances is a problem that cannot be addressed through law
enforcement action alone. A multidisciplinary approach is
necessary to address the threat. The Office of National Drug
Control Policy's 2011 Prescription Drug Abuse Prevention Plan
has outlined a multipronged approach that includes education,
prescription monitoring, disposal, and enforcement to
comprehensively address the national epidemic. DEA plays an
important role in education, disposal, and enforcement.
DEA participates in and hosts numerous education programs
for registrants, health care providers, and community groups.
In 2011, we began a program to educate health care
professionals on the front lines of diversion, pharmacies and
pharmacy techs, on diversion trends and their role in
preventing diversion. These Pharmacy Diversion Awareness
Conferences (PDACs), have been held in nine States thus far,
providing continuing education to nearly 4,000 pharmacists and
techs. We just finished a controlled substance manufacturer,
importer, and exporter conference last week, training almost
400 corporate representatives. We also continue to present at
State and local community meetings and law enforcement programs
throughout the country.
The accumulation of unwanted and unused prescription drugs
in the household medicine cabinet continues to provide easy
access to non-medical users for abuse, accidental ingestion,
and illegal distribution. This easy access to drug seekers,
especially teenagers, has undoubtedly contributed to the
increase in the abuse of these substances. DEA has responded by
coordinating national take-back events with our law enforcement
partners since September 2010. These events have resulted in
the destruction of approximately 2.8 million pounds of unwanted
prescription drugs. DEA is finalizing regulations implementing
the Secure and Responsible Drug Disposal Act of 2010, which
authorizes additional ways for Americans to dispose of their
unwanted and expired controlled substance medications in a
secure and responsible manner.
The diversion of controlled substances occurs at all levels
of the supply chain, and we continue to identify, target, and
investigate violators who cause millions of dosage units of
controlled substances to be diverted due to noncompliance with
the Controlled Substances Act (CSA) and its implementing
regulations. Noncompliance is allowing dangerous
pharmaceuticals to pour into the illicit market, posing an
imminent danger to public health and safety.
Pharmaceutical diversion can be prevented if DEA
registrants fulfill their obligations under the Controlled
Substances Act. When the system breaks down, massive diversion
occurs, as seen in domestic Internet drug distribution schemes
a few years ago and the rogue pain clinics operating in
Florida, Georgia, and Tennessee today. DEA rigorously pursues
criminal, administrative, and civil actions against registrants
who fail to comply with the CSA and their implementing
regulations.
On June 11, 2013, Walgreens Corporation, the Nation's
largest drug store chain, agreed to pay the largest civil fine
in DEA history, about $80 million, resolving DEA's
administrative actions and a civil investigation by DEA and the
United States Attorney regarding the Jupiter, Florida,
Distribution Center and six retail pharmacies in Florida. This
is only the latest in a series of enforcement and regulatory
operations focused on all levels of the registrant population
within the drug delivery system. They were not complying with
the CSA. All levels of the distribution chain, from
manufacturing, wholesalers, retailers, pharmacies, and
practitioners, are being closely scrutinized to ensure
compliance with the act.
Controlled substance pharmaceuticals that are illegally
obtained through health care fraud or abuse of the Medicaid
program is yet another method of diversion that ultimately
weakens the integrity of the closed system of distribution.
While these violations generally occur outside of DEA's
jurisdiction, there are occasions when, while investigating
violations of the Controlled Substances Act, DEA agents and
investigators uncover violations involving health care fraud.
This information is shared with investigators from the
Department of Health and Human Services, the Federal Bureau of
Investigation, and other State and local enforcement and
regulatory bodies with relevant Federal and State authorities.
The importance of these cooperative and information-sharing
relationships is reflected in the fact that HHS OIG and the FBI
and others have investigated assigned or are working on an ad
hoc basis with some of the Tactical Diversion Squads (TDSs)
throughout the country. This collaborative effort facilitates
information sharing between all the involved agencies and
allows investigators to easily draw upon each other's expertise
when conducting investigations and avoiding duplication of
effort.
In conclusion, I want to assure you that DEA is working
closely with our Federal, State, and local partners in
combating drug diversion and, when encountered, health care
fraud as part of the administration's comprehensive approach to
combating prescription drug abuse. DEA is committed to
balancing the need for diversion control and the enforcement
with the need for access to these important medications by
legitimate users.
Thank you for the opportunity to appear today, and I look
forward to your questions.
Chairman Carper. Thanks very much for that testimony.
Mr. Blum, you are recognized. Welcome.
TESTIMONY OF JONATHAN BLUM,\1\ ACTING PRINCIPAL DEPUTY
ADMINISTRATOR AND DIRECTOR OF THE CENTER FOR MEDICARE, CENTERS
FOR MEDICARE & MEDICAID SERVICES, U.S. DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Mr. Blum. Chairman Carper, Ranking Member Coburn, Senator
Chiesa, thank you for inviting CMS to testify at this hearing
and for your focus on the Part D program. I want to assure this
Committee that CMS takes very seriously the concerns being
raised today. Not only does inappropriate prescribing weaken
the fiscal integrity of the Part D program, but it places our
beneficiaries in harm's way.
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\1\ The prepared statement of Mr. Blum appears in the Appendix on
page 56
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CMS sincerely thanks the OIG for its work, and we welcome
further oversight to help us improve the Part D program. We
have taken many steps to reduce waste, fraud, and abuse in the
Part D program, but clearly we can and should do more to take
further steps.
To be sure, the Medicare Part D program is stronger than
ever. It has dramatically lowered Medicare beneficiaries' out-
of-pocket costs since 2006. Due to strong management by CMS and
our plan partners, its total costs are lower than what the
Congressional Budget Office (CBO) and our actuaries projected
when the benefit was passed in 2003. In many respects, Part D
sets the standard for all payers for cost containment measures.
However, its statutory construct of operating the program
through hundreds of Part D plan sponsors presents
vulnerabilities, and like all payers, public and private, Part
D has seen rapid growth in payments for Schedule II pain
medications.
We know that no one agency can solve these challenges, and
that it will take resources from all levels of the government,
Federal and State, and the private sector to solve this
problem.
CMS sees its role as the following:
No. 1, to leverage CMS' data resources of complete Part D
claims to spot outlier prescribing and share this information
with our partners in as real time as possible.
No. 2, to hold sponsors, prescribers, pharmacies, and our
contractors accountable for prescribing that is consistent with
our goals and values. Those that violate our standards should
expect to no longer have a relationship with the Medicare
program.
No. 3, to support this Committee and the Congress in
crafting further legislation to give the Federal Government
more tools to address prescribing fraud.
Over the past several years, CMS has made some important
changes to our policies and operations not reflective in 2009
claims files. Specifically, CMS has changed our rules to
require all Part D drug claims to have a valid national
provider number attached to it. Already in the first quarter of
2013, 99.6 percent of all Part D claims were compliant with
this requirement. CMS now requires all claims for controlled
substances to be checked for a valid DEA number.
CMS now requires all Part D plans to conduct more
comprehensive drug utilization reviews for beneficiaries taking
controlled substances. Part D plans must now verify that
beneficiaries who exceed certain levels of prescribing are,
one, being managed by a physician or, two, cutoff at the point
of sale. To date, this program has cutoff 37 beneficiaries. We
expect this number to grow, and we also expect to expand this
program to other medications.
We have now begun to leverage the fraud prevention system
(FPS) to identify outlier prescribers and pharmacies much
earlier in the process. For example, last week, CMS provided to
all Part D plans a comprehensive list of high-risk pharmacies
for further review and scrutiny.
While we feel these actions will help curb Part D fraud, we
also plan to take more action. For example, CMS is now
considering proposing new regulations that would require all
Part D prescribers be validated as Medicare providers.
CMS is considering new regulations that would expand the
scope of our Part D fraud contract, the Medicare Drug Integrity
Contractor (MEDIC), to provide greater access to Pharmacy
Benefit Management (PBMs'), pharmacies', and prescribers'
records at the physical premises. CMS will expand its Part D
plan compliance reviews. Part D plans that submit claims for
controlled substances greater than norms should expect further
compliance actions and potential financial penalties.
In closing, I do believe further legislation may be needed
to curb controlled substance abuse. Some plan sponsors have
recommended locking in some patients to one pharmacy to receive
controlled substances. We believe it is time for Congress to
consider this potential change. CMS stands ready to help this
Committee to continue to make the Part D program as strong as
possible.
Chairman Carper. We are interested in exploring that and
other ideas that require our action, because this is a shared
responsibility, and it is an all-hands-on-deck initiative.
Mr. Cantrell, please proceed. Mr. Wright, you guys figure
this out.
TESTIMONY OF GARY CANTRELL,\1\ DEPUTY INSPECTOR GENERAL FOR
INVESTIGATIONS; AND STUART WRIGHT, DEPUTY INSPECTOR GENERAL FOR
EVALUATION AND INSPECTIONS, OFFICE OF INSPECTOR GENERAL, U.S.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Mr. Cantrell. Good afternoon, Chairman Carper, Ranking
Member Coburn, and Senator Chiesa. We appreciate the
opportunity to speak to you today about prescription drug
diversion in the Medicare program.
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\1\ The prepared statement of Mr. Cantrell and Mr. Wright appears
in the Appendix on page 72.
