 Ladies and gentlemen, please welcome your conference moderator, Charlotte Grove. Good morning ladies and gentlemen and welcome back. How many of you had fun last night? Did something really fun? Anybody go ride the mechanical bowl anywhere? I heard somebody did. I don't see them this morning. So either A, they still had so much fun. B, they're recovering or B, they just or C, they don't remember. But I did hear that somebody went out and did that. I tried that in my youth and what an exciting time. But we hope you did do something fun in Dallas last night and enjoyed that and that you're back today ready for more information. In your program from yesterday you will notice if you turn ahead a couple of pages that you will see the agenda for today, the list of speakers, etc. Several of you have asked if there are handouts for today. It is again in that program. There are on the registration tables outside a few handouts left of the copies that were made for the entire conference. So those are there. Again a few administrative things. For those of you that have the cell phones, would you please turn them off or on to silent? We would greatly appreciate that. Again today we do have our signers here so they are providing for that. The announcement that was made almost at the close yesterday about the networking breakfast or a networking time. Again that was something that was we tried to assist those of you, some 80 of you that asked if there was any way. It was strictly voluntary. We did post all 10 regions with the states under those regions on that bulletin board last night. It was voluntary for anyone that wanted to show up. So if you came this morning and your region was not here, I'm sorry for that. We had facilitators. We had all 10 regions broken out. Some of you were able to network. How many of you were able to network within your regions this morning? Well that's good. That's a good number. Now from 12 to 1245 in the sapphire room. We are making another effort for those of you that want to network within your regions. So again that's from 12 to 1245 in the sapphire room. Again it's voluntary. If for any reason your particular region representative is not there, they're aware of it. We can only do so much to help facilitate that. It is an important process. So if we can do that, we'll try and do it. The breaks and lunches again, same scenario as yesterday, same restaurants. Again, if you would keep the walkways clear, and particularly today you will see floor mics because we have four Q&A sessions and I'll address each one of those as they happen. Our facilitators have been asked again if you can bring luggage in for those of you that are checking out today. Please do not. We do not have the storage space. It is not a secure site. So I would encourage you to use the bell services or if a colleague is staying over later until tomorrow and you can put things in their room. But otherwise I would not encourage you to bring it into the room. Again if you are wireless, you should be able to access in this room. As I mentioned yesterday, there is no electrical power. So having said all of those announcements, it is now my pleasure to introduce our first presenters for today. Our first discussion is over RDS payment overview and we have two presenters, James Mayhew, whom you'll remember from yesterday, and Joanne Salznack. Joanne, I will introduce. She is the Retiree Drugs Subsidy IT Development Manager with a government services group VIPS Inc. She has been a VIPS employee since May 1992. She has been in a management role since 1999. She is currently responsible for the development of the system requirements, training, and overall system testing. She manages a team of 10. She has been involved in EDI, HEPA, and CFO projects as well as call center support. She is an author and editor for the WEDNI SNP publication. Prior to coming to VIPS, Joanne worked her way from Coder to a director role at a Dunn and Brad Street subsidiary providing health care reporting products. She has more than 25 years of technical and project management experience specialized in the health care sector. It is my pleasure to welcome Jim and Joanne. Good morning. I see most of you came back. That's a good sign from yesterday. That's something that we all had fun here yesterday. And we're going to continue to have fun. We're going to continue to learn today. What we're going to do this morning is go over the payment process. What I will do is just go over briefly the statutory and regulatory requirement and then Joanne will get into more detail. But just wanted to let you know that the payment process is not final. It's still in the works. So what we're talking about today is really our current thinking about the payment process as we develop the system. And so we're really going to be looking forward to your input and your comments and your questions to help us develop this process if we move along. And then once we develop the process, it will go through just like the application did, a paperwork reduction act, the clearance process where it will be published in the data element will be published in the federal register and it will be a 30-day comment period. So starting today, there will be plenty of opportunities for input and comment in this system as we continue to develop it. Okay. Let me just give you a high-level overview of the requirements. When you talk about payment, I get the first question to come to mind is what is the amount that's going to be paid? And that's pretty clear in the statute. And essentially, it's for each qualified and covered retiree in the sponsor's retired qualified retiree prescription drug plan. The sponsor received a subsidy of 28% of the allowable costs in the plan year that are attributable to the gross prescription drug costs between the cost threshold and the cost limit. That's the rule for the payment. And I'll break that down in a second. But when I was at the lunch break yesterday, I was back in the CMS staff room reading over the questions. And there were lots of questions about what is the qualifying covered retiree. So I thought I'd go over that briefly to hopefully answer some of these questions and clarify exactly who you can get the subsidy for. And essentially, a qualifying covered retiree is a participant, a spouse or dependent of a participant who is a Medicare eligible individual who is either retired or disabled and is eligible to enroll in Part D, but does not enroll in Part D. And basically, it really boils down to the individual participant status. And the question asked is do they really have the participant have current employment status under the MSP rule? Essentially, are they actively working? If they're actively working, then even though they're Part D eligible, you cannot collect a subsidy for that person. And the other thing to remember is the eligibility for the spouse dependent really is tied to the status of the participant. I'll give you a couple of examples. For example, if you have a participant in your plan who is retired, Medicare eligible for Part D does not enroll in Part D, you can collect the subsidy for that participant. If that participant has a spouse who is on the employer, we'll call that Employer Employer A. Employer A's plan, but the spouse is Medicare eligible but does not enroll in Part D. But the spouse is actively working for Employer B but is on Employer A's retiree plan as the spouse of the participant. Employer A can collect a subsidy for that spouse, even though that spouse is actively working for another company. The key is that the spouse is enrolled in the participant's retiree plan and it's Medicare eligible. Conversely, if you have Employer A has a participant who is actively working but is Medicare eligible, not enrolled in Part D but actively working in the active plan, the Employer A cannot collect the subsidy for that participant. If that participant has a spouse who is also on the active plan, Employer A's active plan is retired, Medicare eligible, not enrolled in Part D, that Employer A will not be able to collect the subsidy for that spouse, even though that spouse is retired because that spouse is tied in with the participant's active plan. So that's essentially a really basic overview of what a qualified qualified and covered retiree is. Now, as I said, the amount of the retiree drug subsidy payment, again, is for each qualified and covered retiree, the sponsor will receive a subsidy payment of the 28% of the allowable cost that is attributable to the gross prescription drug cost between the cost threshold and the cost limit. So what are gross prescription drug costs? Essentially, gross prescription drug cost is a non-administrative cost incurred under the plan in the plan year for the purchase of Part D drug. And essentially, this is going to be the dispensing fees, first of all, it's going to be the ingredient cost of the drugs plus the pharmacy dispensing fees. Again, administrative costs cannot be counted towards the gross prescription drug cost. The gross cost includes not only costs paid by the plan, but it also includes the cost paid by the retiree. It does include the retiree's cost sharing. Okay, so that's the basic on the gross cost. What are the allowable retiree costs? Allowable retiree costs are, again, gross prescription drug costs that are actually paid. They're paid by the plan, by the qualifying cover retiree, or on the qualifying cover retiree's behalf. Net of any manufacturer, pharmacy, discount, charge the back, rebate, and other price concerns that are received by the insurance carrier or the plan sponsor. So essentially, what you have to do when you want to calculate the subsidy amount for a particular qualifying cover retiree is you take the gross cost that incurred by that retiree between the cost threshold and the cost limit for that particular plan year. Then you have to back out the rebate and the price concession that is associated with the gross cost, and then you apply the 28%. And that will essentially get your subsidy amount. Okay, in the final regulation, we outline the payment methodology. And again, as I indicated before, we have a lot of flexibility. We've built a lot of flexibility in this provision. This is 42 CFR, 423, 888. And the flexibility is that the sponsor can again choose the payment frequency, monthly, quarterly, annual, or interim annual. And as I indicated before, the difference between interim annual and annual is that for interim annual, right after the end of the plan year, the sponsor will submit the interim payment cost plus the estimated rebate. You can get a payment shortly after the end of the year, and then would again have to reconcile those payments within 15 months after the end of the plan year. For annual, you don't bother with the interim payment process. You just submit, essentially submit your first request within 15 months after the end of the plan year, and it'll just be in reconciliation format, your final cost and your final rebate amount. Now, once the