SHARP HEALTH PLAN MEDICARE ADVANTAGE POLICY AND PROCEDURE Product Line (check all that apply):

SHARP HEALTH PLAN MEDICARE ADVANTAGE POLICY AND PROCEDURE Product Line (check all that apply): Title: SHP Pharmacy Management Policy and Procedure for Part D Coverage Determination All Group HMO Individual HMO PPO POS Medicare N/A Division(s): Department(s): Owner (Title): Health Services Pharmacy Director of Pharmacy Relevant Regulatory/Accrediting Agencies/Citations (specify): CMS: 42 CFR 423.562 General provisions, 423.566 Coverage Determinations, 423.578 Exceptions process, Prescription Drug Benefit Manual, Chapters 6 and 18 DMHC: NCQA-HP: NCQA-WHP: OTHER: Approved by: (Signature of VP, Compliance Officer, or CEO) Approval date: 03/31/2016 I. PURPOSE: This Policy and Procedure establishes Sharp Health Plan s (SHP) policy on Part D Coverage Determinations as outlined by the Centers for Medicare & Medicaid Services (CMS). The purpose of this process is to provide and maintain meaningful procedures that allow Part D members the right to a timely Coverage Determination as defined by Chapter 18 of the Medicare Prescription Drug Benefit Manual. II. POLICY: It is the policy of Sharp Health Plan (SHP) to comply with all guidelines and regulations set forth by CMS regarding providing and maintaining a process to review coverage determinations within turnaround time requirements. Sharp Health Plan (SHP) has delegated the Coverage Determination process to their contracted PBM, MedImpact. The Page 1 of 15

PBM will provide timely Coverage Determinations in accordance with CMS approved requirements. III. DEFINITIONS: A. Appeal A Part D term, for any of the procedures that deal with the review of adverse Coverage Determinations made by SHP/MedImpact on the benefits under a Part D plan the member believes s/he is entitled to receive, including a delay in providing or approving the drug coverage (when a delay would adversely affect the health of the member), or on any amounts the member must pay for the drug coverage. These procedures include Redeterminations by Plan, Reconsiderations and if necessary, by the IRE, hearing before an ALJ, reviews by the MAC, and judicial reviews. B. Coverage Determination A Part D term for any decision made by or on behalf of SHP/MedImpact regarding payment or benefits to which a member believes s/he is entitled. C. Exception Members may request Exceptions to SHP/MedImpact s Pharmacy utilization management processes. For example, members may request a nonformulary drug, or Exception to Step Therapy (ST), Prior Authorization (PA) or Quantity Limits (QL) requirements. D. Excluded Drugs A Part D term for drugs that are defined as not eligible for Part D benefits according to the Medicare Modernization Act of 2003. E. Grievance for Part D, any complaint or dispute, other than one involving an organization determination, expressing dissatisfaction with the manner in which SHP/MedImpact or a delegated entity provides health care services, regardless of whether any remedial action can be taken. A member may make the complaint or dispute, either verbally or in writing, to SHP/MedImpact, a provider, or facility. An expedited Grievance may also include a complaint that SHP/MedImpact refused to expedite a Coverage Determination or Redetermination, or invoked an extension to a Coverage Determination or Redetermination time frame. In addition, Grievances may include complaints regarding the timeliness, appropriateness, access to, and/or setting of a provided health service, procedure, or item. Grievance issues may also include complaints that a covered health service procedure or item during a course of treatment did not meet accepted standards for delivery of health care. F. Inquiry In general, an initial transaction involving a non-covered Part D or excluded drug should be treated as an Inquiry unless the enrollee, the enrollee's physician, or another prescriber files a Grievance or requests a Coverage Determination by: complaining about the policy that causes the drug not to be a covered Part D drug (i.e., files a Grievance); arguing that the drug is a covered Part D drug under 1860D-2(e)(1) of the Act or is covered under 1860D-2(e)(1) for the indication it was prescribed for (i.e., makes a request for a Coverage Determination). G. Independent Review Entity (IRE) - An independent entity contracted by CMS to review Medicare health plans adverse Coverage Determinations for Part D benefits or Reconsiderations of organization determinations. The CMS contractor Page 2 of 15

