Coordination of Benefits between Part D Plans and Other Prescription Coverage Providers (CMS-10171)

DEPARTMENT OF HEALTH & HUMAN SERVICES
Centers for Medicare & Medicaid Services
7500 Security Boulevard
Baltimore, Maryland 21244-1850

CENTER FOR MEDICARE
June 26, 2013

Dear State Official:
The Centers for Medicare & Medicaid Services (CMS) is requesting the annual update to your
State Pharmaceutical Assistance Program’s (SPAP) benefit, enrollment and coordination
information. Attached is the standardized template and instructions for submitting this
information for your calendar year (CY) 2014 coverage. The information you provide allows
CMS to understand your programs so that we may work collaboratively to bring our
beneficiaries the most comprehensive benefits available to them under both the Medicare
Prescription Drug Benefit and State programs.
States should submit their scanned and signed template (Attachment 2) as well as any concerns
to the following email box by July 15, 2013: SPAP@cms.hhs.gov. If you have any questions
regarding the instructions, please contact Heather Rudo at (410)786-7627 or Stephen Ludwig at
(410)786-0554.
Recent Changes
We want to make you aware of changes made to the Part D program that will be effective
beginning in CY 2014 that may impact your members’ benefits or your program’s operations.
These changes were part of the final Call Letter for 2014, which was published on April 8, 2013.
You may access the final Call Letter at http://www.cms.gov/Medicare/HealthPlans/MedicareAdvtgSpecRateStats/downloads/Advance2014.pdf. Specifically:


Effective January 1, 2014, Part D sponsors must establish and apply a daily cost-sharing
rate for certain prescriptions dispensed by a network pharmacy for less than a 30-day
supply, which removes the disincentive for enrollees having to incur costs for a full
month’s supply when the beneficiary is receiving less than a full month’s supply. This
option may also help enrollees who are prescribed a chronic medication during the
deductible phase in their benefit or the coverage gap, when they are faced with higher
cost-sharing.



Beginning January 1, 2013, the definition of a Part D drug was revised to include
barbiturates used in the treatment of epilepsy, cancer, or a chronic mental health disorder,
and benzodiazepines. Effective at the beginning of 2014, any remaining restriction of
barbiturate coverage under Part D has been removed. This means that barbiturates that
otherwise meet the definition of a Part D drug under §1860D-2(e) may be covered under Part

P a g e | 2 State Official
D for any medically accepted indication, as defined in regulation. Please note that only a few
potential additional products are likely to qualify as Part D drugs in 2014, the most notable
being FDA-approved butalbital-containing products used for the treatment of headaches.

For those SPAPs that pay supplemental to Part D, please refer to Attachment 1 of this letter. The
attachment details the steps necessary for the TrOOP Facilitation process to work properly in
order to provide record of your payment to the Part D plan.
We appreciate your prompt attention to this request, and look forward to our continued work
with you.

Sincerely,

Cynthia Tudor
Director, Medicare Drug Benefit and C&D Data Group

Arrah Tabe-Bedward
Director, Medicare Enrollment &
Appeals Group

INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW:
This information has not been publicly disclosed and may be privileged and
confidential. It is for internal government use only and must not be disseminated,
distributed, or copied to persons not authorized to receive the information.
Unauthorized disclosure may result in prosecution to the full extent of the law.

