Department of Health & Human Services 

OFFICE OF

INSPECTOR GENERAL

 

MEDICARE PRESCRIPTION DRUG 

SPONSORS’ TRAINING TO 

PREVENT FRAUD, WASTE, 

AND ABUSE 

 

Daniel R. Levinson 

Inspector General 

July 2011 

OEI-01-10-00060 
 

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 EXECUTIVE SUMMARY

OBJECTIVES 

1. To determine the extent to which Medicare drug plan sponsors 

provided, and network pharmacies took, training to prevent fraud, 

waste, and abuse in 2009.

2. To determine the extent to which the training’s content reflected 

Centers for Medicare & Medicaid Services’ (CMS) guidance.

3. To describe the extent to which plan sponsors determined that the 

training was effective. 

BACKGROUND

Medicare Part D provides prescription drug coverage to beneficiaries 

through private plan sponsors that contract with CMS. Sponsors 

provide drug coverage through either a stand-alone prescription drug 

plan or a Medicare Advantage prescription drug plan. 

As a condition for contracting with CMS to offer Part D benefits, 

sponsors must have compliance plans that help them follow Federal 

regulations and prevent fraud, waste, and abuse. Among other 

elements that CMS requires, these plans must include effective annual 

training and education to prevent fraud, waste, and abuse for network 

pharmacies. Office of Inspector General reviews of Medicare 

prescription drug plans and reports in the news media have shown that 

pharmacies are at risk for fraud, waste, and abuse from beneficiaries, 

employees, prescribers, and drug manufacturers. This raises concerns

about the extent to which sponsors comply with these requirements. 

To conduct this study, we surveyed all 266 Part D sponsors and a 

random sample of 528 pharmacies (165 chain pharmacies, 

157 independent pharmacies, and 206 mail-order pharmacies) to collect 

data on training to prevent fraud, waste, and abuse in 2009. We also 

analyzed 420 training materials from sponsors and pharmacies. 

Finally, we interviewed a purposive sample of five sponsors and five 

pharmacies based on their survey responses. 

FINDINGS

Nearly all Part D network pharmacies received training to prevent 

fraud, waste, and abuse in 2009; however, not all sponsors 

documented the training. At least 87 percent of pharmacies reported 

that all of their staff received training. However, 30 percent of sponsors 
 

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EXECUTIVE SUMMARY

did not require their network pharmacies to submit documentation of 

training to verify completion.

Training materials generally reflected CMS guidance on content and 

source, with a few exceptions. Although most training materials 

included all elements in CMS guidance, more than a third failed to 

include information on the Health Insurance Portability and 

Accountability Act (HIPAA). Additionally, more than half of the 

materials were developed by pharmacies’ corporate offices, despite CMS 

guidance to sponsors stating that pharmacies should not develop their 

own materials.

Most sponsors could not determine the extent to which training was 

effective. Although 59 percent of sponsors reported that they assessed

the training’s effectiveness, fewer than half could measure its impact on

fraud, waste, and abuse. The remaining 41 percent did not assess its

effectiveness. 

RECOMMENDATIONS

Fraud, waste, and abuse represent significant threats to Medicare Part D, 

making training on how to prevent them vital to safeguarding the 

program. Toward that end, CMS provided guidance on such training to 

strengthen network pharmacies’ ability to prevent, detect, and respond to 

these threats. This study identified opportunities to help hone the 

effectiveness of that training. 

Therefore, we recommend that CMS:

Reiterate to sponsors their responsibilities as the entities

accountable for network pharmacies’ training to prevent Part D fraud, 

waste, and abuse. CMS should reissue guidance to sponsors regarding 

its expectations for them to: (1) develop and disseminate training 

materials to their network pharmacies; (2) include HIPAA in their training 

materials; (3) maintain documentation that pharmacies have received 

training; and (4) determine the extent to which they are providing effective

training and education that reduce fraud, waste, and abuse risks.

Use its monitoring authority to determine compliance with training 

requirements. CMS routinely audits sponsors’ compliance plans to 

oversee sponsors’ adherence to programmatic requirements. Toward that 

end, CMS should use these audits to ensure that sponsors are in 

compliance with all fraud, waste, and abuse training requirements noted 

above. To achieve this goal, CMS should: (1) review training materials to 
 

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EXECUTIVE SUMMARY

ensure that pharmacies are not developing them; (2) verify that all 

required contents, including HIPAA, are part of the materials; (3) clarify 

its requirements regarding sponsors’ obligations to collect documentation 

from their network pharmacies that they have taken training; and 

(4) request documentation supporting the extent to which sponsors are 

developing and providing effective training and education for their 

network pharmacies.

