Department of Health and Human Services 
OFFICE OF 
   
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
A   M
UDITS OF  EDICARE 
 
P D P
RES CRIPTION  RUG  LAN 
 
S  
PONSORS
 
 
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
December 2011 
OEI-03-09-00330     
 
E X EE CX UE TC IUVTE I   VS EU  MSMUAMR MY A  R Y  
OBJECTIVES
 
To determine: 
(1) the extent to which stand-alone Medicare prescription drug plan 
(PDP) sponsor contracts were audited between 2006 and 2009, 
(2) the extent to which these audits identified problems, and 
(3) whether the Centers for Medicare & Medicaid Services (CMS) had 
evidence to show that corrective actions were taken to resolve these 
problems. 
BACKGROUND 
CMS contracts with private companies, known as plan sponsors, to offer 
Part D coverage to beneficiaries.  One of CMSs oversight activities is to 
audit plan sponsors to ensure that they comply with Part D laws and 
regulations.  CMS staff identified seven types of audits, other than 
financial audits, that CMS used for auditing stand-alone PDP contracts 
in the first 4 years of the Part D program (2006 through 2009):  
autoenrollment readiness audits, benefit integrity audits, bid audits, 
compliance plan audits, long-term-care pharmacy contract audits, 
pharmacy access audits, and program audits.  CMS selects auditees 
based on risk analysis and other factors.  It is not required by law to 
conduct any of these audits.   
In this report, we provide a broad overview of CMSs use of the seven 
types of audits from 2006 through 2009.  The Office of Inspector General 
(OIG) is conducting a separate review of CMSs use of financial audits.    
A stand-alone PDP is a Part D insurance plan that covers only 
prescription drugs.  We focused on stand-alone PDPs because the 
majority of the 27 million beneficiaries who enrolled in Part D in 2009 
were in stand-alone PDPs.  In this report, PDPs refer to stand-alone 
PDPs.  
We requested that CMS provide us with a list of all PDP audits it 
completed for the seven audit types during the first 4 years of the     
Part D program.  We also collected information from CMS on the audits 
that found problems.  We then selected a sample from the audits that 
identified problems for a more detailed review.   
   
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E X E C U T I V E   S U M M A R Y  
FINDINGS 
Some PDP sponsor contracts were never audited between 2006 and 
2009.  CMS had 125 active, unique PDP sponsor contracts during the 
first 4 years of the Part D program.  Fifty of these contracts, which 
covered 1.1 million beneficiaries, were never audited in any way.  PDP 
contracts were active between 1 and 4 years.  Of the 68 contracts that 
were active for all 4 years, 13 (19 percent) were never audited.  CMS 
had no parameters regarding the number of audits it should conduct 
and did not complete any compliance plan audits during the 4-year 
period.   
Seventy-nine percent of the 245 PDP audits completed between 
2006 and 2009 identified problems.  Two-thirds of the 673 problems 
reviewed involved beneficiaries coverage status or payment issues.  For 
example, 41 percent of problems identified through program audits 
involved plan sponsors enrollment and disenrollment processes.    
Forty-two percent of the problems identified through bid audits involved 
issues such as adjustments to cost-sharing amounts and the 
categorization of direct and indirect costs that might affect beneficiaries 
Part D premiums.      
CMS did not have evidence to show that all corrective actions were 
implemented for two audit types.  CMS did not document that 
corrective action was taken for 88 of 506 problems (17 percent) 
identified by program audits and autoenrollment readiness audits.  
Most of these problems were identified through program audits.  
RECOMMENDATIONS 
CMS is responsible for overseeing the Part D program.  Auditing is one 
way CMS ensures that plan sponsors comply with laws and regulations 
related to the Part D program.  Although CMS is not required to 
conduct the seven types of audits in our report, it developed them to 
identify problems and correct deficiencies within the Part D program.  
However, CMS did not have parameters regarding the number of audits 
it should conduct.  In addition, CMS did not always have evidence to 
show that all problems were addressed for certain audit types. 
Prior OIG reports have shown that CMS delayed beginning some types 
of audits.  This report shows that some PDP contracts were never 
audited, and that CMS completed no compliance plan audits between 
2006 and 2009.  This report also shows that when audits were 
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EE XX EE CC UU TT II VV EE    SS UU MM MM AA RR YY   
conducted, they frequently identified problems that may directly affect 
beneficiaries coverage status or payments.  Audits can potentially 
identify problems that might not be detected through other forms of 
oversight.     
We recommend that CMS: 
Establish a comprehensive Part D auditing strategy that ensures that each 
plan sponsor will be audited in some way within a certain timeframe.   
Ensure that evidence is available to show that corrective actions have been 
implemented.   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS partially concurred with the first recommendation, stating that it 
believes all sponsors should undergo a bid audit and that it plans to 
complete a bid audit by 2013 of every PDP parent organization in the 
program since 2006.  CMS is not in favor of establishing a comprehensive 
Part D auditing strategy.  It believes a comprehensive oversight strategy, 
developed in coordination with offices responsible for the management of 
Part D, is more effective than an auditing strategy.  CMS also believes 
that its heavy reliance on monitoring, defined as systematic evaluation of 
the complete universe of sponsors, allows it to assess key performance 
indicators across 100 percent of PDP sponsors.  CMS stated that 
monitoring is the only efficient approach for assessing critical 
performance areas across all PDP contracts.   
OIG stands by its first recommendation, to establish a comprehensive 
Part D auditing strategy.  This recommendation is not meant to be a 
substitute for a comprehensive oversight strategy or a substitute for 
monitoring. 
CMS concurred with the second recommendation.  CMS stated that in 
2010, it began a more comprehensive process for validating corrections 
made by sponsors as a result of deficiencies found during audits.  CMS 
stated that it now maintains, and will continue to maintain, 
documentation of corrective actions implemented for all audits.   
 
