TL/DR –
The OIG’s audit revealed that Essence, a Part D sponsor, inaccurately reported to CMS amounts paid to primary care doctors as direct and indirect remuneration (DIR) for the years 2017 to 2020. Essence’s incorrect reporting included risk-share payments and incentive payments which were not linked to Part D drug costs. The OIG’s three recommendations included Essence requesting CMS to reopen its 2017 to 2019 DIR reports and refile its 2020 DIR report with the correct amounts, however, Essence disagreed with the findings and did not address the recommendations.
Reasons for the OIG Audit on CMS Contracts
The Office of Inspector General (OIG) audited CMS contracts due to the implications of Direct and Indirect Remuneration (DIR) on Medicare Part D sponsor compliance. CMS works with private entities, known as sponsors, who function as payers and insurers, offering prescription drug benefits through Medicare Part D.
Part D prescription drug plan sponsors may receive DIRs, including rebates, subsidies, and price concessions that decrease the costs for a part D drug. This investigation is one among many OIG reports focusing on compliance regarding DIR in Medicare sponsorships.
OIG Findings on Essence’s DIR Reporting
Essence, a Medicare Part D sponsor, was found to have incorrectly reported amounts paid to primary care physician contractors as DIR during 2017-2020. The reported DIR risk-share payments were not attributable to Part D drug costs.
From 2017 to 2020, Essence misreported DIR incentive payments worth undisclosed amounts that were unrelated to Part D drug cost. Another type of risk-share payments, termed ‘guarantee payments,’ also contained amounts incorrectly reported as DIR. Unfortunately, the exact misreported amount couldn’t be determined.
By including non-drug costs in its DIR report, Essence lowered its overall DIR, inflated its drug costs, and could have received higher payment amounts from CMS than it was due.
OIG’s Recommendations following the Audit
The OIG made three suggestions, primarily urging Essence to have CMS reopen its DIR reports from 2017-2019 and refile its 2020 DIR report with correct amounts. However, Essence did not concur with these findings and did not address OIG’s recommendations.
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