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Manage Drug Rebate

Accounts Receivable Management

Description

The Manage Drug Rebate business process describes the process of managing drug rebate that the State Medicaid Agency (SMA) collects from manufacturers. This business process: • Receives quarterly drug rebate information from Centers for Medicare & Medicaid Services (CMS). • Compares drug rebate to quarterly payment history information. • Identifies drug information matches based on manufacturer and drug code. • Applies the rebate factor and volume indicators. • Calculates the total rebate per manufacturer. • Prepares drug rebate invoices. • Sorts the invoices by manufacturer and drug code. • Sends the invoice information to the drug manufacturer via the Send Outbound Transaction. • Sends an alert to Manage Accounts Receivable Information to monitor for rebate payment.

Business Process Template

Trigger events
Environment-based

None published

Interaction-based
  • Receive the CMS quarterly drug rebate information from Receive Inbound Transaction.
Results
  • Alert sent to invoice the drug manufacturer.
  • Alert sent to Manage Accounts Receivable Information business process to monitor for payment.
  • Tracking information as needed for measuring performance and business activity monitoring.
Business process steps
  • 1. START: The state receives a quarterly file from CMS containing the rebate factors by manufacturer, drug code, and volume.
  • 2. Compare file to the corresponding claims history extract for the same quarter.
  • 3. Select drug claims matching the manufacturer and drug codes based on the CMS Drug Product Data.
  • 4. Sort drug claims selected for invoice processing by manufacturer and drug code.
  • 5. Apply the rebate factor and volume indicators to calculate a rebate total per manufacturer.
  • 6. Send alert to invoice manufacturer.
  • 7. END: Send alert to monitor payment activities to Manage Accounts Receivable Information business process.
Predecessor processes
  • Receive Inbound Transaction
Successor processes
Shared data
  • CMS Unit Rebate Amount (URA) information
  • Claims data store including both professional and drug payment information
  • Reference data store including drug code and manufacturer information
  • Financial data store including accounts receivable information
Constraints

The Manage Drug Rebate business process will be in accordance with state-specific drug formulary, business rules, and reporting requirements that may differ by state, and will comply with federal mandates.

Failures
  • CMS does not send quarterly drug rebate information.
  • There are no drug claims for rebate matching the manufacturer and drug codes based on the CMS Drug Product Data for the period. NOTE: the process could complete with errors (e.g., errors in rebate rates, drug payment file errors), and the SMA would correct these errors or disputed amounts in the Manage Accounts Receivable Information business process.
Performance measures
  • Time to complete the process = e.g., ___ months, ___ weeks or ___ days
  • Accuracy with which the Drug Rebate rules are applied = __%
  • Consistency with which the Drug Rebate rules are applied = __%
  • Amount of drug rebate dollars recovered quarterly = ___%
  • Error rate = __% or less

Source: CMS MITA 3.0 Business Process Template, Financial Management BPT.pdf, pages 7-9.

Business Capability Model (11 questions)

Each capability question defines five maturity levels, from Level 1 through Level 5.

