The Opioid Epidemic: An Important Auditor Update

The Opioid Epidemic
An Important Auditor Update
Angie Caldwell, MBA, CPA
Consulting Principal
PYA, P.C.
Sarah Bowman, MBA, RHIA, CHC
Consulting Senior Manager
PYA, P.C.
1

Agenda
 An overview of the scope and history of the crisis
 The role of prescribing patterns
 The role of opioid manufacturers
 Current events and changes: Is there any good news?
 A description of affected risk areas that require internal controls
 Examples of monitoring for opioid crisis fraud and abuse cases:
What can CPAs do?
2

The Opioid Crisis: Overdose Deaths1
3
1. Centers for Disease Control and Prevention (2019) https://www.cdc.gov/drugoverdose/epidemic/index.html

Scope of the Crisis2,3,4
 In 2017, 70,237 Americans lost their lives to drug overdoses (up
from 63,000 in 2016)
 Of these, 47,600 (67.8%) were linked to opioids and 17,029 (24.2%)
were linked to prescription opioids
 On July 17, 2019, the CDC’s National Center for Health Statistics
released provisional counts of both reported (67,744) and
predicted (58,557) overdose deaths in the United States
4
2. Centers for Disease Control and Prevention (2019) https://www.cdc.gov/drugoverdose/data/statedeaths.html
3. National Institute on Drug Abuse (2019) https://www.drugabuse.gov/related-topics/trends-statistics/overdose-death-rates
4. Centers for Disease Control and Prevention (2019) https://www.cdc.gov/nchs/nvss/vsrr/drug-overdose-data.htm#dashboard

Some Success in Combating the Crisis?
5
 According to U.S. HHS Secretary Alex Azar on July 17, 2019:
o “America’s united efforts to combat the opioid crisis are working: Today,
[CDC’s] National Center for Health Statistics released data that showed a
5.1 percent decline in provisional counts of overdose deaths in the U.S.
between 2017 and 2018….
o The latest provisional data on overdose deaths show that America’s united
efforts to curb opioid use disorder and addiction are working. Lives are
being saved, and we’re beginning to win the fight against this crisis” 5
5. FierceHealthcare (2019) https://www.fiercehealthcare.com/practices/decline-opioid-prescriptions-translates-to-drop-drug-overdose-deaths-for-first-time?utm_source=internal

CDC’s Provisional Drug Overdose Deaths6
6
6. Centers for Disease Control and Prevention (2019) https://www.cdc.gov/nchs/nvss/vsrr/drug-overdose-data.htm#dashboard
Tennessee
Predicted Cases (December 2017): 1,850
Predicated Cases (December 2018): 1,939
Percent Change: 4.8%

Continued Increases in Tennessee (+8.6%)7
7

President Declares a Crisis
 On October 26, 2017, President Donald Trump declared a public
health emergency
 President’s Commission on Combating Drug Addiction and Opioid
Crisis issues preliminary report:
o Describes the overdose death toll as September 11 every three weeks
8

The Role of Prescribing Patterns8
 According to the CDC, the overall national opioid prescribing rate
has declined from 2012 to 2017; and in 2017, the prescribing rate
fell to the lowest it has been in 10 years at 58.7 prescriptions per
100 persons
 However, in 2017, prescribing rates continued to remain high in
certain areas across the country
o In 16% of U.S. counties, enough opioid prescriptions were dispensed for
every person to have one
o In 2017, the state of Tennessee had prescribing rates at 94.4 prescriptions
per 100 persons
9

And It Doesn’t Just Affect Our Patients…
10
9. MLive Michigan (2014) https://www.mlive.com/news/ann-arbor/2014/03/police_u-m_nurse_fatally_overd.html
10. MLive Michigan (2014) https://www.mlive.com/news/ann-arbor/2014/04/police_u-m_doctor_overdosed_on.html
11. Dallas News (2018) https://www.dallasnews.com/news/investigations/2018/12/02/two-nurses-died-overdoses-inside-dallas-hospital-went-wrong
12. NBC News (2018) https://www.nbcnews.com/storyline/va-hospital-scandal/opioid-theft-missing-prescriptions-prompts-investigation-va-hospitals-staff-n723291
9
10
12
11

