On January 15, 2013, the Centers for Medicare and Medicaid Services (CMS) imposed immediate Intermediate Sanctions on SilverScript Insurance Company's (SSIC) stand-alone Medicare Part D prescription drug plans (PDPs) under contract number S5601. SilverScript may no longer market contract S5601 prescription drug plans or accept enrollments in Medicare Part D plans under contract number S5601.
There are approximately four (4) million members in the SilverScript S5601 prescription drug plans. Since January 1, 2013, SSIC has experienced widespread data system failures in the areas of enrollment processing, call center operations, and claims processing. These failures have created disruptions in tens of thousands of Medicare beneficiaries' access to prescription medications.
The sanctions will remain in effect until CMS is satisfied that the deficiencies have been corrected and are not likely to recur. The CMS actions do not affect current SilverScript Medicare Part D plan members, who will continue to receive prescription drug services through SilverScript.
Re: Notice of Imposition of Immediate Intermediate Sanctions (Suspension of Enrollment and Marketing) for Medicare Prescription Drug Plan Sponsor Contract S5601
Dear Mr. McDonald:
Pursuant to 42 C.F.R. § 423.756, the Centers for Medicare & Medicaid Services (CMS) hereby informs Silverscript Insurance Company (SSIC) of its determination to immediately impose intermediate sanctions on the following Medicare Prescription Drug Plan (PDP) Sponsor Contract: S5601.
These intermediate sanctions will consist of the suspension of the enrollment of Medicare beneficiaries (42 C.F.R. § 423.750(a)(1)) and the suspension of all marketing activities to Medicare beneficiaries (42 C.F.R. § 423.750(a)(3)). CMS is imposing these intermediate sanctions immediately, effective January 15, 2013 at 11:59 p.m. EST, pursuant to 42 C.F.R. § 423.756(c)(2), because it has determined that SSIC’s conduct poses a serious threat to the health and safety of Medicare beneficiaries.Pursuant to 42 C.F.R. § 423.756(c)(3), the intermediate marketing and enrollment sanctions will remain in effect until CMS is satisfied that the deficiencies upon which the determination was based have been corrected and are not likely to recur.CMS will provide SSIC with detailed instructions regarding the marketing and enrollment suspension in a separate communication.
Summary of SSIC’s Non-Compliance
SSIC currently holds a contract with CMS to administer stand-alone outpatient prescription drug benefits (i.e., Medicare Part D) to Medicare beneficiaries throughout the United States.As of January 1, 2013, SSIC is responsible for the delivery of Part D benefits to approximately four million beneficiaries.Since January 1, 2013, SSIC has experienced widespread data system failures that have directly led to extensive violations of the Part D program’s requirements regarding enrollment processing, call center operation, and claims processing.These failures have created disruptions in tens of thousands of Medicare beneficiaries’ access to prescription medications.CMS has determined that SSIC’s operational deficiencies have resulted in the substantial failure to comply with SSIC’s PDP contract and warrant the imposition of an intermediate sanction in the form of the suspension of its marketing and enrollment activities.CMS has further determined that SSIC’s failures pose a serious risk to its current and prospective members’ health and safety and therefore is making the sanction effective immediately.
Relevant Part D Benefit Requirements
To receive Part D benefits, Medicare beneficiaries must elect to enroll in a prescription drug benefit plan offered by an organization that contracts with CMS to operate as a Part D sponsor (sponsor). Sponsors are required to operate systems that adjudicate claims in real time at the point of sale (i.e., at a pharmacy). 42 C.F.R. § 423.505(b)(17). To operate such a system, sponsors must accurately process enrollment transactions. 42 C.F.R. Part 423, Subpart B. This includes assigning individuals to their elected plans, transmitting enrollment data to CMS and maintaining accurate information on beneficiaries’ eligibility for a low-income subsidy (LIS) that would exempt them from liability for premiums and deductibles and afford them access to special low co-payment amounts. 42 C.F.R. Part 423, Subpart B and § 423.800.
