CMS Pub. 100-16, ch. 21, § 50.7.6

42 C.F.R. §§ 422.503(b)(4)(vi)(G), 423.504(b)(4)(vi)(G)

CMS issues alerts to Part D sponsors concerning fraud schemes indentified by law

enforcement officials. Typically, these alerts describe alleged activities involving

pharmacies practicing drug diversion or prescribers participating in illegal remuneration

schemes. Sponsors may take action (including denying or reversing claims) in instances

where the sponsor’s own analysis of its claims activity indicates that fraud may be

occurring. A sponsor’s decision to deny or reverse claims should be made on a claim-specific basis.

When a Fraud Alert is received, the sponsor should review its contractual agreements

with the identified parties. It would be appropriate for the sponsor to consider

terminating the contract(s) with the identified parties if law enforcement has issued

indictments against particular parties and the terms of the sponsor’s contract(s) authorizes

contract termination in those circumstances.

Sponsors are also obligated to review their past paid claims from entities identified in a

fraud alert. With the issuance of a fraud alert, CMS has placed sponsors on notice (see

42 CFR 423.505(k)(3)) that they should review claims involving identified providers. To

meet the “best knowledge, information, and belief” standard of certification, sponsors

should make their best efforts to, identify claims that may be or may have been part of an

alleged fraud scheme and remove them from their sets of prescription drug event data

submissions.