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Drastic Spike in Medicare Bills for Topical Creams Raises Questions from the OIG

A recent report from the U.S. Department of Health and Human Services Office of the Inspector General (OIG) has determined questionable Medicare billing for topical drugs. They claim that a high number of pharmacies in New York, Houston, Detroit, and Los Angeles have been submitting bills for expensive creams, practices that the OIG says “warrant further scrutiny.”

According to the report, Medicare Part D spending for topical medications has soared exponentially in recent years, from $13.2 million in 2010 to $323.5 million in 2016, a 2,350 percent increase. This spike can be attributed to both the rise in prices and number of prescriptions. The OIG found 550 pharmacies had submitted “questionable” Part D billing, and 16 of those had billed for “identical drugs” for at least 200 customers. They found that 20 pharmacies had a sole medical practitioner writing over 131 prescriptions or had “increased their billing by more than 10,000 percent.”

Some of these controversial practices included an Oregon pharmacy submitting Medicare bills for creams for 91 percent of customers, and a New York pharmacy that had received prescriptions from one podiatrist for 5,342 compounded topicals totaling $1.6 million. A pharmacy in Tennessee had billed for creams containing lidocaine-prilocaine for 588 Part D patients. The prescriptions were ordered by 564 practitioners located in 22 different states.

Although this report suggests many alarming red flags, some patients can’t swallow medicine in a pill-form, and therefore can only be administered topical treatment. “We recommend that the Centers for Medicare & Medicaid Services (CMS) clarify Part D policies for coverage of compounded topical drugs and use of utilization management tools,” writes the OIG. “Specifically, CMS should clarify that sponsors—the private companies that provide the Part D benefit—have the option to cover compounded topical drugs through an exceptions process.”

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