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In January 2014, CMS announced 2014 changes to the Coverage Gap Discount Program (CGDP) related to Negative Invoice Reconciliation and resulting changes to the Quarterly Invoice process. The changes will be in effect for 1Q2014 processing quarter with invoice reports hitting Manufacturers by mid to late April 2014. Quickly reacting to change can cause uncertainty, but with the right awareness, focus, and preparation you can position your organization for a successful transition.
This presentation will enable you to better understand these changes, how they will impact your business process, and what you need to consider and evaluate to prepare for these changes. The change overview and impact considerations will offer insights to companies of all stages.
What you can expect to learn:
- Overview of 2014 CGDP Changes; Negative Invoice Reconciliation and Changes to Quarterly Invoice Process.
- How these changes will impact your business process.
- How to prepare for these changes.
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4. Paragon is a professional services firm providing a full spectrum of consulting services
from advisory through solution design and implementation for tighter alignment between
business and IT.
Leverages a proprietary set of
methodologies and approaches to
develop a pragmatic path to reaching
business objectives.
Provides application
architecture and development,
project management, and
implementation integration
services.
Quick Facts:
• 550 Employees
• Global Clients
• NJ Headquarters
• 5 US Offices & 2 overseas
• Dual-shore Development capability
• Privately owned, 32-year history
5. Principal Consultant, Paragon Solutions
Connect with Me:
• Email: sbermudez@consultparagon.com
• Read my blog
• Connect with me on Linkedin
6. • Current State - Negative Invoice Reconciliation
• Invoice Reconciliation - Negative Balance Solution
- New Plan: Phase 1
- New Plan: Phase 2
– Resulting Quarterly Invoice Process changes effective 1Q2014
• What to expect in each phase
• What you’ll be required to do in each phase
• How to prepare for each phase
• The Business Process Impact
7. Are you aware of the CGDP 2014
invoice process changes and how
they will affect your business
processes?
8. • On January 22, 2014 CMS
announced a “new plan” for
reconciling the negative
invoices.
• New Plan =
New Name - Invoice Reconciliation -
Negative Balance Solution
• October 31, 2013 reports
were erroneous
• Reports should be
discarded
• Reports will not be
reissued
• Payment should not have
been issued
9. The new plan for the Negative Balance Solution is a two phased approach.
PHASE 1 PHASE 2
Reconciliation of negative
invoices accrued between
1Q11 to 4Q13
Long term solution for
reconciling on-going negative
invoices 1Q14 and beyond
10. • On April 17, 2014, the TPA will distribute negative invoice
reconciliation reports.
• The reports will be collective and will reconcile negative
invoices accrued from 1Q2011 to 4Q2013
• These reports will be distributed to all Manufacturers even if
negative invoices did not exist during these qtrs.
• EFT payments from Sponsors to Manufacturers are due
within 38 days from distribution of invoices.
WHATTOEXPECT
11. Track Receipt of Funds Confirm Receipt of Funds
• Track receipt of EFT funds through A/R
system
• Reconcile to Reports
• Summarize variances
• Generate payment confirmation report
• Confirm receipt or non-receipt of funds for
negative invoice payments
• Note applicable amount on report
• Send payment confirmation report to TPA
12. Phase 1
• Reconciliation of
negative
invoices accrued
between 1Q11 to
4Q13
Phase 2
• Long term
solution for
reconciling on-
going negative
invoices 1Q14
and beyond
The new plan for the Negative Balance Solution is a two phased approach.
13. • Negative invoice amounts will continue to be included in
standard invoice reports.
• As of 1Q14, Negative invoices will be resolved during the
invoice quarter in which they are reported.
• Negative invoice balances will not be carried forward
• Sponsors will be required to pay negative invoice amounts
to Manufacturer at the time of the applicable invoice
quarter.
• This will all occur within the standard 38 day processing
window.
• This will result in changes to the quarterly invoice process.
WHATTOEXPECT
15. What’s New
• EFT funds will flow both ways in a given quarter.
