Coverage Determination Processes Allow for Prompt Decisions, Apply a Range of Criteria, and Have Resulted in Approvals for the Majority of Requests

Study sponsors have designed their coverage determination processes to  allow for prompt decision making within CMS-required time frames. In the sample of coverage determination case  files we reviewed at the seven study sponsors, coverage of the requested  drug was approved in approximately two-thirds of the cases. Technical  staff, such as pharmacy technicians or call center representatives, enter  the patient information into the computer system. Sponsors Apply a Range of Coverage Criteria in Making Coverage Decisions

Sponsors apply a range of coverage criteria to evaluate requests for drugs  with restrictions. In order to show medical necessity, the prescribing  physician must provide a statement that the requested drug is medically  necessary because (1) all of the covered Part D drugs on the sponsor’s  formulary for treatment of the same condition would not be as effective  for the beneficiary, would have adverse effects for the beneficiary, or both;  (2) the prescription drug alternatives on the formulary have been  ineffective in the past, are likely to be ineffective, or are likely to cause an  adverse reaction for the beneficiary; or (3) the number of doses available  under a quantity limit for a requested drug has been ineffective or is likely  to be ineffective. Sponsors in our study also considered the following factors. Approval  rates varied among sponsors, ranging from 57 percent to 76 percent. The approval rates for standard and expedited  requests were 67 percent and 53 percent, respectively. Appeals Processes Allow for Better Informed Decisions, Have Often Resulted in Coverage Approvals, and Are Impeded by AOR Requirement

The appeals process allows for individuals not involved in the previous  case review to make better-informed decisions by considering additional  supporting evidence. In making redeterminations—the first level of  appeal—sponsor staff evaluate any corrected or augmented evidence to  see if coverage criteria have been met. In conducting reconsiderations— the second level of appeal—IRE officials consider the information the  sponsor reviewed, along with any additional support that may be available. In many cases, appeals result in new interpretations of whether the  requested drug should be covered. CMS appeals data show that, from July  2006 through December 2006, the median approval rate across all Part D  sponsors was 40 percent; from July 2006 through June 2007, appeals to the  IRE received full or partial approval in 28 percent of cases. We found that,  for some standard appeals, missing AOR documentation contributed to  delays in study sponsor redetermination decisions and dismissals of IRE  reconsideration cases. Some study sponsors have developed  “workarounds” to eliminate the need for a completed AOR form. As part of the decision process, the IRE determines whether the sponsor  has met its obligation for coverage under the Part D rules. CMS Efforts to Inform Beneficiaries about Sponsors’ Performance Have Improved; Oversight Hindered by Poorly Defined Reporting Requirements

CMS has improved its efforts to inform beneficiaries about sponsors’  performance, but its oversight of sponsors is hindered by poorly defined  reporting requirements. To oversee sponsors’ processes, CMS requires that  sponsors report data on several coverage determinations and appeals  measures; however, the agency provided minimal guidance on the  information to be included in each coverage determination measure. As a  result, our study sponsors have reported data differently to CMS,  hindering the agency’s ability to monitor sponsors’ activities adequately. Areas of sponsor noncompliance ranged from incomplete written policies  and procedures to delays in authorizing drug coverage after the IRE  approved an expedited request. Recommendations for Executive Action

To improve the Medicare Part D coverage determination and appeals  processes, we recommend that the Administrator of CMS:  reduce the need for completed AOR forms by requiring sponsors and the  IRE, upon receipt of standard appeal requests submitted by prescribing  physicians without completed AOR forms, to telephone beneficiaries to  determine whether they wish to initiate the appeal, and   ensure that sponsor-reported data used for monitoring coverage  determination and appeals activities are accurate and consistent by  providing specific data definitions for each measure.
Why GAO Did This Study

Under the Medicare Part D program, prescription drug coverage is provided through plans sponsored by private companies. Beneficiaries, their appointed representatives, or physicians can ask sponsors to cover prescriptions restricted under their plan--a process known as a coverage determination--and can appeal denials to the sponsor and the independent review entity (IRE). GAO was asked to review (1) the processes for sponsors' coverage determination decisions and the approval rates, (2) the processes for appealing coverage denials and the approval rates at the sponsor and IRE levels, and (3) the Centers for Medicare & Medicaid Services' (CMS) efforts to inform the public about sponsors' performance and oversee sponsors' processes. GAO visited seven sponsors that account for over half of Part D enrollment. GAO also interviewed and obtained data from CMS and IRE officials.

What GAO Found

Sponsors in our study address coverage requests for drugs with restrictions using processes that allow for prompt decisions, apply a range of criteria, and have resulted in approvals of most cases. To minimize the amount of time needed to make a determination, study sponsors use automated systems to compare the patient information they receive from prescribing physicians against preset coverage criteria. The coverage criteria for specific drugs incorporate Medicare requirements--such as whether the drug use is excluded from coverage under Medicare Part D--and discretionary components--such as whether a less expensive alternative drug has been tried and failed. Some study sponsors indicated they feel pressure to make decisions within the CMS-required time frames even when all pertinent patient information from physicians is not at hand. In reviewing a sample of 421 case files, GAO found that overall, study sponsors approved about 67 percent of the coverage determination requests, ranging from 57 percent to 76 percent. The process for conducting appeals allows staff not involved in the previous case review to make better-informed decisions by considering additional supporting evidence. At the first level of appeal, sponsor staff evaluate any corrected or augmented evidence to see if coverage criteria have been met. At the second level of appeal, IRE staff consider the information the sponsor reviewed, along with any additional support that may be available. In many cases, appeals result in new interpretations of whether the requested drug should be covered. CMS appeals data show that, from July 2006 through December 2006, the median approval rate across all Part D sponsors was 40 percent; from July 2006 through June 2007, appeals to the IRE received full or partial approval in 28 percent of cases. For some standard appeals, missing appointment of representative (AOR) documentation contributed to delays in sponsor-level appeals decisions and dismissals of IRE appeals cases. Some study sponsors have developed "workarounds" to eliminate the need for the completed AOR form. CMS has improved its efforts to inform beneficiaries about sponsors' performance, but its oversight of sponsors is hindered by poorly defined reporting requirements. CMS developed two performance metrics on sponsors' timeliness and the outcomes of their coverage decisions. The agency improved the way it displays this information on the Medicare Web site in late 2007. In addition, CMS requires that sponsors report data on various measures of coverage requests and approvals. However, the agency has provided minimal guidance on the types of cases to be included in each coverage determination measure. As a result, our study sponsors reported data differently to CMS, hindering the agency's ability to adequately monitor sponsors' activities. Finally, CMS has conducted several audits and found that sponsors were noncompliant with a number of specific requirements. Areas of sponsor noncompliance ranged from incomplete written policies and procedures to delays in authorizing drug coverage after the IRE approved an urgent request.