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‘Pay and chase’ provisions require manufacturers to pay claims first, then reconcile disputes over charges
The infamous Medicare Part D “donut hole,” wherein Medicare patients were required to cover all of the costs of prescription drugs until annual payments reached a certain level, was addressed by the 2010 Affordable Care Act: pharma manufacturers are obliged to cover 50% of the donut hole, starting last January; while CMS would gradually increase its coverage until the donut hole disappeared in 2020. According to recently published CMS data, this 50% coverage cost the pharma industry about $1.5 billion through Oct. 31st; the annual total will likely come in around $2 billion. And according to iMany (Philadelphia), an IT developer whose CARS contract administration system is widely used among pharma manufacturers and wholesalers, the process of reconciling the invoices that manufacturers are receiving from over 600 individual Prescription Drug Plans (PDPs; essentially health insurers providing Part D coverage) is complex—but the manufacturers are required to make payments quickly, and to follow a “pay and chase” procedure, meaning that they must pay the bill first, and then attempt to document any overcharges in order to get refunds.
In practice, when a patient fills a nominal $100 prescription at a pharmacy, the pharmacy collects $50 (plus a processing fee), sends an invoice for $50 to the PDP, who reports the data to CMS, which passes it to a third-party contractor, who then bills the manufacturer. The manufacturer has 38 days after receipt of the third-party bill to send a payment to the PDP.
To meet that requirement, iMany is offering a Medicare Part D module to its CARS contract administration system. Besides processing the basic payment calculations, the module is said to:
-provide necessary data security
-import all invoice file data fields
-automatically document payment to prevent penalty charges
all while saving IT departments time and effort to make accurate, timely payments. CARS is designed to handle chargebacks, reimbursements (rebates) and service fees while following user-defined contract terms. “The Medicare module not only makes it easier for manufacturers to adhere to the stringent Affordable Care Act requirements, but also simplifies the operational processes for contracting and compliance departments,” says Joe Marttila, senior director of life sciences solutions.