Medicare Parts C and D Universal Audit Guide

Attachment I
Formulary and Benefit Administration
Audit Process and Universe Request
Purpose: To evaluate performance in the four areas outlined below related to Formulary and
Benefit Administration. CMS will perform its audit activities using these instructions (unless
otherwise noted).
1) Formulary Administration (including protected class medications)
a) Rejected Claims Universe: Sponsors with >=20,000 enrollees will pull a universe
consisting of 30 days of rejected claims data with dates of service from – (date of audit
engagement letter). Sponsors with < 20,000 enrollees will pull a universe consisting of
60 days of rejected claims data with dates of service from – < date of audit engagement letter > (date of audit engagement
letter). Submit universe in Attachment I-A (Rejected Claims_FormularyAdmin Tab)
using Excel format (files may be submitted in CSV or Text format if the file is too large
for Excel). The rejected claims universes submitted should not be filtered by the sponsor
and no attempts to reprocess claims prior to or during the audit should occur.
b) Sample Selection: CMS will select a sample of 30 claims from the 2013 rejected claims
universe as follows: 15 claims for non-protected class drugs and 15 claims for protected
class drugs. The sample will consist of rejections relating to formulary administration
(e.g. prior authorization, step therapy, non-formulary drugs, and quantity limitations).
c) Documentation: The Part D sponsor will provide documentation for each case selected,
such as a screen-print for each CY 2013 paid claim for each beneficiary/drug
combination that is determined to be an inappropriate reject.
d) Sample Case Results: CMS will test each of the 30 cases. If CMS requirements are not
met, a sample case fails and a condition (finding) is documented. If CMS requirements
are met, a sample case passes and no conditions (findings) are documented.

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Attachment I
Formulary and Benefit Administration
Audit Process and Universe Request
2) Transition
Part 1 - continuing beneficiaries with a cross year formulary change
Part 2 - new members
a) Universe
i) Rejected Claims Universe: Sponsors with >=100,000 enrollees will pull a universe of
all rejected claims data with dates of service for January 2013. Sponsors with <
100,000 enrollees will pull a universe of all rejected claims data with dates of service
for January and February 2013. Submit universe in Attachment I-A (Rejected
Claims_Transition Tab) using Excel format (files may be submitted in CSV or Text
format if the file is too large for Excel).
ii) Prescription Drug Event Data (PDE) Universe: Sponsor will pull a universe
consisting of all prescription drug event data from November and December of 2012
for only those beneficiaries included in the rejected claims universe. The sponsor
needs to ensure that only standing paid claims are submitted. The PDE universe
will be used with the rejected claims universe to test transition for continuing
beneficiaries with a cross year formulary change. Submit the universe in the
Standard Prescription Drug Event Data Format.
iii) New Members Universe: Sponsor will pull a universe consisting of all beneficiaries
that CMS authorized the sponsor to enroll effective January 1, 2013. This also
includes members enrolled in Part D sponsor’s employer plans. This universe will be
used with the rejected claims universe to test transition for new enrollees. Submit
universe in the attached Attachment I-A (Transition-New Members Tab).
b) Sample Selection:
i) For continuing beneficiaries with a cross year formulary change CMS will select
a sample of 15 claims from the universe as follows: 7 claims for non-protected class
drugs and 8 claims for protected class drugs from the 2013 rejected claims universe.
CMS will analyze the universes and the CMS approved formulary to identify all
beneficiaries and drug combinations where a drug changed formulary status between
2012 and 2013, using the following steps:
(1) Identify all formulary changes between 2012 and 2013 (formulary deletions,
addition of prior authorization, step therapy);
(2) Identify beneficiaries who were taking a medication affected by a formulary
change;
(3) Identify all 2013 rejected claims for the affected beneficiary/drug combinations.
ii) For new enrollees CMS will select a sample of 15 claims from the universe
categories as follows: 7 claims for non-protected class drugs and 8 claims for
protected class drugs from the 2013 rejected claims universe.

