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March 26, 2008

 

CMS EXTENDS CERTAIN DEADLINES FOR COMPLETING RETIREE DRUG SUBSIDY RECONCILIATIONS

Plan sponsors will get additional time to complete their Retiree Drug Subsidy (RDS) reconciliation1 under a deadline extension announced by the Centers for Medicare & Medicaid Services (CMS) on Monday, March 24, 2008.2 The extension applies to plan sponsors with RDS applications for plan years ending in either 2006 or the first quarter of 2007. It provides welcome relief for plan sponsors that have been scrambling to complete the reconciliation. In many cases, plan sponsors had not yet received information from their pharmacy benefit managers (PBM) needed to complete the reconciliation.

 

The Extension

The table below provides details about the much-needed extension:

End of Plan Year Old Reconciliation Deadline Extended Reconciliation Deadline
  2006   March 31, 2008   June 30, 2008*
  January 2007   April 30, 2008   July 31, 2008
  February 2007   May 31, 2008   August 31, 2008
  March 2007   June 30, 2008   September 30, 2008
* This extension applies to calendar and noncalendar year RDS applications for plan years ending in 2006.

These extensions are automatic. There is no requirement for a plan sponsor to apply for the extension in order to receive it. (Prior CMS guidance had indicated that there would be a process to apply for an extension of the March 31, 2008 reconciliation deadline.)

The reconciliation deadline has not changed for plan years ending on or after April 1, 2007. The deadline is still the last day of the fifteenth month following the last day of the RDS plan year stated in the application.

 

Consequences of Failure to Meet the Extended Deadlines

CMS indicated that the consequences of failing to meet the new deadlines will be as follows:

  • Plan Sponsors that Have Received Interim Subsidy Payments Those interim subsidy payments will be treated as an overpayment, giving CMS the authority to seek immediate recovery action.
  • Plan Sponsors that Have Not Received Interim Subsidy Payments These plan sponsors will lose eligibility for any subsidy payments for the relevant RDS application.

 

Next Steps for Plan Sponsors that Can Take Advantage of the Extended Deadlines

Even though there are now three additional months to complete the reconciliation, plan sponsors should still complete the process as soon as possible in order to avoid last minute problems. The extended deadlines are final. CMS states that no additional time will be provided to complete reconciliation for plans receiving this extension.

        

The Segal Company can be retained to work with plan sponsors on maximizing RDS income and can provide reconciliation assistance.

1 For a description of RDS reconciliation, see The Segal Company’s June 2007 Bulletin, “CMS Announces Final RDS Reconciliation Process” To return to the Capital Checkup text, click here.)
   
2 To see the announcement, click here (To return to the Capital Checkup text, click here.)
   

 

Capital Checkup is The Segal Company's periodic electronic newsletter summarizing activity with respect to health care and related subjects. Capital Checkup is for informational purposes only. It is not intended to provide guidance on current laws or pending legislation. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice. For back issues of Capital Checkup, click here.

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