Department of Health & Human Services 
OFFICE OF 
   
INSPECTOR GENERAL 
 
 
 
 
 
 
 
M   P D
EDICARE  RESCRIPTION  RUG 
 
S  T T
PO NSORS   RAINING  O 
 
P F , W ,
REVENT  RAUD   ASTE        
 
 
A  
AND  BUSE
 
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
July 2011 
OEI-01-10-00060     
 
 E X E C U T I V E   S U M M A R Y  
OBJECTIVES 
1.  To determine the extent to which Medicare drug plan sponsors 
provided, and network pharmacies took, training to prevent fraud, 
waste, and abuse in 2009. 
2.  To determine the extent to which the trainings content reflected 
Centers for Medicare & Medicaid Services (CMS) guidance. 
3.  To describe the extent to which plan sponsors determined that the 
training was effective. 
BACKGROUND 
Medicare Part D provides prescription drug coverage to beneficiaries 
through private plan sponsors that contract with CMS.  Sponsors 
provide drug coverage through either a stand-alone prescription drug 
plan or a Medicare Advantage prescription drug plan.   
As a condition for contracting with CMS to offer Part D benefits, 
sponsors must have compliance plans that help them follow Federal 
regulations and prevent fraud, waste, and abuse.  Among other 
elements that CMS requires, these plans must include effective annual 
training and education to prevent fraud, waste, and abuse for network 
pharmacies.  Office of Inspector General reviews of Medicare 
prescription drug plans and reports in the news media have shown that 
pharmacies are at risk for fraud, waste, and abuse from beneficiaries, 
employees, prescribers, and drug manufacturers.  This raises concerns 
about the extent to which sponsors comply with these requirements.  
To conduct this study, we surveyed all 266 Part D sponsors and a 
random sample of 528 pharmacies (165 chain pharmacies,                   
157 independent pharmacies, and 206 mail-order pharmacies) to collect 
data on training to prevent fraud, waste, and abuse in 2009.  We also 
analyzed 420 training materials from sponsors and pharmacies.  
Finally, we interviewed a purposive sample of five sponsors and five 
pharmacies based on their survey responses.   
FINDINGS 
Nearly all Part D network pharmacies received training to prevent 
fraud, waste, and abuse in 2009; however, not all sponsors 
documented the training.  At least 87 percent of pharmacies reported 
that all of their staff received training.  However, 30 percent of sponsors 
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EE XX EE CC UU TT II VV EE    SS UU MM MM AA RR YY   
did not require their network pharmacies to submit documentation of 
training to verify completion. 
Training materials generally reflected CMS guidance on content and 
source, with a few exceptions.  Although most training materials 
included all elements in CMS guidance, more than a third failed to 
include information on the Health Insurance Portability and 
Accountability Act (HIPAA).  Additionally, more than half of the 
materials were developed by pharmacies corporate offices, despite CMS 
guidance to sponsors stating that pharmacies should not develop their 
own materials. 
Most sponsors could not determine the extent to which training was 
effective.  Although 59 percent of sponsors reported that they assessed 
the trainings effectiveness, fewer than half could measure its impact on 
fraud, waste, and abuse.  The remaining 41 percent did not assess its 
effectiveness.   
RECOMMENDATIONS 
Fraud, waste, and abuse represent significant threats to Medicare Part D, 
making training on how to prevent them vital to safeguarding the 
program.  Toward that end, CMS provided guidance on such training to 
strengthen network pharmacies ability to prevent, detect, and respond to 
these threats.  This study identified opportunities to help hone the 
effectiveness of that training.   
Therefore, we recommend that CMS: 
Reiterate to sponsors their responsibilities as the entities 
accountable for network pharmacies training to prevent Part D fraud, 
waste, and abuse.   CMS should reissue guidance to sponsors regarding 
its expectations for them to:  (1) develop and disseminate training 
materials to their network pharmacies; (2) include HIPAA in their training 
materials; (3) maintain documentation that pharmacies have received 
training; and (4) determine the extent to which they are providing effective 
training and education that reduce fraud, waste, and abuse risks. 
Use its monitoring authority to determine compliance with training 
requirements.  CMS routinely audits sponsors compliance plans to 
oversee sponsors adherence to programmatic requirements.  Toward that 
end, CMS should use these audits to ensure that sponsors are in 
compliance with all fraud, waste, and abuse training requirements noted 
above.  To achieve this goal, CMS should:  (1) review training materials to 
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E X E C U T I V E   S U M M A R Y  
ensure that pharmacies are not developing them;  (2) verify that all 
required contents, including HIPAA, are part of the materials; (3) clarify 
its requirements regarding sponsors obligations to collect documentation 
from their network pharmacies that they have taken training; and           
(4) request documentation supporting the extent to which sponsors are 
developing and providing effective training and education for their 
network pharmacies.  
Take steps to ensure that sponsors are providing effective training 
and education to prevent fraud, waste, and abuse.  CMS requires 
sponsors to provide their network pharmacies with training and education 
that are effective in preventing, detecting, and responding to potential 
fraud, waste, and abuse.  Therefore, CMS should:  (1) develop guidance for 
sponsors to use in assessing the effectiveness of training and education on 
fraud, waste, and abuse; or (2) provide a forum (e.g., online or conference 
call) in which sponsors can share best practices used to determine the 
trainings effectiveness.   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE   
CMS concurred with our recommendations.   
 
