Navigating Reconciliation: Timely Tips and Reminders

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March is historically the busiest month for Plan Sponsors completing the Reconciliation process for their RDS applications. Review the following tips and reminders to help prepare for the Reconciliation process and navigate through some of the most common issues reported to CMS' RDS Center.

Before You Start…

1) Know the Reconciliation Deadline

The Reconciliation Deadline is approximately 15 months after an application’s Plan Year End Date. The Reconciliation Deadline displays in the Details box on all Reconciliation pages including the Reconciliation Checklist page. The Reconciliation Deadline may also be viewed from the Application Status page, any page that displays the Application Information box, or the Benefit Option Final Cost List page. For a list of common Reconciliation Deadlines, visit Important Reconciliation Deadline Information. It is recommended that Plan Sponsors allot at least 90 days prior to the deadline to focus on Reconciliation activities.

If the Reconciliation Deadline is missed, additional time will not be granted. Interim payments will become overpayments, and CMS will initiate immediate overpayment recovery action. The Plan Sponsor will no longer be eligible for subsidy payments.

2) Ensure All Desired Interim Payments Have Been Requested

Once Reconciliation is initiated, it cannot be undone, and interim payments may no longer be requested. The RDS Secure Website prevents users from requesting an interim payment in the final 60 calendar days prior to an application’s Reconciliation Deadline. However, if there are more than 60 calendar days left before your application’s Reconciliation Deadline and you wish to request an interim payment, keep in mind that Reconciliation cannot be initiated if there is a pending interim payment request.

If there is a pending interim payment request in process and the Plan Sponsor feels it doesn’t have ample time to complete Reconciliation, it may contact CMS' RDS Center to cancel the payment request. Refer to the Common Question How may a Plan Sponsor request cancellation of a payment request? for instructions. The costs included in the canceled interim payment request can then be included in the Reconciliation payment request; however, only final costs are reported during Reconciliation.

3) Get Key Players in Place

The Account Manager and the Authorized Representative are required users to complete the Reconciliation process. Designees (either associated with the Plan Sponsor or a third party) are optional users that may also be involved to complete certain tasks. Before beginning Reconciliation, it’s important to ensure all of the proper users are assigned. Plan Sponsors should verify that Account Manager and Authorized Representative user accounts are active, and that the individuals in those roles will be available to complete their assigned tasks on time. If Designees will be assisting with the Reconciliation process, ensure those individuals have been invited to the application with the appropriate privileges and have registered in the RDS Secure Website.

Note: It’s imperative that all key players involved have up-to-date email addresses on record with CMS' RDS Center. CMS' RDS Center’s official means of communication is through email. Email notifications are sent during the Reconciliation process to alert key players regarding tasks such as retiree processing and banking information updates.

In addition to the required roles that complete Reconciliation tasks in the RDS Secure Website, Plan Sponsors should ensure they are aware who will be preparing, coordinating, and submitting cost information. These parties may be Pharmacy Benefit Managers, claims processors, third party administrators, and benefit coordinators who provide information needed to complete Reconciliation, but may not necessarily log in to the RDS Secure Website.

4) Don’t Change EFT When Close to Beginning Reconciliation

Changing your application's banking information close to your planned start date could delay the process. To begin Reconciliation, an application must be in "Approved" status. Changing the application's banking information prior to Reconciliation changes the application's status to "EFT Resign." The application remains in this status until the Authorized Representative re-signs the Plan Sponsor Agreement. Once the Authorized Representative re-signs the agreement, the application's status changes to "Submitted" until the new Electronic Funds Transfer (EFT) information is verified. Waiting for EFT verification could delay the start of Reconciliation by another 5 to 7 days.

EFT information is reviewed and approved in Steps 10 and 11 of the Reconciliation process, so Plan Sponsors have an opportunity to update this information prior to submitting the Reconciliation payment request in Step 12.

5) Manage Your Retirees Early

CMS' RDS Center has found that a lot of Plan Sponsors who are able to complete Reconciliation smoothly and on time manage their retirees throughout the application plan year, not just at Reconciliation. Before beginning Reconciliation, request a Covered Retiree List. Compare it to your records for any discrepancies, and send CMS' RDS Center an updated retiree file if needed. Review Retiree Response Files and Weekly Notification Files for changes to beneficiaries.

Costs may only be reported for the beneficiaries, benefit options, and subsidy periods listed in the Covered Retiree List—the Covered Retiree List always wins. Managing retirees and verifying the Plan Sponsor’s records and CMS' RDS Center’s records are in sync will help smoothly finalize retirees in Steps 3 and 4 and accurately report costs in Step 6. Once retirees are finalized, retiree information should be sent to cost preparers to begin preparing costs.

Once Reconciliation Is Initiated…

1) Ensure Payment Setup is Complete

The Account Manager or Authorized Representative complete Step 2: Review Payment Setup to review the cost reporting and payment request privileges needed for Reconciliation. Once Reconciliation is initiated, Payment Setup can only be accessed through the Reconciliation Checklist. Payment Setup should be updated if there are changes to the Plan Sponsor's methods, sources, or Cost Reporters that were used for interim cost reporting.

Ensuring Payment Setup is complete and that the proper relationships have been established will help Step 6: Manage Submission of Final Cost Reports go more smoothly. If Payment Setup is incomplete, costs cannot be entered on the RDS Secure Website, and Vendor Mainframe cost reports will be rejected. Ensure all six steps in the Payment Setup menu are marked complete.

