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GAO-08-1074R 1 (2008-09-30)

handle is hein.gao/gaobaankk0001 and id is 1 raw text is: ,10,G A 0 .,!! = Accountability * Integrity Reliability United States Government Accountability Office Washington, DC 20548 September 30, 2008 The Honorable Henry A. Waxman Chairman Committee on Oversight and Government Reform House of Representatives Subject: Medicare Part D Prescription Drug Coverage: Federal Oversight of Reported Price Concessions Data Dear Mr. Chairman: To help Medicare beneficiaries manage the rising cost of prescription drugs, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which established the outpatient prescription drug benefit known as Medicare Part D.! The benefit was first available in January 2006, and that year it provided federally subsidized prescription drug coverage for nearly 28 million beneficiaries at a cost of $47.4 billion-almost 12 percent of total Medicare spending. The Centers for Medicare & Medicaid Services (CMS), part of the Department of Health and Human Services (HHS), manages and oversees the Part D program. Part D sponsors-entities that enter into contracts with Medicare2-administer the benefit and compete for beneficiary enrollment. To provide coverage, the sponsors often enter into contractual relationships with pharmacy benefit managers (PBM),3 drug manufacturers, and retail pharmacies, among others. The Part D program relies on sponsors to generate prescription drug savings, in part through their ability to negotiate price concessions, such as rebates and discounts, with these entities. Sponsors must report the price concession amounts to CMS and pass price concessions on to the program.4 CMS uses the reported data to calculate final plan payments, so accurate data are necessary to ensure accurate payments. CMS is responsible for ensuring that the reported price concessions data are reliable. 'Pub. L. No. 108-173, § 101, 117 Stat. 2066, 2071-2152 (inserting a new Part D into title XVIII of the Social Security Act (SSA)). 2Part D sponsors are typically private health plans or insurers. In addition to their Medicare business, Part D sponsors typically offer drug coverage in the private insurance market. 3Health insurers may contract with PBMs to help manage their prescription drug benefits. PBMs often negotiate drug prices with pharmacies and drug manufacturers on behalf of health plans and, in addition to other administrative, clinical, and cost containment services, process drug claims for the health plans. 4See SSA sections 1860D-2(d)(2), -15(b)(2) and -15(e)(1)(B) (as added by the MMA) (codified at 42 U.S.C. §§ 1395w-102(d)(2), -115(b)(2), and -115(e)(1)(B)). GAO-08-1074R Medicare Part D Oversight

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