Life Science Compliance Update

November 07, 2017

MedPAC Discusses Part D Exceptions and Appeals Process


On October 6, 2017, the Medicare Payment Advisory Commission (MedPAC) met for its October meeting, where it discussed recent information about Medicare Part D exceptions and appeals. Also discussed were the potential benefits and obstacles to the adoption of electronic tools, such as real-time prescription benefit checks and electronic prior authorization that have the potential to reduce the need for the exceptions and appeals process.

MedPAC commissioners were supportive overall for the adoption of electronic tools to streamline efforts, but stopped short of making specific recommendations due to lack of reliable data.

MedPAC Senior Analyst Jennifer Poldulka outlined the exceptions and appeals process for Medicare Part D beneficiaries, noting that enrollees may request a formulary or tier exception for purchase of a specific drug. She said that plans are required to report data on transactions that are rejected at the point of sale and outcomes of the determination and redetermination appeal steps. Ms. Poldulka said that few pharmacy transactions are appealed to plans for coverage determinations or redetermination and that the plan decisions typically favor the enrollee, based on 2015 data.

It was noted that the most common Part D pharmacy transaction rejections happen when a drug is classified as a non-formulary drug. Ms. Poldulka found that only five percent of redeterminations were appealed to the Independent Review Entity (IRE), and that the IRE usually upholds plans’ redetermination decisions. However, Ms. Poldulka cautioned that not all Part D plan data must be reported, and that some data that is reported does not pass CMS data validation standards. She also mentioned that MedPAC found variations in reported pharmacy transaction rejections and determinations, redeterminations, and IRE outcomes.

MedPAC Research Assistant Emma Achola highlighted four electronic prescribing tools that can be used to help streamline the exceptions and appeals process:

(1) electronic prescribing (eRx);

(2) formulary look-up;

(3) real-time prescription benefit (RTPB) check and;

(4) electronic prior authorization (ePA).

Ms. Achola focused on ePA, noting that it is the most complete option, though there are “significant” obstacles with full adoption of ePA. She said that in order for ePA to operate efficiently, multiple actors within the healthcare system must effectively coordinate. She pointed out that the large number of electronic health record (EHR) and ePA vendors make data integration difficult. Additionally, she cautioned that clinicians may bear additional costs and must embrace practice pattern changes in order for an ePA model to succeed.

Commissioner Discussion

Commissioner Jack Hoadley of Georgetown University highlighted the need for a “good, effective” solution to the appeals process and that data limitations make it difficult to make sense of what the numbers actually mean. He was supportive of ePA, noting that he is encouraged by the technology and believes that it can be a “good route” to improving the exceptions and appeals process.

Commissioner Amy Bricker of Express Scripts called for a requirement centered around eRx. She noted that eRx gives the clinician more control and provides an effective solution for all parties involved. Ms. Bricker said that she is a big proponent of ePA, noting that it’s a “great” way to solve issues such as delays and physician workload, but that there would need to be an adequate incentive model for physicians to participate.

Commissioner Pat Wang of Healthfirst complimented the array of electronic tools that are available. She noted that the key issue is integration of planned formulary rules into EHRs so that the data is found on one platform, saying that the only way to get full adoption of ePA is to make it as easy as possible for the prescriber. She encouraged more discussion about the technology that currently exists within EHR vendors, and how it can be properly integrated into ePA.

Commissioner Dana Gelb Safran of Blue Cross Blue Shield of Massachusetts and Commissioner Kathy Buto both spoke to their support of ePA. Commissioner Craig Samitt of Anthem said that prior authorization is an area of “angst,” noting that it is a costly process for also supports ePA, but cautioned that finding a method to both mandate and incentivize these techniques raises issues. Mr. Samitt encouraged a broader conversation as to the best ways to advocate for eRx and ePA, questioning if there is an existing business model that captures this successfully.

Commissioner Rita Redberg of UCSF called the process for eRx “strenuous” and “not user friendly. She noted that it is likely that doctors would retire before they adjust their practices to account for technological disruption. Dr. Redberg also said that there are much bigger issues within prior authorization that are of concern to physicians and beneficiaries.

October 26, 2017

House Passes Medicare Part B Improvement Bill


Earlier this year the U.S. House of Representatives passed a bipartisan bill, the Medicare Part B Improvement Act of 2017. The bill would amend the Stark Law (Section 1877(h)(1) of the Social Security Act) and impact other provisions governing Medicare Part B. It is now in the hands of the Senate for further action.

The bill would codify Stark Law changes previously made by the Centers for Medicare and Medicaid Services in the Medicare Physician Fee Schedule that took effect on January 1, 2016.

Additionally, the bill would:

  • provide that the writing requirement for certain compensation arrangements may be satisfied by means determined by the HHS Secretary, including “a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties;”
  • to include provisions for “indefinite” holdovers involving certain personal service arrangements and leases of office space or equipment;
  • and to provide for up to 90 days to obtain missing signatures in certain compensation arrangements that have become noncompliant.

