Coverage Gap Discount Program

1. Coverage Gap Discount Program Manufacturer Webinar December 12, 2012

2. Announcements • Welcome to the first of a new series of Manufacturer Webinars • Today’s content is based on questions received by CMS from pharmaceutical manufacturers and others • Topics for future webinars may be sent, at anytime, to webinar@tpadministrator.com • Slides will be posted to the TPA website, http://tpadministrator.com after the webinar 2

3. Webinar Schedule 2013 • February 13 • April 17, June 12, August 14, October 9, December 11 • Send topics to: webinar@tpadministrator.com • Wednesday, Time TBD • ListServ announcement with registration instructions, Event Reminder, Web and Phone Access Information 3

4. Agenda • Benefit Design • New TPA website • File Submission Errors • Online Payment Confirmation • Negative Amounts • 2014 Manufacturer Agreement • Coverage Gap Mock Up with 2009 data • Resources 4

5. Benefit Design Presented by Tara Waters 5

6. DEFINED STANDARD BENEFIT 2012APPLICABLE BENEFICIARIES AND APPLICABLE DRUGS YTD Gross Covered Drug Costs $6,730.39 $320 $2,930 75% Plan Pays 80% Reinsurance Coverage Gap Deductible Total Drug Cost –Gap Discount 25% Coinsurance $4,700 TrOOP 15% Plan Pays 5% Coinsurance Gap Discount for Applicable Drugs– 50% Direct Subsidy/ Beneficiary Premium Medicare Pays Reinsurance Beneficiary Liability Gap Discount for Applicable Drugs

7. STRADDLE CLAIMS Cross one phase of the benefit to another phase of the benefit Straddle Straddle Straddle

8. BASIC BENEFIT PLAN TYPES *The actuarial value remains equivalent to a DS benefit plan such that no supplemental premium is required. 8

9. TIERED COST-SHARING • Tiered cost-sharing is an alternate way to implement cost-sharing. • Plans may deviate from the standard cost-sharing rates provided their proposed cost-sharing passes actuarial tests for being actuarially equivalent to the DS benefit.

10. EXAMPLE OF A TIERED BENEFIT 10

11. Benefits Guidance • HPMS Guidance • “Additional Guidance Concerning Closing the Coverage Gap in 2011” released September 10, 2010 • “Medicare Coverage Gap Discount Program – Maximum Applicable Discounts” released January 27, 2012 • Prescription Drug Event Data Technical Assistance Participant Guide • Module 4 - on Calculating and Reporting the Basic Benefit • Module 7 - Calculating and Reporting the Enhanced Alternative Benefit

12. New TPA Web Site Overview Presented by Donna Kellett 12

13. New TPA Website • http://tpadministrator.com • New email addresses • webinar@tpadministrator.com WEBINAR ONLY • tpaoperations@tpadministrator.com • New content being rolled out • Improved functionality • Online, real time HELP coming soon 13

14. TPAdministrator.com 14

15. File Submission Errors Common Errors on Payment Confirmation Submissions Presented by Donna Kellett 15

16. Edit Code Frequency File Rejection Errors on Payment Confirmation File Submissions E004 Invalid FILE ID E007 No Date Entered/Invalid, or Date is > Current Date E008 Payment Amount not Numeric E010 Invalid Record Types in File E015 Confirm Date Precedes Invoice Report Distribution Date E019 Payment Method is Invalid or Missing

17. E019 – Payment Method Is Invalid Or Missing Accepted methods are: 1 – ACH 2 – Wire • If something other than the two acceptable methods (1 or 2) is indicated, or if nothing at all is placed in this field, the system will generate an E019 edit.

18. E010 – Invalid Record Types In File INCORRECT SUBMISSION TPAMH20110100001172011042509562010MPCP999920110804    H9999 INVALID RECORD TYPE TPACH20110100000012011042509562010MPCH9999 LBLR 2011010000001P9999H9999633040000000203D TPACT20110100000012011042509562010MPCH9999000000100000000000000{… H8888 INVALID RECORD TYPE TPACH20110100000022011042509562010MPCH8888 LBLR 2011010000001P9999H8888633040000000203D TPACT20110100000022011042509562010MPCH8888000000100000000000000{…   CORRECT SUBMISSION TPAMH20110100001172011042509562010MPCP999920110804 TPACH20110100000012011042509562010MPCH9999 LBLR2011010000001P9999H9999633040000000203D TPACT20110100000012011042509562010MPCH9999000000100000000000000{… TPACH20110100000022011042509562010MPCH8888 LBLR 2011010000001P9999H8888633040000000203D TPACT20110100000022011042509562010MPCH8888000000100000000000000

