- Associated Press - Thursday, May 10, 2012

WASHINGTON (AP) — It would take a mighty big pill box to hold them.

A pharmacy in Kansas billed Medicare for more than 1,000 prescriptions each for two patients in a single year, part of a pattern of questionable billings at 2,600 drugstores nationwide uncovered by federal investigators in a report Thursday.

The inspector general of the Health and Human Services department found that corner drugstores are vulnerable to billion-dollar fraud, partly because Medicare does not require the private insurers that deliver prescription benefits to seniors to report suspicious billing patterns.

“While some pharmacies may be billing extremely high amounts for legitimate reasons, all warrant further scrutiny,” said the report. Medicare paid $5.6 billion to drugstores whose billings are being questioned.

The analysis broke new ground by scrutinizing every claim submitted by the nation’s 59,000 retail pharmacies during 2009 — nearly 1 billion prescriptions. Using statistical analysis, investigators were able to reveal contrasts between normal business practices and potential criminal behavior.

“The findings call for a strong response to improve (program) oversight,” the report said.

In written comments, Medicare administrator Marilyn Tavenner said the agency mostly agrees with the inspector general’s call to action. But she suggested that requiring private insurers to monitor and report suspicious activity could place a burden on the companies and may flood government officials with leads that turn out to be useless.

Medicare also said it has anti-fraud contractors that are already keeping close tabs on the program.

“We believe it is important to note that (the inspector general’s) report identified what appeared to be questionable billing based on its own data analysis but did not determine any actual fraud committed by the pharmacies,” Tavenner wrote.

The inspector general’s office says its findings aren’t just smoke.

“What we are seeing in the data is extremely concerning,” said Jodi Nudelman, a regional inspector general in New York who directed the research.

Her team will turn over the names of the 2,637 pharmacies it identified for follow-up. They are “extreme billers, when you look at their peers and compare them,” added Nudelman.

A pharmacy trade group stressed that the vast majority of drugstores are law abiding businesses. Kevin Schweers, spokesman for the National Community Pharmacists Association, said the report “lacks sufficient detail to evaluate the medical legitimacy and appropriateness of the claims reviewed.”

Overall, the inspector general found only a small fraction of retail pharmacies — 4.4 percent — have telltale patterns of questionable billings. But in some parts of the country, the share was much higher, reaching nearly 20 percent of pharmacies in Miami, an area known as an incubator for Medicare fraud.

In Los Angeles, where 12 percent of pharmacies had questionable billings, one drugstore in a suburban strip mall billed Medicare more than $8.4 million, nine times the national average. That worked out to an average of 116 prescriptions per beneficiary.

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