Take steps to ensure that sponsors are providing effective training 

and education to prevent fraud, waste, and abuse. CMS requires 

sponsors to provide their network pharmacies with training and education 

that are effective in preventing, detecting, and responding to potential 

fraud, waste, and abuse. Therefore, CMS should: (1) develop guidance for 

sponsors to use in assessing the effectiveness of training and education on 

fraud, waste, and abuse; or (2) provide a forum (e.g., online or conference 

call) in which sponsors can share best practices used to determine the 

training’s effectiveness. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with our recommendations. 
 TABLE OF CONTENTS

EXECUTIVE SUMMARY ................................ ..... i

INTRODUCTION ............................................ 1 

FINDINGS .................................................. 9 

Nearly all Part D network pharmacies received training to prevent 

fraud, waste, and abuse in 2009; however, not all sponsors 

documented the training .................................. 9 

Training materials generally reflected CMS guidance 

on content and source, with a few exceptions................. 10

Most sponsors could not determine the extent to which training 

was effective. .......................................... 13

 

RECOMMENDATIONS ..................................... 15

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

 

APPENDIXES ............................................. 18

A: Confidence Intervals ................................ . 18

B: Agency Comments ................................... 21

ACKNOWLEDGMENTS ..................................... 23
 

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 INTRODUCTION

OBJECTIVES 

1. To determine the extent to which Medicare drug plan sponsors 

provided, and network pharmacies took, training to prevent fraud, 

waste, and abuse in 2009. 

2. To determine the extent to which the training’s content reflected 

Centers for Medicare & Medicaid Services’ (CMS) guidance.

3. To describe the extent to which plan sponsors determined that the 

training was effective.

BACKGROUND

Medicare Part D provides prescription drug coverage to beneficiaries 

through private plan sponsors that contract with CMS. Sponsors 

provide drug coverage through either a stand-alone prescription drug 

plan or a Medicare Advantage prescription drug plan.1 In 2009, 

266 sponsors offered Part D plans. 

Previous Office of Inspector General (OIG) reviews of Medicare 

prescription drug plans and reports in the news media indicate that 

pharmacies are at risk for fraud, waste, and abuse from beneficiaries, 

employees, prescribers, and drug manufacturers.2, 3, 4 Although CMS 

requires Part D sponsors to develop compliance programs that provide 

their network pharmacies with training to prevent fraud, waste, and 

abuse, OIG and the Government Accountability Office (GAO) have 

shown that CMS has not sufficiently audited sponsors’ compliance plans 

to determine whether pharmacies’ staff can prevent, detect, and respond 

to fraud, waste, and abuse.5, 6 The vulnerabilities identified within 

pharmacies raise concerns about the extent to which sponsors have 

1 Medicare Prescription Drug, Improvement, and Modernization Act of 2003, 

P.L. 108-173, § 101; Social Security Act, § 1860D-1(a); 42 U.S.C. § 1395w-101(a).

2 OIG, Medicare Drug Plan Sponsors’ Identification of Potential Fraud and Abuse, 

OEI-03-07-00380, October 2008.

3 Associated Press, Grand Couteau Pharmacist Pleads Guilty, December 19, 2009. 

Accessed at www.wdam.com on December 22, 2009.

4 E. White, Meijer Will Settle Pharmacy Case for $3 Million, Associated Press, 

December 8, 2009. Accessed at www.abcnews.go.com on December 22, 2009. 

5 OIG, Oversight of Prescription Drug Plan Sponsors’ Compliance Plans, 

OEI-03-08-00230, October 2008.

6 GAO, Some Plan Sponsors Have Not Completely Implemented Fraud and Abuse 

Programs, and CMS Oversight Has Been Limited, GAO-08-760, July 2008.
 

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INTRODUCTION

complied with CMS’s requirement to provide effective training and 

whether fraud, waste, and abuse may be undetected in a pharmacy 

setting. 

Medicare Part D Compliance Plans

As a condition for contracting with CMS to offer Part D benefits, 

sponsors must have in place compliance plans that help them follow 

Federal regulations and prevent fraud, waste, and abuse. Each plan 

must include the following elements: 

• written policies, procedures, and standards of conduct articulating 

the organization’s commitment to comply with all applicable 

Federal and State standards;

• the designation of a compliance officer and compliance committee 

accountable to senior management;

• provision of effective training and education by the compliance 

officer and the sponsor’s employees, managers, and directors for

the sponsor’s first-tier, downstream, and related entities;

• effective lines of communication between (1) the compliance officer, 

members of the compliance committee, the sponsor’s employees, 

managers, and directors; and (2) the sponsor’s first-tier, 

downstream, and related entities; 

• enforcement of standards through well-publicized disciplinary 

guidelines;

• procedures for effective internal monitoring and auditing; and

• procedures for ensuring prompt responses to detected offenses and 

development of corrective action initiatives relating to the 

organization’s contract as a sponsor.7

CMS’s Requirement for Sponsors To Provide Effective Training and 

Education To Prevent Fraud, Waste, and Abuse

CMS requires sponsors’ compliance plans to provide for effective 

training and education to first-tier, downstream, and related entities.8 

A first-tier entity is any party that enters into a contract with a sponsor, 

such as a pharmacy benefit manager (PBM). A downstream entity is 

7 42 CFR § 423.504(b)(4)(vi). CMS revised its compliance program regulations in 2010 to 

provide more detail generally with respect to each of the program elements, including the 

requirement for training. 75 Fed. Reg. 19678 (Apr. 15, 2010). 

8 Ibid.
 

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INTRODUCTION

any party that enters into a written arrangement with a sponsor and 

first-tier entity, such as a network pharmacy. Network pharmacies 

include retail, mail-order, long-term-care, home infusion, and Indian 

Health Services/Tribal/Urban Indian Health (I/T/U) pharmacies.9 A 

related entity is any party related to a sponsor by common ownership or 

control, such as a PBM whose parent company is a sponsor.10

Medicare regulations state that sponsors must provide effective training 

and education on fraud, waste, and abuse.