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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  .................................................  11 
Some PDP sponsor contracts were never audited between  
2006 and 2009 .........................................  11 
Seventy-nine percent of the 245 PDP audits completed  
between 2006 and 2009 identified problems ..................  13 
CMS did not have evidence to show that all corrective                  
actions were implemented for two audit types ................  16 
   
RECO M M END AT I O N S  .....................................  17 
Agency Comments and Office of Inspector General Response ....  17 
 
 
APP EN DI X ES  .............................................  19 
  A:  Categories of Problems Identified Through Sampled  
               Audits, 20062009 ...................................  19 
B:  Categories of Corrective Actions Taken To Address  
      Problems Identified Through Sampled Audits, 20062009 ...  21 
C:  Agency Comments ...................................  23 
 
 
ACKNO WL E DG M E N T S ..................................... 26 
     
 
 I N T R O D U C T I O N  
OBJECTIVES 
To determine: 
(1) the extent to which stand-alone Medicare prescription drug plan 
(PDP) sponsor contracts were audited between 2006 and 2009, 
(2) the extent to which these audits identified problems, and 
(3) whether the Centers for Medicare & Medicaid Services (CMS) had 
evidence to show that corrective actions were taken to resolve these 
problems. 
BACKGROUND 
This report adds to the Office of Inspector Generals (OIG) body of work 
regarding CMSs oversight of the Medicare Part D program, also known 
as the Voluntary Prescription Drug Benefit Program, which went into 
effect on January 1, 2006.1  One of CMSs oversight activities is to audit 
plan sponsors to ensure that they comply with laws and regulations 
related to the Part D program.  Plan sponsors are private companies 
under contract with CMS to provide Part D coverage to beneficiaries.  
OIGs previous work has found that CMS delayed beginning various 
types of Part D audits.  Audits can identify problems that might not be 
detected through other forms of oversight.  This report examines the 
extent to which CMS has completed audits and identified problems in 
the first 4 years of the Part D program. 
This report provides a broad overview of seven types of audits
excluding financial auditsthat CMS planned to use to audit plan 
sponsors of stand-alone PDPs between 2006 and 2009.  We did not 
include financial audits in this report because OIG reviewed these 
audits separately.   
Two types of plans provide Part D coverage.  Medicare Advantage 
prescription drug plans cover a variety of medical services, including 
prescription drugs, while stand-alone PDPs cover only prescription 
drugs.  We focused on stand-alone PDPs because the majority of 
beneficiaries in the Part D program were enrolled in stand-alone PDPs.  
In 2009, 17 million of the 27 million beneficiaries enrolled in Part D 
 
1 Social Security Act  1860D-1, 42 U.S.C.  1395w-101. 
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were in stand-alone PDPs.2  In this report, PDPs refer to stand-alone 
PDPs. 
PDP Contracts 
A plan sponsors PDP contract with CMS may include more than one 
plan.  As of February 2011, plan sponsors had 84 PDP contracts that 
included a total of 1,304 plans.3  Plans within a contract may differ in 
coverage and copayments.    
Part D Expenditures 
In 2009, total expenditures for Part D were $60.8 billion.4  CMS makes 
monthly prospective payments to plan sponsors to provide drug 
coverage to Medicare beneficiaries.  These payments are based on bid 
amounts approved by CMS.  Bid amounts are cost estimates that plan 
sponsors provide to CMS prior to the beginning of each plan year.  After 
the close of the plan year, CMS reconciles these payments with the plan 
sponsors actual costs to determine whether plan sponsors owe money to 
Medicare or Medicare owes money to them.   
CMS Offices That Conduct Part D Audits  
Several CMS offices audit plan sponsors with PDP contracts.  Some 
offices have overlapping responsibilities for the same type of audit.   
The following CMS offices were responsible for the audits in this report 
during the period we reviewed: 
  the Office of the Actuary (OACT), 
  the Program Compliance and Oversight Group (PCOG), 
  the Program Integrity Group, and 
  the Medicare Drug Benefit and C & D Data Group (MDBG). 
Offices may conduct offsite or onsite Part D audits.  The teams that 
conduct the audits may include CMS central office staff, CMS regional 
office staff, or CMS contractors, including the Medicare Drug Integrity 
 
2 CMS, Monthly Contract and Enrollment Summary Report, June 2009.  Accessed at 
http://www.cms.gov/MCRAdvPartDEnrolData/ on July 14, 2009.   
3 CMS, Monthly Enrollment by Contract, Monthly Enrollment by Plan, February 2011.  
Accessed at http://www.cms.gov/MCRAdvPartDEnrolData/ on July 12, 2011. 
4 The Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary 
Medical Insurance Trust Funds, 2010 Annual Report, August 5, 2010, p. 135.  Accessed at 
http://www.cms.gov/ReportsTrustFunds/downloads/tr2010.pdf on February 22, 2011. 
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Contractors (MEDIC).  MEDICs perform specific program integrity 
activities in the Part D program.5   
Seven Types of Audits  
In addition to financial audits, CMS began conducting seven types of 
audits between 2006 and 2009.  Although CMS is required by law to 
conduct financial audits, there are no legal requirements for it to 
conduct any of these seven types of audits.6  CMS conducts these audits 
at the plan sponsors parent organization, contract, or plan level, 
depending on the audit type.  Each CMS office that conducts Part D 
audits selects plan sponsors to audit based on certain criteria, including 
enrollment levels, recommendations from other CMS offices, risk 
analysis, and resource limitations.  
Autoenrollment readiness audits.  MDBG and PCOG were the CMS 
offices responsible for this type of audit.  Autoenrollment readiness 
audits assess a plan sponsors automated systems and processes to 
ensure that the plan is ready to receive autoenrollments of beneficiaries 
who qualify for low-income subsidies.  When beneficiaries qualify for 
such subsidies but fail to enroll in Part D plans, CMS automatically 
enrolls them in a PDP.  Each year, CMS identifies PDPs qualified to 
accept autoenrollees and selects plan sponsors from this group to audit.  
The audit measures the plan sponsors readiness to autoenroll 
beneficiaries in the coming contract year and to provide timely notices 
and evidence of enrollment to beneficiaries so they can immediately use 
the plan services.   
Benefit integrity audits.  These audits are conducted on an ad hoc basis to 
identify and investigate Part D fraud cases.  At the time of our review, 
the CMS office with oversight responsibility for these audits was the 
Program Integrity Group, then operating within the Office of Financial 
Management.   
Benefit integrity audits may be performed on any entity in the Part D 
program.  CMS, a MEDIC, or a plan sponsor can recommend and 
conduct a benefit integrity audit.  With CMSs approval, MEDICs may 
participate in plan sponsors audits of pharmacies. 
 
