[Federal Register Volume 87, Number 89 (Monday, May 9, 2022)]
[Rules and Regulations]
[Pages 27704-27902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-09375]
[[Page 27703]]
Vol. 87
Monday,
No. 89
May 9, 2022
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 417, 422, and 423
Medicare Program; Contract Year 2023 Policy and Technical Changes to
the Medicare Advantage and Medicare Prescription Drug Benefit Programs;
Policy and Regulatory Revisions in Response to the COVID-19 Public
Health Emergency; Additional Policy and Regulatory Revisions in
Response to the COVID-19 Public Health Emergency; Final Rule
Federal Register / Vol. 87 , No. 89 / Monday, May 9, 2022 / Rules and
Regulations
[[Page 27704]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 417, 422, and 423
[CMS-4192-F, CMS-1744-F, and CMS-3401-F]
RIN 0938-AU30, 0938-AU31, and 0938-AU33
Medicare Program; Contract Year 2023 Policy and Technical Changes
to the Medicare Advantage and Medicare Prescription Drug Benefit
Programs; Policy and Regulatory Revisions in Response to the COVID-19
Public Health Emergency; Additional Policy and Regulatory Revisions in
Response to the COVID-19 Public Health Emergency
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule will revise the Medicare Advantage (MA) (Part
C) program and Medicare Prescription Drug Benefit (Part D) program
regulations to implement changes related to marketing and
communications, past performance, Star Ratings, network adequacy,
medical loss ratio reporting, special requirements during disasters or
public emergencies, and pharmacy price concessions. This final rule
will also revise regulations related to dual eligible special needs
plans (D-SNPs), other special needs plans, and cost contract plans.
This final rule finalizes certain 2021 and 2022 Star Ratings provisions
that were included in two interim final rules with comment period (IFC)
that CMS issued on April 6, 2020, and September 2, 2020; other policies
from those interim final rules will be addressed in other rulemakings.
DATES:
Effective dates: These regulations are effective on June 28, 2022,
except for amendatory instructions 27 and 36 (regarding the definition
of ``negotiated price'' at Sec. Sec. 423.100 and 423.2305), which are
effective January 1, 2024.
Applicability dates: The applicability date of the provisions in
this rule is January 1, 2023, except as explained in SUPPLEMENTARY
INFORMATION.
FOR FURTHER INFORMATION CONTACT: Marna Metcalf Akbar, (410) 786-8251,
or Melissa Seeley, (212) 616-2329--General Questions.
Jacqueline Ford, (410) 786-7767--Part C Issues.
[email protected]--Part C and D Star Ratings Issues.
Marna Metcalf-Akbar, (410) 786-8251--D-SNP Issues.
[email protected]--Part D Pharmacy Price Concession
Issues.
[email protected]--MLR Issues.
SUPPLEMENTARY INFORMATION:
Acronyms
ACC Automated Criteria Check
AHC Accountable Health Communities
AKS Anti-kickback Statute
ANOC Annual Notice of Change
ARB At-Risk Beneficiaries
BBA Bipartisan Budget Act
CAHPS Consumer Assessment of Healthcare Providers and Systems
CAI Categorical Adjustment Index
CMS Centers for Medicare & Medicaid Services
COI Collection of Information
COVID-19 Coronavirus 2019 Disease
C-SNP Chronic Condition Special Needs Plan
DME Durable Medical Equipment
D-SNP Dual Eligible Special Needs Plan
EGWP Employer Group Waiver Plan
EOC Evidence of Coverage
FAI Financial Alignment Initiative
FDR First-Tier Downstream and Related Entity
FFS Fee-for-Service
FIDE SNP Fully Integrated Dual Eligible Special Needs Plan
FQHC Federally Qualified Health Center
HEDIS Healthcare Effectiveness Data and Information Set
HHS Department of Health and Human Services
HIDE SNP Highly Integrated Dual Eligible Special Needs Plan
HIPAA Health Insurance Portability and Accountability Act of 1996
HOS Health Outcomes Survey
HPMS Health Plan Management System
HRA Health Risk Assessment
HSD Health Service Delivery
ICR Information Collection Requirement
IRE Independent Review Entity
I-SNP Institutional Special Needs Plan
LOI Letter of Intent
LTSS Long Term Services and Supports
MA Medicare Advantage
MAC Medicare Administrative Contractor
MACPAC Medicaid and CHIP Payment and Access Commission
MA-PD Medicare Advantage Prescription Drug
MCO Managed Care Organization
MCMG Medicare Communications and Marketing Guidelines
MACPAC Medicaid and CHIP Payment and Access Commission
MedPAC Medicare Payment Advisory Commission
MIPPA Medicare Improvements for Patients and Providers Act
MLR Medical Loss Ratio
MMA Medicare Prescription Drug, Improvement, and Modernization Act
MMCO Medicare-Medicaid Coordination Office
MMP Medicare-Medicaid Plan
MOC Model of Care
MOOP Maximum Out-of-Pocket
NAMBA National Average Monthly Bid Amount
NEMT Non-emergency Medical Transportation
NMM Network Management Module
OACT Office of the Actuary
OMB Office of Management and Budget
PACE Programs of All-Inclusive Care for the Elderly
PAHP Prepaid Ambulatory Health Plan
PBP Plan Benefit Package
PDE Prescription Drug Event
PDP Prescription Drug Plan
PHE Public Health Emergency
PIHP Prepaid Inpatient Health Plan
PRA Paperwork Reduction Act
RFI Request for Information
RFA Regulatory Flexibilities Act
RHC Rural Health Clinic
SAE Service Area Expansion
SB Summary of Benefits
SDOH Social Determinants of Health
SHIP State Health Insurance Assistance Program
SNP Special Needs Plan
SSA Social Security Administration
SSBCI Special Supplemental Benefits for the Chronically Ill
TPMO Third-Party Marketing Organization
Additional information regarding the applicability dates: The Star
Ratings provision at Sec. 422.166(i)(12) is applicable to the
calculation of the 2023 Star Ratings released in October, 2022, as
discussed in section II.D.2. of this final rule. The definition of
``fully integrated dual eligible special needs plans (FIDE SNP)'' in
Sec. 422.2 at paragraphs (2)(i) and (iii) through (v), (5), and (6) as
discussed in section II.A.5 of this final rule are applicable beginning
January 1, 2025. The definition of ``highly integrated dual eligible
special needs plans'' in Sec. 422.2 at paragraph (3), as discussed in
section II.A.5.f. of this final rule, is applicable beginning January
1, 2025. The applicability date of the requirements at Sec. 422.101,
as discussed in section II.A.4. of this final rule, is January 1, 2024.
The requirements at Sec. 423.100, as discussed in section II.H. of
this final rule, are applicable beginning on January 1, 2024.
I. Executive Summary
A. Purpose
Over 29 million individuals receive their Medicare benefits through
Medicare Advantage (MA or Part C), including plans that offer Medicare
Prescription Drug Benefit (Part D) coverage. Over 23 million
individuals receive Part D coverage through standalone Part D plans.
The primary purpose of this final rule is to
[[Page 27705]]
implement changes to the MA and Part D programs. This final rule
implements changes related to marketing and communications, past
performance, Star Ratings, network adequacy, medical loss ratio
reporting, special requirements during disasters or public emergencies,
and pharmacy price concessions. This final rule also revises
regulations related to dual eligible special needs plans (D-SNPs),
other special needs plans, and Medicare cost contract plans.
B. Summary of Major Provisions
1. Enrollee Participation in Plan Governance (Sec. 422.107)
Managed care plans derive significant value from engaging enrollees
in defining, designing, participating in, and assessing their care
systems.\1\ Through this final rule, we require that any MA
organization offering a D-SNP establish one or more enrollee advisory
committees in each State to solicit direct input on enrollee
experiences. We also establish that the committee must include a
reasonably representative sample of individuals enrolled in the D-
SNP(s) and solicit input on, among other topics, ways to improve access
to covered services, coordination of services, and health equity for
underserved populations. Public comments on our proposal reinforced our
belief that the establishment and maintenance of an enrollee advisory
committee is a valuable beneficiary protection to ensure that enrollee
feedback is heard by managed care plans and to help identify and
address barriers to high-quality, coordinated care for dually eligible
individuals.
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\1\ Centers for Medicare & Medicaid Services. (n.d.). Person &
Family Engagement Strategy: Sharing with Our Partners. Retrieved
from https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Downloads/Person-and-Family-Engagement-Strategy-Summary.pdf.
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2. Standardizing Housing, Food Insecurity, and Transportation Questions
on Health Risk Assessments (Sec. 422.101)
Section 1859(f)(5)(A)(ii)(I) of the Social Security Act (hereafter
known as the Act) requires each special needs plan (SNP) to conduct an
initial assessment and an annual reassessment of the individual's
physical, psychosocial, and functional needs. We codified this
requirement at Sec. 422.101(f)(1)(i) as part of the model of care
requirements for all MA SNPs. Certain social risk factors can lead to
unmet social needs that directly influence an individual's physical,
psychosocial, and functional status. Many dually eligible individuals
contend with multiple social risk factors such as homelessness, food
insecurity, lack of access to transportation, and low levels of health
literacy. Building on CMS's experience with other programs and model
tests, and with broad support from public commenters, we are finalizing
a requirement that all SNPs include one or more questions from a list
of screening instruments specified in sub-regulatory guidance on
housing stability, food security, and access to transportation as part
of their health risk assessments (HRAs). However, based on public
comments, we are not finalizing our proposal that all SNPs use the same
specific standardized questions.
Our final rule will result in SNPs having a more complete picture
of the risk factors that may inhibit enrollees from accessing care and
achieving optimal health outcomes and independence. We believe this
knowledge will better equip the MA organizations offering these SNPs to
meet the needs of their members. Our final rule will also equip these
MA organizations with person-level information that will help them
better connect people to covered services, social service
organizations, and public programs that can help resolve housing
instability, food insecurity, or transportation challenges.
3. Refining Definitions for Fully Integrated and Highly Integrated D-
SNPs (Sec. Sec. 422.2 and 422.107)
Dually eligible individuals have an array of choices for how to
receive their Medicare coverage. We proposed several changes to how we
define fully integrated dual eligible special needs plan (FIDE SNP) and
highly integrated dual eligible special needs plan (HIDE SNP) to help
differentiate various types of D-SNPs, clarify options for
beneficiaries, and increase integration for these types of D-SNPs.
In this final rule, we are requiring, for 2025 and subsequent
years, that all FIDE SNPs have exclusively aligned enrollment, as
defined in Sec. 422.2, and cover Medicare cost-sharing and three
specific categories of Medicaid benefits: Home health services (as
defined in Sec. 440.70), medical supplies, equipment, and appliances
(as described in Sec. 440.70(b)(3)), and behavioral health services
through a capitated contract between the State Medicaid agency and the
Medicaid managed care organization that is the same legal entity as the
MA organization that offers the FIDE SNP. In addition, we are requiring
that, for plan year 2025 and subsequent years, each HIDE SNP have a
service area that completely overlaps the service area of the
affiliated Medicaid managed care plan with the capitated contract with
the State. Consistent with existing policy outlined in sub-regulatory
guidance, this final rule also codifies specific, limited carve-outs of
the Medicaid long-term services and supports and Medicaid behavioral
health services covered under the Medicaid capitated contract
affiliated with FIDE SNPs and HIDE SNPs.
We believe these policies will create better experiences for
beneficiaries and move FIDE SNPs and HIDE SNPs toward greater
integration, which we believe is a purpose of the amendments to section
1859(f) of the Act regarding integration made by section 50311(b) of
the BBA of 2018.
4. Additional Opportunities for Integration Through State Medicaid
Agency Contracts (Sec. 422.107)
Section 164 of Medicare Improvements for Patients and Providers Act
of 2008 (MIPPA) (Pub. L. 110-275) amended section 1859(f) of the Act to
require that a D-SNP contract with the State Medicaid agency in each
State in which the D-SNP operates to provide benefits, or arrange for
the provision of Medicaid benefits, to which an individual is entitled.
States have used these contracts to better integrate care for dually
eligible individuals. In this final rule we codify new pathways through
which States can use these contracts to require that certain D-SNPs
with exclusively aligned enrollment (a) establish contracts that only
include one or more D-SNPs within a State, and (b) use certain
integrated materials and notices for enrollees. Where States choose
this opportunity, it will help individuals better understand their
coverage. Because Star Ratings are assigned at the contract level, this
final rule will also provide a mechanism to provide States and the
public with greater transparency on the quality ratings for the D-
SNP(s), helping CMS and States better identify disparities between
dually eligible beneficiaries and other beneficiaries and target
interventions accordingly.
We also codify mechanisms to better coordinate State and CMS
monitoring and oversight of certain D-SNPs when a State has elected to
require these additional levels of integration, including granting
State access to certain CMS information systems. Collectively, our
proposals will improve Federal and State oversight of certain D-SNPs
(and their affiliated Medicaid managed care plans) through greater
information-sharing among government regulators.
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5. Attainment of the Maximum Out-of-Pocket Limit (Sec. Sec. 422.100
and 422.101)
In order to ensure that MA plan benefits do not discriminate
against higher cost, less healthy enrollees, MA plans are required to
establish a limit on beneficiary cost-sharing for Medicare Part A and B
services after which the plan pays 100 percent of the service costs.
Current guidance allows MA plans, including D-SNPs, to not count
Medicaid-paid amounts or unpaid amounts toward this maximum out-of-
pocket (MOOP) limit, which results in increased State payments of
Medicare cost-sharing and disadvantages providers serving dually
eligible individuals in MA plans. In this final rule we specify that
the MOOP limit in an MA plan (after which the plan pays 100 percent of
MA costs for Part A and Part B services) must be calculated based on
the accrual of all cost-sharing in the plan benefit, regardless of
whether that cost-sharing is paid by the beneficiary, Medicaid, other
secondary insurance, or remains unpaid (including cost-sharing that
remains unpaid because of State limits on the amounts paid for Medicare
cost-sharing and dually eligible individuals' exemption from Medicare
cost-sharing). The change will result in more equitable payment for MA
providers serving dually eligible beneficiaries. We project that our
requirement as finalized will result in increased bid costs for the
MOOP for some MA plans. A portion of those higher bid costs will result
in increased Medicare spending of $3.9 billion over 10 years. That cost
is partially offset by lower Federal Medicaid spending of $2.7 billion
and the portion of Medicare spending paid by beneficiary Part B
premiums, which totals $600 million over 10 years. The net Federal 10-
year cost estimate for the finalized requirement is $614.8 million.
6. Special Requirements During a Disaster or Emergency for Medicare
Advantage Plans (Sec. 422.100(m))
In order to ensure enrollees have uninterrupted access to care,
current regulations provide for special requirements at Sec.
