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MEDICARE PART D: MEASURES NEEDED TO 

STRENGTHEN PROGRAM INTEGRITY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JULY 14, 2015 

Serial No. 114–66 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

TIM MURPHY, Pennsylvania 

Chairman 

DAVID B. MCKINLEY, West Virginia 

Vice Chairman 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

H. MORGAN GRIFFITH, Virginia 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

DIANA DEGETTE, Colorado 

Ranking Member 

JANICE D. SCHAKOWSKY, Illinois 

KATHY CASTOR, Florida 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

JOSEPH P. KENNEDY, III, Massachusetts 

GENE GREEN, Texas 

PETER WELCH, Vermont 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Timothy Murphy, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 1 

Prepared statement .......................................................................................... 3 

Hon. Diana DeGette, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 4 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 5 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 7 

Prepared statement .......................................................................................... 8 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 66 

WITNESSES

Shantanu Agrawal, M.D., Deputy Administrator and Director, Center for 

Program Integrity, Centers for Medicare & Medicaid Services, Department 

of Health and Human Services ........................................................................... 9 

Prepared statement .......................................................................................... 12 

Answers to submitted questions ...................................................................... 74 

Ann Maxwell, Assistant Inspector General, Office of Evaluation and Inspections, Office of Inspector General, Department of Health and Human Services ......................................................................................................................... 23 

Prepared statement .......................................................................................... 25 

Answers to submitted questions ...................................................................... 85 

SUBMITTED MATERIAL

Subcommittee memorandum .................................................................................. 68 

Statement of the National Community Pharmacists Association, July 14, 

2015, submitted by Mr. Murphy ......................................................................... 72 

(1) 

MEDICARE PART D: MEASURES NEEDED TO 

STRENGTHEN PROGRAM INTEGRITY 

TUESDAY, JULY 14, 2015 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:02 a.m., in room 

2322 of the Rayburn House Office Building, Hon. Tim Murphy 

(chairman of the subcommittee) presiding. 

Members present: Representatives Murphy, McKinley, Barton, 

Burgess, Blackburn, Griffith, Bucshon, Flores, Brooks, Mullin, 

Hudson, Collins, DeGette, Schakowsky, Castor, Tonko, Yarmuth, 

Clarke, Kennedy, Green, Welch, and Pallone (ex officio). 

Also present: Representative Bilirakis. 

Staff present: Leighton Brown, Press Assistant; Noelle Clemente, 

Press Secretary; Jessica Donlon, Counsel, Oversight and Investigations; Charles Ingebretson, Chief Counsel, Oversight and Investigations; Alan Slobodin, Deputy Chief Counsel, Oversight; Traci Vitek, 

Detailee, Health; Jessica Wilkerson, Oversight Associate; Ryan 

Gottschall, Democratic GAO Detailee; Meredith Jones, Democratic 

Director of Communications, Member Services, and Outreach; 

Christopher Knauer, Democratic Oversight Staff Director; Una Lee, 

Democratic Chief Oversight Counsel; and Elizabeth Letter, Democratic Professional Staff Member. 

Mr. MURPHY. Good morning. I convene this hearing of the Subcommittee on Oversight and Investigations. 

OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

We are here again today to discuss an ongoing problem with our 

entitlement programs—waste, fraud, and abuse—this time in the 

Medicare Part D program. However, the failures that we will hear 

about today go far beyond lost dollars and cents, rather, they are 

helping to feed the prescription drug abuse crisis that is gripping 

the country. 

Medicare Part D is the fastest growing component of the Medicare program, providing approximately 39 million beneficiaries 

with supplemental prescription drug coverage. Given this rapid 

growth, Medicare Part D has been a prime target for fraud and 

abuse. In fact, this past June, the Department of Justice announced a nationwide Medicare fraud takedown, which led to 

charges against 243 individuals for approximately $712 million in 

2 

false billings. More than 44 of the defendants were arrested on 

fraud related to Medicare Part D. This joint law enforcement effort, 

which involved the Department of Justice, the Department the 

Health and Human Services, the Office of Inspector General, and 

the FBI should be commended. But more work needs to be done at 

the agency level to ensure that fraudsters are not able to take advantage of the program in the first place. 

Thankfully, since the inception of the Part D program, the Office 

of Inspector General has been working diligently to reduce waste, 

fraud, and abuse in the program. The OIG has released numerous 

reports and issued several recommendations intended to strengthen the integrity of Medicare Part D, which would save taxpayers 

a tremendous amount of money and would ensure that prescription 

drugs are being used as intended and not overprescribed or diverted. 

Unfortunately, CMS has not implemented these recommendations. In its portfolio, the OIG highlighted at least nine recommendations that CMS has not implemented. All of these recommendations were issued to CMS in at least one previous OIG report, and in some instances, up to five previous reports that date 

back to December 2006. And these are commonsense recommendations; for example, requiring plan sponsors to report all potential 

fraud abuse to CMS or the Medicare Drug Integrity Contractor. 

This recommendation was issued in five different OIG reports. 

Another important recommendation: implement an edit to reject 

prescriptions written by providers who have been excluded from 

the Medicare program. That makes sense. Yet CMS hasn’t taken 

action to implement these recommendations. And just 6 weeks ago, 

one of today’s witnesses, Dr. Agrawal, testified before this subcommittee and said, ‘‘holding our feet to the fire is appropriate,’’ 

and when asked about fraud occurring under CMS’ watch, and as 

I said, that’s precisely what we are going to be doing today. 

CMS’ failure to implement these recommendations has led to 

trends of questionable billing associated with pharmacies, prescribers, and beneficiaries. In fact, in its Data Brief, which analyzed prescription drug events, OIG found that a lot of questionable 

billing was tied to commonly abused opioids. 

This subcommittee has held a series of hearings examining the 

growing problem of prescription drugs and heroin addiction we 

know is ravaging our country. The opioid abuse epidemic resulted 

in a loss of 43,000 lives last year, and the problem continues to get 

worse. 

As we examine the Medicare Part D program, it troubles me that 

between 2006 and 2014, the total number of beneficiaries receiving 

commonly abused opioids grew by 92 percent, compared to 68 percent for all drugs. Similarly, the average number of prescriptions 

for commonly abused opioids per beneficiary grew by 20 percent, 

compared to 3 percent for all drugs. Since 2006, Medicare spending 

for commonly abused opioids has grown faster than spending for all 

Part D drugs. We need to take a closer look at those numbers and 

make sure that this program is not contributing to this devastating 

epidemic. 

The OIG has outlined several commonsense recommendations 

that CMS can implement. Now it is incumbent upon CMS to take 

3 

action and actually prevent fraud and abuse before it reaches a 

level that requires a nationwide takedown. 

The committee is concerned that it continues to hold hearings 

like this one today where we see steps not taken and tools not utilized to protect the integrity of these programs as well as taxpayers’ dollars. Now, we acknowledge it is the people who are committing fraud, whether they are physicians or pharmacists or other 

people, they are the ones we are going after, but we are listening 

today to the ideas of Dr. Agrawal and Ms. Maxwell of how we can 

do that. 

So I thank our witnesses for joining us. You have the ability to 

save the American taxpayer massive amounts of money, and of 

course, save lives in this process. 

It is this subcommittee’s hope that we will hear concrete plans 

from you on how you will go about accomplishing this task. I might 

say, we need funds in other areas of care, and so we’d also like to 

hear when you make recommendations if there are some things 

that actually save us money that we know we need—for example, 

the mental health sphere—please tell us that as well. 

[The prepared statement of Mr. Murphy follows:] 

PREPARED STATEMENT OF HON. TIM MURPHY

I convene this hearing of the Subcommittee on Oversight and Investigations. We 

are here again today to discuss an ongoing problem with our entitlement programs: 

waste, fraud, and abuse. This time in the Medicare Part D program. However, the 

failures that we will hear about today go far beyond lost dollars and cents, rather, 

they are helping to feed the prescription drug abuse crisis that is gripping the country. 

Medicare Part D is the fastest growing component of the Medicare program, providing approximately 39 million beneficiaries with supplemental prescription drug 

coverage. Given this rapid growth, Medicare Part D has been a prime target for 

fraud and abuse. In fact, this past June, the Department of Justice announced a 

nationwide Medicare fraud takedown, which led to charges against 243 individuals 

for approximately $712 million in false billings. More than 44 of the defendants 

were arrested on fraud related to Medicare Part D. 

This joint law enforcement effort, which involved the Department of Justice, the 

Department the Health and Human Services, the Office of Inspector General, and 

the FBI should be commended. But more work needs to be done at the agency level 

to ensure that fraudsters are not able to take advantage of the program in the first 

place. 

Thankfully, since the inception of the Part D program, the Office of Inspector 

General has been working diligently to reduce waste, fraud, and abuse in the program. The OIG has released numerous reports and issued several recommendations 

intended to strengthen the integrity of Medicare Part D, which would save taxpayers a tremendous amount of money and would ensure that prescription drugs 

are being used as intended and not overprescribed or diverted. 

Unfortunately, CMS has not implemented these recommendations. In its Portfolio, 

the OIG highlighted at least nine recommendations that CMS has not implemented. 

All of these recommendations were issued to CMS in at least one previous OIG report, and in some instances, up to five previous reports that date back to December 

2006. 

And these are commonsense recommendations. For example, requiring plan sponsors to report all potential fraud abuse to CMS or the Medicare Drug Integrity Contractor. This recommendation was issued in five different OIG reports. Another important recommendation: implement an edit to reject prescriptions written by providers who have been excluded from the Medicare program. That makes sense. Yet 

CMS hasn’t taken action to implement these recommendations. Just six weeks ago, 

one of today’s witnesses, Dr. Agrawal testified before this subcommittee and said, 

‘‘holding our feet to the fire is appropriate,’’ when asked about fraud occurring under 

CMS’ watch, and that’s precisely what we are here to do today. 

CMS’ failure to implement these recommendations has led to trends of questionable billing associated with pharmacies, prescribers, and beneficiaries. In fact, in its 

4 

Data Brief which analyzed prescription drug events, OIG found that a lot of questionable billing was tied to ‘‘commonly abused opioids.’’ This subcommittee has held 

a series of hearings examining the growing problem of prescription drugs and heroin 

addiction that is ravaging our country. The opioid abuse epidemic resulted in 43,000 

lives lost last year and the problem continues to only get worse. As we examine the 

Medicare Part D program, it troubles me that between 2006 and 2014, the total 

number of beneficiaries receiving commonly abused opioids grew by 92 percent, compared to 68 percent for all drugs. Similarly, the average number of prescriptions for 

commonly abused opioids per beneficiary grew by 20 percent, compared to 3 percent 

for all drugs. Since 2006, Medicare spending for commonly abused opioids has grown 

faster than spending for all Part D drugs. We need to take a closer look at these 

numbers and make sure that this program is not contributing to this devastating 

epidemic. 

The OIG has outlined several common sense recommendations that CMS can implement. Now it is incumbent upon CMS to take action and actually prevent fraud 

and abuse before it reaches a level that requires a nationwide takedown. The committee is concerned that it continues to hold hearings like this one today where we 

see steps not taken and tools not utilized to protect the integrity of these programs 

as well as our taxpayers’ dollars. 

I would like to thank our witnesses for joining us -you all have the ability to save 

the American taxpayer massive amounts of money, and save lives in the process. 

It is this subcommittee’s hope that we will hear concrete plans from you on how 

you will go about accomplishing this task. 

Mr. MURPHY. So thank you for being here today, and I now recognize the ranking member of the subcommittee, Ms. DeGette of 

Colorado, for 5 minutes. 

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Ms. DEGETTE. Thank you so much, Mr. Chairman. 

Medicare Part D represents the fastest growing component of the 

Medicare program overall. From 2006 to 2014, spending for Part D 

drugs increased by 136 percent from $51.3 billion to $121 billion. 

In the last 5 years, the OIG has reported a 134 percent increase 

in complaints and cases involving the Part D program. The Office 

of Management and Budget has declared Medicare Part D a higherror program with an estimated improper payment rate of 3.3 percent, or $1.9 billion. That could make up the difference with the 

21st Cures and the money we had to take out. P.S. 

As with all Federal healthcare programs, reducing improper payments and protecting taxpayer dollars must be a priority of the Department and a priority of this committee, but here’s the part 

where I pile on to the chairman’s statement because it is not just 

about Federal taxpayer dollars, it is about all of the other problems 

you have with Medicare Part D. 

As the chairman said, we are in the midst of a prescription drug 

abuse crisis. In 2013, prescription painkillers were involved in over 

16,000 overdose deaths, and heroin was involved in an additional 

8,200 deaths. Over 2.1 million Americans live with a prescription 

opioid addiction while 467,000 Americans are addicted to heroin. 

These are absolutely devastating numbers, and the chairman is 

right: this series of hearings that we have had this year has been, 

I think, one of the most eye-opening series of hearings that we 

have ever had in this committee illuminating this problem. And 

Part D is a part of it because drug diversion and overprescribing 

are serious challenges in the program. 

5 

Between 2006 and 2014, Part D spending for commonly abused 

opioids grew by 156 percent, which outpaced the growth of spending for all Part D drugs. Additionally, generic Vicodin was the 

number one prescribed drug in the Part D program in 2013. 

The OIG is going to testify that investigations into Part D fraud, 

waste, and abuse have uncovered not only financial harm to the 

program but also serious medical harm to individual patients from 

the inappropriate prescribing and diversion of opioids as well as 

other prescription drugs. Complex criminal networks involving 

healthcare professionals, pharmacies, and street traffickers are becoming a pervasive element of Part D fraud schemes. In fact, last 

month, the Department announced the largest takedown in the history of the Medicare Fraud Strike Force, resulting in charges 

against 243 individuals involving about $712 million in false billings. More than 44 of the defendants arrested were charged with 

fraud related to Part D. 

So I want to take a minute to recognize both the OIG and CMS 

for the excellent work in achieving this important outcome and 

sending a message to the perpetrators that those who steal from 

Federal healthcare programs will pay a high price for their crimes. 

I look forward to hearing from Dr. Agrawal, our perennial witness to this committee now, about what the agency has done to 

strengthen program integrity in Part D, particularly as it pertains 

to the issue of drug diversion and overprescribing. I know that the 

agency’s Overutilization Monitoring System has already resulted in 

a substantial reduction in the number of opioid overutilizers in 

Part D, and I think this is an excellent step in the Federal effort 

to address the prescription drug abuse epidemic. 

However, as we are going to hear from OIG today, Part D remains vulnerable to fraud, and there are additional opportunities 

to identify fraud, waste, and abuse. As the OIG describes, ensuring 

the integrity of the Part D program requires constant and proactive 

efforts at every level from the plan sponsors to CMS Program Integrity Contractors to the oversight role. However, CMS does not 

require plan sponsors to report potential fraud and abuse. In 2012, 

only 35 percent of plans reported such data voluntarily. In the 

opinion of the OIG, the low level of fraud identified by some plan 

sponsors raises questions about the sufficiency of their fraud and 

abuse detection programs. 

I know, Dr. Agrawal, you will have more to tell us about this 

today. I think it is important, Mr. Chairman, that we follow up 

with the plan sponsors themselves to find out why they are not reporting this information about the fraud detection system. It would 

have been helpful to have them here today but perhaps we can 

have another hearing, and with that, I yield back. Thanks. 

Mr. MURPHY. The gentlelady yields back. 

I now recognize the vice chair of the full committee, Mrs. 

Blackburn, for 5 minutes. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman. 

6 

I want to say thank you to our witnesses. It is not your first appearance, and I am certain it is not going to be your last. We are 

so pleased to dig into this issue. The chairman spoke very well to 

that. 

