WASHINGTON BUREAU — Senate Finance Committee leaders want to know what happened to $64 million that the Centers for Medicare and Medicaid Services paid to a New York prescription drug plan provider this year.

The provider, Fox Insurance Company, New York, was terminated from the Medicare Part D drug program March 9, after CMS officials conducted an on-site review and reported finding violations of payment and appeals rules.

Fox, which had 123,000 Part D plan enrollees when it was terminated, is the first company that CMS has cut from the Part D program since the program was created, officials say.

Fox representatives were not immediately available to comment on the CMS allegations and the Baucus-Grassley letter.

Fox has been trying to defend itself in the U.S. District Court in New York.

Fox asked the court to reinstate it as a Part D provider. A district court judge rejected the request March 24, and a 3-judge panel at the 2nd U.S. Circuit Court of Appeals affirmed the decision of the district court judge June 29.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, and Sen. Charles Grassley, R-Iowa, the highest-ranking Republican on the committee, have sent Fox a letter asking the company to tell them by July 9 what happened to the Medicare Part D funding the company had received.

The senators released a copy of the letter Tuesday.

“Medicare paid Fox more than $66 million to provide prescription drug benefits for February and March,” the senators write in the letter. “How much of this amount was being held by Fox Insurance Company as of June 1, 2010, and why?”

CMS terminated Fox participation in the Part D program because the company “has failed to fully meet its obligations to Medicare beneficiaries,” particularly new enrollees, by imposing prior-authorization and step-therapy requirements that were not approved by CMS, officials say.

Fox also has violated appeals deadlines, and it has failed to comply with the requirements that apply when enrollees are being shifted to use of covered drugs, officials say.

The Fox plan had enrollees in Arkansas, Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Louisiana, Maryland, Missouri, North Carolina, New Jersey, New York, Nevada, Ohio, Pennsylvania, South Carolina, Texas and West Virginia. The enrollees were transferred to other providers after Fox was terminated.