Home Health & Hospice Week

Part D sponsors owe Medicare million of dollars less for 2007 payment reconciliation than for 2006, but what they do owe is still too much.

The HHS Office of Inspector General analyzed Part D reconciliations for both years and found that Part D sponsors only owed $18 million to Medicare for 2007 -- a huge decrease over the year before. Yet, "sponsors continue to submit inaccurate bids and make large unexpected profits," the OIG noted.

Problem: Many sponsors overestimated the costs of providing the drug benefit -- leading to higher than necessary premiums for beneficiaries and larger than necessary payments from Medicare. But while Medicare can recoup its payments, beneficiaries can't.

These mistakes also triggered Medicare's risk-sharing requirements. "Based on our calculations, the 179 sponsors that had profits large enough to trigger risk sharing made at least $1.02 billion in unexpected profits in 2007," the OIG reported. Aportion of these profits will be paid back to Medicare.

Currently, CMS has collected most of the funds sponsors owed but still needs to collect $14 million to close out the year. Collections for 2007 are still in process.

Suggestions: The OIG recommends that CMS push sponsors to place bids that more accurately reflect their costs, hold sponsors accountable for inaccurate bids, determine if there are other options for determining payment that would better align costs, and continue to seek out payment from sponsors for 2006.

Read the full OIG report at www.oig.hhs.gov/oei/reports/oei-02-08-00460.pdf.