CMS Releases Updates to Its Medicare Advantage and Part D Plan Audit Protocols and Processes

Health Care and Life Sciences Client Alert

Epstein Becker Green Health Care and Life Sciences Client Alert On February 12, 2015, the Centers for Medicare & Medicaid Services (“CMS”) released an updated version of its Medicare Advantage (“MA”) and prescription drug benefit (“Part D”) plan audit protocols and also announced the beginning of a new audit cycle, indicating that all plan sponsors will be considered for audit, even those audited during the previous (2010-2014) cycle.[1]

Under this second audit cycle, CMS stated that it will continue to select plan sponsors for audit based on risk as well as other factors. Additional factors considered include:

  • whether the plan sponsor has previously been audited,
  • whether the plan sponsor is in its first two years of operation with no prior affiliation with the Medicare program), and
  • whether the plan sponsor has a large percentage of MA or Part D enrollment.

Organizations operating Medicare-Medicaid plans under a financial alignment program should be aware that, if they are selected for an audit, these plans will also be audited.

CMS modified several of the current program area audit protocols and added several new program areas on a pilot basis. Modifications were made to the Formulary and Benefits Protocol to remove review of the Pharmacy and Therapeutics (“P&T”) Committee, with CMS noting that it would find other mechanisms to assess the sponsor’s use of this committee and implementation of its recommendations. CMS also revised how it will measure the timeliness of appeals and grievances for both MA and Part D and will now use separate submission templates to facilitate review against the different processing timelines. Also revised to be “less burdensome” and more “outcomes focused” is how CMS will conduct the compliance program effectiveness review. The new approach will use five sample issues that will be “traced” through the sponsor’s compliance program to assess program effectiveness.

Newly introduced pilot areas are Medication Therapy Management (“MTM”) and Provider Network Adequacy (“Network Adequacy”). The protocols have not yet been released and audits of these areas will not begin until mid-2015. Scores on audits of these pilot areas will not be included in the sponsor’s final audit report.

Beyond the two pilot areas, the 2015 audit process will continue to address the same program areas reviewed in 2014:

  • Part D Formulary and Benefit Administration (“FA”),
  • Part D Coverage Determinations, Appeals, and Grievances (“CDAG”),
  • Part C Organization Determinations, Appeals, and Grievances (“ODAG”),
  • Special Needs Plans—Model of Care (“SNP-MOC”), and
  • Compliance Program Effectiveness.

Audits will continue to take place over a two-week period, with the first week consisting of a webinar-based review of the first four program areas and the second week consisting of an on-site review of compliance program effectiveness.

CMS has made several modifications to the audit process itself. Sponsors will be given additional time to provide requested universes as compared to prior year’s processes. Audit notices will be sent six weeks in advance, with submission of universes required three weeks before the scheduled audit start date. This increase in time, however, is being balanced by a more punitive response for sponsors that cannot provide accurate data within the given timeframe. Specifically, a sponsor with three failed attempts to submit an accurate universe will be cited with an Immediate Corrective Action Required (“ICAR”) for each condition that CMS cannot test due to the sponsor’s failure to submit the requisite data in the appropriate format. Unlike most ICARs, these conditions will not require proof of correction, though sponsors will be expected to provide accurate universes during CMS’s audit correction validation review.

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This Client Alert was authored by Helaine I. Fingold and Lynn Shapiro Snyder. For additional information about the issues discussed in this Client Alert, please contact one of the authors or the Epstein Becker Green attorney who regularly handles your legal matters.

[1] Centers for Medicare & Medicaid Services, 2015 Program Audit Protocols and Process Updates, February 12, 2015, available at