And It Doesn’t Just Affect Our Patients (cont.)…
11
 Hospitals and health systems are seeing opioid addiction and
overdose in their providers
 The National Council of State Boards of Nursing (NCSBN) has
released multiple resources and educational materials on
substance use disorder in nursing and other healthcare staff

Case Example:
Ohio Doctor Charged with 25 Counts of Murder
 Ohio doctor accused of ordering excessive and potentially fatal
doses of opioids to dozens of near-death patients is facing multiple
counts of murder
o Patients were given 500-2,000 micrograms of fentanyl while 100
micrograms is normal for a patient, depending on their size and
circumstances
o 30 employees, including nurses and pharmacists, were placed on leave
12

Case Example:
Doctor Pleads Guilty to Fraud
 Massachusetts doctor was seeing 100+ patients a day:
o Writing prescriptions for oxycodone and other opioids without doing
exams or tests
o Wrote more oxycodone prescriptions in one month (over 1,000) than some
of the largest hospitals in Massachusetts
13

Case Example:
Physician Charged with Illegal Prescriptions
 Alabama physician charged with healthcare fraud:
o Saw 80 to 145 patients per day
o Wrote prescriptions for all patients seen
o Initial visits lasted only five minutes or less
o Follow-ups for medication refills lasted two minutes or less
o Physician did not obtain prior medical records and did not treat with
anything other than controlled substances
14

The Role of Opioid Manufacturers
 August 16, 2018
o President Trump calls on his attorney general to sue opioid makers, the
latest move by his administration to combat the highly addictive painkillers
linked to tens of thousands of U.S. deaths a year
o President Trump asked Attorney General Jeff Sessions to bring a “major
lawsuit” against drug companies that “are really sending opioids at a level
that it shouldn’t be happening”
15

76 Billion Oxycodone and Hydrocodone Pain Pills
in the United States from 2006 to 2012
16
 Database maintained by Drug Enforcement Agency (DEA) tracks
path of every single pain pill sold in the United States
 Just six companies distributed 75% of the pills from 2006 to 2012
and three companies manufactured 88% of the opioids for the same
period
 Volume of pills increased from 8.4 billion in 2006 to 12.6 billion in
2012
13. Washington Post (2019) https://www.washingtonpost.com/investigations/76-billion-opioid-pills-newly-released-federal-data-unmasks-the-epidemic/2019/07/16/5f29fd62-a73e-11e9-86dd-
d7f0e60391e9_story.html?noredirect=on&utm_term=.8fa1cc93fa17

Tidal Wave of Litigation
 The drug industry, including opioid painkiller manufacturers,
distributors, wholesalers, and pharmacy chains are facing a “tidal
wave” of litigation
 At least 30 states, cities, and counties have either filed lawsuits or
are formally recruiting lawyers to initiate legal actions
 Complainants argue that manufacturers used aggressive sales
tactics to boost revenues while downplaying the risks and turning a
blind eye to excessive orders
17

Case Example:
McKesson Corporation
 U.S. Department of Justice (DOJ) announces a $150 million
settlement14
o Case alleges McKesson failed to detect and report “suspicious orders”
for controlled substances distributed to independent and small chain
pharmacies
o Settlement requires McKesson to suspend sales of controlled substances
from distribution centers in Colorado, Ohio, Michigan, and Florida for
several years
18
14. DOJ (2019) https://www.justice.gov/opa/pr/mckesson-agrees-pay-record-150-million-settlement-failure-report-suspicious-orders

Case Example:
Boston Medical Center Study
 Study published in 2017 found that 1 in 12 doctors has received
money from drug companies marketing prescription opioid
medications15
 Further, 68,177 doctors received more than $46 million from drug
companies
 Doctors were paid the most to promote fentanyl
 Companies were not aggressively marketing tamper-proof versions
of the pills
19
15. Boston Medical Center (2017) https://www.bmc.org/news/press-releases/2017/08/09/one-12-doctors-accepts-payment-pharmaceutical-companies-related

