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Tag Archives: Medicare Part D
Is it me, or is time flying by? Applications are done, bids are in, new plans are in planning stages, and existing plans are getting ready for the launch of the next benefit year.
Top of mind when we are talking about Medicare compliance should be that the ultimate customer is the taxpayer who funds this program. That’s why the Centers for Medicare & Medicaid Services (CMS) has to attempt to account for every nickel that comes into or goes out of the programs. One of the murkiest finance areas is in Medicare Part D – that is Direct and Indirect Remuneration (DIR). CMS published a memo on January 19, 2017, with this very title.¹ DIR is the additional compensation – besides a partially capitated payment from CMS – received by a plan sponsor or Pharmacy Benefit Manager (PBM) after the pharmacy point of sale (POS) transaction. This changes the final cost of the drug for the plan sponsor or the price of the drug paid to the pharmacy. DIR has grown significantly in the past few years in large part because of the growth of preferred network pharmacies. CMS states they have observed “a growing disparity between gross Part D drug costs, calculated based on costs of drugs at the POS, and net Part D drug costs, which account for all DIR.”
There are many industry voices adding their perspectives about the new administration and changes to come. However, the Compliance Officers I know do not have the luxury of stopping and truly considering the potential impact as they are managing the continuous pressures of their daily directives. Today I address a group of very industrious Compliance professionals not often addressed, and those are the staff responsible for Compliance Programs at first tier, downstream and related entities, or “FDRs.” Under Medicare regulations, plan sponsors may enter into contracts with FDRs to provide administrative or healthcare service functions on their behalf.
Imagine entering University and enrolling into Advanced French Language and Literature, a 300-level class, with no previous knowledge or study of the French language. As your professor welcomes you into class with bonjour, bienvenue, ça va, you have no idea how to reply. Now imagine sticking with that course for the full semester, trying to understand complex language and reading concepts without the foundation or basics. It would be quite an overwhelming few months for anyone.
The Centers for Medicare & Medicaid Services (CMS) released its annual Medicare Advantage (MA) and Part D “landscape files” with data on plans and bids for 2017. It’s a picture of programs that are rock-solid and driving insurers’ revenues and earnings, offering better supplemental benefits for no increase in price for two-thirds of beneficiaries. Interestingly, CMS appears to be sandbagging its enrollment projections and assumed no growth for MA in 2017. We think we’re heading to 4.2-4.5% enrollment growth, continuing a steady, winning drumbeat for the industry.