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In addition to the Medicare dollars stolen, there are few
areas of health care fraud where we see such a direct and
devastating impact to patients. The CDC has characterized
prescription drug abuse as an epidemic, and too much of the
time the bill is being paid by Medicare. This is a drug trade
subsidized by the taxpayers. Bringing these criminals to
justice is a top priority for OIG, and over the last 5 years,
our prescription drug fraud investigations have nearly
quadrupled.
Of particular concern are those prescription drug schemes
that result in patient deaths. These are often associated with
sham pain clinics or pill mills. One particular clinic was
associated with the deaths of over 60 patients. The doctor and
his wife, who was a nurse and the office manager, were
sentenced to over 30 years in prison and ordered to pay back
$114 million for their crimes.
Prescription drug fraud also often involves sophisticated
criminal enterprises. One case involved a licensed pharmacist
who owned 26 pharmacies. He was the mastermind of a scheme that
enlisted physicians, pharmacists, and patient recruiters to
defraud Medicare, Medicaid, and private health insurance. He
paid kickbacks and other inducements to physicians to write bad
prescriptions. The pharmacist responsible for this egregious
scheme was sentenced to 17 years in prison and ordered to pay
back $17 million.
Prescription drug schemes are not limited to controlled
substances. OIG also investigates matters that involve
expensive non-controlled substances. In one example, a pharmacy
billed for medically unnecessary and very expensive
antipsychotic, respiratory, and cardiac drugs but never
dispensed the drugs. The perpetrators of this scheme were
sentenced to nearly 5 years in prison and ordered to pay $4.9
million.
These cases illustrate what happens when greed and profit
trump patient care. And now my colleague Stuart Wright will
discuss how better oversight will help curb these problems.
Mr. Wright. Good afternoon. I am Stuart Wright, Deputy
Inspector General for Evaluation and Inspections in the Office
of Inspector General. I appreciate the opportunity to talk
about our most recent work examining Medicare prescription drug
billing as well as our body of work related to Part D. Our
written statement outlines this work in more detail.
A basic safeguard in paying for medical care is ensuring
that the care is ordered by an appropriate medical
professional. A report that we released today shows that this
safeguard is not always operating effectively. Nationwide,
Medicare Part D paid more than $5 million in 2009 for
prescriptions ordered by individuals who clearly did not have
the authority to prescribe. These individuals included massage
therapists, athletic trainers, dental hygienists, and
contractors responsible for home repairs. We even found that
interpreters, lodging companies, and veterinarians ordered
prescriptions.
In addition, we reviewed 10 States in depth and found that
Medicare inappropriately paid for drugs ordered by other types
of unauthorized prescribers, such as counselors, social
workers, and chiropractors. Medicare paid more than $26 million
for these drugs. Senator Carper, as you indicated in your
opening remarks, tens of thousands of these prescriptions were
for controlled substances.
Vulnerabilities in Part D are not limited to unauthorized
prescribers. In our report issued last week, we identified
questionable prescribing patterns by 736 general care
physicians. In total, Medicare paid $352 million for drugs
ordered by these physicians in 2009. These physicians were
extreme outliers and prescribed very differently than their
peers. Some ordered extremely high percentages of certain
controlled substances, such as oxycodone and morphine. In one
example, Medicare paid $9.7 million for one California
physician's prescriptions. This is 151 times more than the
average prescriber. We also found 24 doctors who ordered more
than 400 prescriptions for at least one of their patients.
In another review, we found approximately 2,600 retail
pharmacies that billed far outside the norm. Medicare paid a
total of $5.6 billion in 2009 to these pharmacies.
While some of these billings may be appropriate or may be
due to billing errors, these patterns raise flags that warrant
further review. This demonstrates that basic checks need to be
done routinely by Medicare administrators and contractors.
In addition to conducting claims analysis, since the
inception of Part D, we have examined CMS's oversight program
and identified vulnerabilities. Notably, we found that some
plan sponsors did not identify any fraud and abuse cases, and
the MEDIC has not fully utilized data analytics to identify
potential fraud and abuse.
Taken together, our findings consistently demonstrate the
need to strengthen Part D monitoring and oversight. Our written
statement highlights a number of recommendations, including:
Require sponsors to verify that prescribers have the authority
to prescribe drugs; strengthen the MEDIC's and sponsors'
monitoring of prescribers and pharmacies; require sponsors to
refer potential fraud and abuse incidents to CMS; develop a
mechanism to recover payments for inappropriate Part D claims;
and provide education and training for prescribers, including
issuing reports to prescribers with information about their
prescribing patterns.
In conclusion, more needs to be done to ensure patient
safety and to prevent fraud, waste, and abuse. CMS, the MEDIC,
and plan sponsors need to conduct rigorous oversight and
monitoring. The OIG will continue to bring all of the oversight
and enforcement tools at our disposal to protect Part D and its
beneficiaries.
Thank you for your interest in this important issue and for
the opportunity to present the results of our most recent work.
We would be happy to answer any questions.
Chairman Carper. Thanks, Mr. Wright, and we will have some,
believe me.
Ms. Lavelle, welcome. Please proceed.
TESTIMONY OF ALANNA M. LAVELLE,\1\ DIRECTOR, SPECIAL
INVESTIGATIONS, WELLPOINT, INC.
Ms. Lavelle. Thank you. Chairman Carper, Ranking Member
Coburn, and Senator Chiesa, I am Alanna Lavelle, Director of
Special Investigations for WellPoint. I also serve as the Chair
of the National Health Care Anti-Fraud Association. Thank you
for the opportunity to provide input and recommendations on
prescription drug abuse in the health care delivery system.
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\1\ The prepared statement of Ms. Lavelle appears in the Appendix
on page 82.
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One of the significant strengths that we and other health
plans bring to the fight against prescription drug abuse is the
data available from our integrated health care delivery
systems. This allows the ability to see the entire health care
spectrum and to spot trends and outliers, such as an
overprescribing physician or a patient receiving several
prescriptions from several providers or pharmacies.
To combat fraud and abuse, WellPoint has a dedicated fraud
and abuse prevention team known as the Special Investigations
Unit (SIU). I am one of their lead investigators, overseeing a
team in the Southeast region. The SIU is staffed with former
Federal and State law enforcement agents and medical
professionals. We also have a data analysis team.
Today some of the top fraud and abuse schemes we currently
see in prescription drug coverage include:
The practice often referred to as ``doctor shopping,''
whereby individuals obtain prescriptions for frequently abused
drugs from multiple prescribers and then fill them at different
pharmacies. Oftentimes providers as well as pharmacies are
involved in the scheme;
Bogus providers: these are the providers that, although
they may have National Provider Identifier numbers (which are
usually stolen or purchased), do not actually perform services
for real patients but bill insurers;
And pain management doctors overprescribing pain
medications.
WellPoint currently has 160 investigations open involving
Medicare Part D. WellPoint refers every Part D case to the
MEDIC, Medicare's Part C and D anti-fraud contractor, and
WellPoint currently has the second highest number of referrals
to the MEDIC nationwide.
Our goal at WellPoint is to prevent health care fraud and
abuse for the benefit of our members' health. To meet this
goal, we have developed a number of different programs.
First we have our Controlled Substance Utilization
Monitoring (CSUM) Program and Medicaid Restricted Recipient
Program. Through these programs, we are helping identify those
who are engaged in or contributing to prescription drug abuse
or drug diversion.
For our Medicaid plans, we have implemented a Restricted
Recipient Program. Through this program we identify a member
who, within a 3-month period, visited three or more prescribing
providers, three or more pharmacies, and filled ten or more
controlled substance prescriptions without a confirmed
underlying medically necessary condition.
To combat fraud and abuse of Schedule II narcotics, such as
OxyContin, they are locked into using only one primary care
physician, one retail pharmacy of their choice, and one
hospital. Our case managers work directly with providers and
members, and to date, this program has saved lives and many
millions of dollars in emergency department visits alone for
the drug-seeking behavior.
Second, we have a Prepayment Review Program to identify
irregular provider practice patterns through data mining and
analytics. WellPoint has implemented two such prepaid provider
review programs in which the most egregious billers who, after
being educated and refusing to modify their billing behavior,
are placed on flagged prepayment review. In that case,
providers must bill us with paper claims accompanied by paper
medical records so that we can determine whether the procedures
billed for are reflected in the records.
And, third, we have recently contracted with a vendor to do
predictive modeling. This program uses advanced neural network
technology from FICO to identify previously unknown and
emerging fraud and abuse provider or member schemes. Suspect
providers and claims are reviewed to identify potential fraud,
waste, or abuse and investigated thoroughly. Since we began
using this tool 6 months ago, the SIU has opened 200
investigations.
We will prevent this year, in 2013, over $13 million in
inappropriate payments by having placed a system edit for urine
drug testing abuse by providers, which is one of the largest
collateral abuses spawned by the prescription drug abuse in the
United States. The overall return on investment at this time is
well over 15:1.
And, finally, we take a multifaceted approach to
identifying bogus providers who do not actually perform
services for real patients. Our provider database teams alerts
the investigator to the presence of new labs, pharmacies, and
durable medical equipment (DME) suppliers, and we perform a
full background check as well as a drive-by of the provider's
office space.
In just the last 6 months, we have identified and stopped
payment to 63 bogus pharmacies through our collaboration with
our PBM Express Scripts, resulting in a savings of $2.1
million.
Based on our experience in combating health care fraud and
abuse, we offer the following recommendations:
First, we are supportive of giving CMS the authority to
establish a Restricted Recipient Program in Medicare Part D for
those beneficiaries displaying a pattern of misutilization.
