Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
L H P D 
ES  S THAN  ALF OF  ART   
 
S V
P  ONSORS  OLUNTARILY 
 
R D
EPORTED  ATA ON 
P F
OTENTIAL  RAUD AND 
A
BUSE 
 
Daniel R. Levinson   
Inspector General  
 
March 2014  
OEI-03-13-00030   
   
EXECUTIVE SUMMARY:  LESS THAN HALF OF PART D SPONSORS 
VOLUNTARILY REPORTED DATA ON POTENTIAL FRAUD AND ABUSE  
OEI-03-13-00030 
 
WHY WE DID THIS STUDY 
 
In 2011, total expenditures for the Medicare Part D prescription drug program were 
$67.1 billion. The Centers for Medicare & Medicaid Services (CMS) contracts with plan 
sponsors to provide Part D coverage to beneficiaries.  The Office of Inspector General 
has recommended that CMS require sponsors to report data on potential fraud and abuse 
related to Part D to CMS. Rather than requiring these data, CMS encouraged sponsors to 
voluntarily report them beginning in 2010.  This study provides information on the fraud 
and abuse data reported by sponsors and on whether CMS used these data to monitor or 
oversee the Part D program.   
 
HOW WE DID THIS STUDY  
 
We accessed CMSs Healthcare Plan Management System to download data on potential 
fraud and abuse reported by Part D plan sponsors from 2010 through 2012.  We also 
accessed CMSs public files of Part D enrollment to determine the number of 
beneficiaries enrolled in Part D plans from 2010 through 2012.  We reviewed the 
sponsors aggregate data to determine the number and percentage of sponsors that 
reported data on potential fraud and abuse each year.  In addition, we surveyed CMS 
about its review and use of these reported data.     
 
WHAT WE FOUND 
 
More than half of Part D plan sponsors did not report data on potential fraud and abuse 
between 2010 and 2012. Of those sponsors that did report data, more than one-third did 
not identify any incidents for at least one of their reporting years.  In total, sponsors 
reported identifying 64,135 incidents of potential fraud and abuse between 2010 and 
2012. Sponsors identification of such incidents varied significantly, from 0 to almost 
14,000 incidents a year.  CMS requires sponsors to conduct inquiries and implement 
corrective actions in response to incidents of potential fraud and abuse; however,  
28 percent of Part D plan sponsors reported performing none of these actions between 
2010 and 2012. Although CMS reported that it conducted basic summary analyses of the 
data on potential fraud and abuse, it did not perform quality assurance checks on the data 
or use them to monitor or oversee the Part D program.  
 
WHAT WE RECOMMEND  
 
We recommend that CMS (1) amend regulations to require sponsors to report to CMS  
their identification of and response to potential fraud and abuse; (2) provide sponsors 
with specific guidelines on how to define and count incidents, related inquiries, and 
corrective actions; (3) review data to determine why certain sponsors reported especially 
high or low numbers of incidents, related inquiries, and corrective actions; and (4) share 
sponsors data on potential fraud and abuse with all sponsors and law enforcement.  CMS 
did not concur with the first recommendation, partially concurred with the second and 
fourth recommendations, and concurred with the third recommendation.  
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................5 

Findings........................................................................................................7 

More than half of Part D plan sponsors did not report data on 

potential fraud and abuse between 2010 and 2012 ..........................7 

Sponsors identification of incidents of potential fraud and  

abuse varied significantly, from 0 to almost 14,000 incidents  

a year................................................................................................8 

Twenty-eight percent of Part D plan sponsors reported initiating  

no inquiries and corrective actions regarding incidents of   

potential fraud and abuse between 2010 and 2012 ........................10 

Although CMS reported that it conducted basic summary   

analyses of the data on potential fraud and abuse, it did not 

perform quality assurance checks on the data or use them to 

monitor or oversee the Part D program ..........................................12 

Conclusion and Recommendations ............................................................15 

    Agency Comments and Office of Inspector General Response .....17 

Appendix....................................................................................................20 

A: Number of Incidents Identified for Each Part D Plan Sponsor 

That Reported Data and Number of Beneficiaries in 2012 ............20 

B: Number and Types of Incidents of Potential Fraud and Abuse 

Identified by Part D Plan Sponsors From 2010 Through 2012 .....25 

C: Agency Comments  ...................................................................26 

Acknowledgments......................................................................................29 

 
   
   
OBJECTIVES 
To determine: 
1. 	  the extent to which Part D plan sponsors voluntarily reported data on 
potential fraud and abuse to the Centers for Medicare & Medicaid 
Services (CMS) for 2010 through 2012 and 
2. 	  the extent to which CMS used these data to monitor or oversee 
sponsors activities to control fraud and abuse. 
BACKGROUND 
Medicare Part D is the voluntary prescription drug program that went into 
effect in 2006.  In 2011, 35.7 million beneficiaries were enrolled in Part D 
and total expenditures for Part D were $67.1 billion.1  
Plan Sponsors 
CMS contracts with private insurers, called plan sponsors, to provide 
Part D coverage to beneficiaries.  Sponsors may offer beneficiaries two 
types of drug plans. One type provides drug coverage only and is called a 
prescription drug plan (PDP), or stand-alone plan.  The other type 
provides all Medicare benefits (e.g., hospital and physician services), 
including drug coverage, and is called a Medicare Advantage prescription 
drug plan (MA-PD). 
Sponsors may have one or more Part D contracts with CMS.2 Each 
contract may include one or more plans for enrollees to choose from in a 
specific geographic region. Plans can vary in the prescription drugs 
covered and the amount of out-of-pocket expenses for which the 
beneficiary is responsible. 
Sponsors are responsible for all Medicare contract requirements and must 
ensure that all entities with which they subcontract meet regulatory and 
compliance requirements.3   These subcontractors include, but are not 
limited to, pharmacy benefit managers, pharmacies, marketing firms, and 
claims processing firms.   
 
1 The Boards  of Trustees, Federal Hospital Insurance and Federal  Supplementary Medical  
Insurance Trust Funds, 2012 Annual  Report, p. 10.  

2 Throughout this report, the word sponsor also refers to individual Part  D contracts 

because CMS requests that sponsors report data on potential fraud and abuse by contract. 

3 42 CFR   422.504(i) and 423.505(i); CMS, Prescription Drug Benefit Manual, 

Pub.  100-18, ch. 9,  40; Medicare Managed Care Manual, Pub. 100-16, ch. 21,  40. 