The bill also contains provisions relating to dialysis facilities, including: expanded access to home dialysis through the use of telehealth for monthly end stage renal disease (ESRD) visits, and providing for the survey and accreditation of dialysis facilities by accreditation bodies approved by the Secretary.

Additionally, the bill would provide a temporary transitional payment methodology for home infusion therapy services, under which home infusion drugs would be assigned to three payment categories, and each category would be designated a single payment amount and billed with Healthcare Common Procedure Coding System (HCPCS) codes specified in the bill.

The bill would also provide that the documentation created by an orthopedist or prosthetist would be considered part of the medical record to support a determination that orthotics and prosthetics are reasonable and medically necessary.

October 25, 2017

OIG Faults CMS for Improper Payment Rates


Under the Improper Payments Information Act of 2002, as amended, the Department of Health and Human Services (HHS) is required to annually report on improper payments and meet certain improvement metrics. In a report released last fall, HHS identified approximately $96.9 billion in gross improper payments in fiscal year (FY) 2016.  $90 billion of this money were found to be overpayments.

On May 16, 2017, the HHS Office of Inspector General (OIG) released a report examining these improper payments to determine HHS’s compliance with the statute.  In violation of the statute, the improper payment rates for both Medicare fee-for-service and Medicaid exceeded 10 percent in FY 2016. The OIG also found that HHS did not meet its improper payment reduction goals for the Medicare Advantage program and the Children’s Health Insurance Program (CHIP).

OIG Report

In the OIG findings, HHS largely agreed with what was reported. Working with Ernst & Young, it was determined HHS met many requirements but did not fully comply with IPIA. Among the items required for compliance with IPIA, EY determined HHS published the AFR for fiscal year (FY) 2016, conducted risk assessments for 22 programs deemed not susceptible to improper payments and determined the programs were not at risk for them, and published corrective action plans for 7 of the 8 programs OMB deemed susceptible to significant improper payments and all 5 programs deemed susceptible to significant improper payment under the Disaster Relief Appropriations Act (DRAA) (P.L. No. 113-2) that had not expended all funds by FY 2016.

EY concluded that HHS did not comply with several IPIA requirements. EY found HHS did not report an improper payment estimate for the Temporary Assistance for Needy Families program. EY also determined HHS did not achieve an improper payment rate of less than 10 percent for the Medicare Fee-for-Service and Medicaid programs; did not meet improper-payment-rate reduction targets for the Medicare Advantage program, the Children's Health Insurance Program, and the Foster Care program; and did not conduct recovery audits for the Medicare Advantage program.

OIG Recommendations

According to the OIG, HHS has not fully addressed recommendations from the prior years’ OIG performance audits related to improper payments, including the need to provide an improper payment estimate and corrective action plan for TANF, meet certain improper payment rate reduction targets, and reduce improper payment rates to below 10%. Addressing these recommendations would improve HHS’s compliance with the IPIA, as amended, including compliance issues identified in the current findings.

Some of the recommendations include:

  • HHS first focus on implementing an approach to reporting on TANF improper payment as this process will aid in identifying root causes of TANF improper payments. However, OIG recommends that HHS develop and publish corrective action plans after implementing an approach.
  • OIG recommend that HHS and ACF continue working with states to (1) provide technical assistance and training related to policy updates and (2) support the Foster Care program in reaching its overall reduction goal target through appropriate implementation of corrective action plans at the state-level.
  • OIG recommend HHS proactively take action throughout the fiscal year to achieve its established improper payment target rates. Medicare Advantage did not achieve the target rate mainly due to insufficient documentation by third parties, and therefore, OIG recommend, for example, that HHS continue to work with the Medicare Advantage plans and providers to communicate the documentation requirements and monitor the adherence to such requirements throughout the year.
  • In addition, CHIP did not achieve its target rate in FY 2016 due to administrative or process errors made by the state or local agencies, and as a result, OIG recommend, for example, that HHS work with the states to bring their respective systems into compliance to implement new requirements.
  • OIG recommend that HHS focus on the root causes for the improper payment rate percentage and evaluate critical and feasible action steps to decrease the improper payment rate percentage below 10%.
  • OIG recommended that HHS focus on the root causes of the improper payment percentage and evaluate critical and feasible action steps to assist states with their compliance efforts for these new requirements.
  • This would include working with the states to bring their respective systems into full compliance with new requirements to decrease the improper payment rate percentage below 10%. In addition, as HHS only reviews 17 states each year for the Medicaid improper payment rate, HHS should continue to follow up with states during the interim period to verify that corrective actions identified after the improper payment error rate measurement review are being implemented.
  • OIG recommend that HHS actively search for RAC contractors for Medicare Advantage (Part C) and finalize the award in a timely manner with the intention to perform RAC audits in FY 2017.


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