New steps to prevent drug card fraud

Centers for Medicare & Medicaid Services Administrator Mark B. McClellan, M.D., Ph.D. today announced efforts that CMS is undertaking to strengthen oversight of the Medicare-approved Discount Drug Card Program. 

“We have been working closely with health care providers and our partners in law enforcement and oversight to reduce fraud and abuse in Medicare, and we are extending those efforts to Medicare’s new programs,” said HHS Secretary Tommy G. Thompson.  “We are implementing new steps to make sure that Medicare-endorsed drug cards follow the rules, and we are continuing to keep watch for any drug card scams.”

CMS will monitor the activities conducted by the Medicare-endorsed discount cards, which will start enrollment next month and will start providing discounts in June.  CMS will:

  • Conduct weekly updates on the covered drugs and drug prices provided by the card sponsors to ensure there is no “bait and switch.”  CMS will monitor changes in overall drug prices and identify programs that stray from the expected changes in the prices the card sponsors themselves pay, which are based on the average wholesale prices.  Drug card sponsors can only increase the negotiated price for covered drugs if there is 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.
  • Log and respond 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.
  • Conduct “mystery shopping” of the card sponsor 1-800 numbers to ensure they are charging beneficiaries the advertised enrollment fees, checking the prices displayed on the Medicare drug price comparison website, and following other federal guidelines.

“The vast majority of health care providers try to do the right thing, so we are going to be very clear about our rules and focus our efforts on those who intentionally seek to commit fraud,” said Dr. McClellan.  “As we improve Medicare and expand its benefits, we will protect both Medicare beneficiaries and the Medicare trust fund from unscrupulous individuals.”

Although Medicare beneficiaries cannot enroll in any Medicare-approved drug cards until May 3, some beneficiaries across the country have reported cases of unsolicited calls as well as in-person solicitations from individuals or companies posing as Medicare officials attempting to gain personal information with the intent to scam.  Cases have been reported in Alabama, Georgia, Idaho, Maine, Massachusetts, Maryland, Nebraska, New York, Oklahoma, Pennsylvania, Rhode Island, Virginia, and Washington.  In many of these cases, individuals received telephone calls or solicitations in their home, purportedly for “Medicare” products.  These are individual cases; CMS has not identified any large-scale fraudulent drug card operations.  In its monitoring activities involving drug card fraud, CMS continues to work closely with the Department of Justice, Federal Bureau of Investigation, and the Office of the Inspector General as well as other consumer protection agencies.

Dr. McClellan also discussed some facts that consumers should know to help prevent fraud.  “Medicare does not allow legitimate drug cards to be marketed through unsolicited calls or unsolicited visits to your home.  Medicare beneficiaries, or anyone else, for that matter, should never share personal information such as their bank account number, social security number, health insurance card number (or Medicare number) with any individual who calls or comes to the door claiming to sell any Medicare related product,” said Dr. McClellan.  “If anything like this happens to you, or if you think you might be the victim of a fraud for other reasons, you should call 1-800-MEDICARE, the Fraud Hotline of the HHS Office of the Inspector General at 1-800-447-8477, or you local police department.”

“Legitimate Medicare-endorsed discount cards are coming soon, and if you have any questions about how you can get the most help from this new program, call 1-800-MEDICARE any time, day or night,” said Dr. McClellan. 

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