 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   1 
 
 
   
   
Compliance Programs To Control Fraud, Waste, and Abuse 
Sponsors are required to implement a compliance program that includes 
measures to control fraud, waste, and abuse.4 Under the compliance 
program, CMS requires sponsors to conduct a timely, reasonable inquiry 
when evidence suggests potential fraud or abuse related to payment or 
delivery of items or services under their contracts.5 In addition, CMS 
requires sponsors to carry out appropriate corrective actions in response to 
potential fraud and abuse.6  Furthermore, sponsors should have procedures 
to report potential fraud or misconduct to CMS or its designee.7  However,  
sponsors are not required to actually report this information to CMS or its 
designee. 
Medicare Part D Drug Reporting 
Each year CMS issues a Medicare Part D Reporting Requirements  
document to sponsors.  This document includes topics on which sponsors 
must report information to CMS.  Topics include, but are not limited to, 
enrollment, coverage determinations, appeals, pharmaceutical 
manufacturer rebates, and long-term care utilization.   
Voluntary Reporting of Numeric Data Related to Fraud and Abuse. In 
January 2010, CMS added a new topic to the reporting requirements 
document.  The new topic was voluntarily reported aggregate data related 
to [sponsors] anti-fraud, waste, and abuse activities.8   These are 
aggregated numeric data.  They do not provide any narrative or descriptive 
information about the specific incidents of potential fraud and abuse 
identified. 
In the reporting requirements document, CMS defines incidents of 
potential fraud and abuse. CMS defines a fraud incident/complaint as 
an allegation that a provider, a beneficiary, or other entity engaged in an 
intentional deception or misrepresentation that the individual knows to be 
false or does not believe to be true, and the individual makes knowing that 
the deception could result in some unauthorized benefit to himself/herself 
or some other person.  CMS defines an abuse incident/complaint as an  
allegation that a provider, a beneficiary, or other entity engaged in 
behavior that the individual should have known to be false, and the 
 
4 42 CFR   422.503(b)(4)(vi) and  423.504(b)(4)(vi).  

5 42 CFR   422.503(b)(4)(vi)(G)(1) and  423.504(b)(4)(vi)(G)(1). 

6 42 CFR   422.503(b)(4)(vi)(G)(2) and  423.504(b)(4)(vi)(G)(2). 

7 42 CFR   422.503(b)(4)(vi)(G)(3) and  423.504(b)(4)(vi)(G)(3). 

8 CMS, Medicare Part D Reporting Requirements, p. 27, effective January 1,  2010. 

 
 
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individual should have known that the deception could result in some  
unauthorized benefit to himself/herself or some other person.  
Sponsors that choose to report data are asked to submit them each year by 
February 28 for the previous contract year and to report the numbers at the 
contract level. The particular types of data sponsors report include: 
 	  the number of incidents of potential fraud and abuse identified 
within selected types of fraud and abuse (e.g., number of incidents 
related to inappropriate billing),  
 	  the number of incidents of potential fraud and abuse identified by 
internal sources or external sources, 
 	  the number of inquiries initiated as a result of incidents of potential 
fraud and abuse, 
 	  the number of corrective actions initiated as a result of incidents of 
potential fraud and abuse, 
 	  the number of incidents of potential fraud and abuse referred to 
CMS for action, 
 	  the number of incidents of potential fraud and abuse referred to 
State insurance commissioners or licensing authorities, and  
 	  the number of incidents of potential fraud and abuse referred to 
local or Federal law enforcement entities for action.9  
According to CMSs reporting requirements document, these data would 
enable CMS to monitor sponsors programs to control fraud, waste, and 
abuse. The document also states that such data would measure types of 
incidents of potential fraud and abuse as well as activities taken by 
sponsors in response to the incidents. 
Technical Specifications for Reporting. In connection with the annual 
reporting requirements document, CMS issues a technical specifications 
document to sponsors.  This latter document includes definitions of the 
types of data to report and informs Part D sponsors that the reporting of 
these data is voluntary.    
As of the 2013 technical specifications document, CMS stated that it had 
not yet determined how it would evaluate the aggregated reported data on 
 
9 CMS, Medicare Part D Reporting Requirements, p. 28, effective January 1,  2010. 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   3 
 
 
   
   
activities to control fraud, waste, and abuse or how it might monitor other 
data sources.10    
Healthcare Plan Management System  
CMS uses a system named the Health Plan Management System (HPMS) 
to maintain Part D records and communication with sponsors.  Within 
HPMS, the voluntarily reported aggregate data on potential fraud and 
abuse are accessible in standard extract files.    
Related Office of Inspector General Work 
This report adds to a body of work on sponsors identification of fraud, 
waste, and abuse. In February 2012, the Office of Inspector General 
(OIG) issued a report on Medicare Advantage (MA) organizations  
identification of potential fraud and abuse in 2009.  In that year, these 
organizations identified 147,840 incidents of potential Part D fraud and 
abuse, and not all of these organizations initiated inquiries or corrective 
actions in response to the incidents they identified. 
Many MA organizations offer both Part C and Part D coverage to 
beneficiaries. OIG found that only 3 of 170 MA organizations identified 
95 percent of the incidents of potential fraud and abuse within Part C and 
Part D. OIG also found that differences in the way organizations defined 
and detected potential fraud and abuse may account for some of the 
variability in the number of incidents identified.  OIG recommended that 
CMS require MA organizations to report data on their activities to control 
fraud, waste, and abuse. In response, CMS stated it would explore the 
option of requiring MA organizations to report aggregate data on antifraud 
activities.11    
Another OIG report, issued in October 2008, similarly found that most of 
the incidents of potential fraud and abuse identified by PDP sponsors in 
2007 were reported by only a small number of sponsors.  In the first 
6 months of 2007, PDP sponsors identified 9,774 incidents of potential 
fraud and abuse, and not all PDP sponsors that identified such incidents 
conducted inquiries, initiated corrective actions, or made referrals for 
further investigation. We recommended that CMS require plan sponsors 
to report information related to the results of their programs to control 
 
10 CMS, Medicare Part D Plan Reporting Requirements:  Technical Specifications 
Document, Contract  Year 2013, p. 72. 

11 OIG,  Medicare Advantage Organizations Identification  of Potential Fraud and Abuse, 

OEI-03-10-00310, February  2012. 

 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   4 
 
 
   
   
fraud and abuse. CMS did not state whether it concurred with this 
recommendation.12  
METHODOLOGY 
Data. We accessed HPMS to download data on potential fraud and abuse 
reported by Part D sponsors from 2010 through 2012.13   We reviewed the 
sponsors aggregate data to determine the number and percentage of 
sponsors that did or did not report data on potential fraud and abuse for 
each year.  We analyzed the data to determine the types of fraud and abuse 
incidents reported and the total and average number of (1) total incidents 
identified; (2) incidents identified through internal efforts; (3) incidents 
identified through external sources; (4) inquiries conducted; (5) corrective 
actions initiated; and (6) referrals to CMS, State agencies, and Federal and 
local law enforcement entities.   
To determine the type of contract that each sponsor had with CMS, we 
accessed CMSs publicly available Part D enrollment files for December  
of each year.   We excluded sponsors that had only cost or demonstration 
contracts with CMS.14, 15  We excluded sponsors of employer direct plans 
because they are excluded from  the option of reporting this data. 16   We  
also excluded sponsors of Programs of All-Inclusive Care for the Elderly 
(PACE) because they are exempt from all Part D reporting requirements.17     
From the enrollment files, we determined the number of beneficiaries 
enrolled in each contract from 2010 through 2012.18 Because of privacy 
laws established under the Healthcare Insurance Portability and 
Accountability Act of 1996, CMS does not publish the enrollment figures 
for contracts covering 10 or fewer beneficiaries.  To calculate enrollment 
statistics, we assigned such contracts a beneficiary enrollment of 10. 
 
