CMS Revises Prior Authorization Guidance for Part D Drugs for Hospice Patients, Provides 2-month Delay in Effective Date


On March 10, 2014 CMS released a memo, Part D Payments for Drugs for Beneficiaries Enrolled in Hospice – Final 2014 Guidance, to hospice providers and all Part D plan sponsors.  This memo is a follow-up to a December 6, 2013 memo suggesting a prior authorization (PA) process for Part D enrollees receiving hospice care.  NAHC’s Hospice Association of America (HAA) submitted comments to CMS on the December memo that included the following concerns:

  • statements made in the December 6, 2013 memo and other previous instruction from CMS may lead some to conclude that ALL care for terminally ill patients receiving hospice care is the responsibility of the hospice
  • the negative impact of numerous and inconsistent PA processes
  • concerns over the independent review entity and process
  • more time needed prior to implementation (originally proposed for March 1, 2014)

In response to these and other comments, CMS revised its Part D guidance for 2014, provided more details about the PA policy and process, and postponed the effective date.  CMS also indicated that additional changes (such as development of an independent review process for use in where disputes over coverage responsibility arise) can be expected as part of future rulemaking but will not be implemented during 2014.

Representatives of NAHC participated in a conference call with CMS subsequent to the release of the memorandum; CMS confirmed that Part D plans are permitted to continue review efforts that they may already have in place related to specific categories of drugs for hospice patients.

The details outlined in the most recent memo are effective May 1, 2014 and will be applied prospectively.  Until then, the Part D plan sponsors are able to continue or initiate other processes to ensure that Part D is not billed for drugs that should be covered under Medicare Part A via the Medicare Hospice Benefit or should be paid for by the beneficiary.  On and after May 1, 2014 the sponsors are expected to have a PA process in place.

Under the process, CMS instructs the Part D plan sponsors (sponsors) to place beneficiary-level PA requirements on all drugs for beneficiaries who have elected hospice to determine whether the drugs are coverable under Part D.  Sponsors will look to the prescriber or the hospice to make the decision on whether a drug should be covered by the hospice under Medicare Part A or the beneficiary is responsible to pay for the drug.  Below is a summary of the PA process.

Determination of Payment Responsibility for Drugs for Hospice Beneficiaries

There are three scenarios for payment responsibility

  1. The hospice pays for drugs covered under the Hospice Benefit
  2. The beneficiary pays for the drugs
  3. The sponsor pays for the drugs covered under the Part D Benefit

Hospices are reminded that they are responsible for all medications that are reasonable and necessary for the palliation and management of the terminal illness and related conditions.  This includes medications the patient may have been on for some time prior to the election of hospice care as well as new medications.  It also includes medications that may not be on the hospice’s formulary.  The hospice is able to require the patient to try a medication on the formulary that is equivalent to an off-formulary medication if there are no medical reasons for not doing so.  In addition, a hospice is able to refuse paying for a drug that is not reasonable and necessary for the management of the patient’s symptoms related to the terminal illness and related conditions.

A beneficiary is liable for medications that are not reasonable/necessary for the palliation and management of the terminal illness and related conditions.  These could be medications the patient insists on taking that the hospice interdisciplinary group (IDG) has determined are no longer effective in the intended treatment and/or may be causing additional negative symptoms.  These could also be brand name drugs where the patient refuses to try to the generic equivalent that is on the hospice’s formulary and there are no medical reasons to indicate that the generic drug cannot/should not be taken.  CMS has stated and confirmed in the March 10, 2014 memo that the hospice is not responsible for providing an ABN to the beneficiary in these cases unless the hospice is actually providing the drug to the beneficiary.  If the hospice provides the drug even though it is not reasonable and necessary it must provide the ABN in order to the charge the patient for the drug.  If the hospice does not provide the drug it still must fully inform the beneficiary of his/her liability.  If the beneficiary believes Medicare should cover the drug, he/she can submit an appeal directly to Medicare on Form CMS-1490S.  If coverage of the drug is still denied, the beneficiary can further appeal through the process set forth in 405, Subpart I.

The Part D plan sponsor pays for the drug when it is completely unrelated to the terminal illness and related conditions.  CMS expects that this will be unusual and occur only in exceptional circumstances.  However, CMS is not stating that ALL medications are to be covered by the hospice.

When the Part D plan sponsor receives a claim for drugs for a hospice beneficiary, the PA process begins.  The PA process determines coverage responsibility.  The beneficiary, the prescriber or the hospice can provide information regarding this responsibility. The Sponsor can accept verbal or written explanation as part of the PA process.  If the prescriber is not affiliated with hospice, CMS policy is that the sponsor will require an attestation from the prescriber attesting that he/she has coordinated with the hospice to confirm the drug(s) is unrelated. Upon receiving the verbal or written explanation, the sponsor will let the beneficiary know the result.  If the prescriber provided the information, the sponsor notifies the prescriber and if the prescriber is not affiliated with the hospice the sponsor can provide information to the hospice as well, but is not required to do so.  If the hospice or prescriber does not respond to the PA, the drug will not be fulfilled.

