Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

MEDICARE 

INAPPROPRIATELY PAID FOR 

DRUGS ORDERED BY 

INDIVIDUALS WITHOUT 

PRESCRIBING AUTHORITY

Daniel R. Levinson 

Inspector General

June 2013

OEI-02-09-00608
MEDICARE INAPPROPRIATELY PAID FOR DRUGS ORDERED BY 

INDIVIDUALS WITHOUT PRESCRIBING AUTHORITY

OEI-02-09-00608

WHY WE DID THIS STUDY

Under Medicare Part D, the Centers for Medicare & Medicaid Services (CMS) contracts 

with private insurance companies, known as sponsors, to provide prescription drug 

coverage to beneficiaries who choose to enroll. In recent years, prescription drug abuse 

has emerged as a serious and growing problem. The Centers for Disease Control and 

Prevention has characterized prescription drug abuse as an epidemic. With the rise in 

prescription drug abuse, concerns about Medicare fraud, particularly prescriber fraud, 

have increased. 

HOW WE DID THIS STUDY

We based this study on an analysis of all Prescription Drug Event records from 2009. 

Sponsors submit these records to CMS for each drug dispensed to beneficiaries enrolled 

in their plans. We matched each record to the National Plan and Provider Enumeration 

System to determine the prescriber type, such as physician or dentist. We selected 14 

types that clearly did not have the authority to prescribe and identified the drugs they 

prescribed nationwide. We also identified 7 other types for a more in-depth review in the 

10 States with the highest Part D payments. 

WHAT WE FOUND

Nationwide, Part D inappropriately paid for drugs ordered by individuals who clearly did 

not have the authority to prescribe, such as massage therapists, athletic trainers, home 

contractors, interpreters, and transportation companies. This raises concerns about the 

appropriateness of Part D payments and about patient safety. In 10 States, Part D also 

inappropriately paid for drugs ordered by other individuals without the authority to 

prescribe, such as counselors, social workers, and chiropractors. Tens of thousands of 

these drugs were controlled substances. These drugs are of particular concern because 

they have potential for abuse. 

WHAT WE RECOMMEND

Our findings show the need for increased oversight of prescribers. We recommend that 

CMS: (1) require sponsors to verify that prescribers have the authority to prescribe 

drugs, (2) increase the Medicare Drug Integrity Contractor’s monitoring of prescribers, 

(3) ensure that Medicare does not pay for prescriptions from individuals without 

prescribing authority, and (4) follow up on the individuals without prescribing authority 

who ordered prescriptions. CMS concurred with all four recommendations.
TABLE OF CONTENTS

Objective ......................................................................................................1

Background..................................................................................................1

Methodology................................................................................................6

Findings......................................................................................................10

Nationwide, Part D inappropriately paid for drugs ordered by

individuals who clearly did not have the authority to prescribe,

such as massage therapists and athletic trainers. ...........................10

In 10 States, Part D also inappropriately paid for drugs ordered

by other individuals without the authority to prescribe, such as

counselors and social workers. ......................................................12

Tens of thousands of drugs ordered by individuals without 

prescribing authority were controlled substances..........................14

Conclusion and Recommendations............................................................16

Agency Comments and Office of Inspector General Response.....18

Appendix....................................................................................................20

A: Agency Comments...................................................................20

Acknowledgments......................................................................................23
Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 1

OBJECTIVE 

To determine whether Medicare Part D paid for drugs ordered by 

individuals who did not have the authority to prescribe.

BACKGROUND

The Medicare Part D program provides an optional prescription drug 

benefit to Medicare beneficiaries.1 The Centers for Medicare & Medicaid 

Services (CMS) contracts with private insurance companies, known as 

sponsors, to provide drug coverage to beneficiaries who choose to enroll. 

In 2011, 36 million beneficiaries were enrolled in Part D.

2

Prescription drug abuse is a serious and growing problem. The Centers 

for Disease Control and Prevention (CDC) has characterized prescription 

drug abuse as an epidemic.3

 In 2010, approximately 7 million people in 

the United States were misusing prescription drugs.4 Moreover, overdoses 

of prescription painkillers—called opioids—are among the leading causes 

of accidental death in the United States.

5

With the rise in prescription drug abuse, concerns about Medicare fraud, 

particularly prescriber fraud, have increased. A number of recent fraud 

cases have focused on prescribers. In one case, a physician knowingly 

allowed nonmedical personnel to prescribe commonly abused painkillers, 

such as oxycodone, morphine, and hydrocodone, to Medicare patients.

6

 In 

a similar case, a physician assistant used prescriptions that were signed in 

advance by a physician to inappropriately prescribe drugs to Medicare 

1 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, 

P.L. 108-173. 2 The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary 

Medical Insurance Trust Funds, 2012 Annual Report of the Boards of Trustees of the 

Federal Hospital Insurance and Federal Supplementary Medicare Insurance Trust 

Funds, p. 164. Accessed at http://www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2012.pdf on 

July 6, 2012. 

3 CDC, Press Release, Prescription Painkiller Overdoses at Epidemic Levels, 

November 1, 2011. Accessed at 

http://www.cdc.gov/media/releases/2011/p1101_flu_pain_killer_overdose.html on 

February 21, 2012. 