Second, we recommend----
Chairman Carper. Is that another way of saying the lock-in
program?
Ms. Lavelle. Yes, that is correct.
Chairman Carper. OK.
Ms. Lavelle. Second, we recommend that dually eligible
beneficiaries with evidence of drug-seeking behavior should be
locked into one managed care plan rather than continue to be
allowed to switch plans on a monthly basis to evade detection.
Third, we support better coordination and cooperation among
CMS, the Department of Justice (DOJ), and all stakeholders.
And, finally, all expenses for health insurer anti-fraud
and abuse programs should be included as ``activities that
improve health care quality'' in the medical loss ratio (MLR)
calculation for both commercial health insurers as well as
Medicare Advantage since they reduce waste, reduce the cost of
health care, and enhance patient safety by helping identify and
remove providers engaging in unsafe and fraudulent practices.
In conclusion, I would like to thank the Committee for the
opportunity to testify today on behalf of WellPoint on this
critical issue and pledge our support in any efforts to make
the health care system financially viable and safer for our
members.
Chairman Carper. Thanks. Ms. Lavelle.
Just to put this in some context, Dr. Coburn and I focus
on--and I will just say to our new colleague, whose name I
believe is pronounced ``Key-ay-sa,'' not----
Senator Chiesa. ``Chee-ay-sa.''
Chairman Carper. Has it ever been mispronounced?
Senator Chiesa. Has it ever been? Never. [Laughter.]
Chairman Carper. All right. Well, I will work on that.
To put this in context, our budget deficit is down. We are
down from about $1.4 trillion maybe 4 years ago. We are told
this year it is only going to be about $650 billion. It was
$1.4 trillion about 4 years ago. That is an improvement. The
biggest piece of our deficit--and we are going to actually get
closer to a balanced budget--is health care costs, and the 800-
pound gorilla in the room is probably Medicare. And rather than
cutting benefits that people actually need that are doing a lot
of good, what we have to do is to look for every bit of money
that is just wasted, spent inefficiently, fraudulently, and
that brings us to today's hearing.
We have some numbers up here on this board. These are 2009
numbers. It is money that Medicare paid apparently
inappropriately for prescription drugs that year. About 417,000
prescriptions that year, some 29,000 controlled substance
prescriptions, involving maybe 15,000 or so prescribers, cost a
loss to taxpayers of $31.6 million. My fear is that this
understates the situation.
We never conduct ``gotcha'' hearings here. We never do
that, and we are not going to do that today. I just want to
impart a sense of urgency. We do not have the money to be
wasting, whether it is $31 million, $131 million, or $231
million. We do not have the money to spend wastefully.
I supported the Medicare Prescription Drug Program. I voted
for it. Not many Democrats did. I voted for it. A lot of people
were concerned it was not going to be a good benefit. They did
not like the way the program was crafted. They were afraid it
would run way over budget and that the folks who would use it
would not like it. As it turns out, it has not run way over
budget. And what does it cost? About $60 billion a year or so,
something like that, a little more than that. And I think about
85 percent of the folks who use it like it. Those are better,
favorable numbers than I have at home, and probably for my
colleagues as well.
Having said that, we have to figure out how to save some
money in this program. We have to continue. Everything we do,
we have to look at and say how do we save some money in this
program.
Ms. Lavelle has just given us a little bit of a to-do list
here. What was the first one? And what I am going to do is ask
everybody on the panel just to react to it and figure out who
is responsible for doing that. I think the first one may
involve some responsibility for us on this side of the dais.
But go ahead, Ms. Lavelle, just go through the first one, and
then we will have some discussion on each of these.
Ms. Lavelle. Sure. The first one was to establish a
Restricted Recipient Program in Medicare Part D or a lock-in
program.
Chairman Carper. All right. OK. Don't we have that in
Medicaid? Don't we have that in most States in Medicaid where
you basically say to someone who is thought to be maybe an
abuser, they say ``You are going to have one doctor--one
pharmacy, you are going to have one doctor, and that is it.''
And maybe that requires the assent of the Federal Government. I
do not know that it does. It seems strange to me that we have
that provision, a lock-in provision, in Medicaid but not in
Medicare.
So let us just talk--start off with Mr. Rannazzisi, your
reaction to that recommendation.
Mr. Rannazzisi. Well, again, that is a little outside the
scope of my authority, but----
Chairman Carper. In that case, just be very brief.
Mr. Rannazzisi. As far as diversion goes, I think it is a
fantastic idea. If I am not mistaken, that lock-in program is
being used in Ohio, if I am not mistaken, and the Ohio Board of
Pharmacy, the investigators, the Ohio Board of Pharmacy believe
in that program.
Chairman Carper. I am told it is used in a number of
States, not just Ohio but in a number of States, and we will
find out how many.
Mr. Blum, please?
Mr. Blum. I think that many State Medicaid programs do have
a lock-in program. I do not believe that it is a Federal
requirement, but I know that States on their own do put in
place lock-in programs. The Part D program in its current
construct runs the benefit through many different Part D plans,
so I think this is an area that Congress would have to
authorize. I do think it is time that Congress consider this
change. I think the Congress would have to set out clear
thresholds for which beneficiaries are required to be locked
in, but we are happy to work with this Committee. And I think
the Drug Utilization Review (DUR) Program that CMS put in place
this year could serve as a model for which beneficiaries hit
that threshold.
Chairman Carper. All right. Mr. Cantrell.
Mr. Cantrell. Yes, I think any legislation that would help
us explore ways to prevent doctor shopping--and some of the
patients that we encounter in our cases actually are paid
kickbacks to participate in these schemes. So in situations
like that, I think we would be interested in exploring ways to
prevent that kind of activity.
Chairman Carper. Mr. Wright.
Mr. Wright. I agree, and I think there may be two different
kinds of lock-ins that are under discussion. One is to lock
beneficiaries in a particular plan, and the other would be to
lock them within a specific prescriber or pharmacy. We think
that both of those should be considered.
Chairman Carper. All right. Good.
What was your second point, Ms. Lavelle?
Mr. Lavelle. That was indeed the dual eligibles with
evidence of drug-seeing behavior that bounce from one managed
care plan to another on a monthly basis. And we at WellPoint
are not allowed to tell Cigna or Aetna that someone that is
coming from our plan is going to be a problem for them as well
just because of the Health Insurance Portability and
Accountability Act (HIPAA) requirements.
Chairman Carper. All right. What can we do within the
constraints of HIPAA? Anyone, please, what can we do?
Mr. Blum. I think Congress can clearly provide greater
authority for that data to be shared. I think there is always a
balance between privacy and controlling payment, but this is
another area that I would suggest that Congress can give more
permission for that data sharing to happen.
Chairman Carper. All right. Thank you.
What was No. 3?
Ms. Lavelle. The third was we support better coordination
and cooperation among CMS, DOJ, and all stakeholders.
Chairman Carper. All right. Our friends from the OIG, react
to that for us, if you would.
Mr. Cantrell. We are very much in favor of better
coordination and communication. We are coordinating very well.
We have the Health Care Fraud Prevention Partnership that has
been established. It is in its infancy, but we are very much
supportive of private-public data sharing and public
partnerships where we can.
Chairman Carper. All right. No. 4?
Ms. Lavelle. The last one was to recommend that all
expenses for health insurance anti-fraud and abuse programs be
included as activities that improve health care quality in the
medical loss ratio. Right now they are not.
Chairman Carper. Would you all react to that? Anyone. Who
wants to react to that? Mr. Blum. Is it Dr. Blum? It is Mr.
Blum, isn't it? I always want to call you ``Doctor.''
Mr. Blum. Thank you, but it is Mr. Blum. CMS believes, and
I think it is consistent with the State insurance
commissioners, that strong fraud and abuse is part and parcel
to what a plan should be doing, that it is not part of benefit
costs but it is the cost to run a well-managed program. CMS in
its rules does permit collections to count toward the MLRs. We
think we have found the right balance between requiring plans
to set up procedures that is part and parcel to running a plan,
but we do allow plans to count the collections toward the
benefit side of the MLR.
Chairman Carper. OK. Well, Ms. Lavelle, you have given us a
pretty good start on a to-do list from our side, and this is
one of those deals where there is work to be done on both
sides, and not just the Federal Government, not just the
legislative branch, not just CMS, but a bunch of us, including
folks that are not in Congress and not at CMS.
Dr. Coburn, thank you.
Senator Coburn. So, Mr. Blum, let me just kind of get you
on the record a little firmer here. CMS supports the
modification of the Part D program to establish a lock-in?
Mr. Blum. What I can say to you, Senator, is that we have
no official position, but I believe that it is time for
Congress to consider this change.
Senator Coburn. CMS does not have a position on that?
Mr. Blum. I am speaking for CMS, and I believe it is time
for Congress to consider it, that it is not part of the
President's 2014 budget submission, but I do think it is time
for Congress to make this change.
Senator Coburn. So would your recommendation back up the
chain at CMS that would go along with Congress writing the bill
that would do that?
Mr. Blum. Yes. And we are happy to support this Committee
in that change.
Senator Coburn. The second point: Would CMS also go back up
the chain and support a loosening of the HIPAA rules so that
insurers can protect patients and their long-term well-being by
allowing them to transfer data on drug-seeking behavior
patients?
