Fighting Rx Abuse and the Cash-Claims Loophole

May 9, 2013
Closing the cash-claims loophole at pharmacies would provide nationwide visibility and aid in the fight against prescription drug abuse.

Prescription-drug abusers operate outside of every acceptable social norm, so we shouldn’t expect that they would politely hand over an insurance card when they go to buy more drugs at the pharmacy.

They’ll have enough resources to support their habit – who knows where they got the money – and they’ll go pharmacy by pharmacy until they find one that will take their money and feed their addiction.

The human costs of prescription-drug abuse are high: prescription narcotics are responsible for 3 out of every 4 prescription-drug overdose deaths. When individuals get addicted to medication, they may need treatment or even face legal action, and this can affect children and families. Millions of people are victims of medical ID theft because of the illegal trade in prescription medication.

Drug overdose rates

The financial price tag is no less severe: up to $224 billion is lost annually to healthcare fraud, $73.5 billion to drug diversion alone. Is fighting prescription-drug abuse a lost cause? Not the way we look at it.

First though, let’s understand the magnitude of the problem. Normally, when an individual obtains prescription medications, including narcotics, the claim is processed through a pharmacy benefit manager (PBM).

Through the compilation of member, physician and pharmacy data, PBMs play a vital role in the detection of fraud, waste and abuse by applying advanced analytics across all submitted prescription claims.

However, about 6% of all prescriptions – $258 million in claims in 2011 alone – are paid for by cash (self-paid). When someone obtains a prescription narcotic using cash, the standard protocols to monitor prescription drugs are bypassed. There is no record that can be cross-checked to ensure that the drugs are not being abused or diverted to the illegal market.

We have a simple solution and the technology for it already exists: legislation requiring pharmacies to submit all cash transactions involving controlled substances to a transactional PBM (also known as a “cash PBM”). Existing PBM systems could be modified relatively quickly to capture these cash payments.

The transactional PBM would be realized in two phases:

  • Phase One — Pharmacies would be required to process self-paid prescriptions for Schedule II-V controlled substances through the transactional PBM, using the existing NCPDP claims billing format.
  • Phase Two — Pharmacies would report using another transaction type (the n transaction), now used for information sharing (not billing). This more comprehensive reporting would require an estimated 12 months to 24 months to implement.

The transactional PBM reporting system could replace current state-based systems, which are inadequate to address the problem, by creating a repository of reliable, real-time interstate data. Through data mining and advanced analytics, potential drug abuse will be investigated and referred to appropriate government agencies.

Such a system would help close the cash loophole and provide visibility into an area that is currently a blind spot.

It would help deter those seeking to obtain narcotics for illegal uses and save the nation hundreds of millions of dollars a year. And it would prevent our families and communities from being victims of the epidemic of prescription-drug abuse.

comments powered by Disqus