Is There Any Good News?
 Opioid prescriptions are decreasing nationwide16
o Between 2013 and 2017, opioid prescriptions decreased by more than 55
million, a 22.2% decrease
o All 50 states have seen a decrease in opioid prescriptions over the last 5 years
o The nation saw a 9% decrease in prescriptions between 2016 and 2017 alone
20
16. The Visual Capitalist (2018) https://www.visualcapitalist.com/americas-opioid-epidemic/

States Recognizing and Embracing
Their Role in Combating the Crisis?17
21
17. OIG Final Report: Oversight of Opioid Prescribing and Monitoring of Opioid Use: States Have Taken Action to Address the Opioid Epidemic (2019) https://oig.hhs.gov/oas/reports/region9/91801005.pdf
 The Office of Inspector General (OIG) recently published a report
outlining steps many states have taken to address the opioid epidemic
 Eight states were included in the sample selected and have
demonstrated success in establishing:
o Opioid prescribing limits
o Requirements for review of prescription drug monitoring program (PDMP) data
o Methods for data analysis and provision of this data to prescribers
o Opioid-related training for providers
o System for sharing PDMP data with other states

Prescription Drug Monitoring Programs (PDMPs)
 PDMPs are being used more than ever.
o PDMPs are databases used to help inform physicians’ clinical decisions
o More than 1.5 million physicians and other healthcare professionals are
registered in state-based PDMPs
o State PDMPs were used more than 300.4 million times in 2017
o Pharmacists can use these databases to access records of any patient
controlled prescription fills across pharmacies and prescribers
22

PDMPs (cont.)18
 In Tennessee, prescribers are required to check PDMP data:
o Before prescribing certain controlled substances (including opioids) to a
patient at the beginning of a new episode of treatment
o If the prescriber is aware or reasonably certain a person is attempting to
obtain a controlled substance, including opioids, for illicit purposes
23
18. OIG (2019) https://oig.hhs.gov/oas/reports/region9/91801005.pdf

PDMPs (cont.)19
 In West Virginia, prescribers are required to check the PDMP data
when issuing an initial prescription; if the prescriber continues to
treat the patient with a controlled substance, they must check the
PDMP data at least annually (or at least every 90 days if prescriber is
a physician in a licensed pain management clinic)
 Both Tennessee and West Virginia are now sharing their PDMP data
with others states via PMP InterConnect
24
19. OIG (2019) https://oig.hhs.gov/oas/reports/region9/91801005.pdf

State Legislation Regarding Prescribing Limits20
 In Tennessee, initial opioid prescribing for acute pain in an opioid
naïve patient is 3 days
o Medicaid policy states that for first-time or non-chronic opioid users, prescriptions
are covered for up to 15 days in a 180-day period at a maximum dosage of 60
MME per day.
 In West Virginia, state law limits opioid supply to no more than:
o 4-day supply in emergency or urgent care setting
o 3-day supply for minors
o 3-day supply for dentists
o 7-day supply for prescribers in non-emergency settings issuing initial opioid
prescription
25

Data Analysis21
 Tennessee analyzes top prescribers of controlled substances and
releases report cards to prescribers identifying those prescribing
controlled substances at a high rate
o Data analytics are also used to identify specific providers for engagement
and outreach
 West Virginia analyzes claims data and creates utilization reports to
allow for identification of at-risk Medicaid beneficiaries and high
prescribing physicians
o The state also creates reports that detail the percentage change in the
population’s MME use beginning at intake and organizes this information
according to patient risk assessment levels
26

Federal Programs and Initiatives
 Attorney General Jeff Sessions announces new tools:
o Operation Synthetic Opioid Surge, or S.O.S.
o Adding prosecutors to high-risk areas to support the arrest, prosecution, and conviction
of fentanyl dealers
o Opioid Fraud and Abuse Detection Unit
o A data analytics program that focuses specifically on opioid-related healthcare fraud
27

