Prescription Drug Event - Medicare Part D

Front 1

AARCC

Back 1

Adjusted Allowable Risk Corridor Costs

Front 2

AE

Back 2

Actuarially Equivalent

Front 3

AGNS

Back 3

AT&T Global Network Services

Front 4

APPS

Back 4

Automated Plan Payment System

Front 5

ASCII

Back 5

American Standard Code for Information Interchange

Front 6

BA

Back 6

Basic Alternative

Front 7

BIC

Back 7

Beneficiary Identification Code

Front 8

CBC

Back 8

CMS Center for Beneficiary Choices

Front 9

CFR

Back 9

Code of Federal Regulations

Front 10

CMS

Back 10

Centers for Medicare & Medicaid Services

Front 11

COB

Back 11

Coordination of Benefits

Front 12

COBA

Back 12

Coordination of Benefits Agreement

Front 13

COTS

Back 13

Commercial Off the Shelf

Front 14

CPP

Back 14

Covered D Plan Paid Amount

Front 15

CSMM

Back 15

Customer Support for Medicare Modernization

Front 16

CSSC

Back 16

Customer Service and Support Center

Front 17

DAW

Back 17

Dispense as written

Front 18

DCD

Back 18

Drugs Claims Database

Front 19

DDPS

Back 19

Drug Data Processing System

Front 20

DEA

Back 20

Drug Enforcement Agency

Front 21

DESI

Back 21

Drug Efficacy Study Implementation

Front 22

DIR

Back 22

Direct and indirect remuneration

Front 23

DOB

Back 23

Date of Birth

Front 24

DOS

Back 24

Date of Service

Front 25

EA

Back 25

Enhanced Alternative

Front 26

EACS

Back 26

Enhanced Alternative Cost-Sharing

Front 27

EBCDIC

Back 27

Extended Binary Coded Interchange Code

Front 28

EDI

Back 28

Electronic Data Interchange

Front 29

EGWP

Back 29

Employer Group Waiver Plans

Front 30

EIN

Back 30

Employer Identification Number

Front 31

EOB

Back 31

Explanation of Benefits

Front 32

FBDE

Back 32

Full-Benefit Dual Eligible

Front 33

FPL

Back 33

Federal Poverty Level

Front 34

FTP

Back 34

File Transfer Protocol

Front 35

GDCA

Back 35

Gross Drug Cost Above the Out-of-Pocket Threshold

Front 36

GDCB

Back 36

Gross Drug Cost Below the Out-of-Pocket Threshold

Front 37

GHP

Back 37

Group Health Plan

Front 38

HCCs

Back 38

Hierarchical Condition Categories

Front 39

HICN

Back 39

Health Insurance Claim Number

Front 40

HIPAA

Back 40

Health Insurance Portability and Accountability Act

Front 41

HPMS

Back 41

Health Plan Management System

Front 42

HRI

Back 42

Health Related Item

Front 43

IAP

Back 43

Immediately Actionable PDE Errors

Front 44

IDR

Back 44

Integrated Data Repository

Front 45

ICD-9-CM

Back 45

International Classification of Diseases-9th Edition-Clinical Modification

Front 46

I/T/U

Back 46

Indian Health Service/Tribe/Tribal organization/Urban Indian Program

Front 47

LI

Back 47

Low Income

Front 48

LICS

Back 48

Low Income Cost-Sharing

Front 49

LIS

Back 49

Low Income Subsidy

Front 50

Drug Cost Subject to Part D Payment

Back 50

• Cost incurred by plan for covered
Part D drugs including amounts
paid by or on behalf of an enrollee
and including certain dispensing
fees, but not including admin. fees
• PDE fields: Ingredient cost,
Dispensing Fee, Sales Tax,
Vaccine Administration Fee

Front 51

Defined Standard Benefit
( 4 benefit phases)

Back 51

1. Deductible*
2. Initial Coverage Limit
• 75% Plan Pays
• 25% Coinsurance*
3. Out of Pocket Threshold
• Coverage Gap*
4. Catastrophic Coverage
• 80% Reinsurance
• 15% Plan Pays
• 5% Coinsurance*

* Member pays

Front 52

What is TrOOP and what is its only use?

Back 52

"True Out-of-Pocket" is the portion of cost-sharing incurred by the member.

TrOOP only used to determine when a member reaches the coverage gap and when they qualify for Catastrophic Coverage.

Front 53

OHI

Back 53

Other Health Insurance

Front 54

LIC:
2 types?