Mr. Blum. I think one of the principles that CMS strongly
believes is that we have to have greater data sharing to spot
outliers, both beneficiaries, pharmacies, and physicians, and
CMS would support that change.
Senator Coburn. So if I wrote a bill that would allow just
a little bitty hole for the insurance industry that is managing
this to share the data on drug-seeking behavior to the next
managed care plan, there would not be an objection from CMS to
that?
Mr. Blum. We would have to see the details, obviously,
but----
Senator Coburn. In principle.
Mr. Blum. In principle, yes.
Senator Coburn. All right. Tell me, do you think that CMS
gets $14 million worth of value a year from the MEDIC program?
Mr. Blum. I think the MEDIC program can be improved, and I
think we want the MEDICs to be active, we want the MEDIC to be
proactive, and the MEDIC is just one piece of a strong CMS
oversight practice. But I do think that the MEDIC process can
be improved, and to be more proactive and to take more action.
I think data analysis is just one piece. It is what you do
with the data. And we have to have action. We have to have many
steps beyond just law enforcement action. But, I agree with you
that we can improve the performance.
Senator Coburn. So they had 21 referrals last year for $14
million for prosecution, and you just heard WellPoint talk
about the hundreds that they have done in the last 6 months.
Explain to me why we are not getting more value out of the
MEDIC program.
Mr. Blum. Well, my understanding is that the way the
program works today, once the referral is made, it has to meet
certain thresholds for law enforcement to take action. And what
I think we want to see is the same problem that we have in the
Part B program. There are different levels. And so for behavior
that does not meet the law enforcement prosecutable threshold
but is still outlier behavior, that I believe that the program
should suspend that physician, move to paper claims, and the
same kinds of processes that WellPoint talked about, CMS will
be holding our plans and our contractors to that standard. But
I think one change that we can consider is rather than having
prescribers self-declare what their backgrounds are, according
to the chart that was shown, to have them formally be enrolled
in the Medicare program similar to Part B, and that is a change
that we plan to make.
Senator Coburn. When do you plan to make that change?
Mr. Blum. Well, typically we put out rules in the fall, and
that is in process right now.
Senator Coburn. So we are going to put out rules, so this
time next year we might see a change?
Mr. Blum. My hope and my promise to this Committee is that
in data for 2012-13 we will see a lower number than what the
OIG found, and CMS will continue to make changes to our rules
to bring that number down close to zero. But my hope is that
given the changes CMS has made that I talked about, including
requiring the Medicare Provider Inventory (MPIs) to be on the
Part D claim, to holding our contractors to higher degrees of
accountability, we will see lower numbers. And that will
continue through further policy change and operational details.
Senator Coburn. So I have no firm date. People are going to
continue to die--right?--under this program. And we are going
to put out rules in the fall. Why wouldn't we put out rules now
based on the recommendations of the OIG?
Mr. Blum. Well, I think we are taking action steps to
respond to the OIG's findings. So, for example, we have shared
those pharmacies that are outliers with all our Part D plans
for action today. CMS needs to balance the burdens that are
going to be placed on prescribers who are not part of the
Medicare program today that need to come into the Medicare
program for validation and further oversight, and that is a
process we cannot turn on overnight. We have to go through
proposed rulemaking. But that to me is one more step the agency
can take to achieve better results.
Senator Coburn. You have plenty of paperwork to do; I
understand that. Would you commit to this Committee, based on
the recommendations of the OIG, to give us a report every 3
months for the next four quarters on where you are in complying
with their recommendations since you readily accept that their
recommendations are things you ought to do?
Mr. Blum. Absolutely. My understanding is that we have, and
we are happy to commit to whatever process would be helpful to
this Committee.
Senator Coburn. And will you publish that report so that it
does not just come to the Committee?
Mr. Blum. We will defer to how you want the report
published.
Senator Coburn. Well, if we get it, I will make it public,
because I think, one of our problems in government is we see a
problem, and then our rules of government make it to where we
cannot save the lives of the next 1,600 people who are going to
die from a prescription drug overdose because we are not
managing the Medicare Part D program through CMS effectively.
And that is really not a very good excuse for us to--and I am
not talking about you. I am talking about us, too--to wait
until tomorrow to start making these changes, when you are
talking about lives, you are talking about money. And you are
also talking about not just lives that are snuffed out, you are
talking about lives that are destroyed and people going to
prison because we have made it easy to game the system. So I
hope your commitments will be there.
As you can tell from my opening statement, I am pretty
disgusted with the MEDIC program because I do not think we are
getting that much from it. And I plan on sending you a few
letters and to the OIG to followup on that, because I do not
think we are getting value out of the $14 million. And my hope
will be that you will ride the contractors to where we actually
get values and change the program to what it should be.
My time is up.
Chairman Carper. Senator Chiesa.
Senator Chiesa. Thank you, Mr. Chairman, and thanks to all
of you for your testimony here today.
I know from my experience as Attorney General what a
catastrophic impact this epidemic has on the people that live
in my State and I am sure throughout the country. What I do not
appreciate as much is the impact it has on seniors and the
different ways I think they are particularly vulnerable to
people who are trying to game the system, as Dr. Coburn has
talked about.
And what I would like to find out--and I open this question
to any of you who feel competent to answer it--is: What are the
particular focuses on a population that is clearly vulnerable
to this? They trust their doctors. They want to get better.
Some of them have long-term illnesses that they are dealing
with, and in some cases, it is just easier to try to medicate
your way out of those illnesses than it is to try to talk with
the family and get to the heart of what is going on.
Are there relationships between, for example, assisted care
facilities or nursing homes that are particularly problematic
in this area that lead to this kind of abuse?
Mr. Wright. I do not know that I can directly answer the
question, but with regard to the vulnerable population of the
elderly being in nursing homes and some of these drugs being
very powerful, we did do a review of antipsychotic drugs as
used in the nursing home setting, and we found that 88 percent
of them were prescribed against the black box warning, clearly
raising health concerns. And based on the medical record
review, we found 51 percent of the claims should not have been
paid by Medicare.
So when we did that kind of in-depth review in that
vulnerable setting, we did, in fact, find substantial problems.
Senator Chiesa. OK. Ms. Lavelle, we talked about doctor
shopping as a part of this problem, and I know, again, in my
own experience seeing some of the typical populations that
engage in this behavior, is that a problem? Do we see that
among the senior population as well?
Ms. Lavelle. Frankly, when I speak of the doctor shoppers,
the majority of what we are seeing are those that are under 65.
They are dual eligibles, usually Social Security disability. We
just referred eight cases last week, and all of them are under
65.
Senator Chiesa. OK. And do you have any statistics or
information that is available to tell us what percentage, or in
your experience that you see, are over 65 that are engaging in
this behavior?
Ms. Lavelle. I do not have any exact, but I can get that
for you.
Senator Chiesa. OK. Pain clinics and pill mills. Mr.
Rannazzisi, I know that you are experienced with the DEA.
Again, talking about the senior population, are they being
exposed to a greater extent in those settings than we find
other patients are?
Mr. Rannazzisi. I do not believe so. The pain clinic cases
that I reviewed are generally a younger population of drug
seekers that are going--remember, they are not going there,
these rogue pain clinics, they are not going to get medical
treatment. They are going to get medication to feed their
addiction. So it is not really medical care. It is more of drug
distribution illegally.
Senator Chiesa. OK. And, Mr. Blum, I would like to ask you
about the enrollment process. What factors do you think provide
the greatest deterrence to keeping out the kinds of physicians
that we do not want involved in these programs?
Mr. Blum. I think what we have learned from our fraud
prevention system is that we have to do two things at the same
time: We have to validate physicians' credentials, and that has
to be periodic. And one of the most important changes that the
Congress made is to direct CMS to require this process. That is
not true in the Part D program. There are many prescribers who
are legitimate but are not formally part of the Medicare
system. For example, dentists are one of the most commonly--
frequent prescribers of pain medications. So I believe that
every physician who is writing scripts for the Part D program
needs to be enrolled in the Medicare system so we can validate.
We are not reliant on self-reported databases. We can verify
those who are truly massage therapists versus those who are
just self-reporting as massage therapists. That is a change
that I believe that the program needs to make. It is going to
place new burdens on physicians, and I am sure this Congress
will hear pushback from the physician community that it is
burdensome, that for those prescribers that do not provide
medical services that they should not be enrolled. But I do
believe that it is time that we move to a different framework.
Senator Chiesa. OK. Mr. Rannazzisi, we worked in New Jersey
with the DEA to establish drop-box programs where people can
take their unused prescription medications to those locations
and get rid of them, no questions asked, in a secure location
so that other family members cannot abuse them. In your
experience, how effective do you think those programs have been
at getting at the potential problem of the legitimately
prescribed prescription drugs to a grandparent being then used
inappropriately by one of the younger members of their
household?
Mr. Rannazzisi. Well, we have taken the position that those
medications, once they are expired or unneeded, need to get out
of that household. That is why we have these nationwide take-
back programs. In April, we took in almost 376 tons of
pharmaceuticals, the last take-back program.
I think that we are in the process of drafting the final
regulations for take-back, so we may have these drop boxes
available across the country in certain authorized locations,
and I think that will go a long way to preventing such
tragedies as what we have seen in the past.
Senator Chiesa. And nationwide, what percentage of the
States participate in these programs, the drop-box programs?