sponsors select the payment frequency, then they must submit, once the plan year starts, they have to submit the cost data at the same frequency as they selected the payment. So for example, if you selected a monthly payment, you would have to submit at the end of each month the interim cost for that month and so forth. Quarterly, you do it quarterly, annually do it at the end of the year. So that's essentially the payment frequency issue. So when you select the payment frequency, just say you select monthly, what cost data does the plan sponsor have to submit? And again, I say the plan sponsor submits the cost data. Again, if it's a fully insured plan, the sponsor can have the insurance carriers submit the data on their behalf if they elect to do so, and they would delegate on their application and who's going to be submitting the cost data on their behalf. But during the course of the plan year for the interim payment, what has to be submitted is the total aggregate gross prescription drug cost for all of its qualifying covered retirees. So it has to be one lump sum figure. The total gross cost between cost, threshold and cost limit for all of its qualifying covered retirees. Plus an estimated rebate amount. Now, what is its estimated rebate amount? Well, it would have to be an estimate of how much the plan sponsor expects to get from rebates associated with those costs, the gross cost that they're submitting. And it would have to be an estimate based on historical data. So your financial people, your actuaries can take the historical data on what rebates they receive in the past and give a best estimate on what they expect the rebate will be for the upcoming year that's associated with those gross costs that they're reporting for their qualifying covered retirees. Now we recognize that the fully insured plan, really the basis of their cost or the premium. And so we divide the special role for the interim payment period for sponsors of fully insured plan. So in lieu of submitting the gross cost data that incurred under the plan by the insurance carrier, they could submit the premium cost as the basis for payment. And then the actuary or whoever would have to allocate, would have to break out the premium cost that are associated with those gross costs between the cost limit and the cost threshold and the cost limit and report that amount for payment. So you allocate the portion of the premium that's associated with those gross costs. If the premium and this play when it was developed and factored in rebates, then of course you would not have to provide additional rebate data. If the premium does not factor in rebates, then you would have to provide an estimated rebate amount so that it can be subtracted from the premium cost. So essentially the sponsor of insured, fully insured plans are the couple options and how they want to proceed with the interim payment. They could direct the insurance carrier to report the cost incurred under the plan or they could just report the relevant premium cost for interim payment. Now for reconciliation, which we'll get into in a little bit. The sponsors of the fully insured plan must follow the regular reconciliation process as the other sponsors do. So the final payment is going to be based on the cost incurred under the plan. And the reason for this is the statute really requires that the payment be based on cost incurred under the plan. So we felt we didn't have any flexibility there for final payment, although we had the flexibility for the interim payment. Okay, finally, what was the policy goal as we started to develop this payment process? And you'll see that they're very similar to the policy goal that I talked about yesterday for the application. Obviously, we had to develop in the payment process. We had to comply with the statute and the regulation in that only those allowable costs could be counted towards the subsidy payment. We wanted to keep it simple and straightforward for the sponsors. This would obviously reduce the frustration, reduce the cost to both the sponsors and the government. And obviously, we had to keep it flexible to accommodate both the self-funded and fully insured situation. And obviously, we have to make the system secure to handle the proprietary information and also the protected health information of the beneficiary. And last but not least, we have to build the system so that we get enough information to make the accurate and correct payment. Okay, at this point, I'm going to turn it over to Joanne who's going to give you more details about the process. And then I'll come back in a little while to say a few words about reconciliation. Joanne? The interim payment processes and reconciliation processes as we have them defined thus far, although as Jim said, the payment processes are still under development and design. And we are looking for your feedback to help us. What I want to start with is to say thank you, of course, to the American Academy of Actuaries for getting us this far. I feel like I'm won the Oscar awards, but anyway. Also, I need to say thank you to everybody back at work who is working so hard intelligently to get the application process up and to define the requirements for what we call Release 3, which will include the payment process. And also to the focus group participants and those in the audience who helped guide our thinking. The RDS Center has on its team contractors who are experienced in dealing with reconciliations, providing excellent customer service as you saw yesterday, and satisfying CMS's Alphabet Super Office of the Day, OIS, OFM, OIG, EPOG, et cetera. Plus, I've had the benefit of viewing yesterday's session and the Q&A submitted. I've tried to incorporate as many answers as I could into the upcoming payment presentation, but hopefully you'll not be disappointed that I do not have the actual screens to walk through. As I said, I'm hoping to get your input as this session continues and in the weeks beyond. Jim already explained what a qualifying covered retiree is, but I'm going to just go over it one more time because from our perspective, there's one more piece to being a qualified covered retiree, and that is having the positive response back in a response file that the person is covered through a subsidy period for a month that you're reporting on. There was a question, if a person becomes eligible mid month, can you report costs for that beneficiary or retiree in the month? Yes, you can. First, all costs are applied toward the threshold and then payment request. All payments will be tied to an application which are tied to a planned year. Next planned year's plan will require another application and payment process. We will be publishing the payment request data, both interim and reconciliation in the Federal Register for Public Comment, so you can feel free to hold back today. Just kidding. Someone said to show my sense of humor, we all need one and I've got to say my nerves definitely have the best of me right now. The requirements are not yet finalized, but the system itself is basically ready. Really, we can create ACH files, accounting reports and everything. What we don't have yet is the user interface to collect this particular basis of payment. So the purpose of my presentation will be to provide the pictures and explanations of the planned interactions. Again, all payments will be tied to an application and just like the application process screens that were presented yesterday, you will have, you know, drop down point and click capabilities to review your payment data and remittance advice. Our goal, again, time permitting, is to build a system that allows the most flexibility for the planned sponsor community. We took the feedback received during focus group sessions and will also incorporate the feedback from this session and questions and comments to come later. Each payment request is a claim and must be based on the most accurate information known at the time. Even the interim payments that you receive are a claim to the government and we will give you the opportunity to make corrections to previously reported payment request data. This slide is supposed to present the interactions expected between the RDS center and the users of the application and payment process. Now, we don't think the users of the RDS programmers or snakes relative to the BOA, so I'm sorry for that acronym, but it really stands for Benefit Option Administrator. As Pat's presentation reflected, we have several user roles planned for the RDS program. The Benefit Option Administrators could be designees assigned a role for the completion of the application itself or could just be named in the application as a future contact needed for payment interactions. Either way, this flow is intended to reflect the BOAs kicking off of the interim payment process. The focus group said that some plan sponsors will want nothing to do with the submission of payment request data. They just want to be told when the data is already housed within the RDS system and ready for them to react or finish the interim payment request. Now, I said that the system was built except for user interfaces and that includes the fact that we have not yet defined the format for the submission of the payment file. Our plan is also to allow for data entry of the required data within the secure website. Screen designs are not yet ready for public eyes either. They're still on napkins and such. But for now, let me walk through this flow and the one on the next page. There will be sample spreadsheets that I'll go over later on in the presentation that will more clearly hopefully describe the required data. But for now, let's just assume that we're going to get data from the benefit option administrators or wherever your claims data are housed, because in order to create this interim payment request, you will need to have access to claims data in order to get the actual costs incurred so far and to apply the threshold and limit reductions that are applicable. Unless, of course, you're collecting premiums and reporting that way for fully insured plans. And I'll talk about that also with the spreadsheets in a little bit. And that's when the RDS Center first becomes involved. We'll receive the payment files and we'll actually load the data before we'll notify the plan sponsor. So those two boxes really should be flipped. I just forgot to flip them. And so we'll notify the plan sponsor via email. And the plan sponsor or their payment designee will receive an email from the RDS Center. And that email will tell them that we've received some data. And this is really the first question point that I want to pose to the audience. What we're looking for is to let us know if you think that the notification should include the number of benefit options reporting thus far. So that's to say if you have five benefit options attached to your plan, we received two of five, three of five. The problem here is we understand that not all benefit options may be reporting with