4 National Institute on Drug Abuse, Topics in Brief: Prescription Drug Abuse, 

December 2011. Accessed at http://www.drugabuse.gov/publications/topics-inbrief/prescription-drug-abuse on September 18, 2012. 5 CDC, Unintentional Drug Poisonings in the United States, July 2010. 6 Federal Bureau of Investigation, Palmetto Physician Pleads Guilty To Illegal 

Prescription Drug and Medicare Fraud Conspiracies, March 18, 2010. Accessed at 

http://www.fbi.gov/tampa/press-releases/2010/ta031810.htm on July 2, 2012.
Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 2

beneficiaries.7 In another case, a chiropractor was charged with illegally 

dispensing and distributing prescription drugs.8

This report is part of a larger body of work examining Part D billing. 

Another report identified pharmacies with questionable billing in 2009.

9

 A 

third report identified inappropriate Part D payments for Schedule II 

refills.10 A fourth report determines the extent to which general-care

physicians have questionable prescribing patterns.11 All four reports are 

part of the Health Care Fraud Prevention and Enforcement Action Team 

Initiative (HEAT), which focuses on detecting health care fraud through 

innovative data analysis and enhanced cooperation among the Department 

of Justice (DOJ), OIG, and CMS.12

Prescription Drugs

Medicare Part D covers prescription drugs that meet certain requirements 

and are used for medically accepted indications.13 CMS considers a drug

to be “prescription” if the Food and Drug Administration has determined it 

must be labeled “℞ only,” which means it cannot be dispensed without a 

prescription from a practitioner who is licensed to prescribe such drugs.14 

The types of practitioners that are licensed to prescribe drugs are 

determined by State law.

The Drug Enforcement Agency (DEA) regulates certain drugs that have 

potential for abuse and dependence, called controlled substances.

15 These 

7 Attorney General of Texas, A Dallas Man Pleads Guilty to Health Care Fraud in State 

and Federal Probe, July 18, 2012. Accessed at 

https://www.oag.state.tx.us/oagNews/release.php?id=4091 on July 23, 2012. 8 Department of Justice (DOJ), Former Daytona Beach Chiropractor Charged With 

Illegally Dispensing Prescription Drugs and Health Care Fraud. Accessed at 

http://www.justice.gov/usao/flm/press/2012/may/20120518_Wagner.html on 

May 22, 2012.

9 Office of Inspector General (OIG), Retail Pharmacies With Questionable Part D 

Billing, OEI-02-09-00600, May 2012. 10 OIG, Inappropriate Part D Payments for Schedule II Drugs Billed as Refills, 

OEI-02-09-00605, September 2012. 11 OIG, Prescribers with Questionable Patterns in Medicare Part D, OEI-02-09-00603, 

June 2013.

12 U.S. Department of Health and Human Services and DOJ, HEAT Task Force Success. 

Accessed at http://www.stopmedicarefraud.gov/heattaskforce/index.html on January 11, 

2011. 

13 For more information, see 42 U.S.C. § 1860D-2(e) and CMS, Medicare Prescription 

Drug Benefit Manual, Chapter 6, Part D Drugs and Drug Formulary Requirements,

February 2010.

14 CMS, Medicare Prescription Drug Benefit Manual, Chapter 6, Part D Drugs and 

Drug Formulary Requirements, § 10, February 2010. Also see 21 U.S.C. § 353(b)(1). 15 21 U.S.C. § 801 et seq. Also see DEA, Office of Diversion Control, Controlled 

Substance Schedule. Accessed at

http://www.deadiversion.usdoj.gov/schedules/index.html#define on November 13, 2012.
Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 3

drugs are divided into five schedules. Schedule II drugs have the highest 

potential for abuse of any prescription drugs legally available in the 

United States.16 They include stimulants and narcotics commonly used to 

relieve pain, such as oxycodone and morphine. Drugs on Schedules III 

through V also have a potential for abuse and psychological or physical 

dependence. The DEA requires all practitioners who handle controlled 

substances to register with the agency.17 It assigns each registrant a DEA 

number and maintains a database with information about each registrant, 

such as name, address, degree, and the drug schedules each is permitted to 

handle.

Part D Oversight

CMS relies on sponsors to help safeguard Part D from fraud and abuse.

CMS requires sponsors to have compliance plans that contain measures to 

detect, prevent, and correct fraud, waste, and abuse.

18 CMS recommends 

that sponsors use data analysis as part of these plans.

19 Specifically, it

recommends that sponsors develop indicators and establish baseline data 

so that they can recognize abnormalities and changes in prescribing 

patterns.

In addition, CMS contracts with a Medicare Drug Integrity Contractor 

(MEDIC) to detect and prevent fraud, waste, and abuse. Its 

responsibilities include identifying and investigating potential fraud and 

abuse, referring cases, and fulfilling requests for information from law 

enforcement.20 The MEDIC is required to identify potential fraud and 

abuse through external sources, such as tips, as well as proactive methods,

such as data analysis.21

CMS is responsible for the oversight of the sponsors and the MEDIC. 

