CMS Issues Medicare Part D Marketing Guidelines

The historic Medicare Prescription Drug, Improvement, and Modernization Act of 2003 creates for the first time a comprehensive voluntary prescription drug plan for Medicare beneficiaries, known as Medicare Part D ("Part D"). Medicare Part D will be delivered through private risk-bearing entities under contract with the Centers for Medicare & Medicaid Services ("CMS"). Part D coverage for beneficiaries enrolled in a prescription drug plan begins on January 1, 2006 with beneficiary enrollment to begin on November 15, 2005.

The drug benefit will be offered to beneficiaries through both Part D plans and Medicare Advantage plans (which replaced the Medicare+Choice managed care plans). Part D plans include Private Prescription Drug Plans ("PDPs") and Medicare Advantage Prescription Drug Plans ("MA-PDs"). PDPs are stand alone drug "only" plans for beneficiaries enrolled in Medicare. MA-PDs plans are offered by Medicare Advantage plans for their beneficiaries.

Initially, CMS intended to issue separate marketing guidance for PDPs and MAs. However, CMS decided to issue only one set of Marketing Guidelines ("Guidelines") so that providers operating both PDPs and MAs could use the same Guidelines for the sake of simplicity.

The Guidelines also govern Health Plans, which includes MA only plans that currently offer prescription drug coverage and 1876 Cost Plans that may offer an optional supplemental prescription drug benefit. 1876 Cost Plans are limited managed care plans that Medicare offered prior to 2002.

To comply with the tight January 1, 2006 deadline for implementation of the prescription drug benefit, CMS started approving bids for PDPs and MA-PDs on September 23, 2005. Upon approval, plans can begin marketing to Medicare beneficiaries on October 1, 2005 with beneficiary enrollment to take place from November 15, 2005 through May 15, 2006.

The Guidelines represent the first significant step in enrolling beneficiaries in Part D plans. The Guidelines establish the rules to which plans must adhere in marketing to beneficiaries and set the parameters that all plans must follow. It is expected that competition among plans, particularly in high density urban areas, will be strong. Therefore, it is critical that all plans participating in the Part D program understand the Guidelines.

This article addresses the key components of the Guidelines with a focus on those areas that will likely present compliance concerns for Part D plans.

A significant portion of the Guidelines is devoted to the marketing materials that plans are allowed to use. This portion of the Guidelines covers a range of issues, from the actual content of the marketing materials to the re quired font size of the written materials. The following is a summary of the pertinent requirements.

Before a plan can begin its marketing activities, it must first ensure that its name complies with the Guidelines’ requirements. Plans are required to include disabled Medicare beneficiaries under age 65 as part of their marketing audience, which in turn precludes them from using phrases such as "seniors" or "65+" in their names.

The Guidelines also regulate the advertising materials used by the plans, including television, radio, and banner ads; outdoor advertising; direct mail; print media (e.g., newspapers, magazines, etc.), as well as Internet advertising. In addition, the Guidelines define advertising materials, and prohibit a plan from comparing itself to any other organization or plan by name. All advertising materials, except banner ads and outdoor advertising, must include a statement that the plan contracts with the federal government. Plans are also prohibited from making certain statements about claim forms or paperwork. For example, a plan can state that there is "virtually no paperwork".or "hardly any paperwork." However, a plan can not state that there is "no paperwork" or "no claim forms."

Advertising materials must include certain information, such as the hours of operation for its beneficiaries’ service department, and the telephone numbers and TTY/TDD numbers for the hearing impaired.

There are rules governing references to studies or statistical data. The results of studies or statistical data can be used as long as specific details are provided. At a minimum, this includes the source and date of the information. However, a plan can not use a study or statistical data to directly compare its plan to another.

The formatting requirements are detailed and address such minute issues as the font size for written materials and Internet advertising; address logos and tag lines, product endorsement and testimonials; drawings, prizes and "give aways"; and radio and television spot advertisements.

