OIG Audit Raises Concerns About Medicare Part D Plans

John Commins, March 8, 2011

House Democrats want a formal review of Medicare Part D after a federal audit found the program's "sponsors" may have overcharged policyholders by underestimating by billions of dollars the value of drug manufacturers' rebates in nearly 70% of their bids for plan year 2008.

"According to the Inspector General, the private health insurers providing the drug benefit are commonly underreporting drug manufacturer rebates, resulting in billions of dollars of profits at the expense of taxpayers and Medicare beneficiaries," Democrats on the House Energy & Commerce Committee said in a letter to Joseph R. Pitts, R-PA, the chairman of the Subcommittee on Health, and Cliff Stearns, R-FL, the chairman of the Subcommittee on Oversight and Investigations.
"The Inspector General's report reveals severe problems with the structure of the Part D program and the behavior of the private insurers that administer the drug benefit. These failures present a severe risk to program integrity, reduce beneficiaries access to important drugs, increase drug costs for seniors, and cause billions of dollars in wasted taxpayer funds," the Democrats said in their letter.

The Office of Inspector General for the Department of Health and Human Services conducted the audit and examined six Medicare Part D sponsors, and found that some "may deliberately underestimate their rebates to increase profits."

John Commins

John Commins is a senior editor at HealthLeaders Media.

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