And going back to what Ms. DeGette was saying, when you look 

at the opioids, you have got the abuse. The beneficiaries receiving 

these prescriptions grew by 92 percent in 8 years. Now, common 

sense is going to tell you something is wrong with that. I mean, 

that is just common sense. And then last month we had 243 individuals charged with $712 million in false billings. These people 

were also charged with money laundering, aggravated identify 

theft, and what these crimes highlight and what this growth highlights is basically what is happening at CMS, Dr. Agrawal, which 

is the pay-and-chase model, and it is just not working. My office 

has just completed a study going back and looking at the Inspector 

General reports, and I want you to know, HHS ranks as, I think 

it is number 4 over the past 10 years in collective abuse of—no, 

number 2. They are number 2 on the list, $10.3 billion wasted. OIG 

has pinpointed this. And you have good suggestions. You have got 

nine outstanding recommendations made for CMS right now that 

you can do something about this, and hasn’t been implemented. 

Now, you are going to say we need more money. Well, guess 

what? When you have got a budget that is closing in on a trillion 

dollars and you have got $10.3 billion worth of waste that you have 

done nothing about, we need to come dock you that $10.3 billion. 

And by the way, that is just a 4-year window. You don’t deserve 

more money. You don’t deserve it because you’re not taking good 

care of the taxpayer dollars that are coming your way. 

What we want is to make certain that people that need a program and deserve a program and are rightfully in a program are 

going to receive the benefits of that program, but waste, fraud, and 

abuse is going to be targeted and it is going to be rooted out, and 

when you are given recommendations, we expect those recommendations to see an action. And don’t tell me you are overworked and don’t tell me you don’t have enough money because 

when you have got a job to do, you work until the job is done, and 

that is what we are wanting to see is that you are going to do your 

job. 

So my question to you today is going to be very pointed. You 

have been given recommendations. Do you agree with the recommendations? What are you doing to enact those recommendations, and what is your timeline for having them completed? 

And those are the questions I am going to have, Mr. Chairman. 

I will yield my time to whomever would like the balance of my 

time. 

Mr. MURPHY. Is there anybody on this side who would like to 

speak on this? 

If not, the gentlelady’s time, she yields back, and now recognize 

the ranking member of the full committee, Mr. Pallone, for 5 minutes. 

7 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Mr. Chairman. 

The Medicare Part D program has been a great success for our 

Nation’s seniors and for people with disabilities, and I am glad we 

are here today to discuss ways to strengthen and improve it. 

For decades before its enactment, seniors and disabled Americans, often living on fixed incomes, struggled to afford the rising 

costs of prescription drugs. Now, more than 40 million Americans 

have access to affordable medications through the Medicare Part D 

program, and the ACA strengthened Part D and took crucial steps 

to improve affordability and access by closing the gap in coverage 

where beneficiaries pay the full cost of their prescriptions, known 

as the donut hole. Before the ACA, many beneficiaries struggled 

with crippling out-of-pocket costs in the coverage gap. The ACA 

gradually phases out the donut hole, and closes it completely by 

2020. Since the law’s enactment, 9.4 million seniors and people 

with disabilities have saved over $15 billion on prescription drugs, 

an average of $1,598 per beneficiary. In 2014 alone, nearly 5.1 million seniors and people with disabilities saved $4.8 billion, or an 

average of $941 per beneficiary. These are real dollars and real 

savings for Americans, allowing them to live healthier lives and 

have the peace of mind that they won’t have to decide between putting food on the table or paying for lifesaving medications. 

In addition, the ACA strengthened Medicare by improving the 

solvency of the program and strengthening program integrity. Notably, the law moved beyond the traditional pay-and-chase model 

to a preventative approach that seeks to keep fraudulent suppliers 

out of the program before fraud, waste, and abuse occur. For example, under the authorities in the ACA, CMS recently issued a final 

regulation that requires all Part D prescribers to enroll in Medicare. This will help ensure that Part D drugs are only prescribed 

by individuals who are qualified under State law and under the requirements of the Medicare program, and it implements a longstanding recommendation by the Department’s Office of Inspector 

General. 

The same rule also gives CMS the authority to revoke a provider’s Medicare Part D enrollment status under certain circumstances, including if CMS determines that the provider represents a threat to the health and safety of Medicare beneficiaries 

or has a pattern of prescribing Part D drugs that is abusive. 

And finally, to reduce prescription drug abuse and diversion, 

CMS now requires plan sponsors to implement internal controls to 

prevent overutilization of both opioids and acetaminophen. These 

steps and many others are transforming Medicare Part D program 

integrity efforts, making them more data-driven and risk-based, 

and I look forward to hearing from both the Office of Inspector 

General and from CMS about the important steps the Agency has 

taken to improve program integrity in Part D. 

I also wanted to highlight the important bipartisan work of this 

committee to address one of the OIG’s recommendations to improve 

Part D program integrity. In 2014, the OIG once again recommended that CMS seek statutory authority to implement a 

8 

pharmacy lock-in program that would allow prescription drug plan 

sponsors in Medicare Part D to develop safe prescribing and dispensing programs for beneficiaries that are prescribed high volumes of controlled substances, and I introduced legislation on this 

issue immediately following the OIG’s earlier work, the Medicare 

Prescription Drug Integrity Act of 2013. I am gratified that H.R. 

6, the 21st Century Cures Act, passed overwhelmingly by the 

House last Friday, acts on this recommendation and gives Part D 

plan sponsors the authority to establish these lock-in programs. 

This provision strikes the right balance to protect the integrity of 

the Part D program and improve patient safety, while carefully 

protecting beneficiary access. It is a strong example of what this 

committee can achieve when working in a bipartisan manner to implement commonsense policy solutions. 

So I look forward to hearing from Assistant Inspector General 

Maxwell about the OIG’s outstanding recommendations and from 

Dr. Agrawal regarding CMS’ ongoing efforts to strengthen Part D. 

Thank you, Mr. Chairman, for convening this hearing today. I 

was going to yield to—I don’t know if anybody else wants the time. 

I guess not, so I will just yield back. Thank you. 

[The prepared statement of Mr. Pallone follows:] 

PREPARED STATEMENT OF HON. FRANK PALLONE, JR. 

Thank you, Chairman Murphy, for holding this important hearing. The Medicare 

Part D program has been a great success for our Nation’s seniors and for people 

with disabilities, and I am glad we are here today to discuss ways to strengthen 

and improve the program. 

For decades before its enactment, seniors and disabled Americans, often living on 

fixed incomes, struggled to afford the rising costs of prescription drugs. 

Now, more than 40 million Americans have access to affordable medications 

through the Medicare Part D program. 

The Affordable Care Act strengthened Part D and took crucial steps to improve 

affordability and access by closing the gap in coverage where beneficiaries pay the 

full cost of their prescriptions, known as the donut hole. Before the ACA, many 

beneficiaries struggled with crippling out-of-pocket costs in the coverage gap. 

The ACA gradually phases out the donut hole, and closes it completely by 2020. 

Since the law’s enactment, 9.4 million seniors and people with disabilities have 

saved over $15 billion on prescription drugs, an average of $1,598 per beneficiary. 

In 2014 alone, nearly 5.1 million seniors and people with disabilities saved $4.8 billion, or an average of $941 per beneficiary. 

These are real dollars and real savings for Americans, allowing them to live 

healthier lives and have the peace of mind that they won’t have to decide between 

putting food on the table or paying for lifesaving medications. 

In addition, the ACA strengthened Medicare by improving the solvency of the program and strengthening program integrity. Notably, the law moved beyond the traditional ‘‘pay and chase’’ model to a preventative approach that seeks to keep fraudulent suppliers out of the program before fraud, waste, and abuse occur. 

For example, under authorities in the ACA, CMS recently issued a final regulation that requires all Part D prescribers to enroll in Medicare. This will help ensure 

that Part D drugs are only prescribed by individuals who are qualified under State 

law and under the requirements of the Medicare program, and it implements a long 

standing recommendation by the Department’s Office of Inspector General. 

The same rule also gives CMS the authority to revoke a provider’s Medicare Part 

D enrollment status under certain circumstances, including if CMS determines that 

the provider represents a threat to the health and safety of Medicare beneficiaries 

or has a pattern of prescribing Part D drugs that is abusive. 

Finally, to reduce prescription drug abuse and diversion, CMS now requires plan 

sponsors to implement internal controls to prevent overutilization of both opioids 

and acetaminophen. 

These steps and many others are transforming Medicare Part D program integrity 

efforts, making them more data-driven and risk-based. I look forward to hearing 

9 

from both the Office of Inspector General and from CMS about the important steps 

the Agency has taken to improve program integrity in Part D. 

I’d also like to highlight the important bipartisan work of this committee to address one of the OIG’s recommendations to improve Part D program integrity. In 

2014, the OIG once again recommended that CMS seek statutory authority to implement a pharmacy ‘‘lock-in’’ program that would allow prescription drug plan sponsors in Medicare Part D to develop safe prescribing and dispensing programs for 

beneficiaries that are prescribed high volumes of controlled substances. 

I introduced legislation on this issue immediately following the OIG’s earlier 

work, the Medicare Prescription Drug Integrity Act of 2013. I am gratified that H.R. 

6, the 21st Century Cures Act, passed overwhelmingly by the House last Friday, 

acts on this recommendation and gives Part D plan sponsors the authority to establish these lock-in programs. This provision strikes the right balance to protect the 

integrity of the Part D program and improve patient safety, while carefully protecting beneficiary access. It is a strong example of what this committee can achieve 

when working in a bipartisan manner to implement commonsense policy solutions. 

I look forward to hearing from Assistant Inspector General Maxwell about the 

OIG’s outstanding recommendations and from Dr. Agrawal regarding CMS’ ongoing 

efforts to strengthen Part D. 

Thank you to the chairman for convening this hearing today, and I yield back. 

Mr. MURPHY. I thank the gentleman for yielding back. 

I might comment on the opening statement. You can see that I 

think this committee does its best work when we are united, and 

it is clear that that is the case today. 

I also want to make sure I ask unanimous consent if any other 

Members want to introduce any opening statements for the record, 

they can do so, and without objection, those documents will be accepted. 

You are now aware that the committee is holding an investigative hearing, and when doing so has the practice of taking testimony under oath. Do either of our witnesses today have any objections to testifying under oath? Both of them say no. The Chair then 

advises you that under the rules of the House and the rules of the 

committee, you are entitled to be advised by counsel. Do either of 

you desire to be advised by counsel during your testimony today? 

And both say no. 

In that case, if you would please rise and raise your right hand, 

I will swear you in. 

[Witnesses sworn.] 

Mr. MURPHY. Thank you. You may be seated. Both witnesses 

said yes. 

You are now under oath and subject to the penalties set forth in 

Title XVIII, section 1001 of the United States Code. You may now 

give a 5-minute summary of your written statement, and we will 

start with you, Dr. Agrawal. You may begin. 

STATEMENTS OF SHANTANU AGRAWAL, M.D., DEPUTY ADMINISTRATOR AND DIRECTOR, CENTER FOR PROGRAM INTEGRITY, CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES; AND ANN 

MAXWELL, ASSISTANT INSPECTOR GENERAL, OFFICE OF 

EVALUATION AND INSPECTIONS, OFFICE OF INSPECTOR 

GENERAL, DEPARTMENT OF HEALTH AND HUMAN SERVICES 

STATEMENT OF SHANTANU AGRAWAL 

Dr. AGRAWAL. Chairman Murphy, Ranking Member DeGette, 

and members of the subcommittee. Thank you for the invitation to 

discuss CMS’ recent work to improve the Medicare prescription 

10 

drug program, also known as Medicare Part D. Our objective is to 

ensure that all Medicare beneficiaries receive the medicines they 

need while reducing and preventing prescription drug abuse. 

We appreciate the subcommittee’s continued focus on the problem of opioid abuse and efforts to combat the overutilization of prescription drugs. We also thank the OIG for its work to help us improve the Part D program. 

The growth of prescription drug abuse has touched providers, 

pharmacies and beneficiaries in the Part D program. As this committee has heard, the problems with overutilization, drug diversion, and a variety of other issues are far reaching. The statutory 

construct of operating the Part D program requires CMS to work 

through hundreds of plan sponsors, which presents unique challenges to our program integrity efforts. It requires a coordinated, 

multifaceted approach to address the major players in Part D including prescribers, pharmacies, PMSs, and plan sponsors. 

CMS has taken concrete actions in recent years to strengthen the 

Part D program and address weaknesses identified by the OIG and 

others. One element of these changes has been enhancing the culture around Part D to focus—to include a focus on program integrity, one that emphasizes prevention over the pay-and-chase model, 

instituting and implementing new administrative authorities to ensure only legitimate providers are prescribing drugs to beneficiaries, and improving collaboration and data sharing with Part 

D plan sponsors, law enforcement, and other stakeholders. 

In particular, CMS is focused on holding sponsors, prescribers, 

pharmacies and our contractors accountable for prescribing that is 

consistent with our goals and values of providing safe, high-quality, 

evidence-based care. 

CMS has also taken steps to protect beneficiaries by ensuring 

that they are receiving prescription drugs from legitimate providers. CMS has announced plans to undertake a major programmatic change which will require prescribers of drugs paid for 

by Part D to enroll in Medicare, just as they would in Parts A or 

B of the program, and have begun outreach efforts to enroll over 

400,000 prescribers by January 2016. We will then begin enforcement in June 2016 by requiring plans to deny Part D prescriptions 

that are written by prescribers who do not meet the necessary requirements. 

During the enrollment process, prescribers will be subject to the 

same risk-based screening requirements, which have already contributed to the removal of nearly 575,000 provider and supplier enrollments from the Medicare program since the enactment of the 

Affordable Care Act. This enrollment standard will directly address 

issues OIG has noted including prescriptions by excluded or invalid 

prescribers through new point-of-sale edits Part D plan sponsors 

will be required to implement. 

CMS also has new authorities to remove problematic prescribers 

from the Medicare program for abusive prescribing behaviors. Together, we believe these new policies will help prevent bad actors 

from taking advantage of the Part D program and potentially 

harming beneficiaries. We are also utilizing Part D data more effectively. CMS is doing more to analyze and share data with Part D 

plan sponsors to enhance the detection and prevention of fraud and 

11 

overutilization in Medicare Part D. This includes the Overutilization Monitoring System, in which CMS identifies beneficiaries with 

potentially dangerous opioid utilization. We share a list of those 

beneficiaries with plan sponsors, which are then expected to use 

enhanced drug utilization review strategies such as case management and point-of-sale edits to prevent continued overutilization. 

Further, plans are now allowed to share information about potentially dangerous beneficiary opioid use, actions that can help prevent beneficiaries from changing plans to avoid detection. 

CMS has also developed high-risk pharmacy and prescriber assessments, which we produce for Part D plan sponsors. These assessments contain a list of pharmacies or prescribers identified by 

CMS as high risk based on a methodology which goes beyond simple outlier analysis. We provide plan sponsors with this information so they can initiate investigations and conduct audits, and ultimately terminate pharmacies or prescribers from their networks. 

Since 2013, plan sponsors have taken action against hundreds of 

pharmacies as a result of our Pharmacy Risk Assessments. Our 

newly implemented PLATO system allows plan sponsors to report 

back actions they have taken to address issues posed by pharmacies and prescribers. 

We have also taken steps to improve data sharing with our colleagues in law enforcement. From January 2010 through the 

present, CMS made nearly 2,300 referrals to law enforcement. We 

are working closely with the OIG to prevent bad actors from fraudulently extracting trust fund dollars. Since 2013, CMS has been referring providers who qualify for permissive or mandatory exclusion from participation in Federal healthcare programs to the OIG 

for exclusion. CMS takes seriously the recommendations of the OIG 

and has taken strong steps to improve the integrity of the Part D 

program. We are committed to continue to work with the OIG, this 

committee, and others as we strengthen Medicare Part D. 

I look forward to answering your questions. Thank you. 

[The prepared statement of Dr. Agrawal follows:] 

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Mr. MURPHY. Ms. Maxwell. 

STATEMENT OF ANN MAXWELL 

Ms. MAXWELL. Good morning, Chairman Murphy, Ranking Member DeGette, and other distinguished members of the subcommittee. I am pleased to join you today to discuss how we can 

protect Medicare’s prescription drug program from fraud and 

abuse. 