for processing Appeals is MAXIMUS Federal Services, Inc. (MAXIMUS). Part D Appeals are sent to: MAXIMUS Federal Services, Inc. Medicare Part D QIC 860 Cross Keys Office Park (585) 425-5301 Fairport, NY 14450 H. Other Prescriber A health care professional other than a physician who is authorized under State law or other applicable law to write prescriptions for legend drugs. I. Pharmacy Benefits Manager (PBM) An organization that is contracted with SHP to administer prescription benefits to members. J. Reconsideration A Part D term, for the second Part D Appeal level. A member has the right to a Reconsideration by the IRE, upon request, if Plan upholds the original adverse determination in whole or in part. A member may request a standard or expedited Reconsideration by filing a signed written request with the IRE within sixty (60) calendar days from the date of the notice of the Redetermination, unless the time frame is extended by the IRE. The IRE, which is commonly referred to as the Part D Qualified Independent Contractor (QIC), must conduct the Reconsideration as expeditiously as the member s health condition requires, but not to exceed the time frames applicable for Plan when making Redeterminations. When the IRE completes its Reconsideration, it is responsible for mailing or otherwise transmitting notification of the decision to all the parties. K. Redetermination A Part D term, for first Part D Appeal level, which involves the Plan evaluating an adverse Coverage Determination, the findings upon which it was based, and any other evidence submitted or obtained. L. True out of Pocket (TrOOP) A Part D term for the amount of payment by a Medicare beneficiary or other qualified parties on behalf of the beneficiary for Part D covered drug. The amount of TrOOP for benefit phase determination renews each contract year and is determined by CMS. IV. PROCEDURES A. Coverage Determination Process Overview 1. SHP has delegated the review of all Coverage Determination requests in accordance with CMS regulatory requirements to MedImpact. 2. SHP/MedImpact utilizes the Coverage Determination process to consider the authorization of drugs that are prescribed by physicians or Other Prescribers, which are not on the Part D formulary, have utilization management (UM) edits, or are Exceptions to the formulary because of benefit exclusion or medical necessity. 3. Timely Coverage Determinations are made in accordance with the CMS approved requirements using clinical guidelines approved by CMS or supported by CMS approved compendia below as defined in Prescription Drug Benefit Manual Chapter 6. Benefit allowances are based on medical necessity. Page 3 of 15

a. American Hospital Formulary Service Drug Information; b. DRUGDEX Information System; and c. United States Pharmacopeia-Drug Information. B. Coverage Determination Request Process 1. Standard or expedited Coverage Determination for prior authorization, step therapy, formulary or tier Exception, and Exceptions to dose/quantity limit restrictions can be submitted as a verbal or written request to SHP/MedImpact by a. The member; b. The member s representative with a signed Appointment of Representative Form; or c. The member s prescriber i) The prescriber is informed to contact SHP/MedImpact to provide a supporting statement of medical necessity, including the relevant clinical information to support the request. 2. Coverage Determinations involving reimbursement for a Part D drug must be submitted as a written request to SHP/MedImpact and will be processed as a standard Coverage Determination request. A claim for payment for prescription drugs that the member has already received cannot be expedited. 3. The Medicare Part D Coverage Determination Request Form is located on SHP/MedImpact websites. a. SHP/MedImpact uses the CMS Model REQUEST FOR MEDICARE PRESCRIPTION DRUG COVERAGE DETERMINATION for request form but also accepts the request in other forms. b. The Coverage Determination request can be sent by mail or fax to MedImpact. c. All request forms are date stamped upon receipt. 4. When a member or physician/other Prescriber files a request for an expedited Coverage Determination and SHP/MedImpact denies the request to expedite, SHP/MedImpact will automatically transfer the request to the standard Coverage Determination process, provide prompt verbal notice of the denial of the request to expedite, and subsequently mail written notice of the denial within 3 calendar days after providing verbal notice. 5. SHP/MedImpact has processes in place to accept Coverage Determination requests twenty-four (24) hours a day, seven (7) days a week, including holidays. Page 4 of 15