Mr. Rannazzisi. Well, currently, the only drop-box programs
that are allowed are ones in law enforcement facilities, either
precinct houses or headquarters places. But I cannot tell you
exactly how many because law enforcement agencies are exempt
from the statute, so they could put their drop boxes in the
facilities without reporting to DEA.
Senator Chiesa. OK. But, anecdotally--I know, for example,
we have talked about it actively in New Jersey--do you get the
sense that many States are getting involved in these programs
or not?
Mr. Rannazzisi. Yes. I believe quite a few States are
getting involved in the program. Some States have their own
program. I believe North Dakota has their own program now.
Senator Chiesa. OK. Well, thank you.
Thank you, Mr. Chairman.
Chairman Carper. Thank you very much. Dr. Coburn.
Senator Coburn. [Presiding.] Mr. Blum, is CMS aware of
actions by State medical boards and restricting of licensing or
disciplinary procedures?
Mr. Blum. To some degree, but I think one thing that we
need to do is to improve that data sharing.
Senator Coburn. Does CMS share with providers--and I am
talking insurance providers--when you have taken somebody off
their eligibility to be able to prescribe, or treat Medicare
patients?
Mr. Blum. That is a vulnerability that I concede that we
need to do a better job, but----
Senator Coburn. But do you do it?
Mr. Blum. We will be doing it.
Senator Coburn. But you do not do it now?
Mr. Blum. Not to the fullest degree.
Senator Coburn. Do you ever give the other providers a list
of problematic providers--I am talking insurance providers--a
list of problematic people that are under review or that are
under suspicion of being a bad actor? Do you ever share that
information, not just the ones that have gone off but the ones
that you are suspecting of fraud?
Mr. Blum. That CMS is?
Senator Coburn. Yes.
Mr. Blum. One change that we have made, Senator, is that we
now share those outlier pharmacies, for example, CMS will be
expanding that list.
Senator Coburn. How about outlier physicians?
Mr. Blum. That is going to be a change that CMS moves
forward on.
Senator Coburn. You have to do a rulemaking on that? So
there are some things that you can do immediately----
Mr. Blum. Absolutely.
Senator Coburn [continuing]. To share with the other
providers, the Part D providers as well as other insurers.
Mr. Blum. And CMS pledges to this Committee that CMS will
make those kinds of changes--certain changes require
rulemaking, such as requiring all physicians to enroll in the
Medicare program that prescribe through Part D. Some changes
are management changes that CMS has and will continue to act
on.
Senator Coburn. OK. Ms. Lavelle, we just had this
conversation, and in your testimony you said that plan sponsors
are rarely informed of the ultimate result of actions that are
taken and information collected by the agency is rarely shared
with the private payers and CMS does not share information on
revoked Medicare providers with private payers. You just heard,
I think, some good news and a commitment to this Committee.
WellPoint's Special Investigation Unit refers every Part D
case to the MEDIC, and WellPoint has the second highest number
of referrals to the MEDIC.
Ms. Lavelle. That is correct.
Senator Coburn. What have you seen from that?
Ms. Lavelle. That is one of the issues we have with the
MEDIC. We are very collaborative with them, often refer cases
over, but then we are never advised as to what type of action
is ever taken.
Senator Coburn. So that is something that needs to be fixed
as well.
Ms. Lavelle. That would be very helpful to us.
Senator Coburn. Mr. Blum, what do you think about that?
Mr. Blum. I think a small fraction of those cases that get
referred to law enforcement are taken. Oftentimes there is a
beneficiary who is complicit, and I think we all, the Federal
Government, are hesitant to take action against beneficiaries
who are complicit. I think it is time that we change, and I
think it is time that we share that information. I think it is
time that we hold the Part D MEDIC to a higher degree of
accountability. And I think part of the issue is that the
process now relies on that referral to be taken by law
enforcement, but that is not sufficient.
Senator Coburn. Well, just because they choose not to
prosecute does not mean somebody has not violated the law.
Mr. Blum. Correct.
Senator Coburn. And it does not mean somebody should not be
banned from having Medicare provider status. So you agree with
that?
Mr. Blum. I do.
Senator Coburn. How often do you see Medicare participants
running in this program as far as pill mills? It was asked a
little bit ago by my colleague from New Jersey, but how often
are older patients used as part of the scam, not wanting the
drugs but buying the drugs, using their Medicare number and
their provider to get the drugs? How often are we seeing that?
Mr. Cantrell. More and more we see that they are not even
aware that this is happening. Through identity theft, their
beneficiary numbers are used to bill Medicare, and they are not
even aware of it. So that is often the case.
Similar to the DEA and WellPoint's experience, we see lots
of younger beneficiaries involved in some of the pill mill-type
investigations who are interested in getting the drugs.
Senator Coburn. So all you have to have is a Social
Security number, right?
Mr. Cantrell. In essence and another letter that you tack
on the end.
Senator Coburn. Yes, which you can fraudulently provide. So
that is another reason why we should take Social Security
numbers off the Medicare roll since that is what is at risk.
Mr. Chairman, thank you for this hearing. I have to be on
the floor, but I would just tell you, we need, our staff needs
to followup on this. We have a commitment from Mr. Blum in
terms of quarterly reports on the OIG's recommendations. My
hope is that they make great changes, and I look forward to
working with you on two things that I think we can write very
simple legislation and solve some problems.
Chairman Carper. [Presiding]. You bet. Thank you, Dr.
Coburn.
I want to back up just a little bit. We have been talking
about what we can do in the legislative branch, what you all
can do at CMS, what we can do in the law enforcement community.
We have not talked at all about the roles of parents in this,
and parents or family members, extended family members, talk a
little bit about that. And are you aware of some States or some
communities that are doing an especially good job in that kind
of parental involvement or family involvement? Anybody know?
Because it cannot just be the government. When it is all hands
on deck, we mean all hands, including the hands of parents.
Mr. Wright. When we did the work on antipsychotic drugs
that I referenced earlier, we certainly made as part of that
story that families needed to be more involved, especially when
beneficiaries are in nursing homes and families are not
necessarily aware of everything that is being prescribed on
their behalf. We did very much make the point that this was
something where everybody needed to contribute to correct.
Chairman Carper. Others? Raise your hands. How many of you
are parents? OK. Everybody. You can speak. You do not have to
have your professional hat on. You can put on your parent hat
if you want.
Mr. Blum. I think from a Medicare perspective, Medicare
beneficiaries take many drugs, and I think the average is 12
scripts per beneficiary right now. I think Part D plans do a
lot to do polypharmacy reviews. That is not sufficient.
Beneficiaries themselves, we encourage through the annual new
wellness visit that Congress authorized in the Affordable Care
Act (ACA) that medication be part of the annual wellness visit.
And I think having the independent screen and check on the
multitude of prescriptions beneficiaries take is one important
step in the overall process.
I do think there are voices here that should be at this
table to speak to overprescribing, I think having the physician
community to get much more engaged, I think having the
pharmaceutical manufacturers getting much more engaged. One of
the reasons that payers are seeing so much growth in these
medications is because the marketplace is being flooded, if you
will, with these medications. And so payers can only do so
much, beneficiaries can only do so much, Congress can only do
so much. But there are other voices that I think need to be
part of this conversation--the physician community, the
pharmacy community, pharmaceutical manufacturers--to ensure
that a multifaceted strategy is developed.
Chairman Carper. I do not think I heard you mention
parents.
Mr. Blum. Parents, too. Absolutely.
Chairman Carper. Go ahead, anybody else, please. Mr.
Rannazzisi?
Mr. Rannazzisi. I think one of the biggest problems we are
encountering right now is that parents do not understand the
dangers of these drugs, and they are not talking to their
children about these drugs. Just 2 years ago, we attempted to
do a parents program at the second largest school district in
the country. We made sure that it was adequately marketed with
e-mail blasts and news reports, and we had 11 parents--or 14
parents show up to a huge venue.
I am not so sure that they understand and I am not so sure
parents are willing to understand how bad these drugs are and
how bad the abuse of these drugs are. We work with community
coalitions all the time. We partner with community coalitions
on the take-back programs. We hand out literature. We try to go
to every community meeting that we are invited to, to present.
But in the end, I think you are right; if the parents do not
get involved, we are going to see tragedy over and over again.
Chairman Carper. All right. Others, please? Anybody else?
Ms. Lavelle.
Ms. Lavelle. I had a daughter who was a lacrosse player,
tore her ACL. She had surgery, was sent home with a script for
hydrocodone, and her first day back in school as a sophomore
she had several students approach her and asked if they could
buy her pills. So it is in our backyard, and it is very
insidious.
So we went in the school and did some parent-teacher
conferencing and we actually partnered with FBI and DEA agents
and did some awareness type of workshops, because even if you
have a babysitter over, they look in the prescription cabinet
now, it is that pervasive out in society right now.
Chairman Carper. Any other parents want to say anything on
this one? Mr. Cantrell.
Mr. Cantrell. Yes, I think it is education and outreach to
parents, as Mr. Rannazzisi has mentioned before. I think we
would welcome the opportunity to join them in some of these
outreach efforts, whether they be parents or the prescriber
community. I think that is the front line of defense in
preventing these problems from happening in the first place.
Chairman Carper. The good news here is that parents maybe
do not have to worry as much about their kids being on heroin
or maybe they do not have to worry as much about their kids
being on cocaine or Ecstasy. The bad news is, as you say, this
is pretty insidious.
