This section provides an overview of the following topics regarding Reconciliation:
Reconciliation is a part of an application's lifecycle. This cycle includes the following stages:
Within the lifecycle, User Management and Retiree Management are ongoing processes.
This figure shows how Reconciliation fits into the application lifecycle.
The Reconciliation stage of the application lifecycle consists of 12 process steps which Plan Sponsors are required to complete for each application after the plan year has ended. In Reconciliation, a Plan Sponsor reports the total gross covered retiree plan-related prescription drugs costs including Actual Cost Adjustments (for example, discounts, chargebacks, rebates, and similar price concessions) for a specific plan year. All Benefit Options for which an interim payment has been made within an application must be included in the Reconciliation payment request. The sum of the interim payments is then compared with the final subsidy payment determination for the application. If the sum of the interim payments is larger than the final subsidy payment request for the application, CMS initiates immediate overpayment recovery action, which may include offset against another application.
Note: Each application is reconciled individually and must be reconciled by the applicable Reconciliation Deadline. The Reconciliation process for a given application is independent of any other applications for that Plan Sponsor. Interim cost reports and interim payment requests should continue to be submitted for applications not being reconciled.
Plan Sponsors that chose an annual RDS Payment Frequency, or otherwise did not receive any interim payments, and that wish to receive subsidy, must use the Reconciliation process to submit final cost reports and submit their one and only subsidy payment request. This request consists of the total gross covered retiree plan-related prescription drug costs, Threshold Reduction, Limit Reduction, and Actual Cost Adjustments for the application.
Reconciliation can typically average 90 days to complete all 12 process steps. A successful Reconciliation is often one in which a Plan Sponsor assigns one individual to coordinate the steps and who thoroughly prepares, allocates, aligns, and reviews all necessary resources required to complete the process steps prior to submitting a final payment request. For more information, refer to the Reconciliation Toolkit.
For Plan Sponsors that fail to meet their Reconciliation Deadline for a given application and have received interim payments for that application, the sum of those payments becomes an overpayment, and CMS initiates immediate overpayment recovery action.
Plan Sponsors that fail to meet the Reconciliation Deadline for a given application and have not received interim payments for that application will not be eligible for any subsidy payments for that application. CMS' decision whether or not to afford additional time for Reconciliation or to deny a request for extension of the Reconciliation time limit is not subject to appeal.
A Plan Sponsor is required to complete Reconciliation or submit a final payment request for each application for which they are seeking subsidy. The Reconciliation process should be completed using the RDS Secure Website by the Reconciliation Deadline date.
For a general table of Reconciliation Deadline dates by Plan Year End Date and important Reconciliation information, refer to Important Reconciliation Deadline Information.
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.
To access the RDS Secure Website and navigate to the Reconciliation Checklist page, refer to instructions to access the Reconciliation Checklist.
On the RDS Program Website homepage (http://www.rds.cms.hhs.gov):
View the Reconciliation Deadline in the Details box.
Reconciliation steps are completed by a combination of individuals that include a Plan Sponsor's internal resources (such as the Account Manager, Authorized Representative, and Designee with Request Payment, Report Costs, or View/Send/Receive Retiree Data privilege) along with external resources such as Vendors who may be responsible for cost reporting, as well as the Centers for Medicare & Medicaid Services’ (CMS'), and a Plan Sponsor's banking institution.
The Reconciliation Overview is also beneficial for a Plan Sponsor's designated Vendors that may be performing key tasks in the Reconciliation process.
For more information about user roles in Reconciliation, refer to User Roles and Responsibilities in the Reconciliation Steps.
A Plan Sponsor must always have an active Account Manager and an active Authorized Representative. The Account Manager and Authorized Representative are required to complete critical steps during Reconciliation. While the individuals acting in these roles can be changed, the new Account Manager or Authorized Representative must complete the Registration process in order for the Plan Sponsor to complete Reconciliation.
Federal Security Regulations require that a user log in to CMS' RDS Secure Website (SWS) at least every 180 days to maintain an active account. Active user accounts are required to perform many tasks in the RDS Program, including completing and submitting applications and completing Reconciliation.
Updated Federal security policies also require that each RDS Secure Website account must activate and maintain Multi-Factor Authentication (MFA) prior to accessing the RDS Secure Website. For an overview and step-by-step instructions for managing your Multi-Factor Authentication (MFA) settings, including your text-enabled device number, refer to Multi-Factor Authentication.