the same frequency. So if you've elected a monthly frequency, three of your five may be able to report monthly frequency data, but two may not be quite ready to do that. And so we're not sure that saying three of five is going to be necessarily helpful. But we're happy to incorporate that into our requirements. We'll just like your feedback as to whether you think it will be helpful. And so then the plan sponsor will be viewing the payment summary screen. And as I said, the screens, of course, are not yet developed. But what you'll be able to see is by benefit option what has been submitted. And you will be able to select which benefit option data you want to include in the payment request. And the reason for this is because you may look at something and know that the numbers just don't quite look right. And because you are making this claim for payment, you are ultimately responsible. And so you need that flexibility to say, no, I'm not willing to take that responsibility to include this amount at this time. You'll notice in the box at the right where the VOA submits the data, they can also withdraw data. And so if you did question some data's accuracy, the VOA's would have the ability then to withdraw their data. And our data files would then be updated to say that we have removed some data and our notification would then include the notification that this benefit option data has been removed. And then the process would start again. Our process then will take the selected data and aggregate it together to make an application payment summary total. And this little box talks about being net of accounts receivable. And I really want to defer that to talk in just a few minutes. Okay, so then this slide continues with the next step in this process is once we present the summary screen, which we expect to happen pretty instantaneously. The plan sponsor will review and approve the payment request. And at this time, we do expect them to be reviewing again the plan sponsor, plan sponsor agreement, and testing to the fact that this data is accurate to the best of their knowledge. questions were asked about the frequency elected for payment. During the conference call in June, we said that it was expected that monthly elected payment frequency will cause the RDS Center to receive monthly payment requests within a certain number of days after the end of each month. The frequency example given at the June conference sparked some feedback. So now we're open for your suggestions as to how late that cut off date should be. The cut off date suggested and really, it wasn't a suggestion. It was just an example was 45 days after the end of the month. And there were some pretty strong comments that the data just couldn't be available that quickly. So we're open again, part of the goal of our whole system design and development is to make it flexible to get your participation in this program. It will mean, however, once we set this cut off point, not that you can't request monthly expenditures in subsequent months. So if you were supposed to report January expenditures by May 15, and for whatever reason you weren't ready, that doesn't mean in June, you can't report January expenditures. So relax about you're not going to be losing subsidy dollar reimbursements with the payment request. It just means that we'll accept less than 12 payment requests from the plan sponsor for this particular application. There was also a question in the Q&A session yesterday about the payment advice. And of course, that yet again is not yet defined, but it will be available electronically as this will be a totally paperless environment from the payment perspective. If there are particular data points you would like to see on the payment advice, please let us know. We realize that you need to tie these into your systems as well. And we do understand and are sympathetic that you all have a kind of system work to do as well. And that as soon as we can finalize these payment formats will be the better for you all. So we will be leaving this conference and trying to get the public comment notice out as soon as we can so we can have that 30 day public comment period and more than solidify these payment formats. We're expecting to issue payments or run our payment system weekly. Just as with the application, the debarment and other bad lists will be checked each time payment is requested. And that's what that little diamond is indicating. And so if we have an issue where somebody in the application is now showing up on the debarment list that wasn't there at the time of approving the application, then the payment reject the payment will be rejected. And there will be an email going out to the plan sponsor again notifying them that your account is now in a pending status. And we need to clear up this debarment issue. We're also checking to see if the amount itself of the overall payment request is greater than zero or not. And that's because we're allowing you to make corrections to previously reported monthly data. It is possible that you will be submitting an overall payment request amount that is less than zero. And in that case, we call that a self reported overpayment. And we will then issue a demand letter and you will follow the same process be given the same appeal rights to question those amounts. But of course, if it's self reported, we sort of doubt that you'll be appealing. What I wanted to quickly talk about also is how frequently you can expect to receive your payments once you push the submit button. Yesterday, we talked about having service level agreements or SLAs. We have one attached to how expediently we finalize the payments. And I think it's 30 days from when they were requested. So if there was an application where the payment frequency of quarterly is elected for a calendar year based plan, it's expected then that the first payment request will be received sometime after the end of March 2006. Assuming, for example, say that the payment request was received on May 15 2006, a payment could be made by May 16. If the department is good, and that happens to be the day of the week that we issue payments. But for sure, no later than June 14 2006. Because all payments are being made through EFT, no payment can be effective on banking holidays or weekends, even though every day is a workday for the RDS Center. Okay, now this is for what we call the other kind of plan sponsor, those that need to be involved in everything. We needed to be flexible and leave it up to the plan sponsor community to manage their account and their payment process as they see fit. The basic difference between this view and the previous one is that the benefit option administrators or their designees will provide the payment data to the plan sponsor who will then decide if the numbers look reasonable before passing the data along to the CMS, to the RDS Center. And that's where if the plan sponsor does not think that the data looks accurate, they will reject the files back to the benefit option administrators. And that process can be repetitive as many times as the benefit option administrators needed to be to get data that the plan sponsor agrees. Same notifications will occur. And this slide does reflect the appropriate load of the data before the notification of the plan sponsor. And it also gives the flexibility to withdraw payment data. Now, at this point, the plan sponsor has already sort of approved the benefit option data, but it's possible that after some time or some thought, perhaps, you know, just sleeping on it for the night, you realize that that data might not be as accurate. So the same withdrawal features will still be there. The data will still be required to be submitted, however, at the benefit option level. We are not expecting the plan sponsors to do the aggregation. We will require the data at the benefit option level to enable us to do appropriate reconciliation that the 15 month month. There's one important note here and really this applies to all interim payments for this transition period. If you have a plan that runs for example, for one 2005 through 331 2006 subsidy payments can be made based on the first three months of actual expenses from 2006. So if you have expenditures in January 2006, February 2006 or March 2006, they can be claimed for subsidy, but the threshold and however the limit are applicable to expenditures that occurred from April 1st 2005 through December 2005. So that's why it's important for you to get your retiree list into us and our responses back and to do that process to keep your retiree eligibility in sync with Medicare beneficiary database to enable us to do that matching for you so that you can begin to isolate those retirees and qualified covered retirees who you will be claiming subsidy dollars for. And this slide, there is no difference from this other plan sponsor way of managing their account than the first one. We will go through the same process to check the barman sent to see if there's an overpayment in this payment request or if we can issue an actual payment. So I'm not going to spend a whole lot of time on this slide. I do have some takeaways that I'm hoping that you got out of this brief part of this presentation. The purpose of the retiree updates is to keep our files in sync and also to keep the Medicare beneficiary database updated to be sure that you're requesting subsidy for only qualified covered retirees. It's going to be important for the plan sponsor to check their account, to know when payment data is ready to initiate an interim payment request, to know when payment advice or demand letter is available, and therefore we ask that you pay attention to email notifications received from the RDS Center. The system will be based, will be built with flexibility and ease of use in mind. It will be built upon the application system using the familiar view or here and what's left to do framework and also the help on this screen and data element help. The overpayment process will follow, this is legally, HHS overpayment rules 45 CFR part 30. My little banner says that I'm an accountant, sounds like I'm a lawyer, actually I'm neither. But anyway this means that the demand letters will be issued as soon as an overpayment is self-reported or reported to the RDS Center based on audit findings which we'll talk about later in this presentation or uncovered fraud. The debt is expected to be repaid timely and interest will be incurred and debt will need to be referred to Treasury if collections are not repaid timely. The EFT data agreement part of the application states that the plan sponsor agrees that the RDS Center can deposit or withdraw money from the named account. We do not plan to withdraw monies to satisfy overpayment amount unless we have issued the proper notification and you have approved and said that this money is available in the account. Additionally we expect it to be possible for you to agree to a lesser amount of withdrawal than the full overpayment amount and if repaying an