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Democrats frustrated with Part D plan oversight


Sponsors of Part D legislation believe private Medicare Part D plans have been less effective than the government could be in negotiating price concessions.

That program, touted as a "down payment" on President Obama's pledge to provide health insurance coverage to all Americans, expands health coverage to families with incomes up to 300% of the federal poverty level. Other discussion has focused on the multi-billion dollar health IT package and the funding for comparative effectiveness research.


The legislation's sponsors believe that the private Medicare Part D plans have been less effective than the government could be in negotiating price concessions.

Backers of this legislation have highlighted the HHS Office of Inspector General (OIG) findings that plans under the Medicare prescription drug benefit have overcharged beneficiaries and the program since it began in 2006. The October 2007 report entitled "Medicare Part D Sponsors: Estimated Reconciliation Amounts for 2006" stated that an OIG review of a partially completed CMS audit of plans in 2006 resulted in $4.4 billion in overpayments.

More recently in a November 2008 report, OIG recommended that CMS should conduct the statutorily required bid audits in a timely manner as well as that "CMS could modify the entire bid audit process to: (1) identify instances in which errors are misrepresentations and (2) quantify errors that affect payments to plan sponsors. Modifying the bid audit process would enable CMS to pursue stronger enforcement and corrective actions."

Implementation of the latter would mark an important first step in shifting CMS' current rationale for bid audits, which is to improve future bid submissions, from a bid integrity/quality assurance perspective to an enforcement perspective. Even so, absent of fraud, CMS is still limited in its mid-plan-year enforcement capacities as it currently has no legal authority to revise the accepted bid amount or revise plan payments nor does it appear to have a mechanism to recoup erroneous payments after the reconciliation period is concluded.

Whether Congress will succeed in passing authorizing legislation or the federal government can implement an alternative government Part D option that can effectively compete with private plans is not yet clear. Equally unclear is if CMS will be given the legal authority or, in the current economic climate, provided the funding to pursue more vigorous enforcement of Part D. One thing that does appear clear is that Congressional democrats especially have expressed significant frustration to the frequency and efficacy of CMS oversight of Part D plans.

This column is written for informational purposes only and should not be construed as legal advice.

John Eriksen is a senior associate at Epstein, Becker and Green, P.C. in its Health Care and Life Sciences practice group and focuses primarily on health regulatory, compliance, managed care and transactional matters.

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