Business Capability Descriptions

Is the process primarily manual or automatic?
  1. LEVEL 1The process consists primarily of manual paper-based activity to accomplish tasks.
  2. LEVEL 2SMA uses a mix of manual and automatic processes to accomplish tasks.
  3. LEVEL 3SMA automates process to the full extent possible within the intrastate.
  4. LEVEL 4SMA automates process to the full extent possible across the interstate.
  5. LEVEL 5SMA automates process to the full extent possible across the nation.
How integrated is the process?
  1. LEVEL 1Programs are not exchanging information so rebate process may be uncoordinated, e.g., mental health, waiver, and shared programs with health departments pay for drugs but may not participate in the Medicaid drug rebate program.
  2. LEVEL 2SMA centralizes program data is increase drug rebate coordination.
  3. LEVEL 3SMA adopts MITA Framework, industry standards, and other nationally recognized standards for intrastate exchange of information for all programs that pay for drugs.
  4. LEVEL 4SMA fully integrates the process to the extent possible across the interstate.
  5. LEVEL 5SMA fully integrates the process to the extent possible across the nation.
Does the State Medicaid Agency use standards in the process?
  1. LEVEL 1SMA focuses on meeting compliance thresholds for state and federal regulations using state-specific standards.
  2. LEVEL 2SMA applies a mix of HIPAA and state-specific standards.
  3. LEVEL 3SMA adopts MITA Framework, industry standards, and other nationally recognized standards for intrastate exchange of information.
  4. LEVEL 4SMA adopts MITA Framework, industry standards, and other nationally recognized standards for clinical and interstate information exchange.
  5. LEVEL 5SMA adopts MITA Framework, industry standards, and other nationally recognized standards for national exchange of information.
How does the State Medicaid Agency collaborate with other agencies or entities in performing the process?
  1. LEVEL 1Very little collaboration occurs with other agencies to standardize information exchange or business tasks.
  2. LEVEL 2SMA collaborates with other agencies and entities to adopt HIPAA standards and Electronic Data Interchange (EDI) transactions.
  3. LEVEL 3SMA collaborates with other intrastate agencies and entities to adopt national standards, and to develop and share reusable business services.
  4. LEVEL 4SMA collaborates with other interstate agencies and entities to adopt national standards, and to develop and share reusable processes including clinical information.
  5. LEVEL 5SMA collaborates with agencies and entities for national (and international) interoperability improvements that maximize automation of routine operations.

Business Capability Quality: Timeliness of Process

How timely is the end-to-end process?
  1. LEVEL 1Process meets threshold or mandated requirements for timeliness (i.e., the process achieves results within the time specified by law or regulation). Reporting, analysis, and responses to pharmaceutical companies and CMS inquiries are largely a manual process. The manual generation of invoices relies on paper-based claim files for the necessary information.
  2. LEVEL 2Process timeliness improves through use of automation. Timeliness exceeds legal requirements.
  3. LEVEL 3Timeliness improves via state and federal collaboration, use of information sharing, standards, and regional information exchange hubs. SMA posts invoices on Web portals for pharmaceutical company retrieval; SMA electronically transmits data files. Timeliness exceeds Level 2.
  4. LEVEL 4Information is available in near real time. Processes that use clinical information result in immediate action, response, and results. SMA has interstate interoperability, which further improves timeliness over Level 3.
  5. LEVEL 5Information is available in real time. Processes improve further through connectivity with other States and with federal agencies. Most processes execute at the point of service. Results are almost immediate.

Business Capability Quality: Data Access and Accuracy

How accurate is the information in the process?
  1. LEVEL 1Use of direct data entry for information collection is manually intensive and susceptible to inconsistent or incorrect information. Stakeholders are unable to rely on information for decision-making.
  2. LEVEL 2HIPAA standard transactions improve accuracy of information but the decision-making process may be erroneous or misleading. Accuracy is higher than at Level 1.
  3. LEVEL 3Automation of information collection increases the reliability of SMA’s internal information. External sources of information use MITA Framework and industry standards for information exchange. Decision-making is automatic using standardized business rules definitions. Accuracy is 98% or higher.
  4. LEVEL 4Automation of information collection increases the reliability of SMA’s internal and external sources of information. SMA adopts MITA Framework and industry standards for information exchange with interstate agencies. Decision-making is automatic using regional standardized business rules definitions. Accuracy is 98% or higher.
  5. LEVEL 5SMA adopts MITA Framework and industry standards for information exchange with national agencies. Decision-making is automatic using national standardized business rules definitions. Accuracy is 98% or higher.
How accessible is the information in the process?
  1. LEVEL 1SMA stores information in disparate systems including paper storage and obtains information manually.
  2. LEVEL 2SMA stores information in disparate systems, but automation and HIPAA standards increase accessibility over Level 1.
  3. LEVEL 3SMA obtains information easily and exchanges with intrastate agencies and entities based on MITA Framework and industry standards. Accessibility is greater than Level 2.
  4. LEVEL 4SMA obtains information easily and exchanges with interstate agencies and entities. Accessibility is greater than Level 3.
  5. LEVEL 5SMA obtains information easily and exchanges with national agencies and entities. Accessibility is greater than Level 4.