6. If a department other than Customer Care receives the request for Coverage Determination on a prescription drug, the phone call or written documentation will be transferred to the Customer Care Department, accordingly, the same day as received. a. All written inquiries are to be immediately scanned and emailed to Customer Care. 7. Medical documentation to meet appropriateness criteria must be supplied with the request, which includes but is not limited to: a. Member information, including name, member number, and date of birth; b. Requesting pharmacy name, telephone and fax numbers; c. Requesting physician or Other Prescriber name, telephone and fax numbers; d. Drug(s) requested with dispensing information, dosage and frequency, drug strength, quantity, duration, and amount of refills if needed; e. Diagnosis and history including previous medication history, progress notes, lab results, and medical justification for the use of drug(s) requested; and f. CMS approved clinical compendia documentation or peerreviewed literature supporting off-label use. 8. SHP/MedImpact does not extend the applicable adjudication time frame by dispensing a temporary supply of the requested medication. 9. SHP/MedImpact does not treat the presentation of a prescription at the pharmacy counter as a request for a Coverage Determination. a. SHP/MedImpact is not required to provide the member with a written denial notice at the pharmacy as a result of the transaction. b. As required under 42 CFR 423.562(a)(3), SHP/MedImpact arranges (through the PBM) with their contracted network pharmacies to distribute the standardized notice developed by CMS to notify members of their rights to request and receive detailed written notices from SHP/MedImpact regarding their prescription drug coverage, including information about the Exceptions process and about how to obtain a Coverage Determination. C. Types of Coverage Determination Request 1. A Coverage Determination is any determination (i.e., an approval or denial) made by SHP/MedImpact with respect to the following: a. A decision about whether to provide or pay for a Part D drug (including a decision not to pay because the drug is not on the Page 5 of 15

plan s formulary, because the drug is determined not to be medically necessary, because the drug is furnished by an out-ofnetwork pharmacy, or because the Part D plan sponsor determines that the drug is otherwise excluded under section 1862(a) of the Social Security Act if applied to Medicare Part D) that the enrollee believes may be covered by the plan; b. Failure to provide a Coverage Determination in a timely manner when a delay would adversely affect the health of the enrollee; c. A decision whether to reimburse a member for his/her out of pocket expense for a drug, even when the basis for the request is the TrOOP calculation; d. A decision concerning a formulary Exceptions request under 42 CFR 423.578(b); a decision concerning a tiering Exceptions request under 42 CFR 423.578(a); e. A decision on the amount of cost sharing for a drug; f. A decision whether a member has, or has not, satisfied a prior authorization or other utilization management requirement. D. Coverage Determination Review Process 1. Coverage considerations utilized during the Coverage Determination process are based upon CMS approved prior authorization criteria and may also include: a. The member has had treatment failure, intolerable side effects, or a contraindication to formulary alternatives; or b. The request for a Part D drug for uses not approved by the FDA (a.k.a. off-label uses) may be considered for coverage if the off label use of the drug meets the definition, per CMS-recognized compendia for determining medically accepted indications, as defined by the Social Security Act Section 1861(t)(2)(B)(ii)(I). 2. When SHP/MedImpact decides to provide or pay for a requested benefit, in whole or in part, the decision is a favorable Coverage Determination. 3. When SHP/MedImpact decides not to provide or pay for a requested benefit, in whole or in part, the decision is an adverse Coverage Determination. a. If the member disputes an adverse Coverage Determination, the case is processed through the federally mandated Appeals process. b. If a member complains about any other aspect of SHP or MedImpact s operations (e.g. the manner in which a benefit was provided), SHP addresses the issue through the Grievance process. Grievance procedures are separate and distinct from the procedures that apply to coverage determinations. Page 6 of 15