12 OIG,  Medicare Drug Plan  Sponsors Identification  of Potential Fraud  and Abuse, 
OEI-03-07-00380, October  2008. 
13 We  accessed HPMS on  March 5  and 6, 2013. 

14 Medicare payments for cost  contracts are based on the reasonable costs of  providing
  
services to enrollees.   

15 Demonstration contracts test improvements in Medicare coverage, payment, and 
 
quality of care.  These contracts usually operate for a limited time, are for a specific 

group of  people, and/or are offered only in specific areas. 
 
16 An employer direct plan is  one in  which the employer or union contracts directly  
with CMS to  offer Part D coverage for its Medicare-eligible retirees. 

17 PACE is a benefit that features a comprehensive service delivery system and integrated 

Medicare and  Medicaid financing. 
 
18  We accessed enrollment data at https://www.cms.gov on March 7, 2013. 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   5 
 
 
   
   
We compared reported data among sponsors of different size on the basis 
of their enrollment numbers, and we identified any significant differences 
in reporting. To compare sponsors rates of incidents identified relative to 
their enrollment size, we calculated the number of incidents that sponsors 
identified per 1,000 beneficiaries. 
CMS Survey. We surveyed CMS about its review and use of the sponsors  
reported fraud and abuse data. As part of the survey, we requested any and 
all policies and procedures related to CMSs collection, review, and use of 
the data.  
We used the data to determine whether CMS had followed up with 
sponsors. We also determined whether CMS had used the data to share 
information about potential fraud and abuse with its contractors and with 
sponsors. In addition, we determined whether CMS had used the data to 
monitor or oversee the sponsors programs to control fraud and abuse.   
Limitations 
We did not verify the data on potential fraud and abuse reported by 
sponsors to CMS. 
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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FINDINGS 
More than half of Part D plan sponsors did not report 
data on potential fraud and abuse between 2010 and 
2012 
In 2010, CMS modified its Part D reporting requirements to encourage 
sponsors to voluntarily report aggregated data on potential fraud and 
abuse. Since this change, no more than 40 percent of sponsors reported 
any fraud and abuse data between 2010 and 2012.  Forty percent of 
sponsors reported data in 2010, 37 percent in 2011, and 35 percent in 
2012. There were 701 sponsors that had PDP or MA-PD contracts with 
CMS for at least one year between 2010 and 2012. Across all 3 years, 
46 percent of sponsors (320 of 701) reported data. Table 1 shows the 
number and percentage of sponsors that reported data. 
 
Table 1: Number and Percentage of Part D Plan Sponsors That Voluntarily  
Reported Data From 2010 Through 2012  
 
Total Across  
2010  2011   2012   Years1  
Number of Part D 
Plan Sponsors   651  626  620  701 
Number of Part D 
Plan Sponsors  That 
Reported Data   263  231  217  320 
Percentage of Part D 
Plan Sponsors  That 
Reported Data   40%  37%   35%   46%  
Source:  OIG a nalysis of Part D plan sponsors data reported in HPMS, 2013. 
 
1 The number of  Part D plan sponsors in this column is a count of unique  sponsors  that had contracts with CMS across 
  
these 3 years. 
Of the 701 sponsors that had contracts with CMS, 78 sponsors had 
contracts for only 1 year, 50 sponsors for 2 years, and 573 sponsors for all  
3 years. Among sponsors that held contracts across all 3 years, more than 
half (293 of 573 sponsors) did not report any aggregate data on potential 
fraud and abuse for all 3 years. 
The 293 sponsors that did not voluntarily report any data for all 3 years 
during which they had contracts with CMS covered 14.5 million 
beneficiaries in 2012, or 46 percent of the total number of beneficiaries 
enrolled in Part D plans.  Therefore, CMS does not have data on incidents 
 
 
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of potential fraud and abuse for plans covering almost half of the 
beneficiaries enrolled in Part D.  The largest sponsor that did not 
voluntarily report any data across all 3 years covered between 6 and          
9 percent of the total number of beneficiaries enrolled in Part D from 2010 
through 2012. 
Sponsors identification of incidents of potential fraud 
and abuse varied significantly, from 0 to almost 
14,000 incidents a year  
Sponsors identified 64,135 incidents of potential fraud and abuse between 
2010 and 2012. The number of such incidents identified varied 
significantly among the 320 sponsors that voluntarily reported data.  The 
number of incidents sponsors identified annually ranged from 0 to 13,919, 
with an annual average of 90 incidents per sponsor and a median of 
4 incidents per sponsor. Nearly a quarter of sponsors identified just      
one incident of potential fraud and abuse during a single reporting year.   
The total number of incidents of potential fraud and abuse identified did 
not increase over the years. Sponsors identified the highest number of 
incidents of potential fraud and abuse in 2010, or 26,092 incidents. In 
2011 and 2012, the total numbers of incidents of potential fraud and abuse 
identified were 12,796 and 25,247, respectively.   
Of the 320 Part D plan sponsors that reported data, more than 
one-third did not identify any incidents of potential fraud and 
abuse in at least one year 
From 2010 through 2012, 117 of 320 sponsors did not identify any 
incidents of potential fraud and abuse in at least one of the reporting years.  
The 117 sponsors covered 1.2 million beneficiaries in the years without 
reported incidents of potential fraud and abuse.  Fifty-nine of these 
sponsors did not identify any incidents for any of the years for which they 
reported data. 
In 2012, three Part D plan sponsors identified more than     
two-thirds of all reported fraud and abuse incidents  
Of the 217 sponsors that reported data in 2012, 3 sponsors identified more 
incidents than all other sponsors combined.  These 3 sponsors identified 
13,410 incidents (53 percent of the total), 2,586 incidents (10 percent), and 
1,287 incidents (5 percent), respectively.  In contrast, the majority of 
sponsors each identified fewer than 10 incidents in 2012.  Figure 1 
provides the ranges of incidents identified by sponsors in 2012.   
 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   8 
 
 
   
   
 
Figure 1: Range of Numbers of Incidents of Potential Fraud and Abuse 
Identified by Part D Plan Sponsors in 2012  
80 
74 
70 
60 
56 
s 
r
o
ns 50  48 
o
p
S
n 
a
Pl 40 
of 
r 
e
b
m 30 
u
N
20 
15 
12 
10  7 
2  2 
1 
0 
0 
0  1 to 9  10 to 49 50 to 99  100 to  200 to  500 to  1,000 to 5,000 to  More 
199  499  999  4,999  9,999  than 
10,000 
Range of Numbers of Incidents Identified 
 
Source:  OIG analysis of Part D plan sponsors data reported in HPMS, 2013. 
 