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 T A B L E   O F   C O N T E N T S  
EX ECUT I VE  SUM M ARY  .....................................i 
 
 
I NT RO DU CT I O N  ............................................ 1 
 
 
F I NDI NG S  .................................................. 9 
Nearly all Part D network pharmacies received training to prevent 
fraud, waste, and abuse in 2009; however, not all sponsors 
documented the training .................................. 9 
Training materials generally reflected CMS guidance                         
on content and source, with a few exceptions .................  10 
Most sponsors could not determine the extent to which training      
was effective. ..........................................  13 
   
RECO M M END AT I O N S  .....................................  15 
 
  Agency Comments and Office of Inspector General Response........17 
  
 
APP EN DI X ES  .............................................  18 
  A:  Confidence Intervals .................................  18 
  B:  Agency Comments ...................................  21 
 
ACKNO WL E DG M E N T S .....................................  23     
 
 I N T R O D U C T I O N  
OBJECTIVES 
1.  To determine the extent to which Medicare drug plan sponsors 
provided, and network pharmacies took, training to prevent fraud, 
waste, and abuse in 2009. 
2.  To determine the extent to which the trainings content reflected 
Centers for Medicare & Medicaid Services (CMS) guidance. 
3.  To describe the extent to which plan sponsors determined that the 
training was effective. 
BACKGROUND 
Medicare Part D provides prescription drug coverage to beneficiaries 
through private plan sponsors that contract with CMS.  Sponsors 
provide drug coverage through either a stand-alone prescription drug 
plan or a Medicare Advantage prescription drug plan.1  In 2009,         
266 sponsors offered Part D plans. 
Previous Office of Inspector General (OIG) reviews of Medicare 
prescription drug plans and reports in the news media indicate that 
pharmacies are at risk for fraud, waste, and abuse from beneficiaries, 
employees, prescribers, and drug manufacturers.2, 3, 4  Although CMS 
requires  Part D sponsors to develop compliance programs that provide 
their network pharmacies with training to prevent fraud, waste, and 
abuse, OIG and the Government Accountability Office (GAO) have 
shown that CMS has not sufficiently audited sponsors compliance plans 
to determine whether pharmacies staff can prevent, detect, and respond 
to fraud, waste, and abuse.5, 6  The vulnerabilities identified within 
pharmacies raise concerns about the extent to which sponsors have 
 
1 Medicare Prescription Drug, Improvement, and Modernization Act of 2003,               
P.L. 108-173,  101; Social Security Act,  1860D-1(a); 42 U.S.C.  1395w-101(a). 
2 OIG, Medicare Drug Plan Sponsors Identification of Potential Fraud and Abuse,     
OEI-03-07-00380, October 2008. 
3 Associated Press, Grand Couteau Pharmacist Pleads Guilty, December 19, 2009.  
Accessed at www.wdam.com on December 22, 2009. 
4 E. White, Meijer Will Settle Pharmacy Case for $3 Million, Associated Press,    
December 8, 2009.  Accessed at www.abcnews.go.com on December 22, 2009.  
5  OIG, Oversight of Prescription Drug Plan Sponsors Compliance Plans,                     
OEI-03-08-00230, October 2008. 
6 GAO, Some Plan Sponsors Have Not Completely Implemented Fraud and Abuse 
Programs, and CMS Oversight Has Been Limited, GAO-08-760, July 2008. 
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I N T R O D U C T I O N  
complied with CMSs requirement to provide effective training and 
whether fraud, waste, and abuse may be undetected in a pharmacy 
setting. 
Medicare Part D Compliance Plans 
As a condition for contracting with CMS to offer Part D benefits, 
sponsors must have in place compliance plans that help them follow 
Federal regulations and prevent fraud, waste, and abuse.  Each plan 
must include the following elements: 
  written policies, procedures, and standards of conduct articulating 
the organizations commitment to comply with all applicable 
Federal and State standards; 
  the designation of a compliance officer and compliance committee 
accountable to senior management; 
  provision of effective training and education by the compliance 
officer and the sponsors employees, managers, and directors for 
the sponsors first-tier, downstream, and related entities; 
  effective lines of communication between (1) the compliance officer, 
members of the compliance committee, the sponsors employees, 
managers, and directors; and (2) the sponsors first-tier, 
downstream, and related entities;  
  enforcement of standards through well-publicized disciplinary 
guidelines; 
  procedures for effective internal monitoring and auditing; and 
  procedures for ensuring prompt responses to detected offenses and 
development of corrective action initiatives relating to the 
organizations contract as a sponsor.7 
CMSs Requirement for Sponsors To Provide Effective Training and 
Education To Prevent Fraud, Waste, and Abuse 
CMS requires sponsors compliance plans to provide for effective 
training and education to first-tier, downstream, and related entities.8  
A first-tier entity is any party that enters into a contract with a sponsor, 
such as a pharmacy benefit manager (PBM).  A downstream entity is 
 
