The Payment Integrity Information Act of 2019 (PIIA) (Public Law No. 116-117) requires government agencies to identify, report, and reduce erroneous payments in the government's programs and activities. The Implementation Guidance in Appendix C of the Office of Management and Budget (OMB) Circular No. A-123 requires executive branch agency heads to review their programs and activities annually and identify those that may be susceptible to significant improper payments. When a program is identified as being susceptible to significant improper payments, agencies are required to estimate the annual amount of improper payments and report the estimates along with plans to reduce these improper payments to Congress.
In compliance with the PIIA, the Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) has implemented a systematic plan for identifying, measuring, and reporting erroneous payments for the Medicare Part D program, known as the Part D Improper Payment Measure (Part D IPM).
Part D IPM measures error in payments due to invalid and/or inaccurate Prescription Drug Event (PDE) records, which results in adjustments to beneficiaries’ benefit phases and reinsurance subsidy payments. PDE records selected for audit are evaluated using supporting documentation, including the Prescription Record Hardcopy or Medication Order (RxRec) and a Claim Detail File (CDF) collected from the Part D sponsors and their downstream entities. The findings from the validation process are imputed onto the corresponding PDE records of a randomly selected five (5) percent sample of the Part D beneficiary population. CMS calculates the estimated error for this sample of beneficiaries and extrapolates the result onto the payments of the remaining Part D beneficiaries to determine the Part D IPM gross payment error amount, and the national Part D IPM. The national Part D IPM reflects both overpayments and underpayments.