TRICARE Guidance Documents Available on the TMA Website

By: Meredith Taylor, Esq., CIS Senior Manager
meredithtaylor@cis-partners.com

The TRICARE Final Rule was published on March 17, 2009, and since then CIS has been providing up-to-date information and interpretations of the Rule. In addition to the conference call CIS and Reed Smith hosted on March 26, 2009 (a recording of the call is available upon request, see note below), CIS has been providing you with various blog postings including: Dana Zelig’s article summarizing the rule, Clarissa Crain’s article summarizing and interpreting the comments, and Dave Rice’s article addressing next steps for manufacturers.

In this article, I would like to address the various guidance documents provided for Manufactures on the TRICARE Management Activity’s (TMA) website. TMA is an office of the Department of Defense (DoD) and runs the TRICARE Program. NOTE: The DoD frequently posts Responses to Manufacturer Questions. This article addresses the responses posted on March 19, 2009. Additional questions and responses were posted on March 31, 2009 and can be found here.

Dear Manufacturer Letter – March 18, 2009[1]

This Dear Manufacturer Letter was distributed to advise manufacturers of the publication of the TRICARE Final Rule. The letter states the portion of the National Defense Authorization Act[2] (Act) that pertains to TRICARE, and explains that the Act required the DoD to publish regulations to interpret and implement to provisions in the Act.

The letter advises manufacturers that utilization data for the four quarters of 2008 continues to be available to manufacturers. As you may recall, in order to obtain utilization data, a manufacturer must have filled out a questionnaire and returned it to the DoD, which allows the DoD to provide the data. This has been available over the past year. In regard to Q1 2009 data, the letter indicates that it will be available on April 15, 2009.

The letter explains that refund payments calculated from this data will be required and are due on May 26, 2009, unless a waiver or compromise is negotiated. As you may recall from prior blog articles and the conference call, pursuant to the Federal Debt Collection Act[3], the DoD is permitted to enter into Agreements with manufactures to reduce or waive the refunds that are due. The DoD does not believe that these refunds are retroactive because manufactures have been on notice (since the enactment of the Act in January 200), that refunds would be collected once the regulation was published.*

Finally, the letter addresses the Agreements that manufacturers must enter into with the DoD in order to be considered for Tier 2 on the Uniform Formulary. The DoD will provide further guidance about the procedures for the Agreements and compliance with the Final Rule, but they anticipate that Agreements will have to be executed by June 1, 2009. Manufacturers must enter into an Agreement with the DoD in order to be eligible for Tier 2, but this does not necessarily mean they will be placed on Tier 2; depending on the drug, they may still be placed on Tier 3 even if they enter into an Agreement. Additionally, manufacturers should negotiate these Agreements in a timely manner because the DoD is more likely to reward proactive negotiations with a compromise/waiver on the refunds that are due.

DoD Formulary Pricing Agreement (draft) [4]

The DoD published a draft sample “Retail Refund Pricing Agreement Between TRICARE Management Activity (TMA) and the Manufacturer Identified in Section IX of this Agreement.” This is only a draft Agreement; manufacturers must negotiate their own Agreement with the DoD. The sample Agreement indicates that it does not need to be used as a template and manufacturers may deviate from this particular structure; however, the terms should be similar. The sample Agreement also notes that it does not cover the drugs that are currently part of an executed Uniform Formulary Voluntary Agreement; those arrangements are covered by pre-existing Agreements.

The sample Agreement contains the following sections:

1. Definitions

2. Manufacturer's Responsibility
- Manufacturers must provide refund payments within seventy days from the date of submission of the utilization data, unless they are going through the Dispute Resolution Process.
- There are two calculation methods to choose from in regard to refund calculation: (1) difference between the average Non-FAMP and FCP, and (2) the difference between FCP and the direct commercial contract sales prices attributed to the reported TRICARE paid pharmaceuticals.
- There are two calculated methods to choose from in regard to per unit refund amount: (1) based on units report on utilization reports, and (2) total number of package sizes units (divides total metric quantity by the package size) and round to the next whole number.
- Manufacturers must retain all relevant records for at least three years.

