Recently, CMS updated its Part D Manual to include specific changes to the Manual’s Medicare Secondary Payer (MSP) provisions.  The updated manual can be found here. Page 40 now provides:

“Part D sponsors are responsible for adjudicating enrollees’ claims in accordance with MSP requirements. Under CMS’ adjudication logic for Part D MSP claims, the provider/pharmacy receives at least the Part D sponsor’s negotiated price for the drug. Policy regarding Part D payments for MSP claims applies the following order of payment: primary insurer’s payment, beneficiary cost sharing under the Part D plan, and finally the Part D plan payment. If the primary payment is greater than or equal to the Part D negotiated price, no other payment is made. If the primary payment is less than the Part D negotiated price, the beneficiary pays the lesser of either: the negotiated price minus the primary payment; or the beneficiary’s cost sharing liability under the plan. This policy is supported by Federal regulations at § 411.33(e) and addressed in section 17 of the PDE Guidance available on the CMS Website. See Appendix B for the specific Web address.

A claim for a drug that should be paid as MSP may not be submitted or paid as a primary claim by the Medicare plan. Additionally, the Part D sponsor should not require the pharmacy to submit MSP claims with different 4Rx or unique BIN/PCN information than would otherwise be used for any other claim submitted to the Medicare Part D benefit.” (emphasis added)

The foregoing policy change is arguably a foreboding of the Centers for Medicare & Medicaid Services (CMS) auditing Part D plans to ensure that they are both not paying for prescriptions where a primary payer is available and recouping conditional payments where the Part D plan paid, and the primary plan was responsible for payment. As CMS has made this policy change, and if CMS were to start auditing Part D plans, what does it mean as for the impact to primary payers as it relates to both conditional payments and Medicare Set-Asides (MSAs)?

As it relates to conditional payments, historically we have not seen Part D plans be as aggressive in their recovery efforts to recover payments as traditional Medicare (Parts A and B) and Medicare Advantage (Part C) have been. Some Part D recovery organizations such as Express Scripts have been more aggressive in sending Part D conditional payment demands than other Part D plans/recovery agents that have been less proactive in recouping payments.

At times, primary payers have received questionnaires from Part D plans/recovery agents rather than an actual conditional payment demand. These questionnaires request that the primary plan supply the Part D plan with the claimed injuries to enable the Part D plan to identify secondary payer situations. The reason that this occurs and that the Part D plans have not had the requisite/accurate data to identify these situations from CMS. In the alternative, Part D plans use data models based upon diagnosis codes, as well as self-reports by plaintiff attorneys with a description of the claimed injury(ies) received to investigate secondary payer situations. If the primary plan supplies the Part D plan with the information requested as it pertains to the claim, that will assist the Part D plan in identifying Part D conditional payments.

In summary as it relates to conditional payments, we can expect that with this policy change that CMS will begin auditing Part D plans regarding their conditional payment recovery programs. We can also expect that the Part D plans will in turn request that CMS supply Part D plans with more data to identify conditional payment recovery situations. The last remaining question as Part D plans turn up the heat on their recovery efforts is whether Courts will find in the same manner as the 3rd and 11th Circuits have found for Part C Medicare Advantage Plans, that the Part D Plan has the right to pursue a double damages private cause of action for unreimbursed conditional payments, just like Part C and traditional Medicare can. This will be something to keep a close eye on, as we continue to see Part C MSP conditional payment litigation increasing across the country.

As it relates to MSAs, CMS has also recently started to share Part D MSA information with Part D plans to enable the Part D plan to “coordinate benefits” (deny coverage for the requested benefit) in secondary payer situations. In other words, if a Medicare beneficiary receives a settlement which includes an MSA which is intended to pay for the beneficiary’s prescription as it relates to the underlying injury, the Part D plan under CMS’ MSP directives should be refusing to pay for that drug and the beneficiary should be billing their MSA for that prescription drug instead.

CMS has also recently this year added explanatory fields as it relates to MSAs in its data sharing with Part D plans. Part D plans now know the MSA administrator (if professionally administered, who the professional administrator is, or if self-administered, the beneficiary), as well as who the workers’ compensation carrier/plan is, as well as status codes regarding the approved MSA and the amount approved.

Notwithstanding, we can expect that Part D plans will be more aggressive in coordinating benefits in situations where a claimant has received an MSA and then expects the Part D plan to pay for the injury-related drug. The Part D plan will now reject the claim and direct the beneficiary to bill their MSA for the prescription.

This intended policy change by Part D plans highlights the importance of accurate allocation prescription drugs in an MSA, as well as ensuring any Part D plan conditional payments have been resolved at the time of settlement. CMS is clearly looking to increase enforcement of the MSP to ensure the longevity of the Trust Fund.

Direct any questions on this policy update to Heather.Sanderson@francosignor.com.


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