The variability in the number of  incidents identified was often not 
explained by the size of the sponsors enrollment.  To compare sponsors  
rate of incidents identified relative to their enrollment size, we calculated 
the number of incidents identified by sponsor per 1,000 beneficiaries.  
Four sponsors identified more than 100 incidents per 1,000 beneficiaries.  
All four of these sponsors had low beneficiary enrollment.19 The sponsor 
with the highest rate308 incidents per 1,000 beneficiariesidentified    
121 incidents, yet had only 393 beneficiaries enrolled in its plan.  The 
majority of sponsors (159 out of 217) identified less than 1 incident per 
1,000 beneficiaries. Among the sponsors that identified incidents of 
potential fraud and abuse, the sponsor with the lowest rate0.03 incidents 
per 1,000 beneficiariesidentified just 1 incident per the 
38,144 beneficiaries enrolled in its plan.  Appendix A provides the number 
 
19 These 4 sponsors had total beneficiary enrollments of 33, 185,  393, and 1,963.  
 
 
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of incidents reported by each sponsor  in 2012, the number of beneficiaries 
enrolled in each sponsors plan, and the range of numbers of incidents 
identified per 1,000 beneficiaries. 
CMS does not have detailed information on the incidents 
identified by Part D plan sponsors because of its limited 
reporting categories 
Sponsors may use five general categoriesfor example, inappropriate 
billing or providing false information to identify the different types 
of incidents. These categories provide only very broad information about 
the types of potential fraud and abuse that sponsors are identifying.  
Because of the limited categories, CMS does not have specific information 
about who committed the potential fraud and abuse or other details about 
the incidents. 
In addition, for thousands of incidents of potential fraud and abuse 
reported from 2010 through 2012, the types are unknown because 
sponsors categorized these incidents as other.  In 2010 and 2011, other 
was the second most common type of incident identified by sponsors; at 
least 10 percent of incidents were categorized in this way. CMS does not 
require sponsors to specify or describe what is included in this category.   
Therefore, CMS does not know the incident type for a large number of 
incidents being reported. 
Without detailed information about incidents of potential fraud and abuse 
reported by sponsors, CMS may be missing the opportunity to discover 
and alert sponsors to new fraud and abuse schemes.  Appendix B shows 
the number and types of incidents of potential fraud and abuse identified 
by sponsors between 2010 and 2012. 
Twenty-eight percent of Part D plan sponsors 
reported initiating no inquiries and corrective actions
regarding incidents of potential fraud and abuse 
between 2010 and 2012 
CMS requires sponsors to conduct a timely, reasonable inquiry and to 
carry out appropriate corrective actions in response to potential fraud and 
abuse.  From 2010 to 2012, 28 percent of the 261 sponsors that identified 
at least 1 incident of potential fraud and abuse reported initiating no 
inquiries and corrective actions with regard to any of these incidents.  In 
that timeframe, these 74 sponsors identified 4,028 incidents of potential 
fraud and abuse. Of these sponsors, 38 percent reported initiating no 
 
 
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inquiries and 51 percent reported initiating no corrective actions in 
response to identified incidents. 
Though they are not required to do so, sponsors can also refer incidents of 
potential fraud and abuse to CMS, Federal and local law enforcement, and 
State agencies. Sixty-one percent of the 261 sponsors did not refer any 
identified incidents to these entities.  
Across the 3 years, sponsors initiated 73,102 inquiries and 
23,833 corrective actions with regard to identified incidents and they 
referred 3,834 incidents to CMS. Table 2 provides the number of actions 
taken by sponsors each year.  
 
Table 2: Number of Actions Taken by  Part D Plan Sponsors in Response to Incidents of 
Potential Fraud and Abuse From 2010 Through 2012  
 
2010  2011  2012  
Type of Action Taken in   Number of   Percentage  Number of   Percentage  Number of   Percentage 
Response to Incidents of   Actions   of 26,092  Actions   of 12,796   Actions   of 25,247 
Potential Fraud and Abuse   Reported  IdInecnitdifeiendts1    Reported  IdInecnitdifeiendts1    Reported  IdInecnitdifeiendts1   
Initiated Inquiries  25,381  97%   5,357   42%   42,364   168%1  
Initiated Corrective Actions  
9,245   35%   2,300  18%   12,288  49%  
Referred to CMS   
778  3%  1,598   12%  1,458   6%  
Referred to Federal Law  
Enforcement  55  < 1%   85  < 1%   42  < 1%  
Referred to Local Law  
Enforcement  25  < 1%   26  < 1%   15  < 1%  
Referred to State Insurance 
Commissioners or State  < 1% 
101  172  1%   174  < 1%  
Licensing Authorities 
 
Source:  OIG analysis of Part D plan sponsors data reported in HPMS, 2013. 
 
1 For inquiries and  correct ive actions, CMS does not require the data to be reported as a  subset of the incidents identified for that reporting year.  
Therefore, it is possible that inquiries  and corrective actions may correspond to incidents of potential fraud and abuse identified in a prior year.  In 2012, 
CMS instructed sponsors  to  report referrals to CMS and other entities as a  subset of the  number of incidents identified during the reporting year. 
 
 
 
 
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Anomalies in inquiry data may stem from a lack of guidance to 
Part D plan sponsors 
It is interesting to note that the number of inquiries initiated in 2012 was 
significantly higher than the total number of incidents of potential fraud 
and abuse reported that year42,364 inquiries were made, whereas only 
25,247 incidents were identified. Furthermore, this number of inquiries 
was higher than the combined total number of incidents identified in 2010 
and 2011.  The highest number of inquiries conducted by a sponsor in that 
year was 33,525; this was the same  sponsor that identified the highest 
number of incidents (13,410 incidents). 
CMS does not require the number of inquiries to be reported as a subset of 
the number of incidents identified during the year.  Therefore, some of the 
anomalies in the inquiry data may be due in part to carryover from  
previous reporting years. Alternatively, it may be caused by sponsors  
counting inquiries in different ways.  In a 2010 report, OIG found 
differences in the ways in which some MA organizations defined and 
tracked inquiries that they initiated in response to incidents of potential 
fraud and abuse.20   For example, one MA organization defined the number 
of inquiries it conducted as the number of its staff members who 
investigated a particular incident of potential fraud and abuse.  Another 
organization defined inquiries as the number of unique contacts that [the] 
organization made during the investigation of each incident.  It is 
possible that Part D plan sponsors also may be using distinctly different 
methods to arrive at the number of inquiries they reported having 
conducted. 
Although CMS reported that it conducted basic
summary analyses of the data on potential fraud and 
abuse, it did not perform quality assurance checks on 
the data or use them to monitor or oversee the Part D 
program 
CMS reported that from 2010 through 2012, it conducted basic summary 
analyses on data on potential fraud and abuse.  For instance, CMS stated 
that it summarized fraud and abuse control activities across sponsors, as 
well as across years.  CMS stated that it integrated data from other 
sources, such as CMSs Complaint Tracking Module, into the analysis.21   
 
20 OIG,  Medicare Advantage Organizations Identification  of Potential Fraud and Abuse, 
OEI-03-10-00310, February  2012. 

21 The Complaint Tracking Module is part of HPMS and is the central repository of 

Medicare Part C and Part D complaints. 

