How To Complete Reconciliation - Updated 09/16/2008
This document includes information about the following:
- What is the purpose of reconciliation?
- What is the reconciliation deadline?
- What happens if I miss the reconciliation deadline for an application?
- Do I have to reconcile?
- When can Plan Sponsors begin reconciliation?
- What is needed to prepare for reconciliation?
- Who is allowed to complete reconciliation?
- How can I tell if each step is completed?
- Can reconciliation be canceled after it is started?
- What happens when reconciliation is complete?
- Can benefit options be reconciled individually?
- What if a Plan Sponsor has multiple applications?
- In what order must the steps be completed?
- Do the reconciliation steps have to be completed all at once (i.e., in one login session)?
- What do the different reconciliation step status indicators mean?
- What is the difference between the status of a step and the status of the application?
- What if I no longer agree with the covered retiree list that I accepted in Step 4: Finalize Covered Retirees?
- What if a new mainframe final cost report is submitted after Step 6: Manage Submission of Final Costs is marked "Complete"?
- What is the difference between an interim payment request and a reconciliation payment request?
- Can estimated premiums be reported for purposes of reconciliation?
- Can estimated cost adjustments be reported for purposes of reconciliation?
- How should coordination of individual retiree cost data be handled?
- How should coordinated individual retiree cost data be reported?
- How should rebates received by the Plan Sponsor directly from a drug manufacturer be reported?
- What happens if my Account Manager or Authorized Representative changes after I've initiated reconciliation?
- Does a Plan Sponsor have to submit its maximum number of interim payment requests before initiating reconciliation?
- How quickly will CMS' RDS Center process reconciliation payment requests?
- If a Plan Sponsor submits a negative interim payment request before it initiates reconciliation, what will happen?
- What records must be maintained in case of audit?
What is the purpose of reconciliation?
Reconciliation is the process by which a Plan Sponsor that had received any interim payment must submit to CMS, after the end of the plan year, the total gross covered retiree plan-related prescription drug cost and actual cost adjustments (e.g., discounts, chargebacks, rebates, and similar price concessions) for the application. The sum of the interim payments is compared with the final subsidy payment determination for the application. If the sum of the interim payments is larger than the final subsidy payment determination for the application, CMS will initiate immediate overpayment recovery action.
Plan Sponsors that chose an annual RDS payment frequency, or otherwise did not receive any interim payments, and that wish to receive a subsidy, must use the reconciliation process to submit final cost reports and submit their one and only subsidy payment request. This request would consist of the total gross covered retiree plan-related prescription drug costs, and actual cost adjustments for the application.
What is the reconciliation deadline?
For information about the reconciliation deadline, go to: Important Reconciliation Deadline Information.
Note: Reconciliation must be completed no later than the Plan Sponsor's reconciliation deadline, which can be viewed on the Reconciliation Checklist.
What happens if I miss the reconciliation deadline for an application?
For information about the reconciliation deadline, including if you missed the deadline, go to: Important Reconciliation Deadline Information.
Do I have to reconcile?
All Plan Sponsors that have received at least one interim payment MUST perform reconciliation for the application for which the payment was received. Those Plan Sponsors choosing the annual payment frequency who wish to receive subsidy must make one annual payment request using the RDS Secure Web Site reconciliation process.
When can Plan Sponsors begin reconciliation?
Reconciliation can only be started after the plan year ends. You should not begin reconciliation if you intend to submit further interim payments or have not received final rebate information. However, Plan Sponsors should not submit an interim payment request during the final 30 calendar days before the reconciliation deadline.
What is needed to prepare for reconciliation?
Plan Sponsors should prepare for reconciliation by making sure that:
- add/update/delete retiree files have been submitted to ensure that the retiree list reflects the most current data regarding qualifying covered retirees
- all retiree response files and retiree notification files sent from CMS' RDS Center have been processed
- all final cost data have been processed by communicating with all cost reporters (e.g., Vendors and Pharmacy Benefit Managers (PBMs) )
- all actual cost adjustments (e.g., discounts, chargebacks, rebates, and similar price concessions) for the final costs reported must be calculated
- each individual retiree's cost data for purposes of calculating each retiree's cost threshold and cost limit is coordinated across the application
For more information about preparing for reconciliation, go to: Reconciliation Job Aid.
Who is allowed to complete reconciliation?