CMS conducts a number of audits for sponsors, including onsite audits of 

their compliance plans.22 During these audits, CMS assesses the 

16 Schedule I drugs currently have no accepted medical use in the United States. They 

include drugs such as heroin.

17 DEA registration grants prescribers Federal authority to handle certain schedules of 

controlled substances. See 21 CFR § 1301.11. 18 42 CFR § 423.504(b)(4)(vi).

19 CMS, Prescription Drug Benefit Manual Chapter 9, Compliance Program Guidelines 

§ 50.6.9, July 2012. Accessed at http://www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovContra/Downloads/Chapter9.pdf on 

September 12, 2012.

20 CMS, MEDIC Statement of Work, July 2009. 21 For more information on the responsibilities of the MEDIC, see OIG, MEDIC Benefit 

Integrity Activities in Medicare Parts C and D, OEI-03-11-00310, January 2013. 22 For more information on audits by CMS, see OIG, Audits of Medicare Prescription 

Drug Plan Sponsors, OEI-03-09-00330, December 2011.
Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 4

effectiveness of sponsors’ fraud and abuse programs. CMS evaluates the 

MEDIC’s performance annually.

Prescription Drug Event Data

Sponsors submit a Prescription Drug Event (PDE) record to CMS for each 

prescription filled for their enrollees. CMS uses the PDE records to 

administer the program and to calculate its payments to sponsors at the 

end of each year in a process known as reconciliation. Each PDE record 

contains information about the drug and beneficiary. It also includes

identification numbers for the prescriber and pharmacy, which are 

typically National Provider Identifiers (NPI).23

Sponsors are required to certify the accuracy, completeness, and 

truthfulness of their PDE data.24 Beginning in January 2012, they are also

required to ensure that the prescriber identifiers on the PDE records are 

active and valid, meaning that they are currently assigned to a health care 

provider.

25 NPIs are assigned to many types of health care providers. 

Having an NPI does not mean that an individual has the authority to 

prescribe drugs. CMS does not specifically require sponsors to verify that 

drugs are ordered by individuals who have the authority to prescribe.

Prescriber Information

CMS maintains a registry of all the NPIs it assigns in its National Plan and

Provider Enumeration System (NPPES) database.26 To receive an NPI, 

providers report certain identifying information such as their names, 

addresses, and professional credentials, such as M.D. or R.N. Providers

also indicate whether they are individuals or organizations, such as a 

hospital, clinic, or group practice.

Providers must also select a taxonomy code that provides information 

about their primary specialty.

27 The taxonomy code indicates a provider’s

23 PDE records allow four types of prescriber identification numbers: NPIs, DEA 

numbers, State license numbers, and Unique [Physician] Identification Numbers (UPIN). 

See CMS, Prescriber Identifier on Part D NCPDP Pharmacy Claims Transactions, 

May 1, 2009. Accessed at https://www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovContra/Downloads/MemoNPIPrescriberID_050108v2.pdf

on December 5, 2012.

24 42 CFR § 423.505(k). 25 Sponsors must also confirm that any controlled substance is within the prescriber’s 

scope of practice to prescribe. CMS, Announcement of Calendar Year (CY) 2012 

Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment 

Policies and Final Call Letter, April 4, 2011. 26 The Health Insurance Portability and Accountability Act of 1996 (HIPAA) required the 

development of a standard unique health care system identifier for each provider. 

Providers that are subject to HIPAA must have an NPI. This includes all providers that 

bill Medicare.

27 CMS, National Plan and Provider Enumeration System (NPPES) Data Elements Data 

Dissemination: Information for Providers, June 20, 2007.
Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 5

type and specialty, if any. For example, it may indicate that a prescriber is 

a family-medicine physician specializing in geriatric medicine.

Providers must ensure that information in the NPPES database, including 

the taxonomy, is updated and accurate. When applying for an NPI,

providers certify that the information is correct and that they agree to 

provide notification within 30 days of any changes.28

Related Work

A recent OIG report found that 2,637 retail pharmacies had questionable 

billing in 2009.29 These pharmacies had extremely high billing for at least 

one of the eight measures we developed. For example, many pharmacies 

billed extremely high dollar amounts or numbers of prescriptions per 

beneficiary or per prescriber, which could mean that a pharmacy is billing 

for drugs that are not medically necessary or were never provided. Among 

other things, the report recommended that CMS strengthen its monitoring 

of pharmacies, provide additional guidance to sponsors on monitoring 

pharmacy billing, and further strengthen its compliance plan audits. CMS 

concurred with these recommendations.

Another recent OIG report found that Medicare Part D inappropriately 

paid $25 million for Schedule II drugs billed as refills in 2009.30 Sponsors 

should not have paid for any of these drugs because Federal law prohibits 

the refilling of Schedule II controlled substances without a valid 

prescription.31 Also, three-quarters of Part D sponsors paid for Schedule II 

drugs billed as refills, indicating that many sponsors do not have adequate 

controls to prevent these refills. Among other things, the report 

recommended that CMS issue guidance to sponsors to prevent billing of 

Schedule II refills and to exclude Schedule II refills when calculating 

payments to sponsors.

