Centers for Medicare & Medicaid Services (CMS) - Medicare Prescription Drug Benefit (Part D)

High-priority program

Home > Agencies & Programs > Centers for Medicare & Medicaid Services (CMS) - Medicare Prescription Drug Benefit (Part D)

Program level Payment Integrity results

Sponsoring agency: Department of Health and Human Services

Medicare Part D is a federal prescription drug benefit program for Medicare beneficiaries. The primary causes of overpayments are drug discrepancies (when the drug dispensed differs from the drug prescribed), drug pricing discrepancies (when the pricing on the drug prescribed differs from the pricing of the drug dispensed, commonly due to dosing issues), and insufficient documentation to determine whether payment was proper or improper. The agency contracts with Part D Sponsors who are responsible for administering the program, which includes the accuracy of data and support for payment purposes and validation. A known barrier to preventing improper payments is that sponsors' compliance with requirements is outside of the agency's control.

View on Federal Program Inventory

PROGRAM METRICS

$86,812 M

in FY 2021 outlays, with a

98.4%

payment accuracy rate

PROGRAM METRICS

$88,416 M

in FY 2022 outlays, with a

98.5%

payment accuracy rate

PROGRAM METRICS

$90,075 M

in FY 2023 outlays, with a

96.3%

payment accuracy rate

PROGRAM METRICS

$96,521 M

in FY 2024 outlays, with a

96.3%

payment accuracy rate

PROGRAM METRICS

$105,559 M

in FY 2025 outlays, with a

96.0%

payment accuracy rate

  • Improper payment estimates over time
    View as:

    Chart toggle amounts:
    Proper payments
    Overpayment
    Underpayment
    Technically improper
    Unknown

Payment Integrity results

  • FY 2021 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    01/2019 - 12/2020


    Confidence interval:

    >95%


    Margin of error:

    +/-656.76

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.0 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $686.49 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $686.49 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $682.75 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $682.75 M

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

Additional information

$682.75 M

Unknown Payment Details

Evaluation of corrective actions

Annually, the agency identifies the root causes of IPs and UPs and develops specific corrective actions to address them. This work is reported on through the AFR process.

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Medicare Prescription Drug Benefit (Part D) has established a baseline.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $115,818 M
Current year +1 estimated future improper payments $1,389.82 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 1.2 %

The program's current year improper payment and unknown payment rate of 1.58 % has not been achieved with a balance of payment integrity risk and controls and does not represent the lowest rate that can be achieved without disproportionally increasing another risk, therefore it is not the tolerable rate.

A tolerable rate has not been established for this program.

A tolerable rate has not been established for this program.

Additional programmatic information

  • FY 2022 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    01/2020 - 12/2020


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.49

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $1,323.24 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $1,323.24 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $37.87 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $37.87 M

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

Additional information

$37.87 M

Unknown Payment Details

Evaluation of corrective actions

The program is taking the following steps to ensure that managers, programs, and where appropriate, States and local governments are held accountable through annual performance appraisal criteria for meeting the program’s improper payment and unknown payment reduction target. Strengthening program integrity throughout HHS agencies and programs is a top priority of HHS, extending to each of our divisions and programs. As evidence of this focus, each accountable official’s performance plan contains strategic goals that are related to strengthening program integrity, protecting taxpayer resources, and reducing improper payments. The agency’s IP and UP reduction targets and progress towards meeting those goals are reported annually in the AFR. In addition, the agency sets annual GPRA goals related to the improper payment rates and reports quarterly on specific corrective actions to address improper payment rates through the quarterly scorecard process for high-priority programs.

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Medicare Prescription Drug Benefit (Part D) has established a baseline.

