Coordination of Benefits and Coordination of Benefits and TrOOPTrOOP

Christine HindsChristine HindsCenter for Beneficiary ChoicesCenter for Beneficiary Choices

CMSCMS

Coordination of BenefitsCoordination of Benefits““COBCOB””

The Medicare Modernization Act requires The Medicare Modernization Act requires plans to coordinate with entities providing plans to coordinate with entities providing other prescription drug coverage, as other prescription drug coverage, as stated in section 1860Dstated in section 1860D--23(a) and 1860D23(a) and 1860D--24(a) of the Social Security Act. 24(a) of the Social Security Act. Implementing regulation is Subpart J or 42 Implementing regulation is Subpart J or 42 CFR 423.452 through 423.464CFR 423.452 through 423.464

Other PayersOther Payers

Plans must permit the following entities to Plans must permit the following entities to coordinate benefits:coordinate benefits:

State Pharmaceutical Assistance Programs (SPAPs)State Pharmaceutical Assistance Programs (SPAPs)Medicaid programs (including 1115 waiver programs)Medicaid programs (including 1115 waiver programs)Group health plansGroup health plansFEHBP plansFEHBP plansTRICARE and VATRICARE and VAIHS IHS Rural Health CentersRural Health CentersFederally Qualified Health CentersFederally Qualified Health CentersOther entities as CMS determinesOther entities as CMS determines

TrOOPTrOOPThe Medicare Prescription Drug The Medicare Prescription Drug Improvement and Modernization Act of Improvement and Modernization Act of 2003, as stated in 1860D2003, as stated in 1860D--2, requires the 2, requires the tracking of Truetracking of True--OutOut--OfOf--Pocket (Pocket (TrOOPTrOOP) ) expenditures for Medicare beneficiaries expenditures for Medicare beneficiaries enrolled in Part D in order to meet the enrolled in Part D in order to meet the eligibility for catastrophic coverageeligibility for catastrophic coverage

Coordination ElementsCoordination Elements

Enrollment file sharingEnrollment file sharingClaims processing and paymentClaims processing and paymentClaims reconciliationClaims reconciliationApplication of the Application of the TrOOPTrOOP limitlimitOther processes as determined by CMS Other processes as determined by CMS

COB ContractorCOB Contractor

CMS has established enrollment file CMS has established enrollment file sharing mechanism through its current sharing mechanism through its current COB contractor.COB contractor.Under Part D, the same COB contractor Under Part D, the same COB contractor will assist CMS in identifying Part D will assist CMS in identifying Part D enrollees with other health insurance. enrollees with other health insurance. The COB contractor will also assist with The COB contractor will also assist with the TROOP Facilitation process.the TROOP Facilitation process.

Claims Processing and PaymentClaims Processing and Payment

Part D plans will be required to receive Part D plans will be required to receive and transmit claims data using the NCPDP and transmit claims data using the NCPDP V 5.1 format.V 5.1 format.Allows the coordination of benefits to Allows the coordination of benefits to occur in real time at the pharmacy. occur in real time at the pharmacy. Assists in the Assists in the TrOOPTrOOP Facilitation process. Facilitation process.

Potential Coordination Issues for Potential Coordination Issues for Part D Plans Part D Plans

Plans will need to determine how it will: Plans will need to determine how it will:

Receive and transmit claims in NCPDP v5.1 formatReceive and transmit claims in NCPDP v5.1 format

Receive secondary payer data from the Receive secondary payer data from the TrOOPTrOOP contractor and the contractor and the enrolleeenrollee

Determine Determine TrOOPTrOOP balances and communicate this information to the balances and communicate this information to the beneficiary beneficiary

Accommodate consolidated premium payments from third party Accommodate consolidated premium payments from third party payerspayers

Correct claims paid by the wrong payer Correct claims paid by the wrong payer

User FeesUser FeesCMS may impose user fees on Part D plans for CMS may impose user fees on Part D plans for transmittal of information necessary for COBtransmittal of information necessary for COBCMS may retain a portion of user fees to CMS may retain a portion of user fees to defray COB costsdefray COB costsCMS CMS will notwill not impose user fees on SPAPs/ impose user fees on SPAPs/ entities offering other prescription drug entities offering other prescription drug coveragecoveragePart D sponsors cannot impose fees on Part D sponsors cannot impose fees on SPAPs/entities offering other prescription drug SPAPs/entities offering other prescription drug coverage that are unrelated to the cost of COBcoverage that are unrelated to the cost of COB