Another OIG report found that Medicare Part D paid $1.2 billion in 2007 

for drugs with invalid prescriber identifiers, which had either never been 

assigned or had been retired.32 The report recommended that CMS 

conduct periodic reviews to ensure the validity of prescriber identifiers 

28 CMS, National Provider Identifier (NPI) Application/Update Form, November 2008. 

Accessed at https://www.cms.gov/Medicare/CMS-Forms/CMSForms/Downloads/CMS10114.pdf on June 5, 2012.

29 OIG, Retail Pharmacies With Questionable Part D Billing, OEI-02-09-00600, 

May 2012.

30 OIG, Inappropriate Part D Payments for Schedule II Drugs Billed as Refills, 

OEI-02-09-00605, September 2012. 31 Federal law permits partial refills under certain circumstances. It is possible some of 

these drugs may have been inaccurately billed as refills when they were partial fills. 32 OIG, Invalid Prescriber Identifiers on Medicare Part D Claims, OEI-03-09-00140, 

June 2010.
Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 6

and require Part D plans to institute procedures to identify and review 

records containing invalid prescriber identifiers.

Finally, another OIG report found barriers to the MEDIC’s benefit 

integrity efforts.33 These barriers included problems in sharing of 

information and recovering inappropriate payments. The report also found 

that only a small percentage of the MEDIC’s investigations and case 

referrals resulted from proactive data analysis. In the 1-year study period, 

the MEDIC initiated just 209 Part D investigations from proactive 

methods, such as data analysis. 

METHODOLOGY

We based this study on an analysis of all PDE records from 2009, which 

we collected to undertake this study and other studies.

34 We matched these 

records to the NPPES database to obtain descriptive information about the 

prescribers.

PDE Data

We identified all PDE records for covered Part D drugs with dates of 

service from January 1 to December 31, 2009.35 We identified 

1.07 billion PDE records.36

For each PDE record, we identified the identification number of the 

prescriber, which was generally an NPI. For records that used other types 

of prescriber identification numbers, we used a “crosswalk” developed by 

OIG analysts to identify the prescriber’s NPI.37

Using the NPI, we determined which PDE records were prescribed by 

individuals, as opposed to organizations. We focused our review on 

individual prescribers because organizations may be associated with 

multiple prescribers. We identified 1,102,275 individual prescribers who

were associated with 1.03 billion PDE records.38 These records represent 

33 OIG, MEDIC Benefit Integrity Activities in Medicare Parts C and D, 

OEI-03-11-00310, January 2013. 34 These studies include: Retail Pharmacies With Questionable Part D Billing

(OEI-02-09-00600); Inappropriate Part D Payments for Schedule II Drugs Billed as 

Refills (OEI-02-09-00605); and Prescribers with Questionable Patterns in Medicare 

Part D (OEI-02-09-00603). 35 This excludes any over-the-counter medications that sponsors provide as part of a 

utilization management program. These medications are not considered covered Part D 

drugs.

36 The exact number of PDE records was 1,070,149,994. 37 To develop this crosswalk, we used information from the Services Tracking, Analysis, 

and Reporting System, the DEA database, and the NPPES. We did not include 

214,042 PDE records in our review because they did not have prescriber identification 

numbers.

38 The exact number of PDE records was 1,026,983,870.
Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 7

96 percent of all PDE records and totaled $71 billion in Medicare 

payments.39 All of these records contained NPIs that were assigned to 

providers. Having an NPI, however, does not mean that a provider has the 

authority to prescribe.

Analysis

To determine the prescriber type, such as a physician or dentist, we 

matched the NPI for each individual prescriber to the NPPES. We used 

the taxonomy code reported by each prescriber in the NPPES and grouped 

these codes into categories of prescriber types.

40

We reviewed the prescriber types of all Part D prescribers nationwide. We 

selected 14 prescriber types, such as contractors or veterinarians, that

clearly did not have prescribing authority. We identified all of the PDE 

records for these prescriber types in all 50 States, the District of Columbia, 

and the Territories.41

We then conducted a more in-depth analysis of 10 States. To do this, we 

identified the 10 States with the highest Part D payments in 2009:

California, Florida, New York, Texas, Pennsylvania, Ohio, Illinois, North 

Carolina, Michigan, and New Jersey. 42 These States accounted for 

53 percent of all Medicare Part D payments in 2009.43 We selected seven 

prescriber types that we suspected did not have the authority to prescribe

in these States. Attorneys from the Office of Counsel to the Inspector 

General reviewed State laws and confirmed that none of these 7 prescriber 

types had the authority to prescribe in these States. We then identified all 

of the PDE records for the 7 prescriber types in the 10 States.

We took several steps to verify that the individuals identified nationwide

and in the 10 States did not report any other information in the NPPES that 

suggested they had the authority to prescribe. First, we reviewed all the 

information that these individuals reported in the additional taxonomy 

fields in the NPPES.44 Second, we reviewed the information they reported 

in the credential field in the NPPES. We also determined whether any of 

39 The exact amount was $70,657,705,438. We used three fields on the PDE records to 

calculate Part D payments: the ingredient cost, dispensing fee, and sales tax. 

