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With the comment period to respond to the Centers for Medicare & Medicaid Services’ (CMS’) annual Medicare Advantage (MA) Advance Rate Notice and Draft Call Letter behind us, we now wait for the CMS response, expected April 3, 2017.
How was your Annual Election Period (AEP)? Have you evaluated your performance? Do you need to enhance your sales and marketing strategies? Now is the time to recognize and appreciate your 2017 successes as well as confront your shortcomings.
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.
Whether you are just updating your current product benefits, are offering a new plan benefit package (PBP), new product, or service area, or are new to Medicare Advantage altogether, now is the time to start planning for the 2018 bid submission.