5 CMS, Prescription Drug Benefit Manual, Rev. 2, April 25, 2006, ch. 9,  10.1.  Accessed at 
http://www.cms.gov/PrescriptionDrugCovContra/12_PartDManuals.asp on September 22, 2011. 
6 Social Security Act  1860D-12, 42 U.S.C.  1395w-112.   
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Bid audits.  OACT is the CMS office responsible for reviewing, 
approving, and auditing bid amounts.  Before it approves a sponsors 
bid, CMS conducts a review to ensure that the bid meets CMSs 
requirements.   
Once a bid is approved, CMS may conduct a bid audit, i.e., an audit of 
the plan sponsors bid development for selected plans offered by the 
sponsor.  The bid development includes the bid amount, which is the 
plan sponsors per-member, per-month estimated cost of providing drug 
coverage.  Bid audits are reviews of the reasonableness of the data and 
the support for actuarial assumptions used to develop the plan sponsors 
bid.  Bid audits review base period data, which are a previous years 
actual utilization, drug cost, and administrative fee data that help 
determine the bid amount. 
CMS categorizes deficiencies found through bid audits as findings or 
observations.  Findings are deficiencies that, if corrected, could lead to 
reduced payments from CMS, additional benefits to enrollees, or 
reduced enrollee premiums.  Observations are inconsistencies, errors, 
omissions, and unreasonable assumptions and practices that do not 
significantly affect the bid.7   
CMS reviews plan sponsors subsequent bids to determine whether 
issues identified by previous bid audits were addressed.  Findings and 
observations identified through bid audits are forwarded to MDBG to be 
used in performance analysis of those plan sponsors. 
Compliance plan audits.  Late in 2009, the responsibility for compliance 
plan audits was transitioned to PCOG.  Prior to that time, the Program 
Integrity Group was responsible for these audits.  All sponsors are 
required to have a compliance plan.  Compliance plans detail sponsors 
policies and procedures regarding fraud, waste, and abuse.  The 
compliance plan must include certain elements such as procedures for 
effective internal monitoring and auditing and procedures for ensuring 
prompt responses to detected offenses.8  Compliance plan audits 
determine whether sponsors have these elements in their plans and the 
extent to which their compliance plans are effective.   
Long-term-care pharmacy contract audits.  MDBG was responsible for 
this type of audit at the time of our review.  Long-term-care pharmacies 
 
7 CMS, Audit Procedures for Calendar Year 2008 Bids, p. 3. 
8 42 CFR  423.504(b)(4)(vi).   
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dispense prescription drugs to beneficiaries in institutional settings 
such as nursing homes.  Long-term-care pharmacy contract audits were 
performed on plan sponsors with the largest number of beneficiaries in 
long-term institutional settings.  These audits reviewed agreements 
between the plan sponsors and long-term-care pharmacies to ensure 
that they met CMS requirements, such as convenient access to  
long-term-care pharmacies for institutionalized enrollees.  CMS 
conducted these audits in response to complaints about long-term-care 
pharmacy negotiations. 
Pharmacy access audits.  Pharmacy access audits were another type of 
audit for which MDBG was responsible.  These were audits of contracts 
between plan sponsors and pharmacies and pharmacy benefit managers 
that administer sponsors prescription drug benefits.  The audits 
determined whether the contracts met CMS requirements.  These 
requirements include, but are not limited to, meeting retail pharmacy 
access standards, abiding by privacy regulations, and charging the 
correct cost-sharing amount.  CMS did not conduct pharmacy access 
audits after 2007 because it began requiring PDPs to submit analyses of 
Part D pharmacy access to CMS each year. 
Program audits.  Also known as program compliance audits, program 
audits examine a broad array of policies, procedures, and operations 
related to sponsors Part D plans.9  These audits are conducted by 
PCOG and examine areas such as enrollment and disenrollment; 
marketing; coordination of benefits; formularies; and enrollee coverage 
determinations, grievances, and appeals.    
Corrective Action Plans 
CMS requires plan sponsors to develop and implement corrective action 
plans to address problems identified through most types of audits.  
Within certain types of audits and for certain types of problems, CMS 
takes corrective actions, such as warning or monitoring the sponsor.   
For bid audits, CMS does not use a corrective action plan process.  
Instead, CMS determines whether the problems identified through bid 
audits are resolved when it reviews plan sponsors bids for the following 
contract year.   
 
9 We use the term program audit instead of program compliance audit throughout this report 
to distinguish program audits from compliance plan audits. 
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Problems identified through benefit integrity audits conducted by plan 
sponsors are addressed through a corrective action process that is 
controlled by the sponsor.   
During our review, CMS described the corrective action plan process as 
an iterative one that begins when the plan sponsor submits an initial 
corrective action plan.  After it reviews the corrective action plan, CMS 
can require the plan sponsor to modify it and resubmit it until CMS is 
satisfied that the corrective action plan addresses the audit findings and 
approves it. 
Monitoring 
According to CMS, audits are just one part of its strategy to ensure that 
PDP sponsors are in compliance with Part D laws, regulations, and 
guidance.  CMS reported that although its initial approach was to use 
auditing to ensure compliance, it was faced with a number of urgent 
issues surrounding Part D that drove the creation of a more intensive 
monitoring program.  CMS stated that as day-to-day monitoring has 
become more sophisticated, particularly in the past few years, it has not 
had to rely as heavily on audits as a source of information about PDP 
sponsor performance.  The new monitoring program includes the 
collection of measurements from all plans on key issues, e.g., beneficiary 
complaints, call center response times, disenrollment rates, and Part D 
pricing accuracy.  CMS reported that monitoring provides more timely 
information than audits and also results in compliance actions.  
Related OIG Work       
OIG has issued several reports concerning CMSs oversight of the  
Part D program that have included information about audits.   
Three reports found delays in starting financial audits.10  Two of these 
reports, issued in 2007, found that financial audits had not yet begun.  
The third report found that only 4 percent of the required number of 
financial audits for contract year 2006 had begun as of April 2008.  
 