 Because 

sponsors rely specifically on network pharmacies and pharmacists to 

administer Part D benefits, sponsors must provide them with effective 

training on how to prevent, detect, and respond to fraud, waste, and 

abuse. 

11

CMS Guidance on Training To Prevent Fraud, Waste, and Abuse

 However, CMS does not 

provide any specific definition of what constitutes effective training and 

education. Therefore, it is the sponsors’ responsibility to determine 

whether the training and education they provide to their network 

pharmacies are effective in preventing fraud, waste, and abuse. 

In 2008, CMS clarified its guidance on training and education to 

prevent fraud, waste, and abuse and set deadlines for sponsors to 

provide training to network pharmacies and downstream and related 

entities. This guidance required sponsors to provide training between 

January 1 and December 31, 2009, and annually thereafter.12

Since Part D began, sponsors have sought clarification from CMS on the 

content of fraud, waste, and abuse training and have raised concerns 

about how to provide it to their network pharmacies.

 

13 Although CMS 

offers general recommendations on the content of training and 

education, it does not specify a complete list of elements that must be 

included.14

9 Home infusion pharmacies provide medications to beneficiaries who need long-term 

therapy while living at home. 

 For example, CMS states that training and education 

10 42 CFR § 423.501.

11 42 CFR § 423.504(b)(4)(vi). 

12 CMS Memorandum, Fraud, Waste and Abuse Training Requirements, October 20, 

2008.

13 Ibid.

14 CMS, Medicare Prescription Drug Benefit Manual, Pub. No. 100-18, ch. 9, § 50.2.3.1; 

CMS Memorandum, Fraud, Waste and Abuse Training Clarification, August 21, 2009.
 

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INTRODUCTION 

should include, but not be limited to, the following topics for all 

first-tier, downstream, and related entities:15

• laws and regulations related to Part D fraud, waste, and abuse 

(i.e., False Claims Act, antikickback statute, Health Insurance 

Portability and Accountability Act (HIPAA));

• obligations to have appropriate policies and procedures to 

address fraud, waste, and abuse;

• process for reporting suspected fraud, waste, and abuse to the 

sponsor; 

• protections for employees who report suspected fraud, waste, 

and abuse; and 

• types of fraud, waste, and abuse that can occur.16

CMS allows sponsors to delegate the development of training materials 

and the administration of training to any contractor, such as a PBM, 

professional association, or third-party consultant. CMS guidance to 

sponsors states that pharmacies should not develop their own training 

materials, as this is the sponsors’ responsibility.17, 18

CMS gives sponsors latitude in how training is administered. The 

agency’s guidance states that “training can be conducted interactively, 

led by expert facilitators, via Web-based tools and Intranet sites, live or 

videotaped presentations, written materials, or a combination of these 

techniques.”

 However, CMS 

guidance states that pharmacy staff may administer the training to 

themselves if the materials are provided by a sponsor or contractor.

19 To assist sponsors in developing training, CMS guidance 

identifies types of fraud, waste, and abuse risks that may occur in a 

pharmacy setting: 

• billing for nonexistent prescriptions;

15 CMS uses the term “should” for recommendations, but uses “shall” or “must” to refer to 

statutory or regulatory program requirements. 16 CMS Memorandum, Fraud, Waste, and Abuse Training Clarification, August 21, 2009.

17 CMS Memorandum, Fraud, Waste, and Abuse Training Requirements, October 20, 

2008. 

18 A PBM may provide training materials to its own pharmacies on behalf of sponsors 

with which it contracts. However, pharmacies’ corporate offices that are not acting as PBMs 

should not provide training materials. 

19 CMS, Medicare Prescription Drug Benefit Manual, Pub. No. 100-18, ch. 9, § 50.2.3.3.
 

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INTRODUCTION 

• billing for more expensive brand-name drugs but dispensing 

generics; 

• forging or altering prescriptions; 

• switching, splitting, or shorting prescriptions; and 

• stealing a Medicare beneficiary’s identity.20

Sponsors’ Obligations To Provide or Ensure Provision of Training

CMS requires sponsors to either provide training directly to all of their

pharmacies or to provide training materials and ensure that the 

training has been taken.21 CMS guidance does not specify how sponsors 

should ensure that their network pharmacies have taken training to 

prevent fraud, waste, and abuse; however, CMS states that as part of an 

audit and review process, it will verify that all necessary training has 

been provided.22 

Sponsors contend that it is cumbersome for pharmacies to receive 

training from each sponsor with which they contract.23, 24 Therefore, 

CMS states that network pharmacies need to take only one training 

that fulfills the requirement and provide proof to each sponsor to verify 

completion.25, 26 

METHODOLOGY

Scope

This study analyzed the extent to which Medicare drug plan sponsors 

provided, and network pharmacies received, training to prevent fraud, 

waste, and abuse in 2009. It also analyzed the extent to which sponsors 

determined whether training was effective in preventing, detecting, and 

responding to these threats. Although training should be provided to all 

first-tier, downstream, and related entities, this study focused on 

network pharmacies only—specifically, chain, independent, and 

mail-order pharmacies. This study excluded long-term-care, home 

20 CMS, Medicare Prescription Drug Benefit Manual, Pub. No. 100-18, ch. 9, § 70.1.3.

21 CMS Memorandum, Fraud, Waste, and Abuse Training Requirements, October 20, 

2008. 