Opioid Fraud and Abuse Detection Unit
 New DOJ pilot program:
o Will use data to identify those worthy of prosecution
o Data analytics team will identify:
o Which physicians are writing opioid prescriptions at a rate exceeding peers
o How many of a doctor’s patients died within 60 days of an opioid prescription
o Average age of patients receiving prescriptions
o Pharmacies that dispense disproportionately large amounts of opioids
o Regional spots for opioid issues
28

Opioid Fraud and Abuse Detection Unit (cont.)
 In July 2017, DOJ conducted nationwide sweep:
o More than 400 individuals, including doctors, nurses, and licensed medical
professionals charged with $1.3 billion in Medicare fraud schemes
o One in four cases involved opioid-related crimes22
 In 2018, another mass enforcement effort undertaken:
o DOJ coordinated the efforts of more than 1,000 state and federal law
enforcement agents to charge more than 600 defendants, including 76
doctors, with more than $2 billion in fraud
o On October 25, 2018, the DOJ created the Appalachian Regional Rx Opioid
Strike Force, indicating an allocation of significant resources (Georgia not
listed in included states)23
29
22. DOJ (2019) https://www.justice.gov/usao-mdfl/pr/national-health-care-fraud-takedown-results-charges-against-over-412-individuals
23. DOJ (2019) https://www.justice.gov/usao-mdfl/pr/national-healthcare-fraud-takedown-results-charges-against-601-individuals-responsible

Physician Education
 The American Medical Association Opioid Task Force encourages all
physicians to enhance their education
o In 2017, more than 549,700 physicians and other healthcare professionals
completed continuing medical education training
o In 2016 and 2017, physicians and other healthcare professionals used the
AMA opioid microsite website to access education and training resources
30

Preventive and Alternative Options
 Physicians continue to increase access to life-saving naloxone (a
narcotic blocker used to treat narcotic drug overdose)
o AMA Opioid Task force and U.S. Surgeon General urges greater use of naloxone
o Naloxone prescriptions more than doubled in 2017
 Physicians are helping to improve access to high-quality treatment for
opioid use disorder
o Presently, more than 50,000 physicians are certified to provide in-office
buprenorphine for the treatment of opioid use disorder across all 50 states
31

Consumer Awareness
 The CDC’s Rx Awareness campaign focuses on adults ages 25-54 who
have taken opioids at least once for medical or nonmedical use
 The goal of the campaign is to:
o Increase awareness that prescription opioids can be addictive and dangerous
o Increase the number of individuals who avoid using opioids nonmedically
(recreationally) or who choose options other than opioids for safe and
effective pain management24
32
24. Centers for Disease Control (2019) https://www.cdc.gov/rxawareness/pdf/RxAwareness-Campaign-Overview-508.pdf

However…
 There is new concern that patients are
turning more to illegal opioids like fentanyl
to fill the gap
 Deaths from prescription opioids, as well
as heroin and illicit fentanyl, continue
to rise
 Decreasing prescriptions alone
will not end the epidemic
 Despite safeguards, many hospitals still
experience theft and drug diversion
33

Procurement and Dispensing Risk Areas
 Purchase orders and packing slips
 DEA 222 forms and signatures
 Product container tampering
 Multidose vial diversion
 Replacement of prepared
contents
35

Inventory Management Risk Areas
 Access to medication storage
 Method of access
 Time/purpose of access
 Product tampering
36

Prescribing Risk Areas
 Prescription pad access
 Self-prescribing
 Verification of verbal orders
37

What Industries
Are Affected?
 PHYSICIAN
PRACTICES
 HOSPITALS
38
 PHARMACIES
 DISTRIBUTORS
 WHOLESALERS
 MANUFACTURERS

AMA Recommendations
 All public and private payers should ensure that their formularies
include FDA-approved forms of medication and assisted treatment
 Policymakers and regulators should increase oversight and enforcement
of parity laws for mental health and substance abuse disorders
 All public and private payers, and pharmacy benefit management
companies, must ensure that patients have access to affordable,
non-opioid pain care
 Put an end to the stigma; patients with pain or substance use disorders
deserve the same care and compassion as any other patient with a
chronic medical condition
39