422.100(m) for MA plans during disasters or emergencies, including
public health emergencies (PHEs), such as requirements for plans to
cover services provided by non-contracted providers and to waive
gatekeeper referral requirements. The timeframe during which these
special rules apply can be very specific depending on the type or scope
of the disaster or emergency, while other situations, like the PHE for
COVID-19, may have an uncertain end date. Currently, the regulation
states that a disaster or emergency ends (thus ending the obligation
for MA plans to comply with the special requirements) the earlier of
when an end date is declared or when, if no end date was identified in
the declaration or by the official that declared the disaster or
emergency, 30 days have passed since the declaration. This has caused
some confusion among stakeholders, who are unsure whether to continue
special requirements during a state of disaster or emergency after 30
days, or whether those special requirements do not apply after the 30-
day time period has elapsed. In this final rule, we clarify the period
of time during which MA organizations must comply with the special
requirements. Under this final rule, MA organizations must ensure
access for enrollees to covered services throughout the disaster or
emergency period, including when the end date is unclear and the period
renews several times, so long as there is a disruption of access to
healthcare.
7. Amend MA Network Adequacy Rules by Requiring a Compliant Network at
Application (Sec. 422.116)
We proposed to amend Sec. 422.116 to require applicants to
demonstrate that they meet the network adequacy standards for the
pending service area as part of the MA application process for new and
expanding service areas and to adopt a time-limited 10-percentage point
credit toward meeting the applicable network adequacy standards for the
application evaluation. Under our current rules, we require that an
applicant attest that it has an adequate provider network that provides
enrollees with sufficient access to covered services, and we will not
deny an application based on the evaluation of the MA plan's network.
Network adequacy reviews are a critical component for confirming that
access to care is available for enrollees. As such, we believe that
requiring applicants to meet network adequacy standards as part of the
application process will strengthen our oversight of an organization's
ability to provide an adequate network of providers to deliver care to
MA enrollees. This change will also provide MA organizations with
information regarding their network adequacy ahead of bid submissions,
mitigating current issues with late changes to the bid that may affect
the bid pricing tool. Finally, we understand that it may be difficult
for applicants to have a full network in place almost 1 year ahead of
the beginning of the contract as the proposed change for network
adequacy rules will require. Therefore, the final rule includes a 10-
percentage point credit towards the percentage of beneficiaries
residing within published time and distance standards for new or
expanding service area applicants. Once the contract is operational,
the 10-percentage point credit will no longer apply and MA
organizations will need to meet full compliance.
We are finalizing our proposal, with one modification; to allow
applicants to utilize Letters of Intent (LOIs) to meet network
standards in counties and specialty types as needed. Once the contract
is operational, MA organizations must have signed contracts with
providers and facilities to be in full compliance.
8. Part C and Part D Quality Rating System
Due to the scope and duration of the COVID-19 PHE, we adopted a
technical change to the 2022 Star Ratings methodology for extreme and
uncontrollable circumstances in the ``Medicare and Medicaid Programs,
Clinical Laboratory Improvement Amendments (CLIA), and Patient
Protection and Affordable Care Act; Additional Policy and Regulatory
Revisions in Response to the COVID-19 Public Health Emergency''
published in the Federal Register and effective on September 2, 2020
(hereafter referred to as the ``September 2nd COVID-19 IFC''),\2\ (CMS-
3401-IFC; 85 FR 54820) at 42 CFR 422.166(i)(11) to make it possible for
us to calculate 2022 Star Ratings for MA contracts. We proposed making
a technical change at Sec. 422.166(i)(12) to enable CMS to calculate
2023 Star Ratings for three Healthcare Effectiveness Data and
Information Set measures that are based on the Health Outcomes Survey
(87 FR 1842, January 12, 2022). Specifically, these measures are
Monitoring Physical Activity, Reducing the Risk of Falling, and
Improving Bladder Control. Without this technical change, CMS will be
unable to calculate measure-level 2023 Star Ratings for these measures
for any MA contract. We are therefore finalizing Sec. 422.166(i)(12)
without modification. In this final rule, we also respond to comments
we received on the Medicare Advantage and Part D Star Ratings
provisions in the interim final rules titled ``Medicare and Medicaid
Programs; Policy and Regulatory Revisions in Response to the COVID-19
Public Health Emergency'' published in the Federal Register on April 6,
2020,
[[Page 27707]]
with a March 31, 2020 effective date (hereafter referred to as the
``March 31st COVID-19 IFC'') \3\ (85 FR 19230) and the September 2nd
COVID-19 IFC. As detailed in sections II.D.3. and II.D.4. of this final
rule, we are finalizing most of the Star Ratings provisions from the
March 31st COVID-19 IFC and the September 2nd COVID-19 IFC, but we are
not finalizing several Star Ratings provisions in those interim final
rules, regarding circumstances that did not happen, because they are
moot. CMS will address other provisions from the interim final rules in
other rulemakings.
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\2\ www.federalregister.gov/documents/2020/09/02/2020-19150/medicare-and-medicaid-programs-clinical-laboratory-improvement-amendments-clia-and-patient.
\3\ www.federalregister.gov/documents/2020/04/06/2020-06990/medicare-and-medicaid-programs-policy-and-regulatory-revisions-in-response-to-the-covid-19-public.
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9. Past Performance Methodology to Better Hold Plans Accountable for
Violating CMS Rules (Sec. Sec. 422.502 and 422.503)
In a previous rulemaking cycle, CMS modified the past performance
methodology, revising the elements that are reviewed to determine if
CMS should permit an organization to enter into a new contract or
expand an existing contract. The current regulatory language prohibits
an organization from expanding or entering into a new contract if it
has a negative net worth or has been under sanction during the
performance timeframe. In this final rule, we include an organization's
record of Star Ratings, bankruptcy issues, and compliance actions in
our methodology going forward.
10. Marketing and Communications Requirements on MA and Part D Plans To
Assist Their Enrollees (Sec. Sec. 422.2260 and 423.2260, 422.2267 and
423.2267, 422.2274 and 423.2274)
CMS has seen an increase in beneficiary complaints associated with
third-party marketing organizations (TPMOs) and has received feedback
from beneficiary advocates and stakeholders concerned about the
marketing practices of TPMOs who sell multiple MA and Part D products.
In 2020, we received a total of 15,497 complaints related to marketing.
In 2021, excluding December, the total was 39,617. We are unable to say
that every one of the complaints is a result of TPMO marketing
activities, but based on a targeted search, we do know that many are
related to TPMO marketing. In addition, we have seen an increase in
third party print and television ads, which appears to be corroborated
by State partners. Through this final rule, we will address the
concerns with TPMOs by means of the following three updates to the
communications and marketing requirements under 42 CFR parts 422 and
423, subpart V: (1) We define TPMOs in the regulation at Sec. Sec.
422.2260 and 423.2260 to remove any ambiguity associated with MA plans/
Part D sponsors responsibilities for TPMO activities associated with
the selling of MA and Part D plans; (2) we add a new disclaimer that
will be required when TPMOs market MA plans/Part D products (Sec. Sec.
422.2267(e) and 423.2267(e)); and (3) we update Sec. Sec. 422.2274 and
423.2274 to require additional plan oversight requirements associated
with TPMOs, in addition to what is already required under Sec. Sec.
422.504(i) and 423.505(i) if the TPMO is a first tier, downstream or
related entity (FDR).
CMS' January 2021 final rule, entitled ``Medicare and Medicaid
Programs; Contract Year 2022 Policy and Technical Changes to the
Medicare Advantage Program, Medicare Prescription Drug Benefit Program,
Medicaid Program, Medicare Cost Plan Program, and Programs of All-
Inclusive Care for the Elderly'' (86 FR 5864) did not require notice
and taglines, based on the HHS Office for Civil Rights repeal of
certain notice and tagline requirements associated with section 1557 of
the Affordable Care Act. In the months since the publication of this
rule, CMS gained additional insight regarding the void created by the
lack of these notification requirements. Based on the significant
population (12.2 percent) of those 65 and older who speak a language
other than English in the home and complaints CMS received through our
Complaint Tracking Module, in this final rule we are finalizing a
requirement that MA and Part D plans create a multi-language insert
that will inform the reader, in the top fifteen languages used in the
U.S., as well as any additional non-English language that is the
primary language of at least 5 percent of the individuals in a plan
benefit package service area, that interpreter services are available
for free. As a note, CMS provides plans a list of all languages that
are spoken by 5 percent or more of the population for every county in
the U.S. As part of the finalized requirement, plans will be required
to include the multi-language insert whenever a Medicare beneficiary is
provided a CMS required material (for example, Evidence of Coverage,
Annual Notice of Change, enrollment form, Summary of Benefits) as
defined under Sec. Sec. 422.2267(e) and 423.2267(e). We further note
that existing statutes, including Section 504 of the Rehabilitation Act
and 1557 of the Affordable Care Act, require the provision of any
auxiliary aids and services required for effective communication for
individuals with disabilities at no cost to the individual.
Finally, in this final rule we are codifying a number of current
sub-regulatory communications and marketing requirements that were
inadvertently not included during the previous updates to 42 CFR parts
422 and 423, subpart V.
11. Greater Transparency in Medical Loss Ratio Reporting (Sec. Sec.
422.2460 and 423.2460)
To improve transparency and oversight concerning the use of Trust
Fund dollars, we reinstate the detailed medical loss ratio (MLR)
reporting requirements that were in effect for contract years 2014 to
2017, which required reporting of the underlying data used to calculate
and verify the MLR and any remittance amount, such as incurred claims,
total revenue, expenditures on quality improving activities, non-claims
costs, taxes, and regulatory fees. In addition, the new MLR reporting
templates will require additional details regarding plan expenditures
so we can better assess the accuracy of MLR submissions, the value of
services being provided to enrollees under MA and Part D plans, and the
impacts of recent rule changes that removed limitations on certain
expenditures that count toward the 85 percent MLR requirement.
12. Pharmacy Price Concessions to Drug Prices at the Point of Sale
(Sec. Sec. 423.100 and 423.2305)
The ``negotiated prices'' of drugs, as the term is currently
defined in Sec. 423.100, must include all network pharmacy price
concessions except those contingent amounts that cannot ``reasonably be
determined'' at the point-of-sale. Under this exception, negotiated
prices typically do not reflect any performance-based pharmacy price
concessions that lower the price a sponsor ultimately pays for a drug,
based on the rationale that these amounts are contingent upon
performance measured over a period that extends beyond the point of
sale and thus cannot reasonably be determined at the point of sale. We
proposed to eliminate this exception for contingent pharmacy price
concessions (87 FR 1842, January 12, 2022). We proposed to delete the
existing definition of ``negotiated prices'' at Sec. 423.100 and to
adopt a new definition for the term ``negotiated price'' at Sec.
423.100, which we proposed to define as the lowest amount a pharmacy
could
[[Page 27708]]
receive as reimbursement for a covered Part D drug under its contract
with the Part D plan sponsor or the sponsor's intermediary (that is,
the amount the pharmacy will receive net of the maximum negative
adjustment that could result from any contingent pharmacy payment
arrangement and before any additional contingent payment amounts, such
as incentive fees). We proposed to allow plans the flexibility to
determine how much of the pharmacy price concessions to pass through at
the point of sale for applicable drugs in the coverage gap phase of the
benefit. After consideration of the comments, we are modifying our
proposal to apply the new definition of ``negotiated price'' to all
phases of the Part D benefit, including the coverage gap phase. We are
also amending the definition of ``negotiated price'' at Sec. 423.2305
by revising paragraphs (1) and (2) of the definition of ``negotiated
price'' for the Coverage Gap Discount Program to be consistent with the
definition of ``negotiated price'' that we are adopting at Sec.
423.100 (that is, the lowest possible reimbursement such network entity
will receive, in total, for a particular drug). This policy takes
effect 60 days after publication of the final rule and is applicable
beginning on January 1, 2024. Part D sponsors will need to account for
these changes in the bids that they submit for contract year 2024.
In this final rule, we add a definition of ``price concession'' at
Sec. 423.100. Although ``price concession'' is a term important to the
adjudication of the Part D program, it had not yet been defined in the
Part D statute, Part D regulations, or sub-regulatory guidance. We
define price concession to include any form of discount, direct or
indirect subsidy, or rebate received by the Part D sponsor or its
intermediary contracting organization from any source that serves to
decrease the costs incurred under the Part D plan by the Part D
sponsor.
C. Summary of Costs and Benefits
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR09MY22.000
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[GRAPHIC] [TIFF OMITTED] TR09MY22.001
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[GRAPHIC] [TIFF OMITTED] TR09MY22.002
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[GRAPHIC] [TIFF OMITTED] TR09MY22.003
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[GRAPHIC] [TIFF OMITTED] TR09MY22.004
BILLING CODE 4120-01-C
D. Background
We received approximately 6,179 timely pieces of correspondence
containing one or more comments for the provisions addressed in this
final rule from the proposed rule titled ``Medicare Program; Contract
Year 2023 Policy and Technical Changes to the Medicare Advantage and
Medicare Prescription Drug Benefit Programs'' which appeared in the
Federal Register on January 12, 2022 (hereafter referred to as the
January 2022 proposed rule, 87 FR 1842). Comments were submitted by MA
health plans, Part D sponsors, beneficiaries, MA enrollee and
beneficiary advocacy groups, trade associations, providers, pharmacies
and drug companies, States, telehealth and health technology
organizations, policy research organizations, actuarial and law firms,
MACPAC, MedPAC, Members of Congress, and other vendor and professional
associations.
The proposals we are finalizing in this final rule range from minor
clarifications to more significant modifications based on the comments
received. Summaries of the public comments received and our responses
to those public comments are set forth in the various sections of this
final rule under the appropriate headings.
We received an overarching comment related to the proposed rule,
which we summarize in the following paragraphs:
Comment: A commenter expressed a concern about the timing of the
provisions included in the proposed rule related to the deadline for
bid submissions, especially related to proposals with contract year
2023 effective dates. The commenter noted that several proposals would
require operational and technical changes for MA organizations as well
as additional resource allocations, and, as such, welcomed additional
time for implementation. The commenter suggested it could better align
and collaborate with CMS in the future if given more time to fully
understand and implement proposed changes.
Response: We understand and appreciate the commenter's concerns and
MA organizations and Part D sponsors' willingness to work to meet the
implementation date timeframes. In response to comments, we are
modifying the date on which some of the new and amended regulations in
this final rule become applicable. We describe these modifications in
further detail in the respective sections of the rule.
We also note that some of the public comments received for the
provisions implemented in this final rule were outside of the scope of
the proposed rule. As such, these out-of-scope public comments are not
addressed in this final rule. The following paragraphs summarize the
out-of-scope public comments.
A commenter noted that long-term care provider-led institutional
special needs plans (I-SNPs) offer a strong additional solution to
States in integrated efforts, especially for long-term care services
uses with complex, high risk needs.
We received a few comments related to D-SNP look-alikes, which are
addressed at Sec. 422.514(d). A commenter requested that CMS consider
reducing the threshold for a D-SNP look-alike from the current 80
percent of dually eligible individuals enrolled to 50 percent and
requiring the Medicare program to inform individuals that they are
enrolling in a non-integrated model where an integrated model exists.
Without such action, this commenter expressed that D-SNP look-alikes
could undermine progress on integration,
[[Page 27713]]
leading to the erosion of D-SNP enrollment over time and additional
beneficiary confusion. Another commenter requested that CMS reconsider
its current policy for States without a D-SNP option for partial-
benefit dually eligible individuals by either allowing these
individuals to enroll in FIDE SNPs or excluding them from the 80-
percent threshold calculation used to determine D-SNP look-alikes in
these States.