22 72 Fed. Reg. 68700, 68707 (Dec. 5, 2007).

23 CMS Memorandum, Fraud, Waste, and Abuse Training Clarification, August 21, 2009. 

24 74 Fed. Reg. 54644 (Oct. 22, 2009). 

25 Ibid.

26 72 Fed. Reg. 68706 (Dec. 5, 2007).
 

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INTRODUCTION 

infusion, and I/T/U pharmacies because they make up a small 

percentage of the population of network pharmacies. This study focused 

specifically on the elements of sponsors’ training that address Part D 

fraud, waste, and abuse. We did not review other elements of sponsors’ 

compliance plans, nor did we assess sponsors’ overall program 

compliance. 

Data Sources

We used the following four data sources to analyze training to prevent 

fraud, waste, and abuse in 2009: (1) a survey of Part D sponsors, (2) a 

survey of a random sample of network pharmacies, (3) training 

materials, and (4) followup interviews with sponsors and pharmacies.

Survey of Part D sponsors. We surveyed all 266 sponsors that offered 

Part D plans in 2009. We used files from CMS’s Health Plan 

Management System to create the universe of sponsors. We developed 

and used a questionnaire to determine the extent to which sponsors 

developed and provided training in 2009. We also used the 

questionnaire to ask sponsors for contextual information, such as who 

designed the training and what documentation they used to verify that

network pharmacies had taken it. Additionally, we used the

questionnaires to assess how sponsors determine whether their network 

pharmacies are receiving training and education that are effective in 

preventing, detecting, and responding to fraud, waste, and abuse. We 

made three attempts to obtain survey responses from sponsors. We 

made the first attempt via U.S. Postal Service, the second attempt by 

UPS, and the third attempt by phone. We received responses from 

258 sponsors, a response rate of 97 percent. 

Survey of random sample of network pharmacies. We surveyed a random 

sample of 528 pharmacies. We used files from the National Council of 

Prescription Drug Programs (NCPDP), which contains a list of all 

pharmacies in the United States, to create the universe of pharmacies, 

which contained 75,675 pharmacies. 

We limited the file to nongovernment retail and mail-order pharmacies 

that opened prior to November 1, 2009.27, 28 This resulted in 

61,003 pharmacies from which to select our sample. After excluding 

pharmacies in our pretest sample and duplicate pharmacies in the 

27 We excluded long-term-care, home infusion, and I/T/U pharmacies.

28 We selected 15 pharmacies to pretest our survey prior to drawing our random sample. 
 

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INTRODUCTION 

NCPDP list, this left 60,786 pharmacies (40,086 chain, 

20,479 independent, and 221 mail-order) from which to select our 

sample.

We divided our pharmacy population into three strata: chain retail 

pharmacies, independent retail pharmacies, and mail-order pharmacies. 

Our total sample included 551 pharmacies: random samples of 165 

chain retail pharmacies and 165 independent retail pharmacies and the 

complete population of 221 mail-order pharmacies.29 We dropped 23 

pharmacies (8 independent pharmacies and 15 mail-order pharmacies) 

that responded to our questionnaire that they were either no longer in 

business or did not submit Part D claims in 2009, which reduced our 

total sample size to 528.

In our questionnaire, we also asked pharmacies for contextual 

information, such as whether their training was provided to them by 

sponsors, industry associations, or other sources or was selfadministered. We used these questionnaires to determine the extent to 

which network pharmacies took training to prevent fraud, waste, and 

abuse in 2009 and which organization developed and administered it. 

We made three attempts to obtain survey responses from pharmacies. 

We sent the first two attempts via U.S. Postal Service and the third 

attempt via UPS. Our overall response rate was 74 percent.30 We 

received 335 survey responses: 113 chain pharmacies, 136 independent 

pharmacies, and 86 mail-order pharmacies responded. Because the 

NCPDP data lacked information about pharmacy characteristics, we 

were unable to compare respondents to nonrespondents.

Training materials. Our questionnaire asked sponsors and pharmacies to 

submit copies of any materials they used in 2009 to conduct training to 

prevent fraud, waste, and abuse. Among the 258 sponsor respondents, 

209 (81 percent) submitted materials. We received materials from 

211 pharmacies. This represents 38 percent of the 551 pharmacies 

surveyed and 63 percent of the 335 pharmacy respondents. We used 

these materials to assess the extent to which sponsors followed CMS

guidance on training material content.

29 NCPDP defines chain pharmacies as a group of four or more pharmacies under 

common ownership; independent pharmacies may have one to three pharmacies under 

common ownership. 

30 This calculation was weighted based on the stratified sample selection.
 

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INTRODUCTION 

Followup interviews with sponsors and pharmacies. We interviewed staff 

from a purposive sample of five sponsors and five pharmacies. We 

selected each interviewee based on responses to our survey. We aimed 

to interview sponsors and pharmacies whose responses were 

substantively different from one another. We asked sponsor staff about 

the process they use to create and conduct training and the way in 

which they ensure that network pharmacies comply with training 

requirements. In addition, we asked how they evaluate the 

effectiveness of training and requested any documentation that 

supports this. Similarly, we asked pharmacy staff about their 

experiences with and perceptions of training to prevent fraud, waste, 

and abuse. We analyzed interview data for common themes. 

