Transcript Part D - Global Health Care, LLC

The Emerging Market in
Medicare Part D and
Sponsor Compliance
Strategies
A Presentation to the Pharmaceutical Compliance
Congress
November 8, 2005
John Gorman
President/CEO
Gorman Health Group, LLC
2176 Wisconsin Avenue, NW
Washington, DC 20007
(202) 364-8283
Fax: (202) 244-8324
www.gormanhealthgroup.com
Today’s Agenda
• The Emerging Market in Medicare Part D
- Medicare Advantage: Local and Regional Outlook
- Prescription Drug Plans (PDPs)
- Employers and Retiree Groups
• Medicare Fraud, Waste and Abuse (FWA) Issues
and Sanctions
• Compliance and FWA Elements
• Medicare Prescription Drug Integrity
Contractors
(MEDICs) and Their Role
• Part D Plan Sponsor FWA Exposure
• PBM Integrity
• Subcontractor Oversight
• Keys to Minimizing Exposure
• Conclusions
New Medicare Part D
Beneficiaries Will Have Several Coverage Options
Medicare Options
Prescription
Drug-only Plan
(PDP)/
FFS Add-On
Medicare
Advantage
PPO Option
Medicare
Advantage
HMO Option
Medicare
Advantage
PPO Option
Special Needs
Plan (SNP)
Option
Regional
Options
•Blended
benchmark
•Stabilization
fund
•Risk Corridors
Local
(countybased)
Options
Must offer
benefits
equivalent to
standard
coverage
Must offer
benefits
equivalent to
standard
coverage on at
least one plan in
portfolio
Other Options
Limited Risk or
Fallback DrugOnly Plan
If insufficient
number of PDPs
or PPOs emerge
in the market
Qualified
Employer Plan
Must offer benefits equivalent
to standard coverage to
receive subsidy
Medicare Risk Contracts
1985 to 2005
1-Oct
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1990
1989
1987
October-05
1985
500
450
400
350
300
250
200
150
100
50
0
Source: CMS, October 2005. Note: 570 PDPs will launch on January 1, 2006.
Convergence of Health Policy Factors
Create Opportunities for SNPs
Lock-In
Exemptions
Medicaid
Reform
SNPs
Risk
Adjustment
Part D
Auto-Enroll
of Duals
Regional PPO Sponsors and Revenue vs. Cost
Region 1
118.7%
Region 2
107.7%
Region 23
119.6%
HUM
NPA
HUM
Region 22
111.6%
WLP
Region 24
108.6%
Region 3
Region 11 111.1%
110.3%
UHC
Region 19
116.0%
Region 12Region 6
Region 14
114.7% 114.0%
110.9% WLP HUM HUM
SIE
Region 20
Region 21 117.7%
117.9%
Region 18
110.0%
HUM
HUM
HUM
HNT
Region 17
111.0%
Region 26
110.8%
HUM
HUM
Region 15
111.9%
Region 13
112.4%
Region 7
119.9%
HUM
Region 10
111.7% Region 8
HUM
114.3%
Region 16
110.4%
HUM
WLP
HUM
BSC
Region 4
106.2%
AET
Region 5
107.7%
AET
Region 9
109.7%
UHC
HUM
Region 25
139.9% UHC
Source: GHG analysis adapted from CMS 2005 MA
Payment Rates and 99% FFS Cost Files, January 2005.