How Is the Accounting
Industry Involved?
 CHIEF FINANCIAL
OFFICERS
 CONTROLLERS
40
 INTERNAL AUDITORS
 EXTERNAL AUDITORS
 COMPLIANCE OFFICERS
 GOVERNMENT AUDITORS
 GOVERNMENT
INVESTIGATORS
 CPAS SERVING AS:

Focus on the Flow of Money
 Medicare spending for Part D drugs has risen more than $10 billion
a year
 Overall spending for abused opioids exceeded $4 billion
 Result – federal and state officials are committed to audits and
investigations:
o Will address the flow of money from start to finish
o Practitioners can expect increased audit and investigative scrutiny of tax
dollars through Medicare, Medicaid, Tricare, and private insurance
41

What Can CPAs Do?
 Do the numbers add up?
 Can these increased volumes and revenues be
supported by the current staffing?
 Is it possible for one physician to see 100+
patients per day?
42

What Can CPAs Do? (cont.)
 For healthcare entities:
o Monitor drug costs, particularly opioid drug costs
o Investigate significant changes in drug expenses
o Consider using internal data to identify “superprescribers” of opioids
o Sharp increases in drug costs can highlight inventory issues
o Regardless of quantities of opioids in inventories, sufficient physical and
financial controls needed to mitigate opportunities for theft and misuse
o Internal audits should be used to test these controls
43

 Pharmaceutical company payments:
o Investigate increases in revenue for opioids
o As mentioned, 1 in 12 doctors have received some sort of payment from
drug companies
o Although most payments are small (meals, drinks, etc.), research indicates
pharmaceutical payments result in increased prescribing of marketed
medication
o Review CMS’ Open Payments Data website25 to search for payments made
by drug companies to physicians and teaching hospitals
44
25. Available at: www.openpaymentsdata.cms.gov

 To avoid litigation:
o Verify the legality of any payments your entity
receives from drug companies
o Ensure the payments are reported in accordance
with the Physician Payments Sunshine Act
o If you identify any undefined or uncategorized
revenue streams, ask questions about the origin
of the revenue
45

 Urine drug screens and testing revenue:
o Payers view the billing of urine drug screens as unnecessary and fraudulent
when the documentation does not clearly indicate medical necessity per
their coverage guidelines
o Guidelines have changed significantly as opioid prescription use has
increased
o If significant increase is seen, confirm that the appropriate monitoring and
auditing is performed
o Ensure that documentation supports the order per state and federal
governmental and payer guidance
o Ensure there are no medical necessity concerns
46

 Working for a laboratory:
o Monitor the marketing department’s spending on complimentary supplies
that are provided to physicians and other ordering providers
o In 2015, a laboratory paid $256 million to settle claims for unnecessary
drug testing
o The company had provided free testing cups to physicians in exchange for referrals
o Free supplies to physicians, which may be considered inducement for referrals, are not
permitted in the healthcare industry
47

 A robust monitoring process is important in identifying potential
fraud, waste, abuse, and compliance risks
 It is just as important to have communication protocols in place
 Work with your organization’s compliance officer to determine
potential indicators of an issue
 Include indicators that affect entity’s revenue, legal, and compliance
issues
48

 If an issue is identified:
o Notify your organization’s compliance officer
o Your knowledge in accounting coupled with healthcare
experience, can help identify potential fraud and abuse
to mitigate risks
49

Thank you!
51
Angie Caldwell
MBA, CPA
Principal
acaldwell@pyapc.com
Sarah Bowman
MBA, RHIA, CHC
Senior Manager
sbowman@pyapc.com

About PYA
PYA is a national healthcare advisory services firm providing
consulting, audit, and tax services including:
52
 Regulatory compliance
 Risk assessments
 IT advisory
 Mergers and acquisitions
due diligence
 Fair market value
assessments
 Business valuations
 Strategic planning
 Operations optimization
 Physician compensation
design and strategy

SAVE THE DATES!
53
September 20-23, 2020
AHIA 39th
Annual
Conference
Sheraton Seattle Hotel

The Opioid Epidemic: An Important Auditor Update

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