1. Coretta Edmondson, CMS Gail Sexton, CMS
Creditable Coverage Part D Late Enrollment Penalty, and the Appeals Process
Good Morning, and thank you____________________
We’d like to talk about an area of Medicare Enrollment that deals with creditable coverage, the Part D late enrollment penalty, and the appeals process for the beneficiary
Coretta Edmondson, CMS
Gail Sexton, CMS

2. Learning Objectives Define Creditable Coverage
Understand how the Creditable Coverage Period Determination is Made
Review the Attestation Process
Understand the Part D Late Enrollment Penalty (LEP)
Understand the Part D LEP Appeals Process
Our Learning Objectives for today are to:
Define Creditable Coverage
Understand how the Creditable Coverage Period Determination is made
Review the Attestation Process
Understand the Part D Late Enrollment Penalty (LEP)
Understand the Part D LEP Appeals Process

3. What is Creditable Coverage
Coverage that meets Medicare’s minimum standards (coverage expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage)
Examples include: Group health plans, union/employer-sponsored coverage, VA, TRICARE, that meets actuarial standards
Creditable coverage is coverage outside of the Part D program
Meets Medicare’s minimum standards since it is expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage
Examples may include: group health plans, union/employer-sponsored coverage, Veterans Administration, TRICARE,
In addition, individuals may have prescription drug coverage that isn’t considered creditable.
Prescription drug discount cards, free clinics, or drug discount websites do not constitute creditable prescription drug coverage

4. Disclosure of Creditable Coverage Status
Entities that offer prescription drug coverage to Medicare beneficiaries must:
Determine if the prescription drug coverage offered is creditable or non-creditable coverage, and
Disclose that information to:
CMS
All Part D eligible individuals covered under their prescription drug coverage  
Entities other than Part D sponsors, that offer prescription drug coverage to Medicare beneficiaries, are required to determine if the prescription drug coverage offered is creditable or non-creditable coverage, and disclose that information to:
CMS, and to
All Part D eligible individuals covered under their prescription drug coverage
They must disclose whether the non-Part D coverage they are enrolled in or seeking to enroll in, is creditable coverage or not, so that they can make an informed decision about enrolling in Part D
Under Federal law, this disclosure to CMS must be done annually, and to beneficiaries:
Prior to an individual’s initial enrollment period (IEP);
Prior to the effective date of enrollment, and upon any change;
Prior to the annual election period (AEP); and
Upon request by the individual.

5. Process for Making the Creditable Coverage Determination
Part D sponsors are required to determine if there is a gap in creditable coverage
Query CMS Systems
63 day or longer gap in coverage when individual was eligible for Part D but did not enroll
Sponsor counts “number of uncovered months” (NUNCMO)
Opportunity to attest to having creditable coverage during gap
So, how does the sponsor make a creditable coverage determination:
At the time of an individual’s enrollment in a Part D plan, the Part D sponsor must determine whether an individual has a gap in prior coverage.
To do this, the sponsor queries the CMS systems and determines if the individual had a coverage gap of 63 continuous days or longer – if they do, the sponsor counts the number of full months, up to the month of enrollment in its plan, that an individual was eligible to enroll in a Part D plan, but did not enroll, (these are known as the “number of uncovered months” or NUNCMO)
Eligibility for Part D is based on when the individual first has Part A and/or Part B coverage and lives within the service area of a Part D plan.
If an individual has a gap in coverage, they are provided an opportunity to attest to prior creditable coverage
If an individual did not enroll in Part D (and does not attest to having creditable coverage for that time period) they can be subject to a late enrollment penalty.
The penalty increases each time an individual meets the criteria outlined above. There is no limit (cap) on the Part D penalty.

6. The Attestation Process
Sponsor sends cover letter explaining the coverage gap and an attestation form
Beneficiary has 30 days to respond
Sponsor may accept a telephonic attestation
Sponsors cannot request evidence of coverage, beneficiary only needs to attest to having coverage for the dates outlined in the cover letter
So, a little about the attestation process:
If the sponsor identifies a gap in coverage,
The plan sends the beneficiary a cover letter and an attestation form – the cover letter should tell the beneficiary:
They have a Part D coverage gap;
The dates of the Part D coverage gap
The need to complete and return the attestation form (or contact the plan to provide their attestation) within 30 days – technically, the plans are allowed to accept an attestation up to 60 days after the deadline, but we want to send the message that, it is a 30-day deadline;
How the individual can contact the plan;
The risk that the individual may be subject to a Part D LEP, and explanation of what a Part D LEP is; and
Information on what an individual should have received from their non-Part D insurer in order to determine if their previous coverage was creditable.
If the beneficiary attests that they had creditable coverage during the coverage gap appearing in the CMS systems, then the plan will not assess a NUNCMO
If the beneficiary does not attest to having creditable coverage during the gap, the sponsor reports the uncovered months to CMS

