Retiree Drug Subsidy Program News

Recently the Centers for Medicare and Medicaid Services (CMS) published the 2017 cost threshold and cost limit amounts for the Retiree Drug Subsidy (RDS) program, expanding the cost threshold to $400 and the cost limit to $8,250. This increases the amount of subsidy dollars available by as much as $227 per eligible retiree.

Cost threshold and cost limit amounts are set each year by CMS so that Plan Sponsors can determine how much of each retiree’s drug expenses are eligible for subsidy. The cost threshold is the amount of eligible expenditures a retiree must incur before future eligible expenses qualify for subsidy. Conversely, the cost limit is the maximum amount of eligible retiree expenses that qualify for subsidy payments. It is the range between these two figures that is eligible for RDS reimbursement.

For example, when a member’s expenses exceed the cost threshold of $400, all further allowable retiree drug expenses are eligible for up to a 28% reimbursement until those expense exceed the cost limit of $8,250. This represents a nearly 12% increase in subsidy dollars for every retiree with eligible expenses that meet the cost limit. This could mean tens or in some cases, hundreds of thousands more in subsidy dollars to Plan Sponsors.

This increase should be considered welcome news to the thousands of Retiree Group Health Plan Sponsors who participate in the RDS every year. Given the significant increase in subsidy available to it is clear that the RDS program remains a viable and competitive option for Plan Sponsors looking to offer the best prescription coverage possible to their retirees, while remaining in control of prescription spending.

Since the Retiree Drug Subsidy program was launched in 2005, the CMS has required Plan Sponsors to submit an Authorized Representative (AR) Verification form in order to verify that the assigned AR has legal authority to bind the Sponsor to the specifications of the Plan Sponsor agreement before they could receive payment. On August 15th, 2015, the CMS removed that requirement meaning new or existing ARs no longer need to be verified in order to receive payment.

Visit the RDS Website to learn more and, as always, feel free to contact your PDA Account Manager with any questions or concerns about this change to the AR requirement.

On April 10th the Centers for Medicare and Medicaid Services (CMS) published the 2016 cost threshold and cost limit amounts for the Retiree Drug Subsidy (RDS) program, expanding the cost threshold to $360 and the cost limit to $7,400. This increases the amount of subsidy dollars available by as much as $241 per eligible retiree; the single largest increase since the beginning of the RDS program.

Cost threshold and cost limit amounts are set each year by CMS so that Plan Sponsors can determine how much of each retiree’s drug expenses are eligible for subsidy. The cost threshold is the amount of eligible expenditures a retiree must incur before future eligible expenses qualify for subsidy. Conversely, the cost limit is the maximum amount of eligible retiree expenses that qualify for subsidy payments. It is the range between these two figures that is eligible for RDS reimbursement

For example, when a member’s expenses exceed the cost threshold of $360, all further allowable retiree drug expenses are eligible for up to a 28% reimbursement until those expense exceed the cost limit of $7,400. This represents a nearly 12% increase in subsidy dollars for every retiree with eligible expenses that meet the cost limit. This could mean tens or in some cases, hundreds of thousands more in subsidy dollars to Plan Sponsors.

Contact PDA today to find out how your retiree health plan can benefit from this huge increase in cost limits!

Telephone support through the CMS’ RDS Center Help Line was discontinued after March 27, 2015. Plan Sponsors are still able to contact CMS’ RDS Center by submitting an RDS Secure Website support request or by emailing [email protected]. Since PDA handles all the RDS website tasks for Plan Sponsors, this should not affect any of PDA’s clients. However, any questions or concerns about the RDS’ discontinuation of phone support can be addressed to your PDA Account Manager.

Thank you,

Your Part D Advisors RDS Team

CMS’ RDS Center has created an RDS Program Website Resource Library, which gathers important program materials together into one location for quick access. Plan Sponsors can find the following materials in the Resource Library:

• User Guides
• How To Pages and Documents
• Reconciliation Tool Kit
• Job Aids
• Technical Articles
• Web-Based Training

More information and the Resource Library can be found here

Questions can be addressed to your RDS Account Manager.

Thank you,

Your Part D Advisors RDS Team

Plan Sponsors and Vendors that submit retiree lists and cost reports through Mainframe are no longer required to complete a new Electronic Transmittal Form (ETF) for each new RDS application. A new ETF is only required if the location where data is sent or received changes.

Questions can be addressed to your RDS Account Manager.

Thank you,

Your Part D Advisors RDS Team

Mandatory Payment Reductions in the Medicare Advantage, Part D plans (RDS), and Other Programs

On March 22, 2013, the Centers for Medicare & Medicaid Services (CMS) released a memorandum notifying Medicare Advantage Organizations (MAOs), Part D plans (RDS), and other programs (including Managed Care Organizations) that, beginning April 1, 2013, payments made to MAOs, Part D sponsors, and other programs will generally be reduced by two percent in accordance with the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended. This process of payment reduction is referred to as sequestration.

What Changes are Occurring to the RDS?

RDS payments for all plan months beginning April 1, 2013 and later will be subjected to a 2% payment reduction.

Will I Need to Make Any Changes to My RDS Applications?

No changes are necessary for ongoing RDS clients! Part D Advisors will continue to handle your cost reporting and report all of your submittals. The reductions will be taken from the payments as they are submitted and your invoices will be reduced to reflect the change (if applicable).

Are my RDS Applications Affected and If So, Which Ones?

The sequestration reductions are assessed on a monthly basis for all plan months beginning April 1, 2013 and after. Plan years ending prior to and including March 2013 are unaffected. This mandate affects plan years beginning or including April of 2013. For example, if your plan has a January 2013 to December 2013 plan year, the months of January, February and March will be unaffected by the reduction. However the months of April through December of that year will be reduced by the 2% sequestration requirement.

Can I Avoid the Reduction by Switching to Another Part D Program?

No, the sequestration reduction is being applied to all federal programs. Unfortunately, the RDS is also being affected. However, all programs, including Employer Group Waiver Plans (EGWPs), Medicare Advantage Plans and Part D Plans are being reduced to reflect the broad, federal mandate.

Questions can be addressed to your RDS Account Manager.

Thank you,

Your Part D Advisors RDS Team

New rules proposed by the CMS on January 10th, 2014 suggest some pretty significant changes to the Medicare part C and D programs, not least of which is to enhance the CMS’ authority to audit, evaluate and inspect Part C and D records from a significantly larger pool of resources, such a Plan Sponsors PBM or other contracted entities. These rules are extensive and Plan Sponsors should be aware of potential upcoming changes to the program if these rules are adopted. More information about the potential rules change can be found here and here and, as always, your Account Manager at PDA is ready, willing and able to answer any questions you may have.