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TRANSCRIPT
MEDICARE PRESCRIPTION DRUG PART D COMPLIANCE CONFERENCE
Reporting Requirements: Audit Preparedness for PDPsand Manufacturers
Polaris Management PartnersSeptember 12, 20068:30 – 9:30am Concurrent Breakout Session
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
AGENDA
1. Medicare Part D Overview
2. The Players
3. Reporting Requirements – What We Know
4. Areas of Potential Risk
5. CMS Audit Preparedness
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
• The Medicare Part D benefit has a distinctive public/private structure which is unique when compared to other parts of the Medicare program
Part D
Part D Sponsor
Government
BeneficiarySign-UP
Flow of money
Flow of services
Provider
Medicare Part D Overview
Government Provider
Other Parts of Medicare
Beneficiary
Subcontractor
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
AGENDA
1. Medicare Part D Overview
2. The Players
3. Reporting Requirements – What We Know
4. Areas of Potential Risk
5. CMS Audit Preparedness
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
Pharmaceutical Manufacturers: The organizations who make the Medicare Part D covered drugsPart D Sponsor: The entity that offers the PDPPharmacy Benefit Manager (PBM): An entity that provides pharmacy benefit management services:
--Contracting and payment with network of pharmacies--Negotiating rebate arrangements--Developing and managing formularies--Prior Authorization Management--Patient Compliance Programs--Utilization Review--Disease Management Programs--Mail Order Pharmacies
Provider: Essentially any individual or organization that prescribes or supplies prescription drugs that are reimbursable under Medicare Part D (e.g. hospital, skilled nursing facility, home health, outpatient physical therapy, physician, hospice, laboratory, etc.).
Subcontractor: “Any person or entity that enters into a contract with a CMS contractor, first tier entity or a downstream entity to fulfill some or any of the contractual obligations of the CMS contractor”(Prescription Drug Benefit Manual, Chapter 9, pg.8). Another term used by CMS for a subcontractor is “first tier entity, downstream entity, and related entity”.
Medicare Drug Integrity Contractor (MEDIC): “An organization that CMS has contracted with to perform specific program integrity functions for Part D under the Medicare Integrity Program. The MEDIC is CMS’ designee to manage CMS’ audit, oversight, and anti-fraud and abuse efforts in the Part D benefit” (Prescription Drug Benefit Manual, Chapter 9, pg. 5).
The Players
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
MEDIC
The main functions of the MEDIC are to:
1) Serve as auditor of Part D Sponsor and Subcontractor operations2) Identify/Investigate potential Part D fraud and abuse3) Develop fraud and abuse cases and refer them to law enforcement
agencies4) Liaison between Part D Sponsor/Subcontractor and law enforcement
The Players
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
AGENDA
1. Medicare Part D Overview
2. The Players
3. Reporting Requirements – What We Know
4. Areas of Potential Risk
5. CMS Audit Preparedness
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
According to the Medicare Prescription Drug Benefit final regulations published on January 28, 2005:
“All Part D plan Sponsors are required to have a comprehensive plan to detect, correct and prevent fraud, waste and abuse.”
In addition, when Plan D Sponsors enter into contracts with third parties (i.e. subcontractors) to perform the functions of the PDP:
“…the Sponsor maintains ultimate responsibility for fulfilling the terms and conditions as set out in the contract with CMS.”
Reporting Requirements - What We Know
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
CMS is required to annually audit the financial records of “at least one-third” of the Part D Sponsors offering Part D drug plans and Sponsors must be prepared to allow CMS to audit its financial records, including data relating to Medicare utilization and costs.
Chapter 9 states that an organization’s financial records include, but are not limited to: • Data relating to Medicare utilization and costs• Re-insurance costs• Low-income subsidy payments• Risk corridor cost• Bid calculation• Rebate information
Reporting Requirements - What We Know
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
CMS officials have stated that Sponsors must have their FWA plans in line with the recommendations and requirements set forth in Chapter 9 by January 1, 2007
• CMS ‘contracts’ out the first part of Fraud, Waste and Abuse (FWA) enforcement to Part D sponsors
• The guidance (REF) mandates the inclusion of 8 elements in FWA compliance programs
1. Written policies and procedures2. Compliance officer and committee3. Training and education4. Effective lines of communication5. Enforcement of standards through known disciplinary guidelines6. Monitoring and auditing7. Corrective action8. Comprehensive plan with procedures to self-report potential fraud
and misconduct
Reporting Requirements - What We Know
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
FINAL CHAPTERThe final chapter gives Sponsors more flexibility with respect to reporting:• The final chapter restates that self-reporting of potential FWA is voluntary
(Section 50.2.8.2)• Sponsors should report fraud at their level and their subcontractors’
(Section 50.2.8.2) • Time for self-reporting to MEDICs has been increased from 30 to 60 days
(Section 50.2.8.2) • Time for allowing Sponsors to refer potentially fraudulent activity to
MEDICs has increased from immediately to within two weeks of when such activity has been discovered (Section 50.2.8.2)
• Sponsors are not required to develop Special Investigation Units (SIUs) if they do not already have them in place (Section 50.2.7 .2)
Source: Key Changes Made In Final Chapter 9 Of The Prescription Drug Benefit ManualW. Krasner, G. Fortsch. American Health Lawyers Association. May 05, 2006
Reporting Requirements - What We Know
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
AGENDA
1. Medicare Part D Overview
2. The Players
3. Reporting Requirements – What We Know
4. Areas of Potential Risk
