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Audit (A-07-12-06038)

10-30-2013
Medicare Improperly Paid Millions of Dollars for Prescription Drugs Provided to Unlawfully Present Beneficiaries During 2009 Through 2011

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Summary

Federal health care benefits are not allowable for services provided to unlawfully present beneficiaries. The Centers for Medicare & Medicaid Services (CMS) has specifically implemented a policy that bars Federal payments for health care services provided to unlawfully present beneficiaries in Medicare Parts A and B. Furthermore, an individual is eligible for Part D benefits if he or she is entitled to Medicare benefits under Part A or enrolled in Part B and lives in the service area of a Part D plan. Thus, Federal law prohibits Part D payments for prescription drugs provided to unlawfully present beneficiaries.

CMS did not have a policy addressing payments for unlawfully present beneficiaries under Medicare Part D that was equivalent to the existing policy that covers payments for these beneficiaries under Parts A and B. Without such a policy, CMS incorrectly treated unlawfully present beneficiaries as eligible for Part D benefits and did not prevent Part D payments on behalf of them. Of the prescription drug event (PDE) records submitted by Part D sponsors for calendar years 2009 through 2011, CMS inappropriately accepted 279,056 PDE records with unallowable gross drug costs totaling $29.0 million on behalf of 4,139 unlawfully present beneficiaries and used those records to make its final payment determinations to sponsors.

Because CMS did not have such a policy, it did not have internal controls to identify and disenroll unlawfully present beneficiaries and to automatically reject PDE records associated with them.

We recommended that CMS (1) resolve improper Part D payments made for prescription drugs provided to unlawfully present beneficiaries, (2) develop and implement controls to ensure that Medicare does not pay for prescription drugs for unlawfully present beneficiaries, and (3) identify and resolve improper payments made for prescription drugs provided to unlawfully present beneficiaries for periods after the period of this review but before implementation of policies and procedures. CMS concurred with our first two recommendations but did not concur with our third recommendation. Although CMS did not concur with our third recommendation, we maintain that once CMS has begun the process of recovering improper payments, it should continue and resolve any improper payments that were incurred after the period of this review until system changes are in place that would effectively prohibit the coverage of these beneficiaries under Medicare Part D.

Copies can also be obtained by contacting the Office of Public Affairs at Public.Affairs@oig.hhs.gov.

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