Competitive Landscape for PDPs -- 2006
Region
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
States
ME, NH
CT, MA, RI, VT
NY
NJ
DE, DC, MD
PA, WV
VA
NC
SC
GA
FL
AL, TN
MI
OH
IN, KY
WI
IL
MO
AR
MS
LA
TX
OK
KS
Medicare
Eligibles
431,000
1,808,000
2,856,000
1,259,000
914,000
2,532,000
1,006,000
1,292,000
657,000
1,050,000
3,095,000
1,702,000
1,519,000
1,794,000
1,614,000
844,000
1,733,000
930,000
480,000
467,000
659,000
2,579,000
551,000
408,000
IA, MN, MT,
NE, ND, SD,
WY
1,929,000
NM
271,000
CO
531,000
AZ
800,000
NV
303,000
OR, WA
1,380,000
ID, UT
433,000
CA
4,334,000
HI
186,000
AK
53,000
Source: CMS,Lehman Brothers
Duals
83,000
377,000
628,000
145,000
110,000
296,000
98,000
235,000
129,000
172,000
401,000
338,000
197,000
152,000
240,000
93,000
160,000
144,000
84,000
146,000
103,000
420,000
71,000
44,000
Total MA
1,102
241,554
549,040
96,348
92,290
528,657
2,648
68,432
424
55,971
603,729
154,055
21,407
237,331
79,027
41,146
67,301
136,172
554
20
73,664
221,212
42,337
2,319
Employer
Covered
90,510
379,680
599,760
264,390
191,940
531,720
211,260
271,320
137,970
220,500
649,950
357,420
318,990
376,740
338,940
177,240
363,930
195,300
100,800
98,070
138,390
541,590
115,710
85,680
242,000
143,324
405,090
35,000
42,351
56,910
60,000
139,580
111,510
82,000
209,918
168,000
20,000
85,726
63,630
165,000
322,063
289,800
31,000
47,539
90,930
932,000
1,420,867
910,140
24,000
28,163
39,060
12,000
0
11,130
and GHG Estimates, 10/05
Estimated
Non-Duals
256,388
809,766
1,079,200
753,262
519,770
1,175,623
694,092
717,248
389,606
601,529
1,440,321
852,525
981,603
1,027,929
956,033
532,614
1,141,769
454,528
294,646
222,910
343,946
1,396,198
321,953
276,001
PDPs
16
17
20
17
18
19
16
16
18
18
18
16
17
17
16
17
16
15
15
15
16
20
16
15
1,138,586
136,739
219,910
340,082
133,644
603,137
263,531
1,070,993
94,777
29,870
18
17
17
18
17
20
18
18
12
11
Impact of Dual Assignments on PDPs
Region
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
States
ME, NH
CT, MA, RI, VT
NY
NJ
DE, DC, MD
PA, WV
VA
NC
SC
GA
FL
AL, TN
MI
OH
IN, KY
WI
IL
MO
AR
MS
LA
TX
OK
KS
Duals
83,000
377,000
628,000
145,000
110,000
296,000
98,000
235,000
129,000
172,000
401,000
338,000
197,000
152,000
240,000
93,000
160,000
144,000
84,000
146,000
103,000
420,000
71,000
44,000
25
26
27
28
29
30
31
32
33
34
IA, MN, MT, NE,
ND, SD, WY
NM
CO
AZ
NV
OR, WA
ID, UT
CA
HI
AK
242,000
35,000
60,000
82,000
20,000
165,000
31,000
932,000
24,000
12,000
Plans with
Average
Average
Auto-Assign MarketShare Membership
12
8.3%
6,917
9
11.1%
41,889
11
9.1%
57,091
10
10.0%
14,500
14
7.1%
7,857
14
7.1%
21,143
14
7.1%
7,000
11
9.1%
21,364
14
7.1%
9,214
13
7.7%
13,231
6
16.7%
66,833
8
12.5%
42,250
13
7.7%
15,154
9
11.1%
16,889
12
8.3%
20,000
13
7.7%
7,154
12
8.3%
13,333
9
11.1%
16,000
12
8.3%
7,000
11
9.1%
13,273
10
10.0%
10,300
14
7.1%
30,000
10
10.0%
7,100
10
10.0%
4,400
11
8
10
7
12
12
8
7
7
5
9.1%
12.5%
10.0%
14.3%
8.3%
8.3%
12.5%
14.3%
14.3%
20.0%
Source: Lehman Brothers and GHG Analysis, September 2005.
22,000
4,375
6,000
11,714
1,667
13,750
3,875
133,143
3,429
2,400
Estimated
PMPM
$130.17
$124.35
$123.91
$125.45
$127.54
$126.67
$128.50
$130.38
$128.96
$127.23
$123.15
$126.41
$127.30
$124.77
$129.77
$125.35
$125.68
$125.45
$129.53
$130.47
$128.22
$125.76
$129.21
$127.52
Potential Avg.
Monthly Revenue
$10,804,110
$62,506,600
$84,889,615
$21,828,300
$12,025,200
$32,137,989
$10,794,000
$33,424,691
$14,259,291
$20,200,209
$98,766,300
$64,089,870
$23,149,015
$25,286,720
$31,144,800
$10,760,815
$20,108,800
$24,086,400
$10,880,520
$20,780,313
$15,847,992
$45,273,600
$11,008,692
$6,733,056
$127.19
$120.03
$123.00
$118.70
$117.54
$124.68
$127.70
$117.33
$121.52
$128.74
$33,578,160
$6,301,575
$8,856,000
$16,685,829
$2,350,800
$20,572,200
$5,938,050
$187,459,817
$4,999,680
$3,707,712
PDPs to Watch
Applicant
Partner
Scope
Aetna
Medco
HealthNet
WellPoint
Universal American
Financial Corp.
