RDS FAQ

What is RDS?

“Retiree Drug Subsidy”, or RDS, is a Medicare sponsored cost recovery program. Plan Sponsors can receive a “substantial” annual subsidy from Medicare based on their retiree plan drug spend (approximately 20% cost recovery). It is the goal of CMS to give employers and unions a comprehensive set of options to help them continue to provide high quality prescription drug coverage to their retirees.

Why would you need the services of our firm?
  • To recover subsidy in cases where none has been received.
  • To shift the risk of losing subsidy monies by outsourcing to an “insured” outside vendor (subsidy can be lost with merely a few missteps).
  • To avoid having Medicare take back subsidy monies already received.
  • To relieve overworked & overwhelmed staff from managing an often time-consuming and confusing RDS program.
  • To rely on a firm that stays on top of the ever-changing rules and regulatory landscape of Medicare.
What industry groups have the greatest subsidy opportunity?
  • Municipalities
  • Religious organizations
  • Taft-Hartley plans
  • Union controlled VEBA’s; Welfare Benefit Plans
  • Older, predominately union, private industry plans
  • Schools; Universities

These plan sponsors are eligible to receive the drug subsidy if they provide coverage that is at least actuarially equivalent to the standard Medicare Part D benefit.

What are the primary RDS challenges that frustrate organizations?
  • Confusing RDS application process
  • Managing multiple vendor relationships
  • Aggregating and formatting multiple vendor data
  • Accounting for mid-year plan changes
  • Maintaining up to date retiree lists
  • Troubleshooting errors/issues reported by RDS
  • Completing 12 steps of reconciliation
  • Receiving quality support from RDS call center
  • Organizing records for each application period (necessary for CMS audit)
  • Juggling multiple open application periods
What are the RDS record keeping requirements?

Under CFR 423.888(d) the RDS plan sponsor must maintain and furnish to CMS or the Office of Inspector General upon request, the records documenting its costs and other relevant information used for calculating your Retiree Drug Subsidy amount for 6 years for purposes of CMS audits.

We will provide you with a CD-ROM file for each application year that will include all CMS required audit documents. RDS Services will also represent you in the event of a CMS audit.

What are the standard reports that you provide?
  • Rx claims reconciliation
  • Excluded drug review
  • Retiree list audits
  • Member verification
  • Key metrics tracking
  • Part B drug analytics
  • Ad-Hoc reports (i.e. RDS vs Part D/PDP)
How do you manage eligibility and maximize retiree participants?
  • Match Social Security/Medicare numbers
  • Track status of participants
  • Identify discrepancies between covered retiree list, plan sponsor records & cost reports
  • Investigate CMS rejection records
  • Monitor retiree plan changes
  • Reconcile retiree lists
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