One of the reasons why we are having this hearing is to
figure out what we can do collectively, folks in law
enforcement, CMS, insurance companies, providers, the PBMs, the
legislative branch, what we can do. But we also need to send a
message to parents. It is not good. It is not good for our
kids. I say that as a father of three boys--men--and the
parents just need to get their heads wrapped around this and
understand what is going on here. And they have an obligation
here as well. The government cannot just do it all. We have to
be a partner, but they have to be a partner as well.
I want to go back to some of the steps that CMS has already
taken, steps that you have taken, steps you are about to take,
and then the third area would be steps that are called for in
the President's 2014 budget proposal. Can you just briefly run
through those? What have you already done that you think is
helping? What are you about to do or are undertaking? And,
finally, what would you like to do under the President's
budget?
Mr. Blum. So I think a couple of things. I think our focus
so far has been to put in place our requirements for our Part D
plans to do much more comprehensive drug utilization reviews,
that it is not sufficient to just simply look at the point-of-
sale pharmacy claim, you need to do the complete look over the
course of a year to see the full spectrum of beneficiaries'
uses.
For those beneficiaries that exceed a certain clinical
threshold, we require the Part D plans to contact the patients'
physicians to make sure they are being well managed. If they
are not, then Part D plans are expected to put in place point-
of-sale edits on those beneficiaries that could be doing drug-
seeking behaviors.
CMS, consistent with changes in the law and changes that
this Committee has urged, now requires every drug claim paid by
any Part D plan to have the provider's number on it so we can
track, we can do analyses, we can verify that those scripts are
legitimate. We also hold our Part D plans to a higher degree of
accountability. That is the current work that we are doing.
In addition to the outlier analysis that we are now sharing
with our Part D sponsors and other stakeholders, CMS is moving
to new areas. So I do believe that it is time for us to build a
bigger universe of oversight on all prescribers, not just those
that bill the Part B program but all prescribers in the Part D
program as well. CMS will be upholding our MEDIC to a higher
degree of accountability, but also giving it greater authority
to do much more intensive reviews with PBMs, pharmacies, and
physicians to do more comprehensive looks.
The President's budget has called for ways to promote
greater Part D data sharing. I think one of the limitations
right now with State monitoring programs is they are all
separate systems that do not talk to each other. We know that
drug-seeking behavior crosses State boundaries. We know that it
crosses health insurance plans. Many are cash-paying customers,
so Part D changes alone will not stop the cash-paying
customers.
One proposal in the President's budget is to provide
greater assistance to drug monitoring programs run by States to
share data and build common data sets.
Chairman Carper. Thank you.
A couple of questions, if I could, for Mr. Rannazzisi and
Mr. Cantrell, and these pertain more to the law enforcement
side, and I know you and your agencies are doing a lot to
identify, to investigate, and to try to bring to justice those
that are defrauding Medicare.
But let me just ask you if you could comment on some of the
challenges facing law enforcement and some of the steps that,
whether it is Congress, whether it is the Centers for Medicare
& Medicaid Services, or, frankly, others, steps that we could
take, individually, collectively, that would help you and your
colleagues in your work. So that would be the first question.
Second, the followup, can law enforcement alone curb the
diversion and the abuse of prescription drugs? I think
obviously not, and we have already talked about that. This is
all hands on deck, and it includes not just you sitting at the
table and others; it includes us and it also includes parents
and families.
But let me just go back to the first question. What can
those of us at CMS, those of us in the legislative branch, or
maybe within the Administration do to provide some help for you
in your work? It is a little bit like swimming against the
tide, I think.
Mr. Rannazzisi. As an investigator, one of the most
frustrating things I see is when there are tools available to
the registrant community, the prescribers and the dispensers,
and they are not using them. They could help us in the long run
by just using those prescription drug monitoring programs
(PDMPs). If there is any way Congress could push the States to
do that, because right now some very good programs have less
than 15 percent of the prescribers using them.
Chairman Carper. Why do you think that is?
Mr. Rannazzisi. There are all sorts of reasons. One of the
reasons I always hear is, ``I do not have enough time.'' And
that statement tells me you do not have enough time to provide
patient care, because in the end this is just like another
diagnostic tool. Wouldn't you want to know if your patient is
seeing two or three or four different doctors? Wouldn't you
want to know if you are prescribing methadone and you have two
other doctors prescribing a depressant, a benzodiazepine, two
drugs that might affect how the drug is distributed in the
body, how it is eliminated? Wouldn't you want to know that?
It seems to me that if this tool is available--and in 49
States right now we have either PDMPs or an infrastructure in
place, legislation in place to create a PDMP, that as a
practitioner, be it a mid-level practitioner, a physician, or a
pharmacist, you would want to know what your patient is doing.
Mr. Blum is absolutely right. It is not just payments
through Medicare. These people might be getting payments
through Medicare, and they are also paying cash. And if you are
a true doctor shopper, you are going to go to five, six, seven
doctors at a time for the same illness. If I was that
practitioner, I would want to know exactly what that patient is
doing. Yet in many States, with the exception, I believe, of
New York, Kentucky, and I believe Tennessee now has mandatory
review of the PDMP before prescribing. The other States, they
are just not using them.
Chairman Carper. OK. Anyone else? Mr. Cantrell, do you want
to respond to that as well, please?
Mr. Cantrell. Well, we certainly agree that we should
explore increased utilization of prescription drug monitoring
programs and even the potential for a lock-in to stop the
overprescribing and the doctor shopping that is taking place.
We have seen people leave the State, cross State lines in order
to find places where it is easier to get the drugs. We see that
fairly routinely in our investigations. And we are also very
encouraged by some of the data sharing and additional data
analytics that Mr. Blum has committed to today, and we think
that is going to pay dividends down the road as well.
I would like to mention that our office, which is
responsible for overseeing this huge program, is shrinking in
the face of the growth in Medicare and Medicaid. Based on some
expiring funding streams, we are set to lose roughly 400 bodies
out of a total of 1,800 at our peak in 2012. And that is really
limiting our ability to expand our oversight in some of these
areas.
Chairman Carper. That is a reduction from 1,200 to 400?
Mr. Cantrell. Excuse me, 1,800 to around 1,400.
Chairman Carper. And, again, the reason for that is what?
Mr. Cantrell. Some expiring funding streams. Certainly
sequestration has added to that. But before sequestration, we
were already facing expiring funding streams through the
Medicaid Integrity Program and others. So we are operating with
a reduced budget in the face of the growing program, and just
last year alone, our office closed down 1,200 complaints due to
lack of resources. Those are complaints that came through the
door that we did not have the resources to investigate further
to determine whether it was a viable criminal case or not. And
that number does not appear to be going down.
Chairman Carper. OK. The next question I have is really for
the entire panel, and it focuses on State efforts to combat
prescription drug abuse and diversion. Some of you have
mentioned in your testimonies today the serious efforts being
made to combat prescription waste and fraud at the State level.
We just talked about it here again. For example, the
prescription drug monitoring programs established and operated
by State governments have had a fair amount of success in
rooting out fraud in Medicare as well as Medicaid and in the
private sector. These monitoring programs track prescriptions
filled by pharmacies across a State in order to help identify
and prevent illegal diversion or abuse.
I was encouraged to hear from today's testimony that 46
States have operational monitoring programs and an additional 3
States have enacted legislation to establish one. I think when
we first got into this issue a couple years ago, we found out
that there are a lot more States that did not have this kind of
monitoring program. One of them was my own State, and to the
credit of our Governor and the legislature, they jumped all
over it. But that is the good news. I think it was not that
long ago, maybe 4 years ago, maybe two-thirds of the States,
maybe about 33, 34 of the States had these programs
operational.
Could each of you today just comment on the importance and
effectiveness of the State-run prescription drug monitoring
programs in combating prescription drug waste and fraud? And,
also, what are some of the important next steps to ensure that
the monitoring programs become, over time, even more effective?
Ms. Lavelle, do you want to go first?
Ms. Lavelle. Sure. One of our biggest pain points in
WellPoint is a little corner of the State of Virginia known as
Roanoke. That----
Chairman Carper. ``Star city of the South? ''
Ms. Lavelle. Yes.
Chairman Carper. Where I grew up.
Ms. Lavelle. Really?
Chairman Carper. In Danville and Roanoke.
Ms. Lavelle. Oh, my goodness. We have pharmacies where we
often see up to 15 license plates from outlying States. We know
that they are pill mills. We know that they are impacting Part
D and our commercial plans as well as our Medicaid plans. And
we have been working with the State law enforcement agencies to
get them prosecuted. We have been pretty successful in a lot of
referrals, but it is, again, a major problem in that part of
the State of Virginia, and we are really focusing on that.
Los Angeles County is our other hot spot and----
Chairman Carper. Why do you suppose Roanoke, Virginia,
would be a hot spot? I could see maybe L.A., but why----
Ms. Lavelle. We have often asked that, and maybe the
gentleman from DEA knows more than I. But I have often been
told that it is a spillover from the coal mining days. It is
hard to say, but we have a real pain point in that part of the
world. So we are trying to lock in as many as we can in the
Medicaid program and to refer all the pill mills for
prosecution.
Chairman Carper. And when you are referring them for
prosecution, who do you refer them to? What entity do you refer
them to?
Ms. Lavelle. It depends. Usually the State troopers,
Virginia State troopers will pick up those cases. The U.S.
