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Most CMS Audits of Medicare Part D Prescription Drug Plans Revealed Deficiencies, Many Plans Yet to Be Audited

Written by Roy Albert and Susan Berson

The HHS OIG recently issued a Report concluding that the vast majority of audited Medicare Part D Prescription Drug Plans (PDP) in existence between 2006 and 2009 had problems, many of which resulted from beneficiaries’ coverage status or payment issues.  During this same time period, a number of other PDPs were never audited.  The HHS OIG further concluded that CMS did not have evidence to show that audited PDPs instituted corrective actions as a result of adverse findings. 

The Report focuses on stand-alone PDPs and seven types of audits (not including financial audits) used by CMS between 2006 and 2009.  The results of the review led the HHS OIG to recommend that CMS: 

  • establish a comprehensive Part D auditing strategy that includes timely auditing of all sponsors; and
  • ensure that evidence is available to show that PDPs implemented corrective actions.

CMS only partially concurred with the HHS OIG’s first recommendation, stating that “a comprehensive oversight strategy, developed in coordination with the offices responsible for the management of the Part D program, is more effective than an auditing strategy” and that “auditing is just one facet of CMS’ overall oversight strategy.”  CMS concurred with the HHS OIG’s second recommendation and stated that CMS now maintains documentation of corrective actions implemented for all audits.  

This Report demonstrates that many sponsors of PDPs did not fully comply with Medicare Part D’s comprehensive statutory and regulatory requirements during the early stages of the Program.  Sponsors should be aware that the Report’s findings could result in greater audit activity and increased oversight of PDPs from CMS and the HHS OIG.

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Authors

Karen S. Lovitch

Chair, Health Law and Health Care Enforcement Defense Practices

Karen advises industry clients on regulatory, transactional, operational, and enforcement matters. She has deep experience handling FCA investigations and qui tam litigation for laboratories and diagnostics companies.

Susan W. Berson

Member / Managing Member, DC Office; Chair, Health Law, Communications, Antitrust & ML Strategies Division

Susan advises health care industry clients and private equity firms in complex and high stakes transactions. She focuses on challenges facing managed care organizations, specialty pharmacies, and pharmacy benefit managers.