19. Payment Confirmation Online Application Presented by Donna Kellett 19

20. Online Payment Confirmation • Beta testing starting soon with a small group of manufacturers • Other test groups will be selected to test the application • If you would like to be in a test group contact the TPA 20

21. Online Payment Confirmation • How will it work? • Log on to TPA web site Payment Confirmation application • Choose from a list of your Quarterly Invoice reports • See the amounts due to be paid to contracts • Confirm payments by screen or by item • Receive error messages and instructions on how to fix in real time • Payment Confirmation file is formatted and submitted for you 21

22. Online Payment Confirmation Invoice List • Listed by quarter • Shows latest status • Actions available: • Download • Invoices • Submitted Confirm Files • Confirm Payments • View History 22

23. Online Payment Confirmation Confirmation Line Items • Modify: • Paid Amount • Paid Date • Pmt Method • ACH is the preferred payment method and is the most cost efficient in most cases. • Keeps track of out of balance lines and amounts • Provides real-time edit checking • Formats the submission file 23

24. Online Payment Confirmation Transmit • View Totals • Invoiced Amounts • Confirmed Amounts • ‘Yes’ click needed to submit confirmation 24

25. Online Payment Confirmation Process Confirmation • Date and Time stamped • Success or Failure Msg • Option to Download 25

26. Online Payment Confirmation • Actual screens may differ from the prototype screens shown here • Advantages of an online process • Saves time • Improves accuracy • No need to reformat files into the proper layout

27. Negative Invoice Amounts Identification and Resolution Presented by Donna Kellett 27

28. Negative Amounts • How Did They Happen? • Adjustment to a previously invoiced amount • Money owed to the manufacturer • Discount amounts within the same quarter may not have been enough to cover the negative amount • No methodology exists to recover that amount for Manufacturers 28

29. Negative Amounts Example • PXXXX Pharma Co. Was Invoiced for Discounts to HXXXX Health Plan, Inc • 2011 Q1 $300.00 Paid and Confirmed • 2011 Q2 $200.00 Paid and Confirmed • 2011 Q3 $100.00- Adjustment to Previously Paid Discount is processed, Money is owed to Manufacturer, No Method Exists to Refund to Manufacturer • 2011 Q4 $200.00 Paid and Confirmed • This Manufacturer was Invoiced, and Paid $700.00 in Gap Discounts • BUT This Manufacturer is Still Owed $100.00 for the Adjustment in Q3 2011 • Manufacturer will need to be reimbursed for that $100.00 by the Plan • Net Gap Discount Amount paid by Manufacturer, after reimbursement, is $600.00 29

30. Negative Amounts Proposed Solution 1 – Balance • The TPA will distribute a statement showing each Manufacturer and Part D sponsor the amounts they are owed or owe • 2011 Quarters 1 – 4 and 2012 Quarters 1 – 4 • Statement will be issued early in 2013 • Manufacturers will have a period of time to provide their EFT information to the TPA for distribution to the Part D sponsors • Manufacturer and Part D sponsors will have a period of time to verify the amounts on the statement 30

31. Negative Amounts Proposed Solution 1 – Balance (con’t.) • Payment will be due to manufacturers at the end of verification period • Both parties will confirm online to the TPA • 2013 Quarters will be balanced in February 2014. • Permanent fix will not be applied until 2014 due to existing maintenance schedules • A calendar of the verification, EFT set up, payment and confirmation deadlines will be published before implementation 31

32. Negative Amounts Proposed Solution 2 – Maintain • Beginning with Quarter 1 2014 Negative Amounts will be balanced within the invoice cycle • Negative Balance will be offset by the quarterly charges if possible • Negative Balances will be carried from quarter to quarter and offset until they are consumed • Some balances may remain due to contract changes, manufacturer mergers, and other issues • Outstanding negatives will be balanced after a threshold is reached

33. Negative Amounts DRAFT Statement 33

34. Negative Amounts • CMS will issue guidance in January concerning negative amounts • Other solution options will be considered, such as • Today’s example • P2P model • Comment period will allow industry to provide input 34

