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EXECUTIVE SUMMARY:
Our objective was to determine whether the Fallon Community Health Plan’s use of its Medicare Prescription Drug, Improvement, and Modernization Act (MMA) payment increases was adequately supported and allowable under MMA. In general, Fallon’s use of the $10.9 million MMA payment increase was adequately supported and in accord with MMA requirements. The exception was that Fallon’s estimate of $160,730 for subsidizing its members’ 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.