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Suspicious Medicare Bills Found at 2,600 U.S. Pharmacies

May 10, 2012

More than 2,600 U.S. drug stores, or 4 percent of all retail pharmacies, may have suspicious or excessive billing to Medicare, government investigators said.

Some pharmacies dispensed unusually high percentages of painkillers and other controlled substances or expensive brand- name drugs, according to a report today from the inspector general for the Health and Human Services Department that analyzed claims data from 2009. Other stores billed Medicare a per patient rate of more than 2.5 times the national average, investigators said without naming the drug stores.

The 2,637 suspect pharmacies billed Medicare, the U.S. health insurance program for the elderly and disabled, about $5.6 billion in 2009. Most that had “questionable billing” were independent stores rather than chains such as those owned by CVS Caremark Corp. (CVS:US) or Walgreen Co. (WAG:US), according to the report. About 1 percent of chain drug stores and almost 11 percent of independent shops were considered suspect, investigators said.

“While some of this billing may be legitimate, all pharmacies that bill for such extremely high amounts warrant further scrutiny,” investigators said.

Daniel Levinson, the inspector general for the Health and Human Services Department, recommended that Medicare tell the insurers who administer the program’s drug plans to report potential fraud to the government. The companies currently aren’t required to do so, a situation that Medicare “should seek statutory authority” to change, Levinson said.

Medicare paid about $57 billion in 2009 for prescriptions dispensed by about 59,000 drug stores, according to the report.

Medical Legitimacy

The report “lacks sufficient detail to evaluate the medical legitimacy and appropriateness of the claims reviewed,” said Kevin Schweers, a spokesman for the National Community Pharmacists Association in Alexandria, Virginia, a trade group for independent pharmacies. “There could very well be legitimate medical reasons behind many of the claims.”

Independent pharmacies serve a higher proportion of nursing home residents and other patients with serious medical conditions than chain pharmacies, and those patients need more drugs than average Medicare beneficiaries, Schweers said in an e-mail.

In addition to company reporting, Levinson said Medicare should investigate the pharmacies in the report, and analyze billing data to identify other stores with “a high risk for fraud.”

To contact the reporter on this story: Alex Wayne in Washington at

To contact the editor responsible for this story: Reg Gale at

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