7. Example: Gap in Creditable Coverage
Example: Mrs. Smith’s Initial Enrollment Period (IEP) ended on 5/31/15. She enrolled in a Part D plan during the AEP, effective 1/1/16. The plan identifies a possible gap in coverage while processing the enrollment request and completes the attestation process. It is determined that Mrs. Smith did not have creditable coverage prior to her enrollment in this plan. The plan submits (7) seven uncovered months to CMS.
So, we have an example here of a beneficiary who had uncovered months to report:
Essentially, here, the beneficiary went 7 months without Part D or creditable coverage from 6/1/15 – 12/31/15.
Example: Mrs. Smith’s Initial Enrollment Period (IEP) ended on 5/31/15. She enrolled in a Part D plan during the AEP, effective 1/1/16. The plan identifies a possible gap in coverage while processing the enrollment request and completes the attestation process. It is determined that Mrs. Smith did not have creditable coverage prior to her enrollment in this plan. The plan submits (7) seven uncovered months to CMS.

8. Sponsor’s Next Steps
Sponsor reports the number of full, uncovered months to CMS systems
CMS calculates the LEP and provides the dollar amount to the sponsor to add to the monthly premium
The sponsor must notify the member in writing of the LEP amount within 10 days of notification from CMS of the LEP
The notice must also include the member’s ability to request a reconsideration (review) of the LEP
So, using the previous example of Mrs. Smith, the sponsor would:
Report a NUNCMO of “7” to CMS systems,
Then, CMS calculates the LEP and provides the dollar amount to the sponsor to add to the monthly premium
The sponsor must notify the member in writing of the LEP amount within 10 days of notification from CMS of the LEP
The plan must also include the Part D LEP Reconsideration Notice, “Your Right to Ask Medicare to Review Your Part D Late Enrollment Penalty” (Appendix 14), and the LEP Reconsideration Request Form (Appendix 15) at the same time the plan sends an enrollee his or her LEP letter.

9. What is the Late Enrollment Penalty
A penalty charged to beneficiaries who incur a gap in creditable prescription drug coverage for a period of 63 days or more after their first opportunity to join Part D, and did not have other creditable coverage
Calculation of the LEP:
Only CMS may calculate the LEP amount
LEP = 1% X the National Base Beneficiary Premium (calculated annually)
Amount rounded to the nearest ten cents
Penalty is cumulative – there is no cap
So, a little about the Late Enrollment Penalty
As just stated, the Late Enrollment Penalty or LEP is a penalty charged to beneficiaries who incur a gap in creditable prescription drug coverage for a period of 63 days or more after their first opportunity to join Part D, and did not have other creditable coverage
CMS is the only entity allowed to calculate the LEP.
LEP = 1% X the National Base Beneficiary Premium per month - (calculated annually) – so the LEP amount will change annually based on this premium
Amount rounded to the nearest ten cents
As I stated previously, the penalty is cumulative, there is no cap –
It is generally a lifetime penalty, unless an individual is eligible for Extra Help or there is a situation where the individual had Medicare previously from a disability, and then turns 65 – at that point, the LEP is erased. But, the individual can then be subject to another LEP if they go without creditable coverage for 63 days or longer.

10. Requesting an LEP Appeal
Enrollees or their appointed representative may request a review/reconsideration of a decision to impose an LEP in certain cases.
Review completed by an Independent Review Entity (IRE)
60 days filing period – unless good cause established
An enrollee who has received notice of the imposition of an LEP or an increase in the LEP, where the increase is due to reporting additional uncovered months (except in a case where the number of uncovered months increases as a result of a Part D QIC reconsideration decision), has the right to request that the Part D QIC reconsider the LEP. There is no expedited review process for LEPs.
CMS contracts with an Independent Review Entity, Maximus, to conduct LEP reconsiderations
Appeal must be submitted to the IRE within 60 calendar days from the date on the LEP letter. The IRE will accept late filing if the enrollee/representative provide good cause for filing past 60 time limit. Good cause examples:
1. The party was prevented by serious illness from contacting the plan in person, in writing, or through a friend, relative, or other person;
2. The party had a death or serious illness in his or her immediate family;
3. Important records were destroyed or damaged by fire or other accidental cause;
4. The plan gave the enrollee or the enrollee’s representative incorrect or incomplete information about when and how to request a redetermination;

11. IRE Reconsideration IRE will request Case file from Part D Sponsor
Make the decision based on
Case file
Information supplied by enrollee
Other information IRE deems relevant
Distinct from Part D benefit appeals
No access to ALJ, MAC or Federal District Court
Enrollee and Plan are generally notified of the IRE decision within 90 days
Medicare guidelines
Information from enrollee
Evidence of creditable prescription drug coverage
Case File
Telephone calls to employer, plan and enrollee
The LEP reconsideration process is distinct from the Part D benefit appeals process
That is, LEP decisions cannot be appealed to an ALJ, the MAC or a federal district court. The IRE decision is final.
Also, there is no adjudication timeframe established in regulations the IRE will generally notify the enrollee and plan of the final LEP reconsideration decision within 90 days of the enrollee’s request for reconsideration. The IRE may take an additional 14 calendar days if the enrollee requests an extension or if the IRE finds good cause to extend the timeframe. Good cause would include, for example, when the Part D QIC finds a need for additional information and considers the delay to be in the interest of the enrollee, such as receipt of additional information that may reduce the number of uncovered months upon which the LEP was based.

