Part D Benefit Administration Continues to be Important Monitoring for CMS
Your Pharmacy Benefit Manager (PBM) may have already provided to you their benefit testing pan for 2017. Based on many years of experience, that is not going to be enough. In the September 12, 2016, memo entitled “Contract Year 2016 Part D Formulary Administration Analysis (FAA)”, the Centers for Medicare & Medicaid Services (CMS) reiterates their concern with the accuracy of formulary coding. In previous years’ analysis, 9 out of 88 (10. %) Plan Sponsors were found to have failed FAA, meaning greater than 20% of the sampled rejects were determined to be inappropriate. The parameters for the 2016 FAA are:
- Sponsors are required to submit all point of sale (POS) rejected claims relating to the following four categories:
- Non-formulary status;
- Prior Authorization (PA);
- Step Therapy (ST); and
- Quantity Limits (QL).
As a Plan Sponsor, whether you delegate all or part of your Part D drug benefit set-up to your PBM, CMS expects Plan Sponsors to demonstrate effective management of the CMS-approved formulary to ensure timely beneficiary access to clinically appropriate medications.
CMS expects Plan Sponsors to understand regulatory requirements and to oversee their 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 1 through December 31 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 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 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 Sponsor properly administers the CMS transition policy and its approved formulary by avoiding unapproved utilization management (UM) practices, PAs, QLs, 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 (CMP), or even plan sanction.
Performing a comprehensive Benefit Administration Test review of the formulary and UM system edits prior to going “live” on January 1 of every new plan year requires a robust, systematic process for comparing the CMS-approved formulary benefit to a comprehensive claims universe in order to ensure all covered drugs, tiering, and UM edits are consistently and accurately adjudicated.
Our Pharmacy experts can create a plan and conduct in-depth benefit administration testing for your organization to validate everything is working precisely as it should before the new plan year begins. We can ensure your PBM is processing claims consistent with your CMS-approved prescription drug benefit.
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