7 42 CFR  423.504(b)(4)(vi).  CMS revised its compliance program regulations in 2010 to 
provide more detail generally with respect to each of the program elements, including the 
requirement for training.  75 Fed. Reg. 19678 (Apr. 15, 2010).  
8 Ibid. 
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I N T R O D U C T I O N  
any party that enters into a written arrangement with a sponsor and 
first-tier entity, such as a network pharmacy.  Network pharmacies 
include retail, mail-order, long-term-care, home infusion, and Indian 
Health Services/Tribal/Urban Indian Health (I/T/U) pharmacies.9  A 
related entity is any party related to a sponsor by common ownership or 
control, such as a PBM whose parent company is a sponsor.10  Because 
sponsors rely specifically on network pharmacies and pharmacists to 
administer Part D benefits, sponsors must provide them with effective 
training on how to prevent, detect, and respond to fraud, waste, and 
abuse.   
Medicare regulations state that sponsors must provide effective training 
and education on fraud, waste, and abuse.11  However, CMS does not 
provide any specific definition of what constitutes effective training and 
education.  Therefore, it is the sponsors responsibility to determine 
whether the training and education they provide to their network 
pharmacies are effective in preventing fraud, waste, and abuse. 
CMS Guidance on Training To Prevent Fraud, Waste, and Abuse 
In 2008, CMS clarified its guidance on training and education to 
prevent fraud, waste, and abuse and set deadlines for sponsors to 
provide training to network pharmacies and downstream and related 
entities.  This guidance required sponsors to provide training between 
January 1 and December 31, 2009, and annually thereafter.12   
Since Part D began, sponsors have sought clarification from CMS on the 
content of fraud, waste, and abuse training and have raised concerns 
about how to provide it to their network pharmacies.13  Although CMS 
offers general recommendations on the content of training and 
education, it does not specify a complete list of elements that must be 
included.14  For example, CMS states that training and education 
 
9 Home infusion pharmacies provide medications to beneficiaries who need long-term 
therapy while living at home.   
10 42 CFR  423.501. 
11 42 CFR  423.504(b)(4)(vi).  
12 CMS Memorandum, Fraud, Waste and Abuse Training Requirements, October 20, 
2008. 
13 Ibid. 
14 CMS, Medicare Prescription Drug Benefit Manual, Pub. No. 100-18, ch. 9,  50.2.3.1; 
CMS Memorandum, Fraud, Waste and Abuse Training Clarification, August 21, 2009. 
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I N T R O D U C T I O N    
should include, but not be limited to, the following topics for all        
first-tier, downstream, and related entities:15 
  laws and regulations related to Part D fraud, waste, and abuse 
(i.e., False Claims Act, antikickback statute, Health Insurance 
Portability and Accountability Act (HIPAA)); 
  obligations to have appropriate policies and procedures to 
address fraud, waste, and abuse; 
  process for reporting suspected fraud, waste, and abuse to the 
sponsor; 
  protections for employees who report suspected fraud, waste, 
and abuse; and  
  types of fraud, waste, and abuse that can occur.16 
CMS allows sponsors to delegate the development of training materials 
and the administration of training to any contractor, such as a PBM, 
professional association, or third-party consultant.  CMS guidance to 
sponsors states that pharmacies should not develop their own training 
materials, as this is the sponsors responsibility.17, 18  However, CMS 
guidance states that pharmacy staff may administer the training to 
themselves if the materials are provided by a sponsor or contractor. 
CMS gives sponsors latitude in how training is administered.  The 
agencys guidance states that training can be conducted interactively, 
led by expert facilitators, via Web-based tools and Intranet sites, live or 
videotaped presentations, written materials, or a combination of these 
techniques.19  To assist sponsors in developing training, CMS guidance 
identifies types of fraud, waste, and abuse risks that may occur in a 
pharmacy setting: 
  billing for nonexistent prescriptions; 
 
15 CMS uses the term should for recommendations, but uses shall or must to refer to 
statutory or regulatory program requirements.  
16 CMS Memorandum, Fraud, Waste, and Abuse Training Clarification, August 21, 2009. 
17 CMS Memorandum, Fraud, Waste, and Abuse Training Requirements, October 20, 
2008.   
18 A PBM may provide training materials to its own pharmacies on behalf of sponsors 
with which it contracts. However, pharmacies corporate offices that are not acting as PBMs 
should not provide training materials.  
19 CMS, Medicare Prescription Drug Benefit Manual, Pub. No. 100-18, ch. 9,  50.2.3.3. 
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I N T R O D U C T I O N    
  billing for more expensive brand-name drugs but dispensing  
generics; 
  forging or altering prescriptions; 
  switching, splitting, or shorting prescriptions; and  
  stealing a Medicare beneficiarys identity.20 
Sponsors Obligations To Provide or Ensure Provision of Training 
CMS requires sponsors to either provide training directly to all of their 
pharmacies or to provide training materials and ensure that the 
training has been taken.21  CMS guidance does not specify how sponsors 
should ensure that their network pharmacies have taken training to 
prevent fraud, waste, and abuse; however, CMS states that as part of an 
audit and review process, it will verify that all necessary training has 
been provided.22   
Sponsors contend that it is cumbersome for pharmacies to receive 
training from each sponsor with which they contract.23, 24  Therefore, 
CMS states that network pharmacies need to take only one training 
that fulfills the requirement and provide proof to each sponsor to verify 
completion.25, 26   
METHODOLOGY 
Scope 
This study analyzed the extent to which Medicare drug plan sponsors 
provided, and network pharmacies received, training to prevent fraud, 
waste, and abuse in 2009.  It also analyzed the extent to which sponsors 
determined whether training was effective in preventing, detecting, and 
responding to these threats.  Although training should be provided to all 
first-tier, downstream, and related entities, this study focused on 
network pharmacies onlyspecifically, chain, independent, and       
mail-order pharmacies.  This study excluded long-term-care, home 
 
