**GAO-08-1074R**                      Published: Sep 30, 2008. Publicly Released: Oct 30, 2008.                  

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## Highlights

To help Medicare beneficiaries manage the rising cost of prescription drugs, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which established the outpatient prescription drug benefit known as Medicare Part D. The benefit was first available in January 2006, and that year it provided federally subsidized prescription drug coverage for nearly 28 million beneficiaries at a cost of $47.4 billion--almost 12 percent of total Medicare spending. The Centers for Medicare & Medicaid Services (CMS), part of the Department of Health and Human Services (HHS), manages and oversees the Part D program. Part D sponsors--entities that enter into contracts with Medicare--administer the benefit and compete for beneficiary enrollment. To provide coverage, the sponsors often enter into contractual relationships with pharmacy benefit managers (PBM), drug manufacturers, and retail pharmacies, among others. The Part D program relies on sponsors to generate prescription drug savings, in part through their ability to negotiate price concessions, such as rebates and discounts, with these entities. Sponsors must report the price concession amounts to CMS and pass price concessions on to the program. CMS uses the reported data to calculate final plan payments, so accurate data are necessary to ensure accurate payments. CMS is responsible for ensuring that the reported price concessions data are reliable.

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## Topics

Health Care

Audit oversightAuditsCost analysisData collectionData integrityDrug pricingFinancial analysisFinancial managementFinancial statementsFood and drug lawHealth care cost controlHealth care costsHealth care policiesHealth care programsHealth care reformInternal controlsManaged health careMedicarePharmaceutical industryPrescription drugsPrice supportsPrices and pricingProgram abusesReporting requirementsStatistical data