CMS uses the reduction target to calculate the future IP+UP estimates; therefore, the Reduction target and IP+UP rate are equivalent for FY 2023. CMS expects the FY2023 rate to be statistically similar to the FY2022 rate; however, the target provides a good representation of the expected rate based on historical observations.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $113,525 M
Current year +1 estimated future improper payments $1,866.68 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 1.64 %
Current year +1 estimated future improper payment and unknown payment reduction target 1.64 %

The program's current year improper payment and unknown payment rate of 1.54 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

Methodology to determine the tolerable rate for this program has not been determined.

A tolerable rate has not been established for this program. HHS is working within the current resources to perform the measurement of the Part D error rate calculation methodology.

A tolerable rate has not been established for this program. Current budget submissions are to perform the measurement of the Part D error rate calculation methodology.

Additional programmatic information

  • FY 2023 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    01/2021 - 12/2021


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.86

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Training
    HHS conducted Opioid Education Mission webinars in November 2022 and May 2023. In September 2023, an in-person Opioid Education Mission took place at the Atlanta Regional Office. HHS maintained formal outreach to plan sponsors for incomplete or invalid documentation to address potential improper payments during the sample submission period. Furthermore, HHS sent Final Findings Reports to all Part D sponsors participating in the improper payment measurement, offering feedback on their submissions and validation results compared to all participating sponsors.
    FY2023 Q3
    Completed
    Audit
    CMS conducted audits of Part D plan sponsors, with a focus on drugs that are at high-risk for improper payments.  Each type of audit is different in scope but has the same goal of educating Part D plan sponsors on issues of fraud, waste, and abuse, as well as identifying, reducing, and recovering inappropriate payments under Part D.  Additionally, CMS conducts program integrity audits of Part D plan sponsors to reduce improper payments and identify areas of non-compliance with program integrity requirements.
    The corrective action was not fully completed this reporting period
    Not Completed
    Training
    CMS will continue to conduct training sessions for Part D plan sponsors on program integrity initiatives, investigations, data analyses, and potential fraud schemes. Additionally, CMS will continue formal outreach to plan sponsors to ensure proper payment for Part D drugs and coverage for invalid or incomplete documentation.
    FY2024
    Planned
    Audit
    CMS will continue to conduct audits of Part D plan sponsors, with a focus on drugs that are at high-risk for improper payments.  Each type of audit is different in scope but has the same goal of educating Part D plan sponsors on issues of fraud, waste, and abuse, as well as identifying, reducing, and recovering improper inappropriate payments under Part D.  Additionally, CMS will continue to conduct program integrity audits of Part D plan sponsors to reduce improper payments and identify areas of non-compliance with program integrity requirements.
    FY2024
    Planned

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0 M

The primary causes of Medicare Prescription Drug Plan (Part D) improper payments are drug or drug pricing discrepancies and insufficient documentation to determine whether payment was proper or improper. The agency contracts with Part D Sponsors who are responsible for administering the program, including the accuracy of data and support for payment purposes and validation. Prescriptions, the source document, are not submitted to the agency at the time of making payment determinations.
Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $2,334.94 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $2,334.94 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Outside Agency Control Medical Status $2,334.94 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $1,019.84 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $1,019.84 M

Eligibility element/information needed Eligibility amount
Medical Status $1,019.84 M

Mitigation strategies taken Mitigation strategies planned
Audit, Training Audit, Training

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

Additional information

$1,019.84 M

Unknown Payment Details

Evaluation of corrective actions

HHS will continue to prioritize and implement effective corrective actions and mitigation strategies that reduce improper payments and unknown payments agency-wide as evidenced by its lower error rate of 3.72%. The actions taken and planned to address failure to access data are proportional to the improper payment rate and address the root causes of the improper payments. For example, HHS audits Part D plan sponsors to address high-risk drugs and educate sponsors on fraud, waste, and abuse. These audits have varying scopes but share the goal of reducing and recovering improper Part D payments. Future audits may account for areas in which missing or invalid documentation has been found to be a persistent issue. HHS also uses education and outreach as a key tool to reduce improper payments. Annually, the agency identifies the root causes of improper payments and develops specific corrective actions to address them. This work is reported on through the AFR process.

