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Compliance Insights January 2014

Summary: In this issue of Compliance Insights, MedHOK covers the revised Notice of Denial of Medicare Prescription Drug Coverage (CMS-10146), clarifications to the 2014 policy on automatic delivery of prescriptions, 2015 STAR Ratings measures – CDAG, ODAG, and Compliance Program, and the release of the Mental Health Parity Final Rule.

MedHOK is pleased to bring you important regulatory information from recent HPMS Memos
and other sources. MedHOK offers a single, integrated platform for managing care, quality and
compliance, including NCQA certified quality modules, medical and pharmacy appeals management,
and HPMS memo management.

Revised Notice of Denial of Medicare Prescription Drug Coverage (CMS-10146)

On December 19, 2013, the Centers for Medicare & Medicaid Services (CMS) announced the
availability of the revised OMB-approved standardized Notice of Denial of Medicare Prescription
Drug Coverage (CMS-10146). The notice and instructions are posted under “Downloads” at this link.

Beginning no later than March 1, 2014, Part D plan sponsors must use the revised, OMBapproved
standardized Notice of Denial of Medicare Prescription Drug Coverage (CMS-
10146)
. The revised Part D standardized denial notice must be provided to Part D enrollees
when a Part D plan sponsor issues a full or partial coverage determination denial.

The revised version of the Part D standardized denial notice has been modified to include instructions
for inserting language (as applicable) in the denial rationale free text field regarding
Part D versus Part B coverage. Specifically, when a sponsor denies a drug under Part D, but the
drug may be covered under the Part B benefit, the plan sponsor is instructed to include an explanation
of possible Part B coverage as part of the denial rationale. If an MA-PD plan can approve
coverage for the drug under Part B, the plan sponsor must include this information as part
of the explanation about why the drug is not covered under Part D. Sponsors must continue to
populate the denial rationale free text field of the notice with information that is specific and clear
so an enrollee understands why coverage is not available under Part D, or if coverage is possible,
what information is necessary to obtain coverage for the drug in dispute.

STAR Ratings – CDAG, ODAG, and Compliance Program

As shared in our previous newsletter, CMS intends to add Beneficiary Access and Performance
Problems (Part C and D) to the 2015 Star Ratings measures. Starting with the data for the 2015
Star Ratings, an audit score will be calculated by utilizing the audit results for each of the following
program areas: Part D Formulary and Benefit Administration; Part D Coverage Determinations,
Appeals, and Grievances (CDAG); Part C Organization Determinations, Appeals, and
Grievances (ODAG); and Compliance Program Effectiveness.

MedHOK has several solutions to assist in improving CDAG and ODAG audit readiness and
outcomes. Our solutions allow for real-time monitoring of compliance deadlines and make audit
preparations easy by compiling case summaries and correspondence. A brief summary of our
solutions is as follows:

  • MedHOK’s Appeals and Grievance solutions are pre-configured workflow solutions for processing
    and tracking medical and pharmacy appeals and grievances. The system-defined
    workflow ensures that cases are processed consistently and correspondence is triggered
    automatically and attached to the original case. The dashboard allows for real-time monitoring
    of activity by management and promotes a proactive approach to case load and compliance
    deadlines.
  • MedHOK’s CTM is a workflow solution for processing and tracking CMS Medicare member
    and Part D complaints. The module has integration capabilities with CMS for bi-directional
    loading of case files. The system-defined workflow ensures that cases are processed consistently
    and correspondence is triggered automatically and attached to the original case. The
    dashboard allows for real-time monitoring of activity by management and promotes a proactive
    approach to case load and compliance deadlines.
  • MedHOK’s Pharmacy Prior Authorization solution is fully CMS compliant for processing Coverage
    Determinations and prior authorizations electronically using the 360 EPA functionality
    in our software. The solution also allows for processing of Redeterminations (Rx Appeals),
    Direct Member Reimbursements, and IRE for Medicare Part D plans (External Pharmacy
    Appeals). The out-of-the-box functionality supports Medicare, Medicaid and commercial
    books of business. The software includes multiple intake channels including electronic prior
    authorization through our 360 EPA functionality, auto-population of eligibility data, the capture
    of all key data elements needed for the processing of each case and structured workflow with
    individual user roles and responsibilities / functions that define which task can be completed
    by the specific user.
  • MedHOK’s Medical Utilization Management module (Part C Organization Determinations)
    comes out-of-the-box with Medicare compliant fields and drop downs to ensure CMS compliance.
    The module includes multiple intake channels, auto-population of eligibility data, and
    structured workflows, tasks and work queues triggered by business rules to ensure consistent
    applications of rules, requirements and medical necessity standards. MedHOK can
    support business clinical criteria and is fully integrated with both MCG and Interqual clinical
    criteria. Includes a Business Intelligence reporting tool for ad hoc and immediate reporting
    capability along with canned reports and scorecard.

For information or a demonstration of any MedHOK solution, please submit a request via our
website or call us at 888-963-3465.

Clarifications to the 2014 Policy on Automatic Delivery of Prescriptions

The Centers for Medicare & Medicaid Services (CMS) announced in the 2014 Call Letter that
starting January 1, 2014, Part D sponsors should require their network pharmacies offering automatic
shipments or home delivery of prescriptions to obtain beneficiary or authorized representative
consent prior to delivery. On December 12, 2013 CMS offered additional guidance on the
implementation of this policy for both new and refill prescriptions:

Refill Prescriptions
For any Part D plans offering mail order or home delivery, CMS would like to reiterate that pharmacies
only need to obtain beneficiary or authorized representative consent prior to shipping for
refills that the beneficiary or authorized representative did not initiate (e.g. refills prompted by auto-fill
systems). A pharmacy would not need to obtain consent to deliver a refill that was prompted
by the beneficiary (e.g. refills requested by phone, fax, or online). This policy maintains mail-order
access for beneficiaries who choose it, while reducing the likelihood of unwanted shipments.