5. CMS Audit Preparedness
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Areas of Potential Risk
PDP SponsorsPDP Sponsors
• Calculation of TrOOP – Manipulation of calculations to keep beneficiaries in the coverage gap
• Marketing Schemes – Integration from drug-only plan to potentially more profitable managed care plans
• Manipulation of Risk Corridors – Patient avoidance, dumping and adverse selection of enrollees
• Formulary Issues – Switching, P&T/Manufacturer interactions,
• Calculation of TrOOP – Manipulation of calculations to keep beneficiaries in the coverage gap
• Marketing Schemes – Integration from drug-only plan to potentially more profitable managed care plans
• Manipulation of Risk Corridors – Patient avoidance, dumping and adverse selection of enrollees
• Formulary Issues – Switching, P&T/Manufacturer interactions,
PBM’s(Subcontractors)
PBM’s(Subcontractors)
• Prescription Drug Switching – PBM receives compensation to switch a beneficiary off of one medication and onto another
• Formulary decisions based on cost rather than clinical effectiveness• Drug Shorting – Where mail order PBMs provide less than the prescribed amount
• Prescription Drug Switching – PBM receives compensation to switch a beneficiary off of one medication and onto another
• Formulary decisions based on cost rather than clinical effectiveness• Drug Shorting – Where mail order PBMs provide less than the prescribed amount
ManufacturersManufacturers
• OIG’s 2003 Compliance Guidance for Pharmaceutical Manufacturers• Formulary Support Activities – Inappropriate relationships with formulary committee
members• Payments to PBMs – Could the payments be considered kickbacks? Is payment
based on information generated by the manufacturer? (e.g. rebates, average sales price)
• OIG’s 2003 Compliance Guidance for Pharmaceutical Manufacturers• Formulary Support Activities – Inappropriate relationships with formulary committee
members• Payments to PBMs – Could the payments be considered kickbacks? Is payment
based on information generated by the manufacturer? (e.g. rebates, average sales price)
WholesalersWholesalers
• Counterfeit drugs• Stockpiling drugs• Diverting drugs• False or Inaccurate pricing of drugs
• Counterfeit drugs• Stockpiling drugs• Diverting drugs• False or Inaccurate pricing of drugs
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MEDICs
MEDICs are responsible for implementing CMS’ audits of the PDP Sponsors. In order to do so, they perform the following general tasks:
• Analyze data for potential fraud and abuse• Investigate potential fraud related to
– Enrollment– Eligibility– Distribution of the benefit
Areas of Potential Risk
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Office of Inspector General (OIG)
Pharmacies and PBMs are not only subjected to compliance assessments by CMS and PDP Sponsors. In addition, the OIG workplan contains the following areas of OIG oversight:
• Review of Plan Marketing Materials• Instances of duplicate payments under Part B and Part D• Full disclosure of negotiated prices to enrollee’s• Formularies and how the PBM and pharmacy enforce them• Unusual fluctuations in pricing
Areas of Potential Risk
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
AGENDA
1. Medicare Part D Overview
2. The Players
3. Reporting Requirements – What We Know
4. Areas of Potential Risk
5. CMS Audit Preparedness
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
Some things you can do to prepare for CMS Audits
1. Re-examine your organization’s compliance program for integrating existing fraud control activities. Expand the program to address Part D specifically and FWA more broadly
2. Be very transparent with negotiated prices as well as all discounts, rebates and concessions that are passed through. Make sure that your compliance departments are fully aware of these concessions so they can be fully disclosed
3. Closely monitor interactions with pharmaceutical manufacturers, especially around formulary and rebate arrangements
4. Pharmacies and PBMs should develop their own compliance plans which address the risk areas previously identified. Pharmacies and PBMs should also be proactive in educating the Sponsor on those programs
5. Sponsors should become intimate with the operations and compliance programs of their subcontractors and pharmacy networks
6. Be diligent in your training. Sponsors need to train their employees on compliance and should ensure that their subcontractor is doing the same
7. Hire outside firms to review the Sponsor and subcontractor compliance programs to compare to benchmarks and industry standards
CMS Audit Preparedness
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Have effective reporting between the Sponsor and Subcontractor
Sponsors and their subcontractors should organize themselves in such a way that effective reports can be communicated and analyzed. Chapter 9 recommends the following reports be created:
1) Payment Reports – used to identify over and under payments
2) Drug Utilization Reports – to identify possible therapeutic abuse or illegal activity by an enrollee
3) Prescribing Patterns by Physician Reports – to identify possible prescriber/provider or pharmacy fraud
4) Geographic Zip Reports – to identify possible doctor shopping schemes or script mills
CMS Audit Preparedness
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Audits require a thorough review of required documentation
Sponsors and their subcontractors should have an organized system in place to maintain all required documentation. A central repository, both electronically and in binders should be maintained so that, in case of a CMS audit, all required documentation is readily identifiable and able to be provided.
Examples of required documentation are: • copies of prescriptions• invoices• pharmacy licenses• claims records• signature logs• purchase records• contracts• rebate and discount agreements
CMS Audit Preparedness
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
Questions?
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Medicare Prescription Drug Part D Compliance Conference
September 12, 2006
Mark ScallonPolaris Management Partners
555 Eighth Ave. Suite 501
New York, NY 10018(212) 502-1870 x23