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Medicare Prescription Drug Benefit (Part D) has NOT established a baseline.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $111,960 M
Current year +1 estimated future improper payments $0 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 0 %

The program's current year improper payment and unknown payment rate of 3.72 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

Methodology to determine the tolerable rate for this program has not been determined.

A tolerable rate has not been established for this program. The tolerable rate will be identified when the methodology is developed. Once the tolerable rate is developed, the agency can determine if we have what is needed with respect to internal controls, human capital and information system and other infrastructure to reduce Improper Payments and Unknown Payments to the tolerable rate.

A tolerable rate has not been established for this program. Once the tolerable rate is developed, the agency can determine if we have what is needed with respect to internal controls, human capital and information system and other infrastructure to reduce Improper Payments and Unknown Payments to the tolerable rate and we can describe the resources requested in the most recent budget submission to establish and maintain internal controls.

Additional programmatic information

In Reporting Year (RY) 2023, CMS implemented methodology refinements and technical changes that contributed to an increase in the RY 2023 improper payment rate estimation. Due to the methodology changes introduced in RY 2023, the rates for RY 2022 and RY 2023 are not comparable. A baseline for improper payments in Medicare Part D has not yet been established, as the RY 2023 estimate reflects numerous methodology changes.

CMS is committed to strengthening and maintaining program integrity efforts to reduce improper payments rates. CMS' key corrective actions include conducting outreach to plan sponsors, conducting both Part D and Program Integrity audits, and conducting comprehensive opioid education missions.

  • FY 2024 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    01/2022 - 12/2022


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.42

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Training
    In June 2024, HHS held a Part C and Part D Fraud, Waste, and Abuse training that covered information about current MAO and PDP fraud schemes, fraud prevention techniques, and activities that are critical to the efforts to deter and combat fraud, waste, and abuse. In September 2024, HHS also held an Opioid mission with 4 plan sponsors. This mission covered Opioid best practices and current fraud schemes. HHS maintained formal outreach to plan sponsors for incomplete or invalid documentation to address potential improper payments during the sample submission period. Furthermore, HHS sent Final Findings Reports to all Part D sponsors participating in the improper payment measurement, offering feedback on their submissions and validation results compared to all participating sponsors.
    FY2024 Q4
    Completed
    Audit
    HHS audits Part D plan sponsors to address high-risk drugs and educate sponsors on fraud, waste, and abuse. These audits have varying scopes but share the goal of reducing and recovering improper Part D payments. In FY 2024, the I-MEDIC continued to launch investigations, made recommendations for provider revocations, sent referrals to law enforcement, and submitted referrals to other entities like state pharmacy and medical boards, Medicare Quality Improvement Organizations, and other Medicare contractors. HHS also audits Part D plan sponsors to reduce improper payments and detect non-compliance with program integrity requirements. In FY 2024, HHS conducted four Program Integrity Audits, aiming to educate plan sponsors about fraud, waste, and abuse issues.
    FY2024 Q4
    Completed
    Training
    CMS will continue to conduct training sessions for Part D plan sponsors on program integrity initiatives, investigations, data analyses, and potential fraud schemes. Additionally, CMS will continue formal outreach to plan sponsors to ensure proper payment for Part D drugs and coverage for invalid or incomplete documentation.
    FY2025
    Planned
    Audit
    CMS will continue to conduct audits of Part D plan sponsors, with a focus on drugs that are at high-risk for improper payments.  Each type of audit is different in scope but has the same goal of educating Part D plan sponsors on issues of fraud, waste, and abuse, as well as identifying, reducing, and recovering improper inappropriate payments under Part D.  Additionally, CMS will continue to conduct program integrity audits of Part D plan sponsors to reduce improper payments and identify areas of non-compliance with program integrity requirements.
    FY2025
    Planned