Limitations

All data from surveys are self-reported. We did not independently 

verify survey responses or information given in interviews. 

Standards

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors 

General on Integrity and Efficiency.
 

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Pharmacy Staff Who

Received Training

Pharmacies Reporting That All 

Staff Received Training 

(n=335)

Pharmacies Reporting That 

Most or Some 

Staff Received Training 

(n=335)

Pharmacists 95% 1% 

Pharmacy managers 88% 0% 

Pharmacy technicians 90% 2% 

Rows do not sum to 100% because not all pharmacies employ each type of pharmacy staff listed above.

Source: OIG survey of Part D network pharmacies, 2010. 

Nearly all Part D network pharmacies received 

training to prevent fraud, waste, and abuse in 2009; 

however, not all sponsors documented the training

 FINDINGS

CMS requires sponsors to

provide training to prevent 

fraud, waste, and abuse for any 

pharmacy employee responsible 

for delivering Part D benefits. CMS has also stated that it will audit 

sponsors to determine whether the training requirements have been

met.31

At least 87 percent of pharmacies reported that all of their staff received

training in 2009

 

Most pharmacies reported that every staff member involved in 

delivering the Part D benefit—such as pharmacists, pharmacy 

managers, and pharmacy technicians—took training. One to two

percent of pharmacies indicated that only some of the required staff 

took training. Table 1 shows the percentage of pharmacy staff who 

received training. (See Appendix A for complete point estimates and 

confidence intervals of pharmacy data.)

Table 1: Rates of Training To Prevent Fraud, Waste, and Abuse

for Pharmacy Employees 

Overall, pharmacies reported that staff took training either individually 

or as a combination of group and individual training. Pharmacies also 

reported that the format of their training included a computer-assisted 

component and written materials. Fewer pharmacies reported that 

their training included lecture and discussion. 

31 72 Fed. Reg. 68700, 68707 (Dec. 5, 2007).
 

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FINDINGS

Sponsors did not always require their network pharmacies to submit 

documentation of training

Thirty percent of sponsors reported that they did not require 

documentation showing that pharmacy staff had taken training. 

Similarly, 35 percent of pharmacies reported that sponsors did not require

them to submit documentation verifying completion of the training. 

Sponsors and pharmacies stated that when documentation was collected, 

attestations and certificates of completion were the most common types. 

Although CMS does not specify whether sponsors must document their 

network pharmacies’ completion of training to prevent fraud, waste, and 

abuse, it expects sponsors to be able to demonstrate this during an audit.32 

However, our followup interviews with sponsors suggested that they may 

not know of this requirement or may be unable to readily produce training 

documentation. Sponsors we interviewed told us that they delegate 

training functions to their PBMs, which are responsible for collecting and 

maintaining the documentation on the sponsors’ behalf. 

Training materials generally reflected 

CMS guidance on content and source, 

with a few exceptions

CMS guidance identifies five 

elements that sponsors should 

address to meet the training 

requirement on fraud, waste, 

and abuse: (1) fraud-related 

statutes (e.g., False Claims Act, antikickback statute, HIPAA); 

(2) obligations of the pharmacy to have policies and procedures; 

(3) a process for reporting suspected fraud, waste, and abuse to 

sponsors; (4) protections against retaliation for employees who report;

and (5) examples of fraud, waste, and abuse that can occur in

pharmacies.33 CMS also issued guidance in 2008 to clarify that 

pharmacies should not develop the training materials they use; rather, 

sponsors should administer training directly or provide materials to 

their network pharmacies so that pharmacy staff may administer the 

training to themselves.34 

32 72 Fed. Reg. 68700, 68707 (Dec. 5, 2007).

33 CMS Memorandum, Fraud, Waste, and Abuse Training Clarification, August 21, 2009.

34 CMS Memorandum, Fraud, Waste, and Abuse Training Requirements, October 20, 

2008.
 

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FINDINGS

More than a third of the training materials failed to include information on 

HIPAA

Training materials submitted by sponsors and pharmacies included 

information on the False Claims Act and antikickback laws in nearly all 

cases. However, they did not consistently include information on 

HIPAA (see Table 2). HIPAA established privacy rules for handling 

patients’ sensitive medical data. Pharmacy employees who are 

unfamiliar with that law could inadvertently reveal beneficiaries’ 

medical data, placing them at risk for identity theft and other types of 

fraud.

Table 2: Fraud, Waste, and Abuse Statutes Included in Training 

Materials

Most training materials included the other elements in CMS guidance

Training materials contained information on pharmacies’ obligations to 

have policies and procedures on fraud, waste, and abuse; reporting 

processes; and retaliation protections for employees. Additionally, most 

materials from sponsors and pharmacies directed pharmacy employees 

to report fraud, waste, and abuse to their managers, to PBMs, or 

directly to sponsors (see Tables 3 and 4).

Table 3: Required Elements Included in Training Materials

 

Statute Element Pharmacies 

(n=211)

Sponsors

(n=209)

False Claims Act 96% 98%

Antikickback laws 94% 97%

HIPAA 55% 66%

Source: OIG survey of Part D network pharmacies, 2010. 

