Ensuring Accurate Drug Claims: Insights from CMS Audits and Best Practices

The Centers for Medicare & Medicaid Services (CMS) has added another category of drugs—immunosuppressants—to their national audits in collaboration with the Integrity Medicare Drug Integrity Contractor (PPI MEDIC). CMS began covering end-stage renal disease (ESRD) in 1973, which includes kidney transplants and dialysis.

Immunosuppressants are a mainstay therapy for recipients to protect the grafted organ. On May 10, 2024, CMS published audit results from prescription drug event (PDE) records associated with immunosuppressants from January 1, 2019, through December 31, 2020, as well as their concerns and recommendations for promising practices.

CMS covers ESRD for 36 months, beginning with the date when eligibility takes effect if ESRD is the sole reason for Medicare coverage.[1] If the beneficiary has aged in during the coverage period, the entitlement continues beyond 36 months. If the beneficiary has other conditions that qualify for Medicare coverage besides ESRD, the coverage also continues beyond 36 months.

However, Medicare is the secondary payer for ESRD coverage if the beneficiary has other health insurance (OHI), such as a group health plan. Before January 1, 2021, beneficiaries with ESRD could not join a Medicare Advantage (MA) plan.

Audit observations and suggestions are summarized below:

1. When a Medicare beneficiary receives a Medicare-covered[2] organ transplant, his/her immunosuppressant drugs are covered under Part B, not Part D.
2. To determine if a plan member received a Medicare-covered transplant, the plan should refer to Additional Beneficiary Information Initiatives (ABII) or MARx.
3. Information from #2 should be entered in the enrollment file and sent to the Pharmacy Benefit Manager (PBM) for correct adjudication.
4. Even if the prescriber stated that the member’s transplant was not Medicare-covered, verify in ABII or Marx.
5. The CMS audit found potentially improper Medicare Part D PDE records associated with beneficiaries with evidence of a Medicare-covered transplant from ABII transplant reports; CMS requires these PDE records to be deleted.
6. CMS has also found PDE records for immunosuppressant drugs in member Part C encounter data (on or after the transplant discharge date).
7. In MARx, ESRD data may include kidney transplants paid by Original Medicare or Medicare Advantage plans or transplants that met Medicare coverage rules but were not paid by Medicare; plans should not base coverage determinations on the payer of the transplant but on whether the transplant met the criteria for Medicare coverage.
8. Plans should consider all Part A eligibility periods when making determinations and not only the most recent Part A eligibility period;
9. Plans should leverage their own medical claims/encounter data to determine if a beneficiary had received a Medicare-covered transplant; and
10. If a beneficiary has had two transplants, the first one was not Medicare-covered, but the second is that the beneficiary’s immunosuppressant therapy is eligible for Part B coverage.

Ongoing CMS Efforts:

CMS continues its proactive data analysis to detect unusual changes in specific drug utilization and total Medicare Part D drug spending from PDE records. The most recent findings, released in February 2024, cover the second quarter (Q2) of 2023 to the third quarter (Q3) of 2023 in collaboration with PPI MEDIC.

• Schedule II Opioid Drugs: PDE record utilization showed an overall decrease; however, CMS observed notable spikes. Hydrocodone-acetaminophen was the highest-paid Schedule II drug in Q3 2023, despite a decrease of 1.24% in PDE record utilization and a 0.58% decrease in beneficiary count between quarters.  Of note are two previously reported outliers in generic cost manipulation[3] – Prolate™ (oxycodone-acetaminophen) 10-300 mg and oxycodone-acetaminophen 10-300 mg tablets by FH2 Pharma. In 2023 Q3, Prolate™ exhibited an increase of 119.71% in PDE record utilization, 130.36% in beneficiary count, and 112.99% in total Medicare Part D drug spending (accounting for a $1.76 million increase). Oxycodone-acetaminophen 10-300 mg tablets by FH2 Pharma exhibited a 45.66% increase in PDE record utilization, a 50.18% increase in beneficiary count, and an increase of 51.22% in total Medicare Part D drug spending.
• Testosterone Cypionate: Since 2022 Q1, testosterone cypionate[4], a self-administered injectable, displayed a 22.72% increase in PDE record utilization, a 21.41% increase in beneficiary count, and a 2.74% increase in total Medicare Part D drug use. If used inappropriately and without monitoring of use, the drug can lead to cardiovascular side effects, including stroke.[5] 
• Potential Misuse in Foot Baths/Nasal Rinses/Mouthwashes: As reported by CMS, potential telemarketing schemes and misuse of medications in foot baths/nasal rinses/mouthwashes continue. Crotan™ 10% lotion and Lidogel™ 2.8% displayed the highest increase in PDE record utilization (the former, 91.51% and the latter, 86%) and beneficiary count (105.91% and 105.86%, respectively) and Medicare Part D drug spending from 2023 Q2 to 2023 Q3. In 2023Q3, bacitracin ophthalmic ointment exhibited a 20.88% increase in PDE record utilization, a 20.38% increase in beneficiary count, and a 20.81% increase in Medicare Part D spending. Prescription documentation revealed dilution of the product into foot bath soaks.
• Generic Product Impact: While generic products help stabilize Part D drug costs, not all contribute positively. CMS reported on products like alcohol pads and True Comfort Safety Pen Needles, highlighting discrepancies in unit prices. Alcohol pads remain on the list ($0.45 unit price vs average of $0.12). Oxycodone w APAP of various strengths has unit prices ranging from $50.00 per tab to the average unit price of $0.56 per tab[6] The average paid per PDE record for True Comfort Safety Pen Needles, which are distributed by Home Aide Diagnostics, Inc., is $205.60 for these aforementioned NDCs compared to $88.95 for other available safety pen needles.[7]

CMS System Enhancements:

CMS has enhanced the Batch Eligibility Query (BEQ) Response File and MARx eligibility screen (M232)[8] and made ABII available to drug plans to ensure correct payment decisions without delaying treatment for ESRD enrollees. CMS encourages drug plans to conduct analytics to identify inappropriate use of Part D drugs and products with unusual utilization and costs. Since MA plans only began enrolling ESRD beneficiaries in January 2021, information sharing and additional training can help MA plan staff better understand ESRD coverage.

Inovaare offers professional staff with subject matter expertise and analytical tools to assist MA and drug plans with their surveillance efforts to mitigate unnecessary expenses and stay compliant with CMS rules. Let’s discuss ways we can help. Call us at 1.408.850.2235.

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[1] Eligibility for coverage due to ESRD is irrespective of age.

[2] Medicare-covered =when the transplant is done in a hospital certified by Medicare to perform transplant

[3] Attachment I Drug Trend Analysis and Report, February 2024

[4] This drug is used as replacement therapy in male

[5] Attachment I Drug Trend Analysis and Report, February 2024d

[6] Id

[7] Attachment I Drug Trend Analysis and Report, February 2024

[8] Medicare & Medicaid Plan Eligibility & Enrollment Guide 5/28/2021