Users with disabled accounts should refer to Enable Your User Account for more information about maintaining an active account, as well as step-by-step instructions to enable their user account.
A Plan Sponsor may also assign other user roles to perform various functions in Reconciliation, such as Designees with the Request Payment privilege, View/Send/Receive Retiree Data privilege, and Report Costs privilege.
Before Reconciliation begins, Plan Sponsors should review the active user roles assigned to each application because each user role has access to various steps within the Reconciliation process. Each user must have a valid email address and should verify their user information before starting Reconciliation. The Account Manager and Authorized Representative must maintain active RDS Secure Website user accounts in order for a Plan Sponsor to receive payment.
For more information about user roles in Reconciliation, refer to User Roles and Responsibilities in the Reconciliation Steps.
For specific instructions on reassigning user roles, refer to User Management.
Reconciliation is a flow of interconnected steps that guide Plan Sponsors to a successful final payment request. The 12 steps are grouped into the following five core phases that demonstrate the information flow and communication between participants in the Reconciliation process: Beginning Reconciliation, Finalizing Retirees, Finalizing Costs, Providing Payment Information, and Approval and Submission of the Reconciliation payment request.
The Beginning Reconciliation phase consists of Step 1: Initiate Reconciliation and Step 2: Review Payment Setup. During this phase, Plan Sponsors and Vendors review their retiree Electronic Data Interchange (EDI) information outside the Reconciliation Checklist in the application.
The Finalizing Retirees phase consists of Step 3: Request List Of Retirees and Step 4: Finalize Covered Retirees. During this phase, Plan Sponsors and Vendors complete the Retiree Data Exchange. Note: During Reconciliation, do not request the Covered Retiree List outside of Step 3, as Step 3 will not be marked complete.
The Finalizing Costs phase consists of Step 5: Start Preparation Of Reconciliation Payment, Step 6: Manage Submission Of Final Cost Reports, Step 7: Review Final Costs, and Step 8: Enter Revisions To Final Costs. During this phase, Plan Sponsors and Vendors complete the final cost reporting.
The Providing Payment Information phase consists of Step 9: Finalize Reconciliation Payment Request and Step 10: Review Electronic Funds Transfer (EFT) Information.
Approving and Submitting the Reconciliation Request is the final phase of Reconciliation. This phase consists of Step 11: Approve Electronic Funds Transfer (EFT) Information and Step 12: Review And Submit Reconciliation Payment Request.
This figure summarizes the linear flow of interconnected steps performed during Reconciliation as outlined in this section.
An RDS application is ready for Reconciliation when the following conditions are met.
All desired interim payment requests have either been processed or canceled. (The maximum number of interim payment requests does not have to be used before initiating Reconciliation.)
Note: A Plan Sponsor cannot have a negative interim payment request when they start Reconciliation. If there is a negative interim payment, and it will not be fully offset by a positive payment request on another application, the Plan Sponsor needs to contact CMS’ RDS Center to initiate the cancellation process.
At least 16 calendar days have passed from the date of the last interim payment determination.
Note: It is recommended that Plan Sponsors stop interim payments at least 60 days prior to an application's Reconciliation Deadline to focus on Reconciliation activities.
The Reconciliation Deadline has not passed.
Note: 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, all pages that display the Application Information box, and the Benefit Option Final Cost List page.
Reconciliation can only be started after the plan year ends. Plan Sponsors should not begin Reconciliation if they intend to submit further interim payments. Also, Plan Sponsors should not submit an interim payment request during the final 60 calendar days before the Reconciliation Deadline.
Note: After Step 1: Initiate Reconciliation is complete it cannot be reversed. Also, once Step 4: Finalize Retiree List has been completed, it may only be reversed by CMS' RDS Center.
For more information, refer to the Reconciliation Toolkit.
During this phase, Plan Sponsors complete Steps 1 and 2. Step 1: Initiate Reconciliation indicates to CMS' RDS Center that a Plan Sponsor is ready to submit their application for payment settlement and that the Plan Sponsor is ready to finalize the Qualifying Covered Retiree List and will complete all financial accounting for beneficiary costs and Actual Cost Adjustments for this application based on the Covered Retiree List. This step can only be completed after an application's plan year has ended. Once this step is complete, it cannot be undone.