20 CMS, Medicare Prescription Drug Benefit Manual, Pub. No. 100-18, ch. 9,  70.1.3. 
21 CMS Memorandum, Fraud, Waste, and Abuse Training Requirements, October 20, 
2008.  
22 72 Fed. Reg. 68700, 68707 (Dec. 5, 2007). 
23 CMS Memorandum, Fraud, Waste, and Abuse Training Clarification, August 21, 2009. 
24 74 Fed. Reg. 54644 (Oct. 22, 2009). 
25 Ibid. 
26 72 Fed. Reg. 68706 (Dec. 5, 2007). 
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I N T R O D U C T I O N    
infusion, and I/T/U pharmacies because they make up a small 
percentage of the population of network pharmacies.  This study focused 
specifically on the elements of sponsors training that address Part D 
fraud, waste, and abuse.  We did not review other elements of sponsors 
compliance plans, nor did we assess sponsors overall program 
compliance. 
Data Sources 
We used the following four data sources to analyze training to prevent 
fraud, waste, and abuse in 2009:  (1) a survey of Part D sponsors, (2) a 
survey of a random sample of network pharmacies, (3) training 
materials, and (4) followup interviews with sponsors and pharmacies. 
Survey of Part D sponsors.  We surveyed all 266 sponsors that offered 
Part D plans in 2009.  We used files from CMSs Health Plan 
Management System to create the universe of sponsors.  We developed 
and used a questionnaire to determine the extent to which sponsors 
developed and provided training in 2009.  We also used the 
questionnaire to ask sponsors for contextual information, such as who 
designed the training and what documentation they used to verify that 
network pharmacies had taken it.  Additionally, we used the 
questionnaires to assess how sponsors determine whether their network 
pharmacies are receiving training and education that are effective in 
preventing, detecting, and responding to fraud, waste, and abuse.  We 
made three attempts to obtain survey responses from sponsors.  We 
made the first attempt via U.S. Postal Service, the second attempt by 
UPS, and the third attempt by phone.  We received responses from     
258 sponsors, a response rate of 97 percent.   
Survey of random sample of network pharmacies.  We surveyed a random 
sample of 528 pharmacies.  We used files from the National Council of 
Prescription Drug Programs (NCPDP), which contains a list of all 
pharmacies in the United States, to create the universe of pharmacies, 
which contained 75,675 pharmacies.   
We limited the file to nongovernment retail and mail-order pharmacies 
that opened prior to November 1, 2009.27, 28  This resulted in                   
61,003 pharmacies from which to select our sample.  After excluding 
pharmacies in our pretest sample and duplicate pharmacies in the 
 
27  We excluded long-term-care, home infusion, and I/T/U pharmacies. 
28  We selected 15 pharmacies to pretest our survey prior to drawing our random sample.  
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I N T R O D U C T I O N    
NCPDP list, this left 60,786 pharmacies (40,086 chain,                   
20,479 independent, and 221 mail-order) from which to select our 
sample. 
We divided our pharmacy population into three strata:  chain retail 
pharmacies, independent retail pharmacies, and mail-order pharmacies.  
Our total sample included 551 pharmacies:  random samples of 165 
chain retail pharmacies and 165 independent retail pharmacies and the 
complete population of 221 mail-order pharmacies.29  We dropped 23 
pharmacies (8 independent pharmacies and 15 mail-order pharmacies) 
that responded to our questionnaire that they were either no longer in 
business or did not submit Part D claims in 2009, which reduced our 
total sample size to 528. 
In our questionnaire, we also asked pharmacies for contextual 
information, such as whether their training was provided to them by 
sponsors, industry associations, or other sources or was self-
administered.  We used these questionnaires to determine the extent to 
which network pharmacies took training to prevent fraud, waste, and 
abuse in 2009 and which organization developed and administered it.   
We made three attempts to obtain survey responses from pharmacies.  
We sent the first two attempts via U.S. Postal Service and the third 
attempt via UPS.  Our overall response rate was 74 percent.30  We 
received 335 survey responses:  113 chain pharmacies, 136 independent 
pharmacies, and 86 mail-order pharmacies responded.  Because the 
NCPDP data lacked information about pharmacy characteristics, we 
were unable to compare respondents to nonrespondents. 
Training materials.  Our questionnaire asked sponsors and pharmacies to 
submit copies of any materials they used in 2009 to conduct training to 
prevent fraud, waste, and abuse.  Among the 258 sponsor respondents, 
209 (81 percent) submitted materials.   We received materials from    
211 pharmacies.  This represents 38 percent of the 551 pharmacies 
surveyed and 63 percent of the 335 pharmacy respondents.  We used 
these materials to assess the extent to which sponsors followed CMS 
guidance on training material content. 
 
29 NCPDP defines chain pharmacies as a group of four or more pharmacies under 
common ownership; independent pharmacies may have one to three pharmacies under 
common ownership.   
30 This calculation was weighted based on the stratified sample selection. 
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I N T R O D U C T I O N    
Followup interviews with sponsors and pharmacies.  We interviewed staff 
from a purposive sample of five sponsors and five pharmacies.  We 
selected each interviewee based on responses to our survey.  We aimed 
to interview sponsors and pharmacies whose responses were 
substantively different from one another.  We asked sponsor staff about 
the process they use to create and conduct training and the way in 
which they ensure that network pharmacies comply with training 
requirements.  In addition, we asked how they evaluate the 
effectiveness of training and requested any documentation that 
supports this.  Similarly, we asked pharmacy staff about their 
experiences with and perceptions of training to prevent fraud, waste, 
and abuse.  We analyzed interview data for common themes.  
Limitations 
All data from surveys are self-reported.  We did not independently 
verify survey responses or information given in interviews.   
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors 
General on Integrity and Efficiency. 
 
