More Formularies May Mean More Problems on Audits, Suggests CMS

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care. 

By Lauren Flynn Kelly, Managing Editor

May 25, 2017 Volume 23 Issue 10

CMS’s annual report summarizing activities for the prior audit year — released several months earlier than usual — contained some “encouraging” results, such as improved performance in the Part D program areas of Formulary and Benefit Administration (FA) and Coverage Determinations, Appeals, and Grievances (CDAG), observed a CMS official who spoke during a May 11 session of the Medicare Advantage and Prescription Drug Plan Audit and Enforcement Conference. However, the report showed that plan sponsors continued to be cited for the same mistakes, particularly in Part D, and suggested a correlation between the number of formularies a sponsor operates and its audit score, observed Greg McDonald with the Division of Analysis, Policy and Strategy in the Medicare Parts C & D Oversight and Enforcement Group.

The 2016 Program Audit and Enforcement Report, posted May 9, observed a notable decrease in audit scores (i.e., improved performance) from 2015 to 2016, with the largest percentage drops in FA and CDAG. McDonald noted that this improvement was partly attributable to changes in the way CMS defines “immediate corrective action required” (ICAR), “corrective action required” (CAR) and observations. For example, ICARs now necessitate an “access-to-care issue,” so removing certain things that would formerly have qualified as an ICAR could have lowered scores, he suggested.

Nevertheless, McDonald said CMS continued to see the same “common conditions” in both drug-related program areas as well as in Part C Organization Determinations, Appeals, and Grievances (ODAG) as it has in previous years. In CDAG, this included a sponsor’s failure to appropriately auto-forward coverage determinations and/or redeterminations (standard and/or expedited) to the Independent Review Entity (IRE) for review and disposition within the CMS required timeframe, which has been cited as a common condition in five out of seven program audit years since 2011 and is an area of increasing concern (see story, p. 1).

The report also highlighted the top 10 conditions cited as ICARs in 2015 and 2016; two were in CDAG, three were in FA and five were in ODAG. The most common condition was also a failure to appropriately auto-forward coverage determinations and/or redeterminations to the IRE within the required timeframe, which necessitated immediate corrective action 21 times.

Included in this year’s audit report for the first time was a look at the relationship between audit scores and formulary count in ODAG and FA. CMS split scores for each area across audited sponsors into two groups: those that operate one formulary and those that operate more than one, and found that those with only one formulary had lower (better) scores on average in both FA and CDAG, with a greater difference in FA. CMS suggested this finding may be “attributable to difficulties associated with managing multiple formularies and monitoring and correcting compliance issues.” CMS did not, however, detect any relationship between the number of Part C First Tier, Downstream and Related Entities that audited sponsors had in 2016 and their ODAG audit scores.

CMS in 2016 and early 2017 imposed a total of 21 enforcement actions that resulted in civil monetary penalties amounting to $7.5 million, with an average of $357,756 per CMP (see table, this page). These included 17 enforcement actions based on non-compliance observed in 2016 program audits, which did not result in any intermediate sanctions or for-cause terminations. Excluding three sponsors fined for inaccurate or late Annual Notice of Change/Evidence of Coverage documents and one for marketing misrepresentation, CMPs stemming from 2016 program audit findings totaled nearly $7.3 million, compared with almost $8.5 million imposed on 12 MA and Part D sponsors in 2015 and early 2016.

View the report at http://tinyurl.com/n5emdlt.

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MA and Part D Sponsors Receiving a CMP Based on 2016 Referrals

Date of Imposition	Organization Name	Basis for Referral	CMP Amount
May 26, 2016	Clover Health	Marketing Misrepresentation	$106,095
Aug. 9, 2016	Blue Cross of Idaho Care Plus, Inc.	Inaccurate ANOC/EOC	$102,820
Aug. 9, 2016	AgeWell New York, LLC	Late and Inaccurate ANOC/EOC	$3,325
Sept. 8, 2016	Express Scripts Medicare	Late ANOC/EOC	$5,325
Oct. 11, 2016	Health Care Service Corp.	2016 Program Audit	$115,625
Oct. 11, 2016	Healthfirst, Inc.	2016 Program Audit	$38,125
Oct. 11, 2016	Fallon Community Heatlh Plan	2016 Program Audit	$348,900
Nov. 21, 2016	Caidan Enterprises, Inc.	2016 Program Audit	$57,715
Nov. 21, 2016	Health Plan of San Mateo	2016 Program Audit	$49,725
Nov. 21, 2016	Health Partners Plans, Inc.	2016 Program Audit	$32,600
Nov. 22, 2016	UnitedHealth Group, Inc.	2016 Program Audit	$2,498,850
Jan. 12, 2017	AvMed, Inc.	2016 Program Audit	$764,375
Jan. 12, 2017	Presbyterian Healthcare Services	2016 Program Audit	$775,375
Jan. 12, 2017	Centene Corp.	2016 Program Audit	$31,950
Feb. 23, 2017	FirstHealth of the Carolinas, Inc.	2016 Focused Program Audit	$28,975
Feb. 23, 2017	Independent Care Health Plan, Inc.	2016 Focused Program Audit	$321,900
Feb. 23, 2017	MVP Health Care, Inc.	2016 Program Audit	$85,200
Feb. 23, 2017	WellCare Health Plans, Inc.	2016 Program Audit	$1,174,300
Feb. 24, 2017	CommunityCare Managed Healthcare Plans of OK, Inc.	2016 Program Audit	$760,500
Feb. 24, 2017	PH Holdings, LLC	2016 Program Audit	$83,250
Feb. 24, 2017	SCAN Health Plan	2016 Program Audit	$127,950
ANOC/EOC = Annual Notice of Change/Evidence of Coverage CMP = civil monetary penalty SOURCE: Annual Report from CMS’s Medicare Parts C and D Oversight and Enforcement Group, Published May 9, 2017

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