• Payment setup,
• Cost reporting, and
• Payment request.

The online process discussed in this Capital Checkup refers to the payment process for payment setup and cost reporting for plan sponsors that requested subsidy payments on a monthly, quarterly or interim annual basis.

Plan sponsors that requested an annual payment will submit actual claims information as part of the year-end reconciliation. CMS has not yet released the data reporting procedures for reconciliation.

Payment Setup

As of April 6, 2006, plan sponsors can go online to complete tasks required to receive payment. Either the Account Manager¹ or the Authorized Representative² can complete the online setup process.

During payment setup, plans must assign the following two key roles to different individuals/entities:

• Cost Reporter The Cost Reporter is responsible for providing information on Part D drug costs. The Account Manager may assume this role or designate someone else for this role, such as a pharmacy benefit manager (PBM).
• Payment Requestor The Payment Requestor is responsible for the electronic submission of a formal request for payment. The Payment Requestor is also responsible for reviewing costs that have been reported by the Cost Reporter(s) for each benefit option, and selecting the benefit option(s) for which payment will be requested. The Payment Requestor role may be filled by any of the following: the Authorized Representative, the Account Manager or a Designee³, but none of these can also be a Cost Reporter. The RDS Center will automatically designate the Authorized Representative as the Payment Requestor, unless the role is designated to another individual/entity during the setup process.

In addition to assigning the key roles, plans must submit an Authorized Representative Verification Form as part of the setup process. This form must be submitted to CMS via mail or fax or by e-mailing a scanned image of the form. Submitting this form is a precondition to requesting subsidy payments. For more information and the form, click here.

Cost Reporting

CMS has announced that on July 1, 2006, the RDS Center will accept electronic "cost report" information about Part D drug costs that plans have incurred. Cost Reporters will report aggregate claims information by month and by benefit option for all subsidy-eligible individuals. Although only aggregate data is required to be submitted, Cost Reporters will need access to claims data for each subsidy-eligible individual in order to calculate the aggregate amounts. Detailed information about the cost-reporting process, including formats, as well as Webinars discussing the process, are available on the Retiree Drug Subsidy Web site.

What Plans Sponsors Should Be Doing Now

Plan sponsors must decide who will undertake the various tasks that are needed to complete the payment process. Even though most plan sponsors will have outside entities that administer drug claims, such as a PBM or insurer, complete the actual cost reporting, plan sponsors must still oversee this process, including performing the payment setup discussed above. Plan sponsors also are ultimately responsible for the accuracy of the payment request and all costs reported.

Plan sponsors should do the following:

• Confirm the status of the RDS application. Make sure that the application is approved and the list of retirees is up to date. (The retiree list must be updated monthly, if there are changes to report.)
  
  
• Review training materials and other information on the RDS Web site concerning the payment process.
  
  
• Verify that each drug claims administrator is keeping the necessary data that will be required to prepare cost reports. For non-calendar plan years ending in 2006, this will include 2005 data back to the beginning of the plan year because the plan must calculate the RDS subsidy amount considering when an individual reached certain thresholds during the plan year (e.g., $250 and $5,000).
  
  
• Decide whether the plan itself, the drug claims administrator, or some other entity will report costs to CMS. Plans that designate their drug claims administrator or another entity will need to contract with them to provide this service. Plan sponsors should confirm what the entity will charge for this cost reporter service, as well as the schedule for the submission of cost data to the RDS Center. Those plans that have already contracted with their PBM to provide Part D services may need to revisit the terms of the agreement and make sure it is consistent with the new payment process. In addition, plan sponsors should consider making arrangements to audit the cost reports submitted by their PBM for completeness and accuracy.
  
  
• Plan sponsors that will do the cost reporting themselves should make sure they have the capability and time to obtain the needed cost data and report it to RDS in the specified formats.
  
  
• Complete the payment setup on the RDS system.
  
  
• Submit cost reports on or after July 1, 2006 (or assure that their Designee submits them).
  
  
• Arrange for the Payment Requestor to review cost reports and submit the payment requests.

Future Issues for Plan Sponsors

Plan sponsors should look out for future guidance on the payment process (especially the Payment Requestor role), as well as the process for reconciliation within 15 months after the end of the plan year. The reconciliation process will require the submission of actual claims information.

CMS has not yet announced when payments will be made. Plan sponsors seeking the Retiree Drug Subsidy should assure that all steps are completed in order to receive payment as quickly as possible.

As with all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for authoritative advice on the interpretation and application of the Medicare Modernization Act (MMA) and relevant regulations. The Segal Company can be retained to work with plan sponsors on issues related to Medicare Part D.

1	The Account Manager is the employee or agent of the plan sponsor that manages and controls the RDS application on the RDS Web site. (To return to the Capital Checkup text, click here.)
2	The Authorized Representative is the person ultimately responsible for signing off on and submitting the RDS application. (To return to the Capital Checkup text, click here.)
3	A Designee is a person assigned by the Account Manager or Authorized Representative to perform certain functions related to the RDS application. (To return to the Capital Checkup text, click here.)