Prescription Drug Events (PDEs) are a critical component of the Part D program, and, therefore a critical component of Plan Sponsor and PBM performance. The PDE record is not only the tool by which drug benefit costs are reported to CMS, but also the mechanism that drives Medicare Part D payments and federal program accounting. It is therefore of high importance that all PDEs are complete and accurate. This includes the correct application of definitions and pricing calculations, as set forth by the Centers for Medicare and Medicaid Services (CMS).

PDE calculation and reporting continue to be a source of discomfort for Medicare Part D Plan Sponsors. In large part, this is due to the difficulty in interpreting calculation formulas for various Defined Standard, Basic Alternative, Actuarially Equivalent, and Enhanced Alternative Plans’ PDE scenarios. These scenarios are vast in number and include various situations for Applicable Drugs, Straddle Claims (i.e. when there is one or more Benefit Phases), Coverage Gap Discounts, Low-Income Subsidies, as well as all of the associated accumulators and PDE fields. To add to the complexity, each of these calculations varies based on the plan type.

At Visante, we have observed that Plan Sponsors are struggling to monitor all of the guidance, training, memos, industry group discussions and other communications they are receiving regarding PDE calculation and reporting which can lead to non-compliance in PDE calculations, adjudication processing, and benefit plan edits.

We have also noticed that because of the complexity of the pricing calculations for the various drug event scenarios, the PDE pricing fields can be inaccurate and yet still be accepted by CMS. This happens because the CMS PDE edits do not have the level of validation to detect that a calculation or a coverage determination is inaccurate.  The CMS validation is based on the information in the PDE record. If the calculations to produce the PDE information are inaccurate or are based on inaccurate accumulators, the PDE can still balance. CMS PDE edits would not detect the error. The inaccuracy remains unknown until the Plan conducts an assessment, the manufacturer disputes the calculated Coverage Gap Discount or CMS requests additional information through their monitoring program.

There are also PDE rejects experienced by Plans for which there is no clear understanding of why they occurred. In some circumstances, this is due to changes to existing edits that do not account for the complexities presented by the Plan Design. In other situations, the Plan Sponsor may not have been aware of new guidance for interpreting PDE calculations and PDE edits issued in a CMS memo or training.

In an effort to allay the continuing struggles that Plan Sponsors are experiencing, CMS has issued recent guidance and training.

  • “PDE Maximum Coverage Gap Discount Amount Computer Based Training 12/15/2015” provides best practices for common issues surrounding the Maximum Coverage Gap Discount Amount.
  • “PDE Calculation and Reporting Computer Based Training 12/01/2015” has updated Part D PDE Calculation and Reporting Training.
  • “PDE Common Issues and Best Practices Computer Based Training 11/18/2015” contains training to address many of these issues and provide associated best practices.

We encourage Plan Sponsors to consider their processes for ensuring PDE calculation accuracy and for reviewing and implementing CMS regulation changes, interpretations, and training. It may be time to assess the compliance of your PDEs and the effectiveness of your PDE Operations.

If you would like help with an assessment of your PDE Pricing Calculations or PDE Performance Oversight, please feel free to contact us at solutions@visanteinc.com.

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