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Attachment I
Formulary and Benefit Administration
Audit Process and Universe Request
c) Documentation: The Part D Sponsor will provide documentation for each case selected,
such as a screen-print for each CY 2013 paid claim for each beneficiary/drug
combination that is determined to be an inappropriate reject.
d) Sample Case Results: CMS will test each of the 30 cases. If CMS requirements are not
met, a sample case fails and a condition (finding) is documented. If CMS requirements
are met, a sample case passes and no conditions (findings) are documented.

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Attachment I
Formulary and Benefit Administration
Audit Process and Universe Request
3) Website Review
a) Documentation Request: Sponsors will submit a file of all sponsor specific prior
authorization (PA), Coverage Determination and Exception Request forms, including all
drug specific PA forms. CMS will compare the CMS approved formulary file to the
formulary information, utilization management (UM) criteria, and UM request forms
posted on the sponsor’s website.
b) Sample Selection: CMS will select one contract per formulary ID to review. Contract
selection will be made in the following order: PDP; MAPD; and EGWP. CMS will select
a sample of:
i) PA criteria: 5 drugs per contract to compare to the posted PA criteria.
ii) Formulary information: 10 drugs per contract to compare to the posted formulary to
verify the information is correct (e.g., tier, UM, etc.).
c) Documentation: CMS will record the date the website was accessed and screen-print(s)
for each sample.
d) Sample Case Results:
i) PA criteria: CMS will access the sponsor’s website and determine if the posted
material is accurate based on the CMS approved formulary. In order to result in a
pass, all PA criteria within the sample set must be posted consistent with the CMSapproved criteria and PA request forms must not include mechanism(s) to steer
beneficiaries to mail order or specialty pharmacies. If either of these are not met the
sample set fails and a condition (finding) is documented.
ii) Formulary information: CMS will access the sponsor’s website and determine if the
posted material is accurate based on the CMS approved formulary. In order to result
in a pass, all drugs within the sample set must be posted correctly. If the information
is not posted correctly the sample set fails and a condition (finding) is documented.

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Attachment I
Formulary and Benefit Administration
Audit Process and Universe Request
4) Pharmacy and Therapeutics (P&T) Committee
a) P&T Committee Membership Universe:
i) The sponsor must submit the following documentation with respect to P&T
committee membership:
(1) The criteria utilized to establish that a pharmacist and a physician member are:
(a) Practicing;
(b) Independent and free of conflict of interest relative to the Part D sponsor and
Part D plan, as well as pharmaceutical manufacturers;
(c) Experts regarding the care of elderly or disabled individuals. Documentation
that the members identified in 4)a)(2) met the criteria submitted in response to
4)a)(1).
(2) Submit membership universe in Attachment I-A (P&T Committee Membership
Tab).
ii) Answer the following question:
(1) Does the sponsor’s P&T committee satisfy the criteria for membership?
Yes = Pass; No = Fail, and a condition is documented
b) P&T Committee Minutes Universe:
This section of the P&T Committee audit element will only be conducted when 1) issues
identified during the formulary administration or transition portions of the audit warrant
additional P&T audit steps or 2) when concerns are raised during the Compliance team
review of Element IV of the MA/Part D Compliance Program Requirement.
The P&T Committee minutes that document the P&T Committee’s approval of the initial
CY 2013 formulary and all 2013 formulary updates must be submitted. In addition to the
minutes, the submission must include all supporting documents relating to the CY 2013
formulary provided to the P&T members prior to, or during the meeting.
i) Sample Selection: CMS will identify all formulary changes between CY 2012 and
CY 2013. From this universe, CMS will select a sample of 15 drugs that were either
added to the formulary for 2013, deleted from the formulary for 2013, or changed
formulary status between 2012 and 2013 from the universe categories as follows:
(1) 10 drugs subject to utilization management;
(2) 5 protected class drugs.
ii) Documentation: CMS will review the submitted P&T committee minutes for
evidence documenting the formulary change.
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Attachment I
Formulary and Benefit Administration
Audit Process and Universe Request
iii) Sample Case Results: CMS will test each of the 15 cases. If changes are not
documented in the P&T committee minutes, a sample case fails and a condition
(finding) is documented. If changes are documented in the P&T Committee minutes,
a sample case passes and no conditions (findings) is documented.

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