MEDICARE PRESCRIPTION DRUG PART D COMPLIANCE CONFERENCE. Reporting Requirements: Audit Preparedness for PDPs and Manufacturers

Transcription

1 MEDICARE PRESCRIPTION DRUG PART D COMPLIANCE CONFERENCE Reporting Requirements: Audit Preparedness for PDPs and Manufacturers Polaris Management Partners 8:30 9:30am Concurrent Breakout Session

2 AGENDA 1. Medicare Part D Overview 2. The Players 3. Reporting Requirements What We Know 4. Areas of Potential Risk 5. CMS Audit Preparedness -2-

3 Medicare Part D Overview The Medicare Part D benefit has a distinctive public/private structure which is unique when compared to other parts of the Medicare program Other Parts of Medicare Part D Government Provider Government Provider Subcontractor Part D Sponsor Flow of money Flow of services Beneficiary Beneficiary Sign-UP -3-

4 AGENDA 1. Medicare Part D Overview 2. The Players 3. Reporting Requirements What We Know 4. Areas of Potential Risk 5. CMS Audit Preparedness -4-

5 The Players Pharmaceutical Manufacturers: The organizations who make the Medicare Part D covered drugs Part D Sponsor: The entity that offers the PDP Pharmacy 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). -5-

6 The Players MEDIC The main functions of the MEDIC are to: 1) Serve as auditor of Part D Sponsor and Subcontractor operations 2) Identify/Investigate potential Part D fraud and abuse 3) Develop fraud and abuse cases and refer them to law enforcement agencies 4) Liaison between Part D Sponsor/Subcontractor and law enforcement -6-

7 AGENDA 1. Medicare Part D Overview 2. The Players 3. Reporting Requirements What We Know 4. Areas of Potential Risk 5. CMS Audit Preparedness -7-

8 Reporting Requirements - What We Know 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. -8-

9 Reporting Requirements - What We Know 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 -9-

10 Reporting Requirements - What We Know 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 procedures 2. Compliance officer and committee 3. Training and education 4. Effective lines of communication 5. Enforcement of standards through known disciplinary guidelines 6. Monitoring and auditing 7. Corrective action 8. Comprehensive plan with procedures to self-report potential fraud and misconduct -10-

11 Reporting Requirements - What We Know FINAL CHAPTER The final chapter gives Sponsors more flexibility with respect to reporting: The final chapter restates that self-reporting of potential FWA is voluntary (Section ) Sponsors should report fraud at their level and their subcontractors (Section ) Time for self-reporting to MEDICs has been increased from 30 to 60 days (Section ) 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 ) Sponsors are not required to develop Special Investigation Units (SIUs) if they do not already have them in place (Section ) Source: Key Changes Made In Final Chapter 9 Of The Prescription Drug Benefit Manual W. Krasner, G. Fortsch. American Health Lawyers Association. May 05,

12 AGENDA 1. Medicare Part D Overview 2. The Players 3. Reporting Requirements What We Know 4. Areas of Potential Risk 5. CMS Audit Preparedness -12-

13 Areas of Potential Risk PDP Sponsors PBM s (Subcontractors) 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, 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 Manufacturers 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) Wholesalers Counterfeit drugs Stockpiling drugs Diverting drugs False or Inaccurate pricing of drugs -13-

14 Areas of Potential Risk 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 -14-

15 Areas of Potential Risk 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 -15-

16 AGENDA 1. Medicare Part D Overview 2. The Players 3. Reporting Requirements What We Know 4. Areas of Potential Risk 5. CMS Audit Preparedness -16-

17 CMS Audit Preparedness 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 -17-

18 CMS Audit Preparedness 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 -18-

19 CMS Audit Preparedness 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 -19-

20 Questions? -20-

21 Mark Scallon Polaris Management Partners 555 Eighth Ave. Suite 501 New York, NY (212) x