Coverage Gap Discount Program
(CGDP) Payment Overview
Based on HPMS guidance issued Dec. 22,
2010 titled “Coverage Gap Discount Program
Payment Process”
February 3, 2011
Agenda
 Introduce the CGDP Third Party
Administrator
 Review EFT information transmission
 Review the two distinct CGDP payment
flows
 Discuss CGDP reconciliation
 Discuss Quarterly Invoice
process/reports
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TPA Roles Under The CGDP
 Liaison between Part D Sponsors and Manufacturers in
ALL matters related to the Coverage Gap Discount
Program
 Coordinate notice to Manufacturers of Part D Sponsor
Electronic Funds Transfer (EFT) information
 Distribute quarterly invoices and associated reports to
Part D Sponsors and Manufacturers
 Process payment confirmation reports from Part D
sponsors and Manufacturers
 Confirm “Payment in Full”: Compare Payment
Confirmation Report totals to Invoice Report totals;
report any discrepancies to CMS
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TPA Contact Information
 All customer support will be provided through our
existing Customer Service and Support Center
(CSSC) located at Palmetto GBA LLC in Columbia,
South Carolina
 We will offer ongoing support by our dedicated staff
through the CSSC Help Line at 877-534-2772
 Hours of operations - Monday through Friday from
8:00am to 7:00pm EST
 Or send inquiries to our email address at:
csscoperations@palmettogba.com
 Web site address www.CSSCOperations.com
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Electronic Funds Transfer (EFT)
 TPA distributes Part D sponsor banking
information to the Manufacturers
 Sponsor’s current EFT data stored in APPS
will be used for CGDP
 EFT information will be made available by the
TPA to the Manufacturers via a mailbox on a
secure server
 The TPA will distribute this information to
Manufacturers in mid-February
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Medicare Coverage Gap Discount Program
Agreement


Manufacturer’s Responsibilities
 To pay quarterly invoices directly to accounts
established by Part D Sponsors via electronic
funds transfer
Confidentiality Provisions
 Information disclosed to the Manufacturer
pursuant to this agreement shall only be used
for purposes of paying the discount under the
Discount Program
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Information Verification
Sponsors who would like to
 Verify current APPS banking information
 Verify the name of their banking info contact person
Contact :
Yvonne Rice at CMS
(410) 786-7626
Yvonne.Rice@cms.hhs.gov
Sponsors who wish to use a different EFT account for
CGDP payments may contact the TPA for further
instructions
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Identification of Funds Transfer
To identify payments from Manufacturers look for
 Manufacturer’s company name
 15 character identifier example: CGYYQQ8888H1234
CG = coverage gap
YYQQ = Year and Quarter of the invoice
8888 = P number without ‘P’
H1234 = Contract number
If this 15 character identifier is not visible on the bank
statement or online contact your financial institution
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Coverage Gap Discount Program
Payment Overview
1) Part D Sponsors receive a monthly CGDP prospective
payment from CMS
2) Sponsors advance the Gap Discount at the Point of Sale
and submit PDEs recording the Gap Discount amount
3) CMS aggregates CGDP PDE data and sends to TPA
4) TPA sends quarterly invoice reports to manufacturers and
Part D Sponsors simultaneously
5) Manufacturers pay the invoiced amount in full to Part D
Sponsors
6) Manufacturers and Part D Sponsors send confirmation of
payment to TPA
7) CMS offsets invoiced and now paid amounts from Part D
Sponsors
8) After benefit year, CMS performs a cost-based
reconciliation
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Two Distinct CGDP Payment Flows
 Prospective payment  CGDP Reconciliation
 Manufacturer payment to Part D Sponsors of
invoiced gap discount amount  CMS offset
of invoiced amount
NOTE: The CGDP is a new program, separate
from any existing rebate arrangements with
manufacturers
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CGDP Payment Flow
Prospective payment  CGDP
Reconciliation
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CGDP Prospective Payment
 Monthly prospective payment for every
non-LIS enrollee
 13 months (last being any adjustments
for previous year)
 Allows plan to advance coverage gap
discount at POS
 Prospective payment necessitates a
financial reconciliation
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CGDP Reconciliation
 Cost-based reconciliation
 Separate from Part D payment reconciliation
 Takes place after the sixth invoicing and
payment processing cycle for the benefit year
 CGDP reconciliation is based on:


Submitting Contract – includes PDE data submitted
by plan for Part D eligible beneficiaries even if not
enrolled in plan
All accepted PDE data submitted by contract
 Conducted at the contract/PBP level
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Calculating the CGDP Reconciliation
 Compares actual CGDP costs incurred
to total CGDP prospective payments
received:
Actual CGDP Costs – CGDP Prospective
Payments
 The reconciliation adjustment can be
positive or negative
 After the CGDP reconciliation for the
benefit year:


CMS will discontinue additional CGDP offsets
Part D Sponsors will receive payment for invoiced
CGDP costs from the manufacturer
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CGDP Reconciliation Scenarios
Total CGDP Actual CGDP
Prospective Costs Plan
Payments
Advances
CMS
Manufacturer CMS Offset of
Owes
Reimburses
Invoiced
Plan at
to Plan
Amount
Recon
Plan
Owes
CMS at
Recon
Scenario 1
Prospective
Payments are
Less Than
Actual Gap
Discount Costs
$1,000
$1,750
$1,750
$1,750
$750
$0
Scenario 2
Prospective
Payments are
Greater Than
Actual Gap
Discount Costs
$1,000
$250
$250
$250
$0
$750
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CGDP Payment Flow
Manufacturer payment to Part D
Sponsors of invoiced gap discount
amount  CMS offset of invoiced
amount
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Quarterly Invoice Report Process Overview
1) Part D Sponsors advance Gap Discount at the Point of Sale
2) Part D Sponsors submit PDEs to CMS recording the Gap
Discount amount
3) CMS aggregates PDE data and sends to TPA
4) TPA sends quarterly invoice reports to manufacturers and
Part D sponsors simultaneously
5) Manufacturers pay the invoiced amount in full to Part D
sponsors within 38 days
6) Manufacturers send confirmation of payment to TPA within
5 days
7) Part D Sponsors send confirmation of payment receipt to
TPA within 5 days
8) The TPA sends payment confirmation statistics to CMS
9) CMS offsets invoiced and now paid amounts from Part D
Sponsors through APPS
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CGDP Timeline for Q1 2011
Quarter
Number
PDE
Reporting
Period
End
Quarterly
Invoice
Invoice
Paid by
Distributio
n
Invoice
Payment
Confirmed
by
Payment
Month of
APPS
offset
Q1 2011
3/31/11
4/30/11
6/13/11
8/2011
6/8/11
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What PDEs Are Included On An Invoice?
 Final action accepted PDEs w/reported
gap discount received during a quarter
 Certain PDEs may be pended from an
invoice at the discretion of CMS
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Defining “Final Action”
 When Sponsor adjusts or deletes
previously saved record, the most recent
record saved is designated as final action
record
 Invoice excludes final action deleted
records because they no longer have a
reported gap discount
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Quarterly Invoice Reports
 Allows Sponsors to know how much
they should expect and from which
manufacturer
 Sponsors will receive three reports
from the TPA:



Sponsor Detail Report
Sponsor Invoice Report
A Gap Discount PDE Tracking Report
 Sponsors will send the TPA one report:

Confirmation of Payment Report
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Quarterly Invoice:
Sponsor Detail Report Format
Sponsor Detail Report
PBP
Example 1: Contract A
TPACH
TPAMH
DETSP
DETSP
DETSP
DETSP
TPAMT
TPACT
Example 2: Contract B
TPACH
TPAMH
DETSP
DETSP
TPAMT
TPAMH
DETSP
TPAMT
TPACT
Notes
Contract "A"
P1234
1
1
2
2
11111000001
11111000008
22222111115
22222111116
P1234
$40
$100
$80
$20
$ 240.00
Contract "A"/
Contract "A"/
Contract "A"/
Contract "A"/
PBP "1" .
PBP "1" .
PBP "2".
PBP "2".
$ 240.00 Contract "A"
Contract "B"
P1234
1 11111000002
2 11111000008
P1234
P8888
1 33333000001
P8888
$50
$100
$ 150.00
$75
$ 75.00
Contract "B"/ PBP "1".
Contract "B"/ PBP "2".
.
Contract "B" / PBP "1".
$ 225.00 Contract "B"
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Quarterly Invoice:
Sponsor Invoice Report Format
Sponsor Invoice Report
Example 1: Contract A
TPACH
PTOT
TPACT
Example 2: Contract B
TPACH
PTOT
PTOT
TPACT
Contract A
P1234
Contract A
$ 240.00 Used for TPA Payment confirmation
$ 240.00
Contract B
P1234
P8888
Contract B
$ 150.00 Used for TPA Payment confirmation
$ 75.00 Used for TPA Payment confirmation
$ 225.00
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Gap Discount PDE Tracking Report
 Released at the same time as other quarterly
invoice reports
 Allows sponsor to know which “final action”
accepted PDEs with a reported gap discount
were put on the invoice and which were not
 Future enhancements to this report include
adding a reason code explaining why PDEs
did not get placed on an invoice
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PDE Data Validation Website
 When CMS pends Gap Discount PDEs and
they require a Sponsor response, we will post
them on the PDE Data Validation Website
 Sponsors are expected to respond promptly to
all PDEs posted to the Validation Website
 The timeliness standard will be stricter for Gap
Discount PDEs because they require a
Sponsor response before they will be released
to an invoice (response expected within 2
weeks of posting)
 In the near future, CMS will initiate compliance
action against Sponsors who fail to respond
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Confirmation of Payment Report
 Method for Sponsors to communicate to
the TPA that they were paid in full, per the
terms of the Manufacturer Agreement
 Based on the Manufacturer Total rows
from the Sponsor Invoice Report
 Sponsors will add payment confirmation
details to the records and transmit back to
the TPA
 Additional file format and process
instructions will be forthcoming
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CMS Offsets
 Following the Quarterly Invoice cycle,
CMS will offset Invoiced amounts from
Part D Sponsors
 Processed through APPS
 For the Q1 2011 invoice, offsets will be
processed in the August 2011 APPS
payment
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Questions?
Please submit all questions regarding the
CGDP Payment Process to our
dedicated email box
PDEjan2011@cms.hhs.gov
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