Medicaid Fraud, Abuse Linked to Controlled Substances

Janice Simmons, for HealthLeaders Media , October 5, 2009

The Centers for Medicare and Medicaid Services (CMS) needs to do a better job "of providing guidance and regulatory enforcement" for detecting the abuse of controlled substances by Medicaid beneficiaries, said Sen. Thomas Carper (D-DE), chairman of the Homeland Security and Governmental Affairs subcommittee on federal financial management, at a hearing last week.

In a report to the committee, the General Accountability Office (GAO) found in an analysis of Medicaid claims from five states—California, Illinois, New York, North Carolina, and Texas—that thousands of Medicaid beneficiaries and providers were involved in purchasing controlled substances fraudulently through the Medicaid program, Carper said.

In one instance, GAO found 65 medical providers and pharmacies in the states previously had been barred or excluded from federal healthcare programs, including Medicaid, when they wrote or filled Medicaid prescriptions for controlled substances—which act as painkillers, sedatives, and stimulants—during fiscal 2006 and 2007. However, Medicaid approved the claims at a cost of approximately $2.3 million.

On the other side, GAO found that approximately 65,000 Medicaid beneficiaries in the five states investigated had visited six or more physicians to acquire prescriptions for the same type of controlled substances in the selected states during fiscal years 2006 and 2007. These individuals—many of whom may have been involved in "doctor shopping"—incurred approximately $63 million in Medicaid costs for the drugs.

Some beneficiaries may have justifiable reasons for getting prescriptions from multiple medical practitioners—such as visiting specialists or several doctors in the same medical group. However, analysis of Medicaid claims found at least 400 of them visited 21 to 112 medical practitioners and up to 46 different pharmacies for the same controlled substance, Gregory Kutz, managing director of GAO's Forensic Audits and Special Investigations unit, told the panel.

About 1,800 prescriptions were written for dead patients at a cost of more than $200,000 and another 1,200 prescriptions were "written" by deceased physicians in which Medicaid paid about $500,000 in Medicaid claims based on controlled substance. Kutz said GAO's analysis probably understates the instances and dollar amounts involved.

Kutz said the states need to continue efforts to monitor the execution of the prescription program—including matching Medicaid beneficiary files with third-party databases to determine eligibility and evaluate compliance.

While states are working to prevent Medicaid prescription abuse, a number of "significant issues" still need to be addressed," said Ann Kohler, director of the National Association of State Medicaid Directors. Many states are being hampered by tight state budgets that are slowing efforts to obtain technology-related improvements to detect fraud, she said.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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