The following table indicates which role is allowed to complete each step.
| Step | Authorized Representative | Account Manager | Designee with Request Payment Privilege |
|---|---|---|---|
| Step 1 |  |
|
View only |
| Step 2 | |
|
View only |
| Step 3 | |
|
Note: Both Request Payment and Retiree Data privileges required to access download |
| Step 4 | |
|
View only Note: Both Request Payment and Retiree Data privileges required to access download |
| Step 5 | View only |
|
|
| Step 6 | View only |
|
|
| Step 7 | View only |
|
|
| Step 8 | View only |
|
|
| Step 9 | View only |
|
|
| Step 10 | |
|
Designee with both Request Payment and EFT privileges may complete step |
| Step 11 | |
View only |
View only for Designee with both Request Payment and EFT privileges |
| Step 12 | |
View only |
View only |
How can I tell if each step is completed?
The Reconciliation Checklist displays:
- The status of each step
- The date the step was completed
- The user who completed the step
Can reconciliation be canceled after it is started?
No. After Step 1: Initiate Reconciliation is completed it cannot be reversed.
What happens when reconciliation is complete?
Completion of Step 12: Review and Submit Reconciliation Payment Request completes the reconciliation process. At that point, the reconciliation payment request will be processed by CMS' RDS Center. CMS' RDS Center will deposit any monies owed using an Automated Clearing House (ACH) transaction to the bank account specified in Step 10: Review EFT Information. If the sum of the interim payments is larger than the final subsidy payment due for the application, then that is considered an overpayment.
Note: CMS will initiate immediate overpayment recovery action.
For more information about overpayments, go to: How To Satisfy an Overpayment.
Can benefit options be reconciled individually?
No. All benefit options for which an interim payment has been made within an application must be included in the reconciliation payment request.
What if a Plan Sponsor has multiple applications?
Each application must be reconciled individually and must be reconciled by the applicable reconciliation deadline. The reconciliation process for a given application is independent of any other applications for that Plan Sponsor. Interim cost reports and interim payment requests may continue to be submitted for the applications not being reconciled.
In what order must the steps be completed?
The steps must be completed in numerical order. Please keep in mind that Step 2: Review Payment Setup may be revisited throughout the reconciliation process but must be marked "Complete" in order to continue with any subsequent steps.
To find more information regarding reconciliation and the steps necessary to complete the process, go to: Reconciliation How To List.
Do the reconciliation steps have to be completed all at once (i.e., in one login session)?
No. However, all reconciliation steps must be completed no later than the application's reconciliation deadline. For more information about the reconciliation deadline, go to: Important Reconciliation Deadline Information.
What do the different reconciliation step status indicators mean?
Visual indicators appear before each step in the Reconciliation Checklist, and the status is displayed after each step name. A blue arrow indicates the next step to be completed or that the step is in progress, a green check means that the step has been completed, a red exclamation point indicates that the step needs attention, and a yellow dash means that the step is incomplete.
What is the difference between the status of a step and the status of the application?
The Reconciliation Checklist displays the current status for each of the steps within the reconciliation process. The application status is an overall status for the entire application and changes as the Plan Sponsor completes steps in the reconciliation process.
What if I no longer agree with the covered retiree list that I accepted in Step 4: Finalize Covered Retirees?
It is critical that Plan Sponsors agree to a correct covered retiree list in reconciliation Step 4: Finalize Covered Retirees. Plan Sponsors must ensure that the retiree data reflected in the most recent covered retiree list is accurate. However, despite a Plan Sponsor's best efforts to ensure that the retiree data reflected in the covered retiree list is accurate, there may be instances where a Plan Sponsor becomes aware of changes to its qualifying covered retirees after it has completed Step 3 and Step 4, but before it has completed Step 12. For more information, go to: What if I do not agree with the covered retiree list?
What if a new mainframe final cost report is submitted after Step 6: Manage Submission of Final Costs is marked "Complete"?
Mainframe final cost reports that are submitted after Step 6: Manage Submission of Final Costs is marked "Complete" will have a status of "Mainframe: Errors Detected." For more information about cost report warnings, go to: What does "Status of Last Report" on the Benefit Option List page mean and what are the different statuses that could be presented here?
The "Mainframe: Errors Detected" condition will result in a warning on the Reconciliation Checklist. If a new mainframe cost report is submitted after Step 6 is marked "Complete", the following warning will appear on the Reconciliation Checklist:
A new mainframe cost report was submitted on mm/dd/yyyy AFTER final cost reporting in Reconciliation Step 6 was completed. Please return to Step 6 to review cost reports in the audit trail. If previously submitted cost data is now inaccurate, please return to Step 6 to allow cost reporting and resubmit the cost report.