overpayment would necessitate a hardship at a certain point in time you we will allow you to request installment payments. The payment process as I said will be executed weekly we haven't decided which day of the week. Maybe we'll just pick straws it probably won't be a Monday or a Friday since we're not giving 100% each day. Requested payments will be processed within 30 days after submission and it does include the creation of the EFT to your bank and a payment notice and we are looking for your help in the design of the payment notice and the required data elements that you're looking for to integrate with your systems. As Jim talked about the required data for self-insured benefit option is the gross prescription costs paid, the cost the threshold reduction that has been applied to each qualified covered retiree thus far, the limit reduction and the estimated cost adjustment for rebates. For each benefit option we are requesting this data and the data should be reported for the month in which the costs were paid. Now there is slightly different data required for self-insured versus fully insured interim payments as Jim described and later on I'll talk about what we expect to capture for a fully insured plan. There was a question of 10 a plan year include more than 12 months and the question is answer is yes. There will look like on the screens that we are expecting a typical year 12 months but we understand that there are some plans that don't really have an end date and if that's the case then the application will serve your entire plan year period however long that happens to be. But there is a separate application required for each plan year and therefore payments will be made for each plan year. However long that year happens to be. The limit reduction just to reiterate is $5,000 per qualified covered retiree per plan year for applications covering plan years that end in 2006. The threshold reduction is $250 per qualified covered retiree per plan year for applications again covering plan years that end in 2006. Now per the regulation the cost threshold and cost limit for plan years that end after 2006 will be adjusted in the same manner as the annual Part D deductible and the annual Part D out of pocket threshold are adjusted. I certainly cannot answer any questions about what that really means and so if you do have questions when we break to the Q&A I'm sure Jim will jump in. The estimated cost adjustment Jim did say that that was supposed to be based on historical data and also again generally accepted accounting principles and this is the estimate of the extent to which the expected allowable retiree costs will differ from the gross covered retiree plan related prescription cost drugs. This is a mouthful for expected rebates and other price concessions for the upcoming plan year. This estimate will be used to reduce the periodic payments for the plan year therefore be a portion to each month of expenses reported and this point I really want to make is the reason why yesterday it was asked is there a possibility to change payment frequency elected within an application and it's because you are apportioning these expected cost adjustments that we didn't feel like it was a good idea to give you that flexibility. Okay so this is a spreadsheet example of the required data for self insured. There is an assumption that this application is expecting a monthly payment frequency. There is nothing here this represents the rolled up benefit option administrator totals so there is nothing here that says benefit option one is ten thousand dollars of the gross prescription cost and benefit option two is the other ten thousand or five and fifteen I didn't want to present that much detail here hoping that you get the idea. Let me just quickly talk about the purpose of the colors because it does mean something. Down the column A we have the month of the plan and this is expecting that this plan is on a calendar year. If your plan was in my previous example running from April through March then the first month lifts listed would be April. The months themselves are highlighted in yellow and really those are just to indicate the month and there's no data entry required or permitted in any other column. The next line under each month is there are three lines an old a new and a net. And we did get some focus group feedback that helped us solidify the current thinking on this. The old represents what you previously entered and since this is the first month of reporting there is nothing in the old. The new represents the dollars that are applicable to this month. In the gross prescription cost paid estimated premium costs I'll talk about for fully insured plans. The threshold reduction the limit reduction and the estimated cost adjustment. The new line is in light blue to indicate those columns where data entry is possible. Column H the calculated allowable cost is a calculated yield and it is based on the formula that's presented there where we'll take column C plus column D minus the combination of column E F and G. And then finally the most important column is always the last column calculated subsidy amount which is the 28 percent times whatever the amount happens to be column H. Now the net will be the difference between what was previously reported in old and what is currently reported in new. So the RDS center will be calculating the net effect of these changes. But again because this is the first month there are no changes and nothing shows up in the net. We move ahead to month four of payment. I didn't think it was necessary to walk through monthly reporting for February and March. Hopefully you'll get the idea. Now we're reporting April costs but we can also report changes to prior months reporting. And in this example we're showing that there was a change to February reported dollars. The reasons for adjustments really could be many. There could be a change to a qualified covered retiree that was used in previous reporting. Such that a qualified covered retiree has recently been added to the benefit plan but was not accepted. You didn't get the subsidy period back from our response file prior to the previous month's reporting. So you couldn't have included those costs even though they were incurred. Now you can. A person was previously erroneously claimed. Not really covered under the plan but for some reason was one of those that you entered a delete for in the monthly retiree list updates. Or there's a change received for a qualified covered retiree that retroactively impacts the subsidy periods. So we could receive indication that a retiree has signed up for part D and get that notification out to you after you've already claimed expenses for that month. Or we could get a change from MBD that says that this beneficiary has was really incorrectly labeled as eligible for or entitled to part A or part B. And so for whatever reason there could be changes relative to dollars that you reported relative to qualified covered retirees. There could also have been a change to the actuary calculation of estimated reductions for those chargebacks and rebates. Any value that materially affects previously reported cost adjustment data should be reported as soon as it is known. And again that's because you are making a payment request to the government. This is a claim for money that you will be receiving even though it's on an interim basis and we will be doing the reconciliation at the end of the year. The purpose of reconciliation is really to take into account actual rebate costs that are known at the end of the plan you throughout the interim payment process you are estimating. But if there is a change to what you estimated what your estimate was based on then you need to report that correction as soon as you are aware. The gross prescription cost paid can also change after being reported and that could be for prescriptions that were subsequently pulled back that were never really picked up but you incurred a cost. Apparently that happens all the time. Prescriptions that were not included that were thought not to be part of the party benefit but are subsequently learned to be covered or vice versa. The threshold applicable to the plan your changes or the limit reduction application to the plan your changes those would be reasons why you would have changes in other areas. And any other previously reported inaccuracies that could be typos or whatever the reason is we want you to be making those corrections as your interim payment process continues. Okay so for fully insured benefit options you really have a choice you can submit using the same method of actual costs incurred as a self insured plan or you can base your estimated payments based on premium costs. And as Jim said if your expected cost adjustments are factored into that premium cost then you don't have to give us that separately either. But if not then we would expect that you would give us the estimated cost adjustments that are applicable to your plan as well. The regulation allows it to be based on a portion of the premium costs paid by the sponsor or the qualifying covered retirees for coverage of the covered retirees under the group health plan. Premium costs again using generally accepted actuarial principles but administrative cost and risk charges must be subtracted from the premium. This is for interim payments only reconciliation will require actual cost paid for prescription drug costs incurred by the insurer or retiree. It is possible that the expected cost adjustment may be factored into the estimated premium cost. So here's an example again using month one of a plan or fully insured that has opted to use the method to where they're reporting estimated premium costs. You need to use an actuary to define the appropriate per qualified covered retiree premium cost to include in the interim payment request. You should factor in threshold and limit reductions that will be applicable and you may also factor in estimated cost adjustments. Use only those qualified covered retirees for which you have received eligible subsidy period coverage in the retiree response files and again this data is requested by month of expenditures regardless of your payment frequency election. Now let me just go into that a little bit more since I don't really think I covered that before. If you have elected a quarterly or annual interim payment process we still are expecting each month of expenditures to be reported. Now for moving ahead to month four in a fully insured plan this looks very similar with the blue and the yellow the old new and net. But again here we're just reporting differences to the estimated premium cost line column D and this example also reflects a change in February. The same reasons for adjustment apply here except now there could be a change to the actuary calculation of the amount of the premium that should be covered and you should take care to make sure that you again do the adjustments as they are uncovered. Example three is a combination