Training Element Pharmacies

(n=211) 

Sponsors

(n=209)

Obligations to have policies and procedures 92% 82% 

Process for reporting fraud, waste, and abuse 94% 86% 

Protections for employees 92% 83% 

Source: OIG survey of Part D network pharmacies, 2010. 
 

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FINDINGS

Table 4: Reporting Authorities Included in Training Materials

Training materials also provided common examples of fraud, waste, and 

abuse that can occur in pharmacies. As Table 5 shows, such schemes 

include switching, splitting, or shorting prescriptions; billing for 

nonexistent prescriptions; and billing a sponsor for a brand-name drug 

but dispensing a generic. These are all examples that CMS 

recommended in guidance to sponsors regarding training material 

content.35

Table 5: Common Fraud Risks Described in Training Materials

 

The sources for more than half of the training materials used by pharmacies 

were the pharmacies’ corporate offices, despite CMS guidance

Despite CMS guidance to sponsors stating that pharmacies should not 

develop their own training materials, 51 percent of pharmacies used 

materials created by their corporate offices (see Table 6). However, 

20 percent of pharmacies reported that they used materials that either 

a Part D sponsor or a sponsor’s PBM developed. Other sources included 

third-party vendors/consultants and professional associations.

Reporting Authorities Pharmacies 

(n=211) 

Sponsors

(n=209)

Pharmacy manager, PBM, or sponsor 69% 93%

OIG 52% 15%

CMS 8% 8%

Source: OIG survey of Part D network pharmacies, 2010. 

Common Fraud Risk Pharmacies 

(n=211)

Sponsors

(n=209)

Switching, splitting, or shorting prescriptions 96% 89% 

Billing for nonexistent prescriptions 94% 87% 

Billing for brand-name but dispensing generic 91% 78% 

Source: OIG survey of Part D network pharmacies, 2010. 

35 CMS, Medicare Prescription Drug Benefit Manual, Pub. No. 100-18, ch. 9, § 70.1.3.
 

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FINDINGS

Table 6: Sources of Pharmacies’ Training Materials

 

Source Pharmacies 

(n=335)

Pharmacy corporate office 51%

Third-party vendor or consultant 28%

Part D sponsor 14%

Professional association 6% 

PBM 6%

Other 4%

Do not know 4%

Figures do not sum to 100% because some pharmacies indicated more than one source.

Source: OIG survey of Part D network pharmacies, 2010. 

Most sponsors could not determine the extent 

to which training was effective

CMS requires sponsors to “provide 

effective training and education” 

for their network pharmacies. 

CMS does not define what 

constitutes “effective” training; rather, it instructs sponsors to provide 

training and education that are effective in detecting, preventing, and 

responding to fraud, waste, and abuse. 

Although 59 percent of sponsors reported that they assessed the training’s 

effectiveness, fewer than half used measures clearly linked to fraud, waste, 

and abuse 

Of the 153 sponsors that reported assessing the training’s effectiveness, 

74 analyzed data that could demonstrate changes in pharmacy staffs’ 

understanding of fraud, waste, and abuse issues or changes in the

reporting or detection of fraud, waste, and abuse. Two of these sponsors 

administered posttraining tests to pharmacy staff to determine their 

knowledge of fraud, waste, and abuse. The other 72 reviewed trends in 

fraud, waste, and abuse reporting; pharmacy audits; or analysis of 

pharmacy claims to determine the extent to which they were providing 

effective training. 

The remaining 79 sponsors that reported determining the extent to 

which they provided effective training did not provide any metric that 

they used in assessing the effectiveness of training. Forty-eight of these 

sponsors reported determining that training was effective because it 

raised pharmacies’ awareness of fraud, waste, and abuse issues. The 

remaining sponsors in this group described their general oversight 
 

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FINDINGS

processes for pharmacies, their use of attestations, or feedback from 

pharmacies as the basis for assessing the training’s effectiveness. 

Forty-one percent of sponsors did not assess the effectiveness of their 

training

Among 258 sponsors that responded to our survey, 105 did not 

determine the extent to which training was effective. Fifty-four of these 

105 sponsors gave no explanation, and 37 said that the training was too 

new to assess because it was not required until 2009. The remaining 

sponsors said that they had no guidelines from CMS with which to 

assess it, that they were not required to assess it, or that they planned 

to begin assessing the training in the coming year. Although CMS did 

not enforce training for pharmacies until 2009, this training is not a 

new requirement in Part D. CMS has required sponsors to provide 

training for their employees since the start of the Part D program in 

2006. 
 

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 RECOMMENDATIONS

Fraud, waste, and abuse represent significant threats to Medicare Part 

D, making training on how to prevent them vital to safeguarding the 

program. Toward that end, CMS provided guidance on such training to 

strengthen network pharmacies’ ability to prevent, detect, and respond 

to these threats. This study identified opportunities to help hone the 

effectiveness of that training. 

Overall, we found that sponsors provided, and nearly all pharmacies 

took, training to prevent fraud, waste, and abuse in 2009. However, not 

all sponsors required documentation of training from their pharmacies. 

Furthermore, although the content of the training generally reflected 

CMS guidance, more than a third of the training materials lacked 

information on HIPAA.

Even though CMS specifies that pharmacies should not develop training 

materials, we found that most of them were created by pharmacies.

