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Recent Audits Point to a Few Key Audit Policy Changes

Recent Audits Point To A Few Key Audit Policy Changes

As informal information trickles in on 2018 audits, we wanted to share with you two trends that we are hearing through the grape vine.

Treatment of a pharmacy request that does not require authorization

Most plans tend to treat requests for Coverage Determinations for an on-formulary drug as a Coverage Determination. This goes back to a directive many years ago from the Centers for Medicare and Medicaid Services (CMS). During the 2018 audit year, several plans have now been advised that is not necessarily the correct treatment. While some auditors have not raised an issue with this historic practice, others have. We asked CMS the question directly and we were told that if a beneficiary or prescriber submits a request for a drug on formulary with no UM requirement, the plan should consider this an inquiry. The plan should neither process the request as a coverage determination nor dismiss the case. It is interesting that Chapter 18 generally focuses its discussion of inquiries on Part D drugs that are either excluded or not covered. The model notice for inquires focuses on these areas as well. This seems to broaden the treatment.

If this is a policy change, it might be rooted in the fact that treatment of such cases may impact CMS’ audit efforts as well as how they see Star performance calculated. As an example, the suspect algorithms CMS uses to choose samples for audit review may be impacted when too many formulary drug cases are counted as Coverage Determinations (e.g., these would show as cases that do not have effectuation). While the timeliness measures may not be directly affected by these types of requests for Star performance, CMS has been very aggressive on ensuring the integrity of data for Star as a whole.

Some plans will likely continue the historic practice as there has been no formal announcement, but it seems this guidance could change in the future. The draft Part D universes slated for 2020 include a new universe that essentially looks at unprocessed cases. We wonder if inquires could end up in this unprocessed universe in 2020 or over time.

The inquiry guidance above would logically apply to Part C service requests that do not need plan prior authorizations (Organization Determination) as well.

Physician review of cases denied for medical necessity

Historically, while Chapter 18 said otherwise, many plans have allowed non-physician decision-makers to overturn the original pharmacy prior authorization denial, and plans generally did not have any audit findings. The rationale was that the Coverage Determination denial was being overturned and it provided an expeditious way for the member to get the medication in need. We are now hearing on several audits that plans are being told they must follow the Chapter 18 guidance. We asked CMS directly whether a physician had to review all Part D redeterminations if the original request was denied for lack of medical necessity. We were told that, yes, a physician must review such appeals. More importantly, this applies for those cases denied because medical necessity was not met but also for those cases denied because insufficient information was originally submitted (CMS views these denials, too, as lacking medical necessity). As CMS notes, it does not matter if the appeal is ultimately overturned or sustained. While the guidance is on Part D, a parallel concern might exist for plans for Part C appeals. Chapter 13 also requires physicians to review all medically necessary appeals (again, this includes for lack of sufficient documentation) regardless of the appeal decision (approved or denied). As with Part D, many plans allow someone other than a physician to overturn a medical necessity denial.

Given this change, the need for appropriate outreach is even more important. We know that plans must step up outreach because of the new mandates announced by CMS, but better outreach in and off itself will mean fewer denials for lack of medical necessity documentation and fewer initial cases going to physicians. At the same time, if a case with insufficient documentation makes it to the medical director level, a peer-to-peer final outreach (mandated for MA-PDs) is now even more important. If the case can be fulfilled here, it will not be denied and then subject to additional scrutiny by a different physician at the appeals level.

Conclusion

Plans need to consider what they will do on the first item regarding inquiries. We find it unlikely there will be audit findings if the current practice is continued until this issue is made very clear publicly. Plans likely need to change practices on the second item regarding appeals given the plain reading of the Chapters.

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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