Business Capability Quality: Cost Effectiveness

What is the cost of the process compared to the benefits of its results?
  1. LEVEL 1High relative cost due to low number of automatic, standardized tasks. Relatively high cost of process needed to support and meet rebate level goals.
  2. LEVEL 2Automation improves process and allows focus on exception resolution, improving cost effectiveness ratio over Level 1.
  3. LEVEL 3SMA adopts MITA Framework, industry standards, and other nationally recognized standards further improving cost effectiveness ratio over Level 2.
  4. LEVEL 4SMA adopts MITA Framework, industry standards, and other nationally recognized standards for interstate information exchange. SMA increases cost effectiveness ratio over Level 3.
  5. LEVEL 5SMA adopts MITA Framework, industry standards, and other nationally recognized standards for national (and international) information exchange. SMA increases cost effectiveness ratio over level 4.

Business Capability Quality: Effort to Perform; Efficiency

How efficient is the process?
  1. LEVEL 1Process is labor intensive. There is wasted effort or expense to accomplish tasks. Process meets minimum state process guidelines and SMA performance standards. Non-standardized data and format makes any type of cross program management reporting and analysis for drug rebate purposes difficult and costly. Efficiency is low.
  2. LEVEL 2Automation and state standards increase productivity. Efficiency is higher than Level 1.
  3. LEVEL 3SMA adopts MITA Framework, industry standards and information exchange with intrastate agencies and entities. Staff focuses on resolving disputes Improving efficiency to 95% or higher.
  4. LEVEL 4SMA adopts MITA Framework, industry standards and information exchange with interstate agencies and entities improving efficiency to 98% or higher.
  5. LEVEL 5SMA adopts MITA Framework, industry standards and information exchange with national agencies and entities improving efficiency to 98% or higher.

Business Capability Quality: Accuracy of Process Results

How accurate are the results of the process?
  1. LEVEL 1Manual processes result in greater opportunity for human error. Accuracy is low.
  2. LEVEL 2Automation and standardized business rules definitions reduce error and improve accuracy above Level 1.
  3. LEVEL 3SMA adopts MITA Framework, industry standards and information exchange with intrastate agencies and entities improving accuracy to 90% or higher.
  4. LEVEL 4SMA adopts MITA Framework, industry standards and information exchange with interstate agencies and entities improving accuracy to 98% or higher.
  5. LEVEL 5SMA adopts MITA Framework, industry standards and information exchange with national agencies and entities improving accuracy to 98% or higher.

Business Capability Quality: Utility or Value to Stakeholders

Does the business process satisfy stakeholders?
  1. LEVEL 1Stakeholders lack confidence in information negatively affecting stakeholder satisfaction with the process.
  2. LEVEL 2Automation and standardization provides clear and useful information. Stakeholder satisfaction is greater than Level 1.
  3. LEVEL 3SMA adopts MITA Framework, industry standards and information exchange with intrastate agencies and entities improving stakeholder satisfaction to 90% or higher. SMA uses survey or questionnaire for information collection.
  4. LEVEL 4SMA adopts MITA Framework, industry standards and information exchange with interstate agencies and entities improving stakeholder satisfaction to 95% or higher.
  5. LEVEL 5SMA adopts MITA Framework, industry standards and information exchange with national agencies and entities improving stakeholder satisfaction to 98% or higher.

Source: CMS MITA 3.0 Business Capability Model, Financial Management BCM.pdf, pages 21-28.

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