3. TMA's Responsibility
- TMA must include all drugs listed in Appendix A on the three tiered formulary, and consider the drugs for Tier 2.
- TMA must ensure the availability of drugs on Tier 2.

4. Dispute Resolution
- See below.

5. Confidentiality Provisions
- Proprietary information submitted will remain confidential.
- Manufacturers will hold audit information confidential.
- Confidentiality remains even if the agreement is not renewed or is terminated.

6. Non-Renewal and Termination
- The Agreement is effective for one year, and is automatically renewed unless written notice is provided 90 days before the end of the period.
- Manufacturers may terminate for any reason. Termination becomes effective sixty days after written notice is received.
- TMA may terminate for failure to honor the Agreement in writing after sixty days
- If the Agreement is not renewed/terminated, Manufacturer cannot enter into another agreement for at least one compete calendar quarter, unless there is good cause.

7. General Provisions
- Manufacturers must have an existing FSS contract for all drugs in Appendix A .
- Upon transfer of ownership, Agreement is assigned to a new owner.

8. Effective Date
- The Agreement is effective upon signing.
- This is not to be confused with the Effective Date of the Act - January 28, 2008.

9. Signatures

10. Appendix A - Covered Drugs

11. Appendix B - Dispute Resolution Process
- See below.

Dispute Resolution Process [1]

If a manufacturer disputes the accuracy of the utilization data, payment for the disputed refund amount is deferred during the resolution process. When the dispute is resolved, the refund owed, and any interest accrued, are paid by the manufacturer or credited by TMA during the next quarter.

The Dispute Process is as follows:

1. The Pharmaceutical Operations Directorate (POD) submits a Reconciliation of Quarterly Invoice (RQI), with each invoice, to the manufacturer.

2. The manufacturer submits the RQI to the POD if appropriate. The RQI has pre-populated fields, as well as fields to be filled out by the manufacturer (units paid, units disputed, dispute code, withheld invoice amount, rebate amount paid).

3. The manufacturer must submit a disputed claims report for each disputed claim. There is no standard claim form, but the claim must include: RX number, NDC, product name, units, date of service, pharmacy ID number, claims number, dispute code, and supporting documentation.

4. The manufacturer may submit disputes by email, fax, or in hardcopy. A POD point of contact will be provided.

5. The manufacturer must pay the portion of undisputed refunds.

6. The POD and the manufacturer will use their best efforts to resolve the dispute within sixty days.
- If they are unable to resolve the dispute, the Director of POD will issue an administrative decision.
- This decision may be appealed.

TRICARE Retail Refunds Program Responses to Manufacturer Questions[2]

TMA updated the Q&A document on their website to answer specific questions about the Final Rule. The following are a few of the answers that were provided:

- All TRICARE sales are government sales that should be excluded from Best Price. TRICARE sales are treated as government sales for AMP, Non-FAMP, and ASP as well.

- If a Manufacturer signs an Agreement, they are eligible for Tier 2, but not guaranteed Tier 2 placement. It is reviewed at the next P&T Committee.

- The old UF-VARR Agreements are still effective but may be amended if a price above FCP is being offered. It is not required to re-negotiate an old Agreement if FCP was offered because the proper price was being offered.

- Agreements for an additional amount off FCP for preferred formulary placement may be negotiated. If a manufacturer does not negotiate an Agreement, their drugs may still be purchased by TRICARE recipients and refunds must still be paid, so participation in TRICARE is no longer voluntary.

- Refund payments for utilization data from January 28 through December 31, 2008 are due May 26, 2009 unless a waiver or compromise of the amount is granted. Agreements do not have to be signed until June 1, 2009, but it is in the Manufacturer’s best interest to enter into the Agreement before then in order to waive or comprise refund payments due.

*Words in italics are my opinions and commentary on the information provided in the TMA documents.

Note: As mentioned above, CIS' Tricare Final Rule teleconference was recorded and is available upon request. For a copy of the teleconference, please email PCX GP Module Manager, Dana Zelig at danazelig@cis-partners.com

Sources:
[1] http://www.tricare.mil/pharm_mfg/downloads/Dispute%20Resolution%20Process_Web.pdf

[2] http://www.tricare.mil/pharm_mfg/downloads/Response%20to%20Manufacturer%20Questions.pdf