40 We grouped codes based on the prescribers’ scope of practice or services. For 

example, we grouped all of the counselors together and all of the non-advanced practice 

nurses together, including Registered Nurses and Licensed Practical Nurses.

41 For the purposes of this review, we refer to the District of Columbia and the Territories 

as States.

42 We calculated Part D payments for each State based on the prescribers’ ZIP Codes. 43 Medicare Part D payments in these 10 States amounted to $37,715,549,212 in 2009. 44 Providers may report up to 14 other taxonomies, in addition to their primary taxonomy. 

We reviewed all of the taxonomy codes these prescribers reported.
 

 Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 8 

these individuals had a DEA number.45 We assumed that individuals who 

reported any information suggesting that they were physicians, advance 

practice nurses, physician assistants, dentists, podiatrists, or optometrists 

or had a DEA number had the authority to prescribe and therefore 

excluded them from our analysis. For example, if a prescriber reported 

that he was an interpreter, but included “M.D.” in the credential field, we 

assumed that he was a physician and excluded him from our analysis. 

We then analyzed the PDE data for the 14 prescriber types we identified 

nationwide.46 For these prescriber types, we calculated the total number of 

prescriptions and the amount Medicare paid for these prescriptions in all 

States.47 For the purposes of this study, we use the term “prescription” to 

mean one PDE record. 

We also analyzed the PDE data for the 7 prescriber types in the 10 States 

and calculated the total number of prescriptions these prescribers ordered 

and the amount Medicare paid for these prescriptions. We did this 

analysis by prescriber type and by State. 

Finally, we calculated the total number of prescriptions for controlled 

substances ordered by the 14 prescriber types nationwide and the 

7 prescriber types in the 10 States. To do this, we matched the National 

Drug Code on the PDE record to data from First DataBank. First 

DataBank indicates whether a drug is a controlled substance and, if so, 

which schedule the drug is on. We used this information to calculate the 

total number of prescriptions for controlled substances—Schedules II 

through IV—ordered by these prescriber types.48 

Limitations 

This report does not review all prescriber types without the authority to 

prescribe. It looks at selected types that clearly do not have authority 

45 We used a crosswalk developed by OIG analysts that linked the NPIs to DEA numbers. 

This is a conservative approach. Not every prescriber with a DEA number has the 

authority to prescribe controlled substances. In some cases, mid-level practitioners have 

the right to only administer or dispense the drugs. DEA, Office Diversion Control, 

Mid-Level Practitioners Authorization by State, accessed at 

http://www.deadiversion.usdoj.gov/drugreg/practioners/index.html on August 8, 2012. 

46 We excluded PDE records for specific insulin brands that did not require a 

prescription. We identified these brands of insulin using the Food and Drug 

Administration drug labels. We also excluded medical supplies associated with the 

delivery of insulin, such as syringes, needles, and alcohol swabs, which are covered by 

Part D but do not require a prescription. 

47 To calculate the total amount Medicare paid, we summed three fields on the PDE 

records that represent the total gross drug costs: ingredient cost, dispensing fee, and sales 

tax. 48 We were unable to match 105 PDE records to First Databank. As a result, we could 

not determine whether they were controlled substances. 
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 9

nationwide and selected types that do not have the authority to prescribe in 

the 10 States. 

In addition, this review is based on an analysis of PDE data; we did not 

review documentation from the pharmacies or prescribers to verify the 

data. We also did not independently verify the accuracy of the data from 

the NPPES.

Standards

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors General 

on Integrity and Efficiency.
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 10

FINDINGS

Nationwide, Part D inappropriately paid for drugs 

ordered by individuals who clearly did not have the 

authority to prescribe, such as massage therapists 

and athletic trainers

Medicare should never pay for drugs ordered by individuals who do not 

have the authority to prescribe. To be covered under Medicare Part D, 

drugs must be prescribed in accordance with State law, which specifies the 

types of health care providers that have the authority to prescribe drugs in 

the State. Although these health care providers can vary by State, some 

types clearly do not have the authority to prescribe in any State. If drugs 

are being ordered for Medicare beneficiaries by individuals who do not 

have the authority prescribe, it raises concerns about the appropriateness 

of Part D payments and about patient safety. 

A review of Part D payments nationwide showed that Medicare 

inappropriately paid for 72,552 prescriptions ordered by 14 prescriber

types that clearly do not have the authority to prescribe in any State. We 

selected these 14 prescriber types for review; they do not represent all 

types without the authority to prescribe. The 14 types included massage 

therapists, athletic trainers, and dental hygienists. None have the training 

necessary to prescribe drugs. In total, Medicare paid $5.4 million for 

prescriptions ordered by the 14 prescriber types we reviewed.

49 (See 

Table 1.) 

