Call it drugs for the departed: A quirky bureaucratic rule led Medicare's prescription drug program to pay for costly medications even after the patients were dead.
That head-scratching policy is now getting a second look.
A report released Friday by the Health and Human Services Department's inspector general said the Medicare rule allows payment for prescriptions filled up to 32 days after a patient's death — at odds with the program's basic principles, not to mention common sense.
"Drugs for deceased beneficiaries are clearly not medically indicated, which is a requirement for (Medicare) coverage," the IG report said. It urged immediate changes to eliminate or restrict the payment policy.
Medicare said it's working on a fix.
Investigators examined claims from 2012 for a tiny sliver of Medicare drugs — medications to treat HIV, the virus that causes AIDS — and then cross-referenced them with death records. They found that the program paid for drugs for 158 beneficiaries after they were already dead. The cost to taxpayers: $292,381, an average of $1,850 for each beneficiary.
Medicare's "current practices allowed most of these payments to occur," said the report. It underscored that the problem extends beyond HIV drugs.
Investigators found that of 348 HIV prescriptions dispensed for dead beneficiaries, nearly half were filled more than a week after the patient died. Sometimes multiple prescriptions were filled on behalf of a single dead person.
Among the examples investigators documented:
— Medicare paid $1,200 for a prescription for a 90-year-old Boston-area beneficiary that was dispensed 25 days after he died. The man had no history of HIV in his Medicare record.
— A Miami pharmacy filled a prescription for an 80-year-old beneficiary 16 days after he died. Medicare paid $1,800 for two HIV drugs. That very day, the same pharmacy dispensed the same two drugs on behalf on an 81-year-old woman who died 10 days earlier. Neither had a history of HIV in their Medicare records.
Investigators don't know what happened to the medications obtained on behalf of dead people, but some may have been diverted to the underground market for prescription medicines. The report said HIV drugs can be targets for fraud because of their high cost.
Medicare is the government's premier health insurance program, providing coverage to about 55 million seniors and disabled people. Prescription coverage delivered through private insurance plans began in 2006 as a major expansion of the program. But it's also been a target for scams.
The report did not estimate the potential financial impact across the $85 billion-a-year Medicare prescription program known as Part D. But investigators believe the waste may add up to millions of dollars.
"The exposure for the entire Part D program could be significant," said Miriam Anderson, team leader on the report. "The payment policy is the same for all drugs, whether they are $2,000 drugs to treat HIV or $4 generic drugs."
In a formal response, Medicare agreed with the investigators' recommendations.
"After reviewing this report, (Medicare) has had preliminary discussions with the industry to revisit the need for a 32-day window," wrote Marilyn Tavenner, the Obama administration's Medicare chief.
Medicare had originally maintained that the date of service listed in the billing records could instead reflect when a pharmacy submitted bills for payment. That billing date might have actually occurred after a prescription was filled, since some nursing home and institutional pharmacies submit their bills in monthly bundles.
However, the inspector general's investigators found that about 80 percent of the prescriptions for dead beneficiaries were filled at neighborhood pharmacies, undercutting Medicare's first explanation.
Investigators said they stumbled on the billing problem during an examination of Medicare coverage for AIDS drugs. That previous investigation raised questions about expensive medications billed on behalf of nearly 1,600 Medicare recipients. Some had no record of an HIV diagnosis, but were prescribed the drugs anyway.
Prescription drug fraud has many angles. The high prices of certain drugs can create an underground market. And some medications, like painkillers and anti-anxiety pills, are sought by people with substance-abuse issues.