United Healthcare
Aetna PM
NA
NA
WellPoint PM
PharmaCare
All 34 regions
All 34 regions
6 regions
All 34 regions
32 regions
Walgreens HI
NA
Walgreens HI
Prime Therapeutics
All 34 regions
(AARP endorsement)
8 regions
All 34 regions
Upper Midwest Region
CIGNA PM
Prescription Solutions
Argus
Rite Aid
All 34 regions
All 34 regions
31 regions
All 34 regions
Sierra
WellCare
Heartland Alliance
(6 BCBS plans)
CIGNA/NationsHealth
PacifiCare
Humana
Coventry
Source: company reports
Part D Final Benchmarks for 2006
Actual
(8/9/05)
Expected
(3/2005)
Difference
Base monthly
beneficiary
premium
$32.20
$37.37
-14%
Average Part D
Benchmark
(PMPM)
$94.08
$109.18
-14%
Summary
• The minimum number of plans participating in any of
the regions is 11 (Region 34, Alaska).
• The maximum amount of plans participating is 20
plans (NY, TX, OR/WA).
• In 37 states 100% of Medicare eligibles will have
access to a PPO plan.
• The number of auto-assigned beneficiaries per
organization in a given region will range from as low
as 2,000 to the 6 plans in Alaska to as high as
133,000 individuals in the 7 plans in California.
Part D Projections: 2006
• GHG expects in 2006:
• $112B in revenues generated for private
plans (up from $51B in 2005) – 38%
($42B) through PDPs
• 900,000 new beneficiaries in MA products
(5.8M in 2005)
• 14.3M in PDPs (including duals and lowincome)
• Therefore, over 21M beneficiaries in some
form of managed care in 2006
Strategies Employers Are Likely to Pursue
in 2006
Retiree Health Benefits: Two Choices for
Employers
• For 2006, Expect Most Employers to Choose RDS but
some may prefer Part D
• Actuarial Equivalence - employer plan may not qualify
for the RDS
• Part D offers higher subsidies, especially for employers
with low utilization
• Tax status - governmental entities or nonprofits do not
realize the tax benefits of RDS
• Retirees already in MA plans
• LIS – may be better off in Part D
• Administrative – Part D plans handle administration and
financial risk
Retiree Health Benefits: Two Choices for
Employers
• For 2007 and Beyond, expect a shift to Part D
• Market will be known
• Financial benefits of Part D will be clearer
• Time to submit Part D applications
• Fewer employers will qualify for the RDS, e.g.
percent of plans meeting cap
Employer Options for Retiree Drug
Coverage
Endorse
Migrate Retirees
to Medicare
Part D
Wrap/StandAlone
Wrap/
Integrate
Modify
Employer
Providing
Retiree
Coverage
Sponsor
Annual Decision on
Next Year’s Benefit
Status
Quo
Continue as Primary
Payer for Retirees
(assumes Rx coverage
equivalent to/better than Part
D currently provided)
Subsidy
Impacts of Retiree Drug Coverage Options
Employers
Retirees
RDS
Administrative Simplicity
Compliance Risk
No change
Part D
Subsidies could be higher than
RDS
Low income retirees could
benefit
Part D-Endorse
Medicare primary – employer
contribution small
Choice
May be less coverage
Part D–Stand
alone wrap
COB issues
Different providers and formularies
Same coverage – may
need to pay out of pocket
and seek reimbursement
Part D–
Integrated Wrap
One stop shopping
Part D plan assumes risk
New plan for drug
coverage
Part D–Direct
contract
Eliminate middleman
Financial and compliance risk
Seamless
Impact of Likely Employer Strategies -2006
• 77% of retirees likely to be in plans that continue drug
benefit coverage and accept the 28% subsidy
• 6% of retirees likely to be in plans that supplement
Medicare drug coverage
• 4% of retirees likely to be in plans that discontinue
drug coverage
• 13% of retirees in plans that do not yet know their
strategy or had a different strategy
Source: Kaiser/Hewitt Survey, December 2004.