49 This total includes the amounts paid by Part D sponsors, by the Government, and by or 

on behalf of beneficiaries.
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 11

Table 1: Selected Prescriber Types Without the Authority To Prescribe, 

Nationwide, 2009

Prescriber Type Number of

Prescriptions

Number of

Individuals

Who Prescribed

Total 

Medicare 

Payments

Dietitian and Nutritionist 20,044 713 $1,684,988

Audiologist or Other Hearing/Speech-Related 

Services 16,229 706 $1,085,699

Massage Therapist 12,082 240 $798,991

Athletic Trainer 8,795 398 $694,288

Optician 3,860 157 $261,285

Dental Hygienist, Dental Assistant, Denturist 3,085 223 $144,177

Contractor 2,827 117 $178,443

Home Health Aide or Other Personal Care 

Provider 1,781 117 $287,527

Interpreter 1,529 7 $68,225

Transportation or Lodging Company 890 26 $49,689

Speech-Language Assistant 549 23 $32,503

Music or Art Therapist 493 21 $61,678

Nursing Technician 267 12 $21,058

Veterinarian 121 20 $6,080

 Total 72,552 2,780 $5,374,632* 

*Total does not equal $5,374,632 because of rounding. It includes the amounts paid by Part D sponsors, by the 

Government, and by or on behalf of beneficiaries. 

Note: The prescriber types in the table are not a comprehensive list of all types that do not have the authority to 

prescribe. 

Note: For the purposes of this report, we considered a prescription to be one PDE record.

Source: OIG analysis of Part D data, 2012. 

Notably, massage therapists ordered 12,082 prescriptions in 2009. 

Athletic trainers ordered another 8,795. Contractors ordered 

2,827 prescriptions; these individuals complete home repairs or 

modifications to accommodate a health condition, such as wheelchair 

ramps. Others who ordered prescriptions paid by Part D included personal 

care providers (e.g., home health aides, chore providers, and companions), 

interpreters, transportation companies (e.g., taxis, private vehicles, and 

drivers), lodging companies, and veterinarians. 

 
 

 Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 12 

Examples of Individuals Without Prescribing Authority
 

Who Ordered Extremely High Amounts of Part D Drugs
 

	 One Florida massage therapist ordered 3,756 prescriptions, 

amounting to $183,132. 

	 A Florida dietician ordered 2,645 prescriptions for a total of 

165 beneficiaries. 

	 An interpreter ordered 1,210 prescriptions filled at 55 pharmacies. 

In 10 States, Part D also inappropriately paid for 

drugs ordered by other individuals without the 

authority to prescribe, such as counselors and social

workers 

An in-depth analysis of 10 States revealed that Part D inappropriately paid 

for 344,714 prescriptions ordered by other selected types that did not have 

the authority to prescribe. In total, Medicare paid $26.2 million for drugs 

ordered by counselors, chiropractors, social workers, physical therapists, 

registered nurses, occupational therapists, and speech-language 

pathologists. 50 Our review of State laws found that these prescriber types 

did not have the authority to prescribe drugs in any of the 10 States. 

Although the seven selected prescriber types were the focus of the indepth State analysis, they do not represent all types without authority to 

prescribe in these States. 

As shown in Table 2, counselors ordered 87,400 prescriptions, the most of 

the prescriber types reviewed in the 10 States. Counselors include such 

professions as marriage and family therapists. Chiropractors were next, 

with 70,681 prescriptions, followed by social workers, with 

69,075 prescriptions. 

50 This total includes the amounts paid by Part D sponsors, by the Government, and by or 

on behalf of beneficiaries. 
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 13

Table 2: Selected Prescriber Types Without the Authority To Prescribe in 

10 States, 2009

Prescriber Type Number of

Prescriptions

Number of

Individuals 

Total 

Medicare 

Payments

Counselor 87,400 2,838 $7,374,910

Chiropractor 70,681 2,809 $4,929,992

Social Worker 69,075 2,542 $5,391,641

Physical Therapist 52,892 2,101 $3,690,425

Registered Nurse 27,552 1,076 $2,104,351

Occupational Therapist 19,900 674 $1,481,768

Speech-Language Pathologist 17,214 664 $1,199,122

 Total 344,714 12,704 $26,172,208* 

*Total does not equal $26,172,208 because of rounding. It includes the amounts paid by Part D sponsors, by the 

Government, and by or on behalf of beneficiaries.

Note: For the purposes of this report, we considered a prescription to be one PDE record.

Source: OIG analysis of Part D data, 2012.

Part D paid for drugs ordered by 12,704 individuals without prescribing 

authority in the 10 States. On average, each of these individuals ordered 

27 prescriptions, but a few ordered extremely high numbers. In fact, 32 of 

these individuals without prescribing authority ordered more than

1,000 prescriptions each. 

Examples of Individuals Without Prescribing Authority

Who Ordered Extremely High Amounts of Part D Drugs

• One Florida counselor ordered 2,912 prescriptions for 

217 beneficiaries, which were filled at 103 pharmacies. 

• An Ohio social worker ordered 1,639 prescriptions, which were 

all filled at one retail pharmacy.

• A registered nurse from California ordered 1,111 prescriptions, 

which were filled at a single retail pharmacy in New York.

• An Illinois social worker ordered 1,345 prescriptions, which 

were filled at 149 pharmacies for 312 beneficiaries. Almost all 

of these pharmacies were part of the same national chain.
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 14

As shown in Table 3, among the 10 States, California and Florida had the 

highest number of prescriptions ordered by such individuals. California 

accounted for 25 percent of all of these prescriptions, while Florida 

accounted for 20 percent. 

