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Civil Monetary Penalties Continue at CMS for Medicare Advantage Plans

Civil Monetary Penalties Continue At CMS For Medicare Advantage Plans

On March 1, 2017, the Centers for Medicare and Medicaid Services (CMS) released their list of plan audit results for Part C and Part D Sponsor violations found during the 2016 Program Audit. CMS also posted a series of Civil Monetary Penalty (CMP) letters on its website. MedHOK Strategic Insights has reviewed the findings and three things are clear:

  1. CMS continues to demand strict compliance from Medicare Advantage (MA) and Part D plans and is not afraid to impose fines against them. Indeed, verbiage in the CMP letters points to CMS’ view that any beneficiary harm will not be tolerated. CMS has gone as far as to quantify how given findings cause beneficiary harm.
  2. MA and Part D plans continue to fail in common areas that have been cited by CMS for years now. These are all available in numerous publications from CMS, including audit results, CMP letters, best practices memos, annual program audit finding reports, etc.
  3. At the same time, CMS appears to have introduced new areas of focus and are adding them to the already long list of findings.

CMS’ recent announcement shows 37 plans were audited in 2016. This is about nine percent of active MA and standalone Part D (PDP) contracts. CMS seems to be expanding the number of plans subject to audit each year and will continue to do so in the future. This likely raises the chances of audit for plans significantly; especially those that are new, have not had audits in the recent past, and/or have other regulatory or compliance challenges. In addition, numerous findings surrounded plan formularies, which means plans need to undertake much more aggressive oversight of delegated Pharmacy Benefits Managers (PBMs).

Of the 37 plans audited in 2016, 17 received CMPs totaling $7.3 million. The CMP letters were issued between October 2016 and February 2017. Unlike prior years, no plan received a suspension of marketing, enrollment or payment. Plans are now beginning to receive notices for 2017 audits.

The major findings are below. It is important to note that most of the findings applied to numerous plans.

  • Misclassification of cases – CMS cited plans for not creating either prior authorizations or appeals in both the Part C medical and Part D drug world. Plans had the following issues:
    • Grievances were logged but prior authorizations or appeals should have been created as well or instead of the grievance
    • Customer inquiries to member service departments clearly constituted requests for services or drugs and cases were not created
    • Reopens were done when not appropriate
      • Remember there is a fine line as to when to reopen a previously dispositioned case or when to create an appeal. On the Part C and Part D sides, CMS has created a very narrow list of reopen reasons that apply. Plans should not use reopen as a way to get around creating appeals when authorizations were earlier decisioned. Reopens are allowed in cases where the decision was clearly wrong based on face value or when there is new or material evidence not known at the initial time of the decision. However, generally speaking, these should be strictly and narrowly construed. Reopens simply because a member is dissatisfied with a decision or because a provider finally sent medical documentation would not generally meet the threshold for reopens.
  • Timeliness of medical and drug prior authorizations and appeals – Part C and Part D plans continue to struggle with ensuring timeliness of case requests. CMS now expects all of the following to be completed within the applicable regulatory timeframe:
    • Case decisioning
    • Provider written correspondence in the postal stream or other delivery means
    • Member written correspondence in the postal steam
    • Effectuation
    • And now, new rigorous outreach requirements for cases lacking medical documentation to make an appropriate evidence-based decision, including:
      • Initial attempt within a specified period of time depending on case type; sometimes immediately on receipt
      • A minimum of three attempts and perhaps varied modes of attempts
      • Final medical director verbal outreach to the provider if a case is to be denied for lack of medical documentation
  • Improper dismissal of requests – CMS is concerned plans are inappropriately dismissing cases for numerous reasons. CMS notes that this means members are denied the ability to appeal what otherwise would be denied coverage requests. Additionally, in the Part D formulary world, requests for covered formulary drugs should be approved through the Coverage Determination process even though effectuation is not required. This will ensure no member or provider confusion in the matter.
  • Effectuation – Numerous findings on effectuation of authorizations and appeals were found by CMS at plans receiving CMPs.
    • In general, CMS found plans failed to effectuate authorizations or appeals or that the effectuation was not for prescribed timeframes.
    • In the case of exceptions, a common finding was that plans were not effectuating for the balance of the calendar year.
  • Reimbursement – In instances where members have made financial outlays on the medical side, plans did not issue reimbursement within 60 days.
  • Quality of care grievances – Plans are not informing members of their right to go directly to the Quality Improvement Organization (QIO) when they file grievances related to quality of care. Such grievances should be acknowledged with verbiage that informs the member of this right.
  • Extensions – Plans were cited for taking extensions for a contracted provider when there is a lack of documentation. In general, CMS has indicated that such extensions should not occur for contracted providers (unless requested by the member or provider) because plans should be able to use any means available to obtain medical documentation in a timely manner from a contracted provider. In the small number of cases in which an extension would be needed, there would have to be clear, explicit rationale that the extension is in the best interest of the member.
  • Formulary administration – Numerous findings were logged related to how plans administer their formularies. These are common findings and ones that go back many years. Plans are requiring prior authorization on drugs that are on their formulary and do not require PA. Additionally, plans have various other Utilization Management edits in the claims system that were not filed with CMS and therefore would not be allowed.
  • Transition policy – Many plans and their PBMs simply are doing an insufficient job administering the transition program. CMS takes transition very seriously and looks very closely at whether members are getting the 30-day supply for transition. PBM systems are not adequately capturing whether a person should be granted a transition during qualified periods, including when joining a new plan or when major formulary changes go into effect for existing members at the beginning of each year. The 30-day supply must be granted at the point of sale and plans need to notify the member that they are in a transition phase and must talk to their doctor about either obtaining a prior authorization or moving to a covered formulary drug.
  • Denial rationale and audit rights – Another major plan challenge has been ensuring all denial letters have adequate denial rationales in them (clear and concise wording as to the denial and what the next steps are), as well as not including required appeal rights in letters to members and providers. CMS is now finding plans are not notifying non-contract providers of waiver of liability requirements or of their appeal rights.
  • Hold harmless – Related to the above, plans are also failing to ensure members are held harmless from additional financial exposure for non-contracted providers. Plans need to ensure they enforce not only their co-share requirements, but also ensure providers do not violate balance billing requirements for their members. For emergency services, plans must apply in-network cost sharing rates for out-of-network providers. In addition, balance billing limits apply to providers furnishing these services to Medicare plan members if the provider is enrolled in Medicare FFS. Furthermore, federal law also bars any balance billing for certain dual eligibles, as the Medicare plan is primary coverage and a Medicaid plan or Medicaid FFS covers secondary costs for these members. CMS is insistent plans educate providers on this.
  • Auto-forwards – CMS is closely scrutinizing auto-forwards on audit as well as separately via monitoring of data coming to and from Independent Review Entities (IREs). Plans are not forwarding untimely cases to the IRE or not doing so on a timely basis.

For additional information, please see our past blogs below on this topic:

January 18, 2017 – CMS Audit Season is Upon Us

December 9, 2016 – CMS Timeliness Monitoring to Challenge Plans

November 8, 2016 – CMS Medicare Plan Outreach Requirements in the Spotlight

September 20, 2016 – 2016 Program Audit and Enforcement Report Shows Continued Drive Toward Rigorous Compliance Regime

June 13, 2016 – CMS Pushing Plans on Compliance While Lending a Helping Hand

March 23, 2016 — Compliance and Quality Take Center Stage in Medicare

February 12, 2016 — Compliance and Quality Focus Increases As CMS Embraces SNP Potential

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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