Performance Improvement 2009. Do Prescription Drug Plan Sponsors Owe Money to Medicare Under its Payment Reconciliation Process?


This study assessed the estimated reconciliation amounts that prescription drug plan (Part D) sponsors owed to and received from Medicare for 2006. Results were primarily based on preliminary estimates from the Centers for Medicare & Medicaid Services.

Part D sponsors owed Medicare $4.4 billion for 2006. Eighty percent of sponsors owed money to Medicare, whereas 20 percent of sponsors would receive money from Medicare. The majority of the funds sponsors owed were profits that they must repay to Medicare as a result of risk-sharing requirements. The agency has no mechanisms to collect funds owed by sponsors until it completed reconciliation scheduled to occur months after the plan year ended and had no mechanism to adjust prospective payments prior to reconciliation. As a result, sponsors had the use of these funds for a significant length of time. The Centers for Medicare & Medicaid Services stated that it had the authority to change payment methodologies for the low-income cost-sharing and reinsurance subsidies and that it was examining possible options.

Report Title: Medicare Part D Sponsors: Estimated Reconciliation Amounts for 2006
Agency Sponsor: OS-OIG, Office of Inspector General
Federal Contact: Erin Lemire, 202-205-9523
Performer: Staff; Office of Inspector General
PIC ID: 8985

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