Privatization of the Drug Market
Total U.S. Drug Spending
Before Medicare Drug Benefit
Consumer
Out-of-Pocket
30%
Medicaid,
Other Public
22%
After Medicare Drug Benefit
Consumer
Out-of-Pocket
18%
Private
Health
Insurance
48%
Medicaid,
Other Public
12%
Private
Health
Insurance
70%
Sources: CMS, National Health Spending, 2002; and CBO, Issues in Designing a Prescription
Drug Benefit for Medicare, Oct, 2002.
Compliance Strategies for Part D
Sponsors
Government Oversight Structures
• CMS – Part C & D Monitoring Programs
- 2-3 year on-site, regularly - scheduled audit cycle, depending on risk
assessment for MA plans (3 years for PD plan)
- Focused/targeted desk and on-site audits, depending on risk
assessment
• MEDICS Monitor and evaluate data and trends to identify potential
fraud, abuse, and waste in the Medicare Part D Program.
- Receive reports from contractors and beneficiaries
- Develop and refer cases to the appropriate Law Enforcement (LE)
Agency or to CMS for administrative action as necessary
• Inspector General
- Civil Money penalties
- Exclusion
• Department of Justice
- Civil and Criminal Prosecution
Medicare Part D Compliance Plan Required
Elements
7 Required Elements of a Part D Compliance Program
• Written policies, procedures and standards of conduct regarding
compliance with all applicable Federal and State standards
• Compliance Officer and Committee accountable to senior management
• Effective training programs for employees, contractors, agents and
directors
• Effective lines of communication
• Enforcement through well-publicized disciplinary guidelines
• Effective internal monitoring and auditing
• Prompt response to detected offenses (e.g. payment or delivery of
drugs) and development of corrective action initiatives (e.g. repayment
of overpayments and disciplinary actions)
Comprehensive Fraud and Abuse Program
• Detect, correct, and prevent fraud, waste, and abuse
• Voluntary self-reporting of potential fraud or misconduct
• Separate plan or integrate with the other 7 compliance plan elements
Medicare Compliance and FWA Risks
• Standard Part C Compliance Tests that will Apply to
Part D Sponsors:
• Fails to provide medically necessary services, if
adverse effect
• Imposes excess charges on enrollees
• Discourages enrollment due to health status
• Misrepresents or Falsifies information
• Employs or contracts with excluded individuals and
entities
• Substantially fails to carry out the contract, inefficient
administration of the contract, or no longer
substantially meets the contract requirements
Medicare Compliance and FWA Risks
• Administrative Sanctions
- Contract Termination
- Intermediate Sanctions (Suspension of enrollment and payment)
• Exclusion from all Federal Programs
• Civil Monetary Penalties
- $25,000 for each failure to provide medically necessary services,
health screening or falsification of information to the Secretary
- $25,000 for each determination of failure to carry out the contract
if adverse effect
Medicare Compliance and FWA Risks
• Criminal Penalties (felony conviction and up to 5 year imprisonment)
• Knowing and willful false statement or misrepresentation of fact in
application for benefit or payment under a federal health care
program
• Knowing and willful kickback, bribe or rebate to inappropriately
secure federal funds
•
• False Claims (Whistleblowers) Act
• Signature acknowledging that information is being submitted for
purposes of obtaining Federal funds triggers the FCA
• FCA prohibits false or fraudulent claims
• Treble damages and up to $11,000 per claim
• Whistleblowers receive up to 30% of the recovery
• Liability extends to those who submit the false claim and those who
“cause” the submission of the false claim
• Intent to defraud is not required – mistake or negligence with
system wide effects sufficient
MEDIC Part D - Data Analysis
• Utilization Management
• Medication Adherence and Persistence
• Quality Assurance
• Performance Measures
• Coverage Determination
• Long Term Care (LTC) - Pharmacy Access
• Complaint Tracking
CMS Data Collection – Management Information
Integrated Repository
• Performance Assessment
• Data mining and standard reports will be used to
inform CMS of Plan’s performance under Part D
• Standard Required Reports
• PDE data (claims data)
• Eligibility data
• Complaint data (CTM)
• Plan-reported data (HPMS)
• Plan-finder data
MEDICS Role In CMS Compliance and FWA Review & Audit
– CMS’ Defense against the “Mississippi River of Dollars”
• IDIQ Contract (Indefinite Delivery – Indefinite Quantity Solicitation)
• Of the 21 “Examples” of General Fraud, Waste and Abuse in the
MEDIC Statement of Work, 15 were targeted toward PBM or
pharmacy related issues and business practices – 6 were
Beneficiary fraud issues
- PBMs and Part D Sponsors will be at risk for the acts of their
downstream pharmacy contractors for false claim submission
• Of the 12 Examples of potential Financial Fraud, all 12 will impact
PBMs
- Effective cost allocation systems critical for administrative services
- Rebate contracts will be under scrutiny
General Fraud and Abuse Issues
• Misrepresenting the enrollment, encounter, or prescription drug
event data
• Improper reporting of prescriptions dispensed to maximize
payments.