In addition to a PA process, the sponsor may have a utilization management (UM) edit in place.  UM edits are drug-specific and their requirements must also be requested prior to the hospice beneficiary drug request/claim being fulfilled.  In the memo, CMS directs plans sponsors to conduct beneficiary-level hospice PA coverage determinations concurrent with obtaining information necessary to satisfy UM edits.

The first step in the PA process begins when the Part D plan receives a pharmacy claim for a hospice beneficiary.  For all such claims, the Sponsor will reject the claim.  Please note that these are rejections and not denials.  In addition to the reject coding, CMS indicates that Sponsors should also use a point-of-sale message such as the following: Hospice Provider-Request Prior Authorization for Part D Drug Unrelated to the Terminal Illness or Related Conditions, and also include the 24-hour pharmacy help desk phone number to call with questions.  NAHC and HAA understand that some Sponsors have created a hospice-specific help desk phone number to call that is staffed by individuals trained in dealing with drugs for Medicare beneficiaries.

When the pharmacy receives the claims reject coding with the associated messaging, the pharmacy contacts the beneficiary or prescriber to determine if the hospice provider should cover the drug. If the answer is yes, the pharmacy submits the claim to the hospice provider identified by the beneficiary or prescriber. If the answer is no, or neither the beneficiary nor prescriber know whether the hospice provider should cover the drug, the pharmacy will provide a standardized pharmacy notice to the beneficiary explaining their rights and may direct the beneficiary and/or the prescriber to contact the Part D sponsor.

The beneficiary, the beneficiary’s appointed representative, or the prescriber must contact the sponsor to initiate the PA fulfillment process. While the hospice entity may not initiate the PA fulfillment process, hospices CAN initiate communication to the Part D plan sponsor prior to a Part D drug claim being submitted. CMS and NAHC encourage hospice providers to initiate communication to the Part D plan sponsor before a request for medications is submitted, ideally when a patient elects hospice.  Initiating communication prior to a claim submission, such as at hospice election, will provide early notice of the election to the sponsor and limit retrospective recoveries (discussed below) and delays in patient’s obtaining medications. CMS states in the memo “When hospice providers provide this documentation, sponsors should accept it and use it to satisfy the PA requirements.”  CMS acknowledges that providing this information at the time of the hospice election will facilitate the most timely access to drugs unrelated to a beneficiary’s terminal illness or related conditions.

 When a hospice provider or prescriber provides explanation to document a drug is unrelated to the terminal illness or related conditions without a coverage determination having been requested (such as when the hospice initiates communication with the sponsor prior to a claim submission and provides the documentation necessary for the PA), a coverage determination request must be initiated by the beneficiary, the beneficiary’s appointed representative or the prescriber.

The same processing time frames as those applicable to exception requests are used for adjudicating the claim once the Sponsor has received the explanation of unrelatedness.  The time frames are:

  • 24 hours for an expedited review
  • 72 hours for a standard  review

These time frames begin when the sponsor receives the explanation of unrelatedness from the prescriber or hospice.  If the sponsor believes it needs additional information, it may request it, which could extend these timeframes, provided, however, that it is not extended unreasonably.  The beneficiary can request an expedited review.  NAHC encourages hospices to suggest to all their patients that an expedited review be requested.  This is consistent with the life expectancy of a terminally ill individual and for short length of stay hospice patients in particular.  CMS expects that the prescriber or hospice respond as quickly as possible to the sponsor’s PA request.  CMS further expects that the sponsor will accept the response (explanation) from the prescriber or the hospice, either verbally or in writing, and process the claim for payment.

Retrospective Determinations of Payment Responsibility

If the Part D sponsor has paid for drug claims prior to receiving notification of the beneficiary’s hospice election, the sponsor must perform a subsequent review of claims paid within the hospice election period and should conduct outreach to the hospice provider or prescriber to make retrospective determinations of payment responsibility for the drugs. These retrospective determinations of payment responsibility are not to begin prior to May 1, 2014.  On or after this date, the retrospective determination of payment responsibility would only be necessary for claims paid on or after the effective date of the hospice election and prior to the sponsor’s receipt of notification that the claim is for a hospice patient.  In cases where the Part D plan sponsor has paid for a drug that is the responsibility of the hospice, CMS expects the Part D sponsor and the hospice to negotiate directly with each other.  If it is determined that the beneficiary should have paid for the drug, the Part D sponsor may bill the beneficiary for recoupment. Because hospices and the Part D sponsor are to negotiate payment directly with each other the hospice may or may not be able to negotiate a payment rate equivalent to its contracted pharmacy rate.

There were several attachments to the memo that are quite useful for hospices.  They may even wish to share these with patients.  These are:

  • Attachment  1 – a diagram of the PA process (page 12 of the memo)
  • Attachment 2 – a checklist of items that CMS expects the sponsors to have on a PA form (pp. 13-14 of the memo)
  • Attachment 3 – hospice data flow (page 15 of the memo)

HAA staff are working on providing a more detailed summary focusing on how this impacts hospice practices and providing tips and tools for provider use.