New Prescriptions
Similar to the exception offered to Employer Group Waiver Plans (see October 28, 2013 HPMS
memo, “Clarifications to the 2014 Policy on Automatic Delivery of Prescriptions for Employer
Group Waiver Plans”), CMS clarified that any Part D plans interested in offering an automatic
delivery program for new prescription fills that does not feature obtaining consent prior to delivery
can submit a request for an exception no later than December 20, 2013 to the beneficiary consent
policy at PartDPolicy@cms.hhs.gov.

Plans requesting this exception will additionally be expected to submit their grievances to CMS,
where they also will be monitoring complaints and grievances related to mail order. In cases
where complaints or grievances indicate an automatic delivery program not conforming with the
conditions listed above or automatic delivery of refills are not in alignment with the 2014 Call Letter
policy, it will result in CMS revoking the plan’s exception immediately, making all new and refill
prescriptions not initiated by the beneficiary subject to now have required beneficiary consent
prior to shipping. CMS remains very concerned about the volume and consistency of complaints
that we receive related to mail order and automatic deliveries. A summary of complaints on this
topic has been posted here.

Mental Health Parity Final Rule Released

On November 13, 2013, the Department of Health and Human Services (HHS), Labor and the
Treasury jointly issued a final rule increasing parity between mental health/substance use disorder
benefits and medical/surgical benefits in group and individual health plans. A final regulation
implementing the Mental Health Parity and Addiction Equity Act (MHPAEA) was published
in the Federal Register on November 13, 2013. The regulation is effective January
13, 2014 and generally applies to plan years (in the individual market, policy years) beginning
on or after July 1, 2014
. See the fact sheet here and the full text of the final regulation here.

This followed an interim final regulation, which was published in the Federal Register
on February 2, 2010 and generally applies to plan years beginning on or after July 1, 2010.
This action also includes specific additional consumer protections, such as:

  • Ensuring that parity applies to intermediate levels of care received in residential treatment or
    intensive outpatient settings;
  • Clarifying the scope of the transparency required by health plans, including the disclosure
    rights of plan participants, to ensure compliance with the law;
  • Clarifying that parity applies to all plan standards, including geographic limits, facility-type
    limits and network adequacy;
  • Eliminating the provision that allowed insurance companies to make an exception to parity
    requirements for certain benefits based on “clinically appropriate standards of care,” which clinical
    experts advised was not necessary and which is confusing and open to potential abuse.
  • The final regulation applies to:

  • Non-Federal governmental plans with more than 100 employees, and to Group health plans
    of private employers with more than 50 employees. It also applies to Health insurance coverage
    in the individual health insurance market.

It does not apply to:

  • Group health plans of small employers (except as noted above in connection with the EHB
    requirements). Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) are
    not group health plans or issuers of health insurance. They are public health plans
    through which individuals obtain health coverage. However, provisions of the Social Security
    Act that govern CHIP plans, Medicaid benchmark benefit plans, and managed care
    plans that contract with State Medicaid programs to provide services require compliance
    with certain requirements of MHPAEA.
    See the State Health Official letter regarding application of requirements of MHPAEA to Medicaid MCOs, CHIP, and Alternative Benefit (Benchmark) Plans.

The provisions of the regulation include the following:

  1. The substantially all/predominant test outlined in the statute must be applied separately to six classifications of benefits: inpatient in-network; inpatient out-of-network; outpatient innetwork; outpatient out-of-network; emergency; and prescription drug. Sub-classifications are permitted for office visits separate from all other outpatient services, as well as for plans that use multiple tiers of in-network providers. The regulation includes examples for each classification. Additionally, although the regulation does not require plans to cover MH/SUD benefits, if they do, they must provide MH/SUD benefits in all classifications in which medical/surgical benefits are provided.
  2. The regulation requires that all cumulative financial requirements, including deductibles and out-of-pocket limits, in a classification must combine both medical/surgical and MH/SUD benefits in the classification. The regulation includes examples of permissible and impermissible cumulative financial requirements.
  3. The regulation distinguishes between quantitative treatment limitations and nonquantitative treatment limitations. Quantitative treatment limitations are numerical, such as visit limits and day limits. Nonquantitative treatment limitations include but are not limited to medical management, step therapy and pre-authorization. There is an illustrative list of nonquantitative treatment limitations in the regulation. A group health plan or coverage cannot impose a nonquantitative treatment limitation with respect to MH/SUD benefits in any classification unless, under the terms of the plan (or coverage) as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to MH/SUD benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical surgical/benefits in the classification. The final regulation eliminated an exception that allowed for different nonquantitative treatment limitations “to the extent that recognized clinically appropriate standards of care may permit a difference.”
  4. The regulation provides that all plan standards that limit the scope or duration of benefits for services are subject to the nonquantitative treatment limitation parity requirements. This includes restrictions such as geographic limits, facility-type limits, and network adequacy.

HHS anticipates issuing further responses to questions and other guidance in the future. If you
have concerns about your plan’s compliance with MHPAEA, contact the help line at 877-267-
2323 extension 6-1565 or at phig@cms.hhs.gov. You may also contact a benefit advisor in one
of the Department of Labor’s regional offices at www.askebsa.dol.gov or by calling toll free at
866-444-3272.

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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