10 OIG, CMSs Implementation of Safeguards During Fiscal Year 2006 To Prevent and Detect 
Fraud and Abuse in Medicare Prescription Drug Plans, OEI-06-06-00280, October 2007; OIG, 
Tracking Beneficiaries True Out-of-Pocket Costs for the Part D Prescription Drug Benefit,  
OEI-03-06-00360, December 2007; and OIG, Centers for Medicare & Medicaid Services Audits of 
Medicare Part D Bids, OEI-05-07-00560, November 2008.  
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Two reports, issued in 2008 and 2010, found weaknesses in the bid 
audit process.11  In 2008, OIG found that one-quarter of all bid audits 
for 2006 and 2007 identified at least one finding.  However, bid audits 
were not designed to lead to sanctions, such as civil monetary penalties 
or suspension of enrollment.  OIG recommended that CMS modify the 
bid audit process so that plan sponsors can be held more accountable 
and subject to corrective actions when bid audits identify findings.  CMS 
responded that it would carefully consider modifying the bid audit 
process to hold plans more accountable for findings.  In 2010, OIG found 
that the bid review and audit process needed improvements, including 
consideration of bid audit findings in the year-end reconciliation 
process. 
Three other OIG reports contained information regarding plan sponsors 
compliance plans.12  These reports found delays in starting compliance 
plan audits and that CMS did not have information on Part D fraud and 
abuse that would help it determine the effectiveness of sponsors 
compliance plans.  OIG also found that although MEDICs were 
prepared to conduct compliance plan audits, CMS did not give MEDICs 
approval to do so in fiscal year 2008. 
In its comments on several of these reports, CMS cited budget shortfalls 
and lack of necessary data as reasons that audits had not begun.   
METHODOLOGY 
Data Collection and Analysis  
For this review, we included all PDP audit types identified by various 
CMS offices, with the exception of financial audits.  We collected all audit 
information from CMSs central office, whether the audits were conducted 
by the central office, CMS regional offices, or contractors.  We collected 
information in two phases.  Data collection for this study began in 
December 2009.  However, after receiving responses for both phases of 
data collection from CMS, we had to request clarifying information.  For 
 
11 OIG, Centers for Medicare & Medicaid Services Audits of Medicare Part D Bids,  
OEI-05-07-00560, November 2008; OIG, Medicare Part D  Prescription Drug Event 
Reconciliation Process, A-18-08-30102, June 2010. 
12 OIG, Oversight of Prescription Drug Plan Sponsors Compliance Plans, OEI-03-08-00230, 
October 2008; OIG, Medicare Drug Plan Sponsors Identification of Potential Fraud and Abuse,  
OEI-03-07-00380, October 2008; OIG, Medicare Drug Integrity Contractors Identification of 
Potential Part D Fraud and Abuse, OEI-03-08-00420, October 2009. 
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some audit types, we made repeated requests for clarification.  We 
completed data collection in August 2010.   
First phase.  In the first phase of data collection and analysis, we collected 
the following information on plan sponsors for each of 4 years, 2006 
through 2009: 
  CMSs audit protocols; 
  CMSs criteria for selecting PDPs to be audited; 
  a list of PDP contracts; and  
  a list of the PDPs for which audits were completed for each of the 
seven audit types in this study, the date each audit was 
completed (i.e., final report issued), and whether these audits 
identified problems.  We defined problem as any audit finding 
that CMS determined needed to be addressed by plan sponsors. 
We reviewed the audit protocols and the criteria CMS used for selecting 
PDPs to audit for each of the audit types.   
From the lists of PDP contracts and completed audits, we summarized the 
number of contracts CMS had with plan sponsors each year, and 
calculated the percentage of contracts for which CMS completed each of 
the seven types of audits.  If a parent organization was audited, we 
deemed that all contracts under that parent organization were audited.  
We also summarized the number of audit types completed each year and 
across all 4 years.  Finally, we calculated the number and percentage of 
audits that identified problems.   
Data stratification and sample selection.  From the population of 194 audits 
that identified problems, we selected a stratified random sample of  
129 to review in more detail.  Each stratum of the sample represents an 
audit type.  For each audit type, if there were 35 or fewer audits that 
identified problems in 4 years, we reviewed all of the audits.  As a result, 
we reviewed the entire population of autoenrollment readiness audits, 
benefit integrity audits, long-term-care pharmacy contract audits, and 
pharmacy access audits that identified problems.  Bid audits and program 
audits were the only two audit types for which we did not review the entire 
population.   
Table 1 shows the population of audits that identified problems, the 
number of sample audits from this population, and the number of 
problems in sample audits. 
   
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Table 1:  Sample Audits and Problems in Sample Audits,  
 
20062009  
  Population  Number 
 of Audits  of 
Sample 
  Stratum  Type of Audit  That  Problems 
Audits  
Identified  in Sample 
 
Problems   Audits 
 
1  Autoenrollment readiness audits  19  19  51 
 
  2  Benefit integrity audits  27  27  38 
  3  Bid audits  72  37  107 
  4  Compliance plan audits  NA1  NA1  NA1 
 
5  Long-term-care pharmacy contract audits  9  9  9 
 
6  Pharmacy access audits  2  2  2 
 
7  Program audits  65  35  466 
 
     Total  194  129  673 
 
Source:  OIG analysis of CMS responses to 2010 OIG data request. 
1 Compliance plan audits were not completed during our review period. 
 
