CMS Compliance: Prescription Drug Events (PDEs) Reporting and Reconciliation

By Derek Frye
Thu, Aug, 22, 2019

Recent CMS compliance activity related to Prescription Drug Events (PDEs) record keeping and reporting is creating new headaches for some Medicare Advantage (MA) and standalone Prescription Drug Plans (PDPs). As a result, more are starting to consider conducting PBM audits on the PDE reconciliation process to avoid running afoul of regulators.

MAs and PDPs plans typically submit prescription drug claims bi-weekly to CMS, which uses the data to reimburse plans, project future cost sharing amounts, and identify which plans need a CMS audit. Medicare plans must constantly update this data to ensure accuracy. If CMS thinks the data is not accurate or valid, the agency can deny paying future claims and revoke payment for previously paid claims.

Medicare plans have become savvier at improving the accuracy of their PDE data over time. But as we predicted in 2017, CMS has issued new requirements related to PDE reporting and reconciliation. CMS now audits the financial records of one-third of all Medicare Advantage organizations each year – and has asked that plans self-audit in select new categories of drugs. As a result some plans are enlisting additional support and expertise to avoid the risks of CMS compliance Civil Money Penalties (CMPs).

in early 2019, CMS issued requests to some Medicare plans to conduct self-audits of specific data universes used as part of the PDE reconciliation process and provide the agency with specific claims documentation. This is to determine if certain drugs may have been inappropriately billed to Medicare Part D. Here is what CMS compliance officials requested:

  • Creation of a new data universe for hospice drugs used to control pain related to terminal illness. These drugs include opioid analgesics, anti-anxiety drugs, anti-emetics, and laxatives. Such drugs should often be billed to Medicare Part A.
  • Creation of a new DME drugs data universe for drugs used with a nebulizer or other piece of durable medical equipment (DME). Drugs administered through a Medicare-covered nebulizer should qualify for payment under Part A or Part B.
  • Creation of two new data universes related to immunosuppressant drugs: One for Medicare Part A-covered organ transplant recipients and one for kidney transplant recipients covered under Medicare’s End Stage Renal Disease (ESRD) program. Such drugs also generally should not be billed to Medicare Part D.

CMS compliance staff asked for this information to see where health plans – often via their PBM – are incorrectly processing claims under Part D. It is not clear yet whether CMS compliance officials will impose fines or other penalties on these plans for incorrect Part D billing. However, the action serves as a roadmap for how CMS compliance staff plan to address this area moving forward.

Another key area of concern for health plans involves how CMS compliance professionals use PDE data submitted by plans for its annual financial reconciliation processes. This is increasingly important because of CMS changes to important Medicare drug benefit thresholds (Initial Coverage Limits or ICLs, Medicare coverage gap or donut hole, manufacturer gap discount calculations, and catastrophic limits).

The bottom line: As we predicted two years ago, CMS compliance staff have increased regulatory focus on PDE reporting and reconciliation. So now is a good time for health plans to consider conducting a PBM PDE audit.

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