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.0 M

The primary causes of Medicare Prescription Drug Plan (Part D) improper payments are drug or drug pricing discrepancies and insufficient documentation to determine whether payment was proper or improper. The agency contracts with Part D Sponsors who are responsible for administering the program, including the accuracy of data and support for payment purposes and validation. Prescriptions, the source document, are not submitted to the agency at the time of making payment determinations.
Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $3,052.65 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $3,052.65 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Outside Agency Control Medical Status $3,052.65 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $522.44 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $522.44 M

Eligibility element/information needed Eligibility amount
Medical Status $522.44 M

Mitigation strategies taken Mitigation strategies planned
Audit, Training Audit, Training

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

Additional information

$522.44 M

Unknown Payment Details

Evaluation of corrective actions

HHS will continue to prioritize and implement effective corrective actions and mitigation strategies that reduce improper payments and unknown payments agency-wide as evidenced by its lower error rate of 3.70%. The actions taken and planned to address failure to access data are proportional to the improper payment rate and address the root causes of the improper payments. For example, HHS audits Part D plan sponsors to address high-risk drugs and educate sponsors on fraud, waste, and abuse. These audits have varying scopes but share the goal of reducing and recovering improper Part D payments. Future audits may account for areas in which missing or invalid documentation has been found to be a persistent issue. HHS also uses education and outreach as a key tool to reduce improper payments. Annually, the agency identifies the root causes of improper payments and develops specific corrective actions to address them. This work is reported on through the AFR process.

In FY 2025, HHS will continue Part D plan sponsor audits, outreach, and training to reduce overpayments. Audits and training will be focused on high-risk drugs (i.e., at high risk of overpayments and/or beneficiary harm) and other areas of risk to the program. HHS' activities will align with the drivers and root causes of the error rate.

Part D overpayments mainly consist of errors resulting from drug or drug coverage or insufficient documentation. As such, CMS focused on educating Part D plan sponsors on issues of fraud, waste, and abuse to cut down on confusion regarding documentation requirements and coverage requirements under Part D.

In FY 2024, HHS audited Part D plan sponsors to address high-risk drugs and educate sponsors on fraud, waste, and abuse. HHS also conducted trainings, such as Opioid Education Mission webinars. The improper payment rate for FY 2024 is 3.70%, which supports the effective implementation and prioritization of action within the agency. Collectively, future improper payment rate results will inform whether the overall corrective action plan was effective and provide insight into which components of the plan may need to be modified or refined to improve effectiveness.

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Medicare Prescription Drug Benefit (Part D) has established a baseline.

HHS uses the reduction target to calculate the future IP+UP estimates; therefore, the Reduction target and IP+UP rate are equivalent for FY 2025. HHS expects the FY2025 rate to be within the range of statistically similar to the FY2024 rate; however, as FY2024 represents a new baseline HHS will observe how the rate fluctuates over the next couple of years.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $150,146 M
Current year +1 estimated future improper payments $5,870.71 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 3.91 %
Current year +1 estimated future improper payment and unknown payment reduction target 3.91 %

The program's current year improper payment and unknown payment rate of 3.7 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

A tolerable rate has not been established for this program. The tolerable rate will be identified when the methodology is developed. Once the tolerable rate is developed, the agency can determine if we have what is needed with respect to internal controls, human capital and information system and other infrastructure to reduce Improper Payments and Unknown Payments to the tolerable rate.

HHS did not include program integrity proposals related to Part D in its FY 2026 Budget request.

Additional programmatic information

RY 2024 reflects a new baseline for Medicare Part D. The Reporting Year (RY) 2024 Medicare Part D improper payment rate is statistically similar to the RY 2023 Medicare Part D improper payment rate.

Accountability for detecting, preventing, and recovering improper payments

HHS reports the agency’s improper payment targets annually in the AFR. In addition, HHS sets annual Government Performance and Results Act (GPRA) goals tied to reducing the improper payments. HHS managers are held accountable for assessing improper payment rates and taking meaningful steps to address the root causes of error. These efforts are reflected in each manager’s performance plan, as appropriate. HHS also reports quarterly on the specific actions taken to address the improper payment rates through the quarterly scorecard process for high-priority programs, providing a level of public oversight over these efforts.

