Review of the Centers for Medicare & Medicaid Services' Audits of Part D Sponsors' Financial Records

Our audit found that the Centers for Medicare & Medicaid Services (CMS) did not fully comply with Federal requirements in conducting one-third audits of Part D sponsors' financial records. CMS contracts with private organizations called sponsors that act as payers and insurers to provide prescription drug benefits under Part D. However, CMS did not perform audits for a full one-third of the sponsors in any of the audited contract years as required. CMS excluded certain contracts subject to audit because it interpreted the statutory requirement as allowing it to do so.

Further, at the time of our fieldwork, CMS had not updated its standard operating procedure (SOP) for audit resolution to reflect actual practices and to help ensure that sponsors reported corrective actions to CMS in a timely manner. This diminished CMS's ability to ensure that corrective action was taken as rapidly as possible.

We recommended that CMS (1) audit one-third of all part D sponsors and (2) update its SOP to ensure that policies and procedures are consistent with actual practices and help ensure that sponsors' corrective actions are reported to CMS in a timely manner. CMS generally concurred with our recommendations and described the actions it had taken or planned to take.