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OIG: Compounded Drugs Should be Tracked

A study conducted by the Office of Inspector General (OIG) found that neither the Centers for Medicare & Medicaid Services (CMS) nor Medicare administrative contractors (MACs) have a way to track the number of claims they process for compounded drugs under Part B or how much they pay for such claims. As such, the OIG recommends CMS make some changes that could affect the way providers report compounded drugs on claims.
Compounded drugs are medications customized to meet specific needs of patients. These specialized drugs pose significant health risks if not produced correctly by licensed pharmacists in accordance with the Federal Food, Drug, and Cosmetic Act. An outbreak of fungal meningitis and other fungal infections in late 2012 was linked to contaminated injectable compounded drugs.
Medicare doesn’t pay for compounded drugs knowingly produced in violation of the Act, as determined by the Food and Drug Administration (FDA), but has no way of knowing if it is or not. The OIG contends in the April 29 report, Compounded Drugs Under Medicare Part B: Payment and Oversight, that the ability for CMS to track claims payment of compounded drugs, as well as who produced the drugs, would reduce improper payments.
Based on findings from the study, the OIG recommends in the report that CMS:

  1. Establish a method to identify Part B claims for compounded drugs;
  2. Explore the possibility of requiring providers to identify on the Part B claim the pharmacy that produced the compounded drug; and
  3. Explore the possibility of conducting descriptive analyses of Part B claims for compounded drugs.

CMS concurred with the OIG’s first recommendation and conditionally concurred with the third recommendation, but did not concur with the second recommendation.
“CMS does not need to identify the dispensing compounding pharmacy in order to pay the physician that is billing for the drug,” CMS said. “It is not clear that the authority exists under the statute to collect the suggested information as that information is not necessary to determine the amount of payment.”
CMS also reasoned that the changes to claims processing systems to fulfill the second requirement would be too costly, and that the ability to track who dispensed a tainted drug wouldn’t increase public safety.
“By the time the MAC receives the claim, it will be too late to do anything to prevent the patient from receiving a tainted drug,” CMS said.

Renee Dustman
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Renee Dustman, BS, AAPC MACRA Proficient, is managing editor - content & editorial at AAPC. She holds a Bachelor of Science degree in Media Communications - Journalism. Renee has more than 30 years' experience in journalistic reporting, print production, graphic design, and content management. Follow her on Twitter @dustman_aapc.

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