FOR IMMEDIATE RELEASE, Wednesday, November 7, 2007
CONTACT: Yoni Cohen, Stark (202) 225-3202

WASHINGTON, D.C. -- The Department of Health and Human Services Office of Inspector General today released a report entitled, “Medicare Part D Sponsors: Estimated Reconciliation Amounts for 2006.” This report quantifies a net total of $4.4 billion that Medicare Part D drug plans owe America’s taxpayers for the 2006 plan year alone. The largest Part D drug plan, United Healthcare, is singularly responsible for $2 billion of this total figure. The private drug plans are still holding this money – interest-free – as we close in on 2008.

Ways and Means Health Subcommittee Chairman Pete Stark (CA-13) said, “This OIG Report proves that the insurance industry is getting multi-billion dollar zero-interest loans from Medicare. It is yet another example of why a privatized Medicare drug benefit will never be a good deal for America’s seniors or America’s taxpayers.”

The report goes on to provide recommendations to the Centers on Medicare and Medicaid Services (CMS) to improve reconciliation process to avoid such large discrepancies. In the OIG Report, CMS provides agency comments stating that the agency lacks statutory authority to comply with the OIG recommendations and that “it would be premature to make recommendations to Congress for statutory changes.”

Rep. Stark continued, “CMS hasn’t tried to recoup this money and is even refusing to acknowledge that modifications to the law may be needed to ensure these overpayments are prevented in the future. That’s not advocating for prudent use of taxpayer dollars.”

“I look forward to further analyzing the findings of this report and working to enact legislation to require the agency to do its job. Proper oversight is necessary to make sure that resources are spent providing services to beneficiaries. If CMS isn’t willing to look out for senior citizens and people with disabilities, Congress will.”

Among the recommendations made by the Inspector General were: requiring plan bids to more accurately reflect costs; conducting interim reconciliations throughout the year so that plans do not have an incentive to hold funds; better aligning prospective payments with actual costs; and adjusting risk sharing payments to adequately reflect actual risk.

The full OIG report can be viewed at http://oig.hhs.gov/oei/reports/oei-02-07-00460.pdf.