For pharmaceutical companies, navigating the complexities of the Medicare Part D Coverage Gap Discount Program (CGDP) can be a challenging undertaking. This element of the Affordable Care Act of 2010 requires pharma manufacturers to provide a 50 percent discount to eligible Medicare Part D beneficiaries who receive their applicable covered brand-name Medicare Part D drug(s) while in what is known as the "coverage gap" between the initial coverage limit and the catastrophic coverage limit. Patients who have already exceeded their initial coverage limit but have not yet reached the threshold necessary to qualify for catastrophic coverage are eligible for this discount on applicable covered brand-name Medicare Part D drugs at the point-of-service as soon as they enter the coverage gap. . This is intended to relieve some of the financial burden on patients in the coverage gap by reducing the cost of drugs.
A Serious Financial Burden
Many pharma companies are feeling a monetary squeeze associated with these steep discounts mandated under the Coverage Gap Discount Program. As reported by CMS in July 2014, pharma manufacturers have collectively paid $425 billion in Coverage Gap discounts for the 2013 Benefit Year. However, pharma companies really have no choice but to participate in the CGDP if they want to preserve and protect their existing Medicare Part D business. As of January 1, 2011, these companies were required to enter into a CGDP Manufacturer Agreement with the Centers for Medicare and Medicaid Services (CMS) in order for their drugs to be covered under the Medicare Part D program. These companies are required to provide reimbursement to Part D sponsors for the discounts offered under the CGDP. CMS utilizes Palmetto GBA, a third-party administrator, to invoice pharma companies for these reimbursements and provide a process by which these firms can dispute payments potentially requested in error. Many pharmaceutical manufacturers, however, find the pay and chase dispute process to be complicated and more burdensome than it’s worth. As a result, these companies may fail to recover funds invoiced in error and may end up paying much more than they owe under the CGDP.
A Complex Regulatory Process: Disputes
Disputes identified by the pharma manufacturer that meet CMS designated criteria must be submitted to Palmetto GBA, CMS’ assigned third-party administrator (TPA) electronically. The process generally includes the following steps:
- Identifying the appropriate data records to dispute along with the corresponding reason code for the dispute
- Preparing a dispute submission file that contains only the record or records specifically disputed by the pharma company
- Compiling and emailing supporting information to the TPA for each record disputed
- Submitting the file for review and evaluation by the TPA
- Resubmitting any dispute submission files that are rejected as invalid due to improper syntax or format before the deadline expires
- Waiting for the TPA to evaluate the dispute and uphold or deny the claim
- Appealing denied disputes
- Acceptance of the dispute and adjustment of invoiced payment amounts
Understanding the intricacies of the CGDP dispute resolution process can help pharma companies recoup some of the amounts paid in error through the program and can ensure greater profitability in the competitive marketplace. By determining the best strategies for addressing required CGDP payments and disputing invoices submitted in error, companies can often achieve improved control of potential revenue leakage under CGDP.
Practical Help for Pharma Companies
Understanding the CMS CGDP dispute process can help your company stay profitable and reduce errors that can affect your corporate bottom line. The Complete Guide to the Coverage Gap Discount Program Dispute Process Webinar is designed to provide in-depth information for your pricing compliance coordinators and management team on submitting disputes regarding this federal program. This webinar will be presented by Shannon Bermudez, a principal consultant at Paragon and a specialist in the Medicare Part D pharma contracting field. Topics covered will include the following:
- The timeline of the dispute process from start to finish
- An in-depth look at dispute reason codes and the required documentation for each accepted code
- Determining factors in deciding to dispute or not to dispute
- The dispute process and what to expect at every stage to include acceptance or denial of the dispute
- Setting up a corporate strategy for managing CGDP dispute processes