COB GuidelinesCOB Guidelines

CMS issued guidelines to the industry on CMS issued guidelines to the industry on July 1, 2005 July 1, 2005 --http://www.cms.hhs.gov/pdps/cob.ashttp://www.cms.hhs.gov/pdps/cob.asRequirements of CMS, plans and other Requirements of CMS, plans and other health insurers.health insurers.Specifically provides guidance to Specifically provides guidance to SPAPsSPAPsregarding coordinating payment using the regarding coordinating payment using the lump sum approach.lump sum approach.

TrOOP/Incurred Costs (TrOOP/Incurred Costs (§§423.100)423.100)

TrOOP (true outTrOOP (true out--ofof--pocket costs)/pocket costs)/””incurred incurred costscosts”” is the amount is the amount a beneficiary must spend a beneficiary must spend on covered Part D drugson covered Part D drugs to reach catastrophic to reach catastrophic coverage. The following example is based on coverage. The following example is based on the standard benefit design:the standard benefit design:

$250 deductible$250 deductible+ $500 beneficiary coinsurance during initial coverage+ $500 beneficiary coinsurance during initial coverage+ $2,850 coverage gap+ $2,850 coverage gap= $3,600 out of pocket spending= $3,600 out of pocket spending

The above numbers are for 2006 and will The above numbers are for 2006 and will increase by law in subsequent yearsincrease by law in subsequent yearsPart D premium is not part of TrOOPPart D premium is not part of TrOOP

TrOOP/Incurred Costs (TrOOP/Incurred Costs (§§423.100)423.100)

Payments count toward TrOOP if:Payments count toward TrOOP if:They are made for covered Part D drugs (or They are made for covered Part D drugs (or drugs treated as covered Part D drugs drugs treated as covered Part D drugs through a coverage determination or appeal)through a coverage determination or appeal)They are made by: They are made by: •• The beneficiaryThe beneficiary•• Another Another ““personperson”” on behalf of a beneficiaryon behalf of a beneficiary•• CMS as part of the lowCMS as part of the low--income subsidiesincome subsidies•• A State Pharmaceutical Assistance Program A State Pharmaceutical Assistance Program

(SPAP)(SPAP)

TrOOP/Incurred Costs (TrOOP/Incurred Costs (§§423.100)423.100)Payments DO NOT count toward TrOOP if they are made by:Payments DO NOT count toward TrOOP if they are made by:

A group health planA group health planInsurance or otherwiseInsurance or otherwiseAnother thirdAnother third--party payment arrangementparty payment arrangement

Examples of entities whose wraparound coverage does not count Examples of entities whose wraparound coverage does not count toward TrOOP:toward TrOOP:

MA plansMA plansPACE organizationPACE organizationSCHIP programSCHIP programMedicaid, including 1115 waiver programsMedicaid, including 1115 waiver programsVA or TRICAREVA or TRICAREIndian Health ServiceIndian Health ServiceAIDS Drug Assistance Programs (ADAPs)AIDS Drug Assistance Programs (ADAPs)Federally Qualified Health Centers (FQHCs)Federally Qualified Health Centers (FQHCs)

TrOOP/Incurred Costs (TrOOP/Incurred Costs (§§423.100)423.100)

Part D plans are required to ask Part D plans are required to ask beneficiaries what thirdbeneficiaries what third--party coverage party coverage they have (if any) because this information they have (if any) because this information is necessary for proper TrOOP calculationis necessary for proper TrOOP calculationMaterial misrepresentation of the Material misrepresentation of the supplemental coverage that a beneficiary supplemental coverage that a beneficiary has may constitute grounds for termination has may constitute grounds for termination of coverage from Part Dof coverage from Part D

TrOOPTrOOP FacilitatorFacilitator

The The TrOOPTrOOP Facilitator shall be responsible Facilitator shall be responsible for establishing procedures for facilitating for establishing procedures for facilitating eligibility queries at the pointeligibility queries at the point--ofof--sale, sale, identifying costs for Part D enrollees that identifying costs for Part D enrollees that are being reimbursed by other payers, and are being reimbursed by other payers, and for alerting Part D plans about these for alerting Part D plans about these transactions. transactions.