  • FY 2025 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    01/2023 - 12/2023


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.45

Causes

The primary causes of Medicare Prescription Drug Plan (Part D) improper payments are drug or drug pricing discrepancies and insufficient documentation to determine whether payment was proper or improper. The agency contracts with Part D Sponsors who are responsible for administering the program, including the accuracy of data and support for payment purposes and validation. Prescriptions, the source document, are not submitted to the agency at the time of making payment determinations.

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.0 M
Amount of overpayments outside the agency's control $3,703.19 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
Amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
Amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $3,703.19 M

Underpayment root cause Underpayment amount
Amount of underpayments $522.61 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $522.61 M

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

The amount that could either be proper or improper but the agency is unable to determine whether it was proper or improper as a result of insufficient or lack of documentation $0.0 M

Prevention

In FY 2026, HHS will continue to implement corrective actions including health plan training, audits of high-risk drugs, and investigations to identify potential fraud and recover overpayments. For example, HHS educates plan sponsors on emerging fraud, waste, and abuse drug trends and schemes by issuing Health Plan Management System memos on high risk drugs, audit findings, and best practices. These efforts strengthen fraud, waste, and abuse programs and ensure compliance with HHS requirements.
HHS will continue to prioritize and implement effective corrective actions and mitigation strategies that reduce improper payments and unknown payments agency-wide as evidenced by its lower error rate of 4%. The actions taken and planned to address failure to access data are proportional to the improper payment rate and address the root causes of the improper payments. For example, HHS audits Part D plan sponsors to address high-risk drugs and educate sponsors on fraud, waste, and abuse. These audits have varying scopes but share the goal of reducing and recovering improper Part D payments. Future audits may account for areas in which missing or invalid documentation has been found to be a persistent issue. HHS also uses education and outreach as a key tool to reduce improper payments. Annually, the agency identifies the root causes of improper payments and develops specific corrective actions to address them.

Part D overpayments mainly consist of errors resulting from drug or drug coverage or insufficient documentation. As such, CMS focused on educating Part D plan sponsors on issues of fraud, waste, and abuse to cut down on confusion regarding documentation requirements and coverage requirements under Part D.

In FY 2026, HHS will continue Part D plan sponsor audits, outreach, and training to reduce overpayments. Audits and training will be focused on high-risk drugs (i.e., at high risk of overpayments and/or beneficiary harm) and other areas of risk to the program. HHS' activities will align with the drivers and root causes of the error rate.

Payment type Mitigation strategies taken Mitigation strategies planned
Overpayments Audit, Training Audit, Training
Underpayments Audit, Training Audit, Training

Eligibility element/information needed Description of the eligbility element/information
Medical Status Identifies whether a person is sick/healthy

Additional information

The Reporting Year (RY) 2025 Medicare Part D improper payment rate is statistically similar to the RY 2024 Medicare Part D improper payment rate.

Reduction target

4.23 %

A tolerable rate has not been established for this program. The tolerable rate will be identified when the methodology is developed. Once the tolerable rate is developed, the agency can determine if we have what is needed with respect to internal controls, human capital and information system and other infrastructure to reduce Improper Payments and Unknown Payments to the tolerable rate.

HHS did not include program integrity proposals related to Part D in its FY 2027 Budget request.

HHS reports the agency’s improper payment targets annually in the AFR. In addition, HHS sets annual Government Performance and Results Act (GPRA) goals tied to reducing the improper payments. HHS managers are held accountable for assessing improper payment rates and taking meaningful steps to address the root causes of error. These efforts are reflected in each manager’s performance plan, as appropriate. HHS also reports quarterly on the specific actions taken to address the improper payment rates through the quarterly scorecard process for high-priority programs, providing a level of public oversight over these efforts.

$522.61 M