Part D Benefit Administration Impacts Audit Experience

In the newly released 2018 Part C and D Program Audit and Enforcement Report, CMS reiterates their concern with the accuracy of formulary coding. The range of ICARs cited across audits was unchanged in 2018, the total number of ICARs cited across the different program areas fell markedly in 2018, due to FA where the number of ICARs decreased from 28 in 2017 to 9 in 2018. In 2017, 375 total conditions were cited in FA, CDAG and ODAG. In 2018, this number decreased to 309 total conditions. In 2017, a total of 93 ICARs were cited for FA, CDAG and ODAG. In 2018, the total for these program areas decreased to 81.

Diligence with Benefit Administration Testing (BAT) pays off.

Sponsors are required to submit all point-of-sale (POS) rejected claims relating to the following 4 categories:

1) Non-formulary status;

2) Prior Authorization (PA);

3) Step Therapy (ST); and

4) Quantity Limits (QL).

As a Plan Sponsor, whether you delegate all or part of your Part D Drug Benefit set-up to your Pharmacy Benefit Manager (PBM), The Centers for Medicare & Medicaid Services (CMS) expects plans to demonstrate effective management of the CMS-approved formulary to ensure timely beneficiary access to clinically appropriate medications.

CMS expects Sponsors to understand regulatory requirements and to oversee the PBM to ensure the benefit administration by the PBM is compliant and accurate. Beneficiaries must be able to receive the Part D drugs to which they are entitled consistent with the plan’s CMS approved benefit from January 1st through December 31st of the plan year.

To accomplish this, it is essential to perform comprehensive benefit administration testing of formulary files and system edits prior to going “live” in the adjudication system. In addition, it is required to perform a regular review of rejected point of sale (POS) pharmacy claims as well as to perform regular oversight of other delegated PBM functions.

You can reduce your compliance risk of transition non-compliance by testing transition fill look-back logic which must accurately identify transition eligible beneficiaries and drugs eligible for transition fills; maintaining formulary consistency for beneficiaries across years and during the year; ensuring formulary edits are effectively tested for accuracy prior to implementation; and by ensuring that the PBM does not administer the Part D benefit based on either Medicaid or commercial program requirements.

In the likely event of a Compliance Program Audit, CMS seeks to determine how the Plan properly administers the CMS transition policy and its approved formulary by avoiding unapproved utilization management practices, prior authorizations, quantity limits, rejecting formulary medications as non-formulary, and maintaining beneficiary access to protected class drugs during transition and throughout the year. Failure to properly use approved formularies creates high audit risk, a possible civil monetary penalty, or even plan sanction.

Performing a comprehensive Benefit Administration Test review of the formulary and utilization management system edits prior to going “live” in the adjudication system requires a robust, systematic process for comparing the CMS approved formulary benefit to a comprehensive claims universe in order to ensure that all covered drugs, tiering, and UM edits are consistently and accurately adjudicated.

Our Pharmacy experts can create and conduct an in-depth benefit administration test plan for your organization to validate that everything is working precisely as it should before the new plan year begins as well as on an ongoing basis throughout the year. We can ensure your PBM is processing claims consistent with your CMS-Approved Prescription Drug Benefit.

Wayne Miller
Wayne Miller

Wayne Miller is Senior Director of Pharmacy Solutions at Gorman Health Group (GHG). In this role, he is responsible for supporting the Senior Vice President of Pharmacy Solutions in the oversight and development of projects and services in Medicare Part D, Medicaid, and industry relations. In addition, he manages a variety of client projects in compliance, Centers for Medicare & Medicaid Services (CMS) audit support and remediation, Pharmacy Benefit Manager (PBM) audits and Requests for Information (RFIs). Wayne brings GHG clients 28 years of experience in the health care industry, with broad Medicare and Medicaid pharmacy operations leadership experience in multiple practice settings.

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