of an application that has both fully insured and self insured options within their application. In this example it's month one just to keep it simple where you will be reporting in column C D E F and G and we'll do the rest. Again use the eligible retirees only those retirees where you got an accept from RDS using the subsidy periods included in the RDS response file to know if retiree expenses can be claimed for each month identify the Part D reimbursable drugs or conversely identify which are not reimbursable under Part D and make sure those costs are excluded from your payment request. This however can only be validated during an audit as we will not be getting the actual claim data. Apply the appropriate threshold and limits and remember for this time period where part of your benefit year includes costs incurred in 2005 they can and should be applied to the threshold and the limit. So if you have a qualified covered retiree who has exceeded the limit already in costs expended through 2005 you cannot claim subsidy in 2006 cost expended for that particular qualified covered retiree. Apply the actuary value to be submitted for the estimated premium costs and estimated reductions for charge back and rebates and again because of the apportioning of the estimated cost adjustments and premium costs we didn't think it would be practical to allow a change of payment frequency make year. And that actually concludes my part of the presentation on the interpayment process. So I'm going to turn it back over to Jim to let us move into the reconciliation process. Okay just a few remarks about the reconciliation process. Okay now the sponsor had completed the the plan year and received their interim payments. Now they must go through a reconciliation and this is a very important process because we want to get the reconcile the interim payment so to get the accurate final payment to the plan sponsor. And this is important for both the government government and the plan sponsor because we want to reduce the potential for overpayment. And the overpayment process is not a fun process to go through. So the better we do its reconciliation the less hassle we'll have with overpayment. Now the reconciliation process must be initiated by the plan sponsor within 15 months after the end of the plan year. And we really went back and forth on the time period because we recognize that a lot of rebates are not factored or calculated until after the end of the plan year. So we wanted to allow sufficient time for the sponsor to be able to get the rebate data and rebate calculation. However we did not want to draw it out too far out into the process too far out into the next year or too far down the road to hold up the determination of the final payment. Now that the process for the reconciliation is enumerated in the regulations that 40 TCFR 423888 before. And again as I said at the process to really capture the actual rebate data and make adjustments for final payment for the plan year. And we think that that's going to be really the unresolved question at the end of the plan year there's a rebate because the gross cost really should not change that much from the end payment to the final payment. Although there may be some adjustments and such as a qualifying recovery passes away. And that wasn't accounted for in the during the year you would have to make that the adjustment. But the big open question is the rebate amount. So what does the sponsor have to submit for the reconciliation. Again this is total gross prescription drug costs between the cost threshold and the cost limit for each qualifying recovery. And again this is different from the end payment cost data because this time it's going to be broken down to the individual retiree level. This is not claim data but this is total cost for each qualifying recovery. And this obviously raises the issue of protected health information because this is down to the individual retiree level. This is protected health information and so if the sponsor is not set up to handle protected health information they will not be able to really see this data. It may have to go directly from the insurance company to CMS or to the RDS Center and the sponsor would have to make arrangements with the insurance carrier for that to happen. So in addition to the cost broken down to the retiree level the sponsor has to submit the actual rebate amount that a portion to each qualifying covered retiree. So this is a rebate amount broken down to the retiree level. Now one thing I need to make clear when we're talking about rebates we're only talking about the rebates that are awarded after the point of sale. We discuss in the preamble to the final role but rebates awarded at the point of sale are already factored into the gross cost so there's really nothing to worry about there. We're just really concerned about rebates after the point of sale. Now the sponsor would not have to submit the actual rebate data to the RDS Center for reconciliation. They would just have to maintain that data along with the other required maintained data such as the actual work papers and acclaimed data for potential audit. So for reconciliation the plan sponsor is going to provide the rebate amount that the portion down to the individual retiree. And we think that the actuaries out there would be able to do that calculation. It should be a fairly straightforward process to calculate, take the actual rebate data and allocate the data to the part D drugs and then down to the part D drugs of the qualifying company retiree and then down to the individual retiree level. And that's going to be an actuarial calculation that will again won't have to be reported to the RDS Center but would have to be maintained in the work papers for audit. Now when we, as I indicated in my earlier presentation this morning, this whole payment process and the reconciliation process will have to go through a paperwork reduction act clearance and be subject to a 30 day public comment period. What we're hoping is part of that package we will provide some guidance on some issues surrounding rebates such as what rebates need to be captured, how they need to be captured, how they need to be reported. So we'll be issuing guidance on those issues down the road. And so any comments or any insights you might have in this area would be greatly appreciated. I think that all I have to report on the rebates, I will turn it back to Joanne who will just give you a brief description of the what expected process flow for reconciliation. Thank you. It's almost over. For me anyway. This looks very familiar to what we just saw for the interim payment process, the very first set of screens that were presented and the reason is because we expected to be just like that. However, even though we're expecting to get data from the benefit option administrators or wherever your claim data is held, we will expect the plan sponsor to initiate the reconciliation. And in this initiation, they will also be providing an assurance that the retiree list is current. They will again be reviewing the plan sponsor agreement and they will have the opportunity to review previous payment history. Since now, 15 months could have passed since the last payment was received for this application. It seems money that was received that long ago surely has been spent by now. There will be warnings if the time frame is approaching, but the plan sponsor has not yet initiated a reconciliation. And the reason that we'll do that is because if we don't receive the timely reconciliation data, then all previous interim payments will be treated as an overpayment. They need to be substantiated by the actual reconciliation data. I guess I don't need to do that yet. I said that the data must originate from the claim source and I know that even some plan sponsors have actual claim data and some do not want to see the actual claim data for their particular retirees. You can have that data aggregated up to a retiree level and up to look at that or up to only look at the actual gross costs incurred, but somebody needs to be able to verify that this data is accurate. Even again for fully insured plans, reconciliation data is based on actual costs incurred, no longer on premium dollars. And just like the interim payments, the file formats are not yet defined. But there will not be an option to key enter this reconciliation data. And the reason for that is because now we'll be at retiree level and so we don't want to take the opportunity to cause potential key entry errors at this particular juncture in this important process. Submission methods will include the mainframe to mainframe and HTTPS file transfer methods we talked about yesterday for the retiree file submissions. And so since reconciliation obviously occurs after application, all that connectivity should be in place. We expect the file format to contain the minimal retiree identifying information in addition to the cost data for each retiree to allow us to permit matching back to the retiree list subsidy period data. And that the reason for that is because we will be giving each retiree an identifier number within our system, but we're not passing that number back to you. So you don't have to make those kinds of changes in your systems to maintain that number. So we'll still need the information about the name and the social security number or HIC number that was provided, date of birth, gender and those fields to enable us to match back to the retiree list. And we are expecting to go through some edit process again, where we'll be checking to see if the appropriate threshold and limits were applied to each retiree. So we may have more reason codes added back to that response file that Pat was talking about yesterday, once the payment process is implemented. But we're again looking for your feedback into how best to give you that information back. Here we are expecting to be able to give you the number of files out of number of files expected. Since it is expected that each benefit option attached to the application will have at least one qualifying covered retiree attached to the benefit option. I can walk through the flow will be expecting data to be submitted from the benefit option administrators or wherever your claim data is, it will go directly into the RDS Center, where we will receive the files, do the edit and load. You will also have the same flexibility to withdraw data that previously was submitted where you uncovered some errors or possibly were notified of some error conditions. You can remove files and resend until we get it right. And we will be notifying the plan sponsor as data is received and loaded or removed. The plan sponsor will be able to view the summary data at the retiree level or at the overall application effect and decide by benefit option that they are ready to sign off on this payment request. Then we will go through the same process again where we are checking the debarment list, looking to see if the overall amount is greater