Coordination of Benefits and TrOOP

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

2. 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.

3. 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

4. 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

5. 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

6. TrOOP • 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

7. 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

8. 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)

9. 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)

10. 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

11. 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.

12. 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