Finally, our survey results and interviews also raise concerns about 

whether and how sponsors determine the extent to which their training 

and education are effective. Forty-one percent of sponsors did not 

assess the effectiveness of their training and education; of the 

59 percent that did, fewer than half used measures clearly related to 

fraud, waste, and abuse. 

Taken together, these results raise questions about the extent to which 

fraud, waste, and abuse training is effective in helping pharmacies 

prevent, detect, and respond to these threats. 

Therefore, we recommend that CMS:

Reiterate to sponsors their responsibilities to provide network 

pharmacies’ training on Part D fraud, waste, and abuse

To do so, CMS should reissue guidance to sponsors regarding its 

expectations for them to: 

• develop and disseminate training materials to their network 

pharmacies; 

• include HIPAA in their materials; 

• maintain documentation that pharmacies have received 

training; and
 

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RECOMMENDATIONS

• determine the extent to which they are providing effective 

training and education that reduce fraud, waste, and abuse 

risks.

Use its monitoring authority to determine compliance with training 

requirements

CMS routinely audits sponsors’ compliance plans to oversee their

adherence to programmatic requirements. Toward that end, CMS 

should use these audits to ensure that sponsors are in compliance with 

all fraud, waste, and abuse training requirements noted above. To 

achieve this goal, CMS should: 

• review training materials to ensure that pharmacies are not 

developing them;

• verify that all required contents, including HIPAA, are part of

the materials; 

• clarify its requirements regarding sponsors’ obligations to collect 

documentation from their network pharmacies that they have 

taken training; and

• request documentation supporting the extent to which sponsors 

are developing and providing effective training and education for

their network pharmacies. 

Take steps to ensure that sponsors are providing effective training and 

education to prevent fraud, waste, and abuse

CMS requires sponsors to provide their network pharmacies with 

training and education that are effective in preventing, detecting, and 

responding to fraud, waste, and abuse. To this end, CMS should: 

• develop guidance for sponsors to use in assessing the effectiveness 

of training and education on fraud, waste, and abuse; or 

• provide a forum (e.g., online or conference call) in which sponsors 

can share best practices used to determine the training’s 

effectiveness. For example, sponsors could demonstrate the 

training’s effectiveness using posttraining tests, analysis of 

pharmacy audits or claims data, or other quantifiable methods.
 

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RECOMMENDATIONS

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with our recommendations. The complete text of CMS’s

comments appears in Appendix B. 
 

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 APPENDIX ~ A

 Table A-1: Confidence Intervals

Statistic Sample 

Size

Point 

Estimate

95-Percent 

Confidence Interval

At least 87 percent of pharmacies reported 

that all of their staff received fraud, waste, 

and abuse training in 2009.

335 87.5% 82.9%–91.0%

Ninety-five percent of pharmacies reported 

that all of their registered pharmacists 

received fraud, waste, and abuse training in 

2009.

335 95.0% 91.4%–97.2%

Eighty-eight percent of pharmacies 

reported that all of their pharmacy 

managers received fraud, waste, and 

abuse training in 2009.

335 88.3% 83.8%–91.7%

Ninety percent of pharmacies reported that 

all of their pharmacy technicians received 

fraud, waste, and abuse training in 2009.

335 90.3% 86.0%–93.3%

Fewer than 1 percent of pharmacies 

reported that most or some of their 

registered pharmacists received fraud, 

waste, and abuse training in 2009.

335 0.6% 0.1%–2.2%

Fewer than 1 percent of pharmacies 

reported that most or some of their 

pharmacy managers received fraud, waste, 

and abuse training in 2009.

335 0.3% 0.0%–1.8%

Two percent of pharmacies reported that 

most or some of their pharmacy technicians 

received fraud, waste, and abuse training in 

2009.

335 1.7% 0.7%–4.1%

Eighty-four percent of pharmacies reported 

that their staff took training individually. 326 84.1% 80.0%–87.4% 

Ten percent of pharmacies reported that 

their staff took a combination of group and 

individual training.

326 9.6% 7.0%–12.9% 

Sixty-three percent of pharmacies reported 

that their training included a computerassisted component.326 62.6% 56.1%–68.7% 

Thirty-one percent of pharmacies reported 

that their training included written materials. 326 31.3% 26.4%–36.7% 
 

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APPENDIX ~ A

Statistic

Sample 

Size

Point 

Estimate

95-Percent 

Confidence Interval

Twelve percent of pharmacies reported that 

their training included lecture and 

discussion. 

326 11.6% 8.5%–15.5% 

Thirty-five percent of pharmacies reported 

that sponsors had not asked them for 

documentation of training.

335 35.3% 29.3%–41.8% 

Eighty-seven percent of pharmacies 

reported that attestations were the most 

commonly submitted type of 

documentation.

156 86.6% 79.3%–91.6% 

Eighteen percent of pharmacies reported 

that certificates of completion were the 

most commonly submitted type of 

documentation.

156 17.7% 12.3%–24.9% 

Ninety-six percent of training materials in 

2009 contained information on the False 

Claims Act.

211 96.4% 91.4%–98.6%

Ninety-four percent of training materials in 

2009 contained information on the 

antikickback statute. 

211 94.3% 88.4%–97.3%

Fifty-five percent of training materials in 

2009 contained information on the Health 

Insurance Portability and Accountability 

Act. 

