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Rampant Fraud Feared as Medicare Drug Benefit Ramps Up

October 17, 2005
Some experts are criticizing the government's plans for fighting fraud in the new Medicare prescription drug benefit, saying the benefit is too complex to monitor properly and leaves too much discretion to companies that have fleeced government health programs in the past.

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Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan announced recently that Medicare has contracted with eight companies trained to detect fraudulent activity -- dubbed Medicare Rx Integrity Contractors.

Fraudulent activity would include companies overreporting the number of prescriptions filled or billing for brand-name drugs when generic drugs were actually dispensed. Other fraudulent activity includes inflating drug prices and soliciting or receiving kickbacks.

McClellan said older U.S. residents are the primary target for consumer fraud and noted that two scams related to Medicare beneficiaries already are under investigation. Investigators are examining incidents in Illinois and West Virginia in which beneficiaries were approached by people claiming to represent Medicare and asking for personal information.

McClellan noted the schemes affected only a few individuals. He said Medicare officials will work with the companies to detect fraud and coordinate efforts with providers, the HHS Office of Inspector General, and the FBI and other agencies.

But some experts say rampant abuses are inevitable, partly because of the program is so complex but also because private companies will be administering the benefit.

"Because the program has so many different plans, there's going to be millions of transactions and they're not going to be centralized in any meaningful or auditable way," Alex Sugerman-Brozan, director of the Prescription Access Litigation Project, told the Philadelphia Inquirer. said. "That means some of these abuses may be hard to detect at least until they've been going on for several years."

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