Second phase.  In the second phase of data collection and analysis, we 
collected the following information for all problems identified though our 
sample audits: 
  a description of each problem and each corrective action used to 
address it, 
  the date that CMS accepted the corrective action plan to address 
each problem and the date the problem was resolved, and 
  a description of the evidence CMS used to determine that the 
problem was resolved. 
We also collected CMSs policies and procedures for implementing 
corrective actions. 
We calculated the number of problems identified by each type of audit and 
across audit types.  We categorized the types of problems and corrective 
actions and determined the frequency of each category by audit type.     
For each type of audit, we determined whether CMS had evidence that 
corrective actions were taken to address the problems.  If CMSs 
description of evidence lacked specifics or did not correspond specifically to 
the corrective action, we determined that there was no evidence that the 
corrective action was taken. 
We did not project findings from our sample because we could not make 
reliable projections for bid and program audit problem types.  Therefore, to 
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present all the findings in a consistent manner, we provide information 
based only on our review of the sample data. 
Limitations    
We did not independently verify data provided by CMS.  We also did not 
evaluate whether the audit types described by CMS met general 
accounting or auditing standards. 
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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 F I N D I N G S  
CMS had 125 active, unique PDP 
Some PDP sponsor contracts 
sponsor contracts over the first  
were never audited between 
4 years of the Part D program.  As 
2006 and 2009   
shown in Table 2, 50 of the  
125 contracts were never audited 
in any way.  These 50 contracts covered 1.1 million beneficiaries.13  PDP 
contracts were active between 1 and 4 years.  Of the 68 contracts that 
were active for 4 years, 13 (19 percent) were never audited.  Table 2 
shows the number and percentage of contracts never audited. 
   
Table 2:  Number of Contracts That Were Never Audited,    
20062009 
Number of  Number of  Percentage of 
Number of 
Years Contracts  Contracts Never  Contracts Never 
Contracts 
Were Active  Audited  Audited 
4  68  13  19% 
3  28  13  46% 
2  5  1  20% 
1  24  23  96% 
     Total  125  50  40% 
Source:  OIG analysis of CMS responses to 2010 data request. 
 
CMS did not set parameters regarding the number of audits to conduct                                                                                                   
Whether a plan sponsor is audited depends on selection criteria developed 
by the different CMS offices responsible for conducting the audits.  None of 
these offices had requirements regarding the number of audits to conduct. 
As shown in Table 3, in some years, CMS did not complete any audits for 
certain audit types.  Audits can identify problems that might not be 
detected through other forms of oversight.  
Autoenrollment readiness audits.  CMS completed autoenrollment readiness 
audits in all 4 years.  Thirty-four autoenrollment readiness audits were 
completed between 2006 and 2009. 
 
 
13 The enrollment estimate for these 50 contracts is based on the number of enrollees in 
December of the most recent year each contract was active between 2006 and 2009.  As of 
February 2011, 19 million beneficiaries were enrolled in PDPs. 
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Table 3:  Types of Audits Completed Each Year, 20062009 
 
Total for All            
Type of Audit  2006  2007  2008  2009 
  4 Years 
 
Autoenrollment readiness audits  7  11  8  8  34 
 
Benefit integrity audits1  0  1  17  18  36 
 
Bid audits  41  24  14  NA2  79 
 
Compliance plan audits3  0  0  0  0  0 
 
Long-term-care pharmacy contract  NA4  NA4  NA4  10  10 
audits 
 
Pharmacy access audits  0  9  NA5  NA5  9 
 
Program audits  0  21  31  25  77 
 
      Total   48  66  70  61  245 
So urce:  OIG analysis of CMS responses to 2010 data request.  
1 Benefit integrity audits were conducted by sponsors.  They were audits of pharmacies in sponsors networks. 
2 F ourteen bid audits begun in 2009 were not completed in 2009. 
3 Although CMS did not complete any compliance plan audits between 2006 and 2009, it did begin a number of these 
 
audits in 2010.   
4  C    MS did not begin conducting long-term-care pharmacy contract audits until 2009. 
5 CMS discontinued pharmacy access audits after 2007. 
 
 
Benefit integrity audits.  Plan sponsors completed benefit integrity audits of 
pharmacies in 3 of the 4 years we reviewed.  The number of audits 
completed varied from as few as 1 in 2007 to as many as 18 in 2009.   
Bid audits.  The number of bid audits CMS completed each year ranged 
from 41 for contract year 2006 to 14 for contract year 2008.  Because bid 
audits are always begun in October of the contract year and completed in 
April of the following year, the bid audits that were begun in 2009 were 
not completed in 2009.  
Compliance plan audits.  CMS did not complete any compliance plan audits 
in the first 4 years of the Part D program.  CMS began 10 compliance plan 
audits in 2008 and another 7 in 2009.  Sponsors were selected for 
compliance plan audits based on performance data, risk factors, and 
enrollment levels.  Although the selected sponsors presented the greatest 
risk, the compliance plan audits begun in 2008 and 2009 were never 
completed.  CMS began conducting compliance plan audits in 2010 and 
completed a number of these audits.  
  OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  12     
 
F I N D I N G S  
Long-term-care pharmacy contract audits.  CMS did not conduct this type of 
audit in the first 3 years of the Part D program.  It began conducting  
long-term-care pharmacy contract audits only after receiving complaints 
from plan sponsors about negotiations with long-term-care pharmacies.  
CMS selected plan sponsors with the largest number of enrollees living in 
long-term-care settings for these audits.  Ten audits of this type were 
completed in 2009.  CMS reported that after 2009, it did not conduct these 
audits because it did not receive similar complaints in subsequent years. 
Pharmacy access audits.  In the first year of the Part D program, no 
pharmacy access audits were conducted because all plan sponsors 
pharmacy access networks were reviewed as part of the Part D application 
process.  CMS completed nine audits of this type in 2007.  For these 
audits, CMS selected 10 percent of plan sponsors that made changes 
between 2006 and 2007 regarding the first-tier entity (e.g., a pharmacy 
benefit manager) performing key functions on their behalf.  After 2007, no 
pharmacy access audits were conducted because CMS began requiring 
plan sponsors to submit an analysis of Part D access under new annual 
reporting requirements.   
Program audits.  CMS did not conduct program audits in the first year of 
the Part D program.  It completed 21, 31, and 25 program audits in 2007, 
2008, and 2009, respectively.    
 
Seventy-nine percent of the 245 PDP audits  For six of the seven audit types 
in our review, 245 audits were 
completed between 2006 and 2009 
completed between 2006 and 
 identified problems  
2009.  Of those, 194 (79 percent) 
identified problems.  For four audit types, at least three-quarters of the 
audits identified problems.   
Table 4 shows, by audit type, the total number of audits completed and 
the number and percentage of audits that identified problems.   
   
  OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  13     
 
F I N D I N G S  
 Table 4:  Percentage of Audits That Identified Problems,  
20062009 
 
Number of  Percentage 
  Number of  Audits  of Audits 
Audit Type  Audits  That  That 
  Completed  Identified  Identified 
Problems  Problems 
 
Bid audits  79  72  91% 
 
Long-term-care pharmacy contract audits  10  9  90% 
 
Program audits  77  65  84% 
  Benefit integrity audits  36  27  75% 
  Autoenrollment readiness audits  34  19  56% 
Pharmacy access audits  9  2  22% 
 
Compliance plan audits  0  NA  NA 
 
     Total  245  194  79% 
 
  Source:  OIG analysis of CMS responses to 2010 OIG data request. 
 
Two-thirds of the problems identified involved beneficiaries coverage 
status or payments 
Between 2006 and 2009, the 129 audits reviewed identified                    
673 problems.  As shown in Table 5, two-thirds of these problems (447 of 
673) may directly affect beneficiaries coverage status or payments.     
 
Table 5:  Total Number of Problems by Audit Type, 20062009 
 
Number of Problems 
Number of 
Audit Type  That May Directly 
  Problems  
Affect Beneficiaries 
 
Program audits  466  358 
 
Bid audits  107  45 
 
Autoenrollment readiness audits  51  23 
  Benefit integrity audits  38  21 
  Long-term-care pharmacy contract audits  9  0 
Pharmacy access audits  2  0 
 
Compliance plan audits  No audits completed  No audits completed 
 
     Total  673  447 
 
Source:  OIG analysis of CMS responses to 2010 data request. 
    
  OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  14     
 
F I N D I N G S  
Appendix A lists all categories of problems identified through the audits 
and the number of problems in each category. 
Program audits.  Forty-one percent of the problems identified through 
program audits were deficiencies in the plan sponsors enrollment and 
disenrollment processes.  Examples of these deficiencies include failure 
to provide beneficiaries with membership materials prior to the effective 
date of enrollment, failure to notify beneficiaries of denial of enrollment 
requests, and failure to disenroll beneficiaries who move out of the 
sponsors service area.  Problems in these processes may affect 
beneficiaries understanding of their coverage and, therefore, affect their 
decisions about obtaining needed prescriptions.  
Another 36 percent of the problems identified through program audits 
were deficiencies in plan sponsors coverage determination, grievance, 
and/or appeals processes.  Examples of deficiencies of this type include 
failure to notify a beneficiary of a coverage determination or decision 
regarding a grievance within required timeframes.  Problems in these 
processes could affect beneficiaries ability to obtain the prescription 
drugs they need.   
Bid audits.  Forty-two percent of problems identified through bid audits 
involved adjustment, calculation, or categorization errors.  These errors 
included inappropriate adjustments to cost sharing amounts, 
inappropriate calculation of indirect costs, and inappropriate 
categorization of direct and indirect costs.  Problems in plan sponsors 
bids can affect the premiums beneficiaries pay for Part D coverage and 
the amount CMS pays plan sponsors to administer the Part D benefit.  
As stated previously, CMS categorizes problems identified by bid audits 
as either findings or observations, and findings are more serious than 
observations.  Of the 107 problems identified through bid audits,  
13 were findings.  Of the 13 findings, 5 involved adjustment, calculation, 
or categorization errors. 
Autoenrollment readiness audits.  Two categories of problems represented 
45 percent of problems identified through autoenrollment readiness 
audits.  The two problem categories were deficiencies in testing the 
systems for processing enrollment transactions and deficiencies in 
processes for handling four types of identifying information, called  
4Rx data, needed to route prescription drug claims.  If a plan sponsor is 
unable to autoenroll low-income subsidy beneficiaries or route their 
claims correctly, these beneficiaries could be left without Part D 
coverage.   
  OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  15     
 
FF II NN DD II NN GG SS   
Benefit integrity audits.  Fifty-five percent of problems identified through 
benefit integrity audits involved inappropriate billing by pharmacies, 
such as pharmacies billing for services not rendered.  When pharmacies 
bill inappropriately, the Part D program and beneficiaries may be 
harmed.    
 
CMS did not document that 
CMS did not have evidence to show that all 
corrective action was taken for 
corrective actions were implemented 
88 of 506 problems  
for two audit types  
(17 percent) identified by 
program and autoenrollment readiness audits.14  Eighty-six of these 
eighty-eight problems (98 percent) were identified by program audits.  
The categories of program audit problems for which there was no 
evidence of correction varied and included deficiencies in enrollment 
and disenrollment processes and deficiencies in coverage determination, 
grievances, and appeals processes.     
For two problems identified by autoenrollment readiness audits, CMS 
did not have evidence to show that corrective actions were taken.  The 
corrective actions for these two problems were to submit policies and 
procedures and take corrective action under a different audit type.15   
Appendix B lists all the categories of corrective action used to address 
problems identified through each type of audit. 
   
 
14 For this calculation, we excluded 11 sample problems from the 517 problems identified 
through these 2 audit types either because the problems were unresolved or the PDP contracts 
were not renewed.  
15 There was no evidence to show that corrective action was implemented under the 
other audit, which was a program audit. 
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E X RRE CEE UCC TOO I MMV MME EE  SNN UDD MAA MTT AII ROO YNN  SS   
CMS is responsible for overseeing the Part D program.  Auditing is one 
way CMS ensures that plan sponsors comply with laws and regulations 
related to the Part D program.  Although CMS is not required to 
conduct the seven types of audits in our report, it developed them to 
identify problems and correct deficiencies within the Part D program.  
However, CMS did not have requirements regarding the number of 
audits it should conduct.  Nor did CMS always have evidence to show 
that all problems were addressed for certain audit types.   
Prior OIG reports have shown that CMS delayed beginning some types 
of audits.  This report shows that some PDP contracts were never 
audited, and that no compliance plan audits were completed between 
2006 and 2009.  This report also shows that when audits were 
conducted, they frequently identified problems that may directly affect 
beneficiaries coverage status or payments.  Audits can identify 
problems that might not be detected through other forms of oversight.  
The sooner audits are performed and problems identified, the sooner 
problems can be addressed.   
We recommend that CMS: 
Establish a comprehensive Part D auditing strategy that ensures that each 
plan sponsor will be audited in some way within a certain timeframe  
The strategy should include parameters for conducting each audit type.  
The strategy should also ensure coordination among the CMS offices 
responsible for auditing activities so that no contract goes 4 successive 
years without an audit of some type. 
Ensure that evidence is available to show that corrective actions have been 
implemented 
CMS should maintain documentation that corrective actions were 
implemented. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS partially concurred with the first recommendation, stating that it 
believes that all sponsors should undergo a bid audit and that it plans to 
complete a bid audit by 2013 of every PDP parent organization in the 
program since 2006.  CMS is not in favor of establishing a comprehensive 
Part D auditing strategy.  It believes a comprehensive oversight strategy, 
developed in coordination with offices responsible for the management of 
Part D, is more effective than an auditing strategy.  CMS also believes 
  OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  17     
 
