Medicare Part D:

Plan Sponsors' Processing and CMS Monitoring of Drug Coverage Requests Could Be Improved

GAO-08-47: Published: Jan 22, 2008. Publicly Released: Feb 21, 2008.

Additional Materials:

Contact:

Kathleen M. King
(202) 512-3000
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Under the Medicare Part D program, prescription drug coverage is provided through plans sponsored by private companies. Beneficiaries, their appointed representatives, or physicians can ask sponsors to cover prescriptions restricted under their plan--a process known as a coverage determination--and can appeal denials to the sponsor and the independent review entity (IRE). GAO was asked to review (1) the processes for sponsors' coverage determination decisions and the approval rates, (2) the processes for appealing coverage denials and the approval rates at the sponsor and IRE levels, and (3) the Centers for Medicare & Medicaid Services' (CMS) efforts to inform the public about sponsors' performance and oversee sponsors' processes. GAO visited seven sponsors that account for over half of Part D enrollment. GAO also interviewed and obtained data from CMS and IRE officials.

Sponsors in our study address coverage requests for drugs with restrictions using processes that allow for prompt decisions, apply a range of criteria, and have resulted in approvals of most cases. To minimize the amount of time needed to make a determination, study sponsors use automated systems to compare the patient information they receive from prescribing physicians against preset coverage criteria. The coverage criteria for specific drugs incorporate Medicare requirements--such as whether the drug use is excluded from coverage under Medicare Part D--and discretionary components--such as whether a less expensive alternative drug has been tried and failed. Some study sponsors indicated they feel pressure to make decisions within the CMS-required time frames even when all pertinent patient information from physicians is not at hand. In reviewing a sample of 421 case files, GAO found that overall, study sponsors approved about 67 percent of the coverage determination requests, ranging from 57 percent to 76 percent. The process for conducting appeals allows staff not involved in the previous case review to make better-informed decisions by considering additional supporting evidence. At the first level of appeal, sponsor staff evaluate any corrected or augmented evidence to see if coverage criteria have been met. At the second level of appeal, IRE staff consider the information the sponsor reviewed, along with any additional support that may be available. In many cases, appeals result in new interpretations of whether the requested drug should be covered. CMS appeals data show that, from July 2006 through December 2006, the median approval rate across all Part D sponsors was 40 percent; from July 2006 through June 2007, appeals to the IRE received full or partial approval in 28 percent of cases. For some standard appeals, missing appointment of representative (AOR) documentation contributed to delays in sponsor-level appeals decisions and dismissals of IRE appeals cases. Some study sponsors have developed "workarounds" to eliminate the need for the completed AOR form. CMS has improved its efforts to inform beneficiaries about sponsors' performance, but its oversight of sponsors is hindered by poorly defined reporting requirements. CMS developed two performance metrics on sponsors' timeliness and the outcomes of their coverage decisions. The agency improved the way it displays this information on the Medicare Web site in late 2007. In addition, CMS requires that sponsors report data on various measures of coverage requests and approvals. However, the agency has provided minimal guidance on the types of cases to be included in each coverage determination measure. As a result, our study sponsors reported data differently to CMS, hindering the agency's ability to adequately monitor sponsors' activities. Finally, CMS has conducted several audits and found that sponsors were noncompliant with a number of specific requirements. Areas of sponsor noncompliance ranged from incomplete written policies and procedures to delays in authorizing drug coverage after the IRE approved an urgent request.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve the Medicare Part D coverage determination and appeals processes, the Administrator of CMS should reduce the need for completed AOR forms by requiring sponsors and the IRE, upon receipt of standard appeal requests submitted by prescribing physicians without completed AOR forms, to telephone beneficiaries to determine whether they wish to initiate the appeal.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: Reducing the Need for AOR Forms in the Medicare Part D Appeals Process. In January 2008, GAO reported on its review of the coverage determination and appeals processes under the Medicare Part D program--a voluntary outpatient drug benefit (GAO-08-47). We found that, for some standard appeals, missing Appointment of Representative (AOR) documentation contributed to delays in appeal decisions for plan sponsors in our study, and dismissals of Independent Review Entity (IRE) appeals. Some of the study sponsors had developed "workarounds" to eliminate the need for the completed AOR form for standard appeals. Prescribing physicians were allowed to file an expedited appeal on a beneficiary's behalf, without being his or her representative. In contrast, when filing standard appeals on a beneficiary's behalf prescribing physicians were required to submit a completed AOR form. GAO therefore recommended that the Centers for Medicare and Medicaid Services (CMS) reduce the need for completed AOR forms by requiring Part D plan sponsors and the IRE, upon receipt of standard appeal requests submitted by prescribing physicians without completed AOR forms, to telephone plan beneficiaries to determine whether they wished to initiate the appeal--thus eliminating the need for an AOR form. In response to our recommendation, CMS stated that it would review the current legal requirements for bringing an appeal to determine whether changes were appropriate and necessary to implement our recommendation. CMS also stated that it would work with physician's groups to ensure that physicians promptly submit any needed AOR forms. In May 2008, CMS proposed a change in its regulations and revised them in January 2009 to allow a prescribing physician to request a standard first-level appeal from a Part D plan on a beneficiary's behalf without being his or her representative. Beyond plan-level appeals, however, prescribing physicians must be designated the beneficiary's representative and continue to provide a signed AOR form due to the restriction on disclosure of personal health information to entities that would not otherwise have access to it, which includes the IRE. CMS's actions will help simplify the Part D appeals process so that there are fewer obstacles in the way of beneficiaries receiving the covered medications that they need in a timely manner.

    Recommendation: To improve the Medicare Part D coverage determination and appeals processes, the Administrator of CMS should ensure that sponsor-reported data used for monitoring coverage determination and appeals activities are accurate and consistent by providing specific data definitions for each measure.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: CMS officials reported providing specific data definitions for Part D coverage determination and appeals activities that Part D plan sponsors must report, effective for calendar year 2010 reporting. The agency's data descriptions for calendar year 2010 simplify the data elements to be reported for coverage determinations and appeals and consolidate areas where Part D plan sponsors were inconsistent, as reported by GAO. CMS officials also reported that they will establish data validation standards and procedures to help ensure that Part D plan sponsors' reported coverage determination and appeals data are valid, comparable, and complete.

    Apr 21, 2014

    Apr 18, 2014

    Apr 8, 2014

    Apr 2, 2014

    Mar 26, 2014

    Mar 24, 2014

    Mar 10, 2014

    Mar 7, 2014

    Mar 6, 2014

    Looking for more? Browse all our products here