TrOOPTrOOP FacilitatorFacilitator

CMS awarded the contract to NDC HealthCMS awarded the contract to NDC HealthTasks involved:Tasks involved:

Receiving and maintaining Part D eligibility dataReceiving and maintaining Part D eligibility dataProviding responses to Pharmacy eligibility queriesProviding responses to Pharmacy eligibility queriesReceiving and routing secondary paid claims data to Receiving and routing secondary paid claims data to the Part D plan the Part D plan Receiving batch claims data from secondary payers Receiving batch claims data from secondary payers and routing them to the Part D planand routing them to the Part D planProviding CMS with copies of these secondary claims Providing CMS with copies of these secondary claims transactionstransactionsMaintaining a Help desk Maintaining a Help desk

COB/COB/TrOOPTrOOP Staff ContactsStaff Contacts

Christine Hinds (Part D Policy) (410)786Christine Hinds (Part D Policy) (410)786--45784578

Aaron Aaron WesolowskiWesolowski (COB contractor and (COB contractor and MSP rules) (410)786MSP rules) (410)786-- 8075 8075

Henry Henry ChaoChao (Project Officer for (Project Officer for TrOOPTrOOPFacilitator Contract) Facilitator Contract) –– (410)786(410)786--7811 7811

Part D Coordination of Benefits Part D Coordination of Benefits Prescription Drug Enrollment File Prescription Drug Enrollment File

Exchanges With CMSExchanges With CMS

Office of Financial Management Office of Financial Management CMSCMS

Medicare Coordination of Benefits (COB) Medicare Coordination of Benefits (COB) ContractorContractor

In 1999, CMS named Group Health, Inc. (GHI) as the In 1999, CMS named Group Health, Inc. (GHI) as the COB Contractor to implement an improved plan for COB Contractor to implement an improved plan for coordinating Medicare benefits with beneficiariescoordinating Medicare benefits with beneficiaries’’ other other health insurance coverage. It consolidated activities in health insurance coverage. It consolidated activities in the collection, management, and reporting of Medicare the collection, management, and reporting of Medicare beneficiariesbeneficiaries’’ other health insurance coverage. These other health insurance coverage. These activities are being expanded to include prescription activities are being expanded to include prescription drug coverage information.drug coverage information.

CMS has found that beneficiaries are not always CMS has found that beneficiaries are not always the most accurate source of information about the most accurate source of information about their other health insurance (OHI). CMS has their other health insurance (OHI). CMS has entered into data exchanges with insurers and entered into data exchanges with insurers and other entities that that have this information in other entities that that have this information in

addition to receiving it from beneficiariesaddition to receiving it from beneficiaries..

CMS is expanding existing COB collection and data CMS is expanding existing COB collection and data exchanges to include prescription drug coverage primary exchanges to include prescription drug coverage primary and secondary to Part D. These existing exchanges include and secondary to Part D. These existing exchanges include Medicare Secondary Payer (MSP) Voluntary Data Sharing Medicare Secondary Payer (MSP) Voluntary Data Sharing Agreements (VDSAs) and Parts A and B claim crossover Agreements (VDSAs) and Parts A and B claim crossover Coordination of Benefits Agreements (COBAs).Coordination of Benefits Agreements (COBAs).

CMS is entering into data exchanges with new entities for CMS is entering into data exchanges with new entities for prescription drug coverage, i.e. State Pharmaceutical prescription drug coverage, i.e. State Pharmaceutical Assistance Programs (SPAPs), Pharmaceutical Benefit Assistance Programs (SPAPs), Pharmaceutical Benefit Managers (Managers (PBMsPBMs), and entities that provide drug coverage ), and entities that provide drug coverage that do not fit into VDSA or COBA programs.that do not fit into VDSA or COBA programs.

Information CMS collects will be used by the TrOOP Information CMS collects will be used by the TrOOP Facilitation Contractor to capture paid claims data Facilitation Contractor to capture paid claims data secondary to Part D and transmit them to Part D Plans for secondary to Part D and transmit them to Part D Plans for TrOOP calculation.TrOOP calculation.

Information CMS collects will be used by Part D Plans for Information CMS collects will be used by Part D Plans for payer primacy determinations (using Medicare Secondary payer primacy determinations (using Medicare Secondary Payer rules) and TrOOP calculation.Payer rules) and TrOOP calculation.