Unlike health benefits offered under the Part C or Original Medicare programs, where beneficiary payments and claims are normally processed after the delivery of covered services, outpatient prescription drug claims must be adjudicated in light of the structure (e.g., deductibles and cost sharing amounts) of the beneficiary’s plan benefit package in real time at the point of sale and result in an adjudicated paid response before a pharmacy will fill a beneficiary’s prescription. 42 C.F.R. §§ 423.104(a) and 423.505(b)(17). Any failure of a sponsor’s data systems can immediately cause interruptions in claims processing for its enrollees at pharmacies. In those instances, the beneficiary will have to leave the pharmacy without the drug unless he or she can pay the entire cost of the drug out of his or her own pocket.
Sponsors must pay particular attention to their enrollment operations each December in preparation for the start of a new plan benefit year the following January. They must make certain that prior to January 1, their enrollment records (upon which the operation of their claims adjudication system will depend) show that the sponsor’s continuing enrollees are assigned to the correct benefit plan package for the upcoming year, that new enrollees who elected the sponsor’s plan during the annual election period are assigned to the plan they chose, and that the correct LIS status is recorded for each beneficiaries. 42 C.F.R. Part 423, Subparts B and § 423.800.
Deficiencies Related to the Part D Benefit
On January 2, 2013, the 1-800-MEDICARE phone line began receiving numerous beneficiary complaints about SSIC’s Part D operations. These complaints are recorded in CMS’ complaints tracking module (CTM) which plan sponsors have access to and must review. At the same time, CMS received reports from at least 5 state health insurance program (SHIP) counseling organizations (state-operated programs that provide information and counseling to residents concerning their health insurance options) that SSIC enrollees in their states were experiencing customer service and claims processing problems.
CMS immediately contacted SSIC for more information. On January 3, 2013, SSIC told CMS that, among other problems, it had failed to load thousands of new enrollees into its claims adjudication system. SSIC management explained that an update of SSIC’s Part D data systems performed during late 2012 had led to significant disruptions in its enrollment, LIS tracking, and claims processing operations. SSIC has confirmed that tens of thousands of SSIC enrollees were affected by these system errors.
From January 1 through January 14, 2013, CMS received 2,340 complaints about SSIC’s Part D operations. CMS has received complaints about SSIC at a rate four times greater than the rate of complaints received about all other Part D sponsors combined during the same period. CMS’ analysis of the complaints indicates failures fall into three broad categories: (1) beneficiaries not enrolled in an SSIC plan; (2) beneficiaries are enrolled in the wrong SSIC plan; and (3) incorrect LIS status for the beneficiaries. In addition, the SSIC customer service call center experienced a dramatic increase in call volume as its members sought resolution to claims issues they were experiencing at the pharmacy as a result of SSIC system errors.
A significant number of the SSIC enrollee complaints describe instances where the member had to pay more out of pocket than was required under the terms of the benefit plan because SSIC systems could not correctly adjudicate the member’s claims in real time. For some beneficiaries, this meant paying a higher copay amount while others were charged the full cost of the drug. In many instances, beneficiaries could not afford the higher charge and left the pharmacy without their medication. SSIC has acknowledged to CMS that many of its enrollees have had difficulty obtaining their medications or are being charged incorrect co-pay or cost-sharing amounts. While SSIC tried to mitigate the impact of its systems failures by authorizing pharmacies to use a universal claim form for any customer claiming to be an SSIC member (which would allow the pharmacist to dispense the drug without any cost sharing and without adjudication by the sponsor), the complaints received via 1-800-MEDICARE indicate that in many instances, SSIC enrollees are continuing to leave the pharmacy counter without their prescription medications.
Therefore, CMS analysis of disclosures made by SSIC as well as complaints received by CMS demonstrate that SSIC is substantially out of compliance with 42 C.F.R.§ 423.505(b)(17), which obligates Part D sponsors to use point of service systems to adjudicate claims in a timely and efficient manner. This was a result of SSIC’s substantial failure to meet its obligation, stated at 42 C.F.R. § 423.505(b)(2), to process enrollments in a manner consistent with the requirements stated at 42 C.F.R. Part 423, Subpart B. In addition, SSIC is substantially out of compliance with the requirement, stated at 42 C.F.R. § 423.800(b), that it charge its LIS-qualified enrollees the reduced cost sharing amounts to which they are entitled.
