Medicare Part D sponsors may be overcharging beneficiaries; investigation sought

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Congressional Democrats are calling for a full review of the Medicare Part D program following a recent audit that found that many program sponsors have been overcharging beneficiaries by underestimating manufacturer rebates in their bids.

A recent report from the Office of the Inspector General found that the private health insurers participating in the Part D program routinely underreport drug manufacturer rebates in as much as 70% of their bids during 2008, according to HealthLeaders Media. As a result, these companies rake in billions of dollars in profits at the expense of taxpayers and Medicare beneficiaries, the report said. In a letter to Republican healthcare leaders in the House, Democrats on the House Energy & Commerce Subcommittee said these and other structural problems in the Part D program present a severe risk to program integrity, reduce beneficiaries access to important drugs, increase drug costs for seniors, and cause billions of dollars in wasted taxpayer funds."

The OIG report, released late last week, calls on the Centers for Medicare & Medicaid Services to: ensure more accuracy in sponsors bids; require sponsors to use methods CMS deems reasonable to allocate rebates across plans; ensure that sponsors have sufficient audit rights and access to rebate information; and ensure that sponsors appropriately report the fees that pharmacy benefit managers collect from manufacturers.