than zero, less than zero. Well, now we will be comparing the total dollars required under this application to the total dollars previously provided. So if you are on an annual payment process where you have not received any interim payments, this will of course be a payment request where an EFT transaction will be sent for 28 percent of the amount received. For all other applications where an interim payment has been received, we will be comparing the dollars that are due under this application to the dollars previously received. And that result could generate a demand for another payment to you. The final result of the reconciliation calculation will be available, including the additional payment and advice or demand letter within 30 days after receipt of all required data. And basically that's it for the reconciliation process. It doesn't sound so bad right now and we really don't have to worry about it. And we've really don't have to worry about it. The first thing first is get your applications in, get the retiree list in and begin to work with us on the connectivity issues. And so now I think we're moving into the open floor question and answer. No? What's next? Oh, well then I'll turn it over to you. Thank you, Joanne and Jim. No, we're not going to write into the live. We're going to take a break. But before you all get up and run, the cell phone patrol yesterday it was wireless today it's cell phones. The cell phone patrol is asking again, please check your phones to see that they are on silent. Enough said. After the break. Oh, also we do not have any more copies left of the presentations they will be available on the website in two weeks. Would I please say something again about what's going to happen from 12 to 1245? Yes, 12 to 1245 Sapphire room. Anybody who wants to go in there and network. Go in there and network. Now after the break we will have the first of three live panels. The first panel will be a panel that will come up and address any questions that you have as a result of the RDS payment overview. Now if you have submitted written questions do not worry. There will be four live microphone one in each of the interior aisles. What we will ask you to do is form a line. Take one question per person, not more than 15 multiple parts. And we will take one question per person so that we can facilitate as many of your questions as possible. If you want to rotate back to the end of the line that's fine. But we will start and we will take one question at a time per microphone and then come back to the original microphone. And we have until 11 o'clock to take all of those questions. Any remaining questions for the RDS payment overview will then be turned over to the panel this afternoon. Again that panel process at the end of the day will be similar to yesterday where people will have taken the questions and sorted them. Then we will do the next presentation. We will then bring up another panel for that presentation. And that is how we will go through the presentations for today and then conclude the day with the written questions. So if you have submitted a written question and you want to get up to one of the floor microphones please feel free to do that. It is optional as to whether or not you give your name and address. For those of you that will be up here on the panel we have requested that they try to bring the lights down as much as they can even though they're videotaping so that you can see the people out there. That may not be as easy as that sounds. So having said that we will take a break until 10 15. Thank you. She's supposed to be. I put you right down there unless you want to be right here. Okay. Let me let me do the introductions and then I was told yes at Ambrose if you're in the audience we would like you to come up to the panel if you can see her. There she comes. Here she comes. Okay. Well Pat's making her way up. I have three announcements. The question was asked if I'm not checking out until tomorrow do I have access to the veranda club Thursday. The answer is yes. I'm not going there. Just a reminder to please turn your cell phones to silent. No we are not paying for lunch today. No we're not paying for drinks in the bar tonight unless they're going to me and I don't drink. But white chocolate does wonders. I have been asked by the floor monitors who have received several comments about sidebar conversations. We do have people in here that do have some problems hearing when the volume gets you know as it does sometimes. So if you're having a sidebar conversation please be aware of those around you both front back and inside on the sides. No I don't have lottery tickets. Okay. The updated slides one per page in PDF format including corrections will be available on the RDS website no later than Wednesday July the 20th. You will receive an email when the slides are available next week. The audio and video recording at the RDS conference will be available in two to three weeks. You will receive an email at the same time as the recording is available. They are making every effort to provide you with the HTML screen snapshots. The goal is to have that ready as the same time as the video. For those of you that wanted to retrieve the written questions that you submitted this morning so that you could ask them from the live mics. What's going to happen is we do have a couple of recorders in the back of the room that will be verifying questions so that we this afternoon pull those out that have been asked this morning. As we go to this live session we will focus only on questions that relate to the RDS payment overview. We will ask you to come to one of the live floor mics. We will take them one question at a time one per person. We will ask that if you want to state your name in your organization that is optional. If you want to direct it to a specific person that's fine otherwise we will leave it to the informal decision making up on the podium as to who is going to be answering the question. Those that will be participating in this Q and A include to my immediate right James Mayhew, to his right Joanne Sosnak, to her right David Gardner, and to his right Mark Hammelberg. To my immediate left is Ken Cole, to his left is Pat Ambrose and to her left is David Manus. Did I get it all right? Who did I miss? You moved. Where's that hard hat? Where's the wizard hat when you need it? See what they do? Okay. But before we start with the questions, Jim has a clarification that he would like to make. Yeah, I just wanted to clarify a point that we made in the payment presentation. A plan year for which a sponsor is getting their subsidy payment can't be any longer than 12 months. So a plan year can't be any longer than 12 months. Now, I think what we meant to say was that certainly a particular fall fund coming to retiree can be enrolled in a plan longer than 12 months. But the payment for that particular plan year can't be any longer for a period any longer than 12 months. Thank you. We've got the house lights. All the mics are on. So I think we are ready to begin. Oh, no, one other thing. We have run out of this color Q&A sheet. There are now white ones roaming around. Doesn't make any difference what color they are, but now we've had to go to these because we've run out of the other ones. So if you wonder why they're passing those out to you. We will ask that you again, you have the option of your name, your organization. Please speak directly into the mic so that our signers who are getting audio feed can hear you. We will not be repeating the question other than the initial time. I will start with the lady to my far right. I'm Sabrina Gibson with Aeon Consulting and I thought I heard you say that even if you're submitting annually, you still have to provide the data monthly. And if that's true, what was the rationale behind that? That seems to be an increase in the administrative pieces of the reporting. The only monthly requirement is the update file about the retirees. If you choose an annual payment option, when you do finally come to make your payment request at the RDS Center website, what we meant to say was you would have to break out those costs for qualifying covered retirees by month. You still only have to come in at one time. Well, if you choose interim annual, you'd actually be making two payment requests, summary interim payment request at the end of your plan year, and then the final reconciliation payment request when you do reconcile. But for the interim payment, interim annual, you would have to come into the system and break the costs out by month. You wouldn't have to make 12 updates throughout the course of the year to get paid on an annual basis. My question is if you're doing an annual filing, what's the question? Are you talking about interim annual or the regular final annual option with reconciliation? Either way. Well, they are two distinctly different processes. If you choose just to submit annual, which is the reconciliation process, then you would have to break out, you submit the final reconciliation file with drug costs summarized to the beneficiary level, and that would aggregate that information. We would accept it from whoever your benefit option administrators are submitting the data. We'd present an aggregated final payment request based on the reconciliation data files, and the plan sponsor would simply submit that. The data files would be broken out with the detail, but the actual payment request as it's presented to us or to you in the secure website we're envisioning is going to be at the summary section. So you don't have to file those spreadsheet reports. If you do, just the final payment without the interim. The spreadsheets were provided to give you an example of how we are expecting the files to be broken out. Again, we're not allowing data entry on the website. We're not envisioning that. Is that correct? Not for the reconciliation data, but for interim data, they can key enter. That's why the process of the final or final reconciliation annual payment process. Dave, I actually have sort of a question for you. I know it's not my turn, but I thought that we were... Can somebody turn off her mic? Well, I thought that we, even though they might submit one payment request, that the costs were split out by month, because then upon reconciliation, we are comparing the costs to the number of retirees that they have qualifying covered retirees month by month for the subsidy. And, you know, I think that was one of the thoughts behind it. So I'm not sure... Great. I'm agreeing with that. Okay. If I said something that was not in line with that, I think that would be a good question. The question from the lady at my immediate right, please. Diane Biko from Ford, and I have a question about the reconciliation file. On the file that contains the aggregated drug costs by retiree allowable costs, must the data element of benefit option identifier be included? We understand its inclusion on the eligibility application. Would you envision that element