A Plan Sponsor receiving this warning should contact the cost reporter who submitted the mainframe cost report after Step 6 was completed, in order to learn the reason for the submission. For more information about how to view these reports and how to identify the cost reporter go to: How To Complete Step 6: Manage Submission of Final Costs. If after contacting the cost reporter the Plan Sponsor determines it is necessary to report new cost data, the Plan Sponsor must:
- Return to Step 6 and select Allow Reporting. The status of the application will be "Reconciliation Cost Reporting Opened". Note: Step 7 through Step 11 will be marked "Incomplete" as a result of choosing to allow final cost reporting again, even if it was previously marked "Complete".
- Re-submit mainframe final cost reports that had previously been rejected.
- Resume completion of Step 7 through Step 12.
What is the difference between an interim payment request and a reconciliation payment request?
An interim payment request represents a Plan Sponsor's total gross covered retiree plan-related prescription drug costs (as defined in Federal regulation at 42 CFR §423.882) and estimated cost adjustments (e.g., rebates, discounts, chargebacks, and similar price concessions) and can only be processed before Step 1: Initiate Reconciliation is completed. Costs claimed at reconciliation must represent a Plan Sponsor's total gross covered retiree plan-related prescription drug costs (as defined in Federal regulation at 42 CFR §423.882) and actual cost adjustment data for the application being reconciled. Plan Sponsors that reported estimated premiums for interim payment must instead submit actual cost data and actual cost adjustment data for reconciliation.
Can estimated premiums be reported for purposes of reconciliation?
No. For purposes of reconciliation, actual cost data and actual cost adjustment data must be reported.
Can estimated cost adjustments be reported for purposes of reconciliation?
No. Only actual cost adjustments (e.g., rebates, discounts, chargebacks, and similar price concessions) may be reported for purposes of reconciliation.
How should coordination of individual retiree cost data be handled?
Plan Sponsors are required to coordinate individual retiree cost data within an application for the purpose of appropriately applying each individual retiree's cost threshold and cost limit. CMS' RDS Center understands that the situation may arise where individual retirees may be associated with more than one Unique Benefit Option Identifier (UBOI) within one of a Plan Sponsor's applications, and/or have costs reported by more than one cost reporter within the same RDS application. CMS' RDS Program requires Plan Sponsors to coordinate an individual retiree's drug cost data within an application if the retiree is claimed under multiple UBOIs and/or is being claimed by multiple cost reporters for the same application. The following are scenarios under which such coordination is necessary:
- If multiple cost reporters are reporting costs for a single UBOI within the same application
- If any individual retirees are enrolled in more than one UBOI during the same time period within the same application
- If any individual retirees are enrolled in more than one UBOI within the same application and the time periods do not overlap
- If any individual retirees are enrolled in one UBOI within the same application for two or more separate subsidy periods
If an individual retiree's drug costs are being submitted to CMS' RDS Program for multiple applications, either for the same Plan Sponsor or a different Plan Sponsor, coordination of the retiree cost data across the different applications is NOT required.
What follows is an example that illustrates how cost data should be coordinated for one particular retiree in a UBOI for which two cost reporters report RDS costs.
Example
Henrietta Jones is enrolled in a single UBOI that permits enrollees to obtain prescription drugs through a retail pharmacy, or through mail order, at the retiree's choice, on a prescription-by-prescription basis. Source A administers and reports cost data for retail pharmacy claims, and Source B administers and reports cost data for mail order claims. Throughout the RDS plan year (which for this particular Plan Sponsor correlates to the calendar year), Ms. Jones files both retail pharmacy and mail order claims, in no particular pattern. The Source A and Source B Gross Costs tables display Ms. Jones' claims history for the months of January 2006 through May 2006 for each reporting source.
| Filled (Incurred) Date of Rx | Paid Date of Rx | Gross Cost |
|---|---|---|
| 1/12/2006 | 1/13/2006 | $275 |
| 2/11/2006 | 2/12/2006 | $2,000 |
| 3/17/2006 | 3/18/2006 | $2,000 |
| 4/10/2006 | Not Paid | TBD |
| Filled (Incurred) Date of Rx | Paid Date of Rx | Gross Cost |
|---|---|---|
| 1/16/2006 | 1/17/2006 | $60 |
| 5/31/2006 | 6/1/2006 | $2,000 |
The Source A and Source B Coordinated Costs tables illustrate how Ms. Jones' claims data for the months from January 2006 through May 2006 should be coordinated.
