HHS OIG looks deeply into copay cards for Medicare beneficiaries, finds potential kickback violations

A recent report from the Office of Inspector General (OIG) of HHS finds that a suspected 6-7% of seniors have been using copay coupons or cards (which reduce the copay for, usually, branded drugs that are higher on formulary tiers) in Medicare Part D programs. If manufacturers knowingly enabled such discounting, it is a clear violation of federal anti-kickback laws. However, by digging deeper into manufacturer, pharmacy and payer practices, OIG found that the “safeguards” that manufacturers take to prevent the reimbursement have “vulnerabilities,” and so the reimbursement might be occurring. But “it’s not my fault,” will not be a defense for manufacturers; OIG also issued a Special Advisory Bulletin warning them that “offerors of coupons ultimately bear the responsibility to operate these programs in compliance with Federal law. Pharmaceutical manufacturers that sponsor copayment coupons may be subject to sanctions if they fail to take appropriate steps…”

Devil in the details

OIG’s study of matter focused on top 100 Part D branded drugs, from 30 manufacturers. All these manufacturers provide notices to beneficiaries and to pharmacists that the coupons may not be used. In the claims-adjudication process, however, OIG found that the “edits” performed by claims processing organizations are only partially capable of qualifying (or excluding) beneficiaries. Insurers and others involved in the process are blinded to the details of the beneficiaries (under HIPAA rules). “CMS indicated that Part D enrollment data are not available to manufacturers because they contain sensitive health care information.”

It’s worth noting that OIG did not itself find that seniors (or other beneficiaries of federal health programs, who are also excluded from copay programs) actually received reimbursement; it depended on the data collected, in 2011 and 2012, by, among others, the Pharmaceutical Care Management Assn., whose opposition to copay programs is well-documented. And it relies on a study published in 2013 in the New England J. of Medicine that copay cards affect as much as 62% of branded drugs for which there are lower-cost options (usually generics).

In the final analysis, it would seem that manufacturers will have to demonstrate that they are doing more than relying on the claims-adjudication process to ensure that anti-kickback laws aren’t being violated. “CMS should cooperate with industry stakeholder efforts to improve the reliability of pharmacy claim edits,” says OIG.