Some common mistakes in Payment Setup include not assigning a Vendor to a Benefit Option and not attaching Designees to a Vendor. If a Vendor is not assigned to a Benefit Option, Mainframe cost reports will be rejected. If Designees are not attached to a Vendor, the RDS system assumes a Designee is assigned to the Plan Sponsor. Data Entry cost reports are then inaccurately assigned to the Plan Sponsor source. Also, Plan Sponsor Designees do not have access to Vendor Mainframe cost reports. Work with your Vendor to determine Designees and establish the proper Cost Reporter relationship in Payment Setup.

Note: If the Plan Sponsor is switching Vendors, it cannot delete the old Vendor, only add the new Vendor. Be sure to coordinate Thresholds and Limits if multiple sources are reporting for the same retirees. During Payment Setup, add the Vendor to the application, assign Designees, and attach Designees to Benefit Option(s). Once Payment Setup is complete, notify the Vendor and monitor reports.

For more information on completing Step 2, refer to Step 2: Review Payment Setup.

2) Troubleshoot Completing Step 4: Finalize Covered Retirees

If you are an Account Manager or Authorized Representative and are unable to check the box acknowledging that you have downloaded and reviewed the Covered Retiree List from Step 3, keep in mind that the following conditions must be met before Step 4 can be completed:

  • A Covered Retiree List must be requested since the last response file or notification file was created. If this has not occurred, the following warning appears in red at the top of the Step 4: Finalize Covered Retirees page: "A Retiree Response File or Weekly Notification File was created after the last Covered Retiree List was created. You must request another Covered Retiree List before you can finalize Reconciliation Step 4."
  • Note: During Reconciliation, the Covered Retiree List must be requested in Step 3: Request List of Covered Retirees, not outside of Step 3.
  • The last requested Covered Retiree List must be created. If this has not occurred, the following warning appears in red at the top of the Step 4: Finalize Covered Retirees page: "A new Covered Retiree List was requested and will not be available for download until the next business day. Step 4 cannot be finalized when there is an outstanding Covered Retiree List request." (Note: Covered Retiree Lists are now available for download within approximately 15 minutes from the time of the request. This warning message will be updated at a later date.)
  • The last created Covered Retiree List has been downloaded. If this has not occurred, the following warning appears in red at the top of the Step 4: Finalize Covered Retirees page: "A new Covered Retiree List is available for download. Step 4 may not be completed until the Covered Retiree List has been downloaded."

To download the Covered Retiree List, select the link to "Download Covered Retirees" on the Step 4: Finalize Covered Retirees page.

For more information on completing Step 4, refer to Step 4: Finalize Covered Retirees.

3) Troubleshoot Completing Step 6: Manage Submission of Final Cost Reports

In Step 6, final costs are reported for the application. Here are some common errors that could occur when reporting costs and the corrective actions that you can take:

  • The application is not in "Cost Reporting Open" status. To resolve this issue, either complete Step 5, or, if Step 5 is already complete, return to Step 6 to reopen cost reporting.
  • Payment Setup is incomplete. If payment setup is incomplete or the Vendor was not added to the application or Benefit Option, you must return to Step 2 before attempting to submit another cost report.
  • Costs exceeded the maximum amounts. This error occurs when either costs or retirees are inaccurate. The maximum threshold reduction or gross eligible costs exceed what is allowable based upon the number of Qualifying Covered Retirees. This can occur when costs are typed incorrectly, compiled inaccurately, or the Plan Sponsors is missing Qualifying Covered Retirees. Inaccurate costs can also occur when the Covered Retiree List is not communicated or processed by the Cost Preparer or individual retiree costs are not properly coordinated. To correct this issue, you must re-enter or resubmit correct costs or return to Step 4 to reopen retiree processing.
  • When multiple cost reporters are supplying costs for a single Benefit Option, a warning will be given in Step 6 if the combined costs of both reporters exceed the maximum allowed amounts but their individual cost reports do not exceed allowable costs.
  • Mainframe cost reports were rejected. If you are reporting by Mainframe transmission, you want to check a few things before resubmitting the cost report:
    • Look in the Audit Trail or, if you are subscribed to Quick Access Reports, pull the summary and detail report. Both of these sources will tell you why the report was rejected, although Quick Access Reports will provide much more detail.
    • When was the cost report submitted? Was the cost report submitted before cost reporting opened or after cost reporting closed?
    • Was another final cost report previously submitted with the same costs? Was that cost report accepted? CMS' RDS Center frequently sees that Vendors will submit the same cost report multiple times. Although the last report was rejected, was a previous report accepted when cost reporting was opened?

Note: Consider using Quick Access Reports (QAR), which assist and accelerate the cost reporting activities of Vendors and Plan Sponsors by delivering consolidated cost reporting information.

For more information on completing Step 6, refer to Step 6: Manage Submission of Final Cost Reports.

4) Troubleshoot Completing Step 7: Review Final Costs

In Step 7, costs are reviewed to ensure final costs are accurate, complete, and not duplicated. Final costs from all reporting sources are examined for errors in this step. In December 2015, a new edit was introduced into the RDS system that produces an error if the reported Gross Eligible costs exceed the total maximum Gross Eligible amount possible for the application based on the number of retirees contributing to the Threshold Reduction. Instructions to resolve this error as well as an example are located in the Prepare Cost Data section of the RDS User Guide.

All errors must be resolved and all warnings reviewed before Step 7 can be completed.

For more information on completing Step 7, refer to Step 7: Review Final Costs.

Reconciliation Resources

The following resources are available on the RDS Program Website to help Plan Sponsors successfully complete the Reconciliation process:

If you have questions or need additional information, contact CMS' RDS Center