The Guidelines also have specific rules on pre- and post-enrollment advertising materials. In particular, MA plans must use pre-enrollment materials that contain specific language related to lock-in and access information, in order that beneficiaries are aware that they are "locked into" a provider network and any care obtained from an out-of-plan provider is not covered. These plans must also use marketing materials that clearly explain the concept of networks and sub-networks and the process for obtaining services, including referral requirements. MAPD and PDPs must also provide eligibility information in their pre-enrollment materials, which explains whether the beneficiary is eligible to enroll in the plan.

Another important marketing content requirement relates to the "Summary of Benefits" information. The Summary of Benefits is the primary pre-enrollment document used to inform beneficiaries of the benefits each plan offers, and must contain standardized language so that beneficiaries can more easily compare the benefits offered by different plans. In addition, the Guidelines contain detailed instructions on the language and format of the Summary of Benefits information.

The Guidelines mandate that plans provide certain materials at the time of enrollment, and thereafter on an annual basis. In addition to the Summary of Benefits, this includes the Annual Notice of Change, Evidence of Coverage, an abridged Formulary, an ID Card, and a Provider Directory.

In particular, the Guidelines establish specific formulary marketing requirements, which require plans to furnish beneficiaries with a list of drugs included in their formulary upon enrollment and at least annually thereafter. Notably, however, plans do not have to furnish formulary information in their pre-enrollment marketing materials.

Once a beneficiary is enrolled, the Guidelines also allow plans to provide an abridged formulary out of concern that requiring plans to distribute a comprehensive formulary would be too costly. In addition, plans are required to post their formularies on their Web sites and update the information at least monthly. The Guidelines permit plans to satisfy this requirement by creating a printable document that contains the complete formulary list. CMS suggests that plans include a search tool on their Web site so that beneficiaries can search for a specific drug product.

All marketing materials must be approved by CMS in advance, and the Guidelines specify the process plans must follow for approval.

Plans must submit their materials through the Health Plan Management System, an electronic submission process, or by mail, fax or e-mail to their CMS Regional Office. For plans operating in multiple regions, the marketing review process is determined by agreement with CMS.

There are two time frames for review of marketing materials. For marketing materials developed by a plan, CMS has 45 days from the date of submission to review and act upon them. Failure of CMS to act within the 45-day time period results in the materials being deemed approved on the 46th day.

The second time frame is an expedited review for marketing materials that follow the model language contained in the Guidelines. In this case, CMS must review the information within 10 days of submission. Failure by CMS to act within this time period results in the materials being deemed approved on the 11th day.

All reviewed materials receive one of four designations: "approval," "disapproval,". "deemed," or "withdrawn." Approval means CMS has determined a plan’s marketing materials comply with the Guidelines. Materials that are approved retain this designation until the plan changes the materials or conditions change such that the materials are no longer accurate.

Disapproval means CMS has determined the marketing materials do not comply with the Guidelines. If CMS disapproves a plan’s materials, the plan can resubmit for approval.

Where materials are "deemed approved"., CMS did not approve or disapprove the materials within the specified review period, and the materials are deemed approved on the first day after the expiration of the review period. Marketing materials for plans that do not yet have a finalized contract with CMS are not eligible for "approval" status and will be granted "deemed approved" status. Once a contract is awarded, the materials are considered approved.

Withdrawn means a plan has withdrawn its materials prior to CMS. action.

The Guidelines also provide a review process by which plans can be certified that they followed the Guidelines, which streamlines the approval process, if CMS has determined that the plan has done so. Materials eligible for certification include advertising materials, provider and/or pharmacy directories, formularies, and certain CMS model letters used by the plan without modification.

CMS strongly encourages plans to seek certification, for which there are two different designations that a plan may seek.

Certain marketing materials are eligible to receive "File & Use Certification" prior to first use of those materials. To receive this certification, a plan must submit the materials five calendar days prior to distribution, and the plan must certify that the materials comply with the Guidelines. Model language must be used in these materials, where available, and a plan must submit at least 90 percent of its materials for File and Use Certification in order to qualify.

The second possible designation is "File and Use Eligibility" If a plan can demonstrate over time that it continually meets particular standards of performance, the plan may receive the File and Use Eligibility designation and use certain marketing materials without prior CMS approval. As in the case of File and Use Certification, materials not eligible for consideration in File and Use Eligibility are those that would pose a threat to the beneficiary should the materials be inaccurate in any way.