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 FF II NN DD II NN GG SS   
Nearly all Part D network pharmacies received  CMS requires sponsors to 
training to prevent fraud, waste, and abuse in 2009;  provide training to prevent 
fraud, waste, and abuse for any 
however, not all sponsors documented the training 
pharmacy employee responsible 
for delivering Part D benefits.  CMS has also stated that it will audit 
sponsors to determine whether the training requirements have been 
met.31  
At least 87 percent of pharmacies reported that all of their staff received 
training in 2009 
Most pharmacies reported that every staff member involved in 
delivering the Part D benefitsuch as pharmacists, pharmacy 
managers, and pharmacy technicianstook training.  One to two 
percent of pharmacies indicated that only some of the required staff 
took training.  Table 1 shows the percentage of pharmacy staff who 
received training.  (See Appendix A for complete point estimates and 
confidence intervals of pharmacy data.) 
Table 1:  Rates of Training To Prevent Fraud, Waste, and Abuse 
for Pharmacy Employees  
 
Pharmacies Reporting That  
  Pharmacy Staff Who  Pharmacies Reporting That  All 
Most or Some  
Staff Received Training    
Received Training  Staff Received Training   
   (n=335) 
(n=335) 
  Pharmacists   95%  1% 
  Pharmacy managers   88%  0% 
Pharmacy technicians   90%                      2% 
 
Rows do not sum to 100% because not all pharmacies employ each type of pharmacy staff listed above. 
 Source:  OIG survey of Part D network pharmacies, 2010.   
 
Overall, pharmacies reported that staff took training either individually 
or as a combination of group and individual training.  Pharmacies also 
reported that the format of their training included a computer-assisted 
component and written materials.  Fewer pharmacies reported that 
their training included lecture and discussion.  
 
 
 
31 72 Fed. Reg. 68700, 68707 (Dec. 5, 2007). 
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F I N D I N G S  
Sponsors did not always require their network pharmacies to submit 
documentation of training 
Thirty percent of sponsors reported that they did not require 
documentation showing that pharmacy staff had taken training.  
Similarly, 35 percent of pharmacies reported that sponsors did not require 
them to submit documentation verifying completion of the training.  
Sponsors and pharmacies stated that when documentation was collected, 
attestations and certificates of completion were the most common types.   
Although CMS does not specify whether sponsors must document their 
network pharmacies completion of training to prevent fraud, waste, and 
abuse, it expects sponsors to be able to demonstrate this during an audit.32  
However, our followup interviews with sponsors suggested that they may 
not know of this requirement or may be unable to readily produce training 
documentation.  Sponsors we interviewed told us that they delegate 
training functions to their PBMs, which are responsible for collecting and 
maintaining the documentation on the sponsors behalf.   
 
CMS guidance identifies five 
Training materials generally reflected             
elements that sponsors should 
CMS guidance on content and source,                     
address to meet the training 
with a few exceptions 
requirement on fraud, waste, 
and abuse:  (1) fraud-related 
statutes (e.g., False Claims Act, antikickback statute, HIPAA);             
(2) obligations of the pharmacy to have policies and procedures;            
(3) a process for reporting suspected fraud, waste, and abuse to 
sponsors; (4) protections against retaliation for employees who report; 
and (5) examples of fraud, waste, and abuse that can occur in 
pharmacies.33  CMS also issued guidance in 2008 to clarify that 
pharmacies should not develop the training materials they use; rather, 
sponsors should administer training directly or provide materials to 
their network pharmacies so that pharmacy staff may administer the 
training to themselves.34   
 
 
32 72 Fed. Reg. 68700, 68707 (Dec. 5, 2007). 
33 CMS Memorandum, Fraud, Waste, and Abuse Training Clarification, August 21, 2009. 
34 CMS Memorandum, Fraud, Waste, and Abuse Training Requirements, October 20, 
2008. 
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F I N D I N G S  
 
More than a third of the training materials failed to include information on 
HIPAA 
Training materials submitted by sponsors and pharmacies included 
information on the False Claims Act and antikickback laws in nearly all 
cases.  However, they did not consistently include information on 
HIPAA (see Table 2).  HIPAA established privacy rules for handling 
patients sensitive medical data.  Pharmacy employees who are 
unfamiliar with that law could inadvertently reveal beneficiaries 
medical data, placing them at risk for identity theft and other types of 
fraud. 
Table 2:  Fraud, Waste, and Abuse Statutes Included in Training 
Materials 
 
Pharmacies     Sponsors 
Statute Element  
 (n=211)  (n=209) 
 
False Claims Act  96%  98% 
 
Antikickback laws  94%  97% 
 
HIPAA  55%                      66% 
S ource:  OIG survey of Part D network pharmacies, 2010.   
Most training materials included the other elements in CMS guidance 
Training materials contained information on pharmacies obligations to 
have policies and procedures on fraud, waste, and abuse; reporting 
processes; and retaliation protections for employees.  Additionally, most 
materials from sponsors and pharmacies directed pharmacy employees 
to report fraud, waste, and abuse to their managers, to PBMs, or 
directly to sponsors (see Tables 3 and 4). 
Table 3:  Required Elements Included in Training Materials 
 
Pharmacies  Sponsors 
Training Element 
  (n=211)    (n=209) 
  Obligations to have policies and procedures  92%  82% 
Process for reporting fraud, waste, and abuse  94%  86% 
 
Protections for employees    92%  83% 
 S ource:  OIG survey of Part D network pharmacies, 2010.   
 