 
 
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However, during this time period, CMS did not perform any quality 
assurance checks on the data.  It also  did not use the data for monitoring or 
oversight purposes, nor did it share the data with sponsors or law 
enforcement. 
CMS did not perform any quality assurance checks or followup 
on the fraud and abuse data reported by Part D plan sponsors  
CMSs Technical Specifications Document for 2011 and 2012 states that 
CMS can perform quality assurance checks to establish benchmarks to 
identify outliers or potentially erroneous data on fraud and abuse.22 It also 
states that CMS can identify outliers and notify sponsors to give them the 
opportunity to correct submitted data if needed.  However, CMS reported  
that it did not perform any quality assurance checks on the voluntarily 
reported data between 2010 and 2012 or notify any sponsors that their data 
from 2010 through 2012 were deemed to be outliers.   
CMS expects sponsors to validate their data.  In its Technical 
Specifications Document, CMS states that sponsors should perform a data 
validation check prior to submitting their data.  CMS specifies that the 
total incidents of potential fraud and abuse should equal the sum of the 
individual types of incidents. CMS also specifies that the incidents 
identified through internal efforts and external sources should be subsets 
of the total incidents identified in the reporting year.  
We performed a number of simple checks that either CMS or sponsors 
could have done to ensure the accuracy of sponsors reported data.  For 
2012, we found that the total number of incidents identified and reported 
in HPMS across sponsors did not equal the sum of the number of each 
type of incident. Upon further exploration, we found that this was because 
the total number of incidents identified and reported in HPMS did not 
equal the sum of the individual types of incidents identified for two 
sponsors. In addition, we found that for 39 sponsors, the sum of the 
incidents identified through internal efforts and external sources did not 
equal the total number of incidents reported.        
Although CMS did not perform any quality assurance checks on the data 
from 2010 to 2012, it reported that it is designing procedures to notify 
sponsors that do not pass quality assurance checks.  CMS stated it will 
review and investigate any extreme values reported by sponsors and that it 
 
22 CMS, Medicare Part D Plan Reporting Requirements:  Technical Specifications 
Document, Contract  Year 2011, p. 63; Medicare Part  D Plan Reporting Requirements:  
Technical Specifications  Document, Contract Year 2012, p. 67.  
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   13 
 
 
   
   
will attempt to determine whether extreme values are truly outliers or 
whether they are actually data entry errors.  CMS reported it will notify 
sponsors when it identifies data that need clarification and ask the sponsor 
to correct any mistakes.  
CMS did not use the fraud and abuse data to monitor or 
oversee Part D plan sponsors 
CMS is responsible for the oversight of Part D plan sponsors.  However,  
CMS reported that it did not use the voluntarily reported data for 
monitoring or oversight purposes.  CMS did not follow up with sponsors 
about their fraud and abuse control activities related to the voluntarily 
reported data. CMS stated that it is formulating processes to follow up 
with sponsors and to use the reported data to monitor and oversee 
sponsors. 
CMS reported that it plans to conduct further analyses on the voluntarily 
reported data, including statistical comparisons of fraud, waste, and abuse 
incidents reported by sponsors and parent organizations by each data 
element for 2010, 2011, and 2012.  These comparisons may include 
percentage relationships and average values, as well as identifications of  
sponsors with the most and least identified incidents.  CMS stated that 
future methodologies may incorporate results from other proactive data 
analysis projects and compare those results to voluntarily reported data to 
identify any trends, patterns, or anomalies. 
CMS did not share the fraud and abuse data with Part D plan 
sponsors or law enforcement 
CMS reported that from 2010 through 2012, it did not share the data on 
potential fraud and abuse with its National Benefit Integrity Medicare 
Drug Integrity Contractor (NBI MEDIC), sponsors, or law enforcement 
(e.g., OIG, the Department of Justice).23 CMS noted that beginning in 
2013, it shared the data with its NBI MEDIC.  According to CMS, the 
benefit integrity contractor has developed methodologies to analyze the 
data. CMS stated that it is discussing and formulating processes for 
sharing data with sponsors and law enforcement.  However, CMS stated 
that it is difficult to draw conclusions because the reporting of these data is 
voluntary.  
   
 
23 The NBI MEDIC is  responsible for detecting and preventing fraud, waste, and abuse in  
Medicare Parts C and D nationwide. 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   14 
 
 
   
   
CONCLUSION AND RECOMMENDATIONS 
Part D plan sponsors efforts to identify and address potential fraud and 
abuse are crucial to protecting the integrity of the Part D program.   
Although CMS does not require sponsors to report the identification of or 
response to incidents of potential fraud and abuse, CMS allowed sponsors 
to voluntarily report data on potential fraud and abuse beginning in 2010.  
However, more than half of sponsors did not report data on potential fraud 
and abuse from 2010 through 2012.  Even when sponsors did report data, 
CMS did not use these data for monitoring or oversight purposes, nor did 
CMS share these data with other plan sponsors or law enforcement.   
The number of incidents of potential fraud and abuse identified by 
sponsors varied significantly, and this variation often was not explained by 
the size of the sponsors enrollment. More than one-third of reporting 
sponsors did not identify any incidents of potential fraud and abuse in at 
least one of their reporting years.  Seventy-three sponsors identified just 
1 incident of potential fraud and abuse in a single year, yet 1 sponsor 
identified over 13,000 incidents of potential fraud and abuse.  Despite the 
variation across sponsors when reporting incidents of potential fraud and 
abuse and actions taken on these incidents, CMS did not review the 
reasons that caused sponsors significant differences in reporting. 
CMS could strengthen the usefulness of reported data on fraud and abuse 
by clarifying terms and requesting more specific information about 
incidents. CMS provided sponsors with only a few broad categories with 
which to report the type of data on incidents of potential fraud and abuse.  
In addition, sponsors reported other as the type of fraud for thousands of 
incidents. Therefore, the data reported lack details and their usefulness in 
identifying emerging fraud schemes or trends is limited.  The lack of clear 
definitions for fraud terms also may have led to anomalies in the reported  
data. For example, sponsors, overall, reported initiating a significantly 
higher number of inquiries in 1 year than the total number of incidents 
reported that year.  This may stem from a lack of guidance to sponsors on 
how to count inquiries, thereby leaving sponsors to develop their own, 
distinctly different methods to do so.   
Not all sponsors that identified incidents reported initiating inquiries or 
corrective actions or referring incidents to outside entities for further 
investigation. This raises questions about whether all sponsors have fully 
implemented programs to effectively address potential fraud and abuse as 
required. 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   15 
 
 
   
   
Because CMS does not have data on potential fraud and abuse for more 
than half of Part D plans, it cannot assess the efficacy throughout the Part 
D program of sponsors efforts to control fraud and abuse.  CMS itself has 
stated that it is difficult to draw conclusions about the fraud and abuse data 
because the data are reported voluntarily.     
We recommend that CMS: 
Amend regulations to require Part D plan sponsors to report to 
CMS their identification of and response to incidents of 
potential fraud and abuse 
Since 2010, sponsors have had the option to voluntarily report aggregate 
data on fraud and abuse activity to CMS.  In previous reports, OIG has 
recommended that CMS require sponsors to report incidents of potential 
fraud and abuse to CMS.   We continue to recommend that  CMS require 
sponsors to report to CMS their identification of and response to incidents 
of potential fraud and abuse. CMS should also require that sponsors 
provide more detailed information regarding incidents of potential fraud 
and abusespecifically, information about who committed the potential 
fraud and other details about the incident.  CMS may also want to provide 
more distinct categories of fraud and abuse so that sponsors could specify 
the types of incidents.  This information could result in earlier 
identification of fraud and abuse schemes, which would be important to 
share with other sponsors and law enforcement.  CMS should also use 
these data to target audits and to evaluate the effectiveness of sponsors  
programs to control fraud, waste, and abuse.  
Provide Part D plan sponsors with specific guidelines on how  
to define and count incidents of potential fraud and abuse, 
related inquiries, and corrective actions 
Existing CMS documentation provides basic definitions of fraud and 
abuse incidents. However, there was wide variation in the numbers of 
incidents and inquiries that sponsors reported from 2010 through 2012.  
This may be due in part to the fact that CMS has not provided sponsors 
with more specific guidance regarding the definitions of fraud and abuse 
terms.  Providing such guidance would help CMS to ensure that fraud and 
abuse information could be compared across sponsors and would promote 
a common understanding among sponsors.   
   
