BP - Health Care Compliance Association

Increased government
oversight of
managed care plans—
Are you ready?
Editor’s note: Steven E. Skwara is a partner in
the Washington, DC offices of Epstein Becker
& Green, P.C. He may be reached by telephone
at 202/861-4192 or by e-mail at SSkwara@
ebglaw.com.
Medicare Advantage, Medicare Part D, and
Medicaid managed care plans should assess
whether they are prepared for sure-to-beincreased
governmental oversight of their
monitoring, investigating, and reporting of
providers and other “downstream” entities
for fraud and abuse. To that end, the first
part of this article discusses specific governmental
compliance requirements for fraud
and abuse programs, particularly as they
pertain to third-party monitoring, auditing,
and investigation. The second part of this
article discusses the implications of those
fraud and abuse compliance requirements
for government-contracted health plans, the
reasonableness of those requirements (or lack
thereof), and common indicia of an effective,
and presumably compliant, fraud and abuse
program.
Increased fraud and abuse compliance
requirements
Both federal and state government agencies
expect contracted Medicare and Medicaid
health plans to act as sentinels against
provider and “downstream” fraud and abuse.
Although prosecutors will continue to rely on
“whistleblowers” for federal, and increasingly,
state-level, fraud or False Claims Act cases,
recent comments show that prosecutors are
affirmatively expecting increased referrals for
By Steven E. Skwara
health care fraud prosecution from program
safeguard contractors. 1 Safeguard contractors,
in turn, rely on the reporting of fraud and
abuse by the front-line health plans.
The seemingly inexorable result of this
governmental sentinel effort, as evidenced by
increasingly specific regulatory and contractual
requirements regarding fraud and abuse,
is that government-contracted health plans
will have to demonstrate the efficacy of an
outward-looking fraud and abuse program
as part of an overall compliance portfolio.
As to Medicare, the Centers for Medicare
and Medicaid Services (CMS) has set forth
specific fraud and abuse requirements for
Medicare D plans and has stated its intention
to issue fraud and abuse requirements for
Medicare Advantage plans early in 2009.
In light of recommendations made by the
General Accounting Office in a recent report,
increased CMS auditing of the fraud and
abuse programs of Medicare Part D plans
appears imminent and has been identified
as an area of focus in the HHS-OIG FY
2009 Work Plan. As to Medicaid, against a
backdrop where the federal government has
recently renewed emphasis on Medicaid fraud
and abuse, state Medicaid agencies increasingly
require Medicaid HMOs systematically
to address fraud and abuse in their provider
networks.
Medicare Part D requirements for plan
sponsors
Congress and CMS have required Medicare
Part D plan sponsors to guard against fraud
and abuse by pharmacy benefits managers
(PBM), pharmacies, prescribing physicians,
pharmaceutical manufacturers, and others, as
part of a comprehensive compliance program.
Under the Medicare Modernization Act of
2003, 2 the federal government mandated that
Part D plan sponsors establish a program to
control fraud and abuse.
CMS has issued guidance to “assist Sponsors
in implementing a comprehensive
program to prevent and detect fraud and
abuse in the prescription drug program”
in Chapter 9 of CMS’ Prescription Drug
Benefit Manual (Manual). Although many
of the Manual’s recommendations purport
to be aspirational (e.g., “this chapter provides
recommendations,” 3 ), in reality, many Part D
plan sponsors view the “recommendations”
as mandatory, because those sponsors may
soon be subject to CMS reviews focused in
part on the efficacy of the sponsor’s fraud and
abuse program. Indeed, the HHS-OIG FY
2009 Work Plan specifically identifies this as
an area of focus for fiscal 2009, stating that
“[w]e will determine the extent to which plan
sponsors conduct inquiries, initiate corrective
actions and make referrals regarding potential
fraud and abuse.” 4 (CMS has also announced
that it plans to update its Part D fraud and
abuse guidance in early 2009, but that update
was not available at the time of this publication’s
deadline.)
The CMS Manual requires Part D plan
sponsors to implement plans to monitor and
investigate their transactional partners – “first
tier,” “downstream,” and “related” entities
involved in the administration or delivery
of the drug benefit. 5 These entities include a
plan sponsor’s PBM, pharmacies, prescribing
physicians, drug wholesalers, and pharmaceutical
manufacturers. The Manual does not,
however, explain how a health plan sponsor
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March 2009