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Health Care Blog

Opioid Fraud and Abuse as a Compliance Risk Area

Authored by John H. Fisher, II
John H. Fisher, II
Wausau Office

Posted on February 20, 2018
Filed under Health Care

The opioid epidemic is different than other drug related social problems because, in many cases, addiction to opioids starts in the medical office or in the pharmacy; in most cases through the treatment of legitimate physical pain and often chronic pain.  As such, the marketing practices of companies who manufacture, market, and distribute these highly addictive medications can have a huge impact on the scope of the problem.  Where enforcement activities relating to other types of drugs might focus on the illegal distribution system, addressing opioids often involves a focus on the misuse of an otherwise legal system.  This has resulted in state and federal government investigators utilizing Medicare and Medicaid fraud prosecution, Drug Enforcement Administration (DEA) diversion, and techniques used to track other types of fraudulent activity to police the opioid epidemic.  This has made opioid issues one of the biggest potential compliance risk areas for many providers. 

As with other types of health care payment fraud, there is a range of activity investigators may pursue.  Some will involve obvious fraud and known criminal activity.  However, “normal” providers will encounter potential liability in this area as the government casts its broad enforcement net.  We are seeing an increase in enforcement activity across the country as federal and state governments begin looking at pharmaceutical company marketing, distribution practices, and physician prescribing activity in an attempt to force providers to reduce the amount of opioids placed into the market.

Just last September, a group of over 40 Attorney Generals from throughout the United States, released an announcement they will be jointly investigating companies involved in the manufacture and distribution of prescription opioids.  The joint investigation is focusing on marketing and distribution practices of pharmaceutical companies to determine whether any unlawful marketing and distribution activities result in “overselling” that may be contributing to the opioid epidemic.  The activity of this coalition of State Attorney Generals is emblematic of one of the fraud and abuse approaches being taken to address the opioid epidemic.

In addition to state enforcement activities represented by the Attorney Generals coalition, the federal government is also addressing the issue through various fraud and regulatory prosecutions.  The DEA recently published a summary of recent investigations and criminal convictions relating to overprescribing opioids.  The acceleration of investigated cases and convictions is astounding.  Parallel to state trends to create specialized “opioid” task forces and coalitions, the U.S. Department of Justice (DOJ) recently created an Opioid Fraud and Abuse Detection Unit.  The Unit uses a variety of means to target physicians and other providers who may be inappropriately contributing to the opioid epidemic.  One technique used by the Unit involves the analysis of data to identify potential “outlier” prescribing activity.  Through this Unit, the federal government will devote significant resources, including the establishment of a group of federal prosecutors who will focus solely on prosecution of those identified as contributing disproportionally to the opioid epidemic.  Programs like this put the focus on physicians and others who are found to be “overprescribing” opioids.

As reflected in techniques used by the DOJ Opioid Fraud and Abuse Detection Unit, apparently “suspicious” provider activity is often discovered through use of data mining that reveals indications of “outlier” prescribing practices.  Many cases involve billing fraud investigations, where data analysis has been historically used to identify potential fraud.  Investigators use data outliers to help identify providers who may be prescribing pain medications that are not medically necessary.  Providers who have suspicious prescribing patterns that do not fit norms for their practice area may be identified for further investigation.  Some cases identified through the use of data mining go beyond overprescribing and involve deliberatively issuing prescriptions with knowledge the opioids will be diverted for resale.  Just such a case recently resulted in the conviction of a physician and his wife on several counts of trafficking and illegal diversion of controlled substances.

The extreme cases are illustrative of the serious problem that exists, but the more common case involves a physician who overprescribes beyond what is legitimate for the treatment of a patient’s pain.  Statistics that indicate a physician routinely prescribes more than a legitimate number of opioids may find that physician the subject of a federal or state investigation.  This is not a good position to be in when the opioid crisis is so much in the forefront of societal consciousness.  The government is actively using controlled substance and fraud and abuse laws to make examples of providers.  The goal is to use these examples to force physicians to voluntarily reduce their prescription practices.  Along the way, the government might collect some revenues through repayment of overpaid amounts and penalties.  This is obviously not a comprehensive solution to the current opioid crisis but is one of the tools that enforcers are using to attempt to stem the proliferation of opioids.

One of the results of these and other enforcement activities is to shine a compliance spotlight on prescribing, marketing, and distribution practices relating to addictive opioids.  Government enforcement agencies are deliberately trying to send a signal to the provider community that they should look at their own practices and set standards that will insulate them from scrutiny.  Companies and providers involved in the industry should integrate opioid related fraud enforcement into their compliance risk identification process.  This may warrant additional policies regarding appropriate practices as well as monitoring and auditing to identify potential areas of risk exposure.  There is a clear trend toward enforcement in this area due to the seriousness and visibility of the epidemic.  This warrants action to identify, quantify, and address potential risk in this area.  As always in the compliance areas, it is much better to proactively address risk than to react to risk identified through a complaint, government investigation, or whistleblower action.

Providers should analyze their own prescribing activities and compare their practices to industry norms.  From a compliance standpoint, the goal is to assure analysis of prescribing practices does not stand out for further investigation by government enforcement agencies.  If clear outlier data is identified, changes should be seriously considered unless there is a strong, compelling, and documented reason the nature of the specific practice justifies the identified practices.  If the practice has outlier prescribing data, even if that data can be justified, the provider should count on and plan for government scrutiny and be prepared to defend its practice.  The aggressive data mining and enforcement practices used make scrutiny of “outlier” situations a virtual certainty.

Providers who prescribe opioids should also set standards and limitations for the prescribing practices within their organizations.  Peer data and industry best practices are useful for identifying appropriate practices.  Practices that treat patients who are in chronic pain may find the establishment of prescribing practices challenging.  Patients who are struggling with existing addiction will present challenges as practices are adjusted to require more frequent monitoring and physician control over the products they prescribe.  As a result, along with implementation of prescribing guidelines, practices should take a proactive look at their policies and procedures regarding patient interaction, patient grievances, and patient dismissal.  The best approach is to establish and stick to compliant policies and to notify patients early and often regarding the expectations of the practice, the prescribing policies, and the appropriate process for a patient to present a grievance.

The opioid epidemic presents new compliance challenges for providers.  Proactively addressing issues through a thoughtful compliance process is the best course for providers to reduce risk and minimize practice disruptions.