January 2015 Retiree Drug Subsidy (RDS) Community Information Group (CIG) Webinar: Best Practices for Reconciliation Success

The Retiree Drug Subsidy (RDS) Community Information Group (CIG) hosted a webinar on Wednesday, January 7, 2015 to assist the Plan Sponsor community in understanding and completing the Reconciliation process.

The webinar covered the following topics:

Review these topics for a summary of the information presented, as well as links to recommended resources.

Webinar Topics:

Introducing the RDS Secure Website Support Request

Participants were shown a preview of the new RDS Secure Website support request form. The form is accessible from anywhere in the RDS Secure Website and allows users to report an issue or ask CMS' RDS Center a question. Users choose from a list of topics and questions/issues, and enter details for their request. When the request is submitted, CMS' RDS Center sends an acknowledgement email containing a unique Reference Number. CMS' RDS Center responds to the request within one business day. Responses are made through email, phone call, or both.

For additional information about support requests, including tips for submitting requests and step-by-step instructions to submit or reopen a support request, review the announcement RDS Secure Website Support Requests Now Available.

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Completing the Reconciliation Process

Participants were provided an overview of Reconciliation Steps 5-12, Quick Access Reports, and the Mandatory Payment Reduction.

Step 5: Start Preparation of Reconciliation Payment Request

In Step 5: Start Preparation of Reconciliation Payment Request, the Plan Sponsor allows final cost reporting. The Account Manager or Designee with Request Payment privilege may complete the step. The Authorized Representative has "View Only" access. To complete Step 5, Payment Setup (Step 2) and Step 4 must be complete. Once Step 5 is complete, the status of the application will change to "Reconciliation Cost Reporting Open," and final costs will be accepted from all reporting sources.

Participants were shown what is needed to prepare final costs:

  • The final Covered Retiree List (CRL) agreed to in Step 4: Finalize Covered Retirees: The final CRL must be communicated to Cost Preparers.
  • Gross Retiree Costs per Qualifying Covered Retiree (QCR), Benefit Option, and Plan Month: Cost Preparers must only include Gross Retiree Costs for the QCRs, Benefit Options, and Subsidy Periods listed on the final CRL. Cost Preparers will use the information on the CRL to compute Gross Retiree Costs from QCRs prescription drug claims. To be eligible, the drug cost(s) must be:
    • Covered under Medicare Part D and not reimbursable under Medicare Part B.
    • Incurred on or within the Subsidy Period Effective Date and Termination Date for each QCR listed on the CRL.
    • Paid by the plan, the QCR through out-of-pocket co-pay or deductible, or a combination of the two.
  • Cost Threshold and Cost Limit based on Plan Year End Date: The Cost Threshold and Cost Limit for the plan year will be applied to the calculated Gross Retiree Cost for each QCR to calculate the individual's Threshold Reduction and Limit Reduction for the Plan Month. Only the costs between the Cost Threshold and Cost Limit are eligible for subsidy.
  • Coordinated individual retiree costs: Plan Sponsors are required to coordinate an individual's retiree cost data (Gross Retiree Cost, Cost Threshold, and Cost Limit) in the following situations:
    • Multiple Cost Reporters are reporting costs for a single Benefit Option
    • The QCR is enrolled in more than one Benefit Option on the same application
    • The QCR has more than one subsidy period for the same Benefit Option
  • Actual Cost Adjustment per Benefit Option and Plan Month: At Reconciliation, actual (as opposed to estimated) cost adjustments must be reported. Cost adjustments are the discounts, chargebacks, rebates and other price concessions given by the manufacturer or pharmacy to the Plan Sponsor. Cost adjustments are applied to eligible costs between the Cost Threshold and Cost Limit and reported by Benefit Option and Plan Month. Cost adjustments are not eligible for subsidy.

Step 6: Manage Submission of Final Cost Reporting

In Step 6: Manage Submission of Final Cost Reporting, the Plan Sponsor manages and reports final costs and closes final cost reporting. The Account Manager or Designee with Request Payment privilege may complete the step. The Authorized Representative has "View Only" access. To report final costs, Step 2 (Payment Setup) must be complete, and the application must be in "Reconciliation Cost Reporting Open" status. When Step 6 is complete, a cost report is submitted and accepted for each Benefit Option included in interim payment request(s), and no cost report is in "Saved" status.

