Medicare Part D Fraud

Implemented in 2006, Medicare Part D, also referred to as the Medicare Prescription Drug Program, provides drug coverage for tens of millions of elderly and disabled Americans. Under the program, private insurance companies—referred to as Part D Sponsors—provide prescription drugs to eligible beneficiaries either directly or through pharmacy benefit managers (so-called “PBMs”), and then submit claims to Medicare for the drugs’ cost.

With annual outlays exceeding $100 billion, Part D is one of the fastest-growing components of the Medicare system. Like other Medicare programs, Part D is subject to an ever-increasing amount of fraud by participating healthcare providers, including Part D sponsors, PBMs, pharmacies and prescribing physicians. Both Congress and the Health and Human Services Inspector General have raised the alarm on the uncontrolled fraud occurring under Part D.

When fraud results in improper claims for payment under the Medicare Part D program, it can violate the False Claims Act. Under the statute, whistleblowers can receive rewards of up to 30 percent of any government recovery.

Some of the more common types of fraud occurring under the Medicare Part D program include:

  • Overcharging Medicare for drugs.
  • Billing for drugs not actually provided.
  • Billing for drugs not covered by Medicare.
  • Billing for brand name drugs when generic drugs are provided instead.
  • Billing for drugs—especially opioids and other controlled substances—diverted for illegitimate purposes.
  • Billing for expired drugs.
  • Billing for drugs dispensed without a prescription, or with a falsified prescription.
  • Billing for drugs dispensed with prescriptions from unauthorized, excluded, or non-existent healthcare providers.
  • Billing for drugs provided in quantities that exceed approved limits.
  • Physician kickbacks in exchange for prescriptions.

One example of a successful whistleblower action for Medicare Part D fraud occurred with long-term care pharmacy PharMerica Corporation.

According to the whistleblower, a former PharMerica pharmacist, the company violated the False Claims Act by dispensing Schedule II narcotics in non-emergency situations without first obtaining a written prescription from a treating physician. The company ultimately paid $23.5 million, of which $4.3 million was allocated to the whistleblower.

With this settlement, and numerous others in which the government has recently been involved, the Department of Justice has made clear that going after Medicare Part D fraud is a very high priority.

To find out more about whether a particular type of fraud is actionable under the False Claims Act, contact us today.