also be included? Yes, I would. Straightforward enough answer. Thank you. The gentleman to my immediate left, please. I'm Christian Olmer with Desert Mutual. You said that the final reconciliation, you know, since the extra 15 months after the end of the year, only applies to rebates, to get a B&R and runoff. If a beneficiary incurs a claim in December of 2006, I'm assuming a calendar year plan, say it brings him from $400 to $450, so it's above the threshold. But it's paid in January of 2007. Where does that go? Does it go on the reconciliation for 2006? Does it go on the January plan year? The 2007 plan year? Or is it lost? I would think that it would go with the reconciliation, because it was incurred during the calendar year, and it was actually paid. But the fact that it wasn't paid till after the calendar year, as long as you're still within the cost limit, that can be reported on reconciliation. Meanwhile, it wouldn't go in on any interim report. Certainly not the January interim for 2007. I'm sorry. Well, it's my understanding that you can adjust interim payment request up until reconciliation. Correct. It's just that you were explaining most of these payments being on the month paid rather than month paid. If it was incurred in the last month of the plan year and actually paid in the next month of the new plan year, which application does it go with? The later plan year. That's what I thought. Okay, what if you decide to drop the 2007? The date? Let me clarify. The date at which you need to be concerned with querying your claims databases is the date that the plan paid the claim. In the pharmacy network, a lot of this happens real time. Of course. It should be fairly simple, but we do realize that there are potential delays in filing of claims. I missed the first part of your example. I apologize. If you were assuming that you had an individual go on their own to the pharmacy and get a prescription paid. They went out of pocket and paid themselves and then subsequently submitted a claim to whomever the payer should have been. And that paid date that could happen in February, March, following year cannot be included in the reconciliation file. Obviously you wouldn't have a paid amount actually the paid amount wouldn't have occurred or wouldn't relate to the application period the plan year included in your application. And I think your example was for 2006. Does that answer the question? Does your innocence say that would not be reimbursable? For that year. If you submit an application and go through the process for the next year ending in December 31, 2007 you could include that in that year. The next question then. No this is follow up to that. If I can so that others can also have a chance to ask questions. We're going to have a little confab after this and we'll make sure to address it later if that's okay. I know this is obviously a critically important issue but I want to make sure that everybody gets a chance to answer it. I want to make sure that nobody gets the wrong impression. That's okay. And if you have follow on questions to your questions please write them down so that we do have record of them. The lady to my far left please. I'm Donna Marshall from Washington state health care authority. My question is if a plan sponsor who has multiple benefit options chooses to have benefit options. Can they submit the subsidy payment request on their behalf? Does the plan sponsor need to submit an application for each one of those benefit options or can they submit a combined application that just identifies each one of the options? The benefit options are identified in the application and the assigning of roles for who can be involved with the payment process also happens as designes are added and authorities are given to those designes. So there's no need to assign folks at a later date or to submit another application. All individuals you want involved with from start to finish for that benefit year with submitting the application submitting payment requests, doing anything involving information associated with that benefit year in that application and your application. And we're allowing you to continue to update who those individuals may be throughout the course of the benefit year through the website. So we realize that those individuals can change so we're allowing you to do that. Could you repeat the second half of your question? I want to make sure we address it. I was just making sure do they need to submit a separate application. And I think you had another piece to your question maybe was the first part but you were well, let me clarify. You had said do individuals or do those benefit option administrators have to submit payment requests on your behalf. Let me just clarify. What needs to happen is the data files, the files that you saw, the screen shots but those are essentially going to be file formats that a benefit option administrator would submit to us, the RDS center. We would aggregate those for the purpose of the plan sponsor making the payment request, not the benefit option administrator. The plan sponsor per the regulation has to be the one submitting the payment request. So we will collect data from the benefit option administrator and the plan sponsor and then we need to come in and actually submit, review and submit that payment request. Okay. Thank you. The lady to my far right please. I'm Joe Misker from restat and my question is for James Mayhew. During the payment overview you defined who a qualifying covered retiree was. Could you please repeat that? Okay. The qualifying covered retiree is someone who is a medical individual who is eligible to be enrolled in PUTD but is not enrolled in PUTD and is not in what we call current employment status. I might describe who a retired or disabled and obviously in the sponsored prescription drug plan. And the spouse. That also can include the spouses independent of the participant as long as they are Medicare eligible and they are enrolled in PUTD. Does that help? I thought you had stated that if the spouse was employed. Right. Okay. Let me just give that scenario one more time because I know it's fairly complicated. Let's say you have a participant and employer A who is Medicare eligible eligible to be enrolled in PUTD and is retired. Okay. Employer A constructed subsidy for that person. Say that participant has a spouse who is also on employer A plan. This spouse is Medicare eligible and is not enrolled in PUTD. Even if the spouse is actively working for another employer but is not covered on that employer's plan and is still covered on the employer A retiree plan then employer A can collect a subsidy for that spouse even though that spouse is working for another employer because that spouse is covered on the retiree plan based on the participant's retiree status. Conversely if you have employer A covering a Medicare eligible individual who does not enroll in PUTD but that individual is working and is on the active employer A's active plan obviously because of active employee employer A cannot collect a subsidy for that person nor would they be able to collect a subsidy for the spouse even though the spouse is not eligible and Medicare eligible because the spouse again is getting covered through employer A because of the active status of the participant. Thank you. The gentleman to my right please. If I understand correctly from this morning when Ms. Sosnak was talking about the claim submission that the data would have to be a benefit option. If you have a plan where you are combining all your groups for one net test let's just say you have one PBM what would be the purpose of having to separate all that claim data by benefit option. The purpose of the application gave you the ability to designate benefit options within the plan as they are related to satisfying the gross in the net test. Somebody else can jump in. I think we might be mixing just a couple of issues here that may be a little confusing but in order for us to know how to reconcile payments we've made throughout the course of the year we need to know which unique benefit option a retiree was enrolled in at various points in the year and since a retiree can change options in some cases maybe not in your case but in some cases it's possible given life changes or whatever that a retiree can choose a different option during the middle of the plan in this application. If that were to occur in order to get the accurate information we would have to get it from both sources both benefit option administrators if they are in fact two different entities and actually whether or not they're two different entities is almost irrelevant whether or not it's two different options you've identified to us under the application. So I would like to move back to the last data back to when this retiree was actually enrolled which months they were enrolled in which particular benefit option it becomes important at reconciliation time. I would just urge you to reconsider that because as long as you have one retiree list which we have to submit one list and it tells you what they're up because you're going to get to the same answer at the end of the process. And I would encourage you to submit that comment when we go out for comment public comment on the payment request information. If I could just emphasize the point that Dave just made obviously as I spoke about at the very beginning and I think many of you have appreciated the time frames and all this up and running are beyond tight. So obviously as anybody would expect the rational thing to do is the triage the most critically important things based upon when they needed to be done. So the payment processes are really the last piece of the puzzle since the payments are in fact aren't going to be made till at the earliest early 06 while the applications are going to be made while we're obviously very far down the road in thinking things through perhaps some of the discussion I appear may reflect the fact that we haven't put everything entirely to bed which can be good news for you folks because we are giving you the chance to comment and to influence how the final process is going to work on the payment side. So I do encourage people for those sorts of questions. So I think we make that available which will be very soon. We debated whether or not we wanted to go into this level give you exactly what our latest thinking was because we knew that it could be changing slightly as we move forward through this PRA notice paper work production act notice but we thought it was only fair to go into this level. So I think we have to think about what's going on and just have to forgive us if we don't have the answer to every single question you ask today. A lady to my left please. Good morning. We can hardly hear you. Thank you. Kim Hickman with Mercer Human Resource Consulting which turns out to be a follow up to Derek's question. I'm wondering if you have any information on the data you had. I'm wondering is that information only going