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Coordination of Benefits and TrOOP. Tracey McCutcheon Center for Beneficiary Choices CMS. Coordination of Benefits COB.

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Coordination of benefits and troop

Coordination of Benefits and TrOOP

Tracey McCutcheon

Center for Beneficiary Choices


Coordination of benefits cob
Coordination of BenefitsCOB

  • The Medicare Modernization Act requires plans to coordinate with entities providing other prescription drug coverage, as stated in section 1860D-23(a) and 1860D-24(a) of the Social Security Act.

Cob requirements
COB Requirements

  • Plans must permit the following entities to coordinate benefits:

    • State Pharmaceutical Assistance Programs (SPAPs)

    • Medicaid programs (including 1115 waiver programs)

    • Group health plans

    • FEHBP plans

    • TRICARE and VA

    • IHS

    • Rural Health Centers

    • Federally Qualified Health Centers

    • Other entities as CMS determines

Potential coordination issues for part d plans
Potential Coordination Issues for Part D Plans

Plans will need to determine how it will:

  • Receive and transmit claims in NCPDP v5.1 format

  • Receive secondary payer data from the TrOOP contractor and the enrollee

  • Determine TrOOP balances and communicate this information to the beneficiary

  • Accommodate consolidated premium payments from third party payers

  • Correct claims paid by the wrong payer

User fees
User Fees

  • CMS may impose user fees on Part D plans for transmittal of information necessary for COB

  • CMS may retain a portion of user fees to defray COB costs

  • CMS will not impose user fees on SPAPs/ entities offering other prescription drug coverage

  • Part D sponsors cannot impose fees on SPAPs/entities offering other prescription drug coverage that are unrelated to the cost of COB


  • The Medicare Prescription Drug Improvement and Modernization Act of 2003, as stated in 1860D-2, requires the tracking of True-Out-Of-Pocket (TrOOP) expenditures for Medicare beneficiaries enrolled in Part D in order to meet the eligibility for catastrophic coverage

Troop incurred costs 423 100
TrOOP/Incurred Costs (§423.100)

  • TrOOP (true out-of-pocket costs)/”incurred costs” is the amount a beneficiary must spend on covered Part D drugs to reach catastrophic coverage. It is based on the standard benefit design:

    $250 deductible

    + $500 beneficiary coinsurance during initial coverage

    + $2,850 coverage gap

    = $3,600

  • The above numbers are for 2006 and will increase by law in subsequent years

  • Part D premium is not part of TrOOP

Troop incurred costs 423 1001
TrOOP/Incurred Costs (§423.100)

  • Payments count toward TrOOP if:

    • They are made for covered Part D drugs (or drugs treated as covered Part D drugs through a coverage determination or appeal)

    • They are made by:

      • The beneficiary

      • Another “person” on behalf of a beneficiary

      • CMS as part of the low-income subsidies

      • A State Pharmaceutical Assistance Program (SPAP)

Troop incurred costs 423 1002
TrOOP/Incurred Costs (§423.100)

  • Payments DO NOT count toward TrOOP if they are made by:

    • A group health plan

    • Insurance or otherwise

    • Another third-party payment arrangement

  • Examples of entities whose wraparound coverage does not count toward TrOOP:

    • MA plans

    • PACE organization

    • SCHIP program

    • Medicaid, including 1115 waiver programs

    • VA or TRICARE

    • Indian Health Service

    • AIDS Drug Assistance Programs (ADAPs)

    • Federally Qualified Health Centers (FQHCs)

Troop incurred costs 423 1003
TrOOP/Incurred Costs (§423.100)

  • Part D plans are required to ask beneficiaries what third-party coverage they have (if any) because this information is necessary for proper TrOOP calculation

  • Material misrepresentation of the supplemental coverage that a beneficiary has may constitute grounds for termination of coverage from Part D

Troop facilitator
TrOOP Facilitator

  • The TrOOP Facilitator shall be responsible for establishing procedures for facilitating eligibility queries at the point-of-sale, identifying costs for Part D enrollees that are being reimbursed by other payers, and for alerting Part D plans about these transactions.

Troop facilitator1
TrOOP Facilitator

  • CMS issued RFP on March 3, 2005

  • Tasks involved in the RFP include:

    • Receiving and maintaining Part D eligibility data

    • Providing responses to Pharmacy eligibility queries

    • Receiving and routing secondary paid claims data to the Part D plan

    • Receiving batch claims data from secondary payers and routing them to the Part D plan

    • Providing CMS with copies of these secondary claims transactions

    • Maintaining a Help desk