Marketers’ access to Medicare data probed
WASHINGTON — A government watchdog is launching a nationwide investigation into how marketers, aided by apparent misuse of a government system, may be getting personal Medicare information of seniors, officials said Friday.
The audit will be formally announced next week, said Tesia Williams, a spokeswoman for the Health and Human Services inspector general’s office. It follows a narrower investigation that found that an electronic system for pharmacies to verify Medicare coverage was being used for potentially inappropriate searches seemingly tied to marketing. It raised red flags about possible fraud.
The watchdog agency’s decision comes amid a wave of relentlessly efficient telemarketing scams targeting Medicare recipients and involving everything from back braces to DNA cheek swabs.
For years, seniors have been admonished not to give out their Medicare information to people they don’t know. But a report on the inspector general’s initial investigation, also released Friday, details how sensitive details can still get to marketers. It can happen even when a Medicare beneficiary thinks he or she is dealing with a trustworthy entity such as a pharmacy or doctor’s office.
Key personal details gleaned from Medicare’s files can then be cross-referenced with databases of individual phone numbers, allowing marketers to home in with their calls.
The initial audit focused on 30 pharmacies and other service providers that were frequently pinging a Medicare system created for drugstores.
The electronic system is intended to be used to verify a senior’s eligibility at the sales counter. It can validate coverage and personal details on millions of individuals. Analyzing records that covered 2013-15, investigators discovered that most of the audited pharmacies, along with a software company and a drug compounding service also scrutinized, weren’t necessarily filling prescriptions.
Medicare stipulates that the electronic queries — termed “E1 transactions”— are supposed to be used to bill for prescriptions. But investigators found that some pharmacies submitted tens of thousands of queries that could not be matched to prescriptions. In one case, a pharmacy submitted 181,963 such queries but only 41 could be linked to prescriptions.
The report found that on average 98% of the electronic queries from 25 service providers in the initial audit “were not associated with a prescription.” The inspector general’s office did not identify the pharmacies and service providers.
Pharmacies are able to access coverage data on Medicare recipients by using a special provider number from the government.
But investigators found that four of the pharmacies they audited allowed marketing companies to use their provider numbers to ping Medicare. “This practice of granting telemarketers access to E1 transactions, or using E1 transactions for marketing purposes puts the privacy of the beneficiaries’ [personal information] at risk,” the report said.
Some pharmacies also used seniors’ information to contact doctors treating those beneficiaries to see if they would write prescriptions. Citing an example, the report said, “The doctor often informed [one] provider that the beneficiary did not need the medication.”
The inspector general’s office said it is investigating several health care providers for alleged fraud involving E1 transactions. Inappropriate use of Medicare’s eligibility system is probably just one of many paths through which telemarketers and other sales outfits can get sensitive personal information about beneficiaries, investigators said.
A group representing independent drugstores expressed support for the investigation. “It’s about time,” said Douglas Hoey, CEO of the National Community Pharmacists Association. “We welcome the effort to clean up this misbehavior.” Hoey said some local pharmacists have complained of what appear to be sophisticated schemes to poach customers who take high-cost drugs.
The watchdog agency began looking into the matter after the Centers for Medicare and Medicaid Services, or CMS, asked for an audit of a mail order pharmacy’s use of Medicare’s eligibility verification system.
Officials gave no timetable for completing the audit.