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Medicare Sets Fines for Fraud by Approved Drug
Companies
Agency Also Monitoring for “Bait and Switch”
May 19, 2004 - Medicare has established monetary
fines for any fraudulent activities by the Medicare-approved drug
discount card sponsors and has begun weekly monitoring of drugs and
prices to assure there is no “bait and switch” activity.
An interim final rule providing civil monetary
penalties that may be imposed against endorsed drug card sponsors was
placed on public display in the Office of the Federal Register yesterday
by the Department of Health and Human Services Office of Inspector
General and is scheduled for publication on Wednesday, according to Mark
B. McClellan, M.D., Ph.D., administrator of the Centers for Medicare &
Medicaid Services (CMS). The interim final rule contains a 60-day public
comment period.
“Today’s action adds to the protections and the
close monitoring of the Medicare-endorsed discount cards, to assure that
beneficiaries who have waited too long for help will now begin to get
overdue relief – not just more promises,” McClellan said yesterday.
“Although CMS has investigated some isolated cases of individuals
attempting to sell fake discount cards, no well-organized operations
have been identified, and individual reports are being referred to law
enforcement authorities for further investigation.”
"This regulation puts into force our authority to
impose civil money penalties against sponsors of the Medicare
prescription discount drug cards that engage in fraudulent conduct to
the detriment or our beneficiaries," said Acting Principal Deputy
Inspector General Dara Corrigan. "Under the new rule, we can impose
penalties up to $10,000 per violation against any sponsor that engages
in prohibited marketing practices or misuses federal funds made
available to needy discount drug card enrollees. In addition, the OIG
will actively monitor drug prices under the discount card program to
assure that Medicare beneficiaries are fully protected under the plan in
which they have enrolled."
McClellan said CMS is also doing the following:
> Conducting weekly updates on the covered drugs
and drug prices provided by the card sponsors to ensure there is no
“bait and switch.” CMS also is monitoring changes in overall drug
price and identifying programs that stray from the expected changes in
prices. Drug card sponsors have to report to CMS if prices increase in
an amount that exceeds the corresponding increase in AWP and such
increases must be based on a change in the sponsor’s costs, such as
changes in the discounts, rebates or other price concessions received
from a drug maker or pharmacy.
> Logging and responding to beneficiary complaints
against card sponsors received at 1-800-MEDICARE,
www.medicare.gov, from state health insurance assistance programs
(SHIPS), CMS’s regional offices, state agencies or other partners.
Consistent patterns of beneficiary complaints may lead to sanctions or
further penalties against a drug sponsor.
> Will undertake other activities to make sure that
card sponsors are charging beneficiaries the advertised enrollment fees
and following other federal guidelines.
The Medicare Modernization Act of 2003 (MMA)
created the drug card program to make prescription drugs affordable for
Medicare beneficiaries, most of whom lack insurance coverage for
medication. The new law authorized the imposition of civil monetary
fines against endorsed card sponsors that knowingly engage in conduct
that violates the conditions of their endorsement agreements with CMS or
that constitutes false or misleading marketing practices.
The MMA sanction authorities have been divided
between CMS and the OIG, with CMS having the authority to impose
penalties in those instances where the endorsed sponsor’s conduct
constitutes non-compliance with an operational requirement not directly
related to beneficiary protection.
The OIG rulemaking published today sets forth the
OIG’s new authority for imposing civil monetary penalties against
endorsed sponsors that knowingly engage in false or misleading market
practices; including “bait and switch” activities; overcharge program
enrollees in violation of the terms of endorsed marketing practices; or
misuses transitional assistance funds.
On December 15, 2003, CMS issued an interim final
rule announcing similar authority to impose civil and monetary penalties
for oversight and monitoring drug card sponsors pricing, marketing and
enrollment activities. CMS may also terminate the contract of any card
sponsor upon a determination that a sponsor no longer meets the
requirements of the program or has engaged in false or misleading
marketing.
“We know that the vast majority of card sponsors
try to do the right thing and help make medicine affordable to Medicare
beneficiaries,” McClellan said. “So, we are focusing our efforts on
making our rules as clear as possible and on enforcing our consumer
protections against those who intentionally seek to commit fraud. As we
improve Medicare and expand its benefits, we must also protect both
Medicare beneficiaries and the Medicare trust fund from unscrupulous
individuals.” |