A few commenters encouraged CMS to consider applying other MMP
design elements to D-SNPs. These included extending contract management
teams to HIDE SNPs and FIDE-SNPs, D-SNPs with exclusively aligned
enrollment, and/or D-SNPs with a meaningful proportion of enrollees who
receive Medicaid benefits from a managed care plan affiliated with the
D-SNP; requiring D-SNPs to develop single case agreement policies to
enable enrollees to see out-of-network providers; applying MMP program
audit rules and protocols to D-SNPs with exclusively aligned
enrollment; and allowing beneficiaries to enroll in integrated plans on
a monthly basis rather than the roughly quarterly enrollment
opportunities under MA.
MACPAC noted that while the provisions in the proposed rule promote
integration in existing products, they do not necessarily increase the
availability of integrated models or enrollment in integrated plans and
urged CMS to look for ways to expand policies to promote integration
beyond D-SNPs with exclusively aligned enrollment in future rulemaking.
A commenter encouraged CMS to reconsider its approach to setting
separate requirements for D-SNPs and Medicaid managed care plans and to
align Federal regulations for FIDE SNPs with those that already exist
for Medicaid managed care.
A commenter recommended that CMS take steps to reduce limitations
on data sharing between plans and States and provide additional
guidance on creating a standardized and electronic method to integrate
information in model materials.
A few commenters recommended that CMS take steps to ensure that
quality measurement is appropriately targeted to the populations served
by each product and that measurement and related financial incentives
do not disproportionately penalize D-SNPs for serving populations with
greater risk factors. Other commenters urged CMS to require all States
to adopt standardized, disability-informed quality measurement tools so
that measures are collected and reported in a uniform format.
A few commenters expressed concern related to quality measurement
for D-SNPs more broadly. A commenter stated that because of the
challenges inherent to serving younger dually eligible beneficiaries
with disabilities who represent the most complex and at-risk Medicare
members with the most social risk factors, plans serving this
population have less quality bonus funding available to support
supplemental benefits tailored to the population.
A commenter suggested CMS consider revising the requirement that
the D-SNP and Medicaid managed care plan contract holder must be the
same legal entity in order to qualify as a FIDE SNP; instead, the
commenter recommended using the same requirement that is used for HIDE
SNPs that the contract holder is the same parent organization or
another entity that is owned and controlled by its parent organization.
A few commenters requested CMS consider additional financial
policies. A commenter encouraged CMS to require States to ensure that
the capitated payments for HIDE SNPs and FIDE SNPs are documented in
the State Medicaid agency contract. Another commenter noted that the
existing risk adjustment methodology is not sensitive to pick up all of
the nuances for D-SNPs that largely serve populations with more complex
care. A commenter requested that CMS consider clarifying elements of
the cost-sharing billing process during an enrollee's Medicare deeming
period, including prohibiting Medicare cost-sharing being billed to
dually eligible individuals during the Medicare deeming period.
A commenter requested guidance on how to handle cost-sharing for
supplemental benefits that may overlap with what is provided by
Medicaid.
A commenter expressed concern regarding the complaint resolution
process for dually eligible individuals, noting that it is fragmented
and confusing when some issues are handled by State Medicaid agencies
or plans while others are handled by CMS or MA plans. The commenter
noted that ``no wrong door'' policies for enrollee concerns are
critical to ensuring complaints are addressed.
A commenter urged CMS to consider the limited availability of
transportation options in rural communities when finalizing the
proposed rule.
A commenter expressed interest in additional research to better
understand fluctuations within dual eligibility and what may cause a
partial-benefit dually eligible individual to become a full-benefit
dually eligible individual and encouraged CMS to assess whether
integrated models can help prevent partial-benefit dual eligible
individuals from necessitating full-benefit status.
A commenter suggested that another approach to improving integrated
care is to establish a single program that would provide dually
eligible beneficiaries with their medical, long-term care, behavioral,
and social needs. They further suggested the program allow States to
contract with the administering entities, which would bear two-sided
risk to ensure accountability and eliminate incentives for cost-
shifting.
A commenter expressed concerns about the MA program overall,
including inadequate care provided to MA enrollees, low payments to
providers, and high MA payment rates compared to the original Medicare
fee-for-service (FFS) program.
CMS received a number of comments regarding extending the COVID-19
disaster adjustments that all contracts received for the 2022 Star
Ratings for measures other than HEDIS-HOS measures and reducing the
weight applied to the patient experience/complaints and access measures
for the 2023 Star Ratings.
CMS received many comments regarding network adequacy requirements
and policies that are outside of the scope of this rule. Some
commenters indicated that CMS should consider reinstating previous
network adequacy standards including returning to the 90 percent rate
of beneficiary requirements within time and distance standards for
micro, rural and counties with extreme access considerations, as well
as including dialysis facilities as a specialty type evaluated for
network adequacy under Sec. 422.116(b). Many commenters recommended
that CMS add criteria to our current network adequacy standards. For
example, commenters recommended that CMS add new provider and facility
specialty types, including sub-specialty types, to our list of those
which are evaluated for network adequacy standards under Sec.
422.116(b). Some commenters suggested that CMS increase the frequency
in which network adequacy formal reviews are conducted or align the
triennial network adequacy review timelines with the application
timeline. A commenter suggested that CMS integrate network adequacy
into Star Ratings measures. A few commenters suggested that CMS
consider how increased use of telehealth-provided services will impact
network adequacy, and that CMS should consider expanding the telehealth
credit in certain county types such as rural
[[Page 27714]]
counties. A few commenters recommended CMS establish policies to
enhance information available in MA plan network directories. A
commenter suggested that CMS consider changes and improvements to the
network adequacy exceptions and criteria process. A commenter provided
recommendations regarding how network adequacy standards should
recognize and address the unique needs of enrollees in I-SNPs. A
commenter recommended CMS develop network standards specific to the D-
SNP population. Additional topics out of scope of this rule include
requests to update timelines for release of the Reference and Sample
Beneficiary Files, make MA organizations' network adequacy review data
publicly available, and limit organization's ability to make changes to
network providers throughout the contract year.
CMS received some comments regarding special requirements during
emergency and disasters that are out of scope for this rule. A
commenter asked CMS to provide guidance about online or point-of-sale
processing of Part B out-of-network claims during a disaster or
emergency. Another commenter expressed concerns that these requirements
do not apply to Part D drugs.
A commenter suggested that we take a more holistic approach to past
performance. The commenter suggested we review all contracts for past
performance and not just applicants.
We received several out-of-scope comments related to the provision
on applying all pharmacy price concessions to the negotiated price at
the point of sale. A few commenters urged CMS to address pharmacy
benefit managers' (PBMs') formularies, specifically the preference for
brand medications over generics due to the rebates and with respect to
the use of biosimilars as they launch. Many commenters asked that CMS
address the ``reasonable and relevant'' contracting terms and
conditions between MA organizations/plan sponsors and pharmacies. A few
commenters expressed concern with vertical integration of PBMs and
pharmacies. A few commenters were concerned about the costs of COVID-19
tests and treatments. Some commenters stated that CMS should not make
the changes associated with this Pharmacy Price Concessions rule when
it should instead be working to wind down or officially incorporate
policies put in place during the COVID-19 PHE. Some commenters stated
that the proposal failed to address the root cause of high drug prices
and offered recommendations for regulating the pharmaceutical industry.
A few commenters stated that PBMs should not set drug prices and
encouraged CMS to make sweeping reforms including a patient bill of
rights and a pharmacy bill of rights. A few commenters stated that PBMs
cannot engage in sub-capitation arrangements that require pharmacies to
bear risk. Some commenters requested CMS re-evaluate its policy on U.S.
Food and Drug Administration (FDA)-approved anti-obesity medications.
Other commenters recommended that CMS do more to improve access to the
Part D Low-Income Subsidy (LIS) program, noting the program's
importance to improving health equity and the nearly three million
beneficiaries who are eligible for the program but not enrolled. This
commenter also requested that CMS track and report on the number of
complaints received regarding Part D plans charging individuals
enrolled in the full LIS program the higher plan copayment rather than
the established LIS copayment.
Unless otherwise noted, cites to regulations are to title 42 of the
CFR.
II. Provisions of the Proposed Rule and Analysis of and Responses to
Public Comments
A. Improving Experiences for Dually Eligible Individuals
1. Overview and Background
Over 11 million people are concurrently enrolled in both Medicare
and Medicaid. Beneficiaries who are dually eligible for both Medicare
and Medicaid can face significant challenges in navigating the two
programs, which include separate or overlapping benefits and
administrative processes. Fragmentation between the two programs can
result in a lack of coordination for care delivery, potentially
resulting in: (1) Missed opportunities to provide appropriate, high-
quality care and improve health outcomes; and (2) undesirable outcomes,
such as avoidable hospitalizations and poor beneficiary experiences.
Advancing policies and programs that integrate care for dually eligible
individuals is one way in which we seek to address such
fragmentation.\4\
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\4\ For example, see chapter 1 of Medicaid and CHIP Payment and
Access Commission, Report to Congress on Medicaid and CHIP, June
2021, and chapter 12 of Medicare Payment Advisory Committee, June
2019 Report to the Congress: Medicare and the Health Care Delivery
System.
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``Integrated care'' refers to delivery system and financing
approaches that--
Maximize person-centered\5\ coordination of Medicare and
Medicaid services, across primary, acute, long-term, behavioral, and
social domains;
---------------------------------------------------------------------------
\5\ ``Person-centered care'' typically refers to focusing care
on the needs of the individual and ensuring that a person's
individual preferences, needs, and values guide care decisions. This
is in contrast to approaches to care in which the specific diagnosis
or illness drives care and treatment decisions. See the National
Center on Advancing Person-Centered Practices and Systems for
additional information: https://ncapps.acl.gov/home.html.
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Mitigate cost-shifting incentives, including total-cost-
of-care accountability across Medicare and Medicaid; and
Create seamless experiences for beneficiaries.
We described at 87 FR 1849 through 1850 of the proposed rule a
range of approaches to integrating Medicare and Medicaid benefits or
financing for dually eligible individuals, including through
demonstrations and existing programs. The most prevalent forms of
integrated care use capitated financing, including capitation of health
plans to cover the full range of Medicare and Medicaid services. The
number of dually eligible individuals in integrated care or financing
models or both has increased over time, now exceeding 1 million
beneficiaries, but it remains the exception rather than the rule in
most States.\6\
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\6\ CMS Medicare-Medicaid Coordination Office FY 2020 Report to
Congress, available at: https://www.cms.gov/files/document/reporttocongressmmco.pdf.
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An increasing number of dually eligible individuals are enrolled in
managed care plans. The broader trend toward managed care presents
opportunities for integrated care. It also presents risks for further
fragmentation and complexity. In fact, while enrollment in integrated
care has increased, it is also becoming increasingly likely that dually
eligible individuals are in one sponsor's Medicaid managed care
organization (MCO) and a competitor's D-SNP. The result: Duplicative
health risk assessments (HRAs); multiple ID cards, handbooks, and
provider and pharmacy directories; strong incentives for cost-shifting
where possible; multiple care coordinators; more complex billing
processes for providers; and similar other fragmented care, burdens, or
increased costs.
Section 2602 of the Patient Protection and Affordable Care Act of
2010 (Pub. L. 111-148) (Affordable Care Act) established the Medicare-
Medicaid Coordination Office (MMCO) within CMS to better align and
integrate benefits for dually eligible individuals.
[[Page 27715]]
Section 50311(b)(2) of the Bipartisan Budget Act (BBA) of 2018 amended
that provision to also charge MMCO with--
Developing regulations and guidance related to the
integration or alignment of policy and oversight under Medicare and
Medicaid regarding D-SNPs; and
Serving as the single point of contact for States on D-SNP
issues.
At 87 FR 1850 of the proposed rule, we described recent MA/Part D
rulemaking to enhance D-SNPs. Despite this recent work, additional
actions are needed to maximize the potential of D-SNPs to deliver
person-centered integrated care--and ultimately better health outcomes
and independence in the community--for dually eligible older adults,
people with disabilities, and people with end stage renal disease. We
are working to improve and increase options for more integrated care in
a variety of ways, including through D-SNPs.
a. Dual Eligible Special Needs Plans
Special needs plans (SNPs) are MA plans created by the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L.
108-173) that are specifically designed to provide targeted care and
limit enrollment to special needs individuals. Under section 1859(b)(6)
of the Act, SNPs restrict enrollment to certain populations. The most
common type of SNP is a dual eligible special needs plan, or D-SNP, in
which enrollment is limited to individuals entitled to medical
assistance under a State plan under title XIX of the Act.
D-SNPs are intended to integrate or coordinate care \7\ for dually
eligible individuals more effectively than standard MA plans or the
original Medicare fee-for-service (FFS) program by focusing enrollment
and care management on this population. As of January 2022,
approximately 4.0 million dually eligible individuals (more than 1 of
every 4 dually eligible individuals) were enrolled in 729 D-SNPs.\8\
---------------------------------------------------------------------------
\7\ ``Care coordination'' typically refers to the managing of
care and sharing of information among medical and non-medical
providers and supports across the spectrum primary, acute,
behavioral health, long-term services and supports. See, for
example, https://www.ahrq.gov/ncepcr/care/coordination.html, and
Barth, S., Silow-Carroll, S., Reagan, Russell, M., Simmons, T.
(2019) Care Coordination in Integrated Care Programs Serving Dually
Eligible Beneficiaries--Health Plan Standards, Challenges and
Evolving Approaches. Report to the Medicaid and CHIP Payment and
Access Commission. https://www.macpac.gov/wp-content/uploads/2019/03/Care-Coordination-in-Integrated-Care-Programs-Serving-Dually-Eligible-Beneficiaries.pdf.
\8\ Centers for Medicare & Medicaid Services. SNP Comprehensive
Report (January 2021). Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data.html.
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Federal statute and implementing regulations have established
several requirements for D-SNPs in addition to those that apply to all
MA plans to promote coordination of care, including HRA requirements as
described in section 1859(f)(5)(A)(ii)(I) of the Act and at 42 CFR
422.101(f)(1)(i), evidence-based models of care (MOCs) as described in
section 1859(f)(5)(A)(i) of the Act and at 42 CFR 422.101(f), and
contracts with State Medicaid agencies as described in section
1859(f)(3)(D) of the Act and at 42 CFR 422.107. The State Medicaid
agency contracting requirement allows States to require greater
integration of Medicare and Medicaid benefits from the D-SNPs in their
markets.
Most recently, section 50311(b) of the BBA of 2018 amended section
1859 of the Act to add new requirements for D-SNPs, beginning in 2021,
including minimum integration standards, coordination of the delivery
of Medicare and Medicaid benefits, and unified appeals and grievance
procedures for integrated D-SNPs, the last of which we implemented
through regulation to apply to certain D-SNPs with exclusively aligned
enrollment, termed ``applicable integrated plans.'' These requirements,
along with clarifications to existing regulations, were codified in the
``Medicare and Medicaid Programs; Policy and Technical Changes to the
Medicare Advantage, Medicare Prescription Drug Benefit, Programs of
All-Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service,
and Medicaid Managed Care Programs for Years 2020 and 2021'' final rule
(84 FR 15696 through 15744) (hereinafter referred to as the April 2019
final rule).\9\
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\9\ See https://www.govinfo.gov/content/pkg/FR-2019-04-16/pdf/2019-06822.pdf.
