CMS Medicare Prescription Drug Benefit Manual Amendments | Verisk

October 24, 2018 / 7 min read

The Centers for Medicare and Medicaid Services (CMS) has amended its Medicare Prescription Drug Benefit Manual (Part D Manual) to add, in part, stronger language regarding Medicare Part D sponsors’ secondary payer rights and recovery.[1] As part of these changes CMS is directing Part D sponsors to ensure processes are in place to effectuate proper secondary payer recovery efforts. Further, the new updates preclude Part D sponsors from paying for a prescription that should be paid under the Medicare Secondary Payer (MSP) provisions or submitting these claims to CMS for payment. If acted upon, these updates could lead Part D plans to more aggressively assert their secondary payer status, either through coverage denial in the first instance and/or increased Part D recovery claims regarding workers’ compensation, liability, and other non-group health claims.

New Changes to Part D Manual Updates

The changes subject to this overview relate to Section 50.12 entitled Applying Medicare Secondary (MSP) Requirements. In this section, CMS sets forth its policies regarding Part D payments in MSP situations.

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CMS’ updates supplement its existing requirements and expectations in terms of Part D secondary payer concepts. For example, existing CMS policy states that “Part D sponsors will have the same responsibilities under MSP requirements as [Medicare Advantage] plans, including collection of mistaken primary payment from insurers, group health plans, employer sponsors, enrollees, and other entities” and that Part D generally makes payment in workers’ compensation, black lung, no-fault, and liability claims, based on the plan’s ability to recover secondary payments if mistaken payments are later identified.

CMS’ new manual additions strengthen the agency’s expectation that Part D sponsors assess potential secondary payer situations and pursue recovery where applicable. In further affirming these established policies, CMS’ new updates indicate that “Part D sponsors are responsible for adjudicating enrollees’ claims in accordance with MSP Requirements.”

Along these lines, CMS added the following verbiage to Section 50.12 further reflecting its efforts to fortify Part D secondary payer awareness and recovery:

Part D sponsors are responsible for identifying and recovering any Coordination of Benefits (e.g. where a Part D sponsor paid for a claim and another payer should have paid), MSP related mistaken payments and submitting associated adjustments to CMS. Recovery of payments when the sponsor determines no payment at all should have been made or the amount paid was more than it should have been should be sought from the responsible other party. Sponsors should implement processes to handle payment resolution in these situations directly with the primary payer or in limited cases with the beneficiary.

The above quoted additions supplement existing CMS policy reflecting that “absent information on the [Coordination of Benefits] file that Part D is secondary for a Part D enrollee, should the sponsor receive a secondary claim, the claim cannot be paid. Instead, the sponsor should determine if the enrollee has coverage that is primary to Medicare and, if so, report this information to the BCRC … to update CMS.”

In addition, the new updates also include verbiage which could be interpreted as preventing Part D payment in the first instance in MSP situations. Specifically, CMS states that “[a] claim for a drug that should be paid as MSP may not be submitted or paid as a primary claim by the Medicare plan.” Depending on how this phrase is interpreted and applied, it will be interesting to see if this provision will result in Part D denial of payment during the course of a claim in situations where another form of insurance is (or is considered by the Part D plan) to be primary.

Part D Recovery: The Bigger Picture

In the wider scope, CMS’ updated Part D manual calls into focus larger questions regarding the nature and extent of Part D recovery rights.

On this point, it is noted that federal statutes and regulations provide that Part D plans have the same recovery rights as Medicare Advantage Plans (MAPs). For example, 42 U.S.C. § 1395w-102(4) states that the recovery rights afforded to MAPs “apply in the same manner” to Part D. Likewise, 42 C.F.R. § 423.462 provides that the same “Medicare secondary payer procedures” that apply to MAPs under § 422.108 also apply to Part D plans. Under § 422.108, MAPs may seek reimbursement from claims payers and other parties in workers’ compensation, liability, and no-fault cases. This regulation further gives MAPs the same recovery rights as traditional Medicare under the MSP. Similarly, in 2011, CMS released a policy memo taking the position that Part D plans have the same recovery rights under the MSP as traditional Medicare.

