The Achilles Heels of Part D in Program Audits: FA and CDAG Administration

This may seem like the movie “Groundhog Day,” but Formulary Administration (FA) and Coverage Determinations, Appeals, and Grievances (CDAG) continue to hobble plan sponsors’ Centers for Medicare & Medicaid Services (CMS) program audit results. Failure to properly administer their CMS-approved formulary continues to plague plan sponsors. As a result, enrollees experience inappropriate denials of coverage at the point of sale and were delayed access to their medications, never received their medications, or incurred increased out-of-pocket costs in order to receive their medications. Plan sponsors continue to be tripped up in the following areas of FA:

Administration of CMS-Approved Formulary

  • Rejecting prescriptions for formulary medications that were written by out-of-network providers
  • Improper coding of the approved drug list
  • Failure to allow claims for extended day supplies on initial prescriptions
  • Failure to appropriately test and/or implement coding of quantity limits (QLs) in the adjudication system, resulting in inappropriate rejections

Administration of CMS Transition Policy

  • Improper look-back period of member history
  • Did not register beneficiaries’ historical claims in a timely manner, which led to sponsors not properly identifying beneficiaries’ historical drug regimen and eligible transition fills
  • Denied beneficiary access to transition fills as a result of errors in enrollment data; for example, beneficiaries who were new enrollees were coded as continuing enrollees
  • Failed to allow claims for formulary drugs dispensed in the smallest commercially available package size when the day supply, based on the prescribed dose, exceeded the plan’s day supply benefit
  • Processed transition fills for only some of the drugs that were subject to a cross-contract year formulary change
  • Processed concurrent drug utilization review edits as safety edits during transition, thereby inappropriately restricting drug access during the transition period

Effectuation of Prior Authorizations

  • Not dating the effectuation for approvals to the earliest request of drug purchase date resulting in enrollees’ delayed or denied access to prescription drugs, having to receive formulary alternatives, or having to pay out-of-pocket in order to receive their drugs

Application of Quantity Limits

  • Utilized maximum daily dose limits that were more restrictive than the CMS-approved QLs and/or Food and Drug Administration maximum recommended daily doses
  • Applying incorrect adjudication logic for the type of QL submitted on the approved formulary (Type 1 QL Qty/Time submitted but applying Type 2 daily dose logic prevents partial refills)
  • Applied QLs to non-formulary medications

Application of Step Therapy

  • Using improper look-back period to establish prior drug history
  • Applied prior authorization edits on claims for beneficiaries with a utilization history of protected class drugs

CDAG findings remain a costly area for plans. To date in 2017, 10 plans have been hit with a civil monetary penalty (CMP) – 80% of them were cited for a violation related to Medicare Part D CDAG requirements.1 Plans should be reviewing the common conditions and evaluating their own practices to identify risk areas. A compliance and operational assessment should be completed prior to CMS audit activities to ensure adequate staffing and oversight is in place to avoid potentially costly audit findings. The most common cited conditions seen year over year remain the following:

  • Denial letter rationales
  • Untimely Independent Review Entity (IRE) auto-forwards
  • Insufficient prescriber outreach
  • Untimely decisions and/or notifications
  • Not effectuating exceptions through the end of the plan yea
  • Misclassification of coverage determination or redetermination requests as grievances and/or customer service inquiries

Other areas which were cited in the CMPs and represent additional case selection potential in the 2017 draft audit protocols are the following:

Misclassification of reconsiderations as organization determinations or re-openings

  • Re-openings are considered a remedial action that should be used sparingly. Inappropriate use of this procedure would delay case forwarding to the IRE, thereby delaying or denying enrollees’ right to the appeal process.

Improperly dismissed coverage request

  • Dismissing a coverage determination instead of making a decision (approval or denial) should be done in very limited circumstances, usually limited to cases where a review is not required (e.g., party requesting coverage is not a proper party). If dismissed inappropriately, enrollees are denied access to the appeals process, which may result in delayed or denied access to medication.





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