 
 
 
 
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F I N D I N G S  
Table 4:  Reporting Authorities Included in Training Materials 
 
Pharmacies   Sponsors 
  Reporting Authorities 
(n=211)    (n=209) 
 
Pharmacy manager, PBM, or  sponsor  69%  93% 
  OIG  52%  15% 
8% 
  CMS  8% 
Source:  OIG survey of Part D network pharmacies, 2010.   
 
Training materials also provided common examples of fraud, waste, and 
abuse that can occur in pharmacies.  As Table 5 shows, such schemes 
include switching, splitting, or shorting prescriptions; billing for 
nonexistent prescriptions; and billing a sponsor for a brand-name drug 
but dispensing a generic.  These are all examples that CMS 
recommended in guidance to sponsors regarding training material 
content.35   
Table 5:  Common Fraud Risks Described in Training Materials 
 
Pharmacies     Sponsors 
Common Fraud Risk 
 (n=211)  (n=209) 
 
Switching, splitting, or shorting prescriptions   96%  89% 
 
Billing for nonexistent prescriptions   94%  87% 
 
Billing for brand-name but dispensing generic  91%  78% 
 
Source:  OIG survey of Part D network pharmacies, 2010.   
 
The sources for more than half of the training materials used by pharmacies 
were the pharmacies corporate offices, despite CMS guidance 
Despite CMS guidance to sponsors stating that pharmacies should not 
develop their own training materials, 51 percent of pharmacies used 
materials created by their corporate offices (see Table 6).  However,     
20 percent of pharmacies reported that they used materials that either 
a Part D sponsor or a sponsors PBM developed.  Other sources included 
third-party vendors/consultants and professional associations. 
 
 
 
35 CMS, Medicare Prescription Drug Benefit Manual, Pub. No. 100-18, ch. 9,  70.1.3. 
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F I N D I N G S  
Table 6:  Sources of Pharmacies Training Materials 
  Pharmacies    
Source  
 (n=335) 
 
Pharmacy corporate office  51% 
 
Third-party vendor or consultant    28% 
 
Part D sponsor  14% 
 
Professional association    6%                     
 PBM  6% 
 Other  4% 
Do not know  4% 
 
Figures do not sum to 100% because some pharmacies indicated more than one source. 
S ource:  OIG survey of Part D network pharmacies, 2010.   
 
CMS requires sponsors to provide 
Most sponsors could not determine the extent 
effective training and education 
to which training was effective 
for their network pharmacies.  
CMS does not define what 
constitutes effective training; rather, it instructs sponsors to provide 
training and education that are effective in detecting, preventing, and 
responding to fraud, waste, and abuse. 
Although 59 percent of sponsors reported that they assessed the trainings 
effectiveness, fewer than half used measures clearly linked to fraud, waste, 
and abuse  
Of the 153 sponsors that reported assessing the trainings effectiveness, 
74 analyzed data that could demonstrate changes in pharmacy staffs 
understanding of fraud, waste, and abuse issues or changes in the 
reporting or detection of fraud, waste, and abuse.  Two of these sponsors 
administered posttraining tests to pharmacy staff to determine their 
knowledge of fraud, waste, and abuse.  The other 72 reviewed trends in 
fraud, waste, and abuse reporting; pharmacy audits; or analysis of 
pharmacy claims to determine the extent to which they were providing 
effective training.    
The remaining 79 sponsors that reported determining the extent to 
which they provided effective training did not provide any metric that 
they used in assessing the effectiveness of training.  Forty-eight of these 
sponsors reported determining that training was effective because it 
raised pharmacies awareness of fraud, waste, and abuse issues.  The 
remaining sponsors in this group described their general oversight 
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F I N D I N G S  
processes for pharmacies, their use of attestations, or feedback from 
pharmacies as the basis for assessing the trainings effectiveness.   
Forty-one percent of sponsors did not assess the effectiveness of their 
training 
Among 258 sponsors that responded to our survey, 105 did not 
determine the extent to which training was effective.  Fifty-four of these 
105 sponsors gave no explanation, and 37 said that the training was too 
new to assess because it was not required until 2009.  The remaining 
sponsors said that they had no guidelines from CMS with which to 
assess it, that they were not required to assess it, or that they planned 
to begin assessing the training in the coming year.  Although CMS did 
not enforce training for pharmacies until 2009, this training is not a 
new requirement in Part D.  CMS has required sponsors to provide 
training for their employees since the start of the Part D program in 
2006.   
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 R E C O M M E N D A T I O N S  
 
