Control of Fraud, Waste, and Abuse in Medicare Part D

The MMA includes a requirement that all Part D sponsors have a program  to control fraud, waste, and abuse in Part D; CMS regulations establish  the requirements for comprehensive compliance plans for Part D plan  sponsors. The Part D Sponsors We Reviewed Had Not Completely Implemented CMS’s Required Elements and Selected Recommended Measures for Part D Fraud and Abuse Programs

The five Part D sponsors we reviewed had not completely implemented all  of CMS’s seven required compliance plan elements and selected  recommended measures for Part D fraud and abuse programs. However, Part D  sponsors varied in their implementation of the remaining required  elements and selected recommend measures. CMS’s Activities Have Been Limited to the Initial Review and Approval of the Plans for Part D Sponsors’ Fraud and Abuse Programs

CMS’s oversight activities to date have been limited to review and  approval of Part D sponsors’ compliance plans detailing their fraud and  abuse program plans submitted as part of their initial Part D sponsor  applications. Rather than disapproving these sponsors’ fraud and abuse  program plans, CMS officials reported that they worked with the sponsors  to help them develop fraud and abuse program plans that would be  approved in that first year. In spite of this risk and 3 years after the  start of the Part D program, CMS has not conducted oversight activities to  monitor sponsors’ implementation of fraud and abuse programs. In particular, the agency reported that it would  conduct audits of fraud and abuse programs in 2007. CMS disagreed with our finding that the agency’s oversight has been  limited. Appendix I: Methodology for Examining Certain Sponsors’ Implementation of Fraud and Abuse Programs for Part D

To examine the extent to which certain Part D sponsors implemented  programs to control fraud, waste, and abuse, we conducted on-site  reviews at five Part D sponsors. For these on-site reviews, we developed a data collection instrument  based on: (1) the required compliance plan elements and certain  recommended measures for fraud and abuse programs outlined in  regulations and chapter 9 of the Part D Prescription Drug Benefit Manual  and (2) additional input provided by the Centers for Medicare & Medicaid  Services (CMS).
Why GAO Did This Study

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.

What GAO Found

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.