The OIG has made a strong commitment to help safeguard Medicare Part D. Just last month, OIG special agents and other law enforcement personnel fanned out across the country to conduct the 

largest criminal healthcare fraud takedown ever. A number of the 

arrests were for doctors and pharmacy owners involved in prescription drug fraud, and there are likely to be more arrests because we 

have found that Part D continues to be vulnerable to fraud. 

Recently, we identified 1,400 retail pharmacies with questionable 

Medicaid payments. In one example, a Detroit-area pharmacy 

billed for commonly abused pain medications—opioids, to be 

exact—for 93 percent of its Part D patients. As this committee is 

well aware, abusing opioids can lead to patient harm and event 

death. It is also tied to illegal drug trafficking, which is why the 

OIG is not stopping with the recent takedown. 

As our special agents investigated and built these cases, OIG analysts were already proactively mining the data to identify new 

leads to help us—CMS—shut down and—target and shut down this 

problem. 

As important as our law enforcement efforts have been, we cannot arrest our way out of this problem. We have to strengthen our 

defenses. OIG has several outstanding recommendations for fixing 

some of the systemic vulnerabilities that allow fraud and abuse to 

slip through undetected. To start, CMS can better leverage data as 

a tool to improve oversight and to keep up with the ever evolving 

fraud landscape. This should include collecting the data necessary 

to ensure that plan sponsors, the hundreds of private companies 

that administer the program, are effectively protecting the program. These plan sponsors are Part D’s first line of defense. 

Currently, as you already heard, CMS does not require these 

plan sponsors to report on the fraud and abuse that they identify. 

While plan sponsors may report this information voluntarily, given 

the choice, we found that less than half chose to report. Information on identified fraud and abuse as well as how sponsors handle 

these cases would help CMS assess the effectiveness of sponsors’ efforts to protect Part D. Better leveraging data should also involve 

expanding the analysis of the data CMS already collects. We recommend that CMS and plan sponsors monitor payment data for a 

wider range of drugs prone to abuse. 

CMS does have several key initiatives underway focused on 

opioids, and while opioid abuse is certainly a major concern, OIG 

has identified questionable billing patterns related to other drugs. 

This includes non-controlled substance, which can present a substantial financial loss to Medicare and can be abused in combination with controlled substances. 

24 

In addition to better leveraging data, plan sponsors and CMS 

should buttress current defenses by adding the following three 

oversight tools to their current efforts. 

First, plan sponsors and CMS need to implement stronger payment controls to stop paying for things they shouldn’t be paying 

for, like payments for drugs prescribed by doctors excluded from 

the Medicare program, or paying for illegal refills of controlled substances. Second, another powerful preventative measure would be 

a lock-in program that restricts certain beneficiaries to a limited 

number of pharmacies and prescribers. This tool allows for better 

monitoring to prevent at-risk beneficiaries from overutilizing drugs 

that might harm them or diverting those drugs for illegitimate use. 

Finally, we recommend that CMS improve processes to recover inappropriate Part D payments. 

Our recent law enforcement and data-mining efforts show that 

the current defenses are not strong enough. Plan sponsors need to 

reinforce that first line of defense but they cannot be the only line 

of defense. Ultimately, it is CMS that is responsible for ensuring 

the integrity of Part D. 

For our part, we will continue to focus our full array of resources 

on protecting the program, and we stand ready to work with you, 

with CMS and others to improve program integrity. 

At this time, I am happy to be of assistance and can answer any 

of your questions. Thank you so much. 

[The prepared statement of Ms. Maxwell follows:] 

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29 

30 

31 

32 

33 

Mr. MURPHY. Thank you. I will now recognize myself for 5 minutes as we go through this. 

First of all, we know that prescription drugs and medications can 

heal, they can reduce symptoms, they can keep people out of hospitals. Dr. Agrawal, does CMS have any kind of report that really 

takes an accounting as the prices have gone up in Medicare Part 

D? Has there been any corresponding decrease in hospitalizations 

or doctor visits? Is there any report of that type out there? 

Dr. AGRAWAL. Chairman, that is a good question. I am not aware 

of a report along those lines. I may have just not seen it, so I am 

happy to take that question back. 

Mr. MURPHY. Thank you. I wish you would. 

Ms. Maxwell, you pointed out in your testimony about nine 

unimplemented recommendations that the OIG identified. So as 

she stated that, Doctor—and some of those go all the way back to 

2006. Does CMS agree with the recommendations made by OIG? 

Dr. AGRAWAL. I think we do agree with the recommendations. I 

think we have expressed that in writing to those reports. You 

know, what I would emphasize is, these are all recommendations 

that we are working to make progress on. I think it is very fair to 

say, you know, that we need to continue to work on it, need to get 

to completion. These are often multifaceted recommendations that 

require, you know, multiple levels of implementation. 

Mr. MURPHY. But you recognize some of these go back to 2006, 

so I am sure many members are going to key in on trying to get 

some commitments from you to get that done. 

But let me focus on one of those. The OIG recommended that 

CMS exclude schedule II refills when calculating final payments to 

plan sponsors at the end of each year. So what action has CMS 

taken to implement that recommendation? Ms. Maxwell, can you 

answer that first? Do you know if they have taken action on that? 

Ms. MAXWELL. Absolutely. It is my understanding—and this is 

one of the recommendations in which CMS did not concur. Seven 

of the nine initially CMS did concur with. There are two they 

didn’t. This is one of them. It is my understanding that CMS is 

concerned about the data that is available and the data does not 

make it obvious what is a partial refill versus what is an illegal 

refill, and that they have instituted actions to make it more clear 

in the data. Our position is, once the data is clear, then you have 

the opportunity to put in an edit, and we would continue to recommend that they do put in an edit to stop those illegal refills. 

Mr. MURPHY. Dr. Agrawal, what is your plan of action here? 

Dr. AGRAWAL. Yes, I think Ms. Maxwell has characterized that 

correctly. So our concern is that the data is not completely accurate 

at this point. Early refills of schedule II drugs are illegal. We of 

course don’t support early refills of those drugs. However, partial 

fills, particularly for beneficiaries that may be in long-term-care facilities, are totally legitimate and may actually help to address pain 

and other issues that they have. So what we are doing is working 

with plan sponsors to clarify coding requirements so that we can 

differentiate the legitimate payments from the illegitimate payments and then would be seeking to make the kind of change that 

is being described. 

34 

Mr. MURPHY. And as part of that, hopefully you will also be 

going after people who have made the wrong claims and getting 

that money returned. 

On page 3 of your testimony, Doctor, you had mentioned the 

President’s budget proposes to provide the Secretary with new authorities to suspend coverage and payment for drugs prescribed by 

providers who have been engaged in misprescribing to suspend coverage and payment for Part D drugs when those prescriptions 

present an imminent risk to patients and require additional information on certain Part D prescriptions such as diagnosis instant 

codes and conditional coverage. Do you have any estimate that this 

will actually save money in terms of reducing some of the fraud 

and abuse to implement those recommendations? 

Dr. AGRAWAL. Yes, I think these kinds of recommendations really 

go at the heart of prevention, moving away from the pay-and-chase 

model that others have commented on. We did promulgate policy, 

as you know, last year requiring enrollment to prescribers and also 

with that implementing the ability to revoke providers for abusive 

prescribing. I think all of those things really do take a very strong 

step towards prevention, just as we have done in other parts of the 

program and have been shown to be effective. 

Mr. MURPHY. I was hoping that was something you can give us 

some numbers on in terms of what you estimate that would be savings to Medicare Part D. That would be important to us if we implement those. 

Let me mention something else here. This is on Medicaid but it 

is important, because a report just came out in March issued by 

the HHS Office of Inspector General and found that 92 percent of 

Medicaid enrolled children who are prescribed antipsychotic medications lacked ‘‘medically accepted pediatric indications’’ that would 

warrant such prescriptions. There were instances there of very 

young children being prescribed antipsychotics, 4-year-olds. It was 

a very disturbing and alarming report. That 92 percent number of 

not medically indicated was absolutely astounding. So given that, 

and I don’t expect you to know this today, but if you do know, I 

would like to know what steps CMS is taking to root out the providers who are prescribing children powerful psychotropic medications when it isn’t medically necessary. Would you make sure you 

get back to us on that? 

Dr. AGRAWAL. Absolutely. 

Mr. MURPHY. And finally, the OIG has recommended that CMS 

implement an edit to reject prescriptions written by excluded providers. So Ms. Maxwell, what actions has CMS taken to implement 

that recommendation of those who aren’t supposed to be prescribing at all? 

Ms. MAXWELL. It is my understanding that the sponsors are required to be monitoring excluded providers and making sure that 

the payments don’t go to them. However, when we did look, we did 

find that CMS did accept PDE records from the sponsors that included excluded providers. There was about 15 million in gross 

payments over a 3-year period. So again, we continue to appreciate 

the steps that have been taken but there’s obviously need for further steps and stronger payment controls be put into place. 

35 

Mr. MURPHY. OK. I would like to follow up, but I am out of time 

so I will now turn to Ms. DeGette for 5 minutes. 

Ms. DEGETTE. Let me sort of extend that previous line of questioning, which is, we are talking about the OIG report on Medicare 

Part D integrity and the report notes ‘‘CMS relies on plan sponsors 

to be the first line of defense against fraud, waste, and abuse in 

Part D.’’ I am wondering if both of you can each comment on the 

role that plan sponsors play in this first line of defense against 

waste, fraud, and abuse. I am wondering what tools they use and 

what can be done. Dr. Agrawal? 

Dr. AGRAWAL. Sure. Thank you. I do think, you know, the role 

of Part D plan sponsors is extremely important since they are paying claims or PDE records directly. 

Let me just address maybe the prior point about providers first. 

Ms. DEGETTE. Sure. 

Dr. AGRAWAL. You know, I think it is absolutely indefensible for 

a Part D plan sponsor to pay the prescription of an excluded provider. Now, we have implemented edits behind those plan sponsors 

to indicate when they have done that so they can make the appropriate recoveries on their end. I also think prescriber enrollment 

and the screening requirements that I mentioned earlier will go a 

long way, because it will move those edits from after the PDE 

record to the point of sale when we have all 400,000 prescribers enrolled in the program. 

So we can clearly buttress Part D plan sponsors but their role 

is absolutely vital. I think they need to be on top of the data. We 

share a lot of data with them so that they are aware of who the 

outlier prescribers and pharmacies and their networks are. They 

also have the ability to implement drug utilization reviews and 

other kinds of programs including case management to stem both 

abusive prescribing as well as abusive utilization. 

Ms. DEGETTE. So let us talk about that data for a minute because they are not required to report the data on potential fraud 

and abuse, and in fact, the percentage of plan sponsors that voluntarily report this has declined over the last few years down from 

40 percent in 2010 to 35 percent in 2012. Do you have any more 

recent data about the trends on this? 

Dr. AGRAWAL. I don’t think we have more recent data that I can 

share today. However, this is an area that we have been working 

to make progress as well. So as I mentioned, we give data to the 

plan sponsors on a quarterly basis, and just this year implemented 

a system for them to be able to report back to us what actions they 

took as a result. I think that system, which allows the data to be 

reported, and then for it to be searchable and analyzable has been 

an important step moving us towards better reporting. 

Ms. DEGETTE. What is your view on this, Ms. Maxwell? 

Ms. MAXWELL. It is absolutely true that, as I said in my oral, 

that the sponsors are the first line of defense. They administer the 

program and they are the ones that are paying the pharmacies but 

CMS, as I said, is the second line of defense, and if things do slip 

through the processes and edits they have in place, it is incumbent 

upon CMS to have the second line of defense to prevent that from 

happening. That prevents the Federal Government from actually 

reimbursing the mistakes the sponsors might be making. 

36 

Ms. DEGETTE. And do you think CMS is doing enough to encourage that? 

Ms. MAXWELL. I think CMS has made significant strides in response to many of our recommendations, and of course, we outline 

nine in the report that we believe are important to be included in 

their ongoing effort to improve program integrity. 

Ms. DEGETTE. And what about the plan sponsors’ fraud detection 

programs themselves? Do you think that the plan sponsors are 

doing enough or can they be beefing up that over time? 

Ms. MAXWELL. If we had the data about the fraud and abuse incidents that they are detecting as well as the data about how they 

are responding, we would be able to answer that question with 

more authority. We really don’t have the visibility that we think 

is necessary to hold them accountable. 

Ms. DEGETTE. Is that something, Dr. Agrawal, you think you 

could provide? 

Dr. AGRAWAL. Well, as I mentioned, we are getting some data 

from plan sponsors, and in particular, we are focused on where we 

give them a clear lead such as an outlier pharmacy or an outlier 

prescriber, what are they doing to investigate that lead downstream and then take the relevant actions. What we have found is 

certain plan sponsors are actually good at following up. So we have 

been able to see hundreds of pharmacies be excluded from networks because of the leads we give them. We also conduct compliance reviews of plan sponsors to make sure that program integrity 

processes are a robust part of their operations. Again, some plan 

sponsors I think do quite well there and others have opportunities 

for improvement. 

Ms. DEGETTE. Well, this is an area where it seems like there 

could be a lot of problems, and OIG has recommended making it 

mandatory that they report potential fraud and abuse. I am wondering, first, Ms. Maxwell, could you comment on that recommendation? 

Ms. MAXWELL. Absolutely. As you have pointed out, given the 

current state of affairs that it is not currently voluntary, we don’t 

have full compliance. 

Ms. DEGETTE. Right. 

Ms. MAXWELL. And so we believe we will not have full compliance unless it is mandated, and without the comprehensive reporting of that data, we can’t look across the entire program and 

see—— 

Ms. DEGETTE. Dr. Agrawal, what is your agency’s response to 

that? 

Dr. AGRAWAL. Yes, I think we can essentially agree with that, 

you know, the notion a lot. I think the question for us is, what kind 

of reporting is the most beneficial for other plan sponsors and the 

agency, and so implementing something like the PLATO system, 

giving them leads, and then getting results from those leads is a 

step towards answering exactly that question of what kind of information return is useful to the agency and would be useful to other 

plan sponsors. I think as we get more information and get better 

understanding of the utility, we will be able to require more of plan 

sponsors. 

37 

Ms. DEGETTE. I am sure we have more questions around that 

line too. Thank you. 

Mr. MURPHY. Thank you. I now recognize the gentlelady from 

Tennessee, Mrs. Blackburn, for 5 minutes. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and I am going to 

follow right along with what Ms. DeGette was saying. 

It is troublesome when we hear—and Ms. Maxwell, of course, you 

all have done so much work on this—with the voluntary nature of 

the reporting, and you have recommended that they make it mandatory, and so Dr. Agrawal, what are you doing to beef up the compliance? You can say well, we have PLATO, well, we have this, you 

know, but what are you doing to enforce this? How do the people 

that work at CMS understand this is an imperative, you have got 

to do this? I mean, how do you communicate that? 

Dr. AGRAWAL. I think we take all of OIG’s recommendations as 

important contributions, as imperatives. We do work to implement—— 

Mrs. BLACKBURN. Whoa, whoa, whoa. Wait a minute. They are 

not contributions. They have pointed out to you—let us not even 

start down that road. It is not a contribution. It is, you are doing 

this wrong, you are wasting money, the fraud has been identified. 

Let us just say it like this. They have got nine recommendations 

on the table. Do you agree with those recommendations, yes or no? 

Dr. AGRAWAL. I think we have indicated that we largely agree 

with those recommendations, yes. 

Mrs. BLACKBURN. That is not the question that I asked. Yes or 

no? 

Dr. AGRAWAL. Well, I think Ms. Maxwell has pointed out that the 

agency has agreed with seven of the nine recommendations. 

Mrs. BLACKBURN. OK. Well, the problem is, what are you doing 

then to take an action, and what is your timeline? You know, you 

seem to come here and punt, and we have got another report that 

came out this morning. You are saying oh—and oh, by the way, it 

is only 2 months late. You are 2 months late with your report. People in the private sector that deliver a report 2 months late generally are, you know—they have other problems. 

