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Highlights

The Medicare Part D program, administered by the Department of Health and Human Services' (HHS) Centers for Medicare & Medicaid Services (CMS), provides a voluntary, outpatient prescription drug benefit for eligible individuals 65 years and older and eligible individuals with disabilities. CMS contracts with private companies--such as health insurance companies and companies that manage pharmacy benefits--to provide Part D prescription drug plans for Medicare beneficiaries. These companies are referred to as Part D sponsors. About 27 million individuals were enrolled in Medicare Part D as of December 2009, and estimated Medicare Part D spending was $51 billion in fiscal year 2009. Because of Medicare's vulnerability to fraud, waste, and abuse, GAO has designated Medicare as a high-risk program. We and HHS's Inspector General have previously reported that the size, nature, and complexity of the Part D program make it a particular risk for fraud, waste, and abuse. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which established the Part D program, requires all Part D sponsors to have programs to safeguard Part D from fraud, waste, and abuse. CMS is responsible for managing and overseeing the Part D program. CMS regulations require Part D sponsors to have compliance plans that must include measures that detect, correct, and prevent fraud, waste, and abuse. In April 2006, CMS issued guidance in chapter 9 of its Medicare Part D Prescription Drug Benefit Manual on the seven required elements of these plans. These compliance plans, which must be approved by CMS, articulate policies, processes, and procedures for Part D sponsors to detect, correct, and prevent fraud, waste, and abuse. Implementation of a compliance plan includes conducting the activities described in the plan and developing comprehensive written procedures for activities referenced in the plan. CMS oversees Part D sponsors' fraud and abuse programs and may conduct audits to ensure that sponsors are in compliance with program requirements. Specifically, the Center for Medicare, Program Compliance and Oversight Group (CM/PCOG)--the lead office for CMS's Part D audits (including compliance plan audits) and enforcement of program requirements--coordinates with the Center for Program Integrity (CPI)--the focal point for program integrity, fraud, and abuse issues--to oversee fraud and abuse program compliance. CMS has contracted with Medicare Drug Integrity Contractors (MEDICs) to support its Part D audit efforts. Congress asked us to examine the extent of CMS's implementation of planned oversight of Part D sponsors' compliance plans to ensure that sponsors have effective programs in place to protect Part D from fraud, waste, and abuse. Specifically, this report provides an update on the status of CMS's implementation of on-site audits of sponsors' compliance plans that the agency described in its March 2010 testimony.

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