Medicare Part D:

Some Plan Sponsors Have Not Completely Implemented Fraud and Abuse Programs, and CMS Oversight Has Been Limited

GAO-08-760: Published: Jul 21, 2008. Publicly Released: Aug 25, 2008.

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The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) established a voluntary outpatient prescription drug benefit, known as Medicare Part D. The Centers for Medicare & Medicaid Services (CMS) contracts with private companies to serve as Part D sponsors and administer the Part D prescription drug benefit plans. To protect beneficiaries and the fiscal integrity of the program, the MMA requires Part D sponsors to implement programs to control for fraud and abuse in Part D. Subsequent regulations and guidance from CMS contain requirements and recommended measures for these programs. This report examines (1) the extent to which certain Part D sponsors have implemented programs to control fraud, waste, and abuse and (2) the extent of CMS's oversight of Part D sponsors' programs to control fraud, waste, and abuse. GAO conducted on-site reviews of five of the largest Part D sponsors' fraud and abuse programs. GAO also interviewed officials from CMS and reviewed CMS documents.

The five Part D sponsors in GAO's review had not completely implemented all of CMS's required compliance plan elements and selected recommended measures for Part D fraud and abuse programs. All Part D sponsors had completely implemented the requirements and selected recommendations for three of the seven required compliance plan elements. However, Part D sponsors varied in their implementation of the remaining required elements and selected recommended measures. CMS oversight of Part D sponsors' fraud and abuse programs has been limited. To date, CMS's activities have been limited to the review and approval of sponsors' fraud and abuse program plans submitted as part of the initial Part D applications. For example, CMS officials reported that they worked with sponsors to help them develop fraud and abuse program plans that met the agency's compliance plan requirements and recommendations specific to fraud and abuse. However, CMS has not conducted oversight to assess Part D sponsors' implementation of fraud and abuse programs. Officials from CMS stated that the agency had not audited sponsors' implementation of fraud and abuse programs in 2007, and as of April 2008, no audits of these programs had been conducted.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In the fall of 2008, CMS complied with the recommendation by initiating compliance plan audits of Part D Sponsors to ensure they were fulfilling CMS requirements regarding conducting internal investigations of potential fraud and abuse, developing and taking appropriate corrective actions, and making referrals to CMS for further investigation. As a requirement of the audit, Part D sponsors had to demonstrate how they implemented their compliance plan: to meet the statutory and regulatory requirements; and to identify, prevent and correct fraud, waste and abuse in their operations and the operations of their first tier, downstream and related entities.

    Recommendation: To help safeguard the Medicare Part D program from fraud, waste, and abuse, the Administrator of CMS should ensure that CMS conducts timely audits of Part D fraud and abuse programs to monitor sponsors' implementation of these programs.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services


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