OK. So let us look at this. You are saying you have recovered $454 million and that your Fraud Prevention System is returning 

a 10:1 ratio on this investment, and you are very proud of that, but 

you have got a lot of other waste that is out there, so I want to 

know from you specifically how are you enforcing the recommendations and what is your timeline for bringing your agency’s work 

into compliance on a program that is really important to our Nation’s seniors, and that is not that difficult a question. Now, getting 

the work done obviously that is a little bit harder for you, but we 

want to know specifics on your enforcement and specifics on your 

timeline of meeting this. 

Dr. AGRAWAL. First, Congresswoman, let me just say on the 

Fraud Prevention System report that those numbers have been certified by the OIG itself, and this was a report that we worked on 

in conjunction with them throughout the timeline—— 

Mrs. BLACKBURN. I am fully aware of that. 

Dr. AGRAWAL. So I think the 10:1 ROI is positive, obviously, a 

good development for the system. As to your questions about the 

38 

various recommendations, I am happy to take that back and we 

can give you responses for each recommendation, what we have 

done to implement them. I think on every recommendation we have 

worked to make progress to implement various systems and 

changes towards finally completing that recommendation, but these 

recommendations do take time to implement. 

Mrs. BLACKBURN. OK. You said you had the authority to do the 

job. We know that you have the money and the personnel. Why 

does the job not get done? Is it not a priority? 

Dr. AGRAWAL. This is an absolute priority. We have many staff 

focused every day on the integrity of the Medicare program—— 

Ms. BLACKBURN. Do they understand that they are expected to 

meet a timeline? Do you all have a timeline? You still haven’t spoken to the timeline. 

Dr. AGRAWAL. It think it depends on which recommendation you 

are referencing. 

Mrs. BLACKBURN. No, no, all of them. You have got—you can’t 

pick and choose on this. You have got a list of recommendations. 

You have had waste, fraud, and abuse identified. You know you 

have got problems with the opioids. You know that voluntary reporting gets you part of the way but it doesn’t get you all the way, 

that this needs to be made mandatory. So as to the leader, what 

are you doing to make certain that there is a set timeline? When 

is the timeline? Is it the next report? Is it the next hearing? Is it 

the end of the year? 

Dr. AGRAWAL. Yes, so let me give you an example, Congresswoman. So we have been very specific when it comes to something 

like prescriber enrollment, which will actually go towards resolving 

at least two of the recommendations I believe that OIG has put forward around excluded providers or other kind of invalid prescribers. We have stated—you know, we promulgated the necessary 

rulemaking last year. We are now working with Part D plan sponsors to get these prescribers enrolled so that we don’t cause an 

interruption in legitimate access to services, and we have said that 

that enrollment requirement needs to be met by January 2016 between both the plan sponsors and CMS working collaboratively together. We will then implement point-of-sale edits behind that enrollment in June of 2016, which I think will take a significant step 

towards really eliminating excluded prescribing or other invalid 

prescribing—— 

Mrs. BLACKBURN. So basically you are giving yourself a year to 

come into compliance with something that you know has been a 

problem. 

Dr. AGRAWAL. Well, I think that that—— 

Mrs. BLACKBURN. I yield back my time. 

Mr. MURPHY. I now recognize Mr. Pallone for 5 minutes. We can 

let him answer? I will let him answer. Go ahead. You can answer. 

Let me do that first. 

Dr. AGRAWAL. Thank you. I think it highlights some of the technical challenges in actually getting this work done. So we have to 

be very careful to actually enroll 400,000 prescribers so that we do 

not interfere in legitimate access to services that the Part D program provides beneficiaries. We balance that against the need to 

do this quickly and effectively to stem the various weaknesses and 

39 

issues that the OIG has correctly pointed out. This is a balance we 

work to achieve every day. So yes, it takes time. It takes time for 

prescribers to get up to speed on the requirements and get enrolled. It takes time for our Part D plan sponsors to initiate the 

necessary actions on their part and get the point-of-sale edits in 

place as well. 

Mr. MURPHY. Thank you. 

Mr. PALLONE. Mr. PALLONE. Thank you. I believe that both of our witnesses 

here today have studied a growing phenomenon that is deeply concerning, and that is the overprescribing and/or the overuse of 

opioids in Medicare Part D. This is an issue that we have all 

worked on for many years in response to OIG’s earlier work on this 

topic. 

I introduced the Medicare Prescription Drug Integrity Act of 

2013. Since that time, OIG has repeatedly recommended that CMS 

seek statutory authority to restrict certain beneficiaries to a limited 

number of pharmacies or prescribers when warranted by excessive 

or questionable billing patterns. This practice, commonly referred 

to as lock-in, I mentioned in my opening statement has been successful implemented in the private insurance market and some 

State Medicaid programs. 

In the 21st Century Cures legislation that the House overwhelmingly passed on Friday, there is a provision that would allow Medicare Part D plan sponsors to use these types of drug management 

programs to curb potentially harmful use of opioids and other controlled substances, and that provision as agreed to in the legislation strikes the right balance between protecting beneficiary choice 

and access while also improving continuity of care by ensuring that 

those high-risk patients obtain and fulfill prescriptions for controlled substances only from designated providers, and I think that 

is a big step in the right direction. 

So let me ask some questions. Ms. Maxwell, can you summarize 

OIG’s findings that have led the agency to repeatedly recommend 

that Congress gives CMS authority to allow Part D plan sponsors 

to create these so-called lock-in programs? 

Ms. MAXWELL. Absolutely. As our current data shows, the rate 

of increase of use of opioids within Part D has far outpaced the 

general increase in drugs. In fact, it has grown 156 percent since 

the inception of the program. We also see, as I mentioned, the 

pharmacy fraud where we see pharmacies allowing for opioids to 

flow into the streets and be diverted. This poses not only a patient 

harm issue for the beneficiaries but also is a public health issue for 

some of those things that flow into the streets end up back on 

pharmacy shelves, which affects all of us. This is a significant 

issue, and we believe the lock-in would be a significant move forward in protecting the program beneficiaries from patient harm as 

well as the program from significant financial loss. 

Mr. PALLONE. Thank you. 

Dr. Agrawal, do you believe that if a pharmacy lock-in provision 

in 21st Century Cures was signed into law, CMS would have a 

much-needed tool to address opioid abuse and overprescribing in 

Part D, and have these types of lock-in programs been successful 

in curbing opioid abuse and other programs? 

40 

Dr. AGRAWAL. Yes, I would certainly agree with Ms. Maxwell 

that we have seen beneficiaries that are really at safety risk from 

the levels of utilization of their opioid medications. We have been 

supportive of this kind of legislative change to provide a lock-in approach. It is part of the President’s budget. I do believe that it 

would have impact as it has, as you have already pointed out, in 

both the private sector as well as in various Medicaid programs. 

Mr. PALLONE. OK. I want to switch to that report that Mrs. 

Blackburn mentioned, the Fraud Prevention System report that the 

agency released this morning. The FPS uses predictive and analytics to detect troublesome billing problems and provide it to the 

Medicare program, and after 3 years of operation, CMS today reported that the system identified or prevented $820 million in inappropriate payments in the program’s first 3 years. 

So Dr. Agrawal, first of all, I want to commend you on your work 

on the FPS. In its third year, how has the program changed and 

matured? And let me throw in the second question too because of 

time. Does CMS plan to expand the program to Part C and Part 

D in the near future, and what additional plans does the agency 

have to expand the FPS to additional fraud detection activities? 

Dr. AGRAWAL. Sure. Thank you for the question. Currently, the 

FPS streams all Medicare A, B, and DME claims, so about 4 1⁄2 million claims per day. I think what we have seen over the last 3 

years in terms of evolution of the program is more models being 

implemented, more sophisticated models being implemented that 

not only look at outlier behavior but are truly predictive models 

based on the input of our own investigative field staff as well as 

the input of law enforcement, both OIG and DOJ, based on prior 

kind of patterns of fraud and abuse that they have noted. So that 

is one really big change is on sort of the technology side and just 

improving the modeling. 

The second is making sure that these leads are actually being 

followed. So this was almost a cultural change or just a contractor 

accountability change to make sure that our Program Integrity 

Contractors took these leads seriously, they formed a substantive, 

substantial part of their workload, and they were driving towards 

real administrative outcomes as quickly as possible. 

I think what we will continue to do with this program is continue 

to leverage the technology to implement new approaches like edits 

so that claims can be stopped from being paid, you know, before 

they are actually ever paid. We have been doing some of that already in the first 3 years, and we are looking to expand that capability substantially going forward. I think also the maturing of the 

modeling will facilitate this process. 

To your question about other data sources, we have started to 

fold in Part D PDE records and we will be looking to do that more. 

I think in Part C, we still have the challenge of getting accurate 

encounter data from plan sponsors, so we are still working with the 

relevant parts of CMS and plan sponsors to help improve that encounter data. 

Mr. PALLONE. Thank you. 

Thank you, Mr. Chairman. 

Mr. MURPHY. Thank you. 

I now recognize Mr. Barton for 5 minutes. 

41 

Mr. BARTON. Thank you, Mr. Chairman. 

I guess the first thing we ought to do is thank HHS and the Inspector General for conducting the investigation and actually beginning to try to correct the problem and at least identifying some 

of the bad guys. That is a good start. 

My first question I guess would be to Dr. Agrawal. Is that correct? 

Dr. AGRAWAL. You nailed it. 

Mr. BARTON. Well, how about that? Just a lucky guess. 

How in the world can somebody be on Medicare Part D if they 

are not enrolled in Medicare? If I heard correctly, you said some 

people are actually getting the benefit but they are not in the program. I don’t understand that. 

Dr. AGRAWAL. No, sir, it is not on the beneficiary side of the 

equation. It is the prescriber, the physician or advanced-practice 

nurse, for example, who actually sends a prescription in, hands it 

to a patient. Currently or prior to last year, there was no specific 

enrollment requirement for the provider. There is now, so going 

forward, all prescribers are going to have to come into the program, 

be subject to the same screening standards as in the rest of Medicare. 

Mr. BARTON. OK, but prior to this year, a provider could reject 

Medicare patients but prescribe Medicare Part D prescriptions? 

Dr. AGRAWAL. Correct. It is been a huge program integrity focus 

to bring this up to the rest of the level—to the level of the rest of 

the program. 

Mr. BARTON. But that is no longer a problem? That is one loophole that has been closed? 

Dr. AGRAWAL. We are in the process of closing it as we—— 

Mr. BARTON. In the process—— 

Dr. AGRAWAL [continuing]. Get through enrollment. As I mentioned, we have to enroll 400,000 prescribers by January. 

Mr. BARTON. OK. And if they have a doctor that is not in the program, you just send a letter to the patients that that is not a valid 

prescriber. Is that correct? 

Dr. AGRAWAL. Yes. So the balance with beneficiary access to 

medications is important. What we have done is created essentially 

a transition period. So if a beneficiary takes a prescription to a 

pharmacy from a prescriber who is not enrolled, they will get that 

information but they will also get the medication so that there is 

no interruption in their therapy. They will not get it the second 

time. By that time we would have expected the provider to either 

be enrolled or for the beneficiary to go to a different provider. 

Mr. BARTON. OK. Now I am going to switch to Ms. Maxwell. 

One of the recommendations that hasn’t been acted on but apparently you all are beginning—the program is beginning to act 

upon is this idea of mandatory reporting from the plans. I am not 

a big fan of mandatory anything except people paying the taxes. I 

guess that ought to be mandatory. Why not go the other way? Why 

not create—I heard that—voluntary compliance, but you go to jail 

if you don’t voluntarily comply. All right. A minor point. 

Why not go the other way and provide an incentive to the plan 

that you don’t have to report, but if you do and it really is fraudulent and we recover some of the program funds, we will give you 

42 

a percentage of the monies that are fraudulently—have been fraudulently paid and then recovered? Why not create an incentive program? That works for me, and I think most Republicans would prefer it. Now, I may be wrong but I would rather have an incentive 

to do it than a mandate they have to do it. 

Ms. MAXWELL. You know, the heart of our recommendation is to 

have the visibility to oversight, so as long as we have the data and 

the visibility to what the plan sponsors were doing to protect the 

program, that is ultimately what we are after. 

Mr. BARTON. Congressman Gingrich when he was Speaker put in 

or at least requested that this committee put in a program where 

you could create a hotline that people could call in to, and if it 

turned out that—and this wasn’t just for Medicare, this was before 

Medicare Part D obviously—but if there was fraud involved and 

somebody reported it and it was proven and stopped, the person 

who reported it got some sort of a bonus, and that would be another idea to think about. 

I will go back to the doctor. This is my last question. You may 

have to get back to me on this. Just at the basic level, I would like 

to know where you think the primary cause of the fraud is. Is it 

from the patient’s standpoint? You have got phantom patients perhaps. Is it from the pharmacy standpoint? Is it from a plan who 

is overbilling even though they don’t have patients? Or is it possible it could even be in the Government itself where they work in 

conjunction with the plan to create fraud? Do you have any data 

on that? 

Dr. AGRAWAL. I think what we see is that overutilization in Part 

D is multifaceted. It occurs at patient, prescriber, the pharmacy, 

which is why the response to it—and I think the OIG has pointed 

this out as well—the response to has to be multifaceted. The program has to try to address all of the different areas that fraud or 

abuse could be occurring. 

Mr. BARTON. If you identify the most prevailing area, then you 

put most of your assets there and you will have a better chance to 

get a greater return on your investigations. 

With that, Mr. Chairman, I yield back. 

Mr. MURPHY. Thank you. The gentleman yields back. 

I now recognize the gentleman from Massachusetts, Mr. Kennedy, for 5 minutes. 

Mr. KENNEDY. Mr. Chairman, thank you, and thank you for holding an important hearing. Thank you to our witnesses once again 

for coming back. 

I am going to touch on some—try to flesh out a little bit some 

of what my colleagues have already touched on for both of you. Obviously Medicare Part D is a large and important program, serving 

millions of seniors across the country and a good deal of them in 

my district. Given the scope and the number of transactions involved, proactive data analysis is an essential tool to focus on fraud 

detection and enforcement efforts. 

The OIG Data Brief does just that, highlighting some notable 

outliers when it comes to pharmacy billing. In particular, the suspicious prescriptions for opioids are especially troubling, given the 

nationwide epidemic that we have heard about at previous hearings and some of my colleagues have already touched on. 

43 

So according to the Data Brief, ‘‘spending for commonly abused 

opioids grew at a faster rate than spending for all drugs.’’ That was 

on page 3, I believe. 

So Dr. Agrawal, it is my understanding that the initial comparison with 2011 data shows that there has been a substantial reduction in the number of acetaminophen and opioid overutilizers. I 

was hoping you can try to flesh out a little bit more about CMS’ 

measures to prevent the overutilization of prescription medications 

within the Part D program. 

Dr. AGRAWAL. Sure. So I think where there are—so again, multiple facets to the issue where there is beneficiary overutilization 

where, you know, we can identify beneficiaries that have exceeded 

what we would consider kind of standardly accepted safety thresholds. We share that information with Part D plan sponsors through 

our Overutilization Management System. That gives them the specific beneficiaries that they can then implement I think more 

proactive drug utilization reviews around including case management. What we have seen when we focus on things like schedule 

II drugs is a 30 percent decline in the prevalence of those beneficiaries, which shows that both the data sharing and the actions 

being taken on the part of the plan sponsors is having an impact, 

and we continue to provide that information on a quarterly basis 

so that plan sponsors can continue that work. 

Mr. KENNEDY. Thank you. 

And Ms. Maxwell, you touched on in your opening statement one 

of the pieces that were highlighted in the report of a Detroit-area 

pharmacy that billed for commonly used opioids for 93 percent of 

its beneficiaries. It amounted to 58 percent of all of its Part D prescriptions. Can you talk a little bit about OIG’s plan for follow-up 

in the questionable pharmacy billing 3-year study and tell us a little bit more about the proactive analysis that you ensuring Medicare to take in a broader report? 