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For a more comprehensive review of D-SNPs and legislative history,
see the proposed rule titled ``Medicare and Medicaid Programs; Contract
Year 2021 and 2022 Policy and Technical Changes to the Medicare
Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid
Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care
for the Elderly'' (85 FR 9018 through 9021), which appeared in the
Federal Register on February 18, 2020.\10\
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\10\ See https://www.govinfo.gov/content/pkg/FR-2020-02-18/pdf/2020-02085.pdf.
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b. Medicare-Medicaid Plans
To test additional models of integrated care, we established the
Medicare-Medicaid Financial Alignment Initiative (FAI) in July 2011
with the goal of improving outcomes and experiences for full-benefit
dually eligible individuals while reducing costs for both States and
the Federal Government. This State-Federal partnership is tested using
authority under 1115A of the Act (as added by section 3021 of the
Affordable Care Act) and further described below. Although the FAI
includes two models, the model with the largest number of States
participating is a capitated model through which CMS, the State, and
health plans (called Medicare-Medicaid Plans or MMPs) enter into three-
way contracts to coordinate the full array of Medicare and Medicaid
services for members. Our proposed rule at 87 FR 1851 through 1854
summarized the key elements offered by MMPs under the capitated model
demonstrations.
As discussed in the proposed rule at 87 FR 1851, CMS and States
partnered with MMPs to create a seamless experience for beneficiaries,
but MMPs operate as both MA organizations offering Medicare Advantage
Prescription Drug (MA-PD) plans and Medicaid managed care
organizations. As such, unless waived by CMS, MMPs are required to
comply with Medicaid managed care requirements under 42 CFR part 438,
with MA (also known as Part C) requirements in title XVIII of the Act
as well as 42 CFR part 422 and, with regard to the Medicare
prescription drug benefit, Part D requirements in title XVIII of the
Act and 42 CFR part 423. Section 1115A of the Act (as added by section
3021 of the Affordable Care Act) authorizes waiver of certain Medicare
provisions and CMS used that authority to waive several Medicare
requirements for the FAI. For States participating in the capitated
model, CMS typically uses authority under section 1115(a), 1915(b),
1915(c), or 1932(a) of the Act to waive or exempt the State from
certain provisions of title XIX of the Act or establish the authority
to deliver Medicaid services through managed care.
As of January 2022, there are 39 MMPs in nine States serving
approximately 424,000 members.\11\
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\11\ MMP enrollment as of January 2022. See CMS Monthly
Enrollment by Contract Report (January, 2022). Retrieved from
https://www.cms.gov/research-statistics-data-and-systemsstatistics-trends-and-reportsmcradvpartdenroldatamonthly/enrollment-contract-2022-01.
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As summarized at 87 FR 1851 through 1854 in our proposed rule,
while an independent evaluation of the FAI is still underway, we have
already gleaned several lessons regarding integrated,
[[Page 27716]]
managed care from the capitated financial alignment model:
Enrollee participation in governance helps identify and
address barriers to high-quality, coordinated care;
Assessment processes are a vehicle for identifying and
addressing unmet needs, particularly those related to social
determinants of health;
Medicare-Medicaid integration correlates with high levels
of beneficiary satisfaction;
Carving in Medicaid behavioral health benefits helps
promote better coordination of behavioral health and physical health
services;
Integrated beneficiary communication materials can enhance
the beneficiary experience;
Effective joint oversight of integrated managed care
products is possible;
Integrated care and joint oversight provide a platform for
quality improvement;
There is potential for market distortions in areas with
multiple options targeting the same population; and
State investment is critical to successful implementation
of integrated care either through MMPs or D-SNPs.
Since the outset of the FAI, our shared goal with State partners
has been to develop models that promote greater Medicare-Medicaid
integration that, if successful, could be implemented on a broader
scale. We proposed to incorporate into the broader MA program many of
the MMP practices that successfully improved experiences for dually
eligible individuals.
2. Summary of D-SNP Proposals Related to MMP Characteristics
Many of the proposals in the proposed rule would incorporate
certain MMP policies into the regulations governing D-SNPs or, in
several cases, certain types of D-SNPs. We included a table (87 FR
1854) summarizing how our proposals relate to MMP policies. Section
II.A.14 of this final rule includes an updated version of that table to
reflect the policies adopted in this final rule.
Comment: Several commenters, including MACPAC, described the
challenges dually eligible individuals and their providers and families
experience navigating separate and fragmented Medicare and Medicaid
delivery systems. A commenter noted suboptimal care coordination can
compromise patient care and increase overall program spending. A
commenter noted younger dually eligible individuals face health
inequities caused by institutional racism and other systematic
disadvantages. A few commenters encouraged full integration and MACPAC
cited recent Bipartisan Policy Center reports \12\ urging full
integration of Medicare and Medicaid services for all full-benefit
dually eligible individuals. Another commenter emphasized that coverage
of medical, behavioral health, and long-term services and supports
should be aligned and integrated care should be grounded in the
diversity of dually eligible enrollees, tailored to individuals' needs
and preferences, prioritize care coordination, simplify eligibility and
enrollment processes, minimize administrative burdens, and honor
enrollee choice of plan and providers.
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\12\ Bipartisan Policy Center, Guaranteeing Integrated Care for
Dual Eligible Individuals (2021) and A Pathway to Full Integration
of Care for Medicare-Medicaid Beneficiaries (2020).
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Response: We appreciate the comments and we agree that a fragmented
delivery system raises major issues, as we discussed in the proposed
rule (87 FR 1849 through 1850). We are committed to maximizing
opportunities for integration through the proposals finalized in this
rule and will continue to explore additional ways to better align the
Medicare and Medicaid programs in the future. We acknowledge the
comment about dually eligible individuals experiencing health
inequities caused by institutional racism and other systematic
disadvantages. Addressing such inequity is a major focus of CMS and
other Federal agencies, based in part on Executive Order 13985 on
Advancing Racial Equity and Support for Underserved Communities Through
the Federal Government (January 20, 2021).
Comment: Numerous commenters supported the overall focus of the
proposals to better integrate Medicare and Medicaid services,
incrementally strengthen and improve integration for D-SNPs, advance
health equity, and improve the beneficiary experience for older adults
and people with disabilities. A few commenters indicated these
proposals improve the potential for D-SNPs to provide person-centered
care and support enrollees to remain independent and manage their
health and daily activities. A few commenters indicated the proposals
provide States with greater D-SNP coordination and oversight
opportunities.
A few commenters believed the proposals would tighten and clarify
requirements for D-SNPs. A commenter indicated the proposals would help
simplify D-SNP offerings, and another commenter noted support for the
proposed rule's goal of strengthening consumer protections to ensure
dually eligible individuals have access to accurate and accessible
information about health plan choices and benefits. A few commenters
believed the proposals would help engage enrollees in designing and
participating in care. Another commenter indicated the proposals offer
the potential for both administrative and clinical integration at the
plan level.
A commenter encouraged CMS to couple implementation of the final
rule with guardrails to mitigate against potential unintended
consequences. Another commenter encouraged CMS to quickly adopt
regulations that reflect stakeholder recommendations in light of the
rapid growth of D-SNPs.
Several commenters expressed support for the package of D-SNP
proposals as useful incremental steps toward furthering integrated care
via D-SNPs. A commenter encouraged CMS to consider how steps taken now
build towards a broader long-term vision for integrated care. Another
commenter acknowledged that CMS did not want to be prescriptive but
encouraged CMS to provide sufficient detail with regard to the array of
D-SNP proposals when finalizing the rule given the recent growth in the
D-SNP landscape.
Response: We appreciate the widespread support for our proposals.
As discussed in the proposed rule (87 FR 1850), these proposals build
on two recent MA/Part D rulemakings and our experiences with MMP
policies. We believe this final rule will further the potential of D-
SNPs to deliver person-centered integrated care--and ultimately better
health outcomes and independence in the community--for dually eligible
older adults, people with disabilities, and people with end stage renal
disease.
As we discuss later in this section under specific proposals, we
will provide technical assistance, monitor implementation of the
finalized provisions, and consider future rulemaking as needed to
address any identified areas of concern. For example, information from
CMS audits will help us monitor the extent to which MA organizations
are meeting the enrollee advisory committee requirements at Sec.
422.107(f), and we may consider more prescriptive requirements, as
needed, based on implementation experience.
We acknowledge the request for additional detail related to some of
the D-SNP proposals. As we discuss in response to comments on specific
[[Page 27717]]
proposals later in this section, we aim to strike a balance between
providing MA organizations with flexibility in implementing various
finalized requirements versus being more prescriptive. We explain our
rationale further in responses to comments, including related to
requirements for enrollee advisory committees at Sec. 422.107(e), SDOH
questions in SNP HRAs at Sec. 422.101(f)(1)(i), and limited carve-outs
of Medicaid behavioral health services and long-term services and
supports (LTSS) at Sec. 422.107(g) and (h).
Comment: A number of commenters commended CMS for applying lessons
learned from MMPs to D-SNPs and providing a long-term strategy for D-
SNPs as an integrated plan option. A few commenters stated that the MMP
demonstrations created a gold standard for integrated care and have
given beneficiaries avenues for providing input on plan operations
though beneficiary advisory committees; enhanced the beneficiary
experience through integrated communications materials; scaled up
person-centered care planning and care coordination including
effectively combining medical and behavioral health benefits; and
delivered a platform for incentivizing innovation and investment to
improve quality of care for dually eligible individuals. Several
commenters noted the achievements of particular States and MMPs in the
FAI and expressed appreciation for the CMS goal of establishing a more
permanent mechanism to sustain integrated programs beyond the
demonstrations.
MACPAC expressed support for CMS for proposals to promote
integration by applying features of the MMPs operating under the FAI to
D-SNPs. MedPAC encouraged CMS to extend some of the proposals that
promote integration to HIDE SNPs too. A few commenters acknowledged the
role of nonmedical benefits in providing care to complex populations
and expressed appreciation for flexibilities in payment and benefit
design.
Response: We thank the commenters for the support for the proposals
that incorporate many of the early lessons learned from the MMP
experience into the broader MA program. We believe doing so will
improve experiences for dually eligible individuals.
Comment: A few commenters expressed support for the work of the CMS
Medicare-Medicaid Coordination Office (MMCO) to improve care for dually
eligible individuals, address needs around integration of care, focus
on social determinants of health, and promote equity, while another
commenter noted appreciation for MMCO efforts to lower health care
costs for beneficiaries, States, and Federal Government.
Response: We thank commenters for their support.
Comment: Several commenters noted that Federal support would be an
important component to helping States implement the necessary changes
and to facilitate further integration of D-SNPs. These commenters noted
that State officials often struggle with competing priorities, limited
Medicare knowledge, and limited staff capacity to develop and implement
integrated care initiatives for dually eligible individuals relative to
their other responsibilities. A few commenters acknowledged the wide
range of technical assistance that CMS has provided to date to help
navigate the complexities of the policy environment and expand State
ability to integrate and encouraged CMS to continue to bolster these
resources for States should the proposals in this rule become final.
Other commenters recommended that States would need additional Federal
funding to enhance State capacity and to further incentivize
integration.
Response: We thank the commenters for this feedback and agree that
States are an important partner in implementing many of the D-SNP
proposals in this rule. We are committed to continue working closely
with States to support their integration efforts and intend to utilize
and build from the technical assistance resources we already have in
place, including the Integrated Care Resource Center (see https://integratedcareresourcecenter.com).
Comment: A few commenters noted the importance of robust oversight
to ensure that policies do not lead to higher spending without actually
benefiting people with Medicare and supported the increased oversight
of D-SNPs contained within the proposed rule. A commenter expressed
concern as to whether there was sufficient demographic data, especially
on disability and on social, racial, and economic status, or data on MA
supplemental benefit spending, access, and eligibility for such
oversight. Another commenter expressed concern that the Federal
Government lacks the capacity to conduct adequate oversight without
sharing responsibility with States.
Response: We thank the commenters for these comments. We agree that
oversight is an important component of providing person-centered, high
quality care and will continue to work with stakeholders to ensure
integrated programs do just that. We will consider opportunities for
improving the types and quality of available data necessary to support
such oversight in the future. We address issues related to expenditure
data on MA supplemental benefits as part of MLR reporting in section
II.G of this final rule.
Comment: A few commenters supported the focus on the D-SNP model
for deepening integration, pointing out the widespread availability and
growing enrollment in D-SNPs and the ongoing investments by plans and
States in supporting infrastructure. The commenter indicated the
provisions included in the proposed rule were a logical alternative to
other more radical integration proposals. A commenter specifically
appreciated CMS's focus on the experience of D-SNP enrollees given the
large number of enrollees in D-SNPs in certain States and the health
care needs of these individuals.
Response: We thank the commenters for this feedback. As we
discussed in the proposed rule at 87 FR 1888, the integrated care
landscape has changed substantially over the last 10 years. Key changes
include Congress making D-SNPs permanent, establishing new minimum
integration standards, and directing the establishment of unified
appeals and grievance procedures. Changes in MA policy have also
created a level of benefit flexibility that did not previously exist
outside of the capitated model demonstrations, with MA plans
increasingly offering supplemental benefits that address social
determinants of health and LTSS. These changes make D-SNPs an
attractive vehicle for integration for dually eligible individuals.
Comment: A few commenters stated that the proposals do not go far
enough to further integrated care. A commenter stated that the proposed
changes do not address the main factors that determine long-term
beneficiary satisfaction with integrated care, such as access to
providers, easily understood marketing or other materials to help
inform beneficiaries of their choices, and access to supplemental
benefits. Another commenter stated that while the proposed policy
changes promote integration in existing products, they do not
necessarily increase the availability of integrated models or
enrollment in integrated plans.
Response: We appreciate the feedback from these commenters. We
believe several of our proposals address factors that determine
beneficiary satisfaction--see, for example, our proposal at Sec.
422.107(e) related to using specified integrated materials--but we
appreciate that there remain many other
[[Page 27718]]
opportunities to improve experiences for dually eligible beneficiaries.
We will consider whether there are additional opportunities to address
these issues in the future.
Comment: A few commenters supported the overall effort to promote
care integration for dually eligible individuals but expressed concern
about the potential for increased administrative burden for State
Medicaid agencies, disruptions in care for members, and other
operational challenges. A commenter expressed concern that some of the
proposals would significantly curtail States' ability to customize
programs that meet the specific needs of their State programs and
constituents. Another commenter noted that the proposals are likely to
be most impactful for States that are relatively far along in their
integrated care strategies and recommended CMS continue its efforts
through the Medicare-Medicaid Coordination Office and the Integrated
Care Resource Center to promote integration for States newer to this
policy area. A commenter was concerned that the operational aspects of
some of the provisions would disadvantage new entrants to the MA
market, particularly those that target underserved populations. Another
commenter emphasized that CMS has an opportunity to ensure States do
not use the proposed changes to hinder new market entrants who may
offer more and better service to beneficiaries.
