Benefit Administration Testing – From a Compliance, Audit, and Best Practice Perspective

In 2016, 41 million individuals (72 percent of all Medicare beneficiaries) were enrolled in Medicare Part D. Of those enrolled, 60 percent were in stand-alone Prescription Drug Plans (PDPs), and 40 percent were in Medicare Advantage Prescription Drug plans (MA-PDs). Plan sponsors must adjudicate pharmacy claims for the Part D benefit in accordance with their Centers for Medicare & Medicaid Services (CMS)-approved formulary and Plan Benefit Package (PBP) bids.

Most Part D sponsors delegate prescription claim adjudication to their Pharmacy Benefit Manager (PBM). Formulary and benefit coding performed by a plan sponsor’s PBM is a compliance risk area. Sponsor oversight and auditing of their PBM’s claim processing systems include key formulary administration and transition processes for new and current enrollees that are consistent with 42 CFR §423.120(b)(3).

Benefit Administration Testing on a yearly basis allows for prompt identification and correction of formulary and benefit coding errors prior to go-live. Early detection and correction of areas of non-compliant Part D claim adjudication ensures accurate benefit set-up, minimizes member disruption and access to care issues, and is paramount for a compliant Part D formulary and compliant benefits administration.

A comprehensive Benefit Administration Testing review requires a strategic and systematic process to ensure accurate adjudication of the CMS-approved formulary and PBP. This includes testing for accuracy of all covered drug copayments, tiering, and Utilization Management (UM) and confirming pharmacy claim processing is in compliance with CMS guidance as stipulated in 42 CFR Parts 422 and 423, including guidance located in the Medicare Managed Care Manual, Prescription Drug Benefit Manual, and CMS Program Audit Findings and Best Practices Memos.

Gorman Health Groups (GHG’s) Benefit Administration Testing service provides MA and Part D sponsors with an assessment from not only a compliance, audit, and best practice perspective but also an indication of how the organization would likely perform in an actual CMS audit.

The GHG comprehensive Benefit Administration Testing review includes:

  • Test suite that validates a broad sample of claim types for copayment, pharmacy network, True Out-of-Pocket (TrOOP)/Maximum Out-of-Pocket (MOOP) accumulator, lesser of logic, formulary and non-formulary, excluded drugs, etc.
  • Strategic custom scenarios for each formulary and plan design variation and includes point of sale National Council for Prescription Drug Programs (NCPDP) and custom messaging review.
  • UM edits for Prior Authorization (PA), Quantity Limit (QL), Step Therapy (ST), and grandfathering.
  • A special focus on protected class drugs, transition of care, and look-back logic.
  • Concurrent drug utilization review (cDUR) logic per CMS recommendations for the following, but not limited to, criteria: therapeutic duplication, age/gender-related contraindications, over-utilization and under-utilization (e.g., early refill), drug-drug interactions, incorrect drug dosage, or duration of drug therapy and drug-allergy contraindications.

Common coding errors identified and corrected include:

  • Coding of QLs resulting in inappropriate rejections:
  • Maximum daily dose limits that were more restrictive than the CMS-approved QLs and/or Food and Drug Administration (FDA) maximum recommended daily doses.
  • Quantity over time coding that failed to consider unbreakable packaging.
  • Applying a CMS-approved QL specific to brand drugs only to generic versions of the drugs.
  • Coding errors for transition logic resulting in inappropriate claim rejections for new and continuing beneficiaries transition supplies:
  • Applying PA edits on claims for continuing beneficiaries with a utilization history of protected class drugs.
  • Failure to afford long-term care beneficiaries multiple transition fills as necessary during the entire length of the transition period.
  • Failure to correctly identify drugs with a negative cross-year formulary change.
  • Imposing UM edits that are not appropriate during transition (e.g., edits are not related to Part A or B vs. Part D determination, FDA maximum daily dose, early refill, etc.).
  • Benefit was coded to reject transition-eligible claims for drugs in their smallest available unbreakable package size when the calculated days’ supply exceeded the transition days’ supply limits.

GHG additional offerings include:

  • Marketing Materials Review
  • Post Go-Live Claims Review

Now is the time to lock in your Benefit Administration Testing project for go-live January 1, 2018. GHG’s Pharmacy experts can create and conduct a thorough and strategic Benefit Administration Testing plan for your organization to ensure your PBM is processing claims consistent with your CMS-approved prescription drug benefit before the new plan year begins as well as on an ongoing basis throughout the year through post go-live claim reviews.




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