Ms. MAXWELL. Absolutely. As I mentioned in my opening remarks, when we were proceeding in the takedown, we were already 

mining the data for new leads. We already have 1,400 retail pharmacies targeted that had questionable Medicare billing. We are actively investigating some portion of those, and we have referred the 

rest to CMS for investigation. So the Data Brief allows us to see 

where there are areas for questionable billing and the next step is 

to investigate and weed out which one of those really represent legitimate business and which are fraud that we need to pursue either with OIG investigations or in conjunction with CMS. 

Mr. KENNEDY. And Dr. Agrawal, what’s the—after those are referred over to CMS, what is CMS’ next steps? 

Dr. AGRAWAL. Yes, so again, I would agree that these—that the 

analytical work is a good starting point for further refinement and 

then also investigative activity. Now, let me just say it is the construct of the program that CMS doesn’t have a direct relationship 

with pharmacies. That relationship really occurs with Part D plans. 

Pharmacies don’t enroll or anything like that in the program. 

For that reason, we have to work through Part D plan sponsors 

by giving them better data and, you know, then they take the necessary investigative and other administrative actions. We certainly 

will utilize the information given to us by the IG so they gave us 

44 

about a thousand of the roughly 1,400 pharmacies have been sent 

over to us, and we have been sharing that, or have shared that already with plan sponsors. 

In addition, on a quarterly basis, we do similar work utilizing 

sort of a greater set of variables to identify high-risk pharmacies 

and again share that information on a quarterly basis, which has 

yielded literally hundreds of pharmacies being excluded from plan 

sponsor networks. 

Mr. KENNEDY. Thank you. And then the brief highlights some geographic hotspots as well, some metro areas where average payments for certain drugs are much more than the average nationwide. 

Ms. Maxwell, in conducting the analysis, did OIG evaluate patterns for all non-controlled drugs or did you just focus on specific 

ones? 

Ms. MAXWELL. We chose some examples to highlight the potential problems with non-controlled drugs, so there are other drugs 

that might be of concern that are not highlighted in that Data 

Brief but the ones we did highlight again like the questionable billing for the pharmacies are worthy of further scrutiny to understand what is happening and stay in front of the evolving 

healthcare fraud trends. 

Mr. KENNEDY. Thank you, and I yield back. 

Mr. MURPHY. Dr. Burgess is now recognized for 5 minutes. 

Mr. BURGESS. Thank you, Mr. Chairman, and I think you can 

tell, it is great that we are having the hearing on the integrity of 

the program as it relates to Part D drugs, particularly with respect 

to opioids, but you can tell there are a lot of general questions 

about inappropriate expenditures within the various programs at 

HHS, and Mr. Chairman, I hope you will take this as perhaps a 

reason to consider having a general hearing, a general oversight 

hearing on inappropriate expenditures within the Medicare and 

Medicaid system. 

Mr. Barton talked about previous efforts towards the concept of 

predictive modeling, and it does seem to me that this is an area 

where this would be perhaps a particularly useful type of activity. 

I mean, I got a call at 6 o’clock in the morning a couple of Sundays 

ago that there had been inappropriate expenditures on my 

MasterCard. It seems to me that with the amount of data that you 

all collect on a daily basis, you ought to be able to do a pretty good 

job of isolating—identifying and isolating and investigating unusual trends and expenditures. Is that not possible? 

Dr. AGRAWAL. Dr. Burgess, I agree that it is. We have been—as 

I mentioned earlier, we are looking to include Part D data to a 

greater degree in the FPS system implementing new models just 

around this program as we demonstrated the impact of the FPS. 

Mr. BURGESS. It just calls up the question of, you know, the scale 

of the problem is likely to be much more massive than any recovery 

that has been affected to date. 

I do want to ask a couple of questions, and I realize it is a little 

bit off topic, but I know, Dr. Agrawal, we have talked about this 

before. Ms. Maxwell, I apologize, I don’t remember whether our offices talked to you directly, but it does affect you also. 

45 

We had a hospital in Texas—Dr. Tariq Mahmood—who took $18 

million for the development of an electronic record system and basically just put his medical records down to the basement and let the 

mice eat them, not computer mice, real furry mice. So what can 

you all do—I mean, yes, one of the manager has gone to jail, the 

doctor will have a trial at some point and likely will face jail time 

through the Department of Justice, but what can you all do to recover that $18 million that was inappropriately dispensed under 

the stimulus plan to this hospital chain? 

Dr. AGRAWAL. So thank you for the question, and I am aware of 

the case. I have to tell you, I think it occurred a while back so we— 

you know, I think the general answer is, we do conduct audits of 

the EHR payments, incentive payments that we make, and where 

we find discrepancies, we are able to recover those dollars. This 

was the case that I know we worked on conjoinedly with the OIG 

so I can’t tell you if the audit came first or the OIG investigation 

did. If you are interested in that, perhaps I can take it back. But 

these audits are meant to address exactly the vulnerability that 

you are identifying, which is, you know, essentially false statements that you have implemented an EHR, a viable EHR system. 

We do look at that question. 

Mr. BURGESS. And to answer your question, I would be interested, but see, this is the problem and this is what just drives people crazy. We kind of get into this circuitous stuff between agencies, and I think—again, I think we have had this conversation before. I am told it is under investigation. But really, where are we 

at getting the 18 million bucks that the taxpayer is on the hook 

for for sending these dollars down to Dr. Mahmood? Does either office have that interest in recovering that money? 

Dr. AGRAWAL. Of course we do, and I will happily take that question back, I mean, to specifically address whether the $18 million 

has ever been recovered. I don’t want to leave you with a false impression about this particular case. This was something that we did 

work in coordination with the OIG. It wasn’t sort of a turf battle 

or anything like that, you know. My answer is just, I don’t know 

if they identified the issue first and then came to us or vice versa. 

But we did coordinate across this case. 

Mr. BURGESS. I actually think it was my newspaper, the Dallas 

Morning News, that identified the problem and I brought it to your 

attention. 

But, I mean, again, this is what just drives people crazy. You 

have a massive inappropriate expenditure of Federal money, and 

then no one seems to be primarily responsible for going and recovering it, and quite honestly, reporting back to Congress about what 

the status of that recovery is. In your own statement this morning, 

Dr. Agrawal, you said well, this was some time ago. Yes, it was 

some time ago, so we would like the dollars back, please, and I 

know this individual has—it has been reported that he has got 

plenty of assets so this is something that you would think with the 

full force of the Federal Government and Department of Justice we 

would be able to go and effect that recovery. 

Thank you, Mr. Chairman. I will yield back the time, but I do 

want to follow up with both of you and understand where the status of this recovery is. 

46 

Mr. MURPHY. Thank you. 

I now recognize Mr. Yarmuth for 5 minutes. 

Mr. YARMUTH. Thank you, Mr. Chairman. I appreciate your holding this hearing. I think as has been demonstrated, both sides are 

very much interested in rooting out all the waste, fraud, and abuse 

that exists in the Medicare system. Thanks to the witnesses for the 

work you are doing. 

I tend to—I do have a question about that, but before I do that, 

I want to take this opportunity as I often do to talk about the experience in Kentucky with the Affordable Care Act and the great 

work that my Governor, Steve Beshear, and his team have done in 

implementing the expansion of Medicaid and what has meant for 

our State. We have more than a half-million people who are newly 

enrolled in Medicaid and in private insurance as a result of the 

ACA. That is in the range of 4.4 million. We have reduced the uninsured rate by almost 50 percent in Kentucky. In my district 

alone, the uninsured rate has dropped by 81 percent. Pretty astounding. 

More importantly, for those who say that this is economically 

nonfeasible, the State employed the Deloitte firm to analyze the 

prospects for Kentucky’s economy over the next 6 years under ACA, 

and they determined that under ACA, Kentucky would experience 

added economic activity of $30 billion, the creation of 40,000 new 

jobs, and I think most importantly, from the taxpayer’s perspective, 

an impact, a positive impact on the State budget of $819 million. 

So I think those statistics demonstrate that the ACA can be very, 

very positive, not just in insuring people, giving them access to 

quality care but also from an economic perspective. 

So we have talked a lot about Medicare Part D and the fraud 

provisions and your work in those areas. There is a related issue 

when we talk waste as well, and I wanted to talk about prescription drug costs. One of the things that—when I was part of the 

Democratic Majority back in 2007, one of the first things we did 

was to pass a bill to allow Medicare to negotiate with drug providers on cost that was not implemented into law. But I was talking with a physician friend of mine the other day, who has done 

a lot of work in this area, and he was showing me some really incredible statistics about the difference in cost of certain prescription medicines just in my district, and in some areas, the cost was 

60 to 70 percent different from one outlet to another. 

So my question is, if there are those kinds of potential savings 

involved just in terms of going from one drugstore or one grocery 

store to another, why can’t we have some kind of systemic approach to that from CMS? Doctor, do you want to respond to that? 

Dr. AGRAWAL. Sure. Thank you for the question. 

You know, I can tell from my own practice in the ER, drug costs 

are an important factor in this whole equation, and the ability of 

people to be able to pay for the drugs that they get. 

I will tell you, as you pointed out, that this is an area where we 

do not have legislative authority to kind of engage in the negotiation that you are describing. 

Mr. YARMUTH. Do you think that it could have a substantial impact on saving money for the taxpayers if you did have legislative 

authority to do that? 

47 

Dr. AGRAWAL. You know, I am not aware. I am sure there is 

analyses that have been done. I am not aware at this moment what 

the expected impact would be. Perhaps we could get back to you 

about that. 

Mr. YARMUTH. Well, again, this person has done a lot of work in 

the area, and he mentioned one drug—I know Ranking Member 

DeGette talked about saving a billion-plus something in one area— 

one drug that now is responsible for about $8 billion worth of sales 

in the United States every year that actually can be purchased for 

about 15 percent of that, so you are really talking there about a 

savings of almost $7 billion to the system per year if we just had 

that kind of power to deal with price. So I will just mention that 

for the record because I think that is something that—as we look 

at continuing to make Medicare and Medicaid sustainable over 

time, we are going to have to deal with the issue of the cost of prescription drugs as well as the fraud and abuse side. 

So I thank you for your—— 

Ms. DEGETTE. Will the gentleman yield? 

Mr. YARMUTH. I will yield. 

Ms. DEGETTE. So the CBO estimates that allowing CMS to negotiate Part D prescription drugs would save $155 billion over the 

next 10 years. 

Mr. YARMUTH. That is real money. 

I yield back, Mr. Chairman. 

Mr. MURPHY. And obviously there is more to it than that, and 

we will continue that discussion. Thank you. 

I now recognized Dr. Bucshon for 5 minutes. 

Mr. BUCSHON. Thank you, Mr. Chairman. 

I was a surgeon before, so I am intimately familiar with the situation, and the bottom line, it seems to me that, you know, nobody 

out there is defrauding the Government over Lasix or Hyzaar to a 

large extent. I mean, in my view, we are talking about narcotics. 

We are talking about a funding stream from the Federal Government that is helping to facilitate the use of narcotics in our country. I mean, that is not the only issue but that is a huge part of 

it. Without the funding stream, the problem goes away. 

And so there are multiple funding streams, and people that 

abuse narcotics, people that sell narcotics, when they find an avenue to get that paid for in some way, they will take it, and so my 

point is, there are a lot of other issues other than just payment 

that this subcommittee has been trying to address, the 

interconnectability amongst EMRs including those at pharmacies, 

at the State level, at the Federal level is critical so that we know 

who is prescribing these medications better than we know today. 

We know who is using these medications better than we know 

today. And it is going to take a multiagency approach at the Federal level to address this problem. The payment is only a piece of 

the pie, right? Payment is a big part of it. 

We had a meeting of the Doctors Caucus this morning with the 

Surgeon General of the United States, a very impressive physician 

who we talked with him about trying to address this and using his 

national stage that he potentially has to address this problem. I 

have worked with—tried to work with the FDA, with the States, 

with physician organizations and many others. So this is a problem 

48 

we are going to have to tackle, and I want to thank this subcommittee and the chairman for bringing that—multiple hearings 

on that. 

So the question I have, Dr. Agrawal, is, how much communication with the other agencies do you have, and is there the development of a plan that is coming together maybe to address this problem knowing that really the big problem why you are being defrauded in Medicare Part D is because of the narcotics. I mean, 

that is the biggest problem. We all know it. 

Dr. AGRAWAL. Thank you for the question. So I would highlight 

a few things. First, the Secretary of HHS has identified prescription drug abuse as a major priority for the Department, and there 

is a sort of three-part strategic approach to addressing this issue 

that the Department has taken on inclusive of all of its agencies. 

So one is exactly what you are describing, which is communication 

with the provider community to make sure that prescribing is appropriate, that utilization is appropriate. We are also looking at 

other facets, so medication-assisted therapy for substance abuse 

issues and the use of naloxone, for example, for emergent overdose 

issues. 

CMS has a role to play in the broader kind of social landscape, 

and I think again, your point that this is not just a Part D issue 

but a kind of broader societal issue is exactly right. We are approaching it as a payer using every lever that we can from looking 

at prescribers to the beneficiaries that might be abusing the program, identifying pharmacies that might be part of the problem 

and working very closely with plan sponsors. One even sort of 

broader partnership that I would point out is the Health Care 

Fraud Prevention Partnership where we are working with not just 

Part D or C plan sponsors but the private sector generally, a number of private payers, to look at these issues and others. So we 

have done, for example, an outlier pharmacy study with this public-private partnership, identified 8,000 pharmacies not just in the 

Part D world but also in the private just of pure private payer 

world that we are now looking at and working kind of individually. 

So I completely agree that partnership is at the center of this. We 

are trying various approaches to partnership to help ameliorate the 

issue. 

Mr. BUCSHON. Well, I mean, what does Anthem do, for example? 

I don’t want to throw out any names, but big insurance companies 

that pay for that are a payer, right? Because for the narcotics, if 

there is a funding stream, people are going to look to the funding 

stream to try to obtain these medications. I mean, that is just 

human nature. 

Is there anything the private sector companies are doing differently than maybe CMS is doing on that front? 

Dr. AGRAWAL. Yes, also an important question. So I think one of 

the advantages of the construct of the Part D program is that we 

do work through the private sector. So the common payers that you 

could identify are Part D plan sponsors, and so we are able to utilize the exact same tools and approaches that they have in their 

pure private side for the advantage of Medicare, whether it is—— 

Mr. BUCSHON. So basically you are working through them. I 

know Medicare Part D works through plan sponsors. We have 

49 

talked about that. So you are basically working through them and 

using their techniques to try to tackle this problem? 

Dr. AGRAWAL. Correct, correct, in addition to the other things 

that we can do from an agency kind of Federal leadership standpoint. 

Mr. BUCSHON. OK. Thank you. I yield back. 

Mr. MURPHY. Mr. Green, you are recognized for 5 minutes. 

Mr. GREEN. Thank you, and I want to thank both of you for 

being here today, and I want to take a few minutes to talk about 

the recent successes in combating fraud and abuse in the Medicare 

program. 

In June, HHS and the Department of Justice announced a sweep 

led by the Medicare Fraud Strike Force resulting in charges of 243 

individuals for approximately $712 million in false billing. This was 

the largest takedown in the Strike Force history. More than 44 of 

the defendants arrested were charged with fraud related to the 

Medicare Part D program. 

Ms. Maxwell, the Office of Inspector General was an integral 

part of this takedown. Can you tell me more about the OIG’s role? 

Ms. MAXWELL. Absolutely. I would be happy to provide you more 

details about the national takedown. 

As I mentioned, it is the largest criminal fraud takedown in the 

Medicare Strike Force history. About a third of the cases focused 

on Medicare Part D prescription drug fraud and also focused on 

Medicaid personal care services and Medicare home health. In particular, focused on the prescription drug, there were 44 defendants 

charged in related prescription drug fraud. We have—— 

Mr. GREEN. Go ahead. I was wondering, have those gone to trial 

yet or is it too early? 

Ms. MAXWELL. Too early. So the takedown just happened last 

month, so we are still in the process of working through those. 

Mr. GREEN. I understand the takedown involves a significant 

component of prescription drug fraud. Can you elaborate? Is this 

type of criminal fraud scheme increasing in prevalence in the Part 

D program? 

