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The MEDIC Produced Some Positive Results but More Could be Done to Enhance its Effectiveness


The Medicare Drug Integrity Contractor (MEDIC) is CMS's benefit integrity contractor tasked with detecting and preventing fraud, waste, and abuse in Medicare Part C and Part D. These programs involve billions of dollars in expenditures and cover millions of beneficiaries. Therefore, effective, proactive oversight is essential to protect Medicare and its beneficiaries from fraud, waste, and abuse. OIG conducted this evaluation in response to a congressional mandate outlined in the Comprehensive Addiction and Recovery Act of 2016 (CARA). CARA requires OIG to conduct a study and submit a report on the effectiveness of the MEDIC's efforts to identify, combat, and prevent fraud in Medicare Part C and Part D.


We analyzed Workload Statistic Reports related to the MEDIC's Part C and Part D benefit integrity activities from fiscal years 2012 through 2017 to determine how these activities have changed throughout the years. In addition, we followed up with the MEDIC (Health Integrity, LLC, now Qlarant Integrity Solution, LLC) to ask about its barriers and challenges in performing these activities. From the MEDIC, we also requested its results regarding the identification of high risk pharmacies and providers. To gauge the MEDIC's financial effectiveness, we developed a return on investment measure comparing the amount paid to the MEDIC with actual recoveries reported by the MEDIC. We reviewed information from CMS regarding the measures and data it uses to determine the MEDIC's overall effectiveness.


While the MEDIC's reported recoveries resulted in a positive return on investment ($3 in recoveries for every $1 invested in 2017), CMS has no measures that specifically assess the MEDIC's effectiveness. Without specific measures, it is unclear how CMS assesses the MEDIC's effectiveness in fighting fraud. OIG's analysis of MEDIC activities and responses from MEDIC staff provided insights into MEDIC operations that could lead to both enhanced MEDIC effectiveness and improved measures to gauge this effectiveness.

CMS directed the MEDIC to devote more resources to proactive data analysis and administrative actions in 2014 and 2015, which led to a sharp increase in proactive data analysis, but a decrease in the MEDIC resources available to follow up on the results of these analyses. As a result, there have been fewer MEDIC investigations and referrals to law enforcement agencies, including OIG. The direction did lead to an initial upswing in administrative actions (revocations and exclusions); however, those declined precipitously in 2017 due to other procedural changes. Through its increased proactive analyses, the MEDIC was able to identify thousands of high-risk leads involving drugs, including opioids, from 2014 through 2017. The impact of these activities, however, cannot be measured as plan sponsors are not required to report to CMS the actions taken in response to these leads.

In addition, MEDIC staff described numerous barriers that limit the MEDIC's overall impact. These barriers include the MEDIC's lack of access to complete Part C encounter data; its inability to recommend certain administrative actions, such as revocation of billing privileges, against Part C and Part D providers and pharmacies not enrolled in Medicare; and its inability to obtain all requested medical records from pharmacies, providers, and pharmacy benefit managers.


We recommend that CMS (1) require plan sponsors to report fraud and abuse incidents and the corrective actions taken to address them to a centralized system; (2) provide the MEDIC with centralized access to all Part C encounter data; (3) require that Part C and Part D providers and pharmacies enroll in Medicare; (4) clarify the MEDIC's authority to require records from pharmacies, pharmacy benefit managers, and other entities under contract with Part C and Part D plan sponsors; (5) ensure that the MEDIC has the ability to require medical records from prescribers of Part D drugs not under contract with plan sponsors, obtaining legislative authority, if necessary; and (6) establish measures to assess the MEDIC's effectiveness. CMS did not concur with the third and fifth recommendations.