12. Top Reasons for LEP Appeals
Enrollee did not respond to the Plan
Did not return Declaration
In fact, had coverage
Enrollee attested to some dates
Had additional coverage
Enrollee states, “I was not taking any prescriptions.”
Does not need coverage
The top three reasons for LEP Appeals are:
1. The enrollee did not respond to the Part D Plans declaration for coverage and she or he in fact had coverage.
2. The enrollee only attested to some of the dates the Plan asked for and she or he had additional coverage.
3. The enrollee did not have any coverage during the time period in question and she or he wish to explain why she or he did not need coverage. For example, “I was not talking any prescriptions so why should I participate in Part D prescription drug plan.
Reasons for requesting an appeal:
Had prior creditable coverage that he/she believes may not have been considered.
Had prior prescription drug coverage but didn’t get a notice that clearly explained if the drug coverage was creditable.
Believes the LEP is wrong because he/she was not eligible to enroll in a Medicare drug plan during the period stated by the Medicare drug plan.
Believes the LEP is wrong because he/she was unable to enroll in a Medicare drug plan due to a serious medical emergency during the period the individual was eligible to enroll in a drug plan.
Has/had extra help from Medicare to pay for prescription drug coverage; that is, the low-income subsidy for Medicare prescription drug coverage

13. Favorable Decisions
Enrollee had creditable prescription drug coverage during the time period in question.
Other reasons:
Enrollee had proof of being out of the country
Enrolled within the required time period (Special Election Period)
after verifying the enrollee’s coverage
Enrollee had proof of moving within the United States— enrolled in the required time period
Enrollee or representative had proof of a medical condition—delayed timely enrollment
The most common reason for an appeal to be favorable is:
The Part D QIC verified the enrollee had creditable prescription drug coverage during the time period in question. It is not enough for the enrollee to attest to creditable coverage as is done at the plan. Proof must be provided/verified.
Provided copy of his or her insurance card or a letter from the enrollee’s employer.
Less common reasons:
The enrollee proved s/he was out of the country during the time in question.
After verifying the enrollee’s coverage, s/he enrolled in the Part D Plan within the required time period (SEP).
The enrollee proved s/he moved within the United States and then enrolled in the required time period.
The enrollee/representative proved there was a medical condition which delayed timely enrollment.
 There are other reasons which would fall in the special circumstance category. Having creditable coverage is the vast majority of all the cases.

14. Reasons for Unfavorable Decisions
Enrollee was not taking prescription drugs
Only a couple of inexpensive prescriptions
Not cost-effective to enroll at the time
Enrollee unaware of the “optional” requirement to participate in drug coverage and the penalty
Enroll in a drug plan when first eligible
Choose not to participate
Enrollee states no one informed her/him:
“Social Security representative did not inform me.”
No information about Part D drug plans
No information about late enrollment penalty
General reasons for unfavorable decisions and why the enrollee feels that she or he should not have to pay a late enrollment penalty are:
The enrollee was not taking prescription drugs or she/he were taking a couple of inexpensive drugs and it was not cost-effective to enroll in a coverage plan.
The enrollee was not aware that is a requirement to have Part D coverage and did not participate.
The enrollee states that no one informed her/him about Part D prescription drug plans, or that a penalty would be imposed if she/he did not enroll.

15. Reopening Requests for Unfavorable Decisions
Reopening requests can be accepted:
Up to 180 days following the initial decision
Additional information that could influence the original decision
Proof of creditable coverage
Creditable reason for delay in enrollment
The Part D QIC will accept reopening requests up to 180 days after a decision. The primary condition for reopening is the presentation of some additional information provided to the QIC that could influence the original decision.

16. In Summary
To avoid an LEP, the beneficiary should have Part D or creditable coverage as of the date their Medicare coverage starts
Part D LEP can be appealed
If the IRE decision is unfavorable, the penalty is a lifetime penalty.
So, in summary,
To avoid an LEP, the beneficiary should have Part D or creditable coverage after they are eligible for Medicare
Part D LEP can be appealed, but without a favorable decision, generally, the penalty is a lifetime penalty.

17. References §1860D-13(b) of the Social Security Act
42 CFR §423.46, (g)
Prescription Drug Benefit Manual, Chapter 4 – Creditable Coverage Determinations and Late Enrollment Penalty
Prescription Drug Benefit Manual Chapter 18 – Part D Enrollee Grievances, Coverage Determinations, and Appeals
Part D QIC Reconsideration Procedures Manual
These are references for the previously presented information

18. Questions?