Fraud, waste, and abuse represent significant threats to Medicare Part 
D, making training on how to prevent them vital to safeguarding the 
program.  Toward that end, CMS provided guidance on such training to 
strengthen network pharmacies ability to prevent, detect, and respond 
to these threats.  This study identified opportunities to help hone the 
effectiveness of that training.  
Overall, we found that sponsors provided, and nearly all pharmacies 
took, training to prevent fraud, waste, and abuse in 2009.  However, not 
all sponsors required documentation of training from their pharmacies.  
Furthermore, although the content of the training generally reflected 
CMS guidance, more than a third of the training materials lacked 
information on HIPAA. 
Even though CMS specifies that pharmacies should not develop training 
materials, we found that most of them were created by pharmacies. 
Finally, our survey results and interviews also raise concerns about 
whether and how sponsors determine the extent to which their training 
and education are effective.  Forty-one percent of sponsors did not 
assess the effectiveness of their training and education; of the                
59 percent that did, fewer than half used measures clearly related to 
fraud, waste, and abuse.   
Taken together, these results raise questions about the extent to which 
fraud, waste, and abuse training is effective in helping pharmacies 
prevent, detect, and respond to these threats.  
Therefore, we recommend that CMS: 
Reiterate to sponsors their responsibilities to provide network 
pharmacies training on Part D fraud, waste, and abuse 
To do so, CMS should reissue guidance to sponsors regarding its 
expectations for them to: 
  develop and disseminate training materials to their network 
pharmacies; 
  include HIPAA in their materials; 
  maintain documentation that pharmacies have received 
training; and 
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R E C O M M E N D A T I O N S  
  determine the extent to which they are providing effective 
training and education that reduce fraud, waste, and abuse 
risks. 
Use its monitoring authority to determine compliance with training 
requirements 
CMS routinely audits sponsors compliance plans to oversee their 
adherence to programmatic requirements.  Toward that end, CMS 
should use these audits to ensure that sponsors are in compliance with 
all fraud, waste, and abuse training requirements noted above.  To 
achieve this goal, CMS should: 
  review training materials to ensure that pharmacies are not 
developing them; 
  verify that all required contents, including HIPAA, are part of 
the materials; 
  clarify its requirements regarding sponsors obligations to collect 
documentation from their network pharmacies that they have 
taken training; and 
  request documentation supporting the extent to which sponsors 
are developing and providing effective training and education for 
their network pharmacies.  
Take steps to ensure that sponsors are providing effective training and 
education to prevent fraud, waste, and abuse 
CMS requires sponsors to provide their network pharmacies with 
training and education that are effective in preventing, detecting, and 
responding to fraud, waste, and abuse.  To this end, CMS should: 
  develop guidance for sponsors to use in assessing the effectiveness 
of training and education on fraud, waste, and abuse; or  
  provide a forum (e.g., online or conference call) in which sponsors 
can share best practices used to determine the trainings 
effectiveness.  For example, sponsors could demonstrate the 
trainings effectiveness using posttraining tests, analysis of 
pharmacy audits or claims data, or other quantifiable methods. 
 
 
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R E C O M M E N D A T I O N S  
 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE   
CMS concurred with our recommendations.  The complete text of CMSs 
comments appears in Appendix B. 
 
 
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 A P P E N D I X ~ A  
      Table A-1:  Confidence Intervals 
 
Sample  Point   95-Percent 
Statistic 
Size  Estimate  Confidence Interval 
At least 87 percent of pharmacies reported 
that all of their staff received fraud, waste,  335  87.5%  82.9%91.0% 
and abuse training in 2009. 
Ninety-five percent of pharmacies reported 
that all of their registered pharmacists 
335  95.0%  91.4%97.2% 
received fraud, waste, and abuse training in 
2009. 
Eighty-eight percent of pharmacies 
reported that all of their pharmacy 
335  88.3%  83.8%91.7% 
managers received fraud, waste, and 
abuse training in 2009. 
Ninety percent of pharmacies reported that 
all of their pharmacy technicians received  335  90.3%  86.0%93.3% 
fraud, waste, and abuse training in 2009. 
Fewer than 1 percent of pharmacies 
reported that most or some of their 
335  0.6%  0.1%2.2% 
registered pharmacists received fraud, 
waste, and abuse training in 2009. 
Fewer than 1 percent of pharmacies 
reported that most or some of their 
335  0.3%  0.0%1.8% 
pharmacy managers received fraud, waste, 
and abuse training in 2009. 
Two percent of pharmacies reported that 
most or some of their pharmacy technicians 
335  1.7%  0.7%4.1% 
received fraud, waste, and abuse training in 
2009. 
Eighty-four percent of pharmacies reported 
326  84.1%   80.0%87.4%  
that their staff took training individually. 
Ten percent of pharmacies reported that 
their staff took a combination of group and  326  9.6%   7.0%12.9%  
individual training. 
Sixty-three percent of pharmacies reported 
that their training included a computer- 326  62.6%   56.1%68.7%  
assisted component. 
Thirty-one percent of pharmacies reported 
326  31.3%   26.4%36.7%  
that their training included written materials. 
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A P P E N D I X   ~   A  
 
