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With a laundry list of fraud concerns, Part D payments are far from perfect


As one of the youngest government-run health programs, Medicare Part D has been around for less than a decade, meaning it's just reaching the beginning stages of adolescence. And, like most adolescents, it's still searching for its identity.

Over the course of its short lifespan, Part D has faced plenty of hiccups. In June, for instance, the federal government arrested 243 people across the country connected fraud schemes that cost the government approximately $712 million. Forty-four of those people were accused of defrauding the Medicare Part D program.

In Florida (as usual), the amount of Part D fraud was particularly jarring. Twenty-seven individuals tied to various pharmacies in the state have been charged with fraudulently billing at least $43.8 million.

In the grand scheme of the program, these are isolated incidents. But for many, the Department of Justice's fraud bust in June was a "coming of age" moment that served as an exclamation point at the end of a growing list of fraud, waste and abuse concerns dating back to the program's inception.

But not everyone saw it that way, it seems. In an editorial for Forbes last week, Merrill Matthews, a resident scholar with the Institute for Policy Innovation in Dallas, described how Medicare Part D should be the posterchild for efficiency, noting that it "clearly defies most government program stereotypes." After all, Part D boasts an improper payment rate of just 3.3 percent, according to the Office of Management and Budget (OMB), a far cry from its healthcare counterparts, Medicare A and B (12.7 percent) and Medicare Advantage (9 percent).

Based on those figures alone, Matthews is right. Part D remarkably outperforms almost any other government-run healthcare program. Unfortunately, the OMB figures don't paint the full picture.

In fact, the low improper payment rate associated with Part D can be traced back to an overwhelming lack of data, along with inadequate oversight by the Centers for Medicare & Medicaid Services (CMS). For Part D sponsors, reporting fraud and abuse to the government is voluntary, and like most voluntary endeavors, it happens less than half of the time, according to a 2014 report by the Office of Inspector General (OIG).

It wasn't the first time the OIG had exposed weaknesses in the Part D plan. In 2008, the agency revealed that 24 of the 86 Part D plan sponsors did not identify any potential fraud and abuse incidents. Those that did report found that inappropriate billing was the most prevalent. Even when they did find problems, some sponsors didn't investigate or refer cases to CMS.

Since that 2008 report, the OIG has been frantically waving its arms in an attempt to draw attention to the Part D deficiencies. On multiple occasions, the OIG has called for CMS to require plan sponsors to report fraud and abuse so that the government can adequately determine the effectiveness of their prevention and detection efforts.

So far, it hasn't happened. During a hearing by the House Subcommittee on Oversight and Investigations, legislators openly wondered why CMS hadn't considered the OIG's repeated recommendation to mandate fraud and abuse reporting by Part D sponsors, while pointing to a 156 percent spike in commonly abused opioids within Part D plans over the past nine years, translating to a $3.9 billion expense in 2014.

Others, like ProPublica, have pointed to data that shows fraud "flourishes" within the Part D program. Even some sponsors described it as "kind of a black hole." The news outlet has also identified disturbing trends within Part D prescription data that point to overprescribing practices that could be harmful to patients, such as antipsychotics for dementia patients. Providers suspended from Medicare have routinely billed Part D; however, it wasn't until last year that CMS required Part D prescribers to be enrolled in Medicare, a regulation that aims to close a significant gap in controlling unnecessary prescriptions for commonly abused drugs like oxycodone. In the subcommittee hearing, Shantanu Agrawal, M.D., deputy administrator and director for the Center for Program Integrity at CMS, told lawmakers that CMS would finally complete the process of enrolling more than 400,000 prescribers by January 2016, 18 months after the rule was finalized.

It's not that Medicare Part D "defies most government stereotypes"--it has just managed to effectively evade them. Holding the program up as the posterchild for preventing improper payments ignores years of noticeable oversight flaws. Judging Part D solely on its improper payment rates is like awarding a Grammy to a recording artist based on a single note.

This is not to say Part D is broken beyond repair, but like every other Medicare program, it remains vulnerable to fraud and improper payments. The problem is, we just don't have the data to see it quite as clearly. - Evan (@HealthPayer)