Table 3: Number of Prescriptions Ordered by Individuals Without Authority 

in Each of 10 States, 2009

State Number of 

Prescriptions

Percentage 

of 

Prescriptions

Total Medicare 

Payments

California 86,494 25% $7,001,918

Florida 68,027 20% $4,570,107

New York 49,245 14% $3,887,613

Illinois 34,199 10% $2,564,564

Texas 30,362 9% $2,246,366

Pennsylvania 17,825 5% $1,317,686

Ohio 17,672 5% $1,206,428

New Jersey 14,581 4% $1,208,509

North Carolina 14,034 4% $1,188,530

Michigan 12,275 4% $980,486

 Total 344,714 100% $26,172,208*

*Total does not equal $26,172,208 because of rounding. It includes the amounts paid by Part D sponsors, by the 

Government, and by or on behalf of beneficiaries.

Note: These calculations are based on the seven selected prescriber types. They do not include all types that do 

not have the authority to prescribe.

Note: For the purposes of this report, we considered a prescription to be one PDE record.

Source: OIG analysis of Part D data, 2012.

Tens of thousands of drugs ordered by individuals 

without prescribing authority were controlled 

substances 

Most of the prescriptions ordered by individuals who did not have the 

authority to prescribe were for commonly used drugs; however, thousands 

were for controlled substances.51 These drugs are of particular concern 

because they have potential for abuse. In total, 29,212 prescriptions for 

controlled substances were ordered by 4,863 individuals without 

51 Overall, the drugs that the prescribers without authority most frequently ordered were 

simvastatin, lisinopril, hydrocodone-acetaminophen, amlodipine besylate, and levothyroxine 

sodium. A recent OIG report found that these drugs were also the five most common drugs 

dispensed by retail pharmacies in 2009. See OIG, Retail Pharmacies With Questionable 

Part D Billing, OEI-02-09-00600, May 2012.
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 15

prescribing authority. These included individuals we identified nationwide 

and those from the 10 States for which we conducted an in-depth review. 

Of these prescriptions, 7,679 were Schedule II drugs. Schedule II drugs 

have the highest potential for abuse of any prescription drugs legally 

available in the United States. They include commonly abused painkillers, 

like oxycodone, that can be diverted and resold for profit. In one example, 

a counselor ordered 174 Schedule II drugs for 13 beneficiaries. In a 

second example, a contractor ordered 79 Schedule II drugs, which were all 

commonly abused painkillers. 
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 16

CONCLUSION AND RECOMMENDATIONS

Nationwide, Medicare inappropriately paid for prescriptions ordered by 

individuals who clearly did not have the authority to prescribe, such as 

massage therapists and athletic trainers. Additionally, in 10 States we 

reviewed in more depth, Medicare paid for prescriptions ordered by others 

who did not have the authority to prescribe. These included counselors, 

social workers, chiropractors, registered nurses, physical therapists, 

occupational therapists, and speech-language pathologists. Even more 

concerning, tens of thousands of these prescriptions were for controlled 

substances. 

Our findings raise concerns about the appropriateness of Medicare 

payments and about patient safety. They also show the need for increased 

oversight of prescribers to ensure that Medicare does not pay for drugs 

ordered by individuals who do not have the authority to prescribe. Drugs 

prescribed by such individuals may not be appropriate and may endanger 

patients. Such practices may also contribute to the prescription drug abuse 

problem in our Nation. 

We recommend that CMS:

Require Sponsors To Verify That Prescribers Have the 

Authority To Prescribe Drugs 

CMS requires sponsors to verify that the prescriber identifiers on the PDE 

records are currently assigned to a health care provider. However, having 

an NPI does not mean that an individual has the authority to prescribe 

drugs. CMS should also require sponsors to use the information available 

in the NPPES database to check that the prescriber on the PDE record is a 

type of prescriber that has the authority to prescribe under State law.

Increase the MEDIC’s Monitoring of Prescribers 

CMS should instruct the MEDIC to conduct additional proactive data 

analysis to identify individuals who do not have authority to prescribe 

drugs and further investigate and refer these individuals, as appropriate.

Ensure That Medicare Does Not Pay for Prescriptions From 

Individuals Without Prescribing Authority

CMS should issue guidance that requires sponsors to review PDE records 

to verify that the prescriber is associated with a type of prescriber that has 

the authority to prescribe and to submit adjustments and deletions when 

appropriate. This will help to ensure that payments are accurate. CMS 

should also monitor sponsors’ performance to make sure they are 

appropriately adjusting the PDE records prior to the reconciliation process 

in which CMS finalizes payments to sponsors. 
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 17