Response: We thank the commenters for these comments and
acknowledge the concerns they raise. It is important to note that none
of the provisions in the proposed rule would impose new requirements on
States; rather, States may choose whether or not to take advantage of
any of the proposals finalized here. We are committed to continue
working closely with States to support their integration efforts,
regardless of how far along they are, and intend to utilize and build
from the technical assistance resources we already have in place,
including the Integrated Care Resource Center. While some proposals
would impose new requirements of D-SNPs, we think on balance, the
advantages of increasing the overall level of integration outweigh the
potential downsides.
Comment: A commenter recommended allowing MA organizations to offer
D-SNPs without holding a Medicaid contract either directly or between
the parent company and the State Medicaid agency.
Response: We note that while State contracting policies may have
prevented sponsors from offering D-SNPs in some markets, section
1859(f)(3)(D) of the Act requires a D-SNP to have a contract with the
applicable State Medicaid agency. States are authorized to determine
which D-SNPs they will contract with, as described in section 164 of
the Medicare Improvement for Patients and Providers Act (MIPPA) (Pub.
L. 110-274), which amended section 1859(f) of the Act to add the
requirement for D-SNPs to have a contract with the State.
Comment: A commenter recommended that CMS further define terms such
as care coordination, person-centered care, and integrated care. This
commenter believes further definition of these terms is important to
gain trust among dually eligible individuals, especially those between
the ages of 21 and 65 years old.
Response: An important theme of our proposals is to improve
experiences for dually eligible beneficiaries who are enrolled in D-
SNPs. As part of that, we aim to streamline and simplify operations,
including the terminology we use. We appreciate these suggestions and
will consider them for the future. We believe that the terms care
coordination, person-centered care, and integrated care are
sufficiently clear in this final rule that additional regulatory
definitions are not necessary.
3. Enrollee Participation in Plan Governance (Sec. 422.107)
We believe managed care plans derive significant value from
engaging enrollees in defining, designing, participating in, and
assessing their care systems.\13\ By soliciting and responding to
enrollee input, plans can better ensure that policies and procedures
are responsive to the needs, preferences, and values of enrollees and
their families and caregivers. One of the ways managed care plans can
engage dually eligible individuals is by including enrollees in plan
governance, such as establishing enrollee advisory committees and
placing enrollees on governing boards. Engaging enrollees in these ways
seeks to keep enrollee and caregiver voices front and center in plan
operations and can help plans achieve high-quality, comprehensive, and
coordinated care.\14\ As described at 87 FR 1855 through 1856 of the
proposed rule, Federal regulations for other programs, such as the
Programs of All-Inclusive Care for the Elderly (PACE) and Medicaid
managed care plans that cover LTSS include requirements for stakeholder
engagement and committees, including input from beneficiaries.
---------------------------------------------------------------------------
\13\ Centers for Medicare & Medicaid Services. (n.d.). Person &
Family Engagement Strategy: Sharing with Our Partners. Retrieved
from https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Downloads/Person-and-Family-Engagement-Strategy-Summary.pdf.
\14\ Resources for Integrated Care and Community Catalyst,
``Listening to the Voices of Dually Eligible Beneficiaries:
Successful Member Advisory Councils'', 2019. Retrieved from: https://www.resourcesforintegratedcare.com/Member_Engagement/Video/Listening_to_Voices_of_Dually_Eligible_Beneficiaries.
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As required by the three-way contracts between CMS, States, and
MMPs, all MMPs established enrollee advisory committees. As described
at 87 FR 1854 through 1855 of the proposed rule, these enrollee
advisory committees provide a mechanism for MMPs to solicit feedback
directly from enrollees, assisting MMPs in identifying and resolving
emerging issues, and ensuring they meet the needs of dually eligible
individuals.
We believe that the establishment and maintenance of an enrollee
advisory committee is a valuable beneficiary protection to ensure that
enrollee feedback is heard by D-SNPs and to help identify and address
barriers to high-quality, coordinated care for dually eligible
individuals. Therefore, we proposed at Sec. 422.107(f) that any MA
organization offering one or more D-SNPs in a State must establish and
maintain one or more enrollee advisory committees to solicit direct
input on enrollee experiences. We also proposed at Sec. 422.107(f)
that the committee include a reasonably representative sample of
individuals enrolled in the D-SNP(s) and solicit input on, among other
topics, ways to improve access to covered services, coordination of
services, and health equity for underserved populations.
We proposed to establish the new paragraph at Sec. 422.107(f)
under our authority at section 1856(b)(1) of the Act to establish in
regulation other standards not otherwise specified in statute that are
both consistent with Part C statutory requirements and necessary to
carry out the MA program and our authority at section 1857(e) of the
Act to adopt other contract terms and conditions not inconsistent with
Part C as the Secretary may find necessary and appropriate. We believe
that a requirement for an MA organization offering one or more D-SNPs
to establish one or more enrollee advisory committees is not
inconsistent with either the Part C statute or administration of the MA
program. While current law does not impose such a requirement, our
experience with existing requirements for MMPs and PACE demonstrates
that the use of
[[Page 27719]]
advisory committees improves plans' ability to meet their enrollees'
needs by providing plans with a deeper understanding of the communities
the plans serve and the challenges and barriers their enrollees face,
as well as serving as a convenient mechanism to obtain enrollee input
on plan policy and operational matters. Our experience also suggests
that advisory committees complement other mechanisms for enrollee
feedback--such as surveys, focus groups, and complaints--with most
advisory committees featuring longer-term participation by enrollees
who can share their lived experiences while also learning how to best
advocate over time for broader improvements for all enrollees. We
believe the performance of all D-SNPs would benefit from this new
requirement and that this requirement is therefore necessary and
appropriate.
While we described the proposed advisory committee at Sec.
422.107(f) as an enrollee advisory committee consistent with the use of
the term ``enrollee'' in MA regulations, we noted that ``enrollee''
under the proposed Sec. 422.107(f) requirement for D-SNPs has the same
meaning as ``member'' under the Sec. 438.110 requirement for Medicaid
plans to have a member advisory committee when LTSS are covered under a
Medicaid managed care plan's contract.
First, we proposed that the MA organization offering one or more D-
SNP(s) in a State must have one or more enrollee advisory committees
that serve the D-SNP(s) offered by the MA organization in that State.
As proposed, an MA organization would be able to choose between
establishing one single enrollee advisory committee for one or multiple
D-SNPs in that State or by establishing more than one committee in that
State to meet proposed Sec. 422.107(f).
Second, we proposed that the advisory committee must have a
reasonably representative sample of enrollees of the population
enrolled in the dual eligible special needs plan or plans, or other
individuals representing those enrollees. At 87 FR 1856 of the proposed
rule, we explained that, by using the phrase ``representative sample''
in the regulation text, we intended that D-SNPs incorporate multiple
characteristics of the total enrollee population of the D-SNP(s) served
by the enrollee committee, including but not limited to geography and
service area, and demographic characteristics. For MA organizations
that offer separate D-SNPs serving full-benefit dually eligible
individuals and partial-benefit dually eligible individuals in the same
State, we explained that our proposal would provide flexibility for MA
organizations to solicit enrollee input through one or more committees
where separate committees might represent specific eligibility groups.
Finally, we proposed that the advisory committee must, at a
minimum, solicit input on ways to improve access to covered services,
coordination of services, and health equity among underserved
populations, which is a CMS priority aligned with Executive Order 13985
on Advancing Racial Equity and Support for Underserved Communities
Through the Federal Government (January 20, 2021). Our proposal did not
specify other responsibilities or obligations for the committee, but we
encouraged D-SNPs to solicit input from enrollees on other topics would
be part of the committee's responsibilities.
At 87 FR 1857 of the proposed rule, we described how our proposal
would relate to the requirement at Sec. 438.110 for Medicaid managed
care plans that cover long-term services and supports and how some
organizations may satisfy our proposed requirement at Sec. 438.110
with the same advisory committee.
Citing our belief that D-SNPs should work with enrollees and their
representatives to establish the most effective and efficient process
for enrollee engagement, we did not propose Federal requirements as to
the specific frequency, location, format, participant recruiting and
training methods, or other parameters for these committees beyond
certain minimum requirements. However, we solicited comments on whether
we should include more prescriptive requirements on how D-SNPs select
enrollee advisory committee participants, training processes on
creating and running a successful committee, the committee
responsibilities, additional committee topics, and whether we should
limit the enrollee advisory committee proposed at Sec. 422.107(f) to a
subset of D-SNPs. We also solicited comments on whether our approach to
allow MA organizations to meet the requirements in proposed Sec. Sec.
422.107(f) and 438.110 through one enrollee advisory committee could
dilute the Sec. 438.110 requirement by detracting from the focus on
LTSS enrollees. We noted that, if our proposal were finalized, we would
update the CMS audit protocols for D-SNPs to request documentation of
enrollee advisory committee meetings.
Comment: Numerous commenters expressed strong support for our
proposal to require that an MA organization offering one or more D-
SNP(s) in a State have one or more enrollee advisory committees that
serve the D-SNP(s) offered by the MA organization in that State. Many
of these commenters noted direct input from enrollees helps to improve
plan quality, operations, and care coordination to better serve its
enrollees and can help advance health equity among dually eligible
individuals. A number of commenters stated that their support for our
proposal was informed by their experience with enrollee advisory
committees implemented by MMPs, Medicaid managed care plans, and D-
SNPs. Numerous commenters suggested that engagement of enrollees
representing the diversity of the dually eligible population in a State
is essential to providing meaningful person-centered care and
effectively coordinating and integrating care across Medicare and
Medicaid services in a manner that reflects individual's needs and
preferences. A commenter shared their experience implementing D-SNP
enrollee advisory committees, noting these committees are a chance to
build trust with enrollees, improve plan processes, address health
equity barriers, and empower enrollees as active contributors and co-
designers of programs and policies. Some commenters appreciated that
our proposal builds on existing Federal regulations that require
enrollee advisory processes among Medicaid LTSS managed care plans and
PACE and similar requirements for MMPs, which would create fewer
differences for State staff managing multiple integration efforts and
preserve flexibility in the design of these committees. MACPAC
expressed its support for the proposal and welcomes CMS modeling the
structure after the MMP committees to include beneficiaries, families,
and other caregivers. Some commenters viewed the proposed committee
requirement as an opportunity for States to cross-pollinate committee
input and activities across D-SNPs that operate in their State. Other
commenters appreciated the proposed requirement for the committee to
encompass a representative sample of D-SNP enrollees within a State and
noted that, because of this requirement, plans constructing these
committees would take efforts to recruit participants from the diverse
backgrounds of their enrollees.
Response: We appreciate the widespread support we received for our
proposal. These comments bolster our belief that the establishment and
maintenance of an enrollee advisory
[[Page 27720]]
committee is a valuable beneficiary protection to ensure that enrollee
feedback is heard by managed care plans and to help identify and
address barriers to high-quality, coordinated care for dually eligible
individuals. We agree that the requirement that D-SNPs include a
reasonably representative sample of members will incentivize them to
consider diversity when recruiting for their enrollee advisory
committees.
Comment: A commenter applauded CMS's effort to create more
mechanisms for enrollee input in plan operations and consult enrollees
on issues related to health equity. But, this commenter believed
requiring each SNP to establish and maintain a separate advisory
committee could be redundant and duplicative with existing efforts. The
commenter offered the example that, in many regions, coalitions or
community groups already exist that can provide input on enrollee needs
and stated that in some cases the existing coalitions or community
groups are already prepared to inform plans about the challenges that
impact their enrollees. This commenter recommended that CMS require all
SNPs to have a mechanism to obtain diverse and representative enrollee
input on plan policy and operations rather than requiring all D-SNPs to
use the specific mechanism of enrollee advisory committees. Further,
the commenter suggested that where community groups do not already
exist, plans could then establish their own enrollee advisory
committees.
Response: We thank the commenter for this perspective. We would
like to take the opportunity to clarify that our proposal would not
apply to all SNPs but MA organizations with one or more D-SNPs in a
State. While C-SNPs and I-SNPs could benefit from enrollee advisory
committees and the type of engagement described by the commenter, and
we encourage them to do so, we are not requiring it at this time. Our
experience with such committees has been concentrated on plans
exclusively or mainly enrolling dually eligible individuals, so we have
chosen to apply this requirement to D-SNPs. Based on the D-SNP
experience with such committees, we may consider future rulemaking to
consider such a requirement for C-SNPs and I-SNPs.
We recognize that coalitions and groups serving local communities
can offer helpful perspectives to MA organizations and D-SNPs and our
proposal does not preclude MA organizations and D-SNPs from engaging
with other parties to gather feedback. But, our experience with
existing requirements for MMPs and PACE demonstrates that the use of
advisory committees improves plans' ability to meet their enrollees'
needs by providing plans with a deeper understanding of the communities
the plans serve and the challenges and barriers their enrollees face,
as well as serving as a convenient mechanism to obtain enrollee input
on plan policy and operational matters. Our experience also suggests
that advisory committees complement other mechanisms for enrollee
feedback--such as surveys, focus groups, and complaints--with most
advisory committees featuring longer-term participation by enrollees
who can share their lived experiences while also learning how to best
advocate over time for broader improvements for all enrollees. We
believe the performance of all D-SNPs would benefit from this new
requirement, which is consistent with the existing requirement at Sec.
438.110 for Medicaid plans to establish member advisory committees when
those Medicaid managed care plans cover LTSS.
Comment: Several commenters requested technical assistance for MA
organizations and D-SNPs to help establish the proposed enrollee
advisory committees. A few of these commenters stated that establishing
robust enrollee advisory committees can be challenging. A commenter
emphasized that the existence of an advisory committee is not itself a
demonstration of enrollee input, but that these committees must be
intentionally designed, integrated into overall program structures to
be considered true enrollee engagement, and have decision-making
authority. Another commenter requested that CMS provide technical
assistance and guidance documents and/or training to plans, States, and
consumer advocates on effective and standardized practices for these
committees. A commenter suggested CMS leverage two existing resources
on the topic of consumer engagement in enrollee advisory committees as
technical assistance for plans regarding how to build a meaningful
advisory committee.\15\
---------------------------------------------------------------------------
\15\ Community Catalyst, ``Meaningful Consumer Engagement: A
Toolkit for Plans, Provider Groups and Communities,'' March 2014.
Retrieved from http://www.advancingstates.org/hcbs/article/meaningful-consumer-engagement-toolkit-plans-provider-groups-and-communities; and Community Catalyst, ``Supporting Meaningful
Engagement through Community Advisory Councils,'' August 2020.
Retrieved from: https://www.healthinnovation.org/resources/publications/supporting-meaningful-engagement-through-community-advisory-councils.
---------------------------------------------------------------------------
Response: We welcome this feedback and agree that technical
assistance to support the design and implementation of enrollee
advisory committees is important. CMS's contractor Resources for
Integrated Care partnered with Community Catalyst, a non-profit
advocacy organization, and offered a series of webinars and other
written technical assistance to help enhance MMPs' operationalization
of these committees in 2019.\16\ In the proposed rule at 87 FR 1855, we
outlined some of the best practices leading to successful enrollee
advisory committees. We also noted in the proposed rule (87 FR 1888)
that we intend to continue--focusing now on D-SNPs--many of the
technical assistance and quality improvement activities that we
initially developed for MMPs, including--
---------------------------------------------------------------------------
\16\ Resources for Integrated Care and Community Catalyst,
``Member Engagement in Plan Governance Webinar Series'', 2019.
