Medicare makes payments to health insurers participating in the Part D drug coverage program about 20 days in advance of their pharmacy bills, allowing those companies to invest and earn interest on those advance payments — and preventing CMS from doing the same. By narrowing that time window, the Medicare trust fund could have earned as much as $111.2 million in interest in 2009, the year auditors studied.
Auditors recommended CMS either hold the money longer or require private payors to lower their bids to coincide with interest earned on the advance payments. But the agency disagreed, countering insurers would raise their bid rates to recoup lost interest earnings.
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