• Billing for services not furnished and/or drugs not provided.
• Billing that appears to be a deliberate application for duplicate
payment
• Soliciting, offering, or receiving a kickback, bribe, or rebate
• Billing based on “gang visits”
• Billing non-covered prescriptions as covered items
• Billing under Part A or Part B, and also under Part D
General Fraud and Abuse Issues (Continued)
•
•
•
•
•
•
•
Dispensing without a prescription
Billing for recycled prescription drugs
Submitting false Medicare claims
Receiving duplicative co-pays or premiums from beneficiaries
Billing for brand when generics are dispensed
Altering scripts or data to obtain a higher payment amount
Misrepresentations of dates, descriptions of prescriptions or
services
MEDICS Role In CMS Compliance and FWA Review & Audit
– CMS’ Defense against the “Mississippi River of Dollars”
• 8 MEDICs selected:
• NDCHealth
• Delmarva Foundation for Medical Care
• Electronic Data Systems (EDS)
• IntegriGuard
• Livanta
• Maximus Federal Services
• Perot Systems Government Services
• Science Applications International Corporation (SAIC)
MEDICS Role In CMS Compliance and FWA Review & Audit
– CMS’ Defense against the “Mississippi River of Dollars”
•
•
•
•
•
MEDICs’ Responsibilities include:
Review Part D and RDS plan compliance data to detect fraud
Review bids and FWA components of compliance plans
Coordinate with law officials
Conduct investigations, including audits of PDPs and subcontractors
• MEDICs will annually audit at least 1/3 of PDP and MA plans
• Risk Based Audit Strategy – conduct more investigation and
analysis with unusual billing patterns
MEDICS Role In CMS Compliance and FWA Review & Audit
– CMS’ Defense against the “Mississippi River of Dollars”
•
•
•
•
•
MEDICs Responsibilities (cont’d)
Review improper enrollment and eligibility
Review improper marketing and distribution
Audit RDS sponsors, including RDS eligibility and claims review
Conduct Part D, MA and RDS complaint investigations
MEDIC Audit Target Drivers
• Near Term:
- Beneficiary Complaint Data (e.g. sales misrepresentation)
- Past PBM issues identified in legal proceedings will be
focus of audit
- Areas where there are questions of transparency
- Eligibility and Claims Data audits for Retiree Drug
Subsidy
• Longer Term:
- PDE data and comparisons with other Medicare
Claims Data
- Whistleblowers
- Routine on-site audit reviews (P & T, FWA
implementation etc.)
MEDIC Audit Target Drivers
• The “Good News” on MEDICS
- All New to Medicare Part D
- First Timers or with Some Experience
- Data will take time to gather  But get it right from
the start
General Keys To Avoiding the Inspector General
• Listen to the “Noise” surrounding Part D
- Identify potential CMS or Congressional “hot button” issues and address
them – e.g. Beneficiaries can find appropriate education materials
• Avoid Misinterpretation of Part D Requirements – Ever watchful for
changing CMS regulation or guidance
• Pay attention to past industry criticisms, jibes and legal proceedings
and develop policies and oversight in the areas of concern
• Assess and audit current business and operational practices at a
granular level to identify areas of exposure or lack of controls
- Require process by process policy review and standards and FWA
monitoring requirements
• Ensure documentation of procedures and process descriptions
• Ensure diligence in systems configuration auditing to catch errors
prior to submission
Further Keys To Avoiding the Inspector General
• Implement granular financial auditing, process controls, monitoring
• Use central tracking system for all internal FWA control reporting
• Establish routine monitoring and audits of operations
- Review appropriate staffing for internal auditors
- Review staffing, scope and frequency of pharmacy audit
• Monitor Enrollee grievance and appeals activity
- “Enrollees who don’t get things” trigger problems
- Early Warning System
• Develop corrective action plans
• Establish processes for self-reporting of potential FWA
- Encourage / Incent Internal FWA issue identification & referrals
- Make the FWA department well known
• Thorough training at all levels
Part D Compliance & FWA Exposure Overview
• 5 Critical Areas for a Part D Plan Sponsor
- Part D Specific Requirements – Audits in areas such as TrOOP,
Copay application, COB, PDE data, formulary changes, etc.