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   16 
 
 
   
   
Review data from Part D plan sponsors to determine why  
certain sponsors reported especially high or low numbers of 
incidents of potential fraud and abuse, related inquiries, and 
corrective actions 
From this review, CMS would be able to determine the extent to which the 
significant variation in reporting is caused by (1) a lack of a common 
understanding of key fraud and abuse terms across sponsors; (2) the 
quality of sponsors programs to prevent, detect, and correct fraud, waste, 
and abuse; (3) reporting errors made by sponsors; or (4) natural variation 
of fraud and abuse across sponsors and geographic areas. 
Share Part D plan sponsors data on potential fraud and abuse 
with all sponsors and law enforcement 
CMS stated that it has begun sharing sponsors data with the benefit 
integrity contractor.  Sharing data on potential fraud and abuse with 
sponsors and law enforcement would enable them to target problematic 
providers or beneficiaries and quickly respond to emerging fraud and 
abuse issues. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
CMS did not concur with our first recommendation.  CMS stated that 
sponsors are held accountable for detecting and preventing fraud and 
abuse and sponsors already report potential fraud to CMS's NBI MEDIC.  
CMS also stated that requiring sponsors to report directly to CMS itself  
may duplicate efforts, expend unnecessary additional resources, and 
potentially inundate CMS and its contractors with information that would 
not necessarily yield a better outcome in terms of stopping Part D fraud.   
CMS raised concerns that reporting data to CMS and the NBI MEDIC 
would be duplicative. OIG is not recommending duplicative reporting.  
CMS may choose to select the NBI MEDIC as its designee to receive 
sponsors fraud reports.   
While CMS states in its comments that sponsors already report potential 
fraud to the NBI MEDIC, they currently are not required to do so. The 
Prescription Drug Benefit Manual, Chapter 9, Compliance Program  
Guidelines, specifies that reporting of fraud, waste, and abuse is 
voluntary and that sponsors should refer cases involving potential fraud 
and abuse to the NBI MEDIC. Because these data are voluntarily 
reported, there is not a comprehensive set of data that enables CMS to 
monitor sponsors fraud, waste, and abuse programs.  Yet, according to 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   17 
 
 
   
   
CMSs reporting requirements document, these data are intended to serve 
that purpose. Therefore, OIG continues to recommend that CMS 
specifically require sponsors to report their identification of and response 
to incidents of potential fraud and abuse to CMS or its designee.  
Requiring sponsors to report these data will provide CMS a more 
complete and accurate accounting of  the identification of potential fraud 
and abuse incidents, as well as sponsors efforts to reduce fraud and abuse 
in Medicare. 
CMS partially concurred with our second recommendation.  CMS stated 
that each year, it issues the  reporting requirements document to sponsors.  
This document includes a discussion about voluntarily reported data 
related to anti-fraud activities and definitions of potential fraud and abuse 
incidents. CMS also reported that the July 27, 2012, revision to Chapter 9 
(Compliance Program Guidelines) of the Prescription Drug Benefit 
Manual provides guidance to sponsors on how to report fraud, waste, and 
abuse. OIG agrees that basic definitions of potential fraud and abuse 
incidents are included in the reporting requirements document and the 
Prescription Drug Benefit Manual. However, these documents do not 
specifically outline how sponsors should define and count an incident, an  
inquiry, or corrective action.  Therefore, OIG continues to recommend that 
CMS provide sponsors with specifics on how to define and count these 
data elements. 
CMS concurred with our third recommendation.  CMS stated that data 
sponsors report to it and the referrals sponsors send to the NBI MEDIC 
can be used to analyze the variation in reporting that may exist.  CMS 
stated it can use this information to assist sponsors that may require 
additional assistance in understanding potential fraud, waste, and abuse 
issues, and the ways in which to investigate those issues and to identify 
schemes that may be widespread.  CMS reported that it is reviewing and 
formulating the data reported to the NBI MEDIC and the data voluntarily 
reported to CMS to strengthen its outreach and education efforts. 
Regarding the fourth recommendation, CMS partially concurred and 
stated that it shares any specific (sponsor or prescriber) information with 
law enforcement upon request.  CMS stated that it does not believe that 
sending law enforcement all information would be beneficial, as law 
enforcement cannot pursue all leads since it has finite resources and, 
therefore, must narrow its focus. CMS also stated that specific data 
elements from individual sponsor's referrals are not typically shared with 
other sponsors, but information regarding Part D fraud schemes is shared 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   18 
 
 
   
   
with all sponsors and law enforcement through fraud alerts and quarterly 
Medicare Parts C and D Fraud Work Group meetings.  OIG understands 
that CMS may use its discretion to determine what information to share 
with law enforcement and sponsors.      
The full text of CMSs comments is provided in Appendix C. 
   
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   19 
 
 
   
   
APPENDIX A 
Table A-1 compares the number of incidents of potential fraud and abuse identified by 
Part D plan sponsors to the number of beneficiaries enrolled in Part D plans in 2012.  The 
table is sorted by the number of incidents identified per 1,000 beneficiaries in descending 
order.  Each sponsor is also ranked by number of incidents identified and number of 
beneficiaries enrolled. 
Table A-1:  Number of Incidents Identified for Each Part D Plan Sponsor 
That Reported Data and Number of Beneficiaries in 2012 
 Total Number of   Incidents Identified 
 Total Number of   Beneficiaries  Rank by  Incidents  Rank by  Beneficiary   Per 
Incidents   Enrolled in Plan   Identified   Enrollment  1,000 Beneficiaries 
121                              393                              22  205  307.89 
6                               33                             110  214  181.82 
305                            1,963                              8  185  155.37 
20                              185                              66  211  108.11 
414                            4,644                              7  152  89.15 
2,586                          38,371                              2  49  67.39 
148                            2,513                              20  175  58.89 
106                            1,998                              26  184  53.05 
193                            3,887                              13  159  49.65 
52                            1,322                              38  194  39.33 
13,410                        383,586                              1  7  34.96 
230                            6,785                              11  134  33.90 
464                          16,191                              6  91  28.66 
217                            7,837                              12  129  27.69 
713                          30,684                              4  60  23.24 
13                              627                              89  204  20.73 
281                          15,537                              9  94  18.09 
190                          14,362                              14  97  13.23 
35                            3,300                              48  167  10.61 
38                            4,013                              44  157  9.47 
73                            9,029                              31  117  8.09 
176                          25,268                              16  70  6.97 
42                            7,960                              42  128  5.28 
14                            2,947                              86  173  4.75 
16                            3,490                              78  164  4.58 
184                          40,459                              15  47  4.55 
60                          13,246                              34  102  4.53 
18                            4,065                              72  156  4.43 
154                          35,027                              19  55  4.40 
15                            3,826                              81  160  3.92 
51                          13,896                              39  99  3.67 
57                          15,860                              35  93  3.59 
1                              317                             169  207  3.15 
30                            9,739                              55  111  3.08 
23                            8,890                              60  118  2.59 
5                            2,083                             119  181  2.40 
        continued on next page 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   20 
 
