Audio CD and written materials of AIS's audioconference on November 10, 2005

Compliance Strategies for Combating Medicare Part D Fraud, Waste and Abuse

With enrollment in the new Medicare Part D drug benefit set to begin Nov. 15 and the benefit itself starting Jan. 1, plan sponsors need to focus on full compliance with both Medicare law and the specific CMS regulations and guidance on the benefit. Fines, sanctions and even jail sentences are likely outcomes for non-compliant activities, whether performed by the plan sponsor or a subcontractor, such as a PBM. There are eight already-designated Medicare Prescription Drug Integrity Contractors (MEDICs) directly responsible for examining for potential fraud, waste and abuse (FWA). If you are a plan sponsor, you want to correct errors and detect FWA before MEDICs find them. What strategies will enable you to do that?

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HHS intends to give close scrutiny — starting now in preparation for the Jan. 1 start of the Medicare drug benefit — to “hot spot” compliance areas. When it named the eight MEDICs in October, CMS said it is looking to fight fraud and abuse connected with Part D “even before the new coverage begins on January 1.” The roles of the MEDICs include analyzing data; investigating potential fraud surrounding enrollment, eligibility determination or distribution of the drug benefit; and conducting fraud complaint investigations. The MEDICs will refer their findings of violations to the HHS Office of Inspector General and the FBI for review and potential government enforcement action.

Although the vast majority of plan sponsors have subcontracted with PBMs to administer the benefit, CMS has made it clear that the plan sponsor will be held responsible for violations, even for FWA at the PBM or network pharmacy level.

For both plan sponsors and PBMs, this creates an urgent need to focus on difficult areas such as administering specific benefit designs correctly (e.g., coinsurance, deductibles, moves into and out of the “coverage gap”) and ensuring covered pharmaceuticals are priced correctly (i.e., reflect the proper ingredient cost) on the day purchases are adjudicated. In a market characterized by rapidly changing prices, different prices for different distribution channels, and the need to comply with Maximum Allowable Cost (MAC) lists, among other things, compliance will not be easy.

If a PBM administering the benefit uses the wrong price, and either the government pays too much or the beneficiary pays too much (because of a percentage coinsurance benefit design), there can be serious enforcement problems for both the administrator and the sponsor. Moreover, areas in which there have been FWA investigations and settlements in the private sector, including mail-order pharmacies and handling of pharmaceutical-related matters by call centers, will also receive close scrutiny.

In this special two-hour audioconference (including a 45-minute question-and-answer period), three experts from Gorman Health Group present strategies you can use to detect fraud, waste and abuse regarding the Part D benefit at all levels, with special emphasis on the interface between PBMs and plan sponsors. They cover:

 

Speakers

MICHAEL FLAGSTAD is director, Pharmacy Benefits Practice at Gorman Health Group. He specializes in such areas as process improvement, implementation and measurement. Before his current position, Mr. Flagstad served as senior vice president and chief clinical officer at Express Scripts/ValueRx, where he was responsible for development and implementation of numerous products and services. Prior to that, Mr. Flagstad, who has bachelor's and master's degrees in pharmacy, was chief operating officer of PBM Diversified Pharmaceutical Services - Canada.

JEAN LeMASURIER is director, Employer Group Practice at Gorman Health Group. She joined Gorman after a 30-year career at CMS that culminated in a senior advisor role in which she provided leadership on policy and operational issues related to implementation of the new employer provisions in the 2003 Medicare reform law. Before that, Ms. LeMasurier spent six years as the acting director/deputy director of the Health Plan Benefits Group in CMS's Center for Beneficiary Choices.

STEPHEN BALCERZAK is a principal at Gorman Health Group and had nearly 20 years of experience at CMS predecessor Health Care Financing Administration. His experience there covered all facets of HCFA operations in managed care contracting, especially as related to applications, compliance and enforcement activities. He was director of the Performance Review Division in the agency's Health Plan Purchasing and Administration Group.

Moderator: Barbra Golub, JD, managing editor of AIS's Guide to the Medicare Drug Benefit.

 

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Written Materials