211 54.7% 46.2%–63.0%

Ninety-two percent of training materials 

submitted by pharmacies included 

obligations to have policies and procedures 

on fraud, waste, and abuse.

211 91.9% 85.8%–95.5% 

Ninety-four percent of training materials 

submitted by pharmacies included a 

process for reporting fraud, waste, and 

abuse.

211 93.9% 88.7%–96.8%

Ninety-two percent of training materials 

submitted by pharmacies included 

protections for employees against 

retaliation. 

211 91.8% 86.4%–95.2% 

Sixty-nine percent of training materials from 

pharmacies directed pharmacy employees 

to report fraud, waste, and abuse to their 

managers, to Pharmacy Benefit Managers 

(PBM), or directly to sponsors. 

211 69.3% 60.6%–76.8%

Fifty-two percent of training materials from 

pharmacies directed pharmacy employees 

to report fraud, waste, and abuse to the 

Office of Inspector General. 

211 52.0% 43.6%–60.3% 
 

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APPENDIX ~ A

Statistic

Sample 

Size

Point 

Estimate

95-Percent 

Confidence Interval

Eight percent of training materials from 

pharmacies directed pharmacy employees 

to report fraud, waste, and abuse to the 

Centers for Medicare & Medicaid Services. 

211 8.2% 4.9%–13.3% 

Ninety-six percent of training materials from 

pharmacies list "switching, splitting, or 

shorting prescriptions" as a common fraud 

risk.

211 96.4% 91.4%–98.6%

Ninety-four percent of training materials 

from pharmacies list "billing for nonexistent 

prescriptions" as a common fraud risk.

211 93.8% 88.3%–96.9%

Ninety-one percent of training materials 

from pharmacies list "billing for brand-name 

but dispensing generic" drugs as a 

common fraud risk.

211 91.3% 85.5%–94.9%

Fifty-one percent of pharmacies used 

materials created by their corporate offices. 335 50.5% 44.9%–56.1%

Twenty-eight percent of pharmacies used 

materials created by a third-party vendor or 

consultant.

335 27.7% 22.5%–33.6% 

Fourteen percent of pharmacies used 

materials created by a Part D sponsor. 335 13.7% 10.4%–17.8% 

Six percent of pharmacies used materials 

created by a professional association. 335 6.4% 4.0%–10.0% 

Six percent of pharmacies used materials 

created by a PBM. 335 6.2% 3.9%–9.6%

Four percent of pharmacies said they used 

training materials from another source. 335 3.6% 2.0%–6.3%

Four percent of pharmacies do not know 

which organization created the training 

materials that they used.

335 3.6% 1.8%–7.0%
A P PEN D x B 

Agency Comments 

DEPARTMENT OF HEALTH & HUMAN SERVICES yenteTlj for Medicar. & Medicaid Services 

Administrator 

Washington. DC 20201 

DATE: JUN 0 22011

TO: 	 Daniel R. Levinson 

Inspector General 

FROM: 	 Donald M. Berwick, M.D. 

Administrator 

SUBJECT: 	 Office of Inspector General (OlG) Draft Report: "Medicare Prescription Drug 

Sponsors' Training on Fraud, Waste, and Abuse" (OEI.Ol-1O-00060) 

The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 

comment on the Office of Inspector General (OIG) draft report entitled, "Medicare Prescription 

Drug Sponsors' Tmining on Fraud, Waste, and Abuse." CMS provides guidance on fraud, 

waste, and abuse training to strengthen network pharmacies' ability to prevent, detect, and 

respond to threats. . 

The CMS appreciates OIG's efforts in working with us to help hone the effectiveness ofthat 

training. In accordance with our commitment to safeguard the Medicare trust fund, CMS will 

reissue guidance to sponsors reiterating their responsibilities to provide training on Part D fmud, 

waste, and abuse to their entities, determine sponsors' compliance with training requirements 

through routine audits, and will make available a Web-based Part C/D Tmining Fraud Module, 

as well as hard-copy training material, for sponsors to utilize. Lastly, CMS will work with 

sponsors to develop and share best practices in assessing the effectiveness of fraud, waste, and 

abuse training. 

Our response to each ofthe OlG recommendations follows. 

OIG Reeommendation 

The CMS should reitemte to sponsors their responsibilities to provide network pharmacies' 

training on Part D fraud, waste, and abuse. 

CMS Response 

The CMS concurs with this recommendation. eMS will reissue guidance to sponsors reiterating 


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


downstream, and related entities. 


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APPENDIX ~ B
 

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 ACKNOWLEDGMENTS

This report was prepared under the direction of Joyce Greenleaf, 

Regional Inspector General for Evaluation and Inspections in the 

Boston regional office, and Russell Hereford, Deputy Regional Inspector 

General. 

Melissa Hafner served as the lead analyst for this study. Other 

principal Office of Evaluation and Inspections staff from the Boston 

regional office who contributed to the report include Tim Chettiath; 

central office staff who contributed include Robert Gibbons and Rita 

Wurm. 
Office of Inspector General http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health & Human Services (HHS) 

programs, as well as the health and welfare of beneficiaries served by those programs. This 

statutory mission is carried out through a nationwide network of audits, investigations, and 

inspections conducted by the following operating components:

Office of Audit Services 

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS.

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties.

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for 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.