Ms. MAXWELL. Yes. We have seen an increase of 134 percent of 

our Part D cases. We have 540 pending cases in Part D alone. 

Mr. GREEN. OK. The Health Care Fraud and Abuse Control program, which funds the Medicare Fraud Strike Force, has recently 

seen record-breaking fraud and recovery efforts as well. In the fiscal year 2014 alone, the program recovered $3.3 billion from individuals and companies facing healthcare fraud allegations. Since 

its inception in 1996, the program has recovered $27.8 billion. The 

Affordable Care Act significantly increased funding for HCFAC, indexing the program’s mandatory baseline and funding to inflation, 

providing over $3 million in additional funding. 

Ms. Maxwell, how can we build on these successes in the future? 

Ms. MAXWELL. The HCFAC funding has been integral to the success of the OIG. It, as you mentioned, funds our Medicare and 

Medicaid operations both in investigations, audits and evaluations, 

and as we are looking at this Part D problem, that is the IG’s approach. We have recognized this as a priority and we are taking 

an all-hands-on-deck approach. So we are using those funds to use 

all the tools available to the OIG to focus on this issue. 

50 

Mr. GREEN. The ACA provided new authorities to combat waste, 

fraud, and abuse such as enhanced penalties for fraudulent providers. Ms. Maxwell, how are these new ACA authorities assisting 

the Inspector General in successfully combating Medicare fraud? 

Ms. MAXWELL. The authorities have been incredibly helpful. We 

have been able to use our civil monetary penalty and exclusion authorities to help buttress and protect Medicare Part D. 

Mr. GREEN. OK. Dr. Agrawal, same question. 

Dr. AGRAWAL. Yes, the authorities in the ACA for CMS have also 

been very significant. You know, what it did 5 years ago was, it 

embarked us on a pathway of enrolling every single provider and 

supplier that is in the program, subjecting them to common and 

consistent screening standards, which have led to over 500,000 enrollments now being deactivated or revoked. Bottom line is, they 

can no longer bill the program. So that kind of screening approach 

has been, I think, extremely effective. We have also obviously implemented other approaches along the way like the predictive analytic system that we described earlier to really augment these enrollment activities. 

Mr. GREEN. Thank you, Mr. Chairman. I yield back. 

Mr. MURPHY. Thank you. 

Mrs. Brooks is recognized next for 5 minutes. 

Mrs. BROOKS. Thank you, Mr. Chairman. 

I am a former United States attorney, and so used to be involved 

when I was in Medicare fraud-type of cases, and so I do want to 

commend you for this huge, massive sweep that just happened. 

I am curious if you could share a little bit more about—during 

the time I was U.S. attorney, mortgage fraud was kind of overtaking the country and we had massive schemes involving mortgage fraud. Now it seems that we have massive schemes involving 

Medicare fraud, and I am curious whether or not in these investigations you have found are there connections between the different communities, and are there schemes that are more commonly being utilized than others, particularly with prescription 

drug issues? And I would like both of you to comment as to, you 

know, how prevalent were the identity theft issues in these prescription drug cases as well, whether it was identity theft of the 

beneficiaries or identity theft actually of prescribers? And I am just 

curious whether or not you were seeing any sort of certain types 

of enterprises and certain types of patterns bubbling up in these 

cases? 

Ms. MAXWELL. Absolutely. We are seeing a wide range of fraud 

schemes emerging in Part D, certainly in the national takedown 

that just happened last month, and it can range from small physician or pharmacy to a full-on criminal enterprise. 

One of the new schemes we have been seeing in the emergence 

of patient recruiters that go out and they are in the community, 

trusted individuals in the community that bring patients in to 

these schemes and bring them in as complicit beneficiaries. The 

fraud schemes in the takedown, we focused primarily on pharmacy 

fraud, and we see—for one example we saw in Miami, five pharmacy owners were charged with paying for beneficiaries’ numbers 

so they could illegally bill and also paying a clinic provider to proVerDate Mar 15 2010 09:57 Feb 03, 2016 Jkt 037690 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X66MEDICAREDASKOK121115\114X66MEDICAREDXPDFMADE
51 

vide them adulterated prescriptions to bill for drugs they did not 

dispense. 

Mrs. BROOKS. And so in these different schemes, particularly 

going back to the patient recruiters, were they also charged and 

were they conspiracy charges that were brought against these individuals? Do we have appropriate laws on the books to deal with all 

of the different actors in the schemes? 

Ms. MAXWELL. I know that we are going after the entirety of the 

scheme and all the people involved. I am not a lawyer, so I would 

want to get back to you with specifics about our authorities to combat this. 

Mrs. BROOKS. OK. I would be very interested in knowing whether or not if as the schemes—and we found this in the mortgage 

fraud issues of the 2000s, that people would be recruiting potential 

home buyers as well who really weren’t going to be buying homes. 

And so I think we could see these kinds of schemes obviously happening here. 

I am curious what DEA’s role is, Dr. Agrawal. It is my understanding that you don’t have authority to revoke licenses, that it 

has to go from DEA to a medical licensing board or to a pharmacy 

board. What is the type of work that you are doing with DEA and 

are there any impediments that you and/or DEA have with respect 

to revocation of licensing, which is a huge penalty for any pharmacist or any physician or prescriber? 

Dr. AGRAWAL. Yes, I would agree with you that licensure either 

medical licensure or the specific, you know, schedule II authority 

that the DEA license gives you is incredibly important and valuable to, you know, legitimate prescribers. Those authorities, as you 

pointed out, are levied somewhere else, either at the State level 

and the State medical board or through DEA directly. But where 

we have really tried to get involved is making sure that our licensure information is up to date and that we are taking the relevant 

downstream actions from any licensure changes, whether it is a 

suspension or revocation or whatever. 

The rulemaking that we engaged in last year that I mentioned 

earlier actually specifically links our revocation authority to the 

DEA license, and needing to have a valid DEA license in place actually prescribed in the program. So that is a place—you know, I 

think these are examples of where we can key off the work of other 

agencies as they engage in their oversight and enforcement responsibilities. 

Mrs. BROOKS. Do you report anything to the licensing agencies 

of the States yourself? 

Dr. AGRAWAL. We do. So we are able to make referrals informally 

to them about concerning prescribing habits, and we have done 

that. I think we see a wide degree of discrepancy between licensing 

boards that actually do something as a result versus not. 

Mrs. BROOKS. OK. Thank you. I have nothing further. I yield 

back. 

Mr. MURPHY. Mr. Tonko, you are recognized for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair. 

This subcommittee held a number of hearings earlier this year 

to examine the current opioids abuse epidemic. Dr. Agrawal, you 

mentioned in your testimony that the epidemic has touched all 

52 

parts of the Part D program. The spending for opioids has increased substantially over the past decade, and the number of prescription drugs overdose deaths is staggering, to say the least. We 

need to use all of the tools at our disposal to combat this problem. 

Over the past several years, CMS has taken a number of steps 

to strengthen Medicare program integrity including measures to 

prevent overutilization of prescribed medications. In January 2013, 

CMS implemented the Medicare Part D Overutilization Monitoring 

System that requires plan sponsors to have a drug utilization management program in place. 

So Dr. Agrawal, how does that system work so as to reduce potential opioid overutilization in the Part D program, and would 

statutory authority from plan sponsors to put so-called pharmacy 

lock-in programs in place complement that system? 

Dr. AGRAWAL. Sure. The way the system works is, the agency 

identifies for plan sponsors those beneficiaries that have very high 

utilization of things like opioids using commonly accepted standards of, you know, sort of safety threshold. We provide those specific beneficiaries to the plan sponsors on a quarterly basis and 

then require them to take downstream utilization control steps including case management. What we have seen from the time that 

we have been doing this and working with plan sponsors in this 

way is a 30 percent reduction in the prevalence of those beneficiaries. So clearly, you know, impact is possible and we are looking to—and we continue to do this to ensure that we get as much 

impact as we can. 

I think to the second question, you know, lock-in has been discussed, I think, quite a bit. We, you know, do view it as favorable 

and it does have, you know, good impact in the private sector as 

well as in various State Medicaid programs. It is part of the President’s budget, and we look forward to working with this committee 

on getting that passed. 

Mr. TONKO. And what is the role of the plan sponsors in identifying potential opioid overutilization? 

Dr. AGRAWAL. Yes, the plan sponsors have a critical role, you 

know, throughout Part D whether it is with opioids or other schedule II drugs, other medications generally. You know, I think that 

is why we have highlighted making sure that they have robust 

compliance programs in place, robust utilization programs in place 

so they can address a wide array of issues. We also engage in a 

lot of data sharing with them, both about abusive prescribers, abusive pharmacies, outlier beneficiaries. You know, this is a partnership really to ensure the integrity of the Part D program. The 

agency and Part D plan sponsors really have to work very closely 

together. 

Mr. TONKO. And the system has been in place about 2 years. Is 

that correct? 

Dr. AGRAWAL. The OMS system? 

Mr. TONKO. Right 

Dr. AGRAWAL. I think that is right, yes. 

Mr. TONKO. OK. And the data that are returning are showing 

great promise, I understand. Have you seen a reduction in the 

number of overutilizers in Part D? 

53 

Dr. AGRAWAL. Yes, we have, so again, of the beneficiaries that we 

have identified exceeding or meeting a certain safety threshold and 

that we have shared with plan sponsors. We have seen a 30 percent reduction or roughly 30 percent reduction in the prevalence of 

those beneficiaries. 

We have also exchanged information about acetaminophen because it often is kind of coingested with opioids and is liver-toxic 

in and of itself, and there we have seen a 91 percent reduction in 

the prevalence of those at-risk beneficiaries. 

Mr. TONKO. And you noted in your testimony that there are a 

number of additional tools in the President’s 2016 budget. Those 

tools would prevent the inappropriate use of opioids. Can you 

elaborate on those offerings that he is presenting to us? 

Dr. AGRAWAL. Sure. I think the main one that I can highlight we 

have discussed to some degree is the lock-in approach that would 

essentially restrict certain beneficiaries to, you know, based on 

kind of abusive utilization to select pharmacies and select prescribers, and that is an approach that has been utilized in the industry before. It is a way of trying to balance access to appropriate 

care and medications against that potentially abusive behavior. So 

that is something that we view as potentially having significant 

positive impact, and we hope this committee and others help to 

work with us on that. 

Mr. TONKO. Thank you. 

And Ms. Maxwell, the OIG Data Brief noted that there has been 

substantial growth in spending in Part D drugs, especially for commonly abused opioids. How can the OIG’s recommendations to combat fraud and abuse help combat this situation, this problem? 

Ms. MAXWELL. Similar to the conversation that you have just 

been having, we do recommend that a lock-in program be instituted 

to help address this problem. 

Mr. TONKO. Thank you very much, Mr. Chair. I yield back. 

Mr. MURPHY. The gentleman yields back. 

I now recognize the gentleman from Oklahoma, Mr. Mullin, for 

5 minutes. 

Mr. MULLIN. Thank you, Mr. Chairman, and I thank both of you 

all for being here. 

Doctor, I was just going over some of our notes on this, and I was 

disturbed because we have talked before, and we have talked about 

the abuse of opioids—it is not going to come out. Anyways, we 

know what we are talking about. 

Mr. MURPHY. Opioids. 

Dr. AGRAWAL. With narcotics. 

Mr. MULLIN. Thank you, narcotics. And not enough coffee today. 

Anyways, as we were discussing, some statistics came up, and we 

noticed that Part D spends on average, the beneficiaries, around 

$105 per individual. In Oklahoma, we see that at $165 per individual enrolled in Part D. And 43 percent of those enrolled in that 

receive this drug that is commonly abused. Doesn’t that seem a little high to you? 

Dr. AGRAWAL. I think Part D is like any other sector of 

healthcare. We have seen the increasing use of opioid medications 

throughout healthcare, whether that is in the public sector or in 

the private, you know, and again, I think we have to be careful. 

54 

I sort of take this as a physician to heart. There are people who 

have legitimate pain issues that need to be addressed with these 

powerful medications. 

Mr. MULLIN. But 43 percent enrolled in it in the State of Oklahoma alone? I mean, that seems awfully high to me. 

Dr. AGRAWAL. Yes, I agree, you know, that number does seem 

high. You know, I think the question that is very difficult for anyone to answer is what portion of that is the totally legitimate utilization that you would expect to see. 

Mr. MULLIN. Well, in our previous hearing about Medicaid fraud 

and the addiction of these drugs, I asked you about the number of 

beneficiaries being prescribed methadone as a first line of defense, 

right? And then these numbers come out from last year, and by 

CMS’ own recommendation, it says it shouldn’t be used as a frontline defense. But yet, like I said, in Oklahoma, 43 percent of those 

enrolled in Part D beneficiaries are still receiving it. Abuse seems 

like it speaks for itself through numbers. As a business owner, I 

look at financial sheets all the time, especially when we would go 

in, we would go to purchase a company, I could look at the financial sheets and I could immediately tell you where the balances 

were messed up at, and what we would do when we would see 

something like that is, we would cut that part out to make the 

company profitable again. If we are seeing numbers like this, isn’t 

it easy to say that until we get a hold of it, we should just cut it 

out? There are other drugs on the market. We don’t have to be prescribing this stuff at the rate that we are. Until we understand it 

more or can oversee it in a better capacity, we should pull it. We 

do that all the time with drugs, don’t we? 

Dr. AGRAWAL. So, you know, I am not an addiction expert, and 

you know, I think—— 

Mr. MULLIN. You don’t have to be. 

Dr. AGRAWAL [continuing]. There clearly is a role—— 

Mr. MULLIN. The numbers speak for themselves. I don’t know 

how many hearings we have had of this. We have even brought in 

a detective from Oklahoma that talked about it. 

Dr. AGRAWAL. I think there is clearly a role for medication-assisted therapy in the substance abuse space. What we focus on 

rather than just eliminating a benefit for an entire group of people, 

some of whom might really actually need that benefit, is to try to 

cut away the waste, abuse, and fraud that may be occurring. So 

that is the role of things like the Overutilization Monitoring System that look at bennies—— 

Mr. MULLIN. I get that, but just last year we still had 43 percent 

in Oklahoma prescribed to it. I can’t get that out of my head. You 

can’t convince me that nearly half of those on the Part D need 

these type of prescribed drugs when it is not supposed to be the 

first line of defense. It sounds like to me it is an easy way for them 

to just prescribe it and move on. 

There is not enough research being done to make sure that it is 

not being abused. We are putting people on this and they are blindly taking it because their physician prescribes it to them and then 

they are becoming addicted to it. Is this not throwing up red flags? 

Is there not something that we can do at a more aggressive rate 

than just simply looking into it? 

55 

Dr. AGRAWAL. Well, Congressman, I think you are pointing out 

what I think the agency has been saying is that this is a multifaceted issue. So whether you are talking about the patient or—— 

Mr. MULLIN. I know, but saying—— 

Dr. AGRAWAL [continuing]. Prescriber—— 

Mr. MULLIN [continuing]. Is two different things. 

Dr. AGRAWAL. Correct, and that is why we are focused on doing 

with all of these different programs that we have that look at prescribers, that look at beneficiaries getting the drugs. We have programs around data transparency to send information to prescribers 

about their own prescribing habits so they can see how it compares 

to others. 

I think this is a complex problem. I am not sure that a single 

number is something that the agency can respond to because it 

really, you know, matters what is underneath that number, what 

is the appropriate utilization that you would like to see. 

Mr. MULLIN. And sir, I get that and I am out of time. 

Thank you, Chairman, for indulging me there. 

Mr. MURPHY. The gentleman yields back. 

I recognize Ms. Castor for 5 minutes. 

Ms. CASTOR. Well, thank you, Mr. Chairman, for calling this 

hearing. I think it is an important time for us to take a hard look 

at Medicare Part D. We are about 10 years into the existence of 

the program. We have 42 million Americans who rely on the benefit. A lot of the consternation was how it was constructed where 

you would get coverage and then you would reach a certain level 

of coverage and then fall off a cliff into a doughnut hole, and that 

made it very difficult for many of our neighbors to get the care that 

they need. 