Retrieved from: https://www.resourcesforintegratedcare.com/article/member-engagement/.
---------------------------------------------------------------------------
Learning communities;
Direct work with beneficiary advocates and other
stakeholders;
Targeted efforts to improve outcomes and reduce
disparities; and
Capacity building on topics like person centeredness,
disability-competent care, dementia, and behavioral health.
We expect these topics to also include a focus on enrollee advisory
committees.
Comment: We received numerous comments in favor of more
prescriptive requirements and numerous comments in favor of a less
prescriptive approach consistent with our proposal.
Among those in favor of more prescriptive requirements, numerous
commenters requested that we provide clarification or further
requirements on selection processes for enrollee advisory committees
and what we consider to be a reasonably representative sample of the
population enrolled in the D-SNP. Several commenters suggested that a
reasonably representative sample should include enrollee
characteristics such as race, ethnicity, language, disability status,
sexual orientation and gender identity, receipt of LTSS or behavioral
health services, geography and service area. A few commenters suggested
that we establish percentage thresholds, such as a majority of
committee participants are dually eligible individuals or a majority of
participants are non-white or non-English speaking. A commenter
recommended that enrollee advisory committees be composed of a majority
of participants based on the proportional representation of enrollees
with lived experiences and demographic identities, including
disability, while other commenters requested we provide specific
[[Page 27721]]
parameters on how D-SNPs might meet the definition of ``representative
sample''. Some commenters requested that we specify a minimum number of
participants for the enrollee advisory committees. A commenter
recommended that CMS establish a threshold for volume of D-SNP
enrollees that a single committee could represent, suggesting one
committee per D-SNP or per a certain number of D-SNP enrollees across
plans (for example, 20,000). This commenter also recommended that D-
SNPs be required to notify eligible enrollees of the opportunity to
participate. Another commenter suggested we relax the representative
sample requirement, as it is difficult for D-SNPs to engage all
populations enrolled to include representation on advisory committees.
Another commenter requested that CMS direct MA organizations to
work with stakeholders, such as patient advocacy groups, to ensure
enrollee advisory committees include a diverse and comprehensive
patient population. MACPAC expressed that these committees should be
developed by plans in partnership with advocates and should be
representative of the people served by integrated programs. A few
commenters noted that CMS should require D-SNPs to allow caregivers,
personal care attendants, interpreters, and others to attend to help
enrollees participate.
In making its case for more prescriptive requirements, a commenter
remarked that an analysis of MMP advisory committees indicates that,
despite requirements in most States that committee membership reflects
the diversity of the member body, the lack of guidance on what
diversity means or how to properly recruit leads to under-
representation of minority enrollees in committees. According to the
commenter, not defining ``reasonable sample'' of individuals enrolled
in D-SNPs increases the risk that the committee does not adequately
represent the D-SNP enrollees.
Response: We appreciate the commenters' suggestions for additional
specificity in requirements for establishing enrollee advisory
committees for MA organizations with one or more D-SNPs in a State.
Given the variation in State Medicaid program, D-SNPs, and dually
eligible populations across States and localities and the existence of
enrollee advisory committees established under Sec. 438.110, we
continue to believe that D-SNPs should work with enrollees and their
representatives to establish the most effective and efficient process
for enrollee engagement.
We appreciate comments regarding the need for more prescriptive
requirements with respect to enrollee advisory committee diversity, and
the need to more specifically define a reasonable sample of D-SNP
enrollment such that committee representation is an accurate reflection
of overall enrollment. We recognize that a key finding from the 2019
report ``The Role of Consumer Advisory Councils in the Financial
Alignment Initiative'' \17\ was the need for improved diversity of
enrollee advisory committee participation. The first annual report for
the Massachusetts Financial Alignment Initiative demonstration found
that attracting and retaining diverse stakeholder participation in the
Implementation Council was a challenge.\18\ The second annual report
indicated the Implementation Council was able to recruit additional
members, and one Implementation Council member noted that ``the
resulting diversity was both exciting and challenging''.\19\ While we
are choosing to be nonprescriptive in how a reasonable sample is
defined for the purposes of our new requirement, we may consider more
prescriptive requirements based on information regarding how MA
organizations implement committees and comply with the requirement that
the D-SNP enrollee committees be reasonably representative of the
enrolled population. Future technical assistance will include promising
practices for how plans can build a diverse committee membership.
---------------------------------------------------------------------------
\17\ Center for Consumer Engagement in Health Innovation, ``An
Exploration of Consumer Advisory Councils within Medicare-Medicaid
Plans Participating in the Financial Alignment Initiative'', 2019,
Retrieved from: https://www.healthinnovation.org/resources/publications/an-exploration-of-consumer-advisory-councils-within-medicare-medicaid-plans.
\18\ RTI, ``Financial Alignment Initiative Annual Report: One
Care: MassHealth Plus Medicare, First Annual Report,'' September
2016 (updated July 2017). Retrieved from: https://innovation.cms.gov/files/reports/fai-ma-firstevalrpt.pdf.
\19\ RTI, ``Financial Alignment Initiative: Massachusetts One
Care Second Annual Report,'' April 2019. Retrieved from https://innovation.cms.gov/files/reports/fai-ma-secondevalrpt.pdf.
---------------------------------------------------------------------------
Comment: We received some comments from organizations requesting
that we specify how often the enrollee advisory committees must meet. A
few of these commenters encouraged CMS to establish minimum frequency
requirements but did not specify a meeting interval. Several commenters
recommended that we require enrollee advisory committees to meet at
least twice per year, and a commenter suggested quarterly convenings. A
few of these commenters expressed concern that, without a minimum
required frequency, plans would opt for annual meetings, which the
commenters indicated would have limited value.
A few commenters encouraged CMS to set training requirements for MA
organizations and D-SNPs as they establish these committees. A
commenter emphasized that CMS require D-SNPs to establish a process to
train D-SNP staff on collecting and incorporating advisory committee
feedback into plan operations and informing participants how enrollee
feedback was used. We also received a comment that States should be
given the authority to specify and require training components as part
of their contracting with plans.
Some commenters encouraged CMS to provide more specifics related to
training for enrollee advisory committee participants. A few of these
commenters recommended requirements to ensure MA organizations educate
enrollee advisory committee participants about the responsibilities of
these committees and ways to meaningfully engage in them, including
providing an understanding of D-SNP program design and organizational
structure. A commenter suggested that CMS include a requirement that
the enrollee advisory committee receives training on key health and
health care disparity concerns that affect the population served by the
D-SNP and a robust module be provided on disability inclusion in health
care, emphasizing intersectional identities. This commenter also
suggested that D-SNPs provide the committee basic information about the
right to request reasonable accommodations and policy modifications, an
overview of the D-SNPs' transparency and accountability mechanisms, and
local and State agencies and commissions with overlapping
responsibilities and interests. A few of the commenters suggested that
CMS create standards for training processes but did not provide further
details.
A few commenters suggested that CMS require enrollee advisory
committees to incorporate other parameters. A commenter recommended
that enrollees, not State authorities, should lead the committee
process. Another commenter stated that CMS should consider other
required feedback mechanisms for enrollee input beyond the proposed
committee structure, which--in their view--could have a limited number
of participants or may not include those who have voiced concerns about
the plan. Another commenter suggested that CMS require MA organizations
to implement best
[[Page 27722]]
practices to ensure enrollee advisory committee participant retention
and equity.
A few commenters urged CMS to issue additional sub-regulatory
guidance concerning its expectations of MA organizations and D-SNPs in
establishing these enrollee advisory committees.
Some commenters suggested specific topics the committee should be
required to focus on beyond the health equity topic included in the
proposed rule. A few commenters recommended that the committees focus
on concerns and priorities of the enrollees themselves. A commenter
supported additional topics be shared with committee participants for
their input but did not name any particular topics. Another commenter
did not specify any additional topics but suggested that the D-SNPs
provide information to alert the enrollee advisory committee
participants of the scope of potential topics, such as through a non-
exhaustive list of topics other advisory committees have tackled. A few
additional commenters identified specific topics for consideration,
such as medication adherence, D-SNP collection of self-identified
functional limitation data, and addition of self-identified functional
limitation data fields to electronic patient records.
Response: We appreciate the commenters' suggestions for additional
specificity in requirements for establishing enrollee advisory
committees. We continue to believe that giving D-SNPs flexibility in
structuring the enrollee advisory committees will permit D-SNPs--and
the enrollees participating on the advisory committees--to tailor these
committees based on the local needs of enrollees. As we stated in the
proposed rule, our experience with MMPs establishing and maintaining
enrollee advisory committees demonstrates that these plans have found
the committees useful and carefully consider feedback provided by
enrollees to inform plan decisions without prescriptive Federal
requirements for the committees. We expect the evolution and adoption
of telecommunications technology, including as experienced during the
COVID-19 public health emergency, will mean that the most effective
modalities for enrollee input may change over time. Therefore, we are
not finalizing any additional Federal requirements as to the specific
frequency, location, format, participant recruiting and training
methods, or other parameters for these committees beyond certain
minimum requirements; however, we may consider more prescriptive
requirements in future rulemaking based on D-SNP experience with
enrollee advisory committees.
Comment: Numerous commenters emphasized the importance for
transparency of these enrollee advisory committees and ensuring D-SNPs
are held accountable for adhering to established requirements. Several
commenters suggested that MA organizations create a feedback loop for
advisory committees to see how their feedback is being considered and
implemented and to share this information with enrollee advisory
committee participants. A few commenters welcomed information on how
CMS would evaluate the effectiveness of the enrollee advisory
committees, including any expected measurable outcomes, to better
understand how well the committees are achieving policy goals. Another
commenter requested that CMS consider whether there may be additional
Federal and State benefits to compiling the findings of these enrollee
advisory committees since this information may help inform future
policy duration for not only MA plans and SNPs but also for the
original Medicare FFS program.
Response: We appreciate the request for monitoring of enrollee
advisory committees against the requirements outlined at Sec.
422.107(f) and the interest in information gathered through these
convenings. We are not requiring that MA organizations publicly
distribute enrollee advisory committee meeting agendas or materials
since these committees will be addressing challenging topics related to
plans and their enrollees, including potentially market-sensitive
information related to potential changes in future plan benefits. We
are concerned that requiring plans to make these agendas and materials
publicly available could interfere with committee effectiveness. We
noted in the proposed rule that, if our proposal were finalized, we
would update the CMS audit protocols for D-SNPs to request
documentation of enrollee advisory committee meetings. Information from
CMS audits will help us monitor the extent to which MA organizations
are meeting the enrollee advisory committee requirements at Sec.
422.107(f), and we may consider more prescriptive requirements, as
needed, based on implementation experience.
Comment: Numerous commenters supported the flexibility CMS offered
in the structure of the proposed enrollee advisory committees and urged
CMS to require a less prescriptive approach to the enrollee advisory
committees, consistent with the proposed rule. Many of these commenters
favored a minimum set of requirements to give D-SNPs the flexibility to
implement and manage enrollee advisory committees that best meet the
needs of the local population and obtain meaningful input. Several
commenters stated that the design flexibilities encourage the
development of enrollee advisory committees to best reflect the
different types of D-SNPs (that is, fully integrated dual eligible
(FIDE) SNPs, highly integrated dual eligible (HIDE) SNPs, coordination-
only D-SNPs \20\) currently in place and the complexity of the dually
eligible populations enrolled, which can differ from one locale to
another. Some commenters noted that this flexibility would allow plans
that currently offer D-SNPs in multiple States to build a foundation
for an advisory committee that can be modeled and then refined to
address specific needs of populations represented in each committee.
Several commenters urged CMS not to be prescriptive with enrollee
advisory committee requirements, especially for plans that already have
such committees in place. These commenters emphasized that flexible
enrollee advisory committee requirements would allow plans to build on
experience and existing enrollee feedback approaches to best reflect
the nuance and complexity of the D-SNP plans offered and populations
served by those plans. Other commenters noted that this flexibility
allows MA organizations already implementing such committees to
continue existing operations without major changes, and the flexibility
would allow plans to avoid overlapping or duplicative requirements from
CMS and States as well as avoid beneficiary confusion. In supporting
this perspective, a commenter explained that its experience offering
FIDE SNPs, HIDE SNPs, and coordination-only D-SNPs across multiple
States suggested wide variation in the specific benefits covered and
populations served. Another commenter expressed concern that an overly
prescriptive approach would reduce the flexibility for innovation and
could stifle some of the positive strides already underway among
managed care plans.
---------------------------------------------------------------------------
\20\ Coordination-only D-SNPs are D-SNPs that neither meet the
FIDE SNP nor HIDE SNP definitions at Sec. 422.2.
---------------------------------------------------------------------------
Response: We thank the commenters for their perspectives. Based on
our experience with enrollee advisory committees operated by MMPs and
PACE, we believe that D-SNPs should work with enrollees and their
representatives to establish the most effective and efficient process
for the enrollee advisory committees.
[[Page 27723]]
Permitting flexibility for the enrollee advisory committees gives MA
organizations--and enrollees themselves--more opportunity to establish
committees that best meet the needs of enrollees.
State Medicaid agencies have broad authority to include more
prescriptive parameters for enrollee advisory committees in their
contracts with D-SNPs and could adopt some of the commenters'
suggestions appropriate to their State through these State Medicaid
agency contracts. As discussed in the proposed rule at 87 FR 1857, some
State Medicaid agencies already do this in applying Sec. 438.110.
Though we are choosing to be nonprescriptive on meeting frequency,
location, format, enrollee recruitment, training, and other parameters,
we encourage D-SNPs to adopt identified best practices \21\ to ensure
advisory committee meetings are accessible to all enrollees, including
but not limited to enrollees with disabilities, limited literacy
(including limited digital literacy), and lack of meaningful access
technology and broadband. We note that compliance with Federal law
related to accessibility and effective communications for persons with
disabilities is a requirement under other statutes such as Section 504
of the Rehabilitation Act. We also clarify that the enrollee advisory
committees are not meant to preclude MA organizations and D-SNPs from
gathering enrollee feedback through other means. As we discussed at 87
FR 1856, our experience with existing requirements for MMPs and PACE
suggests that advisory committees complement other mechanisms for
enrollee feedback--such as surveys, focus groups, and complaints--with
most advisory committees featuring longer-term participation by
enrollees who can share their lived experiences while also learning how
to best advocate over time for broader improvements for all enrollees.
---------------------------------------------------------------------------
\21\ Resources for Integrated Care and Community Catalyst,
``Engaging Members in Plan Governance'', 2019. Retrieved from:
https://www.resourcesforintegratedcare.com/article/member-engagement/.
---------------------------------------------------------------------------
Comment: Some commenters requested that CMS clarify what
documentation we will request as part of CMS audit protocols with
respect to enrollee advisory committees. Other commenters suggested we
audit enrollee advisory committees on the accuracy of committee
representation of the D-SNP enrollee membership, meeting frequency and
committee feedback to the D-SNP.