35. The 2014 Manufacturer Agreement Overview of the 2014 cycle Presented by Shelly Winston 35

36. Manufacturer Agreement • 2014 Manufacturer Agreement has been updated to conform with regulation published in April 2012(77 FR 22072) • Model Agreement is available for viewing on the CMS Manufacturer Page (http://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/Pharma.html) • All Manufacturers must re-sign the agreement through HPMS • This means that a manufacturer’s signatory must • Be designated in HPMS as a signatory, and • Have a CMS user ID with HPMS access • Deadline for signature is January 30, 2013 • Questions should be send to CGDPandmanufactuers@cms.hhs.gov 36

37. Coverage Gap Mock Up with 2009 data Presented by Mark Newsom 37

38. Estimating Long-Term CGDP Prescription Drug Event Submission Patterns • Used Coverage Year 2009 PDEs to estimate long-term patterns of submission of PDEs that would have had gap discount amounts if the Affordable Care Act (ACA) had been in place at that time. 38

39. Estimated Cumulative “Gap Discount” PDEs, 2009 39

40. What does this tell us? • PDEs were originally created to facilitate reconciliation of prospective payments to Part D plan sponsors. • Due to the complexity of Part D, even when all goes well CMS generally does not receive a PDE until 30 days after the dispensing event. • We estimate that approximately 4 million “gap discount” PDEs were submitted for 2009 between the end of the calendar year and the June reconciliation cutoff in 2010. • Plans generally get their PDEs in by the June cutoff in the subsequent year for the annual payment reconciliation. • A small (net) number of PDEs are subsequently deleted after the reconciliation. This is usually due to audit activity by the plan, CMS, or the OIG uncovering claims that should not have been paid. 40

41. Caveats • Drug mix is different now than it was then. • Initial coverage limit and catastrophic (TrOOP) levels change every year. • Pattern is different for high cost specialty drugs that push the beneficiary through the initial coverage phase faster. 41

42. Other Considerations • There is a lag between PDE submission and CGDP invoice generation due to the quarterly billing cycle. • In any given time period about 4-6% of PDE submissions are rejected by one or more of the 150+ edit checks the Drug Data Processing System (DDPS) applies. Rejected PDEs typically take at least 90 days to be resolved and correctly resubmitted. However, more complicated issues have been known to take 6-12 months to resolve. • CGDP PDEs that make it through the front-end editing process are subject to additional quality analysis before invoicing. This process adds lag time to invoicing. 42

43. Resources Presented by Christine Oliver 43

44. Resources New TPA website - http://tpadministrator.com • Suggestions for future webinar topics to webinar@tpadministrator.com • Webinar slides will be posted at http://tpadministrator.com • Questions related to dispute files and invoices should be sent to tpaoperations@tpadministrator.com • Questions related to the Manufacturers Agreement or compliance issues should be sent to CGDPandManufacturers@cms.hhs.gov 44

45. Resources 2011 Prescription Drug Event Data Technical Assistance Participant Guide (http://www.csscoperations.com/internet/Cssc.nsf/files/PDEParticipantGuide%20cameraready%20081811.pdf/$FIle/PDEParticipantGuide%20cameraready%20081811.pdf) • Module 4: Calculating and Reporting the Basic Benefit • Module 5: Calculating and Reporting Total Gross Covered Drug Costs (TGCDC) and True Out-Of-Pocket Costs (TrOOP) • Module 7: Calculating and Reporting Enhanced Alternative Benefit • Module 10: Coverage Gap Discount Program Invoice and Payment Process 45

46. Resources HPMS Guidance • Access to HPMS through Gateway at https://gateway.cms.gov • “Additional Guidance Concerning Closing the Coverage Gap in 2011” released September 10, 2010 • “Medicare Coverage Gap Discount Program – Maximum Applicable Discounts” released January 27, 2012 46

47. Resources Medicare Coverage Gap Discount Program Instructions and Agreements for 2014 - http://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/Pharma.html • HPMS memo: “Revised Coverage Gap Discount Program Agreement for 2014” released October 19, 2012 • Access to HPMS through Gateway at https://gateway.cms.gov • The Agreement will be available for manufacturer signature from December 4, 2012 to January 30, 2013 • Questions related to the instructions or Agreements should be sent to CGDPandmanufactuers@cms.hhs.gov 47

48. Conclusion • Thank you for attending today’s webinar • Contact the TPA with questions, comments • Help Line: 1-877-534-2772 • Hours: Monday thru Friday 8am to 7pm ET • Webinar specific: webinar@tpadministrator.com • General: tpaoperations@tpadministrator.com