to be entered in a keyed fashion or is there going to be some HTTPS upload capabilities main to main, etc. The interim payments will be accepted in a key entry fashion as well as biotransfer using main frame to main frame and the primary list. Thank you. The lady to my far left please. Michelle Tucker, Mayo Clinic Foundation. Could you bring your mic up just a little please. My question relates to the end of the year reconciliation process and rebates. You use a lot of words like aggregate and allocate these rebates. When I read the regulations it leads me to believe that you need more detailed level allocation of those rebates. The example I would like you to address is let's say I take Tylenol and you take a leave we're both in the plan Tylenol gives rebates and a leave doesn't. So when we allocate these rebates does the Tylenol rebate get allocated to all the participants or only the participants that received a prescription for Tylenol. So what level do you need this detail at? No, we'll we'll really count on the actuaries to be able to use it's efficient. It's an honest answer because it's a very complicated area and we'll count on the actuaries to be able to really generally accept the actual principal to be able to allocate the rebates down to the individual level. They're going to have to look at the basically the volume of the utilization of each particular group and determine probably a weighted average to allocate that rebate cost that's worthy of a drug level and be able to filter it down to the retiree level. So you would accept an actuarially sound method? Yes, I mean it's not required to have an actuarially due to calculations but it's our anticipation that the actuarially probably would or it could be an accountant or a financial person but it would have to be generally a steppid accounting principal and actuarial principal to do the allocation. And again if I could supplement that it is something that we might consider issuing further guidance on perhaps not for this year perhaps for future years but we'll obviously keep everyone posted. Thank you. The gentleman to my far right please. Good morning. I'm sorry. Tom Parsiack with Aon Consulting and as a health actuar I'd welcome further guidance on that issue but my question is are you sure? I don't want to go there. My question is regarding the term benefit option which we've heard a lot of yesterday and today and I'd like if possible to get some clarity on how discreet that term can get. I'm concerned about a situation for example you have a common plan design in terms of co-pays or deductibles etc. that cross several groups where one group may have their contributions their premium for this option be a percent of pension another group may have their contribution be a function of years of service. Would I have a situation where each discreet contribution dollar amount defines a benefit option or does the formula define a benefit option? I think the sponsor have a really as long as the options are within the a single plan they also have the discretion to define what is the benefit option within their plan. They can use a characteristic such as a formula or a cost sharing arrangement to define that option. It can't be an arbitrary arrangement but it can be an arrangement based on a characteristic of a particular group or whatever I have an option. The gentleman to my right please. I'm James D. Benedetti from CalPERS and my question is that given that your RDS payments are based on actual cost how do you plan to pay employers with just a few Medicare retirees for example maybe as few as one without violating HIPAA restrictions on protected health information. I didn't hear all your questions. Would you repeat the question please? If you have just say one, two, three or so Medicare retirees in your Medicare plan and you get a retiree drug subsidy how do you avoid violating HIPAA when you pay the employer that amount? Okay well that's an excellent question but first of all so I guess the question is you think that the subsidy amount would reveal to the employer the drug utilization of the individual retirees well the payment will be an overall lump sum amount the payment would not necessarily be broken down to the individual retirees it could be based on individual retirees could be a lump sum. But if you only have to say one retiree then that is broken out at the individual level. Right, right. Is this a likely scenario? I don't know if we have a way around that. In our system we have 95 employers with one Medicare retiree so we're trying to get an example how you guys are going to handle the situation to possibly guide us. Well operationally I can tell you as it's not final but our latest thinking again we talked about the application and how you designate various individuals with certain authorities to view different types of information within our system. You can have it is conceivable in our system to have a plan sponsor with an authorized representative an account manager and designees that do not have the authority to see retiree specific information and that is something that you can indicate to us on the application and we're considering when we present payment screens at the time that you're submitting payment requests that a plan sponsor would be submitting a payment request to show only aggregated information. That said your larger scope question about HIPAA and revealing information about a specific individual is a good one and I'm not sure what the answer is right now because in the exact example you gave where there was only one I really am not sure that it would be possible so we'll have to take that under advisement. Let me ask a question or two in those cases do your employers generally have procedures in place to protect data or not? There are so few people in that organization quite often you know we have mosquito abatement districts and just small groups board commissions that contract with us. We can go and talk to the office of civil rights which is the entity within Department of Health Human Services and perhaps issue some guidance on this. We have been docking with them recently and gotten further comfort and clarification about how the and there's information in the preamble to the regulations in the regulations itself that says that the activities an employer may engage in relating to the subsidy program are consistent with HIPAA rules. I understand exactly what you're saying that an employer that may not otherwise have procedures in place to protect individualized data may be able to work backwards and figure out generally what a given person's claims costs might be and if it's an insured arrangement you know there are a lot of steps it's a pretty inferential situation if it's self funded then clearly you're going to know what it's going to be because you're paying the cost if it's insured then you might be able to do this sort of inferential situation and it could be PHI might we can talk with them to see if there's a need to issue further guidance obviously you can handle this by amending your plan to tell people that you would protect that data that may not be the most ideal that you would be able to use although the protections that would be required are pretty minimal in that case and others may have a different view but we'll follow up on that I think as a general matter I don't see that as a critical problem. Thanks. The gentleman to my left please. Tony Cuscio, Emerson Electric. I assume the term rebate includes all the streams of revenue that come from pharma drug manufacturer these transparent contracts that PBMs now have with employer groups or coalitions they get back educational revenue they get back the revenue that pharma get that the PBM gets for selling data to pharma but what about class action lawsuits on July 15th the deadline for filing class or being part of a class action to recover money from the manufacturers of Hytrin or Tetra Zosin where the drug manufacturer either was engaged in price fixing or restraining trade those monies may not come back for a number of years I suspect most of that money will go to the trial lawyer who filed the lawsuit but how do we account for that money and is it intended that we account for that if we get back 10,000 or 20,000 dollars the result of our filing is part of the lawsuit but the good news is that lawyer fever not considered to be based but you know that's an unusual situation and obviously no it's not so unusual there are five of these in the last year well I mean it's not I heal you as I said we might consider issuing some further guidance and we would welcome your comments on that we'll take that under advisement I suspect part of the problem is are we going to ask you to do some estimate of the probability of recovery that's almost impossible to estimate absolutely I agree and if you get it 10 years down the road we're not going to be reopening something that happened 10 years ago so the administrative cost of trying to reopen something may not be worth it to the government to try to recoup those costs by being an employer windfall are you telling me now I won't go there speaking as a lawyer I had to we'll just drop it the RDS center does have the opportunity to receive a request for reopening from plan sponsors there are areas of the regulation that do speak to re-openings so from an operations perspective as long as it may be Jim you could talk a little bit more about re-openings but the RDS center does have the opportunity to consider reopening a previously reconciled period of time so we'll be addressing re-opening the presentation on appeal the lady to my far left please thank you Abby Wilson Kaiser foundation health plan and this is a question for Joanne I was wondering if she could give a few examples of why a plan sponsor would not accept the BOA data sent for the payment request the best example I can think of is if you have reason to believe that for example you have five members of the benefit option and you get a payment amount requested of five million dollars it's going to look wrong so I mean it's mostly going to be gross errors like that that you'll be able to detect beyond that I mean I certainly don't expect the plan sponsor to be able to validate administrator especially in the instances where you don't have access to the actual claim cost data welcome ladies and gentlemen we are out of time for this segment however if you are standing at the microphone with a facilitator facilitators would you make sure that if they would like to do this that they submit directly to you in writing your questions those questions will be then given to me and when we have the final Q&A this afternoon your questions since you have been sending so patiently at the microphones we will put there in as a result of your being very patient so the facilitators give them directly to those facilitators facilitators if you'll give them directly to me I would like to thank our panel let's take a five minute stretch and get ready for the next presenters