4. Coverage Determinations include a plan sponsor s decision on an enrollee s standard or expedited exception request. a. Exception requests include Formulary Exceptions, Compound Formulary Exceptions, Copay/Tiering Exceptions, Quantity Exceptions, Medical Exceptions, and Step Therapy Exceptions. b. A standard Exceptions request may involve a prospective request for benefits or a retrospective request for payment. c. SHP/MedImpact does not require a member to resubmit an Exceptions request at the beginning of a new plan year for the drug(s) approved pursuant to an Exceptions approval, as long as the member remains enrolled in SHP, the physician/other Prescriber continues to prescribe the drug, and the drug is safe for treating the member's condition. 5. Exception Request Review Process a. SHP/MedImpact utilizes a closed formulary to manage its Part D drug benefits and provides members a process to access Part D drugs that are not included on its formulary. b. When a member argues that a UM requirement should not apply in his or her situation because one of the three factors discussed below exists, SHP/MedImpact processes the complaint as a request for an Exception, including: i) All covered Part D drugs on any tier of the formulary would not be as effective for the member as the nonformulary drug, and/or would have adverse effects; ii) The number of doses available under a dose restriction for the prescription drug: i. Has been ineffective in the treatment of the member s disease or medical condition; or ii. Based on both sound clinical evidence and medical and scientific evidence supported by a CMS approved compendium, the known relevant physical or mental characteristics of the member, and known characteristics of the drug regimen, are likely to be ineffective or adversely affect the drug s effectiveness or member s compliance; or iii) The prescription drug alternative(s) listed on the formulary that are required to be used in accordance with step therapy requirements: i. Has been ineffective in the treatment of the member s disease or medical condition or, based on both sound clinical evidence and medical and Page 7 of 15

scientific evidence supported by a CMS approved compendium, the known relevant physical or mental characteristics of the member, and known characteristics of the drug regimen, are likely to be ineffective or adversely affect the drug s effectiveness or member s compliance; or ii. Has caused or, based on sound clinical evidence and medical and scientific evidence supported by a CMS approved compendium, is likely to cause an adverse reaction or other harm to the member. c. SHP/MedImpact is not required to process a member s request for an Exception until the member s physician or Other Prescriber provides a supporting statement demonstrating one of the three factors. d. SHP/MedImpact grants a formulary Exception when it determines that one of the three factors discussed has been demonstrated, and the drug would be covered as a Part D benefit but for the fact that it is a non-formulary drug. This language ensures that Excluded Drugs (excluded under 1862(a) of the Act) are not covered through the Exceptions process. e. The formulary Exception cost-share is the non-preferred brand cost-share (subject to change based on the annual bid). 6. Cost-share/Tier Exception Review Process a. SHP uses a tiered cost sharing structure to manage Part D drug benefits. b. SHP/MedImpact begins processing a member s request for a tiering Exception when the member s prescribing physician or Other Prescriber provides a supporting statement demonstrating that the preferred drug for treatment of the member s condition: i) Would not be as effective as the requested drug; and/or ii) Would have adverse effects that can be avoided by using the non-preferred drug. c. When a tiering Exception is approved, SHP/MedImpact shall provide coverage at the following cost-sharing level: i) Drugs in the non-preferred brand tier are applied a preferred brand cost-share; or ii) Drugs in the non-preferred generic tier are applied a preferred generic cost-share. d. Drugs in the specialty tier, preferred brand tier, preferred generic tier, the gap cost-share and non-formulary drugs covered by a formulary Exception approval are not eligible for tier Exception. Page 8 of 15

7. Adjudication Timeframe a. Standard Coverage Determination i) Determination of approval or denial/dismissal is processed as expeditiously as the enrollee s health condition requires but no later than 72 hours after the date and time the plan receives the request for a standard Coverage Determination. ii) The turnaround time is not tolled (extended) when SHP/MedImpact asks for additional information after it has received the request for a standard Coverage Determination. b. Standard Exception Request i) For standard Exception requests, the determination must be issued no later than 72 hours after receiving the physician s or Other Prescriber s supporting statement. ii) If the prescribing physician is required to submit a written supporting statement following a verbal statement, the adjudication time frame begins when the physician's written supporting statement is received by SHP/MedImpact. iii) If SHP/MedImpact does not request a written supporting statement, the time frame begins when the verbal supporting statement is received. iv) If SHP/MedImpact does not receive the physician s supporting statement within a reasonable period of time, SHP/MedImpact waits at least twenty-four (24) hours after the expiration of the time frame for a standard Exception request to make a determination. i. SHP/MedImpact waits a minimum of ninety-six (96) hours up to fourteen (14) days before issuing its determination. ii. SHP/MedImpact will not leave the request open indefinitely. v) If no evidence exists to support the Exceptions request, SHP/MedImpact will deny the request for lack of medical necessity. The denial notice to the member clearly explains why the request was denied. The member then has the right to appeal the denial. c. Expedited Coverage Determination i) Determination of approval or denial/dismissal is processed as expeditiously as the enrollee s health condition requires, but no later than 24 hours after receipt of the request and/or Page 9 of 15

