Are Pharmacies Misusing Medicare Part D Eligibility Data? OIG Says Yes

Medicare Part D eligibility data has strict parameters on how it’s used. However, a new report from the Office of Inspector General (OIG) released a report noting there was a lack of CMS monitoring around the usage of the data. The report also found that pharmacy providers were taking “gaps” in a system to verify eligibility.  

What Precipitated the Audit

CMS requested the audit by OIG for a specific mail-order pharmacy. CMS had concerns regarding this pharmacy, and the OIG added 29 more thought to be possibly misusing the information.  

Audits of High Volume E1 Transactions Reveal Misuse

The OIG performed an audit on 30 carefully chosen pharmacies that had high volumes of E1 transactions compared to their number of total prescriptions. A pharmacy should use an E1 transaction to bill Part D when patients don’t have their Part D plan card.

The appropriate use of such data should revolve solely around billing for the medication. However, the OIG discovered that 25 of the 30 pharmacies were using this data for other purposes. Almost 98% of those companies’ E1 transactions were not associated with a prescription. This revelation indicated to the OIG that the data was being misused.

Out of those 25 pharmacies, the OIG contacted 15 to inquire further about their use of data. They found that 10 of those businesses were either closed or under investigation.

How Was Data Misused

Pharmacies used the Medicare Part D eligibility data in inappropriate ways according to the report, including for marketing purposes. Pharmacies often have agreements with marketing companies to provide data about eligibility to fuel telemarketing services. Further, the data was sometimes used to learn about a patient’s private insurance coverage

Why It Happened

The OIG said these inappropriate uses of Medicare Part D eligibility data occurred because CMS hadn’t established controls to monitor E1 transactions. CMS has since started a monitoring program. They have also denied E1 transaction access for 20 of the 30 organizations audited. 

What to Know About Pharmacy Audits

Pharmacy audits are standard practice in the industry. Those audits can be requests from government entities or insurance companies. When an audit occurs, pharmacies often scramble to aggregate all the required data to comply. This may include searching legacy systems and current systems. 

Many pharmacies have found it beneficial to archive old records. With an archiving platform, you can meet medical record retention regulations and have easy access to all patient data should an audit occur. 

Pharmacies of every type have been able to simplify record management with our data archiving tool ViewMaster. Learn more about how it can be a valuable tool in audit compliance.