Back 54

Cost Sharing
and
Premium Assistance

Front 55

LICS in PDE data

Back 55

• Low-Income Cost-sharing Subsidy

• Cost sharing assistance that is applied throughout all phases of benefit for qualifying beneficiaries.

-A cost-based component of payment

Front 56

Reinsurance Subsidey

Back 56

The federal government acts as a "reinsurer" for Part D.

• Covers 80% of allowable drug costs above the out-of-pocket threshold
• Applies in the catastrophic coverage phase of the benefit
• A cost-based payment component

Front 57

Risk Sharing

Back 57

• Compares the plan-level risk payments (direct subsidy and premiums) to aggregate allowed plan costs in the:
a) initial coverage period
b) catastrophic phase

• Federal government and the plan share unexpected plan loss or gain

Front 58

What is Reconciliation?

Back 58

• Conducted after the end of the coverage year
• Compares monthly prospective payments
CMS makes throughout the year with actual
costs incurred by the plan
• Different rules for reconciling each payment
mechanism
• Plan-to-plan (P2P) reconciliation
– Part of normal Part D reconciliation
– Separate guidance and training

Front 59

Payment Timetable and
Reconciliation

Back 59

Monthly/Prospective:
• Direct Subsidy
• LICS
• Reinsurance Subsidy
• Risk-sharing

Front 60

DIR

Back 60

• Direct and Indirect Remuneration

• Payment and reconciliation must exclude
DIR, defined as:
Discounts, chargebacks or rebates, cash
discounts, free goods contingent on a purchase
agreement, etc that would serve to decrease
the costs incurred by the Part D sponsor.

• Plans must report DIR
• DIR includes payments to providers as part of risk arrangements

Front 61

Direct Subsidy

Back 61

• Monthly prospective payment received by plan for every enrollee

• Adjustment to the Direct Subsidy is required to account for the health status of the beneficiary

Front 62

Part D Risk Adjustment

3 Purposes

Back 62

• Risk adjustment is used to standardize
bids, establishing a plan bid for a 1.0
(average) beneficiary.

• Allows direct comparison of bids based
on populations with different health
status and other characteristics.

• On the payment side, risk adjustment
appropriately adjusts payment for the
costs of each enrollee.

Front 63

Monthly Prospective Direct Subsidy Payment Calculation

Back 63

Direct Subsidy =
Plan's approved Part D standardized bid amount
x
beneficiary's risk score (RS)
- monthly beneficiary basic premium

Re-calculated twice:
• during the year based on new enrollment and RS
• after year end

NOTE: also used in risk sharing reconciliation

Front 64

Reconciliation:

LICS

Back 64

Monthly prospective LICS subsidy =
(LICS estimate in approved bid * # LI
beneficiaries enrolled/month)
LICS reconciliation amount =
(Sum of plan-reported LICS dollars from
PDEs – Beneficiary-plan-level prospective
LICS subsidy including adjustments)
Reconciliation payment adjustment (+) or
(-)

Front 65

Reconciliation:

Reinsurance

Back 65

• Determine allowable reinsurance costs
– On PDE, plans identify all gross covered drug
costs that are above the out-of-pocket threshold
(GDCA)
– CMS sums GDCA by plan
– Subtract DIR attributed to reinsurance costs
(formula)
– Multiply by 0.80
• Compare to monthly prospective
reinsurance subsidy amounts to obtain
reconciliation payment adjustment (+) or (-)

Front 66

Reconciliation:

Risk Sharing Overview

Back 66

• Calculate the plan’s “goal” (target
amount) payments
– Includes direct subsidy
• Determine actual costs from PDEs
• Compare actual to target within
specified risk limits -> Payment
adjustment if applicable

Front 67

Risk Sharing

Back 67

• Calculate target amount
• Calculate adjusted allowable risk
corridor costs (AARCCs)
• Calculate risk corridors (risk threshold
limits)
• Determine where costs fall with respect
to risk corridor thresholds
• Calculate reconciliation payment
adjustment

Front 68

What part of the Part D payment does the RS affect?

Back 68

Direct Subsidy

Front 69

Target Amount

Back 69

total projected revenue necessary for risk portion of the basic benefit excluding
administrative costs.

In formula:
(Total direct subsidy+Total Part D basic
premiums related to standardized bid) * (1-
Administrative Cost Ratio)

Front 70

AARCC

Back 70

Adjusted Allowable Risk Corridor Costs

Add
– Plan-paid amounts for covered Part D drugs
from PDEs
Then subtract
– Reinsurance subsidy
– Net Covered Part D DIR
For Enhanced Alternative plans only, reduce by
– Induced utilization