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CMS Completes Final Medicare Part D Reconciliation for 2016

CMS has completed the 2016 Final Part D Payment Reconciliation. Each Medicare Part D plan sponsor’s reconciliation reports will be available on October 12, 2017.

By way of background, the Medicare Part D reconciliation process is intended to ensure that the federal government pays each Part D plan sponsor appropriately. To arrive at the reconciliation report, CMS : (1) reviews data provided by the plan sponsor and other sources throughout the year, (2) considers what a plan sponsor paid for drugs during the plan year, what direct and indirect remuneration (DIR) a plan sponsor paid to or received from outside parties, and the total value of prospective payments made by CMS to the plan sponsor for the plan year, and (3) determines whether additional money is owed to or from the plan sponsor.

This is the first Final Part D reconciliation that takes into account direct and indirect remuneration (DIR) that was affected by the new definition of “negotiated prices.”  As discussed further here and here, effective January 1, 2016, CMS amended the definition of “negotiated prices” to include “all price concessions from network pharmacies except those contingent price concessions that cannot reasonably be determined at the point-of-sale.”  Historically, some plan sponsors reported certain price concessions from network pharmacies in DIR and others reflected them in negotiated prices.  Because of the change to the definition of negotiated prices effective January 1, 2016, all plan sponsors were required to reflect price concessions that can be reasonably determined at the point-of-sale in negotiated prices, and therefore excluded such amounts from DIR. CMS continues to instruct plan sponsors to report price concessions from network pharmacies that “cannot reasonably be determined at the point-of-sale” in their annual DIR report.

Plan sponsors should carefully review their reports.  Requests for appeals must be submitted by October 27, 2017.

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About this Author

Tara Swenson-Dwyer, Health Care, Attorney, Mintz Levin, Law Firm

Tara focuses on advising private and public health care services entities, including managed care organizations, pharmaceutical services providers such as PBMs, and integrated delivery systems, on mergers and acquisitions, joint ventures, and complex service arrangements. She works closely with Medicare Advantage Organizations (MAOs) and Medicare Part D Plan Sponsors, including Employer Group Waiver Plans (EGWPs), and first tier and downstream entities to address regulatory and compliance matters that arise as a result of participating in Medicare Parts C and D. Tara has experience...