CMS sanctions SmartD Rx PDP

CMS sanction prescription drug plans to protect Medicare beneficiaries, seniors.

CMS sanction prescription drug plans to protect Medicare beneficiaries, seniors.

The Centers for Medicare and Medicaid (CMS) announced on April 23, 2013, that they were imposing immediate intermediate sanctions on SmartD Rx Prescription Drug Plan (PDP). SmartD Rx PDP is a new Medicare prescription drug plan that started operating in January 2013. CMS cited numerous failures on the part of SmartD Rx to properly handle member’s prescription drug and enrollment transactions. The intermediate sanctions prevent SmartD Rx from enrolling new members or marketing their plans.

CMS sanctions SmartD Rx PDP

From the CMS notice:

These intermediate sanctions will consist of the suspension of the enrollment of Medicare beneficiaries… and the suspension of all marketing activities to Medicare beneficiaries…

CMS is imposing these intermediate sanctions immediately, effective April 23, 2013, at 11:59 p.m. EST,…, because it has determined that Smart’s conduct poses a serious threat to the health and safety of Medicare beneficiaries.

Download the full notification announcement -> [download id=”59″]

Smart and RxAlly

SmartD Rx PDP is owned by Smart Insurance Company and the Chief Executive Officer is Pritpal Virdee. Smart Insurance Company partnered with RxAlly, an umbrella organization of independent pharmacies including Walgreens, to provide a network of pharmacies and marketing. SmartD Rx PDP started enrolling members into their plans during the 2013 Medicare Advantage open enrollment period.

Not the first PDP sanctioned this year

Similar to the sanctions imposed by CMS on SilverScripts earlier this year, SmartD Rx had to immediately halt any new enrollment or marketing until all listed failures are addressed to the satisfaction of CMS. SmartD Rx is permitted to continue to service its current member at their network pharmacies.

Problems from the start 

From the CMS announcement, SmartD Rx was having problems before the plan even started during the 2013 open enrollment. Customer service issues began early as the PDP had problems operating a toll-free number to handle member questions. Problems persisted in a number of areas critical for members transitioning from one PDP to the SmartD Rx plan. From the CMS notification –

CMS has repeatedly communicated with Smart about its extensive failures in major Part D operational areas:

  • Failure to properly administer its CMS-approved prescription drug benefit;
  • Failure to provide timely and appropriate point-of-service claims adjudication;
  • Failure to properly administer its CMS-approved formulary by applying unapproved step therapy, prior authorization, and quantity limits;
  • Failure to properly adjudicate LIS co-payments;
  • Failure to properly process coverage determinations;
  • Failure to properly process redeterminations;
  • Failure to properly process grievances;
  • Failure to operate a toll-free customer service call center;
  • Failure to properly process enrollment requests;
  • Failure to effectively monitor and oversee internal operations; and
  • Failure to effectively monitor and oversee delegated entities.

Hello? Is anybody there?

New members of SmartD Rx were left without access to a call center, had to leave pharmacies without prescriptions being filled and were delayed or denied coverage for prescriptions. From reading through the list of failures it sounds as if Smart Insurance Company didn’t have a robust Information Technology (IT) infrastructure in place prior to launch. In other words, they either didn’t have the people, phone lines or computer muscle to handle the information flow between members, pharmacies and the plan.

Competitive PDP plans, new company 

From the Smart Insurance Company press release announcing the SmartD Rx PDP it sounded as if they were offering a very competitive Medicare prescription drug plan in all 50 states. (Download press release -> [download id=”60″]). There were no $0 member copays for preferred generic medications in both their SmartD Rx Saver and SmartD Rx Plus plans. The Saver plan had an annual deductible of $325 and neither plan offered a mail order option. The RxAlly group of pharmacies provided an extensive in-network list of pharmacies that included independent pharmacies and major retail chains such as Target, Walgreen, Rite Aid, Safeway, Costco and Raley’s in California.

Sanctions are a tough blow

Sanctions imposed by CMS can last as long as a year. Not being able to enroll new members or advertise is a severe blow to any company’s business plan. CMS takes violations very seriously because of the health threat posed to Medicare beneficiaries who can’t access medications in a timely fashion as promised by the prescription drug plan. In addition, CMS reimburses the PDP every month for each member enrolled.

August 2013 Update

It looks like SmartD Rx PDP will have a new claims processor beginning in September. Letters notifying members of the change in management will be sent out in late August or September. The new processing unit should greatly reduce or eliminate the challenges members have experienced over this past year. As new information becomes available, I will post it.

  • Pingback: Medicare Sanctions CVS/Caremark SilverScript Part D Plan()

  • Pingback: Covered California may cancel your current health insurance »()

  • UponAtime

    I wonder how the sanctions will impact RxAlly. To my understanding, SmartD was to enroll the beneficiaries and RxAlly was going to provide MTM services to the enrollees. No new enrollees for approx. a year= no growth for RxAlly and the 22,000 pharmacies they support.

    • Kevin Knauss

      Good question. RxAlly business plan seemed to focus on organizing and supporting independent pharmacies. I would assume that business model would continue even without the feeder business of the Part D Plan.

      • fustrated

        Apparently Smart d RX went to adminstrator Express scripts. Benecard was the administrator removed.

        • Kevin Knauss

          That’s what I heard, but could not confirm.

  • Pingback: California Medicare Part D Prescription Plans for 2014 »()

  • Ben Ghazi

    I am surfing about Silverscript to find if Silverscript is another scam directed at seniors. Lo and behold it seems Silverscript is a real company but as I suspected totally fouled up. Numerous correspondence has gone unanswered and I NEVER ENROLLED in the first place. I think the feds need to dig into this outfit and see if they are perpetuating another Medicare fraud on the taxpayers?

    • Kevin Knauss

      CMS actually jumped on the CVS SilverScripts problems pretty early in the year when they put them on sanction.