supporting statements using the CMS adjudication timeframes. ii) An expedited Coverage Determination may be requested when the member or his/her physician or Other Prescriber believes that waiting for a decision under the standard time frame may place the member s life, health, or ability to regain maximum function in serious jeopardy. iii) SHP/MedImpact educates staff to ensure that requests for expedited review are processed promptly. The twenty-four (24) hour turnaround time for an expedited request begins when the member's request is received by SHP/MedImpact. iv) The turnaround time is not tolled (extended) when the SHP/MedImpact asks for additional information after it has received the request for an expedited Coverage Determination. v) If SHP/MedImpact denies a request to expedite a Coverage Determination, an automatic transfer of the request to the standard Coverage Determination process (seventy-two (72) hours) will occur. i. The member and his or her physician or Other Prescriber will be given prompt verbal notice of the denial, which includes the member s rights, followed by written notification within three (3) calendar days. The notice includes the following requirements: 1. Explains that SHP/MedImpact will automatically transfer and process the request using the seventy-two (72) hour time frame for standard determinations; 2. Informs the member of the right to file an expedited Grievance if he or she disagrees with the MedImpact decision not to expedite the determination; 3. Informs the member of the right to resubmit a request for an expedited determination and that, if the member gets his or her physician or Other Prescriber s support indicating that applying the standard time frame for making determinations could seriously jeopardize the life or health of the member or the member s ability to regain maximum function, the request will be expedited automatically; and Page 10 of 15

d. Expedited Exception Request 4. Provides instructions about the expedited Grievance process and its time frames. i) For expedited Exception requests, the determination must be issued no later than twenty-four (24) hour after receiving the physician s or Other Prescriber s supporting statement. ii) If the prescribing physician is required to submit a written supporting statement following a verbal statement, the adjudication time frame begins when the physician's written supporting statement is received by SHP/MedImpact. iii) If SHP/MedImpact does not request a written supporting statement, the time frame begins when the verbal supporting statement is received. iv) If SHP/MedImpact does not receive the physician s supporting statement within a reasonable period of time, SHP/MedImpact waits at least twenty-four (24) hours after the expiration of the time frame for a standard Exception request to make a determination. i. SHP/MedImpact waits a minimum of forty eight (48) hours up to five (5) days before issuing its determination. ii. SHP/MedImpact will not leave the request open indefinitely. v) If no evidence exists to support the Exceptions request, SHP/MedImpact will deny the request for lack of medical necessity. The denial notice to the member clearly explains why the request was denied. The member then has the right to appeal the denial. e. Standard Coverage Determination (for reimbursement only) i) For standard Coverage Determination request for reimbursement, the determination (including any applicable payment) must be issued no later than 14 calendar days after receipt of the request. ii) If no evidence exists to reach a favorable determination within the 14 calendar day timeframe, SHP/MedImpact will issue an adverse decision. 8. Notification of a Coverage Determination a. Members will be notified in writing of any favorable or adverse Coverage Determination. Page 11 of 15