Attorney's Office has taken quite a few of the pain management
providers, which we often refer to as ``drug dealers in white
lab jackets.'' Some very egregious. We have even had calls from
the coroner's office advising us that the 14th body has come in
from a particular prescriber, and they did not know who else to
call, but they knew they had Blue Cross insurance. So it is
that big of a problem there.
Chairman Carper. OK. Thank you. Mr. Wright.
Mr. Wright. In terms of next steps, we do plan additional
evaluation work looking at Medicaid drug utilization review
programs. That is not something that we have directly reviewed
at this date, but we are planning on doing reviews that will
determine how they operate, how they are reviewed, which ones
are effective. We think this is an important place for us to
go, building on the work that we have discussed today.
In addition to that, we continue to look at issues
associated with Medicaid data overall. It is very important
from a national standpoint that there be complete and accurate
Medicaid data, which historically there have been difficulties
in building. So we plan on continuing to work on that issue,
hopefully getting to the point at a future date when we have a
comprehensive Medicaid data set that will enable us to look at
Medicaid holistically and not just State by State.
Chairman Carper. OK. Thank you. Mr. Cantrell.
Mr. Cantrell. I will just reiterate that we think that the
prescription drug monitoring programs do serve in many States
as a great deterrent to this type of activity, and if all
States had a similar level of program, then we might prevent
some of this crossing State lines in order to avoid them.
I will also just mention that we have the Medicaid Fraud
Control Units, who we work with quite frequently, and their
involvement in this effort is also important.
Chairman Carper. Thank you. Mr. Blum.
Mr. Blum. I think given the steps we are taking at CMS to
reduce the probability that Part D is paying for inappropriate
medications, I do not believe that is going to stop the
problem. I think the drugs are very inexpensive, and if CMS
takes further steps to bring the rate down to zero, those shift
to cash-paying transactions, which means that other data
sources will be necessary to spot drug-seeking behaviors, and I
think that the State drug programs provide a tremendous
resource. Data has to be shared. Data has to be cross-analyzed
because beneficiaries and schemes do cross State lines. But
just focusing on the Part D program will not solve the problem
given the cost of these drugs. They are very inexpensive and
they will just shift to cash.
Chairman Carper. All right. Thank you. Mr. Rannazzisi.
Mr. Rannazzisi. Again, going back to the PDMPs, one of the
most important things involving the PDMPs is Internet
connectivity between the States. If the States are not
interconnected, you are not going to get a full picture of
doctor shopping. The National Association of Boards of Pharmacy
is currently connecting States. I think they have 15 States
interconnected right now. That way it prevents these people
from going cross-border. If you are going cross-border from
Indiana to Kentucky, Kentucky to Ohio, it will show up on your
PDMPs.
As far as why the pill mills are going into rural areas, it
is because they are comfortable there. Pill mills, when they
started in Florida, were very comfortable because Florida did
not have a PDMP and they did not really have a regulatory
infrastructure to prevent them from spreading. As soon as law
enforcement, the regulatory infrastructure in the State of
Florida started passing statutes, they felt heat and started to
move. They moved up into Georgia, rural areas off I-75. Now
Georgia is giving them heat, and they are up in Tennessee. They
move to rural areas because they are comfortable because they
do not believe that law enforcement and the regulatory bodies
will find them in those rural areas. It is not that those areas
have a lot of pain patients. It is that this is where they are
comfortable. And you are absolutely right. If you look at a
very active pain clinic, a rogue pain clinic, you are going to
see license plates from all over the place. When we were doing
the Florida pain clinics, there were license plates as far as
Massachusetts down into Florida.
And you made one other statement before about heroin and
parents not having to worry about heroin because of
prescription drugs. The fact is that we are seeing more and
more throughout the country where children, young adults,
cannot afford the prescription drugs anymore, because,
remember, the street value for hydrocodone is only $5 or $7,
even the oxycodone combination products, $5 to $7 a tablet. But
when you start talking about the single-entity, 30-milligram,
immediate release oxycodone 30s or OxyContin or oxymorphone,
you are talking between $30 and $80 a tablet. And once you are
addicted, you cannot afford that, especially if you are on
multiple tablets a day. So what we are seeing throughout the
country in both rural and urban areas is kids moving to heroin,
and that is well documented, both in the literature and by law
enforcement reports. Heroin is going to be a problem if we do
not get a handle on the opiate abuse in the United States.
Chairman Carper. OK. Can I followup, Mr. Rannazzisi, with
maybe another question? But before I ask this, I am going to
telegraph a pitch, if I could here. One of the things sometimes
I will do with a hearing of this nature is ask not only the
witnesses to give an opening statement, but ask you to give a
brief closing statement, not a 5-minute statement but just a
brief closing statement. If there are some points you want to
reiterate, that would be fine. If some of the other witnesses
have said something that you think needs to be seconded or re-
emphasized, or if there are some things, you have some advice
for us on this side of the dais, again, we would welcome that,
but just some closing thoughts that you think ought to be
mentioned, either for the first time or re-emphasized, that
would be helpful.
But, Mr. Rannazzisi, I am interested in learning a little
bit more about the steps that DEA takes to ensure that its
registry of practitioners authorized to prescribe controlled
substances is accurate and up to date. A key preventive step
for curbing fraudulent diversion of controlled substances such
as OxyContin is, I am told, to maintain an accurate list of
those physicians that are authorized to prescribe in the first
place. But, obviously, there are some challenges.
For example, I understand that the DEA only has access to a
less than complete list of people who have died. There is
something called the Death Master File (DMF), and you have
access to the public file but not the more complete file that
is maintained by the Social Security Administration (SSA). And
I would just ask what steps does the DEA take to ensure that
the registry of controlled substance providers is accurate and
up to date? And are there some additional steps that are under
consideration, perhaps some that might need congressional
support?
Mr. Rannazzisi. I believe that we are bouncing our system
off the Social Security death registry. I have to go back and
look now because I thought we were looking at the complete
system. But if we are looking at a partial system and not
getting the information, I would like to get back to the
Committee.
Chairman Carper. If you would. I am told you have access to
the public file, but not to the more complete file that is
maintained by the Social Security Administration. So if you
could followup on that, and we will ask you to respond in
writing, if you would, please.
Mr. Rannazzisi. Yes, sir.
Chairman Carper. OK.
I have a short closing statement of my own, but before I
offer that, I am just going to go back to our witnesses. And
thank you for being here. Thank you for your work in these
vineyards. This is not an easy one, is it? It is not an easy
one. And none of us has the solution or the ability to--there
are no silver bullets here. A lot of silver BB's. And we have
to make sure that we identify them and that we are putting them
to good use.
Ms. Lavelle, do you want to give just a brief closing
statement, just a minute or two?
Ms. Lavelle. Sure. I appreciate Mr. Blum's words, and they
give us great hope that we are going to have some changes in
the future. I also appreciate the work that HHS and the Fraud
Prevention Partnership has been doing. We have people in the
room here that have been instrumental in bringing the privates
and the publics and the agencies together, and I have great
hope that we will have a very successful partnership going
forward. There is a great deal of promise there, but we have
work to do.
And, second, I wanted to reiterate and point out that the
paradigm is changing for WellPoint. We no longer want to pay
and chase. In doing so we get 20 to 30 cents back on the
dollar. The paradigm for us is prevention and to stop the
dollars from ever going out the door.
So, with that, I want to point out that with the medical
loss ratio we are only allowed credit for collections, which is
counterintuitive to our new paradigm of savings. So it actually
encourages recoveries because that is the only credit we get.
So with our new paradigm, we hope that there may be some
changing activities in the MLR that will give us credit for
some of the work we do and the tools that we use. Thank you.
Chairman Carper. Thank you for that point. Thank you. Mr.
Wright.
Mr. Wright. In closing, I think I would like to make three
points.
One, it is extremely important to follow through and
implement the recommendations that have been made by our
office. I would specifically mention recommendations aimed at
the sponsors. For example, we have recommended that the
sponsors be required to refer fraud and abuse cases to the
MEDIC. Currently that reporting is only voluntary.
There are a series of recommendations aimed specifically at
the MEDIC in terms of their ability to get information from
sponsors, pharmacies, and prescribers that they do not
currently have. There are recommendations pertaining to the
MEDIC in terms of doing more proactive data analytics. And,
last, I think just in general, revamping and strengthening the
MEDIC function is really crucial to what we have been talking
about today.
The second point that I would reiterate is the resource
issues that Gary raised. Fully funding the office in terms of
the President's budget request is crucial for our oversight
activities. As Gary mentioned, we are slated to be down 200
staff by the end of the year and are on track to attrit 400
staff by the end of 2015. The office likes to point out that we
return $8 for every dollar invested in us. To the extent staff
leave, they will no longer be contributing to that return on
investment.
And the third and final----
Chairman Carper. Stop right there if you would. So the
President's budget, you are urging us at least in this respect
to support the President's budget?
Mr. Wright. To fully fund the President's budget, correct.
Chairman Carper. OK. Thank you. All right.
Mr. Wright. And, last, conducting oversight hearings, as
you have done today, is really crucial to shedding light on
these problems and getting all the players aligned to actually
do something about them.
Chairman Carper. All right. Thank you. Mr. Cantrell.
Mr. Cantrell. First, I want to thank you, Chairman Carper,
for holding this hearing. I think it is a great opportunity for
us all to talk and identify potential solutions. And Mr. Wright
has already mentioned the resource issue, so----
Chairman Carper. You can mention it again. Seriously.
