Most violations found during a CMS performance audit occur in the Medicare Part D program area of Coverage Determinations, Appeals & Grievances (CDAG). Since 2014, the violations found during a performance or validation audit have led to 38 of 42 civil monetary penalties (CMPs) levied and resulted in four of the six sanctions imposed. As an operational area in which plans often struggle the most, it is important to identify and correct CDAG issues before a CMS audit occurs. Through mock audits, we are finding plans routinely experience challenges in the following five CDAG areas.

1) Audit Universe Data Accuracy

We are discovering that plans often underestimate the effort required to prepare audit universes. With the new audit protocols requiring significant changes to record layouts, numerous data elements spanning across 15 different universes and the need to compile data from multiple systems, plans need to start CDAG universe preparations now. Creating accurate universes takes time, testing, and repetition. CMS has placed extra emphasis on data integrity by adding a pre-audit webinar to test for data accuracy and implementing a “three-strikes” policy for accurate universe submission. Plans must get it right, or face the consequences.

2) Timeliness Measures

The new universe record layouts provide CMS with the ability to drill-down into specific areas of the CDAG process to measure timeliness. Segmentation of the universes by case level, urgency, and request type allows CMS auditors to hone in on troublesome operational areas. Often, plans struggle to meet notification and effectuation timeframes and subsequently fail to auto-forward late cases to the IRE within the appropriate timeframe. While these failures may occasionally be due to an isolated incident, we tend to find they are indicative of underlying problems with systems, staffing, training, policies, or procedures.

3) Misclassification

The first, and most challenging, step in the CDAG process is the classification of a complaint as an inquiry, grievance, coverage determination, or appeal. Adding to the complexity, one complaint may have multiple issues requiring resolution using separate procedures. We are noticing that plans often have difficulties distinguishing between coverage determinations and grievances (especially when the complaint involves a co-payment amount), inquiries and grievances, and coverage determinations and appeals. Improperly classifying complaints denies members of their rights to timely coverage determinations, appeals, or grievances. Misclassification uncovered in an audit can quickly lead to a condition (finding) and may cast doubt about staff competency.

4) Outreach efforts

We continue to see plans that fail to conduct reasonable and diligent attempts to obtain information required to make an appropriate clinical decision. In the 2016 Final Call Letter released on April 6, CMS indicated they would revise the current guidance to include “…what constitutes ‘reasonable attempts’…” for obtaining necessary clinical documentation and further stated “… [CMS] envisions that there will be separate parameters for expedited and standard requests…” In the meantime, plans should focus on conducting several attempts (we recommend at least 2-3 over different points in time) using multiple modes of communication, while avoiding the temptation to deny requests lacking information too early in the adjudication timeframe.

5) Denial Notice Rationale

In recent mock audits, we have found that the inability to produce a complete, accurate, and understandable denial rationale on a consistent basis continues to plague plans. Too often we have seen that staff members rely on generic, “template text,” instead of tailoring each letter to describe the specific reason for denial. In addition, staff often fails to write the denial rationale at a level for both the prescriber and member to fully understand. While CMS will provide additional guidance to improve denial notices – as mentioned in the 2016 Final Call Letter – plans will continue to be under intense scrutiny to produce a clear and accurate denial letter.


Not sure if these issues are tormenting your plan? Don’t wait for CMS to tell you. Plans need to know that their systems, procedures, and staff are in accord with CMS requirements before an audit. Our experience has been that a detailed universe analysis can help identify gaps and errors in CDAG universes. We have also found that mock audits are a great way to detect issues, run staff through the paces of an audit, and obtain valuable insight into plan performance.

Don’t let an audit catch you by surprise! You can start your audit preparations today. If you are interested in learning more about these issues, or would like to discuss setting up a universe analysis, mock audit or audit-readiness strategy, please contact us at

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