Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

LESS THAN HALF OF PART D 

SPONSORS VOLUNTARILY 

REPORTED DATA ON 

POTENTIAL FRAUD AND 

ABUSE 

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 CMS’s 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 CMS’s 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. 

Less Than Half of Part D Sponsors Voluntarily Reported Data on Potential Fraud and Abuse (OEI-03-13-00030) 2 
 

 

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 CMS’s 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 CMS’s 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 CMS’s 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. 

Less Than Half of Part D Sponsors Voluntarily Reported Data on Potential Fraud and Abuse (OEI-03-13-00030) 6 
 

 

 

 

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 

2010 2011 2012 Total Across 

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 analysis 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 

Less Than Half of Part D Sponsors Voluntarily Reported Data on Potential Fraud and Abuse (OEI-03-13-00030) 7 
 

 

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 

48 

74 

56 

12 

15 

7 

2 2 

0 1 

0 

10 

20 

30 

40 

50 

60 

70 

80 

0 1 to 9 10 to 49 50 to 99 100 to 

199 

200 to 

499 

500 to 

999 

1,000 to 

4,999 

5,000 to 

9,999 

More 

than 

10,000 

Number of Plan Sponsors 

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 rate—308 incidents per 1,000 beneficiaries—identified 

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 rate—0.03 incidents 

per 1,000 beneficiaries—identified 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. 

Less Than Half of Part D Sponsors Voluntarily Reported Data on Potential Fraud and Abuse (OEI-03-13-00030) 9 
 

 

of incidents reported by each sponsor in 2012, the number of beneficiaries 

enrolled in each sponsor’s 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 categories—for 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 

Less Than Half of Part D Sponsors Voluntarily Reported Data on Potential Fraud and Abuse (OEI-03-13-00030) 10 
 

 

 

 

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 

Response to Incidents of 

Potential Fraud and Abuse 

Number of 

Actions 

Reported 

Percentage 

of 26,092 

Incidents 

Identified1 

Number of 

Actions 

Reported 

Percentage 

of 12,796 

Incidents 

Identified1 

Number of 

Actions 

Reported 

Percentage 

of 25,247 

Incidents 

Identified1 

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 

Licensing Authorities 101 < 1% 172 1% 174 < 1% 

Source: OIG analysis of Part D plan sponsors’ data reported in HPMS, 2013. 

1

 For inquiries and corrective 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. 

Less Than Half of Part D Sponsors Voluntarily Reported Data on Potential Fraud and Abuse (OEI-03-13-00030) 11
 

 

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 year—42,364 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 CMS’s 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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Less Than Half of Part D Sponsors Voluntarily Reported Data on Potential Fraud and Abuse (OEI-03-13-00030) 13 

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 

CMS’s 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) 14 

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. 
 

 

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 abuse—specifically, 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 
 

CMS’s 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 CMS’s 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 

 Total Number of 

Beneficiaries 

Enrolled in Plan 

Rank by Incidents 

Identified 

Rank by Beneficiary 

Enrollment 

Incidents Identified 

Per 

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 

 Total Number of 

Beneficiaries 

Enrolled in Plan 

Rank by Incidents 

Identified 

Rank by Beneficiary 

Enrollment 

Incidents Identified 

Per 

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 

 Total Number of 

Beneficiaries 

Enrolled in Plan 

Rank by Incidents 

Identified 

Rank by Beneficiary 

Enrollment 

Incidents Identified 

Per 

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 

 Total Number of 

Beneficiaries 

Enrolled in Plan 

Rank by Incidents 

Identified 

Rank by Beneficiary 

Enrollment 

Incidents Identified 

Per 

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 

 Total Number of 

Beneficiaries 

Enrolled in Plan 

Rank by Incidents 

Identified 

Rank by Beneficiary 

Enrollment 

Incidents Identified 

Per 

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 

 Type of Incident 

Number Reported in 

2010 

Number Reported in 

2011 

Number Reported in 

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 

Through Internal Efforts 16,547 8,872 17,946 

Incidents of Potential Fraud and Abuse Identified 

Through External Sources 8,877 3,893 7,256 

Source: OIG analysis of Part D plan sponsors’ data reported in HPMS, 2013. 

1 According to CMS’s 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 2012, 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 

(...- .·"'J.""""',._ E.. 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 OIG’s 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.