Follow Up on Individuals Without Prescribing Authority Who 

Ordered Prescriptions 

In a separate memorandum, we will refer to CMS for appropriate action 

the individuals without prescribing authority who ordered Part D 

prescriptions, particularly those who ordered high numbers of controlled 

substances.
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 18

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

In its comments on the draft report, CMS concurred with all four of our 

recommendations. It concurred with our first recommendation, stating 

that it will issue guidance requesting “sponsors to include a retrospective 

review in their required programs to combat fraud, waste, and abuse where 

data anomalies, such as those identified by OIG in this report, suggest 

possible inappropriate prescribing and to report any potential fraud to the 

MEDIC for further investigation.” Further, CMS stated that it will 

examine ways to improve the reliability of data in the National Plan and 

Provider Enumeration System (NPPES) database. CMS stated that it is 

aware that there are limitations to the NPPES database and believes that 

instances identified in this report are likely due to administrative data

input and maintenance issues. For example, prescribers may have a record 

that indicates the prescriber is a student, when other data indicates the 

individual has become a full licensed practitioner. We agree with CMS 

that the reliability of the NPPES should be improved and we support its 

efforts to do so; however, we do not agree with CMS’s assertion that the 

instances in this report are due to limitations of the NPPES. As explained 

in the report, we took multiple steps to ensure that none of the individuals 

included in this report provided any information indicating they have 

prescribing authority. For example, we looked for credentials, such as 

M.D., and a DEA number. If they had either, we assumed they had the 

authority to prescribe. We also excluded all students from our review 

because some medical students, such as those on rotation, have the 

authority to prescribe under certain circumstances. 

CMS concurred with our second recommendation and stated that “the 

MEDIC will continue to monitor prescribers and identify other proactive 

analyses targeted at prescribers.” It further noted that the MEDIC 

currently conducts proactive analysis to identify prescribers who do not 

have the authority to prescribe drugs, validates these finding through 

further investigations, and refers to law enforcement and State licensing 

boards, as appropriate. Additionally, CMS noted that it has increased its 

monitoring of prescribers through the Part D Recovery Audit Contractor, 

with which it has contracted to identify and recover Part D improper 

payments. 

CMS concurred with our third recommendation, stating that current PDE 

guidance provides Part D sponsors with a process to delete PDEs that are 

fraudulent. PDEs from prescribers confirmed by the MEDIC as not 

having prescribing authority would be communicated back to sponsors 

who would then delete the PDEs and implement point-of-sale edits to 
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 19

reject claims from these fraudulent prescribers in the future. Finally, 

CMS concurred with our fourth recommendation to follow up on 

individuals without prescribing authority who ordered prescriptions. 

We support CMS’s efforts to address these issues. For the full text of 

CMS’s comments, see Appendix A. 
APPENDIX A 

Agency Comments 

/'!.fA'IICt.f., 

( DEPARTMENT OF HEALTH & HlJMAN SERVICES Centers for Medicare 8. Medicaid Services 

...<::-z~ Administrator 

Washington, DC 20201 

DATE: MAY - 9 2013 

TO: 	 Daniel R. Levinson 

Inspector General 

FROM: 	 Ma(i~ UV61l.n CP 

Acting Adm inist!Utor 

SUBJECT: 	 Office oflnspector General (OIG) Draft Report: "Medicare Inappropriately Paid 

for Drugs Ordered by Individuals Without Prescribing Authority'' 

(OEI-02-09-00608) 

The Centers f()r Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 

comment on the above-referenced OIG draft report. The purpose of this report is to determine 

whether Medicare Part D paid for drugs ordered by individuals who did not have the authority to 

prescribe. 

The CMS is committed to preventing prescriber fraud, particularly when fraud is related to the 

serious and growing problem of prescription drug abuse . To help protect the Medicare Part D 

program , CMS requires plan sponsors to have compliance programs in place to help detect, 

prevent, and correct fraud, waste, and abuse. CMS also contracts with a Medicare Drug Integrity 

Contractor (MEDIC) that is tasked with identifying and investigating potential fraud and abuse, 

referring such cases to law enforcement, and fulfilling requests for information from law 

enforcement. 

We appreciate OIG's efforts in working with CMS to ensure that Medicare, particularly 

Medicare Part D. does not inappropriately pay for drugs ordered by individuals who lack the 

authority to prescribe such drugs . Our response to each ofthe OIG recommendations follows. 

OIG Recommendation 

The OIG recommends that CMS should require sponsors to verify that prescribers have the 

authority to prescribe drugs. 

CMS Response 

The CMS concurs with this recommendation. CMS currently requires Part D sponsors to verify 

that prescribers of controlled substances paid for under Part D have an active and valid 

individual National Provider Number (NPI) number to crosswalk to an individual Drug 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09·00608) 20 
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 21
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 22
 

Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority (OEI-02-09-00608) 23

ACKNOWLEDGEMENTS 

This report was prepared under the direction of Jodi Nudelman, Regional 

Inspector General for Evaluation and Inspections in the New York regional 

office, and Nancy Harrison and Meridith Seife, Deputy Regional 

Inspectors General.

Miriam Anderson served as the team leader for this study. Other principal 

Office of Evaluation and Inspections staff from the New York regional 

office who contributed to the report include Jenell Clarke and 

Jason Kwong. Central office staff who contributed include 

Eddie Baker, Jr.; Kevin Farber; Meghan Kearns; Christine Moritz; and 

Debra Roush. 
Office of Inspector General

http://oig.hhs.gov

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components:

Office of Audit Services

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS.

Office of Evaluation and Inspections

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties.

Office of Counsel to the Inspector General

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities.