Areas of Focus on Recent CMS 1/3 Financial Audits

The 1/3 Part D Financial Audits constantly change as CMS directs its auditors to focus on different areas of compliance risk for PACE organizations. Here are some of the specific areas of interest we have observed auditors verifying in CY 2018 and 2019 audits:

  • Part D, Financial, and FWA policies and procedures (P&Ps) are in place and internally audited and monitored regularly; corrective action plans (CAs) have been created and acted upon for any process anomalies identified.
  • Vendors, providers, and employees regularly are screened against the Preclusion List, Office of the Inspector General (OIG) Exclusion List, General Services Administration (GSA) List (optional), and Outlier Provider/Prescriber Report.
  • Professional licenses and certifications are verified upon hire or contracting and annually thereafter.
  • Prescriptions are linked to an appropriate (FDA approved) diagnosis code.
  • Prescriptions for non-FDA approved diagnoses are not submitted as PDE; PACE may provide these drugs, however they are not Part D.

If you realize your plan is out of compliance or your policies and procedures are out of date in any of these areas, you should start working to correct the deficiencies as soon as possible. If your plan is selected for audit on the next round, it is good practice to disclose the areas of non-compliance you found and provide the status of your CAP. It is better to disclose this information and show the auditors that you are working to correct the deficiency than to let the auditors find the problem and create a finding on your audit report.

In the next issue of Pharmastar News, we will look at a few additional areas on which auditors have been focusing attention.


Dr. Rich Mueller joins Pharmastar as Vice-President, Clinical Strategy

Pharmastar recently welcomed Richard J. Mueller PharmD, MBA, MS, as Vice-President, Clinical Strategy. In this role, Dr. Mueller will work to ensure Pharmastar’s clinically-related products and services meet current and future prospective client needs. Additionally, Dr. Mueller is responsible for oversight of PBM clinical operations related to Pharmastar services, including identifying and executing opportunities to promote efficiencies as well as synergies between Pharmastar and CareVention HealthCare service lines.

Dr. Mueller joins Pharmastar from Community Care, Inc., in Milwaukee, Wisconsin, where he served as Director of Pharmacy Services. Community Care, Inc., has been a valued Pharmastar PACE client for more than 16 years. Dr. Mueller’s experience as a client will provide valuable insights that will enable Pharmastar to further improve the client experience.

Prior to Community Care, Inc., Dr. Mueller held several leadership roles including Consultant for Milliman, Inc.; Pharmacy Manager at Cesarz Infusion Therapy Service; Director of Pharmaceutical Services for Shawano Community Hospital; and Pharmacy Consultant, Merck Medco. Dr. Mueller holds a Doctor of Pharmacy degree from University of Wisconsin-Madison School of Pharmacy, a Master of Business from Cardinal Stritch University, and a Master of Science with a focus in Pharmacoeconomics from University of Florida College of Pharmacy.


Ask the Pharmacist

What is the best way to determine if a drug should be billed under Medicare Part B or Part D? Can Pharmastar assist with this process?

Pharmastar can definitely help with this process! In general, Medicare Part D covers most self-administered drugs like tablets, suspensions, self-injections, insulins, etc. Medicare Part B covers most drugs that would typically be administered in a hospital or clinic by a health care provider in addition to a couple of specific drug classes. Making appropriate Medicare Part B versus D determinations is important, and Pharmastar understands the intricacies involved. To streamline the process for our clients, Pharmastar provides a Medicare Part B vs. D report. We have identified specific drugs that may require a B vs. D determination, and we share a list of these drugs and the patients taking them with the plan sponsor. The plan sponsor views the list of drugs, answers a question that helps determine Part B vs Part D status, and then redacts PDEs for the drugs determined to be Part B. This is a retrospective way that Pharmastar assists plan sponsors with compliant billing practices.

Are there any continuous glucose monitors (CGMs) that are covered by Medicare Part D?

Currently no, CGMs covered by Part D. CGMs are considered durable medical equipment, so they are covered under Medicare Part B. Some of the most prescribed CGMs are Dexcom® and FreeStyle Libre®. Both of these offer continuous blood glucose readings for patients with diabetes. They differ in how they are used, and patients may prefer to use one CGM over another. For most plan sponsors, FreeStyle Libre® may be the more cost-effective option.

How can we ensure that the Medicare Part D drugs used to treat our participants meets CMS’s criteria for a medically accepted indication?

The Medicare Prescription Drug Benefit Manual (Chapter 6) defines medically accepted indications. Part D sponsors should ensure, to the best of their ability, that covered Part D drugs are being used for medically accepted indications, which include the drug’s FDA approved indication. To find a drug’s FDA approved indication, you can search the FDA’s website for the drug’s most current package insert. In addition to the FDA approved indication, other indications may be covered if they are supported in the following compendia: American Hospital Formulary Service Drug Information and DRUGDEX® Information System. Both compendia require a fee for access. To streamline this process for our clients, Pharmastar provides a monthly Medical Necessity Report. The report identifies drugs and drug classes that CMS has suggested could be targeted during audits for appropriate use. Additionally, the report generates a specific question to be answered by the plan’s clinical staff to help determine whether a medication is being used for a medically accepted indication. Pharmastar has access to the recognized compendia and continuously updates the drugs listed on the report.


Why Drug Pricing Matters in PACE

By Deb Quillen and Andrea Slowiak

If PACE plans bid on their Part D spend each year in order to receive reimbursement for participant medications, why should the organization care about drug pricing? This is a frequent question, even among PACE staff members, and there are multiple answers.

Part of the bid process requires the PACE plan to estimate how many participants it expects to enroll during the bid year and then estimate how much will be spent to deliver care and medication to those participants. A projection of how many of these new participants will have chronic, expensive conditions is used by an actuary to help the plan account for a reasonable number of people with hepatitis C, organ transplants, multiple sclerosis, or other conditions requiring specialty drugs, so that the plan’s bid comes as close as possible to the Part D drug spend for the bid year. In the year following the bid year, CMS will do a reconciliation to determine how closely the plan’s actual spend came to their Part D bid. The further away from the bid target the plan’s spend was — either over or under — the less CMS will share in the reconciliation amount (or difference) and the more of the cost the plan will have to absorb.

Another reason to keep drug costs down is that PACE is a Medicare and Medicaid replacement plan. In PACE’s early years, it was first a Medicare Demonstration Plan to prove that 1) PACE could provide better, more coordinated care for its participants than those participants would receive if they were enrolled in regular Medicare and Medicaid; and 2) that PACE could provide that high-level, high-risk care at 90% of what it would cost Medicare and Medicaid. After PACE proved the model could provide better care at less cost, Medicare, and in certain states Medicaid, allowed PACE plans to operate as a fully qualified care option for eligible beneficiaries. Today, 137 PACE programs operate 272 PACE centers in 31 states, serving more than 54,000 participants.

Additionally, as recipients of federal and state funds, PACE plans are obligated to abide by the Fraud, Waste, and Abuse (FWA) regulations set forth by CMS and the states. Paying too much for drugs falls into the category of Waste. When a plan contracts with a pharmacy provider, it is expected that the plan sent out requests for quotations (RFQs) and/or interviewed each pharmacy vendor to determine if the vendor’s rates are reasonable. A plan’s contracted pharmacy rates may be compared with national and regional benchmarks by CMS auditors to determine if the prices are in line with other PACE plans in the same region serving a similar demographic (participants’ age, gender, race, and disease profile.) The CMS PACE Manual and the three-way contract between PACE, Medicare, and Medicaid require that PACE plans be good stewards of funds received and remain fiscally viable.

Remember, too, Medicare and Medicaid funds are tax dollars — OUR tax dollars. It is important to keep drug costs low and monitor for FWA, because no one wants to overpay for the products and services they buy!

Finally, we all know that sometimes the price of something, a house for example, can be very different from the cost once purchased. Keep in mind, low price does not always mean low cost for the program — clinical support, utilization management, and quality of services need to be considered to keep costs down and enhance patient outcomes. 

Keeping costs down and quality up is the right thing to do.