  Sample  Point   95-Percent 
Statistic  Size  Estimate  Confidence Interval 
 
Twelve percent of pharmacies reported that 
326  11.6%   8.5%15.5%  
their training included lecture and 
discussion. 
Thirty-five percent of pharmacies reported 
that sponsors had not asked them for  335  35.3%  29.3%41.8%  
documentation of training. 
Eighty-seven percent of pharmacies 
reported that attestations were the most 
156  86.6%   79.3%91.6%  
commonly submitted type of 
documentation. 
Eighteen percent of pharmacies reported 
that certificates of completion were the 
156  17.7%   12.3%24.9%  
most commonly submitted type of 
documentation. 
Ninety-six percent of training materials in 
2009 contained information on the False  211  96.4%  91.4%98.6% 
Claims Act. 
Ninety-four percent of training materials in 
2009 contained information on the  211  94.3%  88.4%97.3% 
antikickback statute. 
Fifty-five percent of training materials in 
2009 contained information on the Health 
211  54.7%  46.2%63.0% 
Insurance Portability and Accountability 
Act. 
Ninety-two percent of training materials 
submitted by pharmacies included 
211  91.9%  85.8%95.5%  
obligations to have policies and procedures  
on fraud, waste, and abuse. 
Ninety-four percent of training materials 
submitted by pharmacies included a 
211  93.9%  88.7%96.8% 
process for reporting fraud, waste, and 
abuse. 
Ninety-two percent of training materials 
submitted by pharmacies included 
211  91.8%  86.4%95.2%  
protections for employees against 
retaliation. 
Sixty-nine percent of training materials from 
pharmacies directed pharmacy employees 
to report fraud, waste, and abuse to their  211  69.3%  60.6%76.8% 
managers, to Pharmacy Benefit Managers 
(PBM), or directly to sponsors. 
Fifty-two percent of training materials from 
pharmacies directed pharmacy employees 
211  52.0%  43.6%60.3%  
to report fraud, waste, and abuse to the 
Office of Inspector General. 
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A P P E N D I X   ~   A  
 
  Sample  Point   95-Percent 
Statistic  Size  Estimate  Confidence Interval 
 
Eight percent of training materials from 
pharmacies directed pharmacy employees  211  8.2%  4.9%13.3%  
to report fraud, waste, and abuse to the 
Centers for Medicare & Medicaid Services. 
Ninety-six percent of training materials from 
pharmacies list "switching, splitting, or 
211  96.4%  91.4%98.6% 
shorting prescriptions" as a common fraud 
risk. 
Ninety-four percent of training materials 
from pharmacies list "billing for nonexistent  211  93.8%  88.3%96.9% 
prescriptions" as a common fraud risk. 
Ninety-one percent of training materials 
from pharmacies list "billing for brand-name 
211  91.3%  85.5%94.9% 
but dispensing generic" drugs as a 
common fraud risk. 
Fifty-one percent of pharmacies used 
335  50.5%  44.9%56.1% 
materials created by their corporate offices. 
Twenty-eight percent of pharmacies used 
materials created by a third-party vendor or  335  27.7%  22.5%33.6% 
consultant. 
Fourteen percent of pharmacies used 
335  13.7%  10.4%17.8% 
materials created by a Part D sponsor. 
Six percent of pharmacies used materials 
335  6.4%  4.0%10.0% 
created by a professional association. 
Six percent of pharmacies used materials 
335  6.2%  3.9%9.6% 
created by a PBM. 
Four percent of pharmacies said they used 
335  3.6%  2.0%6.3% 
training materials from another source. 
Four percent of pharmacies do not know 
which organization created the training  335  3.6%  1.8%7.0% 
materials that they used. 
 
 
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A  P  PEN  D  B 
Agency Comments 
DEPARTMENT OF HEALTH & HUMAN SERVICES  yenteTlj for Medicar. & Medicaid Services 
Administrator 
Washington. DC 20201 
JUN 0 22011
DATE: 
TO: 	 Daniel R. Levinson 
Inspector General 
FROM: 	 Donald M. Berwick, M.D. 
Administrator 
SUBJECT: 	 Office of Inspector General (OlG) Draft Report: "Medicare Prescription Drug 
Sponsors' Training on Fraud, Waste, and Abuse" (OEI.Ol-1O-00060) 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 
comment on the Office of Inspector General (OIG) draft report entitled, "Medicare Prescription 
Drug Sponsors' Tmining on Fraud, Waste, and Abuse." CMS provides guidance on fraud, 
waste, and abuse training to strengthen network pharmacies' ability to prevent, detect, and 
respond to threats.  . 
The CMS appreciates OIG's efforts in working with us to help hone the effectiveness ofthat 
training. In accordance with our commitment to safeguard the Medicare trust fund, CMS will 
reissue guidance to sponsors reiterating their responsibilities to provide training on Part D fmud, 
waste, and abuse to their entities, determine sponsors' compliance with training requirements 
through routine audits, and will make available a Web-based Part C/D Tmining Fraud Module, 
as well as hard-copy training material, for sponsors to utilize. Lastly, CMS will work with 
sponsors to develop and share best practices in assessing the effectiveness of fraud, waste, and 
abuse training. 
Our response to each ofthe OlG recommendations follows. 
OIG Reeommendation 
The CMS should reitemte to sponsors their responsibilities to provide network pharmacies' 
training on Part D fraud, waste, and abuse. 
CMS Response 
The CMS concurs with this recommendation. eMS will reissue guidance to sponsors reiterating 

their responsibilities to provide tmining on Part D fraud, waste, and abuse to their first tier; 

downstream, and related entities. 

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A P P E N D I X   ~   B  
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 A C K N O W L E D G M E N T S  
This report was prepared under the direction of Joyce Greenleaf, 
Regional Inspector General for Evaluation and Inspections in the 
Boston regional office, and Russell Hereford, Deputy Regional Inspector 
General.   
Melissa Hafner served as the lead analyst for this study.  Other 
principal Office of Evaluation and Inspections staff from the Boston 
regional office who contributed to the report include Tim Chettiath; 
central office staff who contributed include Robert Gibbons and Rita 
Wurm.  
 
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Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health & Human Services (HHS) 
programs, as well as the health and welfare of beneficiaries served by those programs.  This 
statutory mission is carried out through a nationwide network of audits, investigations, and 
inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.