Medicare Part D Claims Rejections for Nursing Home Residents, 2006 to 2010 | Page 2

Our data include approximately 450,000 unique individuals and 4 million total claims in each of the 5 study years (Table 1). The overall rejection rate ranged from 14% to 19% over the 2006 to 2010 time frame, increasing slightly in recent years. The percent of rejections due to products not being covered declined considerably over the study period, from 21% of all rejections in 2006 to 10% in 2010. In contrast, rejections due to utilization management techniques such as prior authorization, drug utilization review, and other coverage restrictions grew in prominence, from 33% of all rejections in 2006 to 44% in 2010. Within the utilization management category of rejections, the most prominent subcategories of rejections were “refill too soon” (43% of utilization management rejections), “Drug Utilization Review Reject Error” (30%), “plan limitations exceeded” (17%), and “prior authorization required” (8%) (eAppendix A). Administrative rejections were consistently high over the study period (approximately 43% of all rejections, on average). Specific codes comprising most administrative rejections were non-matched pharmacy numbers (31% of administrative rejections); missing/ invalid information for requests to “dispense as written” (ie, requests to fill prescriptions for brand-name drugs, even though generic substitutes might be available) (8%); nonmatched plan member numbers (7%); and missing date of service (6%).

Table 2 details product-level rejections for our most recent year of data (2010), with the top and bottom panels describing rejections for the most prescribed medications and medications with the highest rejection rates among drugs with at least 5000 claims, respectively. Among the 20 most prescribed drugs (13 of which are generics), the rejection rate was between 13% and 19%, with denials generally divided between administrative rejections and utilization management, and rarely due to lack of coverage. For the 20 most commonly rejected drugs (9 of which are generics), the rejection rates (23%-62%) and reasons for denial varied more widely. Lack of coverage factored more prominently into these rejections, especially for some alternate formulations. Administrative rejection codes accounted for more than half of denials for 10 out of 20 medications.

The Figure shows rejection rates over time for 7 classes commonly used in long-term care settings—antidepressants, angiotensin receptor blockers, atypical antipsychotics, cholinesterase inhibitors, long-acting opioids, nebulized inhalants, and osteoporosis medications (eAppendix B lists drugs by class). Other than the rejection rates for nebulized inhalants, which declined from 2008 to 2010, class-level rejection rates declined initially and then increased in subsequent years. Some increases were relatively large—for instance, after falling to a low of 16% in 2007, the rejection rate for long-acting opioids increased to 28% in 2010. Rejection reasons varied across classes (see eAppendix C for details).

Table 3 displays rejection rates and the reasons across plans with higher claims volume in 2010. If a company had multiple PDPs nationwide, the information is aggregated across these plans. The overall rejection rates varied (6%-30%), as did the distribution of rejection reasons. Among plans with higher rejection rates, administrative rejections were relatively prominent. The 3 plans with the highest proportion of rejections for administrative reasons (74%, 68%, and 65%) were among the 3 plans with highest rejection rates overall (30%, 24%, and 29%, respectively). Translated to an administrative rejection rate (overall rejection rate x proportion of rejections for administrative reasons), the rate at which claims were rejected because of administrative reasons generally was between 2% and 9% of claims (not shown). Relatively high rates of administrative rejections arose in smaller and larger plans alike. The rates of claims rejections in the other 2 categories did not convey anything consistent about plans’ overall rejection rates.

DISCUSSION

Over the initial 5 years of Medicare Part D, nearly 1 in 6 drug claims for beneficiaries living in nursing homes and other long-term care settings was rejected. Although one might have expected the rejection rate to decline over time after the initial transition to the program and as pharmacies and clinicians grew more accustomed to working across private plans, this has not occurred. After an initial decline, the rejection rate has increased slightly each year. At the same time, reasons for denials have evolved considerably. Lack of coverage has become less of a factor in claims rejections than it was initially; increasingly, other formulary tools such as drug utilization review, quantity-related coverage limits, and prior authorization are used to deny claims. Although these results are consistent with broader trends concerning PDP formularies, somewhat more surprising is the persistence of administrative claims rejections throughout the study period, a feature that likely reflects the complexity of working across multiple plans and policies in a given year, as well as changes in coverage policies over time.

Not surprisingly, rejection rates and reasons varied considerably across products. Medications most commonly used by nursing home residents generally have below average denial rates (around 1 in 7 claims), with coverage issues rarely noted. Given the relatively low cost of many of these drugs (9 out of 10 most commonly used drugs are generics), these features are unsurprising. Among drugs with the highest rejection rates, explanations for denials are complex and vary across products, which include generics, brand drugs with generic alternatives, and brand drugs without generic alternatives.