Since January 4, 2013, CMS has held daily conference calls with SSIC management to discuss SSIC’s efforts to resolve its data systems issues. At each of these meetings, SSIC management has reported that they continue to design and implement updates to their data systems to improve the accuracy of SSIC’s enrollment, LIS, and claims processing systems. However, as of January 15, 2013, SSIC’s deficiencies remain unresolved. This is evidenced by SSIC’s own identification of new issues as well as the daily receipt of numerous urgent complaints from its beneficiaries. Therefore, CMS concludes that SSIC has not yet fully diagnosed the root causes or the extent of its current failures, information which is critical to the development and execution of an effective corrective action plan. CMS expects that SSIC will use the enrollment and marketing suspension period as an opportunity to maintain its focus on coming into compliance promptly and ensuring that its members are consistently receiving the Part D benefits to which they are entitled.
Legal Basis for Immediate Imposition of Marketing and Enrollment Sanctions
As described above, since January 1, 2013, there SSIC has experienced widespread systems failures impacting its ability to correctly adjudicate Part D claims for its enrollees at the point of sale.
Therefore, CMS has determined that SSICs deficiencies provide a sufficient basis for the immediate imposition of intermediate sanctions (42 C.F.R. §§ 422.752(b) and 423.752(b)). CMS has determined that:
• SSIC substantially failed to carry out the terms of its Prescription Drug Plan contract with CMS (42 C.F.R. §423.509(a)(1)); and
• SSIC is carrying out its contracts with CMS in a manner that is inconsistent with the effective and efficient implementation of the program (42 C.F.R. §423.509(a)(2)).
SSIC Deficiencies Create a Serious Threat to Enrollee Health and Safety
SSIC has reported that its own records indicate that large numbers of its enrollees have been denied access to covered drugs. For example, SSIC reported to CMS on January 9, 2013, that its records show reversals of prescription drug claims for over 15,000 of its LIS plan enrollees since January 1, 2013. Claim reversals are frequently done when a beneficiary declines to have a prescription filled after being told by the pharmacist that his or her claim is denied or incorrectly adjudicated to require a higher cost-share than the beneficiary can afford.
Beneficiary access to prescribed medications is the most fundamental aspect of the Part D program because it most directly affects clinical care. The nature of SSIC’s deficiencies, combined with the multiple reported instances of denied access to critical medications resulting from those deficiencies, provide a sufficient basis for CMS to find the presence of a serious threat to beneficiaries’ health and safety supporting the immediate suspension of SSIC’s Part D enrollment and marketing activities. Consequently, these sanctions are effective on January 15, 2013, pursuant to the authority provided by 42 C.F.R. §423.756(c)(2).
Corrective Action Steps
As stated above, pursuant to 42 C.F.R. § 423.756(c)(3), the sanctions will remain in effect until CMS is satisfied that the deficiencies that are the basis for the sanction determination have been corrected and are not likely to recur. Attached to this notice is a template Corrective Action Plan with instructions for SSIC to complete. SSIC should submit its Corrective Action Plan to CMS seven (7) calendar days from the date of receipt of this notice, or by January 23, 2013. If SSIC needs additional time beyond seven (7) days to submit a corrective action plan contact your enforcement lead.
The Corrective Action Plan will assist SSIC in correcting the deficiencies that are the basis for the sanction determination as quickly as possible. The completed document will also guide communications with CMS and serve as a tool for CMS to monitor SSIC’s progress.
Once SSIC has fully implemented its Corrective Action Plan and submitted to CMS an attestation from the SSIC’s Chief Executive Officer, or most senior official, stating that SSIC has corrected the deficiencies that are the basis for the sanction and they are not likely to recur, validation activities will be scheduled by CMS. CMS will provide further guidance on validation activities in a subsequent notice to SSIC. The results of validation are used in conjunction with information gathered from SSIC’s Corrective Action Plan, issues discovered during routine account management monitoring, and the identification of any additional sanction related issues to determine whether the underlying deficiencies have been corrected and are not likely to recur.
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