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Audit (A-18-08-30102)

06-01-2010
Medicare Part D – Prescription Drug Event Reconciliation Process

Executive Summary

We contracted with a certified public accounting firm to audit CMS’s Medicare Part D Prescription Drug Event (PDE) reconciliation process. CMS’s reconciliation process compares estimated subsidy payments made to plan sponsors throughout the year with the cost data submitted by plan sponsors through PDE records and direct or indirect remuneration (DIR) data to determine any residual payments required by CMS to plan sponsors or plan sponsors to CMS.

The audit focused on understanding the design and effectiveness of CMS’s controls to (1) accurately calculate and track monthly plan sponsor payments, (2) identify incomplete and/or inaccurate PDE records received, and (3) determine the completeness of PDE records before yearend reconciliation to determine risk-sharing amounts and adjustments to risk corridors.

The audit recommended that CMS (1) strengthen controls over the bid review and audit process, (2) improve controls over the accuracy and completeness of PDE and true out-of-pocket accumulation, (3) strengthen controls to ensure completeness and accuracy of DIR data before reconciliation, and (4) conduct more plan sponsor audit procedures throughout the benefit year. CMS generally agreed with the recommendations.

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