Mandy Asgeirsson, Director, Berkeley Research Group, speaks with Melissa Wong, Partner, Holland & Knight LLP, about key issues related to the Medicare Advantage/Part C and D programs. They discuss the payment mechanisms for each program and the relationship between private companies and the federal government, benefit design, and current compliance and litigation trends. Mandy and Melissa spoke about this topic at AHLA’s 2022 Fraud and Compliance Forum in Baltimore, MD. From AHLA's Payers, Plans, and Managed Care Practice Group. Sponsored by BRG.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
The following message and support for A H L A is provided by Berkeley Research Group, a global consulting firm that helps organizations advance in the areas of disputes and investigations, corporate finance and strategy and operations. BRG helps clients stay ahead of what's next. For more information, visit think brg.com .Speaker 2:
Hi everyone, and thanks for tuning in. Today we're going to talk about Medicare Part C and Medicare Part D . We'll kick off our discussion with an overview of the Part C and Part D program, discuss payment mechanisms for each program and the relationship between private companies and the federal government. We'll also touch on benefit design and finish off our discussion talking about current compliance and litigation trends related to Medicare Part C and part D . My name is Mandy Oscar , and I'm a director at Berkeley Research Group. VG is a global consulting firm, and my practice specifically focuses on health analytics for healthcare companies undergoing investigations or litigation . The majority of my work involves working with health insurance providers, many of whom participate in the Medicare Advantage Program, as well as healthcare providers and other organizations across the healthcare continuum. I oftentimes use times use data to answer complex questions in false claims act investigations, internal investigations, due diligence and audits. Often my knowledge of healthcare reimbursement is used to calculate damages that are used for settlement negotiations or for trial. In the Medicare Part C space , I often use large amounts of data that are produced to the government to understand trends , calculate financial exposure, and understand the organization's relationship with the federal government. Joining me today, I have Melissa Wong. I'll let Melissa introduce herself and then we'll dive right into our content.Speaker 3:
Great. Thanks Mandy, and good to be with all of you. Wanted to thank B r G and Mandy for sponsoring this podcast where we're going to speak a little bit about Medicare Advantage and Part D, some of the basics and some things to be aware of as the year continues. Um, as Mandy mentioned, my name is Melissa Wong. I'm a partner at holiday night in our healthcare and life sciences practice based out of here in Boston. And I have a few areas of focus, one of them being managed care, so , um, manage Medicare, managed Medicaid, how are things paid for within this , um, healthcare ecosystem. Um, as Mandy mentioned, we are going to talk about Medicare part C and D, and , um, this is going to be a primer . So very basic, providing the listener with an overview of both programs and really trying to educate on the, the nuances of , uh, Medicare Part C and part D . With that, Mandy, if you wanna start off with an overview of the Medicare program overall , uh, kind of the history and context of Medicare Part C, what we finally call Medicare Advantage.Speaker 2:
Great, thanks, Melissa. So the Medicare program was started in 1965, and it primarily provides coverage for Americans aged 65 and older. Uh, and when I say coverage here, I mean health insurance coverage , uh, Medicare A or Medicare is split into four different parts. The first parts that holds go over just very briefly, are Medicare's, part A and part B , Medicare Part A covers hospital visits, hospice visits , um, and any other type of healthcare visits within a facility. Medicare Part B covers office visits, screenings, and other emergency care for Medicare Part A and part B. The coverage is by the federal government. So rather than a health insurance co company covering a Medicare beneficiary, instead, the beneficiary is covered by the federal government. Think of it kind of like you are a Medicare beneficiary and your insurance company is the actual federal government. These services are paid for on what's called a fee for service basis , where a, any each visit , uh, is paid for on its own by the federal government. So that's Medicare part A , and part B. We often refer to that as traditional Medicare. Medicare. Part C was introduced later on , uh, in the eighties, and we now refer to Medicare Part C as Medicare Advantage. What Medicare Part C is, is it is essentially Medicare's part A and B as well as as some additional services. Um, but rather than the federal government serving as the insurance company for the Medicare beneficiary, instead, a private insurance company is contracted with the federal government. Finally, we have Medicare, part D, Medicare Part D was introduced in the early two thousands , and it covers pharmacy benefits, specifically , uh, prescription drugs that are administered or self-administered , um, and often picked up through a pharmacy, a specialty pharmacy or mail order pharmacy. So a little bit more about Medicare Advantage or Medicare Part C. So as I noted, Medicare Advantage is the private plan alternative to traditional Medicare. Uh, Medicare Part C often covers part A and B as well as sometimes additional coverage. Those additional coverage options typically include vision or hearing. Sometimes it includes dental as well as hearing aids or classes . There are minimum require requirements for a Medicare Advantage plan. So Medicare Advantage beneficiaries are still receiving the same type of coverage that a traditional Medicare beneficiary would receive, but they can often opt into additional types of coverage when they're choosing which Medicare Advantage plans to join. I'll get more into this a little bit later, but Medicare Advantage plans are paid for , um, through a risk adjustment model. Essentially what that means, which is true of the health insurance , uh, industry at large, is that medical or health insurance is a risk-based industry. So a health insurance company doesn't know how costly its beneficiaries or its enrolls are going to be prior to registering those beneficiaries or enrollees. So they might have a very healthy population, which would in turn , uh, be less costly to the health insurance company, or they might have a sticker or more acute population, in which case they would be more costly. So that risk-based model is something that will dive into a little bit more detail on, but for now, just know that , uh, the Medicare Advantage industry is what we call is paid based on a risk adjustment model. Um, Medicare Advantage is growing in popularity. So in 2005 , approximately 13% of Medicare beneficiaries we're enrolled , enrolled in a Medicare Advantage plan. By 2015 , that percentage jumped to 31% . It's estimated that by 2025 , about 50% of the Medicare population will be covered by a Medicare advantage plan. So, needless to say, is a growing and very popular , um, option for many Medicare beneficiaries in the United States. So now that I've talked a little bit about Medicare Part C , uh, Melissa, do you wanna tell , give us a little bit more detail on Medicare Part D?Speaker 3:
Sure , happy to. Actually, Medicare Part D is one of my favorite areas of practice. I think that , um, everything is just really complicated and interesting. Um, it tracks to some of the latest trends and , um, you know, discussion about drug pricing, but at the same time, it's really contained. So everything that we go through is very digestible and kind of fits within the four corners of this program. Um , Medicare Part D was established in 2003 under the Medicare Modernization Act as a voluntary prescription drug benefit for all Medicare beneficiaries. Uh, the program actually launched on January 1st in 2006 , um, similar to Medicare Advantage. Part D is provided through private payers. So these payers are approved by C M S to participate and offer this drug benefit. Beneficiaries have the option to enroll in a standalone P D P or prescription drug plan, or they can participate as kind of an addon benefit to their Medicare Advantage plan . Same concept as Medicare Advantage Two , in terms of the risk and the allocation of risk. So the idea is that C M S will subsidize the Part D sponsor for providing the drug benefit, but at the same time, it's important for the sponsor to manage care and expenses , um, appropriately as they provide this drug benefit. So very analogous and a a beam that we'll revisit often. Just to further set the stage in terms of the drugs that are subject to Medicare Part D coverage , um, we might wanna spend some time just going through what's a part D drug and what is a covered part D drug. So as I mentioned before, part D covers outpatient prescription drugs , um, just your run of the mill , what you get over the counter , um, at pharmacies. Um, prescription drugs, biologics, insulin vaccines. It does not include any physician administered drugs. So those drugs would be covered under part A or B. Um, and it doesn't include certain drugs that are statutorily excluded. So fertility drugs or cosmetic drugs or , um, ED drugs. Just a few examples of what is not covered under Part D. Um, so that's kind of the baseline of the drugs that are subject to coverage or eligible for coverage. Um , from there, when we talk about covered part D drugs, that means that the drug is inco included on a formulary. So a list of covered drugs that the Part D plan offers, or it can also be approved through a coverage determination or appeal. So maybe not on the formulary, but you can justify why the drug should be covered for that particular patient. Um, in addition for a drug to be covered, it would need to be dispensed at an in-network pharmacy. So a pharmacy that's contracted with the plan for maybe preferred rates, but pretty much a participating pharmacy or a drug can be filled by a non-network pharmacy if the drug couldn't have been accessed otherwise. Um, in terms of part D enrollment, also definitely a growth , um, plan in this case. Um, generic like standalone prescription drug plans. The enrollment has been pretty steady over the past several years. Um, there are currently eight sponsors that really dominate this market. We are seeing considerable growth though for , um, a p d plans. So again, this is the add-on prescription drug plan to an existing MA policy. Um, also wanted to make sure to mention egg whips . Um, when I say that word, I think breakfast, but it actually stands for employer group waiver plans. Um, it's kind of a subsidized plan that is offered through an employer for qualifying beneficiaries, and we have seen some good growth there as well. Um, the whole nature of these equip plans is that they do have to follow part D , um, regulations, requirements, standards, except when c M s specifically waives certain requirements in these cases. Um, so with that , now that we've covered the basics with Medicare Advantage and Part D , uh, Mandy's gonna go into a , a little bit more depth about how the payment mechanisms work and touch on how this is really relevant for compliance and litigation.Speaker 2:
Great, thanks, Melissa. And one thing that you said early on was , um, so true, which is that this industry is very complex, and so it just means that there's always something new to be aware of. Um, there's constantly changes being made, so it it's the kind of subject while on its face might seem kind of dull, but when you start to get into it, there's just so much nuance and so many interesting things that you can , uh, learn in both the Medicare part C and part D space . Um, so one thing that is very important is the understanding how the Medicare Advantage plans are paid. So , uh, as I noted earlier, Medicare Advantage plan plans are paid based on a risk adjustment model. Essentially, what that means is that for each member in each month, the plan is paid a set dollar amount for each member that mem , or that dollar amount is called , is what we call the bid rate , and varies based on plans. So a plan that covers beneficiaries that live in New York City is going to be different. Their bid rate will be different than plans that cover beneficiaries that are mainly in , um, a very rural area, for example, in Kentucky. Uh, so that dollar amount is set for the plan , um, based on historical information, and each member is covered at that per member per month dollar amount . Then , uh, the beneficiaries dollar amount is adjusted , uh, based on the beneficiaries risk score. A risk score, which is why that word risk is so important , uh, is based on the conditions of that member. So some of that risk score might be related to the patient's age. So you have some of the younger population that would have a lower risk score than potentially a Medicare beneficiary that is in their nineties. Then the dollar amount is also adjusted, or that risk score is calculated based on the different underlying conditions that a patient will have. Now, when I talk about underlying conditions, we're not talking about acute, you know , uh, acute incidents that are happening to that patient. So it's not necessarily the broken arm that's going to impact the patient's risk score. Instead, it's going to be the , uh, chronic conditions that really impacts the overall , uh, cost and resources that go into covering this Medicare beneficiary. So some great examples of a condition that would impact a beneficiary's risk score are diabetes, for example, congestive heart failure , um, and other conditions of the sort . So that risk score is determined for each beneficiary in each plan. Uh, the risk score is then calculated , uh, by the federal government and essentially multiplied times that dollar amount or that bid rate each month to come up with the total dollar amount that's paid to the plan for the month. The risk scores are calculated for the year after. So if a patient is diagnosed with diabetes this year in 2022, that diabetes diagnosis would impact the patient's risk score for next year in 2023 . Now, you might be saying, why do I need to know all this information about the payments that are going from the federal government to the Medicare Advantage plan? And the reason for that is because that is where a lot of the risk areas from a fraud and compliance , uh, perspective , um, exist. So a lot of information is transmitted between the Medicare Advantage plan and the federal government in order to calculate those risk scores. And that information that's transmitted to and from the government is really what comes into play when we're looking at investigations, false Claims Act , uh, investigations , uh, as well as internal investigations and even the audit process. So understanding that the importance of the diagnosis code in the Medicare advantage space is very important because the diagnosis code impacts the payment, and that's where many of our risk areas lie . Now, the way that the this information is documented is through normal patient interactions with providers. So a provider will visit , uh, or a patient rather, will visit a provider in an office setting, in a hospital setting, sometimes in a skilled nursing facility or a home health agency, really anywhere across the care continuum. A patient visits a provider, that provider documents in the medical record, all of the patient's conditions , um, for that visit that they are treating and potentially per peripheral , um, conditions that might be impacting the treatment that the patient is receiving at the provider or with the provider. Those that is where the diagnosis code is captured. So that diagnosis code is initially captured in the medical record, and it's incredibly important that providers are documenting in the record why that diagnosis code has been added. From there, the provider will then submit the claim , uh, or the encounter to the Medicare Advantage plan, and the Medicare Advantage Plan would house the information that is needed to then submit to the federal government. So the Medicare Advantage plan goes through a process where all of that data and that information on the patient's conditions are then filtered to what is eligible to be, be submitted to the government. And then the Medicare Advantage Plan submits that information to the federal government , uh, and specifically they're submitting that information to CMS via what's called the risk Adjustment Processing System or wrap , and the Encounter data processing system, which is called e P s . That data is submitted to cns, CNS processes it, and then they send information back to the Medicare Advantage plan saying, here are the diagnosis codes, or here's the information that we have on file, and if there are any issues or invalid codes, invalid claims, that information is sent back to the Medicare Advantage plan. So as you can imagine, there is a lot of data and a lot of information being submitted between the provider, the insurance company, or the Medicare Advantage Plan, and the federal government. All of that data is certified to be , uh, represented to be correct and accurate , um, which will come really into play when we start looking and talking about audits and investigations and potentially potentially compliance risks. So just a couple of other things to note on the Medicare Advantage , uh, plan, and some of the benefits before I turn it back over to Melissa, is that as of 2019 , Medicare Advantage plans have been , um, given the ability to offer some additional benefits, what we call special supplemental, supplemental benefits to help address the patient's health overall. Um, these benefits might include things like meals , uh, non-medical transportation to places like a senior citizen center or a grocery store , um, some social supports that really help with companionship, which often lead to certain health benefits. Um, and then additional counseling for dementia, depression , um, blood pressure monitoring. Really, there's a wide variety of things that are being offered by Medicare Advantage plans as of 2019 that were not necessarily being offered before. So when we start thinking about trends, this is a place where also there are some compliance implications as well as some risk areas that are newer to the Medicare Advantage space rather than our traditional, what we look at, which is the submission of diagnosis codes to the government. So with that , I'll turn it back over to you, Melissa, to talk through some the, the same nitty gritty details of the Medicare Part D system.Speaker 3:
Great, thanks, Mandy. I'm excited to geek out about Part D payment systems, and very much like you said, it's important to know kind of the ins and outs. It might seem kind of , I wouldn't say it's dull, but I definitely think it's, it's intricate and it is important because that is going to be the foundation for a lot of these fraud, waste and abuse litigation compliance issues. So we'll spend some time on that and again, try to make it digestible. Um, so to, to start out, let's talk about how the plan and the patient may share risk and ultimately, part cn. Part D is a shared risk system. So under a standard Part D benefit, the beneficiary will pay a $480 deductible after that 480 bucks than the patient will enter an initial coverage limit so that, that particular phase, and while they're in that phase, the plan will cover 75% of the beneficiary's costs up to $4,430 in total gross covered drug costs. At that point, the beneficiary will enter what's called the coverage gap, also known as the donut hole. Speaking more about breakfast terminology. But , um, once you're in the gap, the beneficiary under the standard benefit would pay 25% in cost sharing . At that point, the manufacturer subsidizes the cost at about 70% of that drug cost , and the plan pays 5%. Once you reach a true out-of-pocket cost of $7,050, the beneficiary enters what's called the catastrophic phase or catastrophic coverage. Um, it's basically a reinsurance phase for the , um, higher drug costs that a patient may accrue. And at that stage, the patient pays only a 5% co-insurance amount. Um, so again, that's all the standard benefit. A lot of part D plans will offer enhanced benefits to make , um, the benefit a little bit more appealing, so they can offer lower deductibles or reduced beneficiary cost sharing. Um, those additional benefits aren't subsidized by the government, but again, it's , um, an offering that plans may provide on the market to make the benefit look a little bit more attractive. Um, two quick things about these amounts that I just shared. One, they're not gonna last long. So , um, under the Inflation Reduction Act, even just your regular yearly updates to the amounts that have come into play, that's all gonna change, and we'll go into that in a little bit. Um, also there is different cost sharing based on eligibility , um, for low income beneficiaries or Medicare, Medicaid, dual eligibles, all those amounts are different and really have , um, our subsidized to the point where they don't have a lot of cost sharing at that stage. So that's kinda how plans and patients may split the risk or share the risk. Wanted to go into a little bit more detail about how that works from C M S's perspective and how they may subsidize the plan. So , um, plans will receive different parts of , um, reimbursement through either direct subsid , um, subsidy. So that's a monthly capitated payment based on a bid that the sponsor submitted the previous year. Um, there's also reinsurance, and at that stage, C M M S will pay 80% of the drug costs at that catastrophic phase that we just talked about. Um, low income subsidies, a another form of , um, risk sharing reimbursement for , um, low income individuals , um, and then the risk corridor. So , um, this is where C M S and the Part D sponsor will share in excess gains and losses. So think of it, you have a target amount. If the plan has more expenses than they anticipated, the plan is a hundred percent on the hook for up to, let's say 5% greater than what they originally anticipated. If it goes up to 10% greater than what they originally anticipated, then um, they might share it in that the plan gets 50% and c m s has to pay the 50% , um, works , um, in the reverse in the other way. So if the plan actually accrues less expense and anticipated they get to keep the benefit of that up to 5% greater than that c m s kind of dives back in and recos a certain amount. So again, it is to the plan sponsors benefit to kind of actively manage the type of benefits that they're providing for their patients. Um, all of the above is kind of managed through various data submission processes. Again, we are really geeking out here, but , um, on a monthly basis, they submit prescription drug event data. That is , um, what it sounds like for each dispense. There is a record that's created, submitted in bulk from the planned sponsor to c M s. In addition , um, there is direct and indirect remuneration or d i r reporting that is due six months after the close of a planned year. Um, the idea behind d i r is that it kind of accrues all the stuff that you don't know at the point of sale. Um, so anything that's a price concession discount, rebate, coupon grant , um, anything that's received by the plan or by an intermediary like a P B M , um, from any source manufacturer, pharmacies enrolls . If that amount serves to decrease the cost incurred by the plan sponsor, c m s wants to know about it, and they'll adjust the actual payment , um, accordingly. So again, it has to directly , um, impact drug costs , um, in order to be considered d i r or indirectly as well, but it has to impact the particular drug cost . So think of like manufacturer rebates, administrative services, pharmacy price concessions. Importantly, that does not include bonafide services fees. Again, the idea is that it has to defray the cost of the drug if it's a bonafide services fee. That is something that the manufacturer pays to the P B M in this case , um, for actual services that they are performing on behalf of the manufacturer for things that the manufacturer would otherwise have to do itself. So it's not really defraying the cost of the drug when it's purely made at fair market value to compensate the P B M for services. This is a pretty big component, and if I had , um, kind of a subspecialty in Part D that I really like talking about, definitely d i r, again, something that's important, complex, but at the same time , um, super digestible. Um, along those lines, I wanted to go over a couple of other , um, thematic areas that are important to know from a fraud, waste and abuse perspective, and just important to the Part D benefit in general. Um, let's talk about formularies. Um, litigators might see formularies come up in some kind of , um, preference based argument that manufacturers are providing some kind of kickback in order to be put at a more preferable tier in a part D benefit . Um, one thing that's kind of funny to know is that part are active plans are not actually required to , um, utilize a formulary, but most do in order to maximize cost savings and , um, rebates and other , um, payment streams that they have to take into account under this risk sharing payment system. Um, formularies are highly regulated. C m s has a bunch of requirements behind how you can , um, develop a formulary, what kind of drugs to include. Um, the plan will have a pharmacy and therapeutics committee , um, with experts who have to abide by conflict of interest disclosures. There's membership requirements, what their role is, they will devise or recommend what needs to be put on the formulary itself, and ultimately the formulary is going to be evaluated by C M S to ensure there's adequate coverage. Uh, for example , um, you have to have the drug categories represented on the formulary for pretty much all conditions and an acceptable range of choices. So every drug category needs to have at least two drugs unless there's only one drug that's really available, or one drug is just far clinically superior. Um, some pro protected drug classes needs to include all or substantially all of the drugs available in that category. So things like antidepressants, immunosuppressive , um, therapies , um, chemo drugs. Um, the rationale behind this is that it's often , um, kind of a extended amount of time that you have to think about, will this drug work? Is it therapeutically appropriate? What are the side effects? So they wanna offer a wide range of , um, options for these, you know, kind of sensitive conditions that require a lot of work and clinical input. Um, in order to kind of make sure that patients stick to the formulary , um, there's going to be options like , uh, prior authorization, step therapy utilization review. It kind of enforces the choices behind , um, formulary adherence. So let's say I want the blue pill , but the red pill is on the formulary. I still think I want the blue pill. Um, I can try to submit , um, a coverage determination and submit a note by my doctor saying that one pill is better than the other, or , um, the plan might have a requirement that I do have to try the red pill first before I , I get the blue pill to make sure the red pill isn't the one that's working. Um , formularies will also typically include several tiers. So it's preferred tiers with different kind of levels of cost sharing . Um, there is , um, the option to put in a specialty tier for your highest cost unique drugs. Um, so those are all different structures that are put into place by the plants . Um, let's go into FDRs really quick. Not talking about the president, but talking about , um, first tier downstream and related entities. So , um, a first tier entity is any party that enters into a written contract , uh, with a health plan or applicant to provide health or administrative services for Medicare beneficiaries. So in short, plans can't do it all. They contract with other entities to help supplement the work that they have to do to provide the benefit. Um, those contractors are known as first-tier entities. Um, the contractors that the first-tier entities may contract with to provide those benefits or those services related to those benefits, they're called downstream entities, related entities are , um, parties that hold kind of common ownership and control with the plan. So a little bit more scrutiny there. Ultimately, these three groups together are known as first here , downstream or related entities. Again, FDRs, there are a whole host of requirements governing how plans must interact with these FDRs contractual provisions, audit rights, recordkeeping. Um, there's definitely a whole bunch of things that are considered. Um, so for all companies, entities , uh, attorneys advising their clients, it's not just the , the typical, you know, you're a health plan, these are the things you have to keep in mind. A lot of these requirements are implicated even if you are not at a plan, but a provider or a services provider or other type of entity kind of working in this space. Um, with that , um, Mandy , I think I'm gonna turn it back over to you to discuss some of the , um, trends that we're seeing and any other developments from a part C perspective.Speaker 2:
Awesome, thanks, Melissa. Uh , so the , we talked a little bit about the payment model and the understanding as to the relationship between the Medicare Advantage and cm, a Medicare Advantage Plan and cms. So there have been a few trends recently found in the news and publicly available , um, document published by either hhs, oig , or by cms , um, that really show the target areas that could potentially be a risk area for a Medicare Advantage plan. The first is the chart review program and other supplemental programs. What that is, is that a Medicare Advantage plan will contract with a vendor , uh, who has been brought in to review medical records for a portion of the patient population that is covered by the Medicare Advantage plan. This vendor will review medical records and identify potentially codes that were not added to the medical record , but have support within the medical record , and also works to identify codes that are potentially not supported in the medical records . There are other supplemental programs that are similar to this chart review program where a vendor is brought in to understand the diagnosis codes for a given number. This has proven to be a risk area for Medicare Advantage plans in that the DOJ and others have investigated Medicare Advantage plans for potentially improper coding , uh, patterns and potentially , uh, unsupported diagnosis codes that have been submitted to cms. Now, the , um, the issue here is really giving an understanding as a Medicare Advantage plan in terms of do we have the right documentation and are there, are the codes that are being added to a medical record , um, appropriate. So this is where it's very important that a Medicare Advantage plan has a compliance program in place , um, and has policy and policies and procedures, particularly around , um, the addition of codes through the chart review and other supplemental programs. Uh, so that's really one area where we've seen a lot of , uh, enforcement activity around , uh, the chart review program and the codes that are added to patient records through