But thankfully, the Affordable Care Act has brought some significant reforms to Part D. Most important is closing the doughnut 

hole. As a result of the ACA, 9.4 million seniors and people with 

disabilities have saved over $15 billion on their prescription drugs, 

an average of about $1,600 per beneficiary. 

And I wanted to pull up the statistics for the State of Florida and 

make sure they are on the record. Since 2010, overall savings for 

Florida’s seniors under the Affordable Care Act now has been almost a billion dollars, $979 million, and in 2014, Florida’s seniors 

saw savings of about $306 million. On average, that is about $884 

back into the pockets of our older neighbors, so that has been very 

beneficial. 

And just as important as the savings to our neighbors is the 

overall savings to the program. OMB has deemed Medicare Part D 

a high error program, meaning it has an improper payment rate 

above a certain threshold, 3.3 percent, which amounts to $1.9 billion in improper payments, and we have got to save these dollars. 

So I really appreciate the work that the IG and CMS has been 

doing. 

Clearly, we have to do more, and I want to compliment the Medicare Strike Force, especially for the June takedown. In Florida, 

they arrested about 73 people. South Florida has been a problem 

area, and I am going to get into that a little bit more. 

56 

Ms. Maxwell, what is the explanation for the—I know you have 

said it multifaceted but break it down a little bit more. What is the 

explanation for the increasing cases of fraud nationwide? 

Ms. MAXWELL. I think as we have been talking, there is a lot of 

money at stake that is enticing, and we are continuing to build the 

tools to protect the program. Our role in that is multifaceted. As 

you had mentioned, we have investigations where we actually go 

out to try and catch criminals who are defrauding the program, but 

we also have a role to audit and evaluate and make sure that there 

are systemic fixes. As I had mentioned in my oral, enforcement is 

never going to be enough. We need to look at the program as a 

whole and make sure that the plan sponsors have compliance programs in place to protect the program and that CMS also has 

strong resources to back that. 

Ms. CASTOR. So your OIG report emphasizes two areas of opportunity to improve Part D program integrity, first, in the use of data 

to identify vulnerabilities, and second, an increased oversight by all 

parties responsible for protecting Part D, and I know this has to 

include the new emerging criminal networks, because what we saw 

in Florida, especially Miami, of people that have been convicted of 

drug trafficking had served their time, came out of prison and are 

now looking at Medicare Part D fraud. What can—what else do we 

need to be doing to combat these criminal networks, and explain 

to us what some of their schemes are under Part D? 

Ms. MAXWELL. Absolutely. I think one of the things that we are 

doing very successfully now and have continued to focus on are the 

Medicare strike forces in which we partner with CMS and other 

local and State law enforcement to stay on top of this fraud and 

address these emerging issues as they hit the ground. 

As you know, fraud is ever evolving, and so—— 

Ms. CASTOR. So one of the—I wish Mrs. Brooks was still here. 

She is a former U.S. attorney. One of the weaknesses has been the 

penalties, the criminal penalties. Do you agree? 

Ms. MAXWELL. We could always—yes, we could strengthen our 

penalties. 

Ms. CASTOR. OK. And Dr. Agrawal, does CMS need specific direction to require all plan sponsors to report all fraud information 

rather than keeping it strictly voluntary? 

Dr. AGRAWAL. Sure. So as I mentioned earlier, we are working 

to evolve the reporting that is both given to plan sponsors as well 

as what they give back to us. We have started by focusing on leads, 

investigative leads, for plan sponsors to develop and then take any 

necessary administrative actions on. We implemented an IT system 

called PLATO earlier this year for them to be able to—— 

Ms. CASTOR. My time has run out. Could you just say yes, that 

would be helpful if it was mandatory rather than voluntary? 

Dr. AGRAWAL. I think it could be helpful to help—you know, to 

continue to evolve the program and evolve the relationship between 

the agency and plan sponsors. 

Ms. CASTOR. Thank you. 

Mr. MURPHY. The gentlelady yields back. 

Now Mr. Collins of New York. 

57 

Mr. COLLINS. Thank you, Mr. Chairman, and I want to thank my 

fellow committee members for the line of questioning we have had 

today. 

So we had an interesting discussion, Dr. Agrawal, last time, if 

you remember, on Six Sigma Lean Six Sigma. 

Dr. AGRAWAL. Yes, I don’t totally remember it as a discussion but 

we had that conversation, I guess. 

Mr. COLLINS. So let me pick up. After that meeting, what did you 

think, do or say when you went back to your office? What did you 

think, do or say when you went home that night? And did you take 

anything positive out of that discussion or whatever you want to 

call it? 

Dr. AGRAWAL. I think where there are ideas that benefit the program that we can implement differently to improve the integrity of 

Medicaid, of Part D and Medicare, whatever the case may be, we 

take that input seriously, whether it comes from the committee, the 

OIG, the GAO, or others. So again, we take good ideas seriously 

and we work to implement them. It may not be instantaneous or 

overnight but the work is constant. 

Mr. COLLINS. So afterwards, did you give any more thought to 

your 6.7 percent 5-star error rate that, if you were the FAA, you 

would allow 10 airplanes a week to crash and give yourself 5 gold 

stars, or did you understand the tone of any of that and did you 

take any of that back to say, ‘‘Oh, my God, a 6.7 fraud rate is not 

only not acceptable, it is certainly not a bell ringer to say you did 

a good job’’? 

Dr. AGRAWAL. Yes. You know, again, as I think we had communicated in that last discussion, you know, we are not tone deaf and 

we understand that there is work to be done. I look at that error 

rate and, you know, recognize that it needs to come down. You 

know, nothing about that line of questioning sort of augmented or 

changed the recognition. 

Mr. COLLINS. Did you change your 6.7 to something lower or is 

your error rate this year still 6.7? 

Dr. AGRAWAL. Sir, that is measured on an annual basis. It is not 

going to change day to day. 

Mr. COLLINS. See, being a private-sector guy, well, if I was your 

boss, how long do you think you would work for me? 

Dr. AGRAWAL. Sir, I have certain misgivings about thinking 

about working for you. 

Mr. COLLINS. As you should. As you should. 

Dr. AGRAWAL. Let me be clear about something perhaps. So I 

came to this job just over—— 

Mr. COLLINS. That was funny, by the way. 

Dr. AGRAWAL. Thank you. I appreciate it. 

Look, I appreciate the message that you are trying to send, and 

I appreciate the tone of the sort of last line of questioning last 

time. I think what I should have said then in response and what 

I say to you now is, I came to this job from the private sector. I 

have been a clinician. I have taken care of thousands of Medicare 

and Medicaid beneficiaries. My purpose is coming here was to help 

ameliorate, make progress on exactly these kinds of issues. I think 

what would be helpful is a collaborative approach. If we can do 

that, if we can work together on devising solutions and getting 

58 

them implemented, nothing would make me happier. I think merely pointing out that there is an error rate and kind of harping on 

it over and over doesn’t help necessarily make that progress. 

Mr. COLLINS. So, I mean, if you looked into Six Sigma Lean Six 

Sigma, as the county executive of the largest update county in New 

York that was effectively bankrupt when I took over, we took that 

county from number 62 to number one in 3 years. Three years 

after, I had 500 certified yellow belts, green belts, black belts, master black belts. My deputy county executive was a master black 

belt. We had so much money in our county 3 years in, we were paying cash for capital projects. We paid down $150 million of our 

county debt. We had $100 million county surplus in 3 years. Lean 

Six Sigma works but it starts with somebody at the top, in my 

case, the CEO of a county, but also it could be the head of quality 

control, the head of manufacturing, who comes in and says I don’t 

want to accept 67,000 errors per million opportunities; I want zero, 

and I am going to measure that every day and I am going to chart 

that every day, and you know what? I am going to send myself and 

I am going to send others to schools, to training to find out how 

to process map an error. 

What Dr. Burgess pointed out, and I got one of these phone calls 

the other day too, I got one from American Express. There was a 

$25 innocuous charge. They said this looks like it could be fraud, 

and it turns out it was. That was 15 minutes after somebody put 

through that transaction. That is an organization that gets it. That 

is an organization that says we won’t accept any errors, let alone 

67,000. 

So I guess as my time runs out, I would simply challenge you to 

dig into Lean Six Sigma more. It does work. It can be implemented 

in Government, but it starts with the person in charge, someone 

like yourself saying I just categorically reject the level of fraud or 

other errors and I am going to be proactive in finding out how to 

do it better, and I would just perhaps challenge you to look into 

this a little further. 

And with that, I yield back. 

Mr. MURPHY. The gentleman yields back. 

I now recognize Ms. Clarke for 5 minutes. 

Ms. CLARKE. Thank you, Mr. Chairman, and I thank our Ranking Member. I thank our witnesses. This is a very complex issue. 

There is no doubt about that. But the stakes are very high with 

respect to what is happening to the American people and the illicit 

prescription drug proliferation that is taking place in many parts 

of our Nation. 

Ms. Maxwell, I think we all agree on the importance of ensuring 

drugs are prescribed and dispensed appropriately and legitimately. 

The Office of Inspector General’s report suggests several ways to 

strengthen Part D program integrity efforts. The report recommends that CMS determine the effectiveness of programs and 

take action to ensure that sponsors’ compliance plans meet CMS 

requirements. 

So Ms. Maxwell, what more could be done to ensure that sponsors’ fraud detection efforts are effective? 

Ms. MAXWELL. Our recommendations point to mandating the reporting of fraud and abuse that sponsors identify as well as manVerDate Mar 15 2010 09:57 Feb 03, 2016 Jkt 037690 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X66MEDICAREDASKOK121115\114X66MEDICAREDXPDFMADE
59 

dating the reporting of what sponsors do with that. We believe that 

comprehensive reporting from all plans would allow CMS the visibility and the tools to be able to assess the effectiveness of what 

is happening at the sponsor level. 

Ms. CLARKE. So that sounds like a logistical challenge, right? 

You have several sponsors. Right now they voluntarily make that 

information available. Can you drill down a little bit deeper in 

terms of systems that could be established that either trigger some 

sort of an action on the part of CMS or what would you suggest? 

Because if it is voluntary, you know, they are operating businesses, 

they are sponsors. How do you sort of hold them accountable in the 

course of the time that they are spending doing all the other activities that they need to do to run their companies? 

Ms. MAXWELL. Sure, and because they are required right now to 

report voluntarily, I would assume—and I would defer to Dr. 

Agrawal for the specifics—I would assume that there are processes 

for that reporting to happen. So the systems are in place. The question is, why isn’t everyone using them. So when we look for the voluntary reporting, we only see 35 percent. So the other plans have 

the capacity; they have just opted not to do the reporting. 

Ms. CLARKE. So Dr. Agrawal, is it an issue of at this stage voluntary just does not work and that it has to be a mandate? 

Dr. AGRAWAL. Well, to answer your question, we have been working to enhance systems that allow plans to report data back to us. 

We implemented a major enhancement earlier this year that allows 

that data to not only be reported but also be kind of searchable so 

it can be utilized. What we have been doing is focusing on getting 

these plan sponsors better data about leads that they should be investigating and potentially taking action on. I think as we further 

that relationship, as we give them more data, we will be very interested in hearing back from them and perhaps in a mandate exactly 

what work that they have done. But we find that just by improving 

the system and improving the collaboration, we get better reporting. 

Ms. CLARKE. So baked into what you are saying is that there was 

an assumption that there were some misgivings or misunderstanding of what exactly the sponsors were to do to report voluntarily? Is that sort of where the thinking is? 

Dr. AGRAWAL. Well, I think that sponsors like many private companies have concerns about reporting data back, especially when it 

would be visible to other—you know, potentially visible to other 

plan sponsors. So one way that we have worked with them not just 

on the system enhancement side and making the process easier is, 

we actually allow them to report certain information deidentified of 

source. So they tell us a problematic pharmacy or problematic prescriber what they have done to take action against that entity or 

individual. But we are not—it is not necessarily clear to us which 

sponsor—or it can be sort of deidentified which sponsor put that in. 

From a private-sector kind of competitive standpoint, that input 

made sense to us, and so we have taken as a step allowing them 

to input that kind of data so that we get better reporting about the 

actual problem, which is the fraud and abuse in the program. 

60 

Ms. CLARKE. So that can be a double-edged sword, right? They 

don’t want the information attributed to them on the basis of some 

sort of a proprietary disadvantage. Is that what you are saying? 

Dr. AGRAWAL. Well, I think, you know, there is a narrative that, 

you know, fraud and abuse just doesn’t occur in the private sector. 

We have heard numerous committees kind of, you know, suggest 

that that is the case. I think, you know, you have programs like 

Part D which is conducted through the private sector and yet we 

see these problems. So, you know, I think what we have to do is 

get to a place where we are really doing the best we can to get all 

the right information from plans. As we develop that expertise, we 

can, you know, implement more stringent guidance, perhaps getting to the kind of mandate that OIG is requesting of us. But, you 

know, we are taking steps along that kind of evolutionary pathway. 

Ms. CLARKE. Let me ask, Dr. Agrawal, there are some troubling 

findings that the GAO reported in 2014. CMS conducted audits of 

Part D plan sponsors in 2013. Of the plans the agency audited, 

there were fraud, waste, and abuse findings in nearly all of the audits, 94 percent. Specifically, CMS found inadequacies in plan sponsors’ compliance training, resolution of fraud, waste, and abuse inquiries in a timely manner, and corrective actions taken in response to potential fraud, waste, and abuse. These are troubling 

findings, and I think it goes to my previous question. How does 

CMS evaluate the effectiveness of sponsors’ compliance programs? 

Have these efforts changed recently? And what is CMS doing to follow up with the audited plans to ensure that these deficiencies are 

being remedied? 

Dr. AGRAWAL. Thank you for the question. So we do conduct audits of—compliance audits of plan sponsors to make sure that they 

are compliant with our regulations, not only on the fraud, waste, 

and abuse side but also, you know, obviously inclusive of their program integrity work. 

Recently, we have stepped up the amount of both the volume of 

audits that we do as well as the focus in making sure that program 

integrity is part of those audits. Where a deficiency is identified, 

we work with them like we would any other contractor, which is 

we can send letters of concern, we can place them on corrective action plans. There is an array of tools to get contractors into compliance with our expectations. 

Ms. CLARKE. Thank you. I didn’t realize I was so far over time. 

If you could send us something in writing—— 

Dr. AGRAWAL. Sure. 

Ms. CLARKE [continuing]. That outlines that, that would be helpful. 

Thank you. I yield back. 

Mr. MURPHY. Thank you. 

Mr. McKinley is recognized for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. Again, I apologize. I 

had to step out. We have a pipeline safety issue downstairs in another committee, and we just had a fire in a pipeline last week, and 

I needed to be there for that. 

But back on this panel, a few months ago we had a discussion 

here about one of the big problems here with opioids was overprescription, and I don’t know that we came up with a solution how 

61 

we are going to address that because I don’t think we want Congress to be practicing medicine. But then we got into a discussion, 

I think it was with, Doc, and that was over getting the prescription 

database in real time across the country to be able to have that so 

that we might be able to track the abuse that is happening that 

way. Are we making any progress on that from either one of you? 

Can you address that issue? 

Ms. MAXWELL. The Inspector General has not done any work— 

you are talking about the prescription drug monitoring databases 

in the States, I take it? 

Mr. MCKINLEY. In States they have—it is not in real time, it is 

within a week they will file the information. But the problem of 

abuse is because it is in real time. Someone goes across the river 

into Ohio or West Virginia or Kentucky and they are abusing the 

system. We have been talking about that, my goodness, for at least 

3 years. I am just curious what progress we are making on that. 

We heard from the attorneys general who were all suggesting that 

is one of the best ways we could make progress in abuse within our 

Part D. I haven’t heard what progress we are making. 

