System to Detect Medicare Part D Fraud is Badly Flawed

For the most part, the MEDICs relied on external sources, such as complaints, rather than proactive research or analysis of prescription sales data.

In fiscal 2008, 87% of the 4,194 incidents of potential fraud and abuse identified came from external sources, such as complaints from plan sponsors, rather than through proactive methods, the OIG said. That's 15 incidents for every 100,000 beneficiaries.

Another impediment is that Medicare Part D plan sponsors, who may have been aware of abuse or fraud, are encouraged to refer cases to the MEDICs, but they are not required to do so.

"MEDICs may not have been aware of some potential fraud and abuse incidents because plan sponsors are not required to refer them," the OIG report said.

While some of the access problems have been or are being fixed, the system continues to prevent MEDICs from using the data to its fullest capacity.

MEDICs are supposed to have access to Medicare Part B, Part D, and other data, such as Medicaid and Medicare Part A, through an integrated system, the OIG said. "However, the full transition to this system is not expected to be complete until 2011. Until then, MEDICs must access data through individual systems," the OIG report said.

During FY 2008, of the 4,194 incidents of possible fraud and abuse identified, only 1,320 were investigated, 99 were referred to the OIG, and 39 were referred to the CMS for administrative action.