When the Part D Plan knows of primary GHP insurance, the When the Part D Plan knows of primary GHP insurance, the Plan shall deny primary payment.Plan shall deny primary payment.

When the Part D Plan knows of primary incident related When the Part D Plan knows of primary incident related nonnon--GHP insurance, and is certain that the primary drug GHP insurance, and is certain that the primary drug claim is covered by the nonclaim is covered by the non--GHP insurance, the Plan shall GHP insurance, the Plan shall deny primary payment. When the Part D Plan is not certain deny primary payment. When the Part D Plan is not certain that the primary drug claim is covered by the nonthat the primary drug claim is covered by the non--GHP GHP insurance, it shall make a conditional primary payment and insurance, it shall make a conditional primary payment and reconcile with the nonreconcile with the non--GHP insurance post adjudication.GHP insurance post adjudication.

CBC will issue further MSP payment and mistaken payment CBC will issue further MSP payment and mistaken payment recovery guidelines to Part D Plans.recovery guidelines to Part D Plans.

Medicare Secondary Payer (MSP) and Part DMedicare Secondary Payer (MSP) and Part D

In certain situations, Group Health Plans (GHPs) are In certain situations, Group Health Plans (GHPs) are statutorily required to pay primary to Medicare, i.e. for statutorily required to pay primary to Medicare, i.e. for Active (working) Employees and dependents, as found at Active (working) Employees and dependents, as found at 42 U.S.C. 42 U.S.C. §§ 1395y(b).1395y(b).

Under provisions found in Under provisions found in §§ 1860D1860D--2(a) (4) of the MMA, 2(a) (4) of the MMA, the MSP rules have been incorporated in the MMA and the MSP rules have been incorporated in the MMA and are applicable to GHPs prescription drug coverage. are applicable to GHPs prescription drug coverage.

MSP and Part D (continued)MSP and Part D (continued)

NonNon--Part D payers of prescription drugs are required to Part D payers of prescription drugs are required to make payer order determinations for prescription drug make payer order determinations for prescription drug coverage based on the MSP laws in the same way coverage based on the MSP laws in the same way insurers and employers do for hospital and medical insurers and employers do for hospital and medical coverage.coverage.

NonNon--Part D payers will need their insurer and employer Part D payers will need their insurer and employer clients to inform them of the Active or Inactive clients to inform them of the Active or Inactive employment status of covered individuals, as well as employment status of covered individuals, as well as provide them with personal identifying information, i.e. provide them with personal identifying information, i.e. SSNsSSNs or or HICNsHICNs..

Part D COB Data ExchangesPart D COB Data Exchanges

CMS data exchange partners are required to sign a data sharing CMS data exchange partners are required to sign a data sharing agreement. agreement.

CMS data exchange partners submit monthly enrollment files of CMS data exchange partners submit monthly enrollment files of their 55 their 55 y/oy/o and over population (55 and over population (55 y/oy/o is the minimum criteria) to is the minimum criteria) to the Medicare COB Contractor.the Medicare COB Contractor.

The COB Contractor uses the files to identify which of the The COB Contractor uses the files to identify which of the population are enrolled in Part D.population are enrolled in Part D.

The COB Contractor responds to the partner with a file indicatinThe COB Contractor responds to the partner with a file indicating g which of the individuals contained in the file are Part D enrollwhich of the individuals contained in the file are Part D enrollees, ees, with detailed information about the Medicare entitlement and Parwith detailed information about the Medicare entitlement and Part D t D enrollment, i.e. coverage dates, which Part D plan, etc.enrollment, i.e. coverage dates, which Part D plan, etc.

The data exchange can also be used to submit enrollment files foThe data exchange can also be used to submit enrollment files for r participation in the Retiree Drug Subsidy program.participation in the Retiree Drug Subsidy program.

For more information on Part D COB For more information on Part D COB data exchanges, contact:data exchanges, contact:

Harry Gamble, 410Harry Gamble, 410--786786--5787, 5787, harry.gamble@cms.hhs.govharry.gamble@cms.hhs.gov

Aaron Wesolowski, 410Aaron Wesolowski, 410--786786--8075, 8075, aaron.wesolowski@cms.hhs.govaaron.wesolowski@cms.hhs.gov