- PBM Integrity – Major PBMs are high profile candidates for
FWA audits in areas like pricing, rebates, benefit adjudication,
etc.
- Subcontractor Oversight and FWA Issues – Retail pharmacies,
LTC pharmacies (Part A/D), enrollment contractor etc.
- Beneficiary-Prescriber FWA Identification and Management –
Identifying and managing these issues
- Sales Misrepresentation and Fraud- a new issue for PDP
Sponsors and a common CMS target and reason for sanction
based on complaints
Part D Compliance & FWA Exposure Overview
• For Each 5 Critical Areas, Part D Plan Sponsors
should develop:
• Tracking and Reporting mechanisms to report to CMS and
the MEDICS
• Audit and Monitoring Strategies with designated Resources
- On-Site or Desk Audit
- Conducted by the Part D plan sponsor, the PBM, or Audit
organization
• Corrective Action strategies
• Training
• Self-reporting of suspected FWA
Part D Specific Requirements - FWA Touch Points
• Enrollment Accuracy – LIS, Duals, Late Penalty, Proper
Effective Dates
• Beneficiary Billing Accuracy
• Direct bill vs. SSA
• Proper Refunds to Beneficiaries, Charities
• Premiums, cost sharing and accounting
• Reconciliations
• General Administrative Cost Allocations
• Specific program cost allocations, e.g. MTMP
Part D Specific Requirements - FWA Touch Points
(Continued)
• Formulary development and beneficiary notification of
formulary changes
• Generic vs. Brand
• Appeals and Grievances
• Monitoring, Feedback Loops and Disciplinary
Programs
• COB data collection, working with the COB Facilitator
Part D Specific Requirements - FWA Touch Points
(Continued)
• TrOOP accumulation
• Includes only eligible cost sharing, e.g. includes
beneficiary payments and excludes group health plan
payments
• Properly includes all 6 payment fields:
- Patient Pay Amount
- Other TrOOP
- Low Income Cost Sharing Subsidy Amount (LICS)
- Covered D Plan Paid Amount (CPP)
- Non-covered Plan Paid Amount, (NPP)
- Patient Liability Reduction due to Other Payer
Amount (PLRO)
Part D Specific Requirements - FWA Touch Points
(Continued)
• PDE (Prescription Drug Event) data accuracy
• 100% claims data necessary to calculate risk
adjustment, LICS, reinsurance, and risk corridor
payments
• Proper reflection of costs to be included or excluded in
each of the 4 payment calculations, e.g.
- Only Part D drugs covered under the specific plan
- Risk corridor calculations must exclude
administrative costs, patient pay amounts, induced
utilization, rebates, reinsurance subsidy
- Reinsurance calculations must reflect full TrOOP
accounting
- All calculations must properly account for all
rebates, discounts, and other price concessions
PBM Integrity FWA Touch Points
• Pharmacy Contracting, Term Application and Disclosure
• Proper Benefit Set Up And Adjudication at POS
• Eligibility Accuracy and benefit plan assignment
• Drug Pricing – AWP, MAC etc.
• Claims Edit & Processing Accuracy (e.g. Part A, B and excluded
drugs)
PBM Integrity FWA Touch Points (Continued)
• Mail Order Prescription Fills
• Rebate Accounting and Pass – Through  Member level detail
and transparency
• E-Prescribing
Subcontractor Oversight
• Retail Pharmacy
• Monitor dispensing activity of specifically identified
retail pharmacies
• Retail audit by PBM or Audit organization to identify
outlier pharmacies
• Desk audit on all outlier claims to determine:
- Appropriateness of RX dispensed
- Correct quantity and strength of medication
- Correct administration of benefit design and trend
management programs
- Instances of potential fraud and abuse
• On Site audit of pharmacies that continue outlier
dispensing performance
Subcontractor Oversight
• Retail Pharmacy (continued)
• Automated reporting editing systems can include the
following triggers:
- Dispensing volume of high profile medications (e.g.