Another important question to consider is whether Part D plans have “double damages” recovery rights under the MSP’s private cause of action provision—like what their MAP counterparts have been arguing (and prevailing upon) in certain jurisdictions over the past few years. To the author’s knowledge, this precise issue has not yet been litigated regarding Part D. However, at least one court in the MAP context indicated that Part D plans would also enjoy private cause of action rights.

Specifically, as part of the Third Circuit’s decision in the case In re Avandia, 685 F.3d 353 (3^rd Cir. 2012) finding that MAPs enjoy private cause of action rights under federal law, the court stated, in a footnote, that “… our holding on the meaning of the private cause of action will apply equally to private entities that provide prescription drug benefits pursuant to Medicare Part D.” This should certainly be noted when considering Part D lien claims in the Third Circuit, as well as those other jurisdictions that have cited the Avandia decision favorably on this point.

Looking Forward: CMS’ Updates Impact on Claims

It is unknown just yet what impact CMS’ updates may have on actual Part D collection efforts at the claims level— although it is quite evident that CMS is directing (and expecting) Part D sponsors to focus on recovery and collection in MSP situations. CMS’ added language precluding Part D sponsors from paying for drugs in MSP situations also raises questions as to whether beneficiaries will start seeing their Part D plan deny accident and/or claim related prescriptions.

To this effect, it is noted that Part D recovery efforts have been changing over the past year or so. Initially, Part D sponsors were simply sending letters to claims payers asking them to confirm primary payer status, injury date, claimed injuries, and other claim-related information. However, an increasing number of sponsors are now sending letters asserting recovery and providing a breakdown of alleged payments for reimbursement.

Whether CMS policy updates will propel more aggressive practices in collection and/or denying coverage is something all claims payers should closely watch going forward. As the recovery spotlight shifts to Part D recovery, claims payers should have processes in place to address Part D recovery notices to assess what responsibility, if any, may be owed and whether grounds exist to challenge said claims.

How ISO Claims Partners Can Help

ISO Claims Partners is leading the industry in addressing the growing area of Part D recovery actions. Our team understands the complex legal, medical, and practical questions involving Part D recovery claims. We can help you assess exposure, dispute Part D claims, evaluate compliance goals, and develop best practice protocols. For further information, please contact the author at mpopolizio@iso.com or 786-459-9117.

[1] Medicare Part D was added to the Medicare program in 2003, with benefits commencing in 2006. Part D is a voluntary outpatient prescription drug benefit plan available to all Medicare beneficiaries. Beneficiaries enrolled in traditional Medicare can purchase what is known as a “stand-alone” Part D plan, while Medicare Advantage Plans (MAP) beneficiaries may purchase a plan as part of their coverage under their particular MAP program Similar to Part C (Medicare Advantage) MAPs, Part D benefits are provided by private companies (referred to as sponsors), and the scope of coverage varies from plan to plan. In 2018, more than 43 million Medicare beneficiaries were enrolled in a Part D plan. Of this total, 58% of traditional Medicare beneficiaries were enrolled in a stand-alone prescription drug plan, while roughly 42% were enrolled in a Medicare Advantage Drug plan. See, The Henry J. Kaiser Foundation, An Overview of the Medicare Part D Prescription Drug Benefit, October 2018. Currently, United Health, Humana, and CVS Health account for 55% of all Part D enrollees. The Henry J. Kaiser Foundation, Medicare Part D in 2018. The Latest on Enrollment, Premiums, and Cost Sharing, Data Brief, May 2018.

CMS updates its Medicare prescription drug benefit manual – New changes encourage Part D collection and recovery

New Changes to Part D Manual Updates

Part D Recovery: The Bigger Picture

Looking Forward: CMS’ Updates Impact on Claims

How ISO Claims Partners Can Help