R E C O M M E N D A T I O N S  
that its heavy reliance on monitoring, defined as systematic evaluation of 
the complete universe of sponsors, allows it to assess key performance 
indicators across 100 percent of PDP sponsors.  CMS stated that 
monitoring is the only efficient approach for assessing critical 
performance areas across all PDP contracts.  CMS added that in 2011, it 
systematically monitored PDP sponsors performance across more than a 
dozen topic areas, e.g., call center wait times and complaint rates.   
CMS also stated the 2010 program audits and compliance plan audits 
were conducted on sponsors that posed the most risk to the program, and 
that these sponsors were identified through risk assessments using 
information gathered through monitoring efforts.   
OIG stands by its first recommendation, to establish a comprehensive 
Part D auditing strategy.  This recommendation is not meant to be a 
substitute for a comprehensive oversight strategy or for monitoring.  It is 
meant to be a tool CMS can use to ensure that parameters are 
established and followed regarding the auditing of Part D plan sponsors, 
regardless of the types of audits CMS chooses to conduct from year to 
year.        
CMS concurred with the second recommendation.  CMS stated that in 
2010, it began a more comprehensive process for validating corrections 
made by sponsors as a result of deficiencies found during audits.  CMS 
stated that it now maintains, and will continue to maintain, 
documentation of corrective actions implemented for all audits.  For the 
full text of CMSs comments, see Appendix C.    
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   A P P E N D I X   ~   A  
 
Table A-1:  Categories of Problems Identified Through Sampled Audits, 20062009 
Number of 
Audit Type  Problem Category 
Problems 
Autoenrollment readiness audits   Deficient systems testing  12 
Deficient system for handling the identifying 
  11 
information needed to route claims  
  Deficient beneficiary call center  5 
  Deficient formulary transition process  5 
Technical concerns including inappropriate use of 
  Transaction Reply Report weekly files1  4 
Deficient system for correcting low-income subsidy 
  data with best available evidence of Medicaid  4 
eligibility 
  Deficient autoenrollment process  3 
  Deficient low-income subsidy process  2 
  Deficient point-of-sale process  2 
Deficient process for providing beneficiary 
  2 
confirmation notices and/or ID cards 
  Inadequate or insufficient documentation  1 
     Subtotal    51 
Benefit integrity audits2  Inappropriate billing  21 
Inappropriate transfer, storage, disposal, or 
  8 
processing of drugs 
  Inappropriate dispensing of drugs  6 
  Inappropriate technician-to-pharmacist ratio  2 
Owner indicted for Medicaid fraud and sponsor not 
  1 
notified 
     Subtotal    38 
Bid audits  Adjustment, calculation, or categorization error  45 
  Inadequate or insufficient documentation  24 
  Inconsistent, missing, or questionable information  22 
Bid not developed according to instructions from 
  15 
Centers for Medicare & Medicaid Services (CMS) 
  Inconsistent development of rebates among plans  1 
     Subtotal    107 
continued on next page 
   
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A P P E N D I X   ~   A  
 
Table A-1:  Categories of Problems Identified Through Sampled Audits,         
20062009 (Continued) 
Number of 
Audit Type  Problem Category 
Problems 
Long-term-care pharmacy contract audits  Deficient contracts  9 
     Subtotal    9 
Pharmacy access audits   Deficient contracts  2 
     Subtotal    2 
Program audits   Deficient enrollment and/or disenrollment process  189 
Deficient coverage determination, grievance, and/or 
  169 
appeals process 
  Deficient marketing process  21 
  Deficient formulary transition process  17 
  Deficient notices and/or materials for beneficiaries  13 
Deficient process for true out-of-pocket costs and/or 
  12 
coordination of benefits  
  Deficient provider communications  11 
  Deficient policies and procedures  10 
Deficient contracts with first-tier or downstream 
  6 
entities  
  Deficient compliance plan  4 
  Deficient claim processing and/or payment system  4 
  Deficient pharmacy access for beneficiaries  3 
Deficient documentation of reviews by Pharmacy and 
  2 
Therapeutics Committee 
  Deficient drug utilization review process  2 
Deficient in providing CMS information on its quality 
  1 
assurance program to reduce medication errors 
Deficient process for employer group plans'            
  1 
low-income premium subsidy  
Deficient process for revising its Medication Therapy 
  1 
Management Program 
     Subtotal     466 
     Total    673 
Source:  Office of Inspector General (OIG) analysis of CMSs responses to 2010 OIG data request. 
1 Weekly Transaction Reply Reports contain information on changes in beneficiary enrollment information. 
2 Benefit integrity audits, conducted by sponsors, were audits of pharmacies in sponsors networks. 
 