controlled substances, medications targeted for resale or addicted medications)
- Significant number or percent of U & C claims
- Multiple instances of reversed or altered claims
- Multiple pharmacy overrides to excluded or Prior
Authorized medications
- Excessive units per day dispensing
- High dollar medications
Subcontractor Oversight
• Retail Pharmacy (continued)
• Individual Pharmacist Audit - Based on conclusions
from the on-site audit, more focused audits of
individual pharmacists may be warranted to review:
- Potential cases of trafficking
- Potential cases of fraud and abuse
• Retail Pharmacy audits also may include review of:
- Disclosure of low cost generic
- Non-submission of “zero-balance claims”
- COB Audits – Duplicate Billing
Subcontractor Oversight
• LTC Pharmacies
- Example: Determining whether LTC pharmacy filed
claims should be part of a Part A Skilled Nursing
Benefit
- Proper destruction or return of drugs
• Enrollment and Premium Billing Subcontractors
- Developing appropriate metrics and audit protocols
• Insurance Subsidiaries
- Enforcing integrity downstream
- Re-insurance costs if provided by subsidiaries
- Subsidiary service pricing and cost allocations
Beneficiary and Prescriber FWA
• New populations and schemes may require enhanced
system edits
- Addressing Issues common within the Medicaid
population
• Development of Beneficiary and Prescriber Fraud,
Monitoring, Investigation and Referral Unit
- Divining whether Grandma Smith or her nephew
Billy is responsible for the rash of inhaler purchases
- Physician submission of claim for same drug
dispensed at retail pharmacy or by infusion provider
Beneficiary and Prescriber FWA
• Physician Auditing:
• Identified from review of automated or ad hoc PBM Rx
Utilization and Prescriber Utilization Reports
• Focused on identification of:
- High volume prescribing of specific high dollar or abuse
type of medications
- Volume based tracking (number of claims, total drug
spend, targeted drugs)
- Review of controlled substance prescribing patterns
- Cross check of patients to eliminate critically ill patients
• Summary reports to PBM or Part D plan sponsor for further
review
Beneficiary and Prescriber FWA
• Beneficiary Auditing:
• Identified from automated PBM Reports or desk/onsite audits
• Focused review of individual patient RX utilization
focusing on:
- Zip code analysis of where RX’s are picked up
- Potential for “Grey Market” – second hand selling of
drugs with or without the beneficiaries knowledge
- Multiple pharmacy utilization for the same RX
- Multiple physician visits to generate same RX
Retiree Drug Subsidy FWA
• Employer or Union Plan Sponsors are accountable for accuracy and
completeness of all information submitted to CMS
• Application includes attestation that plan sponsor is submitting a
“claim” to the government
• May delegate major data submission to CMS to subcontractors,
but still accountable
• Oversight of subcontractors, including PBMs, is critical
• While Attestations are sufficient for payment, ultimately all data must
be tracked to the individual retiree level by employer benefit option
• Timeline – Final reconciliation 15 months after the end of the plan
year
• Prevention of errors and omissions essential through monitoring
and audits
Retiree Drug Subsidy FWA
• CMS and OIG have announced that RDS audits will be a
priority
• MEDICs tasked to review
- Actuarial Equivalence – documentation to support
attestation that Plan Sponsor coverage is equivalent to
Part D
- Accuracy of RDS Payments – review actual claims and
rebate data to support RDS payment requests
- Creditable Coverage Disclosures – review to assure
consistent with Medicare requirements
• OIG: 2005 OIG workplan includes audits of CMS controls
and 2006 audits will focus on AE, payments and CC notices
Retiree Drug Subsidy FWA Touch Points
• Actuarial Equivalence Attestations
• Supporting documentation for the gross and net tests
• Benefit combination assumptions for net test
• Assumptions on integrated medical and drug premiums
• Subsidy Claims and Rebate Data
• Controls and monitoring to assure that only claims for eligible costs
are submitted, e.g. no Part B or excluded drugs
• Controls and monitoring to assure that complete and accurate
rebate data is submitted
• Controls to assure no administrative costs are submitted
Retiree Drug Subsidy FWA Touch Points
• Retiree Lists
• Controls and monitoring to assure that only validated retirees and
dependents are submitted
• Cross checks with CMS eligibility data
• Creditable Coverage Notifications
• Controls to assure that active workers and retirees get notices
• Documentation to support claims that coverage is creditable for
each benefit option
• Controls to assure that notices for non-creditable coverage were
issued
What Does the Future Hold?