• New effective 1Q14 - Negative invoice amount = Sponsor
sends funds to Manufacturer via EFT
• Existing Process - Positive invoice amount = Manufacturer
sends funds to Sponsor – no change from existing process
• Sponsors can submit EFT funds to Manufacturer for negative
invoices anywhere within the traditional CGDP 38 day payment
cycle
16. What’s The Same?
• Invoice file formats and layouts
• Timelines and deadlines for receipt and
submission
• Timelines and deadlines for payment to
sponsors and payment confirmation report
to the TPA
• Dispute Process
17. Paragon Solutions, Inc. Proprietary and Confidential
New in
2014
Process
positive invoice
payments
Confirm
payment of
invoices
Track receipt of
negative invoice
payments
Confirm payment
or non-payment
of negative
invoices
18. Implement process to Confirm receipt of funds
Confirm payments received for negative invoices
Confirm payments not received for negative
invoices
Confirm payments made for positive invoices
Implement Reconciliation Process
Funds expected vs. actual funds received Internal tracking vs. TPA tracking Summarize & report variances
Implement A/R process to track receipt of funds
Identify & allocate A/R resources Create reports to support tracking
Define overall A/R process, process timeline & SLA
to track receipt of funds
Implement process to receive funds
Set–up account to receive funds from Sponsors
via EFT
Provide applicable EFT banking information to TPA
Ensure A/R system is equipped to receive EFT
funds for CGDP payments
Implement process to receive & translate Negative Balance Reports
Evaluate file formats Determine process and/or system changes Implement applicable changes
AppliestoPhase1&
Phase2
Phase
1Only
20. •Multiple reports
•Manual Updates
•Confirming payments
in and out
•Additional Processing
•Same 38 day
timeframe
•Tracking Funds
coming in
•Tracking funds going
out
•Phase 1 &
Phase2/Qtrly Invoice
Process
•Phase 2 & Standard
Qtrly Invoice Process
Processing
Overlap
EFT Funds
Tracking
Payment
Confirmation
Reports
Resource &
Time
Constraints
21. 1Q14 April May June
7 14 21 28 5 12 19 26 2 9 16 23 30
Phase 1 Negative Invoice Reconciliation
Onetime Negative Invoice Recon Reports Distributed
Receive funds from Plan Sponsor for Negative Invoice Amts
Payment Confirmation Report Due to TPA for Negative Invoice
Payments
Phase 2 Quarterly Invoice Process effective 1Q14
Updated EFT File Distributed 4/25
1Q14 Quarterly Invoices Distributed
1Q14 Quarterly Invoices Received
Invoice Correction Process, if applicable
Payments Received for Negative Invoices in 1Q14
Sponsor Manufacturer
1Q14 Invoice Payments Due
Manufacturer Sponsor
1Q14 Payment Confirmation Report Due to TPA
Standard Processing Deadlines
New 2014 Process Changes for Negative Invoice
4/30
4/25
6/8
6/13
38 Day Payment Cycle
5/6 5/9
4/17
4/17 38 Day Payment Cycle
5/25
5/30
5/1
38 Day Payment Cycle
5/1
6/8
22. Data
Management
Requirements
Data Receipt
Invoice Data
Management
Detail Data
Management
EFT File
Management
Payment
Requirements
Maintain EFT
banking info for
600+ contracts
38 day processing
deadline
Send EFT
payments for 600+
contracts
Reporting
Requirements
Payment
Confirmation
report
Operational
Reports
Financial & Trend
Reports
Retain data for 17
quarters
Negative
Balance
Solution
Negative Invoice
Reconciliation
Report
Maintain EFT info
for receipt of
Negative Invoice
payments
Receive EFT
payments
(Negative
Invoices)
Confirm receipt of
negative invoice
payments
The below figure illustrates the minimum high level requirements Manufacturers should have
in place to support the administration & processing of CGDP payments.
24. If we do not get to your question
during the webinar,
we will reach out to you directly
with the answer.
25. Principal Consultant, Paragon Solutions
• Email: sbermudez@consultparagon.com
• Read my blog
• Connect with me on Linkedin
Paragon Solutions Website:
• Paragon Life Sciences
• Government Pricing & Revenue Management Practice
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