HHS' OIG: 'Prescription drug oversight is a top priority' for 2017

HHS will look at index drug price rebates to inflation

HHS' Office of Inspector General (OIG) on Friday outlined its priorities for next year and indicated it would expand its focus on prescription drug pricing.

Focus on prescription drugs

According to STAT News' "Pharmalot," HHS' OIG regularly examines pharmaceutical issues but is broadening its focus in its 2017 Work Plan. The renewed focus on drug pricing comes amid growing concerns about billing practices and rising costs. A spokesperson for HHS' OIG said, "Prescription drug oversight is a top priority."

For example, HHS' OIG said it will review whether the availability of smaller single-use drug vials could reduce waste and save money. According HHS' OIG, medicine and money is wasted when providers do not use a full vial. The office plans to determine the amount of waste generated by 20 different single-use vial drugs and offer examples of when a different size vial could reduce waste.

The office also plans to investigate how much money CMS could save under Medicare Part B if rebates for certain prescription drugs were tied to inflation. HHS' OIG said it will review 50 to 100 Part B drugs to determine whether a program that uses inflation-based rebates like the Medicaid Drug Rebate Program could help CMS recover more of its spending.

According to the work plan, HHS' OIG also will consider whether the same methodology should be extended to the federal 340B Drug Pricing Program, under which drugmakers must offer discounts of between 20 and 50 percent to providers that serve a relatively high number of low-income individuals.

Further, HHS' OIG plans to investigate "questionable billing" practices for compounded topical drugs under Medicare Part D. According to a recent OIG report, Part D spending on these drugs has increased by 3,466 percent since 2006. Miriam Anderson, a team leader at HHS' OIG, said "We're seeing trends in the data that is a potential emerging fraud … And this may not only affect the Medicare Part D program, but also other federal payers. So we feel it warrants a further look."

Poll: Drug prices are U.S. residents' top health policy concern

In addition, HHS' OIG will look into:

  • FDA's oversight of drug compounding facilities;
  • Price increases for brand-name drugs paid covered by Medicare Part D; and
  • The effect of the Drug Supply Chain Security Act, which aims to track and trace pharmaceuticals, and how the supply chain helps to prevent drug diversions and identify counterfeits.

Other priorities

HHS' OIG also said in 2017 it will focus on:

  • CMS' fraud prevention system;
  • Data privacy controls at NIH;
  • End-of-life care covered by Medicare; and
  • The cost of recalling and replacing medical devices.

For example, HHS' OIG said it will look into Medicare payments for services that seem to have been provided to deceased beneficiaries (Rubenfire, Modern Healthcare, 11/11; Silverman, "Pharmalot," STAT News, 11/10; Siddons, CQ HealthBeat, 11/10 [subscription required]).

How Houston Methodist reduced the effect of drug costs on revenue

 Houston Methodist Health System faced high drug costs that drained overall hospital revenue. Executives challenged the pharmacy and business office teams to mitigate the impact. Using Revenue Cycle Compass dashboard, Houston Methodist was able to go beyond traditional analytics to show what pharmacy costs could be reimbursed or covered by copay assistance, significantly offsetting initial drug cost.

Executive hospital leadership also created three new FTE reimbursement coordinator positions to identify the best payment solutions with patients pre-treatment, discuss out-of-coverage treatments with physicians, and work with the insurance predetermination process to navigate one-off cases. In just three years, Houston Methodist saved over $522,000.

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