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Key Medicare Tools To Safeguard Against Pharmacy Fraud and Inappropriate Billing Do Not Apply to Part D


Medicare Part D paid $168 billion for drugs for 46.8 million Medicare beneficiaries in 2018. Despite its size, Part D does not have the same protections against pharmacy fraud that other parts of Medicare have. OIG has longstanding concerns about pharmacy-related fraud and inappropriate billing in Part D. This issue brief is another step in OIG's larger strategy to fight this fraud and protect beneficiaries. It focuses on the lack of three key tools to safeguard Part D: enrollment, revocation, and preclusion.


To safeguard Medicare against fraud and inappropriate billing, it is crucial to keep out providers-including pharmacies-that pose risks to the program. However, CMS's three key tools for doing so-enrollment, revocation, and preclusion-apply to pharmacies only when they bill Parts B or C, not when they bill Part D.

Pharmacies must enroll in Medicare to bill Part B, but they are not required to enroll to bill Part D. Pharmacies that have their enrollment revoked for failing to meet Medicare requirements are still allowed to bill Part D. CMS adds certain pharmacies that pose risks to Medicare to a Preclusion List. CMS uses preclusion to prevent Part C from paying these pharmacies, but not to prevent Part D from paying them.


If the powerful oversight tools of enrollment, revocation, and preclusion were available to Part D, CMS could take direct action against pharmacies that pose risks to the Medicare program or beneficiaries. OIG views enrollment, with its screening process, as an extremely effective way to protect the Medicare program, including Part D. We continue to recommend that CMS require pharmacies that bill Part D to enroll in the Medicare program. This was an integral part of a previous recommendation that CMS has yet to implement. We also recommend that CMS allow revocation of Medicare enrollment for inappropriate billing of Medicare Part D and include on the Preclusion List pharmacies that inappropriately bill Part D. Lastly, we recommend that CMS apply the Preclusion List payment prohibition to pharmacies and other providers that dispense Part D drugs. CMS concurred with all three of our new recommendations.