Department of Health and Human Services

Office of Inspector General -- AUDIT

"Fallon Community Health Plan's Adjusted Community Rate Proposal Modifications for Contract Year 2004," (A-01-05-00512)

January 11, 2006

Complete Text of Report is available in PDF format (239 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


Our objective was to determine whether the Fallon Community Health Planís use of its Medicare Prescription Drug, Improvement, and Modernization Act (MMA) payment increases was adequately supported and allowable under MMA.  In general, Fallonís use of the $10.9 million MMA payment increase was adequately supported and in accord with MMA requirements.  The exception was that Fallonís estimate of $160,730 for subsidizing its membersí drug discount card purchases exceeded actual purchases.  As a result, Fallon received $154,970 more than it subsidized.  Fallon did not use these excess funds for other allowable purposes under MMA.  Instead, the funds were deposited into the corporate accounts.  We recommended that Fallon return the $154,970 or request permission from CMS to use the funds in a manner consistent with MMA.  Fallon concurred with the finding and indicated it would contact CMS.