Medicare Should Adopt A 'Lock In' Policy

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Source: Forbes

Devon Herrick of the National Center for Policy Analysis has researched the consequences of Medicare’s tying Medicare Part D drug plans’ hands with respect to the abuse of opioids – addictive drugs that have been causing an epidemic of overdoses:

When Congress passed the Medicare Part D drug program back in 2003, it inadvertently created a license to steal. Prescription drug abuse costs health plans nearly $75 billion per year — about two-thirds of it from public programs such as Medicare and Medicaid. That makes Uncle Sam the biggest illicit drug dealer in the country! Prescription drug fraud and abuse also drives up seniors’ premiums as well as boosts costs for taxpayers and health plans that administer seniors’ drugs benefits.

Herrick cites evidence that some Medicare beneficiaries either traffic in opioids or abuse them themselves. Medicare facilitates this because there are no limits to the doctors or pharmacies that beneficiaries can use. For the addicted or criminal Medicare beneficiary, this leads to “doctor shopping” and “pharmacy shopping.” Medicaid programs in some states have succeeded in reducing this abuse by making dependents chose one doctor and one pharmacy. This allows for better monitoring and control of abuse:

Drug-seekers generally fill their prescriptions at multiple pharmacies to avoid detection — hoping that no one pharmacy will track their behavior and question them. This tactic often fools individual doctors and pharmacies into believing their customers are not abusing prescription painkillers or reselling them. Drug plans could easily detect drug-seeking behavior when reimbursing medical claims — that is, if they were allowed to. Federal law doesn’t grant Medicare the authority to stop it. Medicare drug plans are not allowed to restrict the benefits of enrollees thought to be abusing or reselling prescription drugs.

A bipartisan proposal in Congress would allow drug plan managers to block those who profit by stealing drugs from Medicare. Only a small percentage of Medicare drug plan enrollees abuse the system, and seniors’ benefits wouldn’t be affected. However, the con artists who make a living cheating Medicare would have to look elsewhere for an easy way to acquire narcotics to abuse or resell on the illicit market.

The profits are huge. Herrick has a chart showing that the street price of Oxycontin, for example, is a multiple of the pharmacy price:

This “shopping” has been so successful that it is expanding beyond opioids:

It’s also good idea is consider expanding lock-in to include more drugs than just narcotic pain relievers if diversion of other types of drugs becomes a problem. A recent government investigation found Medicare spent $32 million for AIDS drugs in 2012 for 1,600 people with questionable drug utilization — more than half of which did not appear to actually have HIV. Many of these visited multiple doctors for prescriptions and/or filled their drugs at multiple pharmacies to obtain excessively-large quantities of costly HIV drugs. Some of these drugs were likely resold on the illicit market due to their high resale value. Another possibility is unscrupulous (possibly bogus) pharmacies stole Medicare enrollees’ identities and billed Medicare for drugs never dispensed.

Herrick proposes that Medicare adopt what the industry calls “lock in” of a beneficiary’s pharmacy benefits to one doctor and one pharmacy. (The industry could have thought up a better term than “lock in.” How about “exclusive provider”?) The reforms Herrick proposes could save billions of dollars every year.

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