Participants were advised of the difference between a Cost Reporter and a cost reporting source/method, as well as where in the RDS Secure Website to view and report final costs and view previously reported costs. Additionally, some common cost reporting errors were reviewed, such as the application is not in "Reconciliation Cost Reporting Open" status; Payment Setup is incomplete or the Vendor is not set up on the application/Benefit Option; and costs exceeded maximum amounts.

Managing Cost Reporting With Quick Access Reports

Participants were encouraged to use Quick Access Reports (QAR) to assist with cost reporting. QAR assist and accelerate the cost reporting activities of Vendors and Plan Sponsors by delivering consolidated cost reporting information. QAR consist of two reports: 1) the Cost Reporting Summary Report, which displays all applications by Benefit Option that are within 90 days of their Reconciliation Deadline, and 2) the Cost Reporting Exception Detail Report, which displays warning and errors detected on Mainframe cost reports submitted by the Vendor. To learn more about QAR and how to subscribe to them in the RDS Secure Website, refer to the Quick Access Reports (QAR) User Guide.

Completing Cost Reporting

When completing cost reporting, participants were advised to consider the following questions:

  • Are costs reported for all expected Benefit Options?
  • Are costs reported for each Benefit Option included in an interim payment?
  • Are any reports in "Mainframe: Errors Detected" status? If so, do those costs need to be re-reported? Has a previous final report for the same costs been accepted, or has a different Cost Reporter reported those costs?
  • Any reports in "Data Entry: Saved" status? No reports can be left in this status.
  • Are there multiple sources for the same Benefit Option? If so, will a cost report need to be rejected in Step 7?

Final cost reporting can be reopened any time after Step 6 is complete and before Step 12 is complete.

Step 7: Review Final Costs

In Step 7: Review Final Costs, costs must be reviewed to ensure final costs are accurate, complete, and not duplicated. The final costs accepted in Step 7 will determine the final subsidy amount. The Account Manager or Designee with Request Payment privilege may complete Step 7. The Authorized Representative has "View Only" access. To review final costs, cost reporting must be closed, and Payment Setup (Step 2) must be complete. To complete the review of final costs, all errors detected in this step must be resolved, and the Plan Sponsor must indicate that all Benefit Options have been reviewed by selecting a checkbox.

Considerations When Reviewing Final Costs

When reviewing final costs, investigate any reports submitted after cost reporting closed. Also consider any warning conditions such as multiple sources submitted cost reports, and a Mainframe cost report was submitted after costs were reviewed. All cost reports successfully submitted in Step 6 are edited upon initial entry into Step 7. If errors are detected, error messages will display, and the Plan Sponsor will not be permitted to complete Step 7. To resolve the errors, specific cost reports may be rejected or cost reporting may be reopened. If a cost report is rejected, it is excluded from the final Reconciliation payment request and further editing in Step 7.

Scrutinizing Cost Reports

Participants were encouraged to scrutinize the following items before signing off on final costs:

  • Consider the average costs per retiree compared to the last interim payment or last year. Are there significant increases and decreases?
  • Are there missing cost adjustments?
  • Are there duplicate costs?
  • The Threshold Reduction is usually higher at the beginning of the year. Was the Threshold met for every QCR contributing to Gross Eligible?
  • Consider the Limit Reduction, specifically, if there is a Limit Reduction for every QCR with claims exceeding the Cost Limit. The Limit Reduction is higher near the end of the year as QCRs meet the Cost Limit (see more fluctuation with a small number of retirees).
  • Is there a significant change in retirees without changes in costs from the last interim payment or last year's application?
  • Consider the retirees in multiple Benefit Options to ensure Thresholds and Limits were coordinated.
  • Review the calculation for Estimated versus Actual Cost Adjustments to ensure the calculation method was adjusted as needed.

Step 8: Enter Revisions to Final Costs

In Step 8: Enter Revisions to Final Costs, the Plan Sponsor ensures that all individual retiree costs have been accurately coordinated, and no revisions to final costs are necessary before proceeding with finalizing the Reconciliation payment request. The Account Manager or Designee with Request Payment privilege may complete Step 8. The Authorized Representative has "View Only" access.

Step 9: Finalize Reconciliation Payment Request

In Step 9: Finalize Reconciliation Payment Request, the calculated subsidy amount is verified. The Account Manager or Designee with Request Payment privilege may complete Step 9. The Authorized Representative has "View Only" access.