Part D: Key Implementation Dates
DATE
IMPLEMENTATION ACTIVITY
August 2005
SSA begins sending decisions to those who applied for low-income subsidies; continue to
accept applications
September 14,
2005
CMS approves bids for PDPs and MA-PDs and formularies
September
15, 2005
PDP and MA-PD contracts signed
September 15 –
October 15, 2005
CMS completes auto-enrollment of dual-eligibles in PDP basic plans
September 16 –
November 15,
2005
Medigap issuers send written disclosures to policyholders with drug coverage informing
them of their options
October 1, 2005
Approved Part D plans begin marketing
October 1, 2005
Deadline for transfer of Medicare appeals from SSA to DHHS
October 13, 2005
CMS begins distributing information to beneficiaries comparing available Part D coverage
via the Medicare & You handbook mailing, 1-800-MEDICARE, and Plan Comparison web-tool
and Medicare Personal Plan Finder www.Medicare.gov
October 15, 2005
Deadline for Secretary to notify states of their annual per capita drug payment amounts
(“Clawback”) for 2006
Part D: Key Implementation Dates
DATE
IMPLEMENTATION ACTIVITY
October 27 –
November 10, 2005
CMS mails auto-enrollment information to dual eligibles
November 15, 2005
–
May 15, 2006
Coordinated election period for 2006 Part D enrollment for all beneficiaries
November 15, 2005
–
May 15, 2006
States and entities offering drug coverage provide written disclosure to Part D
eligible individuals regarding actuarial equivalence
December 31, 2005
Last Day of Medicaid drug coverage for full benefit dual eligibles
December 31, 2005
Medicare drug discount card program ends for Part D enrollees (May 15, 2006
for all others)
January 1, 2006
- Part D coverage begins for all beneficiaries enrolled in a plan
- Dual eligibles' auto-enrollment takes effect
- Low-income subsidies for Part D coverage begin
- Medigap insurers prohibited from selling new policies with drug
 coverage
Medicare Part A/ B beneficiaries eligible to enroll in Medicare Part D plan of their
choice
The Politics of the MMA
• 2005 budget reconciliation will likely include $12B in
Medicare savings:
• Elimination of Stabilization Fund for Regional PPOs.
• Codify budget neutrality policy for risk adjustment
• Outstanding MedPAC recommendation to reduce MA
county benchmarks to 100% FFS, but no consensus on
Hill to advance.
• Program appears stable for foreseeable future.
• Impact of Medicaid reform:
• Greater flexibility to states
• Emphasis on Aged/Blind/Disabled into managed care.
• Underscores positioning for SNPs – “one-stop
shopping”
2007 Strategic Considerations
• Part D sponsors will be facing contraction of
aggregate reinsurance
• Part D sponsors will be ratcheting-up control
mechanisms
• Step therapy, prior authorization, quantity limits,
strict formularies
• Will evidence-based practices dictate preferred drugs
or tier placement in a therapeutic class?
Immunizing for FWA
Conduct Operations GAP Analysis
• Part D and RDS Operations Analysis
• Compliance Program Review and Assessment
Review PBM Operations for FWA Exposure
• Monitoring and audit mechanisms and staffing
• Performance metrics – Internal and External Reports
• Policies and procedures assessment and review
• Systems tests
• Contract requirements
• Management Oversight
Immunizing for FWA
• Ongoing FWA Program Development
• Business Process Workflow Documentation
• Policy and Procedure Development
• Internal Audit Procedures and Policies
• Subcontractor oversight program development
• Data Analysis to detect beneficiary, prescriber,
pharmacy FWA
• Staff and Subcontractor training
• System logic review for benefit adjudication
• Sales program FWA monitoring program
development
New Marketplace
• Expanded role of private plans – growing influence of
PBMs, and of Medicare regulators on them.
• Increased information for plans, patients – and government.
• Eventual price (rebate) transparency
• comparative drug information
• increased emphasis on medical evidence and outcomes
• Growing pressure on price and performance.
• PDP competition and premium pressures
• pay-for-performance for providers
• cost-effectiveness for drugs
• Expanding out of pocket costs for beneficiaries
• Increased competition
• Dozens of PDPs – all majors will play
• increased incentives for generic substitution
The Challenges
• Moving purchasers toward “value-based purchasing”
• Better data on outcomes and quality
• Pay for performance -- quality indicators
• Integrating disease management and MTMP
• Plan influence on provider decision-making
• Proving the market works
• Helping the PDPs and MA-PDs survive
• Encouraging accelerated movement toward integrated
health plans
• Minimizing government intervention, reference-based
pricing/price controls, PDP failure
• Helping CMS become a successful purchaser (rather
than a regulator)
How to Reach Us
Gorman Health Group, LLC
(202) 364-8283
[email protected]