During Step 2: Review Payment Setup, the Plan Sponsor reviews and confirms that all payment and cost privileges are assigned as needed to complete Reconciliation.
During this phase, Plan Sponsors complete Steps 3 and 4 of the Reconciliation Checklist. Step 3: Request Covered Retiree List is a vital step whereby the Plan Sponsor requests a list of Covered Retirees that includes a record for each Qualifying Covered Retiree for each Benefit Option for each Subsidy Period that has been approved by CMS' RDS Center. Validation of this list is critical because costs can only be reported for the Qualifying Covered Retirees, Benefit Options, and Subsidy Periods listed in the Covered Retiree List.
During Step 4: Finalize Retiree List, the Plan Sponsor agrees to the Covered Retiree List provided by CMS' RDS Center.
During this phase, Plan Sponsors complete Steps 5 through 8 of the Reconciliation Checklist. In Step 5: Start Preparation of Reconciliation Payment Request, a Plan Sponsor's Account Manager or Designee with Request Payment privilege indicates that the Plan Sponsor is ready for CMS' RDS Center to begin accepting final cost reports for the application.
During Step 6: Manage Submission of Final Cost Reports, the Account Manager or Designee with Request Payment privilege monitors the submission of final cost reports and all reporting sources for the application. The Account Manager is able to enter final cost reports for the assigned Benefit Options and specify that final cost reporting is complete for this application. This then disallows any further final cost reports from being submitted. The completion of Step 6 should be carefully coordinated if there are multiple Cost Reporters associated with the application.
In Step 7: Review Final Costs, the Account Manager or Designees with the Request Payment privilege reviews and confirms all final cost reports for the application and indicates their acceptance of all costs at the Benefit Option level or their rejection of individual cost reports.
To wrap up the Finalizing Costs phase, Step 8: Enter Revisions to Final Costs is completed by the Account Manager or Designee with the Request Payment privilege. Here the Account Manager or Designee indicates if revisions are necessary.
During this phase, Plan Sponsors complete Steps 9 and 10 of the Reconciliation Checklist. In Step 9: Finalize Reconciliation Payment Request, the Account Manager or Designee with the Request Payment privilege agrees to the final payment request in preparation for review by the Plan Sponsor's Authorized Representative.
In Step 10: Review EFT Information, the Account Manager, the Authorized Representative or Designee with both the Complete EFT Information and the Request Payment privileges obtain final confirmation of the EFT Information associated with the application. Before the final Reconciliation payment can be requested, Plan Sponsors must review the current EFT Information listed in the application and compare it to their records.
Finally, Plan Sponsors complete Steps 11 and 12 of the Reconciliation Checklist. During Step 11: Approve Changed EFT Information, the Authorized Representative confirms any changes made to the EFT Information in Step 10. If information was changed in Step 10, the Authorized Representative is required to approve or reject the information during this step. This ensures that the Authorized Representative is aware of where the EFT payment is being sent and provides confirmation of that information.
In Step 12: Review and Submit Reconciliation Payment Request, the Authorized Representative reviews and submits or rejects the Reconciliation final payment request as appropriate. This step may not be initiated until Reconciliation Checklist Steps 1 through 11 are marked as completed before the application's Reconciliation Deadline.
CMS' RDS Center processes Reconciliation payment requests after the payment determination is made. If monies are owed to the Plan Sponsor (the amount is greater than $0), CMS’ RDS Center remits those monies in the form of an Electronic Funds Transfer, just like an interim payment. If the Plan Sponsor has an overpayment (the amount is less than $0) and must remit to CMS’ RDS Center, they will be contacted by email with instructions. All Reconciliation payment requests are processed as timely as possible.
Plan Sponsors should maintain and furnish to CMS or the Office of Inspector General (OIG) upon request, the records enumerated in Federal regulations at 42 C.F.R. 423.888(d). The records are maintained for 6 years, or any other period as specified by CMS or OIG, after the expiration of the plan year in which the costs were incurred for the purposes of audits and other oversight activities conducted by CMS to assure the accuracy of the Actuarial Attestation and the accuracy of payments.
Note: Once the Authorized Representative completes Reconciliation Step 12: Review and Submit Final Payment Request on the RDS Secure Website, a page displays that confirms that Reconciliation has been completed. CMS' RDS Center strongly recommends that you print that page for your records.