i) If a member has identified an appointed representative, SHP/MedImpact sends the written notice to the member's appointed representative instead of the enrollee. ii) If a member's physician or Other Prescriber files a request on behalf of a member, a written notice to the member and the member's physician or Other Prescriber is provided. b. SHP/MedImpact may make its initial notification verbally followed by written notification within three (3) calendar days of the verbal notification. c. Written notification is generated and printed between 0700 and 1800 Pacific Time on a business day and 0700 and 1400 Pacific Time on Saturday. d. SHP/MedImpact has six (6) mail pickups between 0800 and 1830 Pacific Time on a business day. On Saturdays, MedImpact has three (3) mail pickups between 0930 and 1415 Pacific Time. e. If SHP/MedImpact s decision is favorable, the Notice of Approval of Medicare Prescription Drug is mailed to the member and the physician or Other Prescriber as applicable. i) The written notices must explain the conditions of the approval, including but not limited to: i. The duration of an approval; ii. Limitations associated with an approval; and/or iii. Any coverage rules applicable to subsequent refills. f. If SHP/MedImpact's decision is adverse, a CMS-approved denial notice is mailed to the member and the physician or Other Prescriber as applicable. i) The written notices must include the following requirements that are understandable and specific to each member: i. The specific reasons for the denial takes into account the member s medical condition, disabilities, and special language requirements, if any; ii. A description of any applicable Medicare coverage rule or any other applicable Part D plan policy upon which the denial decision was based, including any specific formulary criteria that must be satisfied for approval.; Page 12 of 15

9. Effect of Failure to Provide Timely Notice iii. Information regarding the right to appoint a representative to file an Appeal on the member s behalf; and iv. A description of both the standard and expedited Redetermination processes and time frames, including conditions for obtaining an expedited Redetermination, and the rest of the Appeals process. a. If SHP/MedImpact does not provide notice of its determination within the required time frame, SHP/MedImpact forwards the complete case file to MAXIMUS within 24 hours of the expiration of the adjudication time frame. i) Policy applies to standard and expedited Coverage Determination, and standard and expedited Exceptions request. b. SHP/MedImpact shall deliver a hard copy of the case file with a Compact Disc (CD) including the Evidence of Coverage (EOC) and/or formulary as applicable to MAXIMUS by overnight delivery at its designated address, by fax at its designated fax number, or by secure electronic mail. i) A copy of the delivery service or fax is maintained in the member s original case file. c. SHP/MedImpact notifies the member that it has forwarded his or her request to MAXIMUS for review. V. DEPARTMENTAL RESPONSIBILITIES i) The notification (Appendix 6 of the Prescription Drug Benefit Manual Chapter 18, Notice of Case Status ) is sent within twenty-four (24) hours of the expiration of the adjudication timeframe. ii) The notice advises the member of his/her right to submit additional evidence that may be pertinent to the member s case, if the member chooses, and directs the member to submit such evidence to the MAXIMUS, and includes information on how to contact MAXIMUS. A. Responsibilities of the Pharmacy Benefit Manager and its downstream entities 1. Coverage Determination is delegated to MedImpact per the delegation agreement. 2. The PBM is responsible and accountable for complying with all CMS guidelines and regulations regarding providing and maintaining a process Page 13 of 15

to review Coverage Determinations and provide notifications within turnaround time requirements. B. Responsibilities of the SHP Medicare Team 1. SHP monitors and audits (directly or via a separate contracted vendor) the PBM s Coverage Determination process annually during the calendar year as part of the Pharmacy Team s oversight of the PBM to ensure compliance with CMS requirements. a. In the event the audit identifies findings/conditions, SHP may repeat the audit until the Compliance Officer can confirm consistent compliance. 2. The audit program utilizes the CMS audit protocol and reviews sample Coverage Determinations to assess compliance with CMS requirements. VI. ATTACHMENTS A. Coverage Determinations and Exceptions Program Description Coverage Determinations and Ex B. Medicare Part D Coverage Determinations 400-PD-011 V6 Medicare Part D Cove VII. POLICY COMPLIANCE A. The Pharmacy department monitors the Coverage Determination process for accuracy and timeliness. B. The Compliance department reviews quarterly reports from the Pharmacy department and reports material errors to the CMS account manager, if appropriate. VIII. REFERENCES A. 42 CFR 423.562 General provisions B. 423.566 Coverage Determinations C. 423.578 Exceptions Process D. Social Security Act Sections 1861 and 1862. E. Coverage Determination and Exceptions Program Description Page 14 of 15

F. Prescription Drug Benefit Manual, Chapter 18 G. Prescription Drug Benefit Manual, Chapter 6 IX. REVISION HISTORY: Date Modification (Reviewed and/or Revised) 01/25/2016 Revision 06/10/2015 Original Document Page 15 of 15