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Medicare Part D and Pharmacy Issues in Long-Term Care Facilities

Medicare Part D and Pharmacy Issues in Long-Term Care Facilities

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Medicare Part D and Pharmacy Issues in Long-Term Care Facilities

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  1. Medicare Part D and PharmacyIssues in Long-Term Care Facilities June 23, 2009 Nicholas J. LynnDuane Morris LLP190 South LaSalle Street, Suite 3700Chicago, IL 60603Telephone (312) 499-6731; Facsimile (312) 499-6701; E-mail

  2. Medicare Part D - In The Beginning • Medicare Part D - Background • As of February 13, 2006: • More than 25 million people receiving prescription drug benefits – • 15 million from Part D Plans (“PDPs”); and • 10 million from other creditable sources. • U.S. Department of Health and Human Services (“HHS”) projected that 39 million people would have prescription drug benefits in 2006 alone. • Source: Kaiser Family Foundation, Medicare Prescription Drug Coverage Enrollment Update, February 2006

  3. Medicare Part D - In The Beginning (Cont’d.) • From Secretary of HHS Mike Leavitt: • 250,000 new enrollees per week. • Seniors saved an average of $1,100 per year on prescription drug costs. • Projected cost to taxpayers has gone down by $7.6 billion in 2006. • States expect to see savings of $700 million during 2006. • Source: Secretary’s Progress Report II on the Medicare Prescription Drug Benefit, February 22, 2006

  4. Part D Enrollment • Medicare Part D is an “Opt-In” enrollment process. • Beneficiaries must take action to obtain coverage. • This is different from Medicare Part B which is an “Opt-out” enrollment. • Be sure beneficiaries understand the difference.

  5. Open Enrollment Timeline • Newly eligible beneficiaries. • Three months prior to eligibility and three months after eligibility for Part D. • Example: 65th birthday is 6/15/09 – can enroll from 3/1/09-9/30/09. • Benefit will begin 6/15/09.

  6. Late Enrollment • Most individuals will have to pay higher premiums if they wait to enroll. • Additional 1% of base premium for every month eligible but not enrolled. • For as long as enrolled in a Medicare prescription drug plan.

  7. New Admissions and Readmissions • Review Part D coverage for all new admissions. • Does coverage exist? • Does formulary meet resident’s needs? [KEY] • Review Part D coverage for readmissions following a hospital stay. • Does formulary still meet resident’s needs?

  8. Review of Extra Help Options • New admissions will need assistance in understanding their extra help options. • The Centers for Medicare and Medicaid Services (“CMS”) stresses the need for all new residents to complete the “extra help” forms and sign up for a PDP upon admission.

  9. Special Enrollment Periods (SEP) • “A SEP will be provided to an individual who moves into, resides in, or moves out of a: • Skilled nursing facility (SNF) as defined in §1819 of the SSA (Medicare); • Nursing facility (NF) as defined in §1919 of the SSA (Medicaid); • Intermediate care facility for the mentally retarded (ICF/MR) as defined in §1905(d ) of the SSA.

  10. SEP for Institutionalized Individuals(Cont’d.) • In addition, for individuals who move out of one of the facilities listed above, the individual will have an SEP for up to two months after he/she moves out of the facility. The effective date is the first of the month following the month in which the enrollment/disenrollment request is received, but not prior to the month residency begins.” (CMS PDP Eligibility, Enrollment and Disenrollment guidance issued 8/05)

  11. Marketing Guidelines • Part D marketing guidelines are very specific. • Spell out do’s and don’ts for marketing (beware of the pitfalls) – more later. • Marketing guidelines available at:

  12. Formulary Concerns • Not all formularies are created equal. • PDP price range varies considerably based on the placement of non-generic drugs on the formulary. • Monthly premium isn’t necessarily the deciding factor on annual cost. • Neither is deductible. • Cost per the plan finder summary screen can be misleading.

  13. What If No One Pays? • Excluded or non-formulary Part D drugs that are not picked up by Medicaid may fall through the cracks. • Drugs can be charged privately to the family or personal needs allowance, as available. • Per CMS, the facility is not responsible for paying these charges. • CMS January 11, 2006 letter – attached.

  14. What If No One Pays? (Cont’d.)

  15. Transition Fill Process • Prior authorization and/or quantity limitations can be imposed on the transitional fill, but only if they can be resolved at the point of sale. • Pharmacist can ask the beneficiary if he/she has been on the drug. • Should not involve contact with the physician or other prescriber.

  16. Prior Authorizations • Also known as pre-certifications • Require prescribing physician to contact Part D plan to request coverage of drug. • Usually via fax or phone • Physician will need to provide documentation to substantiate request. • Documentation and procedure may vary by plan.

  17. Step Therapy • Requires physician to prescribe a preferred drug before being allowed to use a non-preferred drug. • Try less expensive drug first. • Try less dangerous drug first. • If physician disagrees, may go through the exceptions process.

  18. Quantity Limits • Primarily for safety issues. • Confirm that the dosage amount is correct - no misplaced decimal points or extra zeros. • Maximum daily dosage. • Limit the number of doses, dosage amount or length of time drug may be taken. • May need physician to get approval before refills.

