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This session of the rebate reallocation training will introduce the rebate reallocation tool and explain the review process that CMS completes after the rebate reallocation period.

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It will also provide a demonstration of the rebate reallocation tool.

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After the rebate reallocation period ends, CMS runs a series of two tests to evaluate all BPTs.

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In the first set of tests, CMS evaluates for clear violations of the guidelines.

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CMS and CMS’ contracted bid desk reviewers will contact MAOs regarding any violations that are discovered,

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and MAOs must correct all violations through BPT resubmissions.

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These tests are described in more detail on the next slide.

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In the second set of tests,

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CMS evaluates other changes that were made during the rebate reallocation period and that are beyond the scope of the guidelines or that may lead to the discovery of guideline non-compliance.

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CMS and CMS’ contracted bid desk reviewers require MAOs to submit additional supporting documentation for all changes made during rebate reallocation,

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and MAOs must resolve any issues identified during the rebate reallocation resubmission review.

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The second series of tests are not as explicit as the first series;

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that is, for the second set, if changes are beyond the scope of the guidelines, the results are at CMS' discretion.

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Therefore, there is no need to describe these tests in further detail.

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The first series of tests—those that evaluate for clear violations of the guidelines—require MAOs to resubmit a BPT if it fails one of the tests.

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The tests are as follows: 1. Permissibility.

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If an MAO is required to participate in rebate reallocation for a BPT but has not resubmitted it,

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or if an MAO is not permitted to participate in rebate reallocation for a BPT but has attempted to reallocate rebates,

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the BPT will fail the permissibility test.

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This is a clear violation of guidelines 1, 4, 5, or 8.

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2. Gain/Loss Margin Per Member Per Month (PMPM) Change.

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If the change in the MA gain/loss margin (MA BPT worksheet 4, cell H107)

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increased or decreased by more than $1 before premium rounding, the BPT will fail the gain/loss test.

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This is a clear violation of guideline 10.

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The BPT will fail this test for violations of Appendix E’s premium rounding rules (which specify that failure will occur if the changes to the MA gain/loss margin—

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after the changes for rebate reallocation have been made—represent a higher amount than is required to round the total plan premium).

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3. Part A/Part B Mandatory Supplemental Revenue Requirement Change.

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If the Part A/Part B mandatory supplemental revenue requirement

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(MA BPT worksheet 4, cell R108)

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changed by more than 110 percent of the value of unallocated rebates for rebate reallocation before premium rounding,

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the BPT will fail the Part A/Part B mandatory supplemental test.

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This is a clear violation of guideline 10.

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The BPT will fail this test for violations

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of Appendix E’s premium rounding rules

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(which specify that failure will occur if the changes to the Part A/Part B mandatory supplemental revenue requirement—

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after the changes for rebate reallocation have been made—

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represent a higher amount than is required to round the total plan premium).

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4. Part D Basic Bid.

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If the Part D basic bid amount changed, the BPT will fail the Part D basic bid test.

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This is a clear violation of guideline 6.

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The BPT will not fail this test when a Part D benefit change is required for a bid with a negative Part D basic premium that cannot be offset in the Part D supplemental premium without a change in Part D benefits.

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CMS reviews bids with this exception on a case-by-case basis to ensure that Part D benefit changes are reasonable and appropriate.

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5. Part D Basic Premium Target.

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If the MAO participated in rebate reallocation and did not return to the target for the Part D basic premium—

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or did not implement a partial return in situations in which a full return is impossible—the BPT will fail the Part D target test.

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This is a clear violation of guidelines 1, 4, 5, or 8. 6. Part D Supplemental Bid.

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If there are changes to the Part D supplemental benefits, the BPT will fail the Part D supplemental test.

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This is a clear violation of guideline 6.

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The BPT will not fail this test when a Part D benefit change is required for a bid with a negative Part D basic premium that cannot be offset in the Part D supplemental premium without a change in Part D benefits.

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CMS reviews bids with this exception on a case-by-case basis to ensure that Part D benefit changes are reasonable and appropriate.

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7. Plan Intention for Part D Target Premium.

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If an MAO changes its intention for the Part D target—

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that is, if it shifts from targeting the initial submission for the Part D basic premium to targeting the LIPSA benchmark, or vice versa—the BPT will fail the plan intention for the Part D target premium test.

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This is a clear violation of guideline 3.

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Starting in contract year 2025 , OACT provided MAOs with a rebate reallocation tool,

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which allows MAOs to ensure that BPT rebate reallocation resubmissions comply with CMS’ guidelines for rebate reallocation and premium rounding.

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OACT expects MAOs to use this tool prior to the end of the rebate reallocation period, thereby significantly reducing the number of additional resubmissions.

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The rebate reallocation tool identifies when BPTs fail any of the tests that were described in the previous slide.

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Because CMS requires MAOs to resubmit the BPT to address these issues, it is in the best interest of both MAOs and CMS to address all failures in the rebate reallocation tool

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prior to the end of the rebate reallocation period.

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As previously explained, CMS and CMS’ contracted bid desk reviewers may contact MAOs about other changes—beyond those identified in the tool

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in their BPT resubmissions for rebate reallocation.

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Resubmissions may be required  to resolve other changes.