 
   
   
Table A-1:  Number of Incidents Identified for Each Part D Plan Sponsor 
That Reported Data and Number of Beneficiaries in 2012  (Continued)
 
 Total Number of   Incidents Identified 
 Total Number of   Beneficiaries  Rank by  Incidents  Rank by  Beneficiary   Per 
Incidents   Enrolled in Plan   Identified   Enrollment  1,000 Beneficiaries 
113                          48,662                              24  41  2.32 
4                            1,730                             130  192  2.31 
7                            3,263                             106  169  2.15 
134                          62,665                              21  28  2.14 
16                            7,652                              77  130  2.09 
68                          35,401                              33  54  1.92 
73                          45,371                              30  43  1.61 
18                          11,560                              71  109  1.56 
14                            9,365                              85  114  1.49 
11                            7,424                              93  132  1.48 
236                        161,523                              10  12  1.46 
18                          12,452                              70  105  1.45 
96                          67,697                              28  26  1.42 
5                            3,579                             118  162  1.40 
34                          25,795                              49  69  1.32 
8                            6,223                              99  139  1.29 
8                            6,505                              98  136  1.23 
72                          61,856                              32  30  1.16 
19                          16,600                              69  89  1.14 
19                          17,529                              68  87  1.08 
54                          50,070                              37  39  1.08 
2                            1,871                             149  188  1.07 
1                            1,037                             168  199  0.96 
7                            7,476                             105  131  0.94 
13                          14,039                              88  98  0.93 
33                          35,657                              50  53  0.93 
3                            3,274                             139  168  0.92 
17                          18,645                              75  82  0.91 
158                        182,208                              18  10  0.87 
14                          16,343                              84  90  0.86 
31                          36,318                              53  52  0.85 
45                          53,996                              41  34  0.83 
2                            2,452                             148  177  0.82 
22                          27,300                              62  65  0.81 
14                          18,237                              83  83  0.77 
3                            3,937                             138  158  0.76 
5                            6,631                             117  135  0.75 
7                            9,312                             104  116  0.75 
22                          31,401                              61  56  0.70 
6                            8,631                             109  122  0.70 
37                          53,938                              45  35  0.69 
5                            7,375                             116  133  0.68 
35                          51,937                              47  37  0.67 
3                            4,512                             137  153  0.66 
4                            6,075                             129  141  0.66 
20                          31,009                              65  57  0.64 
        continued on next page 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   21 
 
 
   
   
Table A-1:  Number of Incidents Identified for Each Part D Plan Sponsor 
That Reported Data and Number of Beneficiaries in 2012  (Continued)
 
 Total Number of   Incidents Identified 
 Total Number of   Beneficiaries  Rank by  Incidents  Rank by  Beneficiary   Per 
Incidents   Enrolled in Plan   Identified   Enrollment  1,000 Beneficiaries 
4                            6,347                             128  138  0.63 
2                            3,198                             147  170  0.63 
2                            3,367                             146  165  0.59 
17                          28,683                              74  63  0.59 
5                            8,789                             115  120  0.57 
9                          15,980                              97  92  0.56 
1                            1,795                             167  190  0.56 
31                          57,840                              52  32  0.54 
1                            1,867                             166  189  0.54 
5                            9,376                             114  113  0.53 
23                          43,783                              59  44  0.53 
46                          88,658                              40  17  0.52 
13                          25,160                              87  72  0.52 
1                            2,027                             165  183  0.49 
15                          30,892                              80  58  0.49 
1                            2,068                             164  182  0.48 
4                            8,850                             127  119  0.45 
9                          20,224                              96  79  0.45 
31                          72,472                              51  24  0.43 
4                            9,518                             126  112  0.42 
2                            4,820                             145  148  0.41 
30                          72,751                              54  23  0.41 
11                          26,798                              92  68  0.41 
35                          88,308                              46  18  0.40 
2                            5,054                             144  147  0.40 
28                          73,026                              56  21  0.38 
105                        283,508                              27  9  0.37 
14                          38,271                              82  50  0.37 
21                          58,808                              64  31  0.36 
612                     1,714,406                              5  2  0.36 
56                        157,542                              36  13  0.36 
15                          42,358                              79  45  0.35 
1                            2,864                             163  174  0.35 
3                            8,710                             136  121  0.34 
7                          20,338                             103  78  0.34 
1,287                     3,786,436                              3  1  0.34 
10                          29,834                              95  61  0.34 
3                            9,341                             135  115  0.32 
16                          51,377                              76  38  0.31 
12                          38,560                              90  48  0.31 
7                          22,557                             102  77  0.31 
7                          22,855                             101  76  0.31 
4                          13,750                             125  101  0.29 
85                        315,913                              29  8  0.27 
5                          18,879                             113  81  0.26 
171                        646,772                              17  5  0.26 
        continued on next page 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   22 
 
 
   
   
Table A-1:  Number of Incidents Identified for Each Part D Plan Sponsor 
That Reported Data and Number of Beneficiaries in 2012  (Continued)
 
 Total Number of   Incidents Identified 
 Total Number of   Beneficiaries  Rank by  Incidents  Rank by  Beneficiary   Per 
Incidents   Enrolled in Plan   Identified   Enrollment  1,000 Beneficiaries 
7                          26,980                             100  66  0.26 
5                          19,339                             112  80  0.26 
26                        101,923                              58  15  0.26 
19                          76,040                              67  20  0.25 
6                          25,188                             108  71  0.24 
1                            4,269                             162  154  0.23 
4                          17,889                             124  85  0.22 
1                            4,693                             161  151  0.21 
1                            4,694                             160  150  0.21 
1                            4,722                             159  149  0.21 
11                          53,304                              91  36  0.21 
3                          15,459                             134  95  0.19 
1                            5,173                             158  146  0.19 
17                          92,173                              73  16  0.18 
4                          22,863                             123  75  0.17 
4                          22,999                             122  74  0.17 
2                          12,758                             143  103  0.16 
27                        180,448                              57  11  0.15 
21                        152,637                              63  14  0.14 
10                          72,774                              94  22  0.14 
114                        874,255                              23  3  0.13 
111                        856,479                              25  4  0.13 
2                          16,640                             142  88  0.12 
1                            8,525                             157  124  0.12 
1                            8,553                             156  123  0.12 
3                          28,181                             133  64  0.11 
5                          54,789                             111  33  0.09 
39                        447,410                              43  6  0.09 
1                          11,563                             155  108  0.09 
1                          12,619                             154  104  0.08 
6                          80,130                             107  19  0.07 
2                          30,795                             141  59  0.06 
4                          62,464                             121  29  0.06 
3                          49,736                             132  40  0.06 
4                          67,172                             120  27  0.06 
3                          71,712                             131  25  0.04 
2                          47,856                             140  42  0.04 
1                          24,858                             153  73  0.04 
1                          26,902                             152  67  0.04 
1                          29,225                             151  62  0.03 
1                          38,144                             150  51  0.03 
0                         41,884                             170  46  0 
0                         18,188                             171  84  0 
0                         17,779                             172  86  0 
0                         14,454                             173  96  0 
0                         13,830                             174  100  0 
continued on next page 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   23 
 