Dr. AGRAWAL. Yes, so the implementation of PDMP, prescription 

drug monitoring programs, like the systems that you are describing 

are, you know, as you know, State-level initiatives. HHS has been 

involved in—— 

Mr. MCKINLEY. They can only do it statewide. I am talking about 

interstate, and that is where the catch comes into it because so 

many of us are in border States that we can cross easily over to 

where population is generally on a border. So help me out a little 

bit about where we are going from the Federal. Is there a role for 

us to play? Because you mentioned earlier, Doc, you said we need 

a collaborative effort. I am looking to see what do you need from 

us to help out, to make this collaborative effort. 

Dr. AGRAWAL. Yes, that is a good question. So I think I would 

have to take that back in terms of, you know, the kind of interoperability issue that you are identifying or getting more States on 

board because as I mentioned, that is being done at the HHS level. 

There is less of a direct kind of CMS role in that set of activities. 

I am happy to take that back. 

I will you from just sort of my experience as a clinician, you 

know, one way that States, you know, try to remedy this issue, and 

you see this sort of in the DC/Maryland/Virginia area, is by encouraging providers to get access to numerous different databases. 

Now, it is not a perfect approach but I will tell you, I have utilized 

that approach in my own practice just to make sure that, you 

know, a patient or a beneficiary is not crossing State lines to kind 

of game the system and get these medications. 

Mr. MCKINLEY. I have less than 2 minutes. Let me go back to 

another statement you made to the Congressman from New York. 

You said we need to have more collaborative effort. What did you 

mean by that? Is there something we are not doing? Because our 

whole role here is to try to be supportive. So are we not being collaborative? 

Dr. AGRAWAL. No, and, you know, I appreciate the question. The 

comment wasn’t really about the committee as a whole or anything 

like that. I think it is, from my perspective, a certain tone of quesVerDate Mar 15 2010 09:57 Feb 03, 2016 Jkt 037690 PO 00000 Frm 00065 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X66MEDICAREDASKOK121115\114X66MEDICAREDXPDFMADE
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tioning that I find to be less constructive, but it was not about the 

committee in general. In fact, I think there have been ideas exchanged in recent hearings and certainly even today that I think 

do demonstrate that kind of collaboration. 

Mr. MCKINLEY. In the last minute that I have, I remember the 

issue was over the 6.7 percent, but where do we think—I am just 

curious, where should it be? If not 6.7, should it be 3, 2? Where 

do you—and is that the goal? Are we making progress or is it— 

have we plateaued at 6.7 or has it risen to 6.7? I don’t know the 

trends. I am just curious. What can you share with us about the 

level of abuse? 

Dr. AGRAWAL. Sure. So, if you look year on year, there is variability in the number, and there are two things that I think really 

have greatest impact on the number. One is, what are the requirements that we are implementing that either might be new requirements or that we are working to enforce more closely. What we 

find from a program integrity standpoint is that when there are 

new requirements or enforcement steps up, inherently the error 

rate tends to rise because even legitimate providers are not able to 

keep up with those changes. So it takes a period of education to 

actually get everybody into compliance. It then allows the trend to 

come back down. 

Mr. MCKINLEY. Is the trend rising or is the trend going down? 

Dr. AGRAWAL. I don’t have the figures in front of me. I mean, 

there is year-on-year change, but we can get that to you. 

Mr. MCKINLEY. Let us say over the 15 years, has the trend, is 

it increasing or decreasing? 

Dr. AGRAWAL. We can go back as far as the error rate has been 

measured but we will share that with you. 

Mr. MCKINLEY. Thank you very much. 

Dr. AGRAWAL. Absolutely. 

Mr. MCKINLEY. I yield back my time. 

Mr. MURPHY. I think we all as Members have spoken here. There 

is a few things I want to just wrap up—oh, I am sorry. Mr. Griffith 

is here. 

Ms. DEGETTE. And Mr. Bilirakis came in. 

Mr. MURPHY. Mr. Bilirakis is here too. Then we will go with Mr. 

Griffith for 5 minutes. I am sorry. 

Mr. GRIFFITH. That is all right. Thank you, Mr. Chairman. 

Mr. MURPHY. You snuck in on me. 

Mr. GRIFFITH. Mr. Chairman, first I would ask unanimous consent to insert into the record a statement from the National Community Pharmacists Association. 

Mr. MURPHY. Without objection. 

[The information appears at the conclusion of the hearing.] 

Mr. GRIFFITH. Let me go to Mr. McKinley’s question real quick, 

and I understand that, you know, maybe Maryland, DC, and Virginia, you can check that, but there are some real difficulties from 

my district. If you count the Commonwealth of Virginia, you can 

actually, if you work it out really well, you could hit five States in 

a single day. So I do think we need to be looking at some way that 

doctors can check because you get down there in that little corner 

of Virginia and you are touching West Virginia, Kentucky, Tennessee and North Carolina all within a matter of, you know, 45 

63 

minutes to an hour. So you could—you would have to work it. You 

would have to be at the doorstep of somebody first thing in the 

morning but you could hit five States in a single day. So I would 

ask you to take a look at what Mr. McKinley raised. 

Now, my question also is about the methodology used in the OIG 

report on questionable billing practices. We all want to stop these 

things. We want to stop folks from abusing the opioids, et cetera. 

As the five factors you used seemed cut and dried without much 

room for additional consideration, my concern is that these results 

could present a broad generalization about pharmacies which may 

not paint the whole picture. For example, as I just described to you, 

I represent a fairly rural area, and that area has a higher percentage of senior citizens than the Nation as a whole. So a pharmacy 

might dispense a higher percentage of pain relievers when compared to other pharmacies in a different geographic or demographic 

area simply because there are not as many pharmacies around and 

perhaps the other pharmacies have a younger population that they 

serve. 

It also would not be unreasonable to expect them to have a higher dispensation of controlled substances from a pharmacy located 

near a hospital or a surgery center or an oncology center. There are 

also pharmacies who are contracted providers for long-term care facilities and hospices. So how does CMS plan to address the results 

from the study that truly target the bad actors that we all want 

to get to without hitting the good guys who are just trying to serve 

their customers? And this came up earlier as a part of a complaint 

because one of my rural pharmacies has one supplier for their 

medicines, and at one point they got cut off and so they were having to tell their customers yes, I can’t fill it today, come back at 

the end of the week when we change months. Well, that is hard 

if you are a senior citizen and you need that pain medication, and 

in fact, a friend of mine’s wife was told that who had just gone 

through some surgery. She had to wait 3 days. They managed, but 

that is really not the way it ought to work, whether you would be 

in the urban areas in the northern part of Virginia, Maryland, and 

DC or you are in southwest Virginia in the rural areas. How do we 

fix it? 

Dr. AGRAWAL. Yes, I think you make a good point. You know, 

this kind of data analysis is a starting point and, you know, I think 

as to the specific methodology, I will defer a bit to the OIG. But 

you know, data analysis is always the beginning point of our investigations. Now, I had shared earlier that on a month—on a quarterly basis, we send lists of concerning or high-risk pharmacies to 

Part D plan sponsors. Our methodology takes 16 variables into account, and in order for a pharmacy to make it onto the list, they 

have to be a statistical outlier in at least four of the variables. So 

the purpose there is to do exactly what you are describing, which 

is try to bring a little more specificity to the methodology. But 

again, after that follows the investigation. I think it is really challenging unless the data is extremely cut and dry, which occurs in 

rare situations, to take administrative action without the ensuing 

investigation in between. That is where we really try to get to the 

bottom of, is something really bad happening here or is this just 

64 

an outlier, but it is explained by certain geographic factors that you 

have identified. 

Mr. GRIFFITH. I appreciate it very much. I appreciate you all 

being here today. I apologize. I too have been—we have got pipeline 

issues as well, as you might imagine, and I was in the other hearing. 

Mr. Chairman, I appreciate your time, and I yield back. 

Mr. MURPHY. The gentleman yields back. 

I now recognize Mr. Bilirakis from the full committee for 5 minutes. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. I appreciate it. Thanks 

for holding the hearing. Thanks for allowing me to participate 

today. 

Medicare Part D has been an important addition to the Medicare 

program, one of the most successful programs, I think, in the history of the Congress. It is a program that my constituents love and 

something that Congress should be proud of. 

However, I have been concerned about the growing prescription 

drug problem in the United States and within the Medicare program. That is why in 2013 myself and our colleague, Ben Ray 

Lujan, first introduced the Medicare Part D Patient Safety and 

Drug Abuse Prevention Act, which would create a drug management program to prevent physician shopping and pharmacy shopping within the Medicare program. I am proud that we were able 

to include it in the 21st Century Cures bill that we passed last 

week. 

It is important to the Medicare program to bring a commonsense 

provision that has been used in Medicaid, Tricare and commercial 

insurance. It also makes reforms to the MEDIC program in keeping 

with some of the OIG recommendations. That is the 21st Century 

Cures bill that makes those reforms. 

The first question is for Ms. Maxwell. In your testimony, you talk 

about the need for a lock-in program in Medicare Part D to deal 

with prescription drug abuse and the problem of drug diversion. Do 

you have any estimate on the size of the problem? How many people and how much money are being lost to prescription drug abuse? 

Ms. MAXWELL. I don’t have those specific figures but I do have 

the figures in our Data Brief that the growth in prescribing opioids 

has been significant. It has been a 156 percent increase since the 

beginning of the program, which outpaces the growth in the general program. And so it is a continuing concern. We also have seen 

a tremendous increase in complaints against Part D so we have 

significant concerns about this. We do as a result recommend the 

lock-in. As you mentioned and as I think we have been talking 

about different ways to deal with doctor shopping, which can result 

either in patient harm or the diversion of opioids into the street. 

One way would be the PDMP to provide access to data around this 

issue and across State lines by the way is this lock-in, I mean specifically directed at that issue. 

Mr. BILIRAKIS. Very good. Thank you. 

Dr. Agrawal, I am sorry if I mispronounced. I just got here. In 

2014, CMS issued rules for Part D and stated that they had the 

authority to remove abusive prescribers from the Medicare program. Can you give me an update on this? How many abusive preVerDate Mar 15 2010 09:57 Feb 03, 2016 Jkt 037690 PO 00000 Frm 00068 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X66MEDICAREDASKOK121115\114X66MEDICAREDXPDFMADE
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scribers have been identified in the Medicare program and how 

many prescribers have been removed from the Medicare program? 

Dr. AGRAWAL. Sure. So yes, you know, this is part of our overall 

approach to extending our enrollment requirements into Part D, so 

what we have been working on is getting prescribers enrolled. I 

think I mentioned earlier that there are 400,000 prescribers that 

have written prescriptions in Part D that we are working to enroll. 

We are also working to develop exactly the kind of cases that you 

are identifying, so through proactive data analysis, kind of starting 

to tee up these cases for the first time. I am not sure that we have 

conducted a specific revocation action using only that authority yet. 

Usually we try to do them in combination, and we may have added 

that authority to kind of another revocation action but I can look 

into whether there is a case that we uniquely utilized that authority. 

Mr. BILIRAKIS. Thank you. One more question, Mr. Chairman. 

Ms. Maxwell and Dr. Agrawal, when the MEDICs investigate a 

case and finish their investigation, I am assuming it is automatically referred to DOJ. Is that the case? 

Ms. MAXWELL. I believe they do make referrals as part of their 

requirements. 

Mr. BILIRAKIS. OK. If DOJ chooses not to pursue the case, maybe 

because of the view that the fraud is too small to be worth their 

time, does the information get automatically referred to State and 

local agencies or State licensing authorities? Can you answer that 

question? 

Ms. MAXWELL. I am not aware of that specific mechanism. I do 

know that we are concerned when law enforcement action doesn’t 

take place, that there are no mechanisms and processes to refer it 

for recovery of the inappropriate payments. 

Mr. BILIRAKIS. How about, are Part D plan sponsors provided updates by the MEDICs? How does the MEDIC work with local authorities and State licensing agencies? 

Ms. MAXWELL. Again, I am not familiar with the specifics. Perhaps Dr. Agrawal is—— 

Dr. AGRAWAL. Sure. So the MEDIC—I think this was in the testimony—MEDIC provided 2,300 referrals to law enforcement over 

the last, I think it is 5 years. Obviously we try to refer as much 

over to law enforcement as we can that we think kind of meets the 

threshold for law enforcement activity and investigation. 

Where law enforcement doesn’t accept a case, we have a few options. We have shared information with State medical boards to try 

to get action on their part. We regularly share information with 

Part D plan sponsors. We do that on a routine basis as well as an 

ad hoc basis if new issues come up or there are new entities or individuals that become concerning. 

I think the threshold of our authority currently, you know, there 

is the, you know, OIG recommendation around recovery of dollars 

that Ms. Maxwell discussed. I think there are certain limits in our 

authority that prevent us from going directly to, say, a pharmacy 

and requesting recovery of those dollars. We do have to work 

through Part D plans, but there are a variety of avenues to do just 

that. 

66 

Mr. BILIRAKIS. Very good. Thank you. Thank you, Doctor. Thank 

you, Ms. Maxwell. I appreciate it, Mr. Chairman, and I yield back. 

Mr. MURPHY. Thank you. The gentleman yields back. 

I do want to follow up. The committee sent a letter to CMS seeking information about the improper-payment rate and that response is due tomorrow. Will the committee receive that response 

tomorrow? 

Dr. AGRAWAL. We have been working diligently on it. I think you 

will get the response tomorrow. 

Mr. MURPHY. Thank you. By the way, you seemed to suggest 

something earlier that the ACA is causing an improper-payment 

rate to rise. Is that—did we misunderstand that? 

Dr. AGRAWAL. No. I don’t know if this was perhaps your line of 

questioning. No. What I had said is that, you know, in the program 

integrity world, what we see often is that the improper-payment 

rate rises when there are new, stringent requirements that providers must meet, whether that is documentation requirements, enrollment requirements or other. So for example, the 6.7 rate that 

we discussed last time in Medicaid is largely driven by providers 

needing to enroll in Medicaid programs and States having adequate resources and systems to conduct that enrollment activity. I 

don’t think anybody doubts the importance of enrollment. We 

talked about that as one of the major levers that we are now implementing in Part D that I think will be quite useful. We have already seen its impact in the rest of Medicare. But like any other 

requirement or standard, it can be hard for providers to keep up 

and that can sometimes result in the improper-payment rate going 

up. 

Mr. MURPHY. All right. Well, we want you to continue to stay on 

that. 

Ms. Maxwell, thank you so much. We do appreciate all that your 

offices do. It means a lot to this committee. 

The next time we see you, Dr. Agrawal, I hope you will give me 

a report that all those have been put into place. As you know, some 

have been sitting around for nearly 10 years, and that is just not 

acceptable. So we thank you. 

I thank all the witnesses and Members who participated in today’s hearing. I remind Members they have 10 business days to 

submit questions for the record. We will have a number of those 

and ask the witnesses to respond promptly to the questions. 

And with that, this committee is adjourned. 

[Whereupon, at 12:15 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Medicare Part D is a critically important program for our Nation’s seniors. Unfortunately, similar to our other entitlement programs, Medicare Part D remains vulnerable to fraud and abuse. Just last month, the Medicare Task Force conducted 

a nationwide Medicare fraud takedown. This joint law enforcement operation led to 

charges against 243 individuals for approximately $712 million in false billings. 

While this was an important effort, much more needs to be done. 

According to recent reports from the Department of Health and Human Services 

Office of Inspector General, the Centers for Medicare and Medicaid Services needs 

to take additional actions to strengthen the integrity of the Medicare Part D program. The reports find CMS is either failing or refusing to implement commonsense 

recommendations issued by its OIG. For example, CMS needs to ensure excluded 

67 

providers are not allowed to continue to bill under Part D. Additionally, CMS should 

require plan sponsors to report potential fraud and abuse. Implementing these recommendations is especially important in light of the startling increase in Medicare 

Part D spending on commonly abused opioids. 

Medicare Part D is an expansive program, requiring constant vigilance. Just as 

bad actors will continue to try to find ways to take advantage of the program, we 

must take proactive steps to protect the program’s integrity, taxpayers’ dollars, and 

our Nation’s seniors. A good first step is CMS implementing the OIG’s recommendations. 

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