  19. Formulary Finder Tool • Allows beneficiaries to find drug plans that have all their drugs on their formularies. • Lists all PDPs in a particular State and links to each PDP’s home page for formularies. •

  20. Changes in Formularies • If a covered drug is removed from a formulary or there is a change in preferred status or tier level, the PDP must provide 60 days written notice to beneficiaries who are affected by the change; • Or provide a 60-day supply to affected enrollees.

  21. Changes in Formularies (Cont’d.) • Plans need to provide 60 days’ notice to network physicians, pharmacists and pharmacies when there is a formulary change. • Does not need to be written notice. • Can be a website notice or a change in the posted formulary listing.

  22. Changes in Formularies (Cont’d.) • Plans do not need to notify enrollees if a covered drug has been removed from the formulary because it is deemed unsafe by the FDA or was removed from the market by the manufacturer.

  23. Newly Approved Drugs • When a drug is newly approved by the FDA, the P&T Committees of the PDPs have 90 days from the date of the approval to decide if they will add the drug to the formulary. • If a P&T Committee decides to add the drug, the PDP has 180 days from the date of the approval to include it on the formulary.

  24. Appeals Procedures - Three Categories of Appeals • Non-formulary drugs. • Remove drug utilization management tools. • Prior authorization. • Step therapy. • Quantity limits. • Decrease costing-lower the formulary tier level to bring down to a more affordable co-pay structure.

  25. Time Clock for Multiple Levels of Appeals • The timeframe starts for the appeal process when the PDP receives the physician supporting statement. • The PDP could require the physician supporting statement to be on its specific form. • In this case, the timeframe for the appeal would not start until the physician resubmits the physician supporting statement on the PDP's specific form.

  26. Exception Request/Coverage Determination • PDP must issue coverage determination: • 72 hours for a standard request. • 24 hours for a expedited review. • An expedited review may be requested when the standard timeframe would jeopardize the life or health of the beneficiary.

  27. Exception Request/Coverage Determination (Cont’d.) • Physician must provide: • Enrollee’s identifying information. • Resident history and diagnosis. • Reason for exception. • Clinical or medical references. • Format and details will vary by PDP.

  28. Exception Request/Coverage Determination (Cont’d.) • Must be filed by enrollee, “appointed representative” or prescribing physician. • If exception is granted, it remains in effect for the rest of the plan year. • Plan can choose whether to have beneficiary file a new exception request for the start of a new plan year.

  29. Appointed Representative “Appointed representative means an individual either appointed by an enrollee or authorized under State or other applicable law to act on behalf of the enrollee in obtaining a coverage determination or in dealing with any of the levels of the appeals process. Unless otherwise stated in this subpart, the appointed representative has all of the rights and responsibilities of an enrollee in obtaining a coverage determination or in dealing with any of the levels of the appeals process, subject to the rules described in part 422, subpart M of this chapter.” Source: Medicare Prescription Drug Benefit, Final Rule, January 28, 2005

  30. Appointed Representative (Cont’d.) • Along with the standard request form (or other plan specific request form), an appointment of representative form (CMS-1696) should be sent. •

  31. Redetermination • If the coverage determination is unfavorable, the enrollee may appeal by a written request for a redetermination with the PDP within 60 days of the denial. • Enrollee or appointed representative, but not the prescribing physician, can request. • PDP must issue coverage decision: • Seven days for a standard request. • 72 hours for a expedited review.

  32. Reconsideration • If the redetermination is unfavorable, the enrollee may request a reconsideration within 60 days of the denial which will be reviewed by an independent review entity (IRE). • IRE must issue decision: • Seven days for a standard request. • 72 hours for a expedited review.

  33. Administrative Law Judge (ALJ) • If the IRE decision is unfavorable, the enrollee has 60 days from the date of the reconsideration notice to request an ALJ hearing. • Amount in controversy must exceed $110. • Can be a combination of claims to meet minimum amount.

  34. Medicare Advisory Council (MAC) • Must be filed within 60 days of ALJ denial. • Minimum amount to file an appeal is $110.

  35. Judicial Review • Filed in a federal court. • Must be filed with 60 days of MAC denial. • Amount in controversy must exceed $1,090.

  36. LTCF Part D Policies and Procedures • Suggestions: • Do a PDP formulary review upon resident admission and readmission to facility. • Assist in switching resident to more appropriate PDP when necessary (but be careful how you do it). • Revise admissions packet to include Part D information. • Periodic review of all residents’ plan formularies. • Revise and amend pharmacy contracts. • Signed? • Update current residents’ face sheets/medical records with Part D information. • Develop internal procedures for appeals. • Assign responsibility for keeping abreast of new Part D developments.

  37. Fraud and Abuse Issues – A New Frontier for Medicare Part D • The Medicare Part D program falls within the definition of a “Federal health care program” and the anti-kickback statute and civil monetary provisions of Federal law apply.

  38. Prescription Drug Benefit Manual • Chapter 9 – Part D program to control fraud, waste, and abuse. • Guidance for PDPs to implement a comprehensive program to prevent and detect fraud, waste, and abuse in the prescription drug program pursuant to statutory and regulatory authorities.

