Practical Solutions for Managing the Coverage Gap Discount Program

Practical Solutions for Managing the Coverage Gap Discount Program

ShannonBermudezPrincipal Consultant, Life Sciences

http://www.linkedin.com/pub/shannon-bermudez/b/541/695

[email protected]

Coverage Gap Discount Program History

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The Affordable Care Act stipulated that the Coverage Gap or Donut Hole will be closed by 2020.

• In 2010, CMS provided a $250 rebate to all Part D beneficiaries who entered the Coverage Gap.

• As of January 1 2011, Part D beneficiaries who reached the Coverage Gap received a 50% discount on brand name drugs provided by the brand name drug manufacturers while in the Coverage Gap. This program is known as the Coverage Gap Discount Program (“CDGP”).

• Through 2020, CMS will gradually phase in additional subsidies for generic and brand name drugs which will reduce Medicare Part D beneficiaries’ co-insurance rate in the “donut hole” from 100% to 25%.

By 2020, the “donut hole” will be effectively eliminated and Medicare Part D beneficiaries will pay only a 25% cost-sharing for all drugs until reaching the Catastrophic Coverage threshold.

Closing the “Donut Hole” 2011 - 2020


Benefit Year Beneficiary Part D Plan Manufacturer

2011 50%

- 50%

2012 50%

- 50%2013 47.50% 2.50% 50%2014 47.50% 2.50% 50%2015 45% 5% 50%2016 45% 5% 50%2017 40% 10% 50%2018 35% 15% 50%2019 30% 20% 50%2020 25% 25% 50%

The Affordable Care Act mandated that manufacturers of Branded Drugs, Biologics and Authorized Generics provide Part D beneficiaries 50% discounts of the “negotiated price” of such drugs dispensed in the Coverage Gap (“Donut Hole”) in order for such drugs to be covered under Medicare Part D.

• Based on “negotiated price,” minus dispensing fees and vaccine administrative fees.

• Does not apply to Low Income Subsidy Beneficiary utilization, whose Donut Hole costs are paid by CMS.

• Paid after a Part D Plan’s supplemental benefits

• CMS can waive this requirement in its discretion

• The product must be on the Part D Plan’s formulary, or approved under an exception.

Coverage Gap Discount


Prominent Differences between CGDP & MDRP


CGDP Pay and chase

Not a guarantee of coverage

Hundreds of plans vs. 50 states

Rigid appeals process

Payment level detail only available on audit

No challenges for duplicate rebates (e.g., commercial, 340B)No price reporting

No CPI-U inflation consideration

Manufacturer’s Perspective

Who’s impacted by CGDP in your organization?


Cross Functional Impact

Contract Operations

Responsible for overall

CGDP admin.

Finance

Forecasting accruals

and liability

Managed Markets

Negotiation of standard

Part D agreements

Potential terms

around duplicate discounts

Product Management

Interest on cost to

determine effects on product specific

profitability

Accounts Payable

Sending EFT payments

Maintenance of EFT

information

Accounts Receivable

Track receipt of

EFT payments

for negative invoices

from Plan Sponsors

Information Technology

Infrastructure to support

CGDP admin.

CGDP High-Level Process Requirements

The figure to the right illustrates the minimum high level requirements Manufacturers should have in place to support the administration & processing of CGDP payments.


Data Management Requirements

Data Receipt Invoice Data Management

Detail Data Management

EFT File Management

Payment Requirements

Maintain EFT banking info for 600+ contracts

38 day processingdeadline

Send EFT payments for

600+ contracts

Reporting Requirements

Payment Confirmation

report

Operational Reports

Financial & Trend Reports

Retain data for 17 quarters

Negative Balance Solution

Negative Invoice Reconciliation

Report

Maintain EFT info for receipt of

Negative Invoice payments

Receive EFT payments (Negative Invoices)

Confirm receipt of negative invoice

payments

Dispute Resolution

Mechanism to scrub & validate

detail claims data

Determine data elements to

dispute

Develop Dispute internal

guidelines & polices

Operational Challenges Practical Solutions

• Dedicate resources to specially manage CGDP operations

• Define detailed process & timeline from receipt of data to payment due date

• Automate processes as much as possible

• Promote Cross functional Awareness, Involvement & Collaboration

• Data storage & data repository

• Build operational reporting capabilities


Operational

• Strict Mandated timelines • Resource Constraints• Maintenance of EFT information• Mgmt. of Negative Invoices

Practical Solutions • Adhere to detailed process timeline to avoid payment

penalty

• Data storage & data repository

– Build financial reporting capabilities to support financial analysis

– Negotiate with Part D Plans to limit double dipping concerns

Financial Challenges


Financial

• 25% late payment penalty

• Cash Flow• Forecasting limitations• Potential for double dipping

Practical Solutions • Define business rules, processes, and SOPs with control

points for the overall operational process

• Develop Dispute Business Rules & Process

• Perform reasonability checks on data to support payment justification & additional financial analysis.

• Monitor compliance with business rules, processes, and SOPs

Compliance Challenges


Compliance• Dispute process is pay and chase

• Lack of data visibility•Challenge verifying CG Discount invoiced is correct

• Strict Audit Guidelines

Legal Challenges


Practical Solutions • Exhibit C of the Manufacturer Agreement with CMS restricts the

use of claims-level data.