P a g e | 3 State Official
Attachment 1
TrOOP Cost Accumulation and Coordination of Benefits (COB) Process in Real-Time
To assist Part D sponsors with correctly calculating the TrOOP cost amount for their members,
CMS contracts with a Part D transaction facilitator (the facilitator) to facilitate the transfer of
supplemental payer claim information to Part D sponsors. The primary function of the
contractor is to identify patient paid amounts remaining after other payers have wrapped around
Part D claims so that Part D sponsors can identify these costs and accumulate TrOOP cost
correctly for their members.
For the TrOOP cost facilitation process to work properly, Part D sponsors (or their processors),
other payers, pharmacy switches (claims routers), and the facilitator must interact to accurately
track a member’s TrOOP costs in real-time. To ensure SPAP costs are accurately accounted for
in the TrOOP calculation, SPAPs must sign a data sharing agreement with CMS and submit
electronic enrollment files to CMS’ COB contractor with specific information that will be
provided to the facilitator. Each SPAP enrollment file must include a unique RxBIN or
RxBIN/RxProcessor Control Number (PCN) combination for its Medicare Part D enrollees. It is
this unique identifier that flags the secondary claim so that the pharmacy switch can route the
claim to the facilitator. This identifier also gives Part D sponsors the ability to match the N
transaction it receives from the facilitator to the member’s Part D claim for TrOOP calculation
purposes.
NOTE: Provide a record of your TrOOP specific BIN/BIN-PCN to NCPDP to CMS-SPAPADAPplaninfo@ncpdp.org with SPAP ADAP Update in the Subject line. This insures that the
switches are notified to forward your paid claims to the Transaction Facilitator, who in turn will
attempt to forward the information to the Part D plan.
Using more technical terms, pharmacy claims to payers are transmitted via “B” transactions.
These B transactions are submitted electronically by the pharmacy to their switch. The
pharmacy switch forwards to the facilitator the B transactions that are not rejected by the
secondary payer and that contain a unique RxBIN or RxBIN/RxPCN combination for a plan that
covers Medicare Part D beneficiaries. This identifier is the flag that pharmacy switches use to
route the data to the facilitator. The facilitator uses the information contained in the B
transaction to trigger the creation of a reporting transaction (“N” transaction) and delivers the N
transaction to the Part D sponsor. All claims submitted to other payers must be processed
through a pharmacy switch so that the pharmacy switch can deliver the transactions to the
facilitator enabling accurate TrOOP cost reporting at the Part D sponsor.
If the SPAP does not have electronic claims processing capability, the SPAP may alternatively
submit a batch file of supplemental claims information or make arrangements to submit information
in another format to the facilitator. The supplemental claims data submitted to the facilitator will be
supplied to Part D sponsors for TrOOP cost calculation. If the SPAP uses the batch process, it must
still establish a unique Rx BIN or RxBIN/RxPCN and participate in the data sharing exchange with
CMS’ COB contractor.
INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW:
This information has not been publicly disclosed and may be privileged and
confidential. It is for internal government use only and must not be disseminated,
distributed, or copied to persons not authorized to receive the information.
Unauthorized disclosure may result in prosecution to the full extent of the law.

P a g e | 4 State Official

If the SPAP does not support either the on-line or batch process, no N transaction will be created and
Part D sponsors will not be required to coordinate benefits if the claim(s) later adjust due to changes
in SPAP members’ low-income subsidy (LIS) or dual eligible status. That is, when Part D sponsors
are unable to automatically identify and retroactively adjust those claims paid for by SPAPs, Part D
sponsors are not responsible for ensuring that the SPAP is reimbursed for the overpaid amounts on
the adjusted claims. Part D sponsors will likely reimburse the member directly and it is then the
responsibility of the SPAP, if it so chooses, to recover the money directly from its members.

Steps to Ensure Proper TrOOP Cost Calculation for Part D SPAP Members
1.
Sign a data sharing agreement (DSA) and participate in the COB enrollment file
exchange with CMS’s COB contractor. SPAPs are required to sign a DSA and follow the
instructions contained in the attached user guide when participating in the COB enrollment data
file exchange. The information the SPAP provides via its enrollment file to the COB contractor,
in particular, the unique RxBIN or RxBIN/RxPCN, is sent to both the facilitator and the Part D
sponsors. The DSA and User Guide provide specific information regarding the submission of
the necessary data.
2.
Establish a unique RxBIN or RxBIN/RxPCN combination for their Part D members and
submit this information as part of the COB contractor enrollment file exchange. As explained
above, the unique Rx BIN or RxBIN/RxPCN allows the claim to be routed to the facilitator so
that the facilitator may create an N transaction which will provide the Part D sponsor with the
supplemental payer information that is necessary to calculate TrOOP cost correctly. In other
words, without the correct Rx BIN or RxBIN/RxPCN, TrOOP cost will not be calculated
correctly because the facilitator may not be able to generate the N transaction, nor will the
sponsor be able to match the N transaction to the its enrollee’s Part D claim.
3.
Ensure that the SPAP or its processor, when processing secondary claims, accepts and
processes only those claims that use the same 4Rx information submitted on the SPAP’s input
file (4Rx – RxBIN/RxPCN/RxGroup ID/RxMember ID or a subset thereof of 4Rx data) to the
COB contractor. CMS has found that when SPAPs accept and process claims using only some
of, or the wrong, 4Rx information submitted on their input file to the COB contractor file, an Nx
could not be generated because the facilitator did not identify the SPAP as a TrOOP-eligible
payer. This causes the Part D sponsor to understate its members’ TrOOP balances.
For additional resources related to the process of providing your payment information to the Part
D plans, go to http://ncpdp.org/resources_spap.aspx.

INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW:
This information has not been publicly disclosed and may be privileged and
confidential. It is for internal government use only and must not be disseminated,
distributed, or copied to persons not authorized to receive the information.
Unauthorized disclosure may result in prosecution to the full extent of the law.

P a g e | 5 State Official
Attachment 2 (SPAP template)

INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW:
This information has not been publicly disclosed and may be privileged and
confidential. It is for internal government use only and must not be disseminated,
distributed, or copied to persons not authorized to receive the information.
Unauthorized disclosure may result in prosecution to the full extent of the law.