Are You Controlling Fraud and Abuse in Your Prescription Drug ...

Are You Controlling Fraud and Abuse in Your Prescription Drug ...

Are You Controlling

Fraud and Abuse

in Your Prescription

Drug Program?

by | Ritu Malhotra and Sean M. Brandle

Most multiemployer health and welfare

plans have not yet been made aware of the

many potential problems associated with

prescription fraud and abuse by members.

This issue contributes to the growth

of plan costs and, even more importantly, to the decline of

member health.

According to the Drug Enforcement Administration,

nearly seven million Americans abuse prescription drugs, 1

and a 2009 Centers for Disease Control survey reported that

one in five high-school students had taken a prescription

drug (such as Oxycontin®, Percocet®, Adderall®, Ritalin® or

Xanax®) without a doctor’s prescription. 2 When asked how

they obtained the medication, the most common response

was “from a friend or relative for free.”

Almost 10% of all hospital admissions for substance abuse

in 2008 involved painkillers, up from 2.2% in 1998. Tragically,

a growing number of prescription drug overuse cases result

in fatal consequences. In almost one-third of U.S. states,

accidental drug poisoning now causes more deaths than traffic


Moreover, drug diversion—deflecting prescription drugs


benefits magazine july 2011

The fraudulent use of prescription drugs is a

costly—and growing—problem. Multiemployer

health and welfare plans can work with PBMs to

cut fraud and abuse by participants.

from their original medical purpose to the illegal market,

the primary type of prescription drug fraud—costs all U.S.

health insurers an estimated $72.5 billion per year. 3

Barriers to Action

There are two key reasons the fraud and abuse problem

has only recently begun to receive the critical attention it

deserves from sponsors of multiemployer health plans. The

first is based on the fact that almost all plans work with a

pharmacy benefit manager (PBM) that processes pharmacy

claims and assists with other administrative aspects of offering

a pharmacy benefit (i.e., plan design application, clinical

programs, formulary development and providing mail-order

pharmacy access). 4

These PBMs only recently began reviewing individual

patient drug therapy and utilization in aggregate to examine

drug therapy compliance levels, in the belief that increased

drug compliance may lead to a decrease in overall medical

expenses. Patient-level data also allows specific patientlevel

analyses, such as detailed fraud-and-abuse reporting.

continued on next page

july 2011 benefits magazine 27

health care

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The problem is aggravated by the fact that a PBM is often

the only entity with access to all of a patient’s claims because

patients may use multiple prescribers and pharmacies. Because

PBMs are armed with this data and access to realtime

pharmacy claims, they are in the best position to be

able to offer the most effective fraud-and-abuse programs.

Another key barrier to approaching the problem is the

lack of a uniform definition of what constitutes fraudulent

and abusive behavior. A solid determination often cannot be

established based on pharmacy claims utilization or other

objective criteria alone. Pain medications, the most highly

abused medications, are the most difficult to monitor due

to the subjective nature of pain and, therefore, the different

degrees of dosing required for each individual patient. For

this reason, PBMs have historically shied away from recommending

clinical programs for pain medications. The implementation

of quantity limits or requirements for prior authorization

of pain medications are likely to affect individuals

with legitimate pain problems (e.g., cancer patients) in addition

to fraudulent and abusive users.

takeaways >>

• Diverting prescription drugs from their original medical

purpose to the illegal market annually costs all U.S. health

insurers an estimated $72.5 billion.

• PBMs, which have real-time pharmacy claims, are able to

offer the most effective fraud-and-abuse programs.

• Detecting fraudulent and abusive utilization of prescription

drugs starts with identifying individuals with unusual

utilization patterns.

Identifying the Problem

Despite these barriers, there are ways to combat this problem.

The most effective strategy for detecting fraudulent and

abusive utilization of prescription drugs starts with identifying

unusual utilization patterns. An electronic evaluation of

pharmacy claims can identify:

• Members who received prescription drugs from multiple

pharmacies (poly-pharmacy)

• Members who received prescription drugs prescribed

by multiple prescribers (poly-prescribers)

• Members who have other pattern(s) of potential abuse

or misuse (e.g., duplicate therapy and excessive days’


Once the evaluation has identified individuals with “red

flags,” the PBM or medical vendor should further research

the unusual utilization patterns. The first step is to contact

the prescriber or prescribers to determine the medical rationale

for prescribing high abuse-potential medications and, if

appropriate, to establish coordination of care among many

prescribers. The pharmacist, as the last line of defense against

fraudulent and abusive activities, may also be able to provide

valuable information on the individual’s behavior. Once the

research is complete and fraud or abuse is established, the

plan sponsor, health plan and PBM should jointly determine

the necessary steps to address inappropriate, excess utilization.

Case Study

In 2010, Segal’s National Rx Consulting Practice worked

with a health fund covering about 13,500 active and retired

plan members. Because Oxycontin was their number one

drug (by overall drug spend) in 2008 and 2009, the trustees

and administrator were aware that there was a potential

fraud-and-abuse problem in their population. Although the

trustees had attempted to put controls in place (e.g., prior

authorizations and quantity limits), they suspected these

controls were not effective.

Segal’s analysis showed that 14% of the health fund’s total

drug spend was for drugs that had the potential for fraud and

abuse and that 9% of their claimants were taking these drugs

in ways that triggered potential red flags. More than 80 claimants

had seen seven or more prescribers within a one-year

period to obtain prescriptions for these potentially problematic

drugs, and one claimant had used six different pharmacies

to fill prescriptions from 16 different prescribers. Among


benefits magazine july 2011

health care

the flagged population were 40 families

with two or more claimants taking the

same drug with a potential for fraud

and abuse. One family had spent more

than $90,000 on Oxycontin alone.

Because of these findings, the trustees

held multiple meetings with the

PBM to review the analysis and the

processes in place to control prescription

fraud and abuse. After several discussions,

the PBM implemented customized

administrative protocols in its

system (e.g., quantity limits, refill-toosoon

thresholds and pharmacy lockdowns)

and agreed to provide regular

reporting to show how the administrative

system changes (also sometimes

called system edits) were working. It is

likely that the PBM will repeat the analysis

after the next plan year to provide

a year-over-year comparison report to

help the trustees understand the effectiveness

of the changes.

Call to Action

Multiemployer health and welfare

plans need to work closely with their

PBMs to implement controls and review

processes to identify the potential

for fraud and abuse. Most PBMs offer

both prospective and retrospective

drug utilization reviews for their clients

but, as the case study shows, not all of

these programs contain criteria that are

sophisticated enough to identify prescription

drug fraud and abuse. Health

plans with concerns about active fraud

and abuse should direct their PBM to

implement more targeted clinical edits.

It is important to know that the more

advanced PBMs can exclude individuals

likely to have unique pain relief

needs (e.g., cancer patients) from these

system edits, based on their previous

prescription history.

In addition to the implementation

of administrative system changes

made for clinical reasons or drug utilization

reviews, multiemployer health

and welfare funds still should conduct

regular evaluations of pharmacy claims

to identify potential fraudulent claims

and abusive individuals who may have

slipped through the cracks. Once the

identification and investigations are

complete, there are various options

plan sponsors can use to address individual

abuse of the pharmacy benefit.

For example, certain individuals can

be restricted to using a single pharmacy

or prescriber for particular drugs

with high abuse potential. This strategy

should be discussed with specific pharmacists

and/or prescribers to ensure

they are willing to participate in the

process. The professional judgment of

these medical professionals can be crucial

to ensuring that these individuals

are prevented from obtaining fraudulent

claims or abusing prescription


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