The federal government paid $3.61 million to reimburse private drug plans the cost of prescriptions for Medicare patients who had died a month or more earlier, according to an audit by the U.S. Office of Inspector General.
Improper payments were made for 1,500 of 2.7 million deceased enrollees over a 25-month period spanning 2005 to 2007, less than 1% of those who died, but the problem was that the Centers for Medicare & Medicaid Services categorized these deceased enrollees as alive or having different dates of death than those listed in the Social Security Administration's master files.
"Although CMS had correctly stopped payments for the vast majority of deceased enrollees, its system did not always identify and prevent the improper payments," the OIG said. Additionally, "CMS did not always recover payments made on behalf of deceased enrollees," and needs to recoup that $3,610,710 from the sponsors of Medicare prescription drug plans.
Additionally, for another 2,222 deceased enrollees, CMS recovered overpayments for Part D prescription drugs but recovery was delayed by up to 39 months. For nearly half of those 2,222, delay in recovery was 1.5 to two years.
In response, CMS administrator Donald Berwick, MD, wrote that the agency concurs with the recommendation, "but disagrees that CMS has not yet recouped these payments."
Berwick said it has implemented enhancements to allow the agency to detect and recover such payments made for deceased enrollees retroactively.
The issue involves the program that began Jan. 1, 2006 by which Medicare subsidizes the drug benefit under Plan D for Medicare enrollees by making payments each month to the beneficiaries selected drug plan. Payment is made for the month to cover direct, reinsurance, and low income cost-sharing for the beneficiaries who enrolled.
"If CMS receives health status information that would either increase or decrease the previous monthly payments, it makes retroactive adjustments to correct the payment costs, reinsurance amounts and low-income subsidies after the end of each year," the OIG said. The last allowable payment is for the month the enrollee died.
The OIG recommended that CMS not only recoup the $3.6 million, but also recover improper payments in a timely manner and implement system enhancements to prevent and detect future improper payments for deceased enrollees.