OIG-HHS report on "DESI" drugs in Medicare Part D faults CMS

by Ben Vernia | August 23rd, 2010

In a report released on August 16, the Office of Inspector General of HHS identified approximately $43.3 million in prescriptions submitted to Medicare Part D sponsors for drugs which the FDA had previously identified as “less than effective” (LTE) under the Drug Efficacy Study Implementation (DESI) program. Under Part D, plan sponsors are required to submit Prescription Drug Event (PDE) data to the Centers for Medicare and Medicaid Services (CMS) for each claim submitted. CMS uses this data to determine plan profitability and make annual adjustments in compensation.

According to the report, unlike in the Medicaid program, CMS does not provide a definitive list of LTE drugs to Plan D sponsors, but screens LTE claims from PDE data it receives. For some period of time under review, this edit included an incomplete list of LTE drugs, and CMS mistakenly “accepted” PDE data for nearly 775,000 claims. CMS cited FDA’s failure to maintain a comprehensive list as a cause of the error, but did not fundamentally dispute the OIG-HHS’s findings.

Although OIG-HHS raised quality-of-care concerns for patients prescribed LTE drugs, it did not calculate the financial impact of the errors. Part D plan sponsors submit bids prospectively and are paid a capitated rate for each insured beneficiary. At the end of each year, CMS may adjust compensation to the sponsor (up or down) depending on its actual claims.

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