Participants were encouraged to review costs carefully—the amounts are displayed in the Reconciliation payment request that the Authorized Representative approves or rejects. If changes need to be made to final cost data, revisit Step 6 (Steps 7-9 will need to be recompleted). If the Authorized Representative rejects Step 12: Reconciliation Payment Request, Step 9 will be marked "Incomplete."

Step 10: Review Electronic Funds Transfer (EFT) Information and Step 11: Approve Electronic Funds Transfer (EFT) Information

In Steps 10 and 11, Electronic Funds Transfer (EFT) information is finalized. The Authorized Representative, Account Manager, or Designee with both Request Payment and EFT privileges reviews the EFT information in Step 10. Only the Authorized Representative may approve the EFT information in Step 11. The Account Manager and Designee with both Request Payment and EFT privileges have "View Only" access to Step 11.

If there are no changes to EFT information, Step 11 is automatically completed, and CMS' RDS Center sends the Authorized Representative an email alert. If there are changes to EFT information, CMS' RDS Center sends the Authorized Representative an email to complete Step 11. If the Authorized Representative rejects EFT information, an email alert is sent to the Account Manager and Designee.

Step 12: Review and Submit Reconciliation Payment Request

In Step 12: Review and Submit Reconciliation Payment Request, the Authorized Representative reviews the final payment and either submits or rejects the Reconciliation request. The Account Manager and Designee have "View Only" access.

To complete Step 12, Steps 1 – 11 must be completed, Authorized Representative Verification must be complete, and the Reconciliation Deadline must not have passed. If the Authorized Representative rejects the request, Steps 9 – 11 will need to be recompleted. The Reconciliation Deadline is met once Step 12 is complete.

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Mandatory Payment Reduction

Participants reviewed the effect of the Mandatory Payment Reduction on Reconciliation final payments. Only RDS applications with a plan year that includes April 2013 and beyond are affected by the reduction. The 2% payment reduction is applied at the month level and only applies to plan months of April 2013 and beyond. Applications that have a Plan Year End Date on or before March 31, 2013 are not affected.

The subsidy calculation remains at 28% of the Allowable Retiree Costs (ARC). The mandatory 2% payment reduction is applied to the calculated Subsidy Amount for final costs incurred in April 2013 and beyond. Cost reporting is unaffected. Cost data continues to be aggregated and reported by Plan Month.

Participants were shown how the reduction is displayed in the RDS Secure Website. The reduced subsidy amount will display in the Subsidy Amount column of the Current and Net rows beginning in Reconciliation Step 7. In Step 8, the reduction will appear in the Current and Net Subsidy amounts. The Net Subsidy will be shown as the Reconciliation payment request in subsequent steps of the Reconciliation Checklist. Step 9 displays the amount of the Reconciliation payment request. This amount is equal to the Net Subsidy Amount and includes the reduction. The Amount of Reconciliation Payment Request displayed in Step 12 includes the reduction.

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Understanding an Overpayment

Participants reviewed overpayment conditions, as well as how to identify and satisfy an overpayment. At Reconciliation, an overpayment exists when the sum of interim payment requests exceeds the current subsidy amount based on the most recent Allowable Retiree Costs and the Mandatory Payment Reduction. In addition, if a Plan Sponsor fails to meet the Reconciliation Deadline for an application and has received interim payments, the sum of those payments will become overpayments.

If an application is in an overpayment situation, the Amount of Reconciliation Payment Request and Net Subsidy Amount in Step 12 display a negative amount. The Plan Sponsor will be notified of the overpayment through email.

CMS' RDS Center will deduct an overpayment from any positive interim payment requests or any positive final payment requests on another application with the same Plan Sponsor ID. Overpayments can be satisfied by check or money order only; funds are due immediately upon notification.

If the Plan Sponsor has received an Overpayment Notification Email and has requested an appeal, it must remit payment. Until an appeal decision is made by CMS' RDS Center, the Overpayment Notification Email is considered the final Reconciliation determination, and payment must be remitted based on that determination. CMS reserves the right to refer outstanding amounts to the U.S. Department of Treasury for collection. In addition, interest may be assessed on the outstanding balance.

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Helpful Resources

Participants were provided links to helpful Reconciliation resources on the RDS Program Website:

General Reconciliation

Mandatory Payment Reduction

Mandatory Payment Reduction in CMS' Retiree Drug Subsidy Reconciliation Payments: Refer to this document to learn more about which Reconciliation payment requests are affected by the reduction and how the reduction is applied.

Cost Preparation and Reporting

Overpayments

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