 
   
   
Table A-1:  Number of Incidents Identified for Each Part D Plan Sponsor 
That Reported Data and Number of Beneficiaries in 2012  (Continued)
 
 Total Number of   Incidents Identified 
 Total Number of   Beneficiaries  Rank by  Incidents  Rank by  Beneficiary   Per 
Incidents   Enrolled in Plan   Identified   Enrollment  1,000 Beneficiaries 
0                         12,047                             175  106  0 
0                         11,622                             176  107  0 
0                           9,753                             177  110  0 
0                           8,502                             178  125  0 
0                           8,351                             179  126  0 
0                           8,100                             180  127  0 
0                           6,491                             181  137  0 
0                           6,142                             182  140  0 
0                           5,661                             183  142  0 
0                           5,495                             184  143  0 
0                           5,364                             185  144  0 
0                           5,197                             186  145  0 
0                           4,117                             187  155  0 
0                           3,605                             188  161  0 
0                           3,510                             189  163  0 
0                           3,302                             190  166  0 
0                           3,183                             191  171  0 
0                           3,043                             192  172  0 
0                           2,460                             193  176  0 
0                           2,311                             194  178  0 
0                           2,188                             195  179  0 
0                           2,104                             196  180  0 
0                           1,943                             197  186  0 
0                           1,926                             198  187  0 
0                           1,785                             199  191  0 
0                           1,680                             200  193  0 
0                           1,257                             201  195  0 
0                           1,223                             202  196  0 
0                           1,133                             203  197  0 
0                           1,045                             204  198  0 
0                             763                             205  200  0 
0                             705                             206  201  0 
0                             670                             207  202  0 
0                             642                             208  203  0 
0                             379                             209  206  0 
0                             315                             210  208  0 
0                             297                             211  209  0 
0                             199                             212  210  0 
0                             174                             213  212  0 
0                             122                             214  213  0 
0                              28                             215  215  0 
0                              10                             216  216  0 
0                              10                             217  217  0 
                       25,247  14,034,918       
   
Source:  OIG analysis of Part D plan sponsors data reported in HPMS and enrollment data obtained from publically available files, 2013. 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   24 
 
 
   
   
APPENDIX B 
Table B-1 shows the number and types of incidents of potential fraud and abuse identified by 
sponsors between 2010 and 2012. 
 
Table B-1:  Number and Types of Incidents of Potential Fraud and Abuse Identified 
by Part D Plan Sponsors From 2010 Through 2012 
Number Reported in  Number Reported in  Number Reported in 
 Type of Incident   2010  2011  2012 
     
Total Incidents of Potential Fraud and Abuse 1   26,092  12,796  25,247  
Inappropriate Billing  21,365   8,940   16,848  
Providing False Information   1,352   1,257   4,311  
Doctor-Shopping or Drug-Seeking Beneficiary   544  592  605 
Attempting To Steal Identity or Money    282  323  337 
Other   2,549  1,684  3,149  
Incidents of Potential Fraud and Abuse Identified 
16,547  8,872   17,946  
Through Internal Efforts 
Incidents of Potential Fraud and Abuse Identified 
8,877  3,893  7,256  
Through External Sources 
Source:  OIG analysis o f Part D plan sponsors data reported in HPMS, 2013. 
 
1 According to  CMSs Technical Specifications Document, the total incidents of potential fraud and abuse should equal the sum of the individual types of 
 
incidents.  In addition, incidents identified through internal efforts and external sources should be subsets of  the total incidents identified in the reporting  
year. For all  years, the total number  of incidents of potential fraud and abuse did not equal the sum of  the incidents identified through internal efforts and 
 
external sources.  In 20 12, the total number of incidents of potential fraud and abuse did not equal the sum of the individual types of incidents. 
 
 
 
 
   
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   25
 
 
  APPENDIXC 
Agency Comments 
(...- E..
."'J.""""',._ 
DEPARTMENT OF HEALTH & HUMAN SERVICES  Ceniers for Medicare & Medicaid Services 
'"..,..r;,a 
Administrator 
Washington, DC 20201 
DATE:  JAN -B2014 
TO: 	 Daniel R. Levinson 

Inspector General 

FROM: 	 Marll)<n TaveRner 

Administrat&r 

SUBJECT: 	 Office of Inspector General (OIG) Draft Report: "Less Than Halfof Part D 
Sponsors Voluntarily Reported Potential Fraud and Abuse Data" 
(OEI-03-13-00030) 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 
comment on the above-referenced OIG draft report. CMS is committed to combating fraud, 
waste, and abuse in the Part D program and is continuously taking steps to strengthen our overall 
efforts.  Two key principles are guiding our approach:  1) reducing the number of Medicare 
beneficiaries receiving coverage for prescription drugs that threaten their health and safety, and 
2) preventing Part D coverage for prescription drugs dispensed by pharmacies or prescribed by 
providers engaging in fraud or abuse. 
Our strategy for Part D focuses on the validation and analysis of Part D claims data (prescription 
drug event, or POE, data) that CMS receives from Part D sponsors and leveraging that data to 
provide Part D plan sponsors, law enforcement agencies, and licensing boards with actionable 
information. CMS is committed to working with Part D sponsors to implement this strategy; 
however, we believe that requiring Part D sponsors to report all potential fraud and abuse would 
have the potential to inundate the agency and our contractors with an unwieldy amount of 
information that would not necessarily yield a better outcome in terms of stopping Part D fraud. 
Our response to each of the OIG recommendations follows. 
OIG Recommendation 
The OIG recommends that CMS amend regulations to require Part D sponsors to report to CMS 
their identification of and response to potential fraud and abuse incidents. 
CMS Response 
The CMS does not concur with this recommendation. Part D sponsors are held accountable for 
detecting and preventing fraud and abuse. CMS has issued guidance citing the revision to 
Less Than Half of Part D Sponsors Voluntarily Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)  26   
   
 
 
   
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   27 
 
 
   
   
   
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   28 
 
 
   
   
ACKNOWLEDGMENTS 
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.  
Tanaz Dutia served as the team leader for this study.  Other Office of 
Evaluation and Inspections staff from the Philadelphia regional office who 
conducted the study include Joanna Bisgaier and Nancy J. Molyneaux.  
Central office staff who provided support include Meghan Kearns and 
Christine Moritz.  
 
 
 
Less Than Half of Part D Sponsors Voluntarily  Reported Data on Potential Fraud and Abuse (OEI-03-13-00030)   29 
 
 
   
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.