| Month/Year | Estimated Premium | Gross Retiree Cost | Threshold Reduction | Limit Reduction | Gross Eligible | Estimated Cost Adjustment (3% of GE) | Allowable Retiree Cost |
|---|---|---|---|---|---|---|---|
| Jan. 2006 | $275 |
$250 |
$0 |
$25 |
.75 |
$24.25 |
|
| Feb. 2006 | $2,000 |
$0 |
$0 |
$2,000 |
$60 |
$1,940 |
|
| March 2006 | $2,000 |
$0 |
$0 |
$2,000 |
$60 |
$1,940 |
|
| April 2006 | $0 |
$0 |
$0 |
$0 |
$0 |
$0 |
| Month/Year | Estimated Premium | Gross Retiree Cost | Threshold Reduction | Limit Reduction | Gross Eligible | Estimated Cost Adjustment (3% of GE) | Allowable Retiree Cost |
|---|---|---|---|---|---|---|---|
| Jan. 2006 | $60 |
$0 |
$0 |
$60 |
$1.80 |
$58.20 |
|
| May 2006 | $2,000 |
$0 |
$1,335 |
$665 |
$19.95 |
$645.05 |
NOTES:
The Source B Coordinated Costs table for January 2006 displays $0 for the threshold reduction because when Ms. Jones' paid January claim was incurred in Jan. 2006, more than $250 in gross retiree costs across the application had already been incurred and paid on behalf of Ms. Jones.
The Source B Coordinated Costs table for May 2006 displays $1,335 for the limit reduction because, including Ms. Jones' May 2006 incurred claim, $6,335 in gross retiree costs across the application had been incurred and paid on behalf of Ms. Jones.
How should coordinated individual retiree cost data be reported?
Coordinated individual retiree cost data must be reported in Step 6: Manage Submission of Final Cost Reports.
Please keep in mind that Step 6 must be marked "Allow Cost Reporting" to enable cost reporters to access the Final Costs action for data entry and for final mainframe costs to be accepted.
How should rebates received by the Plan Sponsor directly from a drug manufacturer be reported?
Rebates received by the Plan Sponsor directly from a drug manufacturer must be reported in Step 6: Manage Submission of Final Cost Reports.
Please keep in mind that Step 6 must be marked "Allow Cost Reporting" to enable cost reporters to access the Final Costs action for data entry and for final mainframe costs to be accepted.
What happens if my Account Manager or Authorized Representative changes after I've initiated reconciliation?
A Plan Sponsor must always have an active Account Manager and an active Authorized Representative. The Account Manager and Authorized Representative are required to complete critical steps during reconciliation. While the individuals acting in these roles can be changed, the new Account Manager or Authorized Representative must complete the registration process in order for the Plan Sponsor to complete reconciliation.
For details on who is allowed to hold these user roles, how to register, and how to reassign, go to: How to Register an Account Manager and an Authorized Representative and How To Reassign Account Managers and Authorized Representatives.
Does a Plan Sponsor have to submit its maximum number of interim payment requests before initiating reconciliation?
No. All interim payment requests do not need to be used in order for a Plan Sponsor to initiate reconciliation. Please note that after Step 1: Initiate Reconciliation is completed, interim cost reports and interim payment requests cannot be submitted.
How quickly will CMS' RDS Center process reconciliation payment requests?
CMS' RDS Center processes reconciliation payment requests after the payment determination is made. All reconciliation payment requests are processed as timely as possible.
If a Plan Sponsor submits a negative interim payment request before it initiates reconciliation, what will happen?
If the Plan Sponsor's most recent interim payment request generated a negative net payment amount, and the Plan Sponsor will not or cannot submit another positive interim payment request before it wishes to initiate reconciliation, the Plan Sponsor should contact CMS' RDS Center Help Line.
What records must be maintained in case of audit?
The Plan Sponsor must maintain and furnish to CMS or the Office of Inspector General (OIG) upon request, the records enumerated in Federal regulations at 42 CFR 423.888(d). The records must be maintained for 6 years, or any other period as specified by CMS or OIG, after the expiration of the plan year in which the costs were incurred for the purposes of audits and other oversight activities conducted by CMS to assure the accuracy of the actuarial attestation and the accuracy of payments.
