Strategic Insights March 2013
CMS increases focus on Appeals and Grievances, Coverage Determinations
A review of 2012 CMS Medicare Advantage Audit results reveals that the most significant problem areas for contractors were in the area of Organizational Determinations and Appeals and Grievances (ODAG),
and Coverage Determinations and Appeals/ Grievances (CDAG).
More specifically, the majority of outliers were due to:
- Failure to follow National or Local Coverage Determinations
- Failure to send proper Denial Notices/ Appeal Rights
- Misclassifying Org Determinations/Appeals as Grievances
- Failure to effectuate overturns or approvals
- Failure to auto-forward adverse reconsideration cases (including cases not adjudicated within the timeframe) to the IRE as required.
In 2013, CMS plans to perform a total of 32 routine and two Ad Hoc audits. Audits will extend to two weeks as opposed to the previous one week process. The key focus of the audits will be to ensure that any deficiencies with potential to cause medical or financial harm to members are quickly identified and corrected. The areas of CDAG, ODAG and Part D Formulary Administration are thought to contain the greatest risk for these types of deficiencies. Due to the complexity of these processes, many health plans and their pharmacy benefit managers are moving towards more robust and integrated technology platforms that support compliance with built-in alerts.
Significant Changes to Managed Care Manual
Effective 2/22/13 CMS issued many significant changes to their Managed Care Manual and Prescription Drug Manual. This month our focus is on Chapter 18- Part D Enrollee Grievances, Coverage Determinations, and Appeals. We will summarize changes to other key chapters in upcoming issues of Strategic Insights.
Key Changes to Chapter 18:
Added new sections 40.3.5 (Written Notification of Favorable Decisions), 50.5.2 (Written Notification of Favorable Decisions), 70.9.2 (Favorable Standard Redeterminations) and 70.9.4 (Favorable Expedited Redeterminations) based on revised regulatory requirements that plan sponsors must issue written notification for all favorable coverage determinations and redeterminations. See 42 CFR 423.568(d), 423.572(a), 423.590(a)(1), (b)(1) and (d)(1).
Revised section 30.2.1 (Tiering Exceptions) The revisions eliminates the previous requirement that tiering exceptions be limited to brand-to-brand or generic-to-generic substitutions, with the exception of a tier which contains only generics. Under the revised guidance, an enrollee or the enrollee’s prescriber may request a tiering exception for a brand to generic drug if all lower cost tier alternatives approved for treating the same condition would not be as effective for the enrollee, would have adverse effects for the enrollee, or both.
Updated sections 40.1 (How to Request a Standard Coverage Determination) and 70.2 (How to Request a Standard Redetermination) which requires plan sponsors provide instant access to their coverage determinations and appeals processes via the plan’s internet website.
Revised Sections 40.3.4 (Written Notification of Adverse Decisions) and 50.5.1 (Written Notification of Adverse Expedited Decisions) revised based on new requirement that plan sponsors include a copy of the CMS Model Redetermination Request Form (new Appendix 16) with all Notices of Denial of Medicare Prescription Drug Coverage.
Appendices 4, 12, 13 and 15 updated, a new Appendix 16 was added. This is just a sampling of the changes. For full information please refer to:
Congress’ Sequestration Means 2% Cut for Medicare Payers and Providers
Unless Congress passes an alternate deficit-reduction package, Medicare provider payments and Medicare Advantage contractual payments will be cut by 2 percent beginning April 1, 2013 as part of the spending reductions required by the Budget Control Act of 2011.
The cuts will be applied to provider payments for services administered under Medicare Hospital Insurance (Part A) and Medicare Medical Insurance (Part B) and contractual payments to Medicare Advantage Plans (Part C) and Medicare Prescription Drug Plans (Part D), according to the Congressional Budget Office (CBO).
The sequestration percentage is capped at 2 percent for payments for individual services under Parts A and B and for monthly contractual payments to Part C and Part D providers. Exempted from the cuts are low-income subsidies and additional subsidies for beneficiaries whose spending exceeds catastrophic levels in Part D. Other mandatory program spending for benefits and administrative costs are subject to the same reduction rate as non-exempt mandatory spending, according to the CBO.
That means about 90 percent of Medicare spending is limited to 2 percent in cuts, and 8 percent is completely exempt from sequestration. The remaining 2 percent of Medicare spending would be subject to a 7.6 percent cut in 2013 because it falls under non-exempt nondefense mandatory programs, according to the White House Office of Management and Budget (OMB).
In a letter to Congress sent Sept. 12, 2012, the American Medical Association and more than 100 other provider lobbying organizations wrote, “The combination of the sequestration cut and looming Medicare Sustainable Growth Rate (SGR) payment cut would not only impede improvements to our health care system, it could lead to serious access to care issues for Medicare patients as well as employment reductions in medical practices.”
Healthcare Exchange (“Marketplace”) Update:
Previously known as the Healthcare Exchanges, the Department of Health and Human Services now refers to these emerging state and federally run health insurance offerings as the Health Insurance Marketplace. (HHS) Secretary Kathleen Sebelius announced that more states are moving forward to implement the health care law, with HHS conditionally approving Iowa, Michigan, New Hampshire, and West Virginia to operate State Partnership Marketplaces, which will be ready for open enrollment in October 2013.
“HHS will continue to work collaboratively with all states to build the Marketplace,” Secretary Sebelius said. “Working together, we will be ready in seven months when consumers will be able to use the new marketplace to easily purchase quality, affordable health insurance plans.”
March’s conditional approvals bring the total number of states that have been conditionally approved to partially or fully run their Marketplace to 24 states and the District of Columbia. In addition, several other states have suggested their own approaches to contributing toward plan management in their Marketplace in 2014. HHS will continue to provide all states with the flexibility, resources, and time needed to support the establishment of the new health insurance marketplace.
For more information on the new Health Insurance Marketplace, visit: