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Audit (A-07-10-06004)

12-23-2011
Review of Excluded Providers in the Medicare Part D Program

Executive Summary

Contrary to Federal law, CMS accepted some prescription drug event (PDE) data submitted by sponsors for prescriptions written under the Medicare Part D program by excluded providers and used this PDE data to adjust Medicare Part D payments to sponsors at the end of the plan year. Of approximately $185 billion in gross drug costs included in sponsors' PDE data for calendar years 2006 through 2008, CMS accepted PDE data with gross drug costs totaling $15.1 million for prescriptions written by excluded providers. We also found that CMS accepted PDE data with gross drug costs totaling nearly $2 million for prescriptions that may have been written by excluded providers.

Excluded providers are physicians or other health care professionals who are excluded from Federal health care programs. Federal law prohibits payment under Federal health care programs for prescriptions written by excluded providers when the person dispensing the prescription knows or has reason to know of the exclusion. CMS maintains a database of excluded providers, the Medicare Exclusion Database (MED).

CMS accepted PDE data submitted by sponsors for prescriptions written by excluded providers because it had inadequate internal controls in place during our review. Specifically, CMS did not provide sponsors with access to the MED to accurately and effectively identify excluded providers. In addition, CMS allowed sponsors to use State license numbers, which are not unique identifiers, and did not have an edit in place to reject PDE data submitted by sponsors for prescriptions written by excluded providers.

We recommended that CMS (1) resolve improper Part D payments made for prescriptions written by excluded providers, reopen and revise calendar year 2006 through 2008 final payment determinations to remove prescriptions written by excluded providers; and (2) strengthen internal controls to ensure that, in accordance with Federal regulations, prescriptions written by excluded providers are not paid under the Part D program by: (a) researching and incorporating into the MED all of the provider identifiers that CMS allows sponsors to use, (b) providing sponsors with access to the MED and requiring them to use the MED to ensure that prescriptions written by excluded providers are not accepted, (c) prohibiting sponsors from using State license numbers in the prescriber identifier field of PDE records, and (d) establishing an edit that would reject any PDE data submitted by sponsors for prescriptions written by excluded providers. CMS concurred with our first recommendation and partially concurred with our second recommendation.

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