S. Hrg. 113–244 CURBING PRESCRIPTION DRUG ABUSE IN MEDICARE HEARING BEFORE THE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED THIRTEENTH CONGRESS FIRST SESSION JUNE 24, 2013 Available via the World Wide Web: http://www.fdsys.gov/ Printed for the use of the Committee on Homeland Security and Governmental Affairs ( U.S. GOVERNMENT PRINTING OFFICE 82–571 PDF WASHINGTON : 2014 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS THOMAS R. CARPER, Delaware Chairman CARL LEVIN, Michigan TOM COBURN, Oklahoma MARK L. PRYOR, Arkansas JOHN MCCAIN, Arizona MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin CLAIRE MCCASKILL, Missouri ROB PORTMAN, Ohio JON TESTER, Montana RAND PAUL, Kentucky MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire HEIDI HEITKAMP, North Dakota JEFF CHIESA, New Jersey RICHARD J. KESSLER, Staff Director JOHN P. KILVINGTON, Deputy Staff Director PETER P. TYLER, Senior Professional Staff Member WALTER S. OCHINKO, GAO Detailee KEITH B. ASHDOWN, Minority Staff Director CHRISTOPHER J. BARKLEY, Minority Deputy Staff Director JOSH TRENT, Health Policy Advisor, Office of Senator Coburn TRINA D. SHIFFMAN, Chief Clerk LAURA W. KILBRIDE, Hearing Clerk (II) C O N T E N T S Opening statements: Page Senator Carper ................................................................................................. 1 Senator Coburn ................................................................................................. 3 Senator Chisea .................................................................................................. 4 Prepared statements: Senator Carper ................................................................................................. 37 WITNESSES MONDAY, JUNE 24, 2013 Joseph T. Rannazzisi, Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration, U.S. Department of Justice ...... 6 Jonathan Blum, Acting Principal Deputy Administrator and Director of the Center for Medicare, Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services ...................................................... 8 Gary Cantrell, Deputy Inspector General for Investigations, Office of Inspec- tor General, U.S. Department of Health and Human Services; and Stuart Wright, Deputy Inspector General for Evaluation and Inspections, Office of Inspector General, U.S. Department of Health and Human Services ......... 10 Alanna M. Lavelle, Director, Special Investigations, WellPoint, Inc. ................. 12 ALPHABETICAL LIST OF WITNESSES Blum, Jonathan: Testimony .......................................................................................................... 8 Prepared statement .......................................................................................... 56 Cantrell, Gary: Testimony .......................................................................................................... 10 Prepared statement .......................................................................................... 72 Lavelle, Alanna M.: Testimony .......................................................................................................... 12 Prepared statement .......................................................................................... 82 Rannazzisi, Joseph T.: Testimony .......................................................................................................... 6 Prepared statement .......................................................................................... 43 Wright, Stuart: Testimony .......................................................................................................... 10 Prepared statement .......................................................................................... 72 APPENDIX List referenced by Senator Carper ......................................................................... 41 Statement of the National Community Pharmacists Association ....................... 97 Responses to post-hearing questions for the Record: Mr. Rannazzisi .................................................................................................. 100 Mr. Blum ........................................................................................................... 103 Mr. Cantrell and Mr. Wright ........................................................................... 117 Ms. Lavelle ........................................................................................................ 123 (III) CURBING PRESCRIPTION DRUG ABUSE IN MEDICARE MONDAY, JUNE 24, 2013 U.S. SENATE, COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS, Washington, DC. The Committee met, pursuant to notice, at 3:08 p.m., in room SD–342, Dirksen Senate Office Building, Hon. Thomas R. Carper, Chairman of the Committee, presiding. Present: Senators Carper, Coburn, and Chiesa. OPENING STATEMENT OF CHAIRMAN CARPER Chairman CARPER. Well, a room as quiet as this one probably does not need me to call everyone to order, but this hearing will come to order, and I want to welcome our witnesses. I apologize for running a few minutes late, but thank you for being here and for your preparation and attendance today for an important hearing. Our colleagues are coming in from across the country this after- noon, and we will be joined by a number of them as this hearing proceeds. Today we are going to hear from several witnesses about the Medicare Prescription Drug Program and its vulnerability to waste, to fraud, and to abuse. Medicare, as we all know, is a critical component of health care in our Nation, and the Prescription Drug Program, which we know as Part D, began about 7 years ago, in 2006. We are now in its sev- enth year. The overall reviews of the program have been generally positive, more than 31 million seniors participating. The lion’s share of them like the program. However, Congress must ensure that the $60 billion a year program works effectively and effi- ciently. Unfortunately, Medicare, including Part D, is not as effec- tive or efficient as it could or should be when it comes to pre- venting waste and fraud. Each year, the Federal Government lists the estimates of over- payments, underpayments, undocumented expenditures, and other kinds of mistakes made by each agency. The total for fiscal year (FY) 2012 was more than $100 billion. Medicare has the largest re- ported share of that total at $44.3 billion, and the amount wasted in Medicare’s Prescription Drug Program alone is approaching $1.6 billion. In addition, health care is too often the focus of criminals who wish to take advantage of the system. Whether the care is provided through government programs or the private sector, attempts to (1) 2 defraud the health care system are on the rise. There are estimates for Medicare fraud in the tens of billions of dollars. We cannot afford to tolerate these levels of waste and fraud in our health care programs. As everyone in this room knows, we have faced record budget deficits in recent years, and while they are coming down, they are still way too large. Given the debt and deficit problems that our country faces and the tough work ahead of us as we attempt to address those challenges, we need to focus like a laser on the avoidable, expensive, and, frankly, unacceptable issues we will be discussing here today. During a Subcommittee hearing that I chaired in the fall of 2011—and I might be mistaken, but I think Dr. Coburn was there as well. I am not positive. I think you were, because of your great interest. But the Government Accountability Office (GAO) that day testified that they identified about 170,000 beneficiaries who ac- quired the same class of frequently abused drugs, primarily hydrocodone and oxycodone, from five or more medical practi- tioners at a taxpayer cost of almost $150 million. In two egregious examples, individuals received prescriptions from 87 and 58 dif- ferent medical practitioners. This followed a similar study by the GAO in 2009 showing the same problem in Medicaid. This fraud technique, called ‘‘doctor shopping,’’ involves recipi- ents going to multiple doctors for the same type of drug. In these cases, beneficiaries are almost always either feeding an addiction or selling the drugs they do not use on the street. Drug dealers make the profits while the Federal Government foots the bill. But the problem of prescription drug fraud is about more than just a loss of taxpayer dollars. It is also about the toll that drug abuse takes on people. It is of great concern that one out of seven high school seniors in America has abused, or is abusing, prescrip- tion drugs. In fact, more Americans abuse prescription drugs than the number who abuse cocaine, heroin, hallucinogens, Ecstasy, and inhalants combined. The Department of—do we have a chart here anywhere? The Department of Health and Human Services (HHS), specifi- cally the Centers for Medicare & Medicaid Services (CMS), has es- tablished a set of oversight procedures to protect the Medicare Pre- scription Drug Program and its beneficiaries from fraud and waste. This is a team effort involving Medicare officials, law enforcement at the Federal, the State, and the local level, the Medicare pre- scription drug plans