that program. Another place , uh, where we have seen a trend or an uptick in investigation through , uh, news articles and the like, is the , uh, investigation of the relationship between the Medicare Advantage Plan and the providers that it partnered partners with. So similar to what Melissa was talking about earlier, related to formularies on the Medicare Advantage side, what that means is that you have a relationship between the Medicare Advantage plan and the providers with which the patients are able to visit. Uh, similar to a commercial insurance plan that many of us listeners have access to Medicare Advantage plans partner with certain providers at , on an in-network basis, meaning it is there is a lower cost sharing for the Medicare beneficiary when they go to an in-network provider. One place that we have seen enforcement activity and investigations is around the relationship between those providers and the Medicare Advantage Plan. It's incredibly important that the relationship between , uh, the financial relationship between the provider and the plan if there is one in place , uh, has been reviewed, and that it is , uh, it , it meets the requirements that are needed because that's a place where we have seen potential kickback investigations or investigations into , um, other allegations about bringing in certain members, certain providers to financially benefit either or the provider or the plan. So this has been another place of activity or investigation. Additionally , uh, CMS and hhs I g uh , are often charged with auditing Medicare Advantage plans plans. So there are a number of different ways with which these entities can audit the Medicare Advantage plans. But at a high level, what happens is that a sample of members is chosen from the Medicare Advantage Plans. All of the records for that member, for the specific diagnosis codes that have been targeted are pulled , and , uh, either CMS or HHS OIG will then hire someone to review the medical records and document whether or not each diagnosis code is supported in the record . From there, there's some back and forth between the Medicare Advantage Plan and the entity that is auditing the Medicare Advantage plan to say whether or not these diagnosis codes are supported. From there, you have a sample of members and you have a, an impact based on the, the medical record review of those patients, which is then translated and oftentimes extrapolated to a universe of patients . So sometimes these audits can be very condition specific. So , um, HHS and the Office of the Inspector General will select some diagnosis codes that are riskier , uh, and they will choose a sub portion of the Medicare Advanced Advantage plans in enrolls and extrapolate just to that subpopulation of high risk condition enrollees. Other times the audit will be much broader, where there'll be a sample of all beneficiaries. The review will be done, the medical record review will be done, and ultimately that do that , um, review is then extrapolated to an entire universe of patients. Uh , so this is a place where , um, I know Melissa and myself have seen a lot of activity and , um, here there's really an understanding of, okay, well what does, what are the audit reports saying and what do we see based on the information that we have or our clients have , um, available to them ? And then just one other place where we've seen some internal investigations is really, again, related to those provider , um, provider relationships and anything else related to the submission of diagnosis codes to cms. Um , oftentimes Medicare Advantage plans will have , uh, either whistleblowers or maybe they'll have a call into the hotline to say, we see an average trend of some sort in terms of coding or things like, or medical records. And , um, it's very important to understand what those problems are, potential problems are. And then sometimes that means there's a self-disclosure that happens if we see something that a , someone will come to the compliance hotline and say, I saw this pattern based on a set of providers or a specific provider. Um, it's very important to get an understanding of what that problem is and if it is a problem , um, so that then the appropriate channels can be taken if that means a self-disclosure or something else. Um, so that's kinda the, the big trends that I've been seeing, at least in the Medicare Advantage space. Melissa , I dunno if you wanna talk through some of the trends you're seeing either in , in the MA space or in part D to , to close us up .Speaker 3:
Sure, yeah, happy to do that too. Um, definitely Medicare Part D , it's an exciting time to be in this space. The amount of new requirements that have come out or that will take effect over the next couple years is really groundbreaking. We haven't seen anything like this in, in many years now. Um, I'll go through through them really quick. I feel like each topic could be a podcast in itself. So , um, just to provide you with enough to go on and to work with , um, one thing is the concept of negotiated price. So this has been something that C M S is trying to, has been trying to work with for years. Um, the term negotiated price is defined term of the regulation. It's the primary basis by which the Part D benefited is , is adjudicated. And it's used to determine plan, patient, manufacturer, and government cost sharing throughout the payment year. The negotiated price is meant to include any price concessions. So again, discounts, rebates , um, that occur at the point of sale , except when the price concession can't reasonably be determined at the point of sale. So, for example, if there's some rebate arrangements or performance-based adjustments, you don't know what the adjustment is going to be until much later. So you can try to estimate it, you can try to allocate it , um, but ultimately it's not easily determined at the point of sale. So when is this accounted for? It's accounted for after the plan year, during d i r reporting something we talked about earlier. So it's not going to be reflected in what the patient kind of forks over at the point of sale, but it's going to be accounted for. Um , when plans do do their year end reconciliation with cms. Um, if the amount is accounted for at the point of sale, it directly benefits the patient. So if something is cheaper at the point of sale, they have to pay cost sharing on it, they're gonna pay less. However, the plans have expressed a concern that , um, with these , um, concepts of negotiated price and how it's reported at the end of the year changing that will probably cause plans to have to increase their premiums. So the question is really like, who pays more? Should it be the patients who just have , um, more use of the Part D benefit and pay more at the point of sale and have access to these drugs? Or should it be something that's spread across the entire patient population in the form of increased payments , um, for premiums? So all of this is going to come into play January 1st, 2024. Um, the definition of negotiated price is going to be defined to mean the lowest amount of pharmacy can receive for reimbursement for a covered part D drug. Um, and if the pharmacy is actually paid more than that lowest possible amount, the difference is going to be reconciled and reported in TrueUp as negative D i r . So definitely going to be interesting to see how those payment mechanisms work out. Another big thing is the Inflation Reduction Act of 2022 . I'm gonna tick through these really quickly because again, they are very detailed and require a lot of , um, additional thought and discussion , um, even at the highest levels of government. So it'll be interesting to see how the rules are going to be promulgated on these . Um, under the I R A Medicare is going to be allowed to set the price of certain high cost branded drugs , um, with the highest part B or Part D spend , um, that have at least seven to 11 years since coming to market. And where there is no generic or biosimilar. So traditionally Medicare Part D has always hued to , um, you know, non interference , um, that plans are able to kind of set prices and negotiate with manufacturers themselves. This is going to be a new , um, basically a new maximum fair price that the government can enforce over time. Um, manufacturers will also be asked to pay or required to pay a rebate if the price of single source part B drugs, in most part D drugs increases faster than inflation. So again , um, starting in 2022 and measuring the impact and enforcing that in 20 , um, 23, or I'm sorry, I think that's 2023 and 2024. Um, that all is going to kind of bear out as well. Um, targeting drugs where the cost of those drugs are really just rapidly increasing. Um, some of the cost sharing that we just discussed under Part D , um, that's going going to be eliminated. There's going to be new monthly caps on cost sharing in 2025 . Um, there's going to be an option of pay copays over time in monthly installments. And there is also , um, looking to be a cap on , um, copays for insulin. So again, each one of these things is kind of a big deal in Medicare Part D and something that we'll continue to hear a lot about. The final thing I wanted to mention is just , um, it's a good read. Uh, there has been a recent senate report that came out that talked about , um, concerns on how , um, Medicare Advantage and Part D plans, primarily Medicare Advantage , um, how those drugs are sold and marketed , um, in the marketplace. So , um, concerns about the use of third party marketing organizations, what they say, how they contact beneficiaries. Um, this is very , um, regulated activity and um, just the number of complaints that they've received from beneficiaries has skyrocketed in recent years. So again, worth the read. Um, but we can expect to see a lot of , um, you know, kind of enforcement and , um, additional monitoring restrictions and other developments where the sale and marketing of these plans are concerned. So with that, I think that covers all of the , uh, primmer topics that Mandy and I had for, for us today. Uh, we very much thank you for joining and tuning to a h l a's speaking of Health Law Podcast. Please feel free to reach out to me or Mandy if you have any questions or follow ups about the content, but we hope that , um, you will like these topics as much as we do, and , um, take the time to geek out and dive in a little bit deeper where Medicare Advantage and Part D are concerned. Thank you.Speaker 4:
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