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Presentation at the IIR Pharmaceutical and Healthcare Division\'s 4th Annual Government Programs Summit on the Medicare Coverage Gap Discount Program.
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Coverage Gap Discount Program Invoicing and Disputes
Mark Newsom
Director, Division of Payment Reconciliation, Medicare Plan Payment Group
March 16, 2012
Coverage Gap Discount Process
Prescription Drug Events (PDEs)
Are submitted by Part D plan sponsors.
On each PDE, the plan reports the actual amount of gap discount paid for the dispensing event in the Reported Gap Discount field.
PDE submissions are subjected to a rigorous set of over 150 edits.
Cumulative Accepted PDE Processing Trends 01/01/12 - 01/21/12
0
200
400
600
800
1,000
1,200
1,400
1,600
Mil
lio
ns
More Details on PDE Submission
Available at
www.mcoservice.com
Manufacturer Quarterly Invoice Process
CMS aggregates Gap Discount amounts reported on PDE data and performs a validation analysis.
CMS then sends this information to Palmetto GBA, the Third Party Administrator (TPA) for the CGDP.
The TPA sends quarterly invoice reports to manufacturers and Part D sponsors simultaneously.
Manufacturers are required to pay the invoiced amount in full to the Part D sponsors within 38 days of report distribution.
Count of PDEs Invoiced by Quarter, 2011
136,000
1,706,000 4,675,000
19,555,000
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Rounded to the nearest thousand
2011 Invoiced Amounts by Quarter
Rounded to the nearest thousand
$50,687,000
$174,106,000 $394,864,000
$1,556,676,000
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Dispute Resolution
Manufacturers have the right to dispute invoices within 60 days of receipt.
CMS will deny disputes if the discount payment is accurately calculated based upon accurate data for dispensing events that actually occurred.
Q1 – Q3 Dispute Volume, 2011
2,383
58,827
131,731
Q1 Q2 Q3
Dispute Reasons
DISPUTE REASON CODE DISPUTE REASON DESCRIPTION
D01 Duplicate Invoice Item
D02 Closed Pharmacy
D03 Not PART D Covered Drug
D04 Excessive Quantity
D05 Invalid Days Supply
D06 High Price of the Drug
D07 Last Lot Expiration Date
D08 Early Fill
D09 Marketing Category is not NDA or BLA
D10 Date of Service prior to 01/01/2011
D11 PDE improperly invoiced beyond Manufacturer Agreement Invoice period
D12 Invalid Prescription Service Reference Number
D99 Other
Q1 – Q3 Disputes by Reason Code, 2011
0%
20%
40%
60%
80%
100%
Q1 % Q2 % Q3 %
D03 - Not PART D Covered Drug D09 - Marketing Category is not NDA or BLA
D04 - Excessive Quantity All others
D01 - Duplicate Invoice Item
Denied and Upheld Disputes
To date, 99% of disputes have been denied.
Most of the upheld disputes have been in the “Excessive Quantity” category.
Disputes Should Be Based Upon Part D Policy Only
www.cms.gov/PrescriptionDrugCovContra/12_PartDManuals.asp#TopOfPage
Part D Benefit Designs
2012 Defined Standard Benefit for Applicable Drugs
Part D Benefit Designs (cont.)
The defined standard (DS) benefits is used my only around 10% of Prescription Drug Plans.
Other benefit designs may: Substitute the DS co-insurance, with tiered co-pay structures tied to plan formularies or preferred pharmacies in a plan’s network.
May have reduced deductible or a modification to the initial coverage limit.
May, for an additional premium, have reduce cost sharing and/or have coverage of non-Part D drugs.
Common Reasons CMS Denies Disputes
Duplicate Invoice Item: Most disputes of duplicates have turned out to be a situation where an adjustment to a previously invoiced PDE has been submitted. This is not a true duplicate.
Closed Pharmacy: Edits are performed on PDEs to confirm that a pharmacy was open on the Date of Service (DOS) based up0n NCPDP data. We have observed instability in the data where a pharmacy is reported as closed then later that information is corrected to show a continuous open period. Because of this, CMS allows a six month grace period following the DOS.
Reasons CMS Denies Disputes(cont.)
Not Part D Covered Drug: Often incorrectly disputed as Medicare Part B versus Part D.
Excessive Quantity and Days Supply: These types of disputes should represent inappropriate amounts not clinically acceptable variations from the label.
High Price of the Drug: Part D negotiated prices are not specifically connected to common list prices or prices from other government programs.
Maximum Gap Discount Disputes: Often calculated based on a defined standard benefit, but most Part D plans use other benefit designs.
Reasons CMS Denies Disputes(cont.)
340B Pharmacy Disputes: Part D sponsors may include 340B pharmacies in their networks. The Part D negotiated price is not necessarily the 340B pharmacy acquisition cost.
Marketing Category is Not NDA or BLA and Last Lot Expiration Date: We have found disputes here that are not tied to the actual FDA e-listing as of the date of service for the PDE. Retroactive listing changes will not impact PDEs invoiced before the changes were made.