Response: Information requested as part of the CMS audit protocols
may be similar to that reported by MMPs as part of the reporting
requirement (for example, dates of meetings held, number of enrollees
invited, number of enrollees in attendance). As described in section
IV.B.1.b., prior to implementation of new audit protocols (under OMB
control number 0938-1395; CMS-10717), we will make them available to
the public for review and comment under the standard PRA process, which
includes the publication of 60- and 30-day Federal Register notices.
Comment: Several commenters questioned whether D-SNPs could
delegate the facilitation or operation of enrollee advisory committees
to first tier, downstream, or related entities.
Response: There is nothing in rule that precludes a D-SNP from
delegating the facilitation or operation of an enrollee advisory
committee to a first tier, downstream, or related entity.
Notwithstanding any relationship(s) that the D-SNP has with first tier,
downstream and related entities, the MA organization maintains the
ultimate responsibility for adhering to and otherwise fully complying
with all terms and conditions of its contract with CMS, per Sec.
422.504(i). All requirements with respect to the enrollee advisory
committee are still applicable in the event a D-SNP delegates
facilitation or operation of the enrollee advisory committee.
Comment: In addition to D-SNP enrollee advisory committees, some
commenters recommended CMS require States to create centralized, cross-
plan advisory councils, similar to the implementation councils
currently in place for the Massachusetts and Rhode Island
demonstrations under FAI. Commenters suggested these councils be
comprised of majority of D-SNP enrollees and their caregivers, and
expressed that such councils could provide additional transparency and
insight into D-SNP policy and operations. A commenter suggested CMS
provide Federal funding for these State-level advisory councils, and
another commenter suggested an implementation council was best
positioned to liaise and collaborate with other similar health services
and LTSS/HCBS (home and community-based services) county and State-
level committees including Olmstead committees, Money Follows the
Person advisory committees, and Medicaid advisory committees.
Response: While we acknowledge the utility of a centralized
advisory council, and commend the important work of the Massachusetts
One Care Implementation Council in particular, we defer to States to
decide whether to implement broader advisory councils in order to
solicit feedback more broadly on their Medicaid managed care programs
and the D-SNPs that operate in the State.
Comment: A commenter opposed the approach of allowing MA
organizations to meet the requirements proposed in Sec. Sec.
422.107(f) and 438.110 through one enrollee advisory committee,
acknowledging that, although there is overlap in the enrollees served,
there are important distinctions in the populations and topics relevant
for each stakeholder group.
Response: While we appreciate the commenter's perspective that
there are important distinctions in the populations served, and that
there may be distinct topics for each group, there may also be
instances in which populations align and therefore separate enrollee
advisory councils may be duplicative. We believe the best approach is
to be nonprescriptive and allow one enrollee advisory committee to
satisfy both requirements in the instances in which the minimum
requirements for Sec. Sec. 422.107(f) and 438.110 are both met. States
may choose to apply distinct requirements via their State Medicaid
agency contracts and their Medicaid managed care contracts, such that
plans would need distinct enrollee advisory committees for different
plan populations.
Comment: Many commenters suggested we delay the implementation of
the enrollee advisory committee provision to contract year 2024 or
suggested a phased-in approach that would require FIDE and HIDE SNPs to
implement the enrollee advisory committees starting in contract year
2023, with less integrated D-SNPs implementing in contract year 2024.
Commenters indicated the need for additional time to develop outreach
strategies, coordinate with States, and develop reasonable
representation recruitment strategies. A commenter noted D-SNPs will
need more than a few months to ensure membership represents the
different enrollee perspectives impacted by access, infrastructure,
clinical needs, economic status, and prevalence of social supports.
Response: While we acknowledge commenters concerns around potential
operational challenges to establishing and convening an enrollee
advisory committee, we are nonprescriptive on meeting committee
frequency, location, format, participant recruitment and training
methods. For this reason, we do
[[Page 27724]]
not believe a contract year 2023 implementation timeframe is
unreasonable. Given the implementation timing of this rule, D-SNPs will
have approximately 6 months prior to the effective date of January 1,
2023, to develop an enrollee advisory committee, and we are
nonprescriptive regarding when in calendar year 2023 the committee must
meet, as well as the number of meetings and meeting frequency. Further,
the regulation permits use of one committee per State, allowing for D-
SNPs to start with a single committee and develop more nuanced
committees over time. Additionally, while we have committed to
providing technical assistance to D-SNPs in this area, a number of
resources on establishing meaningful enrollee advisory committees are
currently available via the Resources for Integrated Care.\22\
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\22\ Resources for Integrated Care ``Engaging Members in Plan
Governance'', Retrieved From: https://www.resourcesforintegratedcare.com/article/member-engagement/.
---------------------------------------------------------------------------
Comment: Numerous commenters requested clarification on how D-SNPs
could reimburse enrollee advisory committee members for their time and
expertise, and suggested D-SNPs be able to offer stipends,
transportation or transportation reimbursement for in-person meetings,
and food and drink.
Response: We acknowledge the advantages of reimbursing enrollee
advisory committee participants for their time and expertise, and prior
technical assistance in this area \23\ has cited incentives as a best
practice to recruit and retain enrollee advisory committee members. We
clarify that enrollee participation in an advisory committee is neither
a marketing activity nor a personal enrollee health-related activity
that would fall under Sec. 422.134, so the authorities and limits that
are specific to those activities under MA regulations would not apply.
However, MA organizations are prohibited from providing cash, gifts,
prizes, or other monetary rebates as an inducement for enrollment or
otherwise by sections 1851 and 1854 of the Act. D-SNPs should ensure
that any incentives be structured to avoid an inadvertent impact on
enrollee eligibility for public benefits. In addition, the provision of
stipends, transportation reimbursement, or anything else of value to D-
SNP enrollees serving on the enrollee advisory committee potentially
implicates the Federal Anti-kickback Statute (AKS), found in section
1128B(b) of the Act. Whether any particular arrangement violates the
AKS would be based on the specific facts and circumstances. D-SNPs must
ensure that the provision of reimbursement to these members complies
with the AKS and other applicable law. We will provide future technical
assistance to D-SNPs on this issue to help avoid unintended
consequences related to plan compliance or enrollee eligibility for
public programs.
---------------------------------------------------------------------------
\23\ Resources for Integrated Care ``Engaging Members in Plan
Governance'', Retrieved From: https://www.resourcesforintegratedcare.com/article/member-engagement/.
---------------------------------------------------------------------------
Comment: A number of commenters expressed concerns about
operationalizing an enrollee advisory council for a D-SNP that has low
enrollment. Commenters cited concerns about D-SNPs' ability to meet the
reasonably representative sample if overall plan enrollment is too
small, particularly for a newly established plan or a plan operating in
a rural service area. These commenters suggested CMS either set a
minimum enrollment threshold or allow for advisory committees to cross
geographies (for example, via multi-State consumer advisory councils).
A few commenters recommended we set the minimum D-SNP enrollment
threshold at 1,000 enrollees for the establishment of enrollee advisory
committees. A commenter requested we consider exempting new plans from
this requirement, while another recommended small plans be able to meet
the requirement via focus groups, surveys, or other methods.
Response: While we appreciate the commenters' recommendations with
respect to low-enrollment D-SNPs and the challenges low D-SNP
enrollment might present in operationalizing a consumer advisory
committee, we do not agree that the reasons cited create a significant
barrier for MA organizations to meet the new requirement. First, we
would like to clarify that an MA organization offering one or more D-
SNP(s) in a State must have one or more enrollee advisory committees
that serve the D-SNP(s) offered by the MA organization in that State.
As proposed and finalized here, an MA organization would be able to
choose between establishing a single enrollee advisory committee for
one or more D-SNPs in that State or by establishing multiple committees
in that State to comply with Sec. 422.107(f). Thus, in situations
where an MA organization operates more than one D-SNP in a State, the
MA organization can, unless State Medicaid agency contracts dictate
otherwise, establish one or more committees that encompass multiple D-
SNPs in a State, which should help to address concerns related to low
enrollment in any given D-SNP. Second, a number of MMPs that
participated in FAI had low enrollment (that is, fewer than the
suggested 1,000 enrollee threshold) and were able to operationalize
meaningful enrollee advisory committees. Third, we are nonprescriptive
in this requirement regarding how an MA organization recruits committee
membership, the timing, frequency or number of advisory meetings an MA
organization must conduct in a calendar year, and the meeting's format
(for example, in person or virtual). The reasonably representative
requirement is also sufficiently flexible that small plans can meet the
standard. With this level of flexibility, we believe it is reasonable
for D-SNPs that may have low enrollment to meet the requirements
finalized at Sec. 422.107(f).
Comment: Some commenters asked us to clarify or confirm whether D-
SNPs have the flexibility to convene their advisory councils virtually.
A commenter noted current use of digital platforms, while other
commenters suggested virtual meetings may encourage greater enrollee
participation. A few commenters specifically welcomed the flexibility
in committee format (that is, in-person vs. virtual). A commenter
explained that while in-person meetings remain the gold-standard for
engagement, providing flexibility in how a D-SNP advisory committee
engages with enrollees would help maximize enrollee engagement and
provide flexibility for the D-SNP to evolve its processes as new
effective methods become available.
Response: We are not proposing Federal requirements regarding the
means by which enrollee advisory committees or committee meetings
convene (either in-person or virtually). We confirm that MA
organizations can meet the minimum requirements at Sec. 422.107(f) by
convening meetings virtually, provided they are not restricted from
doing so via their State Medicaid agency contract. However, we
reiterate our encouragement of D-SNPs to adopt identified best
practices to ensure advisory committee meetings are accessible to all
enrollees, including where lack of meaningful access to internet
technology and broadband may limit involvement.
Comment: In the proposed rule, we solicited comments on whether we
should limit enrollee advisory committees to a subset of D-SNPs. A few
commenters agreed that the new requirement should apply to all D-SNPs,
noting it to be the most comprehensive approach to soliciting feedback
from dually eligible enrollees,
[[Page 27725]]
while acknowledging some D-SNPs may already have enrollee advisory
councils that meet the new requirement. A commenter noted that while it
had encouraged applying enrollee advisory committees to FIDE SNPs in
the past, it also supported applying this approach more broadly to all
D-SNPs.
Response: We appreciate the comments of support and we agree that
applying an enrollee advisory committee requirement to D-SNPs broadly,
rather than a subset, is the better mechanism to solicit feedback
directly from enrollees and assist D-SNPs in identifying and resolving
emerging issues. We believe applying this requirement to all D-SNPs,
including those with a low level of integration, is the best approach
to elevate the voice of dually eligible enrollees across a wider array
of States and circumstances.
Comment: To increase transparency, oversight, and accountability, a
few commenters urged State Medicaid agency participation in D-SNP
enrollee advisory councils, or to give States access to the proceedings
and recommendations of the committees on at least a quarterly basis. In
contrast, a commenter suggested the inclusion of State participation on
enrollee advisory councils would add unnecessary complexity.
Response: Nothing in the proposed rule precludes State Medicaid
agencies from requiring, via the State Medicaid agency contracts
required by Sec. 422.107, D-SNPs to include State representatives in
their enrollee advisory council meetings. Additionally, through these
State Medicaid agency contracts, States could require D-SNPs to provide
additional reporting on D-SNP advisory councils as a means for
additional transparency, accountability, and oversight.
Comment: A few commenters suggested CMS allow MA organizations to
establish enrollee advisory committees on a regional or multi-State
basis, to overcome barriers to enrollee participation or when D-SNP
enrollment is small in any single State. A commenter suggested the MA-
PD's enrollee advisory committee within a State include enrollee
representatives of the plans' other Medicare products as another means
to encourage enrollee participation, while another requested to include
Medicaid-only participants on the advisory committee to meet the
existing Medicaid managed care advisory requirement at Sec. 438.110.
Response: Due to the variations in State Medicaid agency contracts
and Medicaid, we believe there is value in keeping enrollee advisory
councils specific to a State. This offers operational simplicity to MA
organizations to meet any State-specific advisory committee
requirements and would improve the effectiveness of an enrollee
advisory committee without combining committee membership across
States, where services, eligibility, and geography could vary greatly.
While we intend this new requirement to generate feedback based on the
unique experience of dually eligible enrollees via a D-SNP enrollee
advisory committee, we recognize that committees may not always be made
up solely of dually eligible enrollees, as organizations can use a
single advisory committee to meet the Medicaid managed care advisory
committee requirement at Sec. 438.110. However, we do not agree that
the enrollee advisory committee should include representatives from
Medicare products that do not focus on dually eligible enrollees. In
meeting the requirement proposed at Sec. 422.107(f), there is nothing
precluding MA organizations from establishing sub-committee
arrangements to established enrollee advisory committees. Also, the
proposed requirement does not preclude non-SNP MA plans from
establishing separate enrollee advisory committees.
Comment: Many commenters indicated that the minimum of a single
Statewide enrollee advisory committee across potentially multiple D-SNP
products was an insufficient approach in larger States, where D-SNPs
may have very large enrollment as well as geographically and
demographically diverse service areas. Commenters noted that a combined
enrollee advisory council in a large State would dilute the value of
the committee. A commenter suggested CMS require each D-SNP to
establish its own committee, and a few commenters requested flexibility
for States to further direct committee geographic scope, composition,
and other factors beyond the Federal minimum requirements, including
the ability to require multiple committees for specific enrollee
populations. Several other commenters asked CMS to clarify whether
enrollee advisory committees need to be at the plan benefit package
(PBP) level. Finally, a commenter expressed that even within a State
and D-SNP parent organization, many D-SNPs have similar plan names and
cover different benefits, which could lead to potential enrollee
confusion if an advisory committee is established Statewide across D-
SNP products.
Response: The new requirement established at proposed Sec.
422.107(f) does not preclude States from using their State Medicaid
agency contracts (as required by Sec. 422.107) to impose more
prescriptive requirements for D-SNP enrollee advisory committees based
on D-SNP enrollment, service area geography, or any other
characteristic. The new proposal does not require D-SNPs to implement
enrollee advisory committees at the PBP level, although they could
choose to do so. States could also require each D-SNP to develop its
own committee, either at the contract or the PBP level. Additionally,
organizations that operate multiple D-SNPs in a State could elect to
establish and maintain multiple enrollee advisory committees that best
represent their eligibility populations (for example, full- or partial-
benefit dually eligible beneficiaries) and/or service areas. We believe
this regulation sets a floor from which States and D-SNPs may work to
craft enrollee advisory committees that best meet local population and
plan needs without committee duplication or significant disruption of
current enrollee advisory committee operations, as required either by
States or Sec. 438.110.
Comment: Many commenters questioned whether D-SNPs could use
existing plan enrollee advisory committees--either FIDE SNP or
committees representing Medicaid managed care plans that cover long
term services and supports--to meet the new proposed requirement at
Sec. 422.107(f). A few commenters asked us to clarify that one
enrollee advisory committee could be used to meet the new requirements
in Sec. Sec. 422.107(f) and 438.110, noting that competing advisory
committees would be inefficient. Another commenter requested we provide
clarity on how the proposal should be implemented with respect to LTSS
and non-LTSS enrollee participants and corresponding council topics.
