In late 2016, the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS) released its 2017 Work Plan. The plan lists the topics in which it sees the greatest potential for fraud under federal health care programs, primarily Medicare and Medicaid. The OIG updates its Work Plan throughout the year as conditions warrant.

The plan is extensive, and for that reason we are presenting the information in several topical parts.

Part III in our series of alerts is focused on prescription drugs. The OIG oversees issues related to prescription drugs through both Medicare Part D and Medicaid. The Work Plan sets out targeted areas under both programs, some of which are described below.

Medicare Part D 

Medicare Part D subsidizes the costs of prescription drugs and prescription drug insurance premiums. With the explosion in drug costs, the OIG is taking a close look at many possible sources of fraud and abuse in the program, including: 

  • Questionable billing for compounded topical drugs
  • OIG will conduct reviews of pharmacies for compliance with Part D billing requirements and the submission of prescription drug event records
  • Part D payments for enrollee prescriptions occurring after their date of death
  • Review of Eligibility Verification (E1) transactions
  • Review of the substantial increase in price for the most-commonly prescribed brand name drugs
  • Enrollment of Pharmacies in Medicare Fee-for-Services as a means of more efficient oversight of Part D
  • Conflict of interest issues with Pharmacy and Therapeutics Committees (PTCs) and the placement of drugs on Medicare Part D plan approved drugs lists


Because the federal government and States jointly fund Medicaid, the States have a great deal of flexibility in structuring their Medicaid programs within broad federal guidelines.  Nonetheless, OIG maintains a significant role in protecting the Medicaid program from fraud, waste, and abuse, particularly in regard to prescription drugs, including the following target areas noted in the Work Plan:

  • An examination of provider compliance with Medicaid billing requirements for breast cancer drug Herceptin – a drug that has also had compliance issues under the Medicare program
  • OIG plans a number of reviews of State policies regarding prescription drugs, including
    • Whether the Medicare rules for the processing of physician-administered drug claims for dual eligible enrollees (those enrolled in both Medicare and Medicaid) are impacting the States’ ability to correctly invoice Medicaid drug rebates from drug manufacturers
    • A review of whether payments to Managed Care Organizations (MCO) have included reimburse for drugs that are not included under the Medicaid program
    • An examination of the specialty drug pricing and Medicaid reimbursement policies
    • A review of drug manufactures’ treatment of the sales of authorized generics in their calculations under the Medicaid drug rebate program and whether those calculations are reducing manufacturer rebate payments to the States

Additional alerts highlighting important aspects of the OIG’s 2017 Work Plan are forthcoming. Should you have questions regarding Part III of our series, please do not hesitate to contact any of the FisherBroyles Health and Pharmacy Law attorneys listed below.

Amy Butler

Anthony Calamunci

Brian E. Dickerson

Nicole Hughes Waid

Katy Wane