Blogging Employee Benefits

February 27, 2006

Medicare Part D Draft CY 2007 Formulary Guidance

Filed under: CMS, Medicare Part D — Fuguerre @ 3:41 pm

Draft CY 2007 Formulary Guidance on Medicare Part D prescription drug policies is available for public comment. CMS will be accepting comment through March 6, 2006. Part D plan formulary submissions must be made between 3/27/2006 and 4/17/2006. [CMS Formulary Guidance Webpage]

Several of the items worth noting in the draft 2007 formulary guidance, as compared with the 2006 guidance

  • Certain Classes of Clinical Concern – The 2006 guidance required Part D plan formularies to include “all or substantially all” drugs in six particular classes: immunosuppressant, antidepressant, antipsychotic, anticonvulsant, antiretroviral, and antineoplastic. Under the draft 2007 guidance, formularies would be required to include substantially all drugs in those classes available on 4/17/2006, with subsequent new drugs to be subject to the normal P&T committee review process. The draft guidance lists four explicit exceptions not subject to the “substantially all” requirement. Restrictions on prior authorization or step therapy requirements for drugs within the six classes are prescribed. CMS further solicits industry feedback on current managed care strategies that might be implemented within the context of CMS policy.
  • Multiple Formularies – Multiple formularies that have been submitted by a plan should have meaningful differences, so that confusion among beneficiaries is reduced. CMS may request withdrawal of a formulary if no meaningful difference from the plan’s other formulary or formularies can be demonstrated.
  • Formulary Key Drug Types – If a USP Formulary Key Drug Type only includes drugs primarily covered under Part B, over-the-counter, statutorily excluded drugs, or drugs determined by the FDA to be less than effective, then the formulary need not include those drug types.
  • Specialty Tiers – CMS will approve formularies and plan designs that include a specialty tier only if certain conditions are met –
    • Single Specialty Tier – Only one tier may be designated a specialty tier exempt from cost-sharing exceptions.
    • 25% Cost-Sharing Ceiling – Cost-sharing for the initial range (or actuarially equivalent, for plans with decreased or no deductible basic alternative benefit design) associated with the specialty tier is limited to 25%.
    • $500 Monthly Price Floor – Only Part D drugs with plan negotiated prices that exceed $500 per month may be included in the specialty tier.

February 24, 2006

Interim Regs on Medicare Secondary Payer Amendments

Filed under: CMS, Healthcare, Medicare, Regulations — Fuguerre @ 7:22 am

Medicare may also seek reimbursement from any entity that has received payment from a primary payer. Entities that receive payment include, but are not limited to beneficiaries, attorneys, and providers or suppliers (including physicians).

Interim regulations implementing Medicare Secondary Payer (MSP) amendments made by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) have been published by Centers for Medicare & Medicaid Services (CMS). [42 CFR 411 and 489, 71 FR 9466] The new rules clarify various MSP definitions and rules, including the legal basis for collection of amounts from employers and other entities payments made by Medicare to providers when Medicare coverage should have been secondary.

A primary payer and any entity that receives payment from a primary payer is obligated to reimburse CMS once primary payment responsibility has been demonstrated. That obligation is not eliminated if the primary payer has paid the wrong party, such as by paying the Medicare beneficiary or the provider when it ought instead to have reimbursed the Medicare program.

Where a group health plan or large group health plan is the primary payer, all employers that sponsor or contribute to the group health plan have a reimbursement obligation to Medicare, regardless of whether the plan is insured or self-insured. Self-insured status may be demonstrated by the failure to obtain insurance, among other ways.

Reimbursement is not required if Medicare has already recovered payment. However, Medicare is not required to pursue the entity that received payment before it pursues the primary payer for reimbursement.

Although technically the MMA amendments clarify MSP provisions effective as if enacted in 1980 with the original legislation, the interim regulations are effective 4/25/06. Comments on the interim regulations should be submitted to CMS by 4/25/06.

January 9, 2006

Guidance on Creditable Coverage Notice to CMS

Filed under: CMS, Medicare Part D — Fuguerre @ 6:06 pm

If an employer-sponsored union group health plan provides presciption drug coverage to individuals who are eligible for Medicare Part D, then the plan sponsor must provide notice to the Centers for Medicare & Medicaid Services (CMS) whether the plan’s coverage is “creditable prescription drug coverage.” CMS has published guidance relating to the form, manner, and timing for meeting that notification requirement. [Disclosure to CMS Guidance]

All entities described in the regulation at 42 CFR 423.56(b) must disclose to CMS whether the prescription drug coverage offered to Part D eligible individuals is creditable or non-creditable. Entities that contract with Medicare directly as a Part D plan or that contract with a Part D plan to provide qualified prescription drug coverage are exempt from the disclosure requirement. 

Entities are to make the disclosure to CMS by completion of an on-line form on the CMS Creditable Coverage Disclosure Web Page. See Disclosure to CMS Form.

The Disclosure Notice must be made to CMS on an annual basis and upon any plan change that affects whether the drug coverage is creditable.  The initial Disclosure Notice must be provided to CMS by 3/31/06.

CMS Encourages Employer Best Practices for Retirees with Automated Enrollment in Part D

Filed under: CMS, Medicare Part D — Fuguerre @ 5:34 pm

The Centers for Medicare & Medicaid Services (CMS) has published a Tip Sheet & Issue Paper About Retirees Automatically Enrolled In Medicare Part D (zipped file containing two Word documents). Included among the provisions of the Medicare Part D prescription drug coverage introduced by the Medicare Modernization Act (MMA), all dually eligible Medicare and Medicaid beneficiaries were to be automatically enrolled in a Medicare prescription drug plan by 12/31/05 to ensure continuation of prescription drug coverage when Medicaid coverage expired on 12/31/05. Under some retiree drug plans sponsored by employers or unions, a retiree loses coverage under the plan if the individual enrolls in a Medicare drug plan, in large part because a Part D subsidy is not paid with respect to any individual who is enrolled in a Medicare drug plan. Notwithstanding the subsidy implications, the CMS tip sheet and issue paper seek to encourage employers to adopt “best practices” aimed at reducing the potential adverse consequences for individuals facing the complicated decisions arising from automatic enrollment.

Although not explicitly required to do so under the law or regulations, CMS suggests that employers and unions that would eliminate coverage under their plans for individuals who enroll in a Part D plan should consider taking the following steps –

  • Flexible Transition and Correction Period. Some retirees who wish to opt out of part D coverage in order to retain employer/union coverage may have been unable to do so in a timely manner. CMS suggests that employer/union plans consider –
    • Deferring permanent changes in retiree’s plan eligibility, enrollment, or covered benefits for a transition period.
    • Providing a special enrollment period for plan re-enrollment.
    • Coordinating benefits with Medicare drug plans for a transition period.
  • Split Retiree/Family Enrollment. For a plan where a retiree’s Part D enrollment would put the employer/union plan’s coverage of spouses and dependents at risk, CMS suggests the employer/union plan be modified to permit continued coverage of spouses and dependents despite the retiree’s Part D enrollment.
  • Supplemental Coverage Option. CMS suggests addition of supplemental coverage under an employer/union plan to minimize adverse consequences to retirees who have been automatically enrolled under Part D.
  • Assisting Retirees in Choice to Opt Out of Part D. CMS suggests that employers and unions provide educational materials and other assistance that can help individuals understand their choices and explain how to disenroll from a Medicare drug plan.

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