• Permitted use- financial statement forecasting and accounting purposes.

Legal• Restrictions on use of data • HIPAA Confidentially• Appeal Process

CGDP Risks to Manufacturer


Operational• Strict Mandated

timelines • Resource Constraints

• Maintenance of EFT information

• Mgmt. of Negative Invoices

Compliance• Dispute process is

pay and chase

• Lack of data visibility• Strict Audit

Guidelines

Legal• Restrictions on use

of data • HIPAA Confidentially

• Appeal Process

Risks across the organization

CGDP Primary Pain Points

• Negative Balance Solution

• Pay & Chase Dispute Resolution Process

• Negotiating with Part D Plans to limit double dipping

• Financial Forecasting & Predictive Analytics


Negative Balance Solution

Negative Balance Solution Impact on Business Process


• Phase 1 & Phase2/Qtrly Invoice Process

• Phase 2 & Standard Qtrly Invoice Process

• Tracking Funds coming in

• Tracking funds going out

• Multiple reports • Manual Updates• Confirming payments

in and out

• Additional Processing

• Same 38 day timeframe

Processing Overlap

EFT Funds Tracking

Payment Confirmati

on Reports

Resource & Time

Constraints

How to manage the Negative Balance Solution


Dispute Process

Tips for Preparing for the Dispute Resolution Process


• Must have mechanism to scrub & validate data for disputes

• Determine data elements & validations to dispute

• Develop Dispute internal guidelines & polices

• Ability to prepare dispute report in CMS defined format

• Understand Dispute Process Timeline & Audit Rights

• Time exercise of audit right to maximize chances of success during appeal

Data Items Eligible for Dispute per CMS


Pay & Chase Dispute Items

• Duplicate Invoice Item (D01) • Closed Pharmacy (D02) • Not Part D Covered Drug (D03) • Excessive Quantity (D04) • Days’ Supply (D05) • High Price of the Drug (D06) • Last Lot Expiration Date (D07) • Early Fill (D08) • Marketing Category is Not NDA or BLA (D09) • Date of Service Prior to 1/1/2011 (D10) • PDE Improperly Invoiced Beyond Manufacturer

Agreement Invoice Period (D11) • Invalid Prescription Service Reference Number (D12) • Other (D99)

340B Pharmacy DisputesMaximum Gap Discount DisputesEmployer Group Waiver Plans (EGWPs)

Invoice corrections for incorrect labeler billings can be submitted within 5 days of receipt of invoices. All other disputes items are pay & chase.

Dispute Resolution Timeline


Extensive Dispute Resolution Timeline in upwards of 210 days.• Disputes must be submitted to the TPA in writing within 60

days of receipt of the applicable invoice.

• The TPA must use its best efforts to work with the Manufacturer to resolve these disputes within 60 days of the notice.

• If the TPA and the manufacturer fail to resolve the dispute within 60 days of the notice, CMS will specify an entity to perform an independent review of the dispute.

• This review will be completed within 90 days of receipt of request by manufacturer for an independent review.

• Upon an unfavorable decision, manufacturer may request CMS Administrator review w/I 30 days after receipt of such determination.

Manufacturer Audit Rights


Manufacturer can audit TPA’s data annually.

• Audit commenced on 60 days notice.

Must include:

• Reasonable basis for the audit; and

• Description of the information required for the audit.

• Review limited to a “statistically significant sample size of PDEs.”

• No audit of CMS records.

• Records are confidential and reviewed on-site.

Data elements subject to audit are:• Contract Number• Plan Benefit Package Identifier• Ingredient Cost Paid• Dispensing Fee Paid• Total Amount Attributed to Sales Tax• Low-Income Cost Sharing Amount• Non-covered Plan Paid Amount• Vaccine Administration Fee• Total Gross Covered Drug Cost Accumulator• True Out-of-Pocket Accumulator

Negotiating with Part D Plans

Limit Double Dipping by Negotiating with Part D Plans


Data Requirements• Consider a clause requiring Part D Plan cooperation in

gathering information that could be useful in a dispute (subject to HIPAA limitations).

• Require Benefit Stage Qualifier of NCPDP standard be valued in standard Part D rebate submissions.

Terms• Pursue terms to carve out double rebates, but Part D Plans

not required to agree.

• Negotiate terms that will allow for the scrubbing out of claims that are identified as falling in the Coverage Gap Benefit Stage.

Maximizing Data for Financial Analytics

Maximizing CGDP Data for Financial Analytics


What’s my total CGDP liability overtimeqtr/qtr & yr/yr ?

What’s my CGDP liability by product & how’s it trending?

How are Part D lives growing?

What am I owed for negative invoices?



How to get there? • Understand all aspects of Coverage Gap data you are

receiving

• Create data repository for data storage for reporting & trend analysis overtime.

• Build Operational & Financial Reporting capabilities

• Build Scrubbing capabilities



What to look for?• Perform validation checks and review data for applicable

disputes acceptable by CMS.

• Use detail data to report by NDC to provide visibility to finance for forecasting, accruals ,GTN purposes and breakout of U.S. vs. Puerto Rico.

• Perform additional analysis on detail data using calculation algorithms to evaluate for reasonableness.

• Innovative approaches to evaluating data that is available to do more advanced analysis.

• Link data between EFT file and invoice file to summarize estimate by plan sponsor and region.

CGDP Business & Technical Process Flow


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