The Department of Health and Human Services' Office of the Inspector General wants the federal government to look more closely at the use of Medicare Part D rebates, according to a new report.
According to the OIG, Medicare Part D sponsors underestimated rebates in 69 percent of their bids for plan year 2008, even though rebates can help reduce costs for Part D beneficiaries. The sponsors reported receiving $6.5 billion in drug manufacturer rebates in 2008, totalling approximately 10 percent of total gross Part D drug costs, according to the report.
Publicly traded companies sponsoring Part D plans include Aetna, Humana, WellPoint, UnitedHealth, CIGNA, CVS Caremark and Medco Health Solutions.
The OIG said all six sponsors selected for further review in the study received rebates when they encouraged beneficiaries to use certain drugs. "These six sponsors commonly had complex relationships with their pharmacy benefit managers, and in some cases these relationships lacked transparency," according to the report.
"This lack of transparency raises concerns that sponsors may not always have enough information to oversee the services and information provided by pharmacy benefit managers," OIG officials said.
[The Senate has had questions about the transparency of Medicare Part D drug pricing in the past. Read more.]
The OIG also found that some of the selected sponsors passed the fees that their pharmacy benefit managers received from manufacturers on to the program, while others did not. "Because of the size of these rebates, it is vital that rebates be reported accurately and that the government and beneficiaries receive the full benefit of these rebates," the OIG said.
Based on the findings, the OIG recommended that the Centers for Medicare and Medicaid Services ensure that sponsors more accurately include their expected rebates in their bids and require sponsors to use methods that CMS "deems reasonable" to allocate rebates across plans. The OIG also called for CMS to ensure that sponsors have sufficient audit rights and access to rebate information, and that sponsors appropriately report the fees that pharmacy benefit managers collect from manufacturers.
According to the OIG, CMS officials have agreed to ensure that sponsors more accurately include rebates in their bids, and they agreed in part with the call for sponsors to appropriately report the fees that pharmacy benefit managers collect from manufacturers. CMS officials did not agree with the other recommendations.
The OIG report can be found here.
[Read what one HFN blogger has to say about transparency and ethics in healthcare.]