To qualify for the File and Use Eligibility designation, a plan must have been participating in the program for at least 18 months. A plan must submit the immediate previous six months worth of eligible marketing materials for review by CMS to be considered for File and Use Eligibility.

CMS will conduct a retrospective review of the six months of materials submitted. At least 90 percent of the materials reviewed by CMS must be considered "acceptable." Acceptable materials are those that are not materially inaccurate or misleading, do not make a material misrepresentation, and follow the Guidelines.

A plan can lose its File and Use Eligibility designation if CMS determines certain of its materials are not acceptable, or if the plan fails to file two or more materials at least five calendar days prior to use. CMS will notify a plan if it is in danger of losing its status and will place the plan on a probationary review period, the length of which will be determined by CMS on a case-by-case basis. During this period, a plan must submit materials 30 days in advance of use, not the usual five day period described above. Half way through the probationary period, CMS will advise the plan, in writing, whether or not further improvement is required. At the end of the probationary period, CMS will notify the plan, again in writing, whether the plan will be allowed to maintain its File and Use Eligibility status.

CMS intends to retrospectively monitor compliance with the Guidelines, and will randomly review a select plan’s materials. CMS will also investigate any complaints pertaining to marketing made by beneficiaries or others. As a result, CMS may require a plan to reissue its materials if they do not comply with the Guidelines.

The Guidelines provide guidance on permissible promotional marketing activities. A plan may not offer cash inducements to join its plan. Any promotional items must be of nominal value and offered to all those eligible, without discrimination. For example, gifts valued at less than $15 offered to beneficiaries who attend a marketing presentation are permissible, and could include such items as key chains, calendars, "thank-you notes" or pens. However, gift certificates are prohibited, regardless of their value.

In addition, any drawings, prizes or promises of a free gift must be accompanied by a disclaimer that there is no obligation to enroll in the plan. Any letters sent to beneficiaries can not state that a gift will be offered for a referral. Although plans can solicit beneficiaries’. names and addresses, they can not ask for telephone numbers.

The Guidelines identify two types of health fairs and other health promotional events: sole-sponsor events where a single plan is the sponsor and multiple-sponsor events which are sponsored by two or more plans. For both sole and multiple sponsor events, the Guidelines advise that they should be social with no sales presentations, although advertisements may be distributed, as well as give aways or free items that do not exceed the nominal $15 value. However, door prizes and raffles can exceed the $15 dollar limit for multiple sponsor events if the plans contribute to a pool of cash for prizes that do not individually identify a particular plan. A plan may also contrib ute cash towards prize money to a foundation or other entity sponsoring the event.

The Guidelines also discuss the involvement of pharmacists and other health care providers (collectively "providers") in marketing and outreach programs. Providers contracting with a plan must comply with the marketing restrictions set forth in the Guidelines. Providers are prohibited from steering beneficiaries toward, or away from, a particular plan if such guidance is based upon the provider’s financial interest. At the same time, the Guidelines also recognize the role that providers play in helping beneficiaries with their health care choices. Consequently, the Guidelines encourage providers to assist beneficiaries in an objective assessment of their health needs and how different drug plans may help meet those needs.

Providers may distribute marketing materials to beneficiaries for all the plans in which they participate. However, the Guidelines prohibit providers from accepting enrollment applications from, or offering inducements to persuade, beneficiaries to join a particular plan. The Guidelines also preclude providers under contract with a plan from receiving money or other direct or indirect compensation for enrolling beneficiaries in a plan or engaging in "enrollment activities."

The marketing materials that each plan develops and uses will play a vital role in convincing beneficiaries to enroll in the Part D program and in the selection of their plan. Consequently, as plans gear up to conduct widespread advertising campaigns to entice beneficiaries to join their plans, it is critical that they carefully review the Guidelines. CMS has made clear that the Guidelines are intended to protect beneficiaries from "unscrupulous or overzealous sales tactics." As a result, CMS will be closely monitoring plans’ marketing activities to ensure that they follow the marketing requirements. To the extent they have not already done so, plans should take steps to incorporate the new Guidelines into their compliance programs and educate all employees on the Guidelines.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.