Repetition is good.
Mr. Cantrell. Well, I will say real quick, you may have
heard of the Health Enforcement Action Team (HEAT) and our
strike force teams that have tackled Medicare fraud in nine
cities across the country. It has been a very successful model
in tackling all types of Medicare fraud. We would like to be
able to expand that kind of focus in other areas of the country
and other areas of the program. And I think with additional
resources that are included in the President's budget, we would
be able to do that sort of thing. And while prescription drug
fraud and abuse is a top priority for OIG now, I know that
there is more that we can do with more boots on the ground.
Chairman Carper. OK. Thank you. Mr. Blum.
Mr. Blum. I want to thank the Committee for holding this
hearing. CMS welcomes the oversight. Oversight helps us build
programs that better serve beneficiaries. And I think it is
true that when the program was established back in 2006, the
focus was on making sure beneficiaries got every drug they
needed. And a lot of the oversight work that CMS has done was
to make sure that beneficiaries get what they need at the point
of sale, and that was appropriate at the time.
But now we are in a different time, and I think now the
focus should be making sure beneficiaries get what they need,
but stopping those payments for the prescribing that is
inappropriate. And that will take some further steps--will
build on current actions but take some further steps. It will
create more friction that you will hear about from the
physician community, from pharmacies, and from beneficiary
themselves. I think that is something that, in addition to
changes in law, I think the programs will need your support
once that friction starts. To enroll all prescribers to the
Medicare program will take a huge lift, and you will hear about
it.
And I think one request that we do have is that Congress
continue to support these changes, but we are going to have to
create more friction in the system to kind of shift the
paradigm from not just providing all drugs at the point of
sale, but to hold everyone accountable, CMS too, to stopping
those drugs that are not appropriate.
Chairman Carper. All right. Thank you. Mr. Rannazzisi.
Mr. Rannazzisi. Finally, Mr. Chairman, I want to thank you
and Senator Coburn for your leadership in this area and to get
the word out about the use of these drugs.
I also want to thank you for identifying education of
parents and family members as being an important part of our
overall strategy because, quite frankly, there are not too many
people that understand that because it does not really affect
them until it actually affects them, and then it is too late.
I look forward to working with colleagues at HHS,
continuing to work in CMS as we move forward against these
people who are basically gaming the system and doctor shoppers
and people who are just diverting.
And, finally, when you talk about sequestration, it is
problematic for us too. We are losing positions through
attrition, and we cannot fill those positions right now,
especially in my scientific staff and my regulatory staff and
our special agents.
Thank you very much for this opportunity.
Chairman Carper. Thank you, each of you, for those closing
statements. I was not going to mention this, but I am going to.
Dr. Coburn has put in a lot of time and energy over the last
several years in helping to develop a comprehensive deficit
reduction plan which involves roughly $1 of revenue, additional
revenue for every $3 on the spending side, and it is a balanced
plan put together under the auspices of Erskine Bowles and
former Senator Alan Simpson, and it is something that I support
as well, as do a number of my colleagues. The President's
latest budget proposal for 2014 actually mirrors and looks a
whole lot like the efforts of the Simpson-Bowles Deficit
Commission.
One of the virtues that it would have if it were adopted,
if something like that were to be adopted, is we would end
sequestration. We would also put ourselves on a track to reduce
the deficit by another roughly $5 trillion over the next 10
years. It does not balance the budget, but it gets us certainly
a lot closer to where we need to be.
In response to your urging for us to be mindful of
sequestration and what it does in terms of your abilities to do
your jobs, I just want you to know, there is a pretty good plan
out there, and the President actually seems to be lined up
behind it now, and my hope is that we can before the end of
this fiscal year actually do that or do something very close to
that.
That leads me to this statement. I have already said it
before. We still have huge budget deficits, about over $600
billion. That is better than $1.4 trillion, but we still have a
ways to go, and it looks like the deficit might continue to go
down for a while and then come back up again. The big driver of
this is my generation, the boomers, and as we move into
Medicare and other programs, we are needing greater Federal
assistance.
As a result, if we are going to be serious on deficit
reduction, it has to include Medicare, not in a thoughtless
way, not in a way that savages older people or poor people, but
in a way that actually saves some money. And it uses a lot of
common sense, it uses technology, and saves these programs for
my kids, for your kids, and for our grandchildren as well.
On the other side of that, Medicare is not running a big
surplus these days. In fact, Medicare, given the tidal wave of
boomers that are moving into a time in their lives when they
are eligible for Medicare and other programs, is looking to
eventually run out of money in the next decade, and that is not
good.
So we attack on this Committee a lot of issues on a fiscal
basis, and we look at why we are wasting money, it makes the
deficit worse, it makes it hastens the day when Medicare runs
out of money. But this issue has another more human side that
we have heard here today. And when you talked, Ms. Lavelle,
about your daughter, a lacrosse player, injured, going back to
school, taking the controlled substance for pain control, and
having other students in the schools saying they would like to
buy some of her extra pills, that really brings it home.
And as good as you and the folks at WellPoint are in the
work that you do in these vineyards, and our friends from the
Inspector General's office and Jonathan Blum and the people at
CMS and folks from DEA and our efforts here, it is not enough.
Any one of us by ourselves cannot do it. This is, as I like to
say, an old Navy guy, all hands on deck. It is a shared
responsibility, and we have to all be part of this team.
We have the benefit of having some technology today that we
did not have that many years ago, and I can remember--my mom is
deceased now, but she passed away about 6 years ago. She lived
down in Florida for most of the last 30 years of her life. She
had I think about six different doctors that were prescribing
15 different medicines. None of them ever talked to each other.
They did not know that the others were prescribing medicines
for her. And, unfortunately, she was not unique, and that
happened a whole lot.
But we figured out in that situation that a Medicare
patient, was receiving medicines that were not compatible with
one another. And we have just gone way beyond that in terms of
our technology and our ability to know what is going on in
those situations.
In this Committee we spend a fair amount of time on
homeland security, the other piece of what we do, and there is
a lot of discussion in the media and across the country about
what the National Security Agency is doing in terms of
telephone calls or electronic messages over the Internet, and
in an effort to try to make sure bad people do not come in and
do harm to us. And we have folks that are hacking into our
systems as we gather here today, and there is a real tension
between how do we protect our privacy, our rights as
individuals, and how do we protect ourselves and our country
from attacks, whether they be from terrorists or whether they
be from cyber terrorists.
Having said that, the kind of tools that are available to
protect our personal safety and our national security and
protect us from cyber attacks, the technology is pretty
amazing. And I think we are only scratching the surface in
terms of what we can do in a way that is respectful to privacy
rights to better harness technology, to identify whether it is
a doctor, whether it is one of these pill mills, or whether it
is a massage therapist--nothing against massage therapists--
whether it is a dental hygienist--nothing against dental
hygienists--but we want to make sure that they are prescribing
what is appropriate, what is lawful; and when they do not, that
we have the ability to detect that and do something about it.
The last thing I want to say is this: Parents have to get
their heads in the game. Most kids grow up in a home where they
have at least one, oftentimes two parents that really care
about them, love them, and want to make sure they are making
the right decisions and the parents are setting the right kind
of examples. The government cannot do this by itself. We need
to be helpful. We need to be supportive. We need to play our
role, and we have a big role to play. But so do parents and
family members, and they need to get their heads in the game.
And my hope is that holding a hearing like this not only helps
to encourage all of us that have these responsibilities to work
on these problems; my hope is that the word will get to a lot
of homes across the country where parents are not as mindful as
they need to be and remind them that they have a responsibility
as well. They have a whole lot at stake as well.
We have a pretty good to-do list here for us on this side
and for you on the other side of the table. Thank you for
helping us put that together, for the work that is being done.
And as I like to say, everything I do I know I can do better.
And as I learned from my father as a little boy growing up in
Roanoke, Virginia, I learned that if it is not perfect, make it
better. That is what I learned: This is not a perfect
situation. We are doing better in some respects, and we can do
a whole lot better, and we need to.
With that, this hearing is almost adjourned, and I am told
by this young lady over here on the left who is going to be
retiring--in how many days? Four days. Trina is going to be
retiring. She has been our chief clerk for a lot longer than
you would imagine. Looking at her, it is hard to believe she is
eligible to retire, but she is. And we appreciate very much her
work. I do not know if we are going to have another hearing
before you step down. I know we are going to have a business
meeting here later today and try to put out some of the
President's nominees. I just want to say in front of you and
those who have admired your work for many years, Trina, how
much we admire you and respect you and are grateful for your
service not just to this Committee, not just to the Senate, but
really to our country.
And with that having been said, the hearing record will
remain open for 15 days--that is until July 9 at 5 p.m.--for
the submission of statements and questions for the record.
And I would just say to our guests, three of us were here
today. A number of staff were here as well. As I said earlier,
we have a vote that starts at 5:30. Members are flying in from
all over the country, from their own home States. And the fact
that there are not more Members here, do not be discouraged by
that. I am not. You should not be either. Dr. Coburn and I and
our new Member from New Jersey, he is going to be good. I think
he is in office until at least October or so. Maybe November.
But we are going to get a lot of work out of him. He knows this
stuff, and he is going to be a good addition to the U.S.
Senate.
All right. I think that is it. It is a wrap, and with that
this hearing is adjourned. Thank you.
[Whereupon, at 4:59 p.m., the Committee was adjourned.]
A P P E N D I X
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