   
  OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  20     
 
  A P P E N D I X   ~   B  
 
Table B-1:  Categories of Corrective Action Taken To Address Problems Identified 
Through Sampled Audits, 20062009 
Number of 
Audit Type  Corrective Action Category  Problems 
Addressed1 
Autoenrollment readiness audits  Centers for Medicare & Medicaid Services (CMS) 
16 
  requested additional information 
  CMS monitoring  10 
  Sponsor submitted policies and procedures  9 
  CMS denied autoenrollees or reassignments  7 
  CMS conducted followup audit  6 
Sponsor submitted audit, compliance, performance, or 
  3 
other reports to CMS 
  CMS warning letter  2 
Sponsor established or revised policies and 
  2 
procedures 
  Sponsor implemented policies and procedures  2 
  Sponsor conducted training   1 
  Sponsor submitted documentation of training to CMS  1 
  Sponsor took corrective action under a different audit  1 
Benefit integrity audits2   Pharmacy terminated from network  22 
  Pharmacy referred to Office of Inspector General (OIG)  19 
  Pharmacy put on corrective action plan   4 
Pharmacy under investigation by Medicare Drug 
  2 
Integrity Contractor 
  Sponsor pursued internal corrective action  2 
  Pharmacy notified of overpayment  1 
Rather than using a corrective action process for 
Bid audits  problems identified by bid audits, CMS determined that  943 
problems found in bid audits were resolved when it 
reviewed the sponsors bid for the next contract year 
Long-term-care pharmacy contract audits     Sponsor submitted revised contracts to CMS  7 
Sponsor established or revised policies and 
  3 
procedures 
Pharmacy access audits   CMS requested a corrective action plan  2 
continued on next page 
 
   
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A P P E N D I X   ~   B  
Table B-1:   Categories of Corrective Action Taken To Address Problems Identified 
Through Sampled Audits, 20062009 (Continued) 
Number of 
Audit Type1  Corrective Action Category  Problems 
Addressed1 
Program audits   Sponsor established or revised policies and 
356 
  procedures 
  Sponsor conducted training   334 
  Sponsor submitted documentation of training to CMS  332 
  Sponsor implemented policies and procedures  162 
  Sponsor submitted policies and procedures to CMS  102 
Sponsor established monitoring and oversight 
  75 
procedures 
Sponsor submitted audit, compliance, performance, 
  69 
or other reports to CMS 
Sponsor implemented monitoring and oversight 
  52 
procedures 
  Sponsor conducted internal audits  49 
Sponsor submitted template of beneficiary notices to 
  44 
CMS 
  Sponsor implemented internal controls  43 
  Sponsor submitted analysis of deficiency to CMS  42 
Sponsor submitted name of staff responsible for 
  24 
implementing corrective action to CMS 
Sponsor revised contracts, contract addenda, or 
  13 
agreements  
  CMS conducted followup audit  12 
  Sponsor submitted accurate data to CMS  11 
  Sponsor developed internal controls  6 
  Sponsor submitted target compliance dates to CMS  5 
Sponsor developed, updated, or implemented a 
  3 
tracking system 
  Sponsor developed provider education materials  2 
  Sponsor revised its Web site  2 
Sponsor improved accountability for accuracy and 
  1 
completeness of information 
Source:  OIG analysis of CMSs responses to 2010 OIG data request. 
1 One problem may have been addressed through more than one corrective action.  Therefore, the total number of problems addressed by a 
corrective action may be greater than the number of problems in an audit type.   
2 Benefit integrity audits, conducted by sponsors, were audits of pharmacies in sponsors networks. 
3 The bid audits reviewed identified 107 problems.  Of these, only 94 were associated with contracts that were renewed the next contract year.  All of 
these 94 problems were resolved.  
 
 
  OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  22  x  c 

A  P  PEN  0 
Agency Comments 
Centers for Medicare & Medicaid Services 
Administrator 
Washington, DC 20201 
DATE:  OCT 2 72011 
TO:  Daniel R. Levinson 
Inspector General 
FROM:  Donald M. Berwick, M.D. 
Administrator 
SUBJECT:  Office of Inspector General (OIG) Draft Report: "Audits of Medicare Prescription 
Drug Plan Sponsors," OEI-03-09-00330 
Thank you for the opportunity to review and comment on the Office ofinspector General's 
(OIG's) draft report, "Audits of Medicare Prescription Drug Plan Sponsors." The Centers for 
Medicare & Medicaid Services (CMS) appreciates the time and resources the OIG has invested 
in examining CMS' use of audits in overseeing Prescription Drug Plan (PDP) sponsors. 
As part ofthis study, the OIG identified seven types ofaudits that CMS used for auditing stand
along PDP's during the first 4 years of the program, 2006 - 2009, and provided an overview of 
CMS' use ofthese types of audits to oversee PDP sponsors. These seven audit types were: 
autoenrollment readiness audits, benefit integrity audits, bid audits, compliance plan audits, long
term-care pharmacy audits, pharmacy access audits, and program audits.  As the report notes, 
CMS is not required by law to conduct any of these types of audits, but developed them to 
identify problems and correct deficiencies within the Part D program. 
The OIG identified three findings as a result of their study. First, the OIG found that some PDP 
sponsor contracts were never audited between 2006 and 2009; second, that seventy-nine percent 
of the 245 PDP audits completed between 2006 and 2009 identified problems; and third, that 
CMS did not have evidence to show that all corrective actions were implemented for two audit 
types. 
The OIG made the following recommendations: 
OIG Recommendation 1: 
Establish a comprehensive Part D auditing strategy that ensures that each plan sponsor will be 
audited in some way within a certain timeframe .. The strategy should include parameters for 
conducting each audit type. The strategy should also ensure coordination among the CMS 
offices responsible for auditing activities so that no contract goes 4 successive years without an 
audit of some type. 
OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  23     
 
A P P E N D I X   ~   C  
   
  OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  24     
 
A P P E N D I X   ~   C  
 
  OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  25     
 
 RA EC CK ON MO WM EL EN DD GA TM IE ON NT SS   
This report was prepared under the direction of Robert A. Vito, 
Regional Inspector General for Evaluation and Inspections in the 
Philadelphia regional office, and Linda M. Ragone, Deputy Regional 
Inspector General.   
Isabelle Buonocore served as the team leader for this study.  Other 
principal Office of Evaluation and Inspections staff from the 
Philadelphia regional office who contributed to the report include   
Nancy J. Molyneaux; other central office staff who contributed include 
Kevin Farber, Robert L. Gibbons, and Rita M. Wurm.  
  OEI-03-09-00330  AUDITS OF MEDICARE PRESCRIPTION DRUG PLAN SPONSORS  26   
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 and 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.