State Prescription Forms Reducing Fraud and Abuse

Albany, NY, July 31, 2007 – A law that requires doctors to use an official state prescription form for all written prescriptions has generated $60 million in Medicaid fraud savings in the first six months of accounting oversight.

The state's expanded Official Prescription Program requires the use of tamper-proof state prescription forms for all non-electronic prescriptions. The forms, which are provided without charge to practitioners, contain state-of-the-art security features that deter alteration, counterfeiting and forgery. Each prescription form contains a unique identifier number, which can be tracked through New York's claims system. The serial numbers of lost or stolen prescription forms are posted on the State Health Department's Web site, where they can be reviewed by pharmacists before dispensing a prescription.

"This program is a powerful tool in reducing prescription fraud, which drives up health-care costs and threatens public safety by diverting drugs from legitimate medical use," said State Health Commissioner Richard F. Daines, M.D. "At the same time, taxpayers are seeing direct savings in Medicaid spending. Fraud deterrence and detection are part of our effort to ensure that the State's Medicaid dollars are spent wisely, for quality health care."

The State Office of Medicaid Inspector General (OMIG) calculates Medicaid fraud savings based on the dollar value of prescription claims that are rejected because they do not contain a prescription serial number. The OMIG began reporting savings from the program in January.

In addition to identifying fraudulent prescriptions, tracking features allow the Department to inform doctors when a patient has obtained controlled substances from multiple practitioners over a short period of time, a practice known as "doctor shopping." The medical community has embraced the notification program, which includes a detailed drug utilization review as well as resource information for the practitioner on how to arrange substance abuse rehabilitation treatment for the patient when deemed appropriate.

Established by Public Health Law in 1972, New York's Official Prescription Program initially covered only Schedule II Controlled Substances, such as morphine. In 1989 benzodiazepines – drugs to treat anxiety, seizures and insomnia – were added. Legislation in 2004 required the program to begin covering all written prescriptions on a phased-in schedule. The program was fully implemented for physicians in April 2006, and for hospitals and non-profit diagnostic and treatment centers by April 2007.

At the start of the Official Prescription Program in the early 1970s, the Department of Health was issuing about 750,000 official prescription forms annually. By 2004, the Department was issuing approximately 8 million a year. Since January 2005, the Department has distributed more than 240 million official prescription forms to more than 97,000 registered practitioners and 2,100 registered health-care facilities.

The State Health Department's Bureau of Narcotic Enforcement analyzes data submitted under the program in connection with its investigations and responsibilities to combat drug diversion and abuse.

"The Official Prescription Program is a vital tool for protecting New Yorkers from the dangers of this type of drug abuse," said Bureau Director James Giglio.

In addition to the Medicaid savings, the Bureau of Narcotic Enforcement estimates the program is also generating $75 million annually in private-sector savings through the reduction in fraudulent prescription claims to health-care plans, although no hard data is available from private insurers.