  39. The “Players” • HHS. • Department of Justice (“DOJ”). • Federal Bureau of Investigation (“FBI”). • Medicare Drug Integrity Contractor (“MEDIC”) – an organization that CMS has contracted with to perform special program integrity functions for Medicare Part D under the Medicare Integrity Program. MEDIC is CMS’ designee to manage CMS’ audits, oversight, and anti-fraud and abuse efforts for Part D benefits. • RACs are not one of the “players.” • Office of the Inspector General (“OIG”).

  40. MEDIC Responsibilities • Review the fraud and abuse components of compliance plans. • Assist CMS in developing a list of entities that may require future monitoring based upon past history. • Facilitate intermediate sanctions as appropriate. • Conduct reviews and audits of participating entities as necessary (announced and/or unannounced/targeted). • Conduct complaint investigations. • Conduct preliminary investigations into entities that may be conducting fraudulent prescription drug benefit enrollment, eligibility determination, and benefit distribution.

  41. MEDIC Responsibilities (Cont’d.) • Investigate aberrant behavior, and develop and refer cases to the appropriate law enforcement agency and/or take administrative action as necessary. • Perform data analysis to detect outliers that may indicate potential fraud, waste, and abuse. • Identify potential overpayments. • Provide support to law enforcement agencies for investigations of potential fraud and abuse, including investigations for which an initial referral to law enforcement did not originate from MEDIC or other CMS contractor.

  42. PDP Responsibilities • Section 1860-D4(c)(1)(D) of the SSA includes a provision that requires PDPs to have in place a program to control fraud, waste, and abuse.

  43. Specific Requirements • The specific requirements of the compliance program for PDPs include: • Written policies and procedures; • Compliance officer and compliance committee; • Training and education; • Effective lines of communication; • Enforcement of standards through well-publicized disciplinary guidelines; • Monitoring and auditing; • Corrective action procedures; • Comprehensive fraud and abuse plans – procedures to voluntarily self-report potential fraud or misconduct.

  44. Monitoring and Auditing Subcontractors • PDPs monitor and audit subcontractors involved in the delivery of the drug benefit. • Auditing is routine and random. • Audits include a review of documentation, such as prescriptions, invoices, pharmacy licenses, claims transaction records, signature logs, purchase records, negotiated prices, minimum standards of pharmacy practice (i.e., counseling) as established by the State, and requirement for network pharmacies to post or distribute notices regarding coverage determinations and exceptions requests if they disagree with information provided by a pharmacist; and rebate, discount, and all other relevant agreements (and supporting data).

  45. Monitoring and Auditing Subcontractors (Cont’d.) • PDPs may request and review the following types of reports: • Payment reports – the amount paid by the PDP and the beneficiary, and a description of the drug provided, including dosage and amount. • Drug utilization reports – the number of prescriptions filled by a particular provider and, in particular, numbers for suspect classes of drugs, such as narcotics, to identify possible therapeutic abuse or illegal activity by provider. • Prescribing patterns by physician reports – typically focus on a class or particular type of drug, such as narcotics.

  46. Monitoring and Auditing Subcontractors (Cont’d.) • Geographic zip reports – identify possible physician shopping schemes or script mills by comparing the geographic location (zip code) of the patient or resident to the location of the provider who wrote the prescription and including the location of the dispensing pharmacy.

  47. Auditing by CMS or Its Designee • CMS is required to annually audit the financial records of “at least one-third” of the PDPs offering Part D drug plans. • In addition to desk audits, on-site audits may be conducted, at the discretion of CMS, of any subcontracted entity of the PDP. • On-site audits require copies of prescriptions, invoices, pharmacy licenses, claims records, signature logs, purchase records, contracts, rebate and discount agreements, as well as interviews of staff. • On-site audits are based on random sampling or the results of desk audits.

  48. Examples of Risk Areas for Fraud, Waste, and Abuse • Failure to provide medically necessary services. • Marketing schemes: • Unsolicited door-to-door marketing; • Misrepresenting the product being marketed as an approved PDP when it actually is a Medigap policy or non-Medicare drug plan; • Requesting financial beneficiary information or check numbers (i.e., potential identity theft by a PDP’s marketing agents); • Requiring beneficiaries to pay up-front premiums.

  49. Examples of Risk Areas for Fraud, Waste, and Abuse (Cont’d.) • Payments for excluded drugs. • Multiple billing – several payors billed for the same prescription, such as the same prescription being covered and paid for under Medicare Part B, and then a second time under Part D and/or possibly Medicaid. • Non-compendium payments – for Part D drugs that are not for a medically accepted indication.

  50. Examples of Risk Areas for Fraud, Waste, and Abuse (Cont’d.) • Appeal process handled incorrectly – Medicare beneficiary denied his/her right to appeal or denied a timely appeal. • Adverse selection – selecting or denying beneficiaries based on their illness, profile, or other discriminating factors. • Duplicative premiums – receiving duplicative co-pays or premiums from beneficiaries. • Excessive premiums – imposing on PDP enrollees premiums in excess of the monthly basic and supplemental beneficiary premiums permitted under the regulations.