Other commenters recommended the use of subcommittees (either D-SNP
enrollee advisory committees specific to MLTSS or MLTSS advisory
committee with a subcommittee specific to dually eligible enrollees) as
a potential means to solicit more precise feedback on unique plan
subpopulations.
Response: We acknowledge some D-SNPs, or their affiliated Medicaid
managed care plans covering LTSS, are currently operating enrollee
advisory committees to meet existing State requirements; these existing
committees may satisfy the requirements at Sec. 422.107(f). As we
noted in the proposed rule, our proposal at Sec. 422.107(f) would
permit an organization that operates a D-SNP that is affiliated with a
Medicaid managed care plan to use one enrollee advisory committee to
meet both the requirement under Sec. 438.110 and the requirement
[[Page 27726]]
proposed at Sec. 422.107(f), when all the criteria in both regulations
are met. However, a State may limit the ability of a D-SNP to use one
committee to meet both regulatory requirements. Finally, nothing in our
proposed requirement would preclude the use of subcommittees with
respect to unique D-SNP subpopulations. As discussed earlier in this
section, we are nonprescriptive on topics (for example, with respect to
LTSS) covered by enrollee advisory committees so long as the minimum
topics specified in the regulation (ways to improve access to covered
services, coordination of services, and health equity for underserved
populations) are addressed; however, we encourage D-SNPs and their
advisory committees to choose topics most relevant to the populations
served.
Comment: Numerous commenters requested we encourage or require D-
SNPs to operate their enrollee advisory committees with accessibility,
accommodations, and communications access in mind for enrollees with
disabilities, as well as enrollees with limited literacy, limited
digital literacy, lack of meaningful access to technology and broadband
and limited English proficiency. Other commenters recommended CMS
require D-SNPs provide interpretation and accommodation for individuals
with hearing and vision disabilities and impairments. Another commenter
recommended CMS require D-SNPs to conduct enrollee advisory committee
meetings in the preferred language of the region/county, when that
region's primary language preference is not English. A commenter noted
the need for committee meeting materials in alternate formats, while
another commenter urged CMS to require D-SNPs to provide accommodations
to committee enrollees who lack transportation or access to the
technology necessary to facilitate robust virtual participation.
Finally, a commenter recommended that CMS provide parameters regarding
the importance of D-SNPs facilitating access to enrollee advisory
committees via training, recruitment, and location and timing of
meetings that reflect the community and population to create a process
that allows enrollees to meaningfully participate in the committee.
Response: We agree with the commenters that it is vitally important
for MA organizations to facilitate meaningful enrollee access to their
enrollee advisory committees through accommodations for their
enrollees' needs in order to achieve a representative sample of
enrollee perspectives and meaningful feedback from the enrollee
advisory committees. Although we are choosing to be nonprescriptive on
meeting frequency, location, format, enrollee recruitment and training
methods, and other parameters, we encourage D-SNPs to adopt identified
best practices to ensure advisory committee meetings are accessible for
all enrollees. Ensuring that the enrollee advisory committee has a
reasonably representative sample of the covered population should
include taking steps to ensure access for enrollees with disabilities,
limited literacy (including limited digital literacy), and lack of
meaningful access technology and broadband, particularly to the extent
that these considerations are also relevant to improving access to
covered services and health equity. Where D-SNPs serve enrollees with
disabilities, limited literacy or limited English proficiency, we
expect those characteristics to be reflected in the D-SNP's enrollee
advisory committee membership. D-SNPs must comply with any applicable
civil rights law. We note that existing Federal civil rights
authorities such as Section 504 of the Rehabilitation Act of 1973, HHS'
implementing regulation at 45 CFR part 84, and Title VI of the Civil
Rights Act of 1964 and the implementing regulation at 45 CFR part 80
would likely apply to an MA organization's administrative functions,
such as enrollee advisory committees. We encourage D-SNPs to also
consider virtual accessibility and transportation accessibility for in
person meetings for their enrollee committee membership.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing without modification our proposed requirement for D-SNPs to
establish and maintain enrollee advisory committees at Sec.
422.107(f).
4. Standardizing Housing, Food Insecurity, and Transportation Questions
on Health Risk Assessments (Sec. 422.101)
Section 1859(f)(5)(A)(ii)(I) of the Act requires each SNP to
conduct an initial assessment and an annual reassessment of the
individual's physical, psychosocial, and functional needs using a
comprehensive risk assessment tool that CMS may review during oversight
activities, and ensure that the results from the initial assessment and
annual reassessments conducted for each individual enrolled in the plan
are addressed in the individual's individualized care plan. We codified
this requirement at Sec. 422.101(f)(1)(i) as a required component of
the D-SNP's MOC. In practice, we allow each SNP to develop its own HRA,
as long as it meets the statutory and regulatory requirements.\24\ In
the final rule titled ``Medicare and Medicaid Programs; Contract Year
2022 Policy and Technical Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare
Cost Plan Program, and Programs of All-Inclusive Care for the Elderly''
(86 FR 5864) (hereinafter referred to as the January 2021 final rule),
we noted that integrated D-SNPs (by which we mean D-SNPs or their
affiliates under the same parent organization also receiving capitation
for Medicaid services) may combine their Medicare-required HRA with a
State Medicaid-required HRA so long as the applicable requirements for
the HRA under Sec. 422.101(f) are met, to reduce assessment burden (86
FR 5879).
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\24\ In the CY 2016 Call Letter (an attachment to the
Announcement of Calendar Year (CY) 2016 Medicare Advantage
Capitation Rates and Medicare Advantage and Part D Payment Policies)
released on April 6, 2015, CMS encouraged SNPs to adopt the
components in the CDC's ``A Framework for Patient-Centered Health
Risk Assessments'' tool but did not mandate their use. Specifically,
CMS encouraged the use of elements that identify the medical,
functional, cognitive, psychosocial and mental health care needs of
enrollees.
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Certain social risk factors can lead to unmet social needs that
directly influence an individual's physical, psychosocial, and
functional status.\25\ This is particularly true for food insecurity,
housing instability, and access to transportation. As summarized in our
proposal rule at 87 FR 1858, CMS in recent years has addressed social
risk through the identification and standardization of screening for
risk factors, including finalizing several standardized patient
assessment data requirements for post-acute care providers \26\ and
testing the Accountable
[[Page 27727]]
Health Communities (AHC) model under section 1115A of the Social
Security Act. The AHC model tests whether systematically screening for
health-related social needs and referrals to community-based
organizations will improve health care utilization and reduce costs,
and includes a CMS Innovation Center-developed AHC Health-Related
Social Needs (HRSN) Screening Tool.\27\
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\25\ Hugh Alderwick and Laura M. Gottlieb, ``Meanings and
Misunderstandings: A Social Determinants of Health Lexicon for
Health Care Systems: Milbank Quarterly,'' Milbank Memorial Fund,
November 18, 2019, https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/.
\26\ See the ``Medicare and Medicaid Programs: CY 2020 Home
Health Prospective Payment System Rate Update; Home Health Value-
Based Purchasing Model; Home Health Quality Reporting Requirements;
and Home Infusion Therapy Requirements'' final rule (84 FR 39151
through 39161) as an example. In the interim final rule with comment
period (IFC) ``Medicare and Medicaid Programs, Basic Health Program
and Exchanges; Additional Policy and Regulatory Revisions in
Response to the COVID-19 Public Health Emergency and Delay of
Certain Reporting Requirements for the Skilled Nursing Facility
Quality Reporting Program'' (85 FR 27550 through 27629), CMS delayed
the compliance dates for these standardized patient assessment data
under the Inpatient Rehabilitation Facility (IRF) Quality Reporting
Program (QRP), Long-Term Care Hospital (LTCH) QRP, Skilled Nursing
Facility (SNF) QRP, and the Home Health (HH) QRP due to the public
health emergency. In the ``CY 2022 Home Health Prospective Payment
System Rate Update; Home Health Value-Based Purchasing Model
Requirements and Model Expansion; Home Health and Other Quality
Reporting Program Requirements; Home Infusion Therapy Services
Requirements; Survey and Enforcement Requirements for Hospice
Programs; Medicare Provider Enrollment Requirements; and COVID-19
Reporting Requirements for Long-Term Care Facilities'' final rule
(86 FR 62240 through 62431), CMS finalized its proposals to require
collection of standardized patient assessment data under the IRF QRP
and LTCH QRP effective October 1, 2022, and January 1, 2023, for the
HH QRP.
\27\ CMS Innovation Center, ``The Accountable Health Communities
Health-Related Social Needs Screening Tool.'' Retrieved from:
https://innovation.cms.gov/files/worksheets/ahcm-screeningtool.pdf.
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As discussed in the proposed rule at 87 FR 1858 through 1859, many
dually eligible individuals contend with multiple social risk factors
such as food insecurity, homelessness, lack of access to
transportation, and low levels of health literacy.\28\ We posited that
requiring SNPs to include standardized questions about social risk
factors would be appropriate in light of the impact these factors may
have on health care and outcomes for the enrollees in these plans and
that access to this information would better enable SNPs to design and
implement effective models of care.
---------------------------------------------------------------------------
\28\ Medicaid and CHIP Payment and Access Commission, ``Report
to Congress on Medicaid and CHIP,'' June 2020. Retrieved from:
https://www.macpac.gov/wp-content/uploads/2020/06/June-2020-Report-to-Congress-on-Medicaid-and-CHIP.pdf.
---------------------------------------------------------------------------
We proposed to amend Sec. 422.101(f)(1)(i) to require that all
SNPs (chronic condition special needs plans, D-SNPs, and institutional
special needs plans) include one or more standardized questions on the
topics of housing stability, food security, and access to
transportation as part of their HRAs. We noted that these questions
would help SNPs gather the necessary information to conduct
comprehensive risk assessments of each individual's physical,
psychosocial, and functional needs as required at Sec.
422.101(f)(1)(i) and would inform the development and implementation of
each enrollee's comprehensive individualized plan of care as required
at Sec. 422.101(f)(1)(ii). Rather than include the specific questions
in regulation text, we proposed that the questions be specified in sub-
regulatory guidance. This would afford us some flexibility to modify
questions to maintain consistency with standardized questions that are
developed for other programs while still providing MA organizations
with clear requirements; we expressed our intent to provide ample
notice to MA organizations of any changes in the questions over time.
As discussed in the proposed rule, SNPs would comply with the new
requirement added to Sec. 422.101(f) by including in their HRAs the
standardized questions on these topics that we would specify in sub-
regulatory guidance. We described in the proposed rule our intent to,
at a minimum, align selected questions with the Social Determinants of
Health (SDOH) Assessment data element \29\ established as part of the
United States Core Data for Interoperability Standard (USCDI) v2, when
finalized and where applicable.
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\29\ For more information, see: https://www.healthit.gov/isa/taxonomy/term/1801/uscdi-v2.
---------------------------------------------------------------------------
While we proposed that the regulation text specify that the wording
of individual questions would be established through sub-regulatory
guidance, we provided examples in the proposed rule of the questions on
these topics used in other Medicare contexts to provide better context
on the proposed requirement and to solicit public comment. These
examples included the transportation question in the post-acute care
patient/resident instruments \30\ and the housing and food insecurity
questions from the AHC Model HRSN Screening Tool.\31\
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\30\ For more information, see: https://prapare.org/the-prapare-screening-tool.
\31\ For the Accountable Health Communities Health-Related
Social Needs Screening Tool, see https://innovation.cms.gov/files/worksheets/ahcm-screeningtool.pdf. The PAC assessment utilized the
same transportation question as the AHC HRSN Tool.
---------------------------------------------------------------------------
As discussed in the proposed rule at 87 FR 1859, our proposal would
result in SNPs having a more complete picture for each enrollee of the
risk factors that may inhibit accessing care and achieving optimal
health outcomes and independence. We believe that these questions are
sufficiently related to and provide information on enrollees' physical,
psychosocial, and functional needs to be appropriate to include the
HRAs. Having knowledge of this information for each enrollee would
better equip MA organizations to develop an effective plan of care for
each enrollee that identifies goals and objectives as well as specific
services and benefits to be provided. Our proposal would also equip
SNPs with person-level information that would help them better connect
enrollees to covered services and to social service organizations and
public programs that can help resolve housing instability, food
insecurity, transportation needs, or other challenges. Coordinating
care along these lines is consistent with the obligations under Sec.
422.112(b)(3) for MA organizations that offer coordinated care plans.
We did not propose that SNPs be accountable for resolving all risks
identified in these assessment questions, but Sec. 422.101(f)(1)(i)
requires that the results from the initial and annual HRAs be addressed
in the individualized care plan. As explained in the proposed rule at
87 FR 1859, results of the HRAs would not require SNPs to provide
housing or food insecurity supports, but having the results means that
SNPs would need to consult with enrollees about their unmet social
needs, which may include homelessness and housing instability, for
example, in developing each enrollee's care plan. We explained that a
SNP could demonstrate this in several ways, consistent with its MOC,
including making referrals to appropriate community partners and taking
steps to maximize access to covered services that meet the individual's
needs.
By standardizing certain data elements, our proposal would make
those data elements available for collection by CMS from the SNPs for
all enrollees. (States can also use their contracts with D-SNPs at
Sec. 422.107 to require reporting of these data elements in the HRAs
to the State or its designee.) In the proposed rule at 87 FR 1859, we
explained that, while we continue to consider whether, how, and when we
would have the SNPs actually report data to CMS, we believe having such
information could help us to better understand the prevalence and
trends in certain social risk factors across SNPs and further consider
ways to support SNPs in promoting better outcomes for their enrollees.
We believe standardizing these data elements could also eventually
facilitate better data exchange among SNPs (such as when an individual
changes SNPs).
We understand that some States may separately require that Medicaid
managed care plans collect similar information, potentially creating
inefficiencies and added assessment burden on dually eligible
individuals who are asked similar, but not identical,
[[Page 27728]]
questions in multiple HRAs. As we explained in the proposed rule, we
believe that the benefit gained by all SNPs having standardized
information about these social risk factors outweighs this potential
risk. Where States are interested in requiring assessment questions, we
recommended that States consider conforming to the standardized
questions we implement for use under this final rule and, for
integrated care programs, ensuring that plans do not need to ask the
same enrollees similar or redundant questions. However, we also
solicited input from States about what questions they are using and how
we can best minimize assessment burden while ensuring that SNPs and
States are capturing actionable information on social risk factors.
As discussed in the proposed rule at 87 FR 1860, we considered
several alternatives to our proposal. We considered requiring fewer or
more assessment questions on additional topics related to social risk
factors or different combinations of questions, including questions on
health literacy and social isolation. We considered soliciting comment
on different examples of questions on housing, food, and transportation
other than the examples included in the proposed rule. We considered
simply proposing that all HRAs address certain domains (for example,
housing), without authorizing CMS to specify the standardized questions
to be used. We also considered specifying that the new questions only
apply to certain enrollees and not others. We explained our rationale
for not including these alternatives in the proposed rule at 87 FR
1860.
Finally, due to the processes associated with developing HRA tools,
approval of MOCs, and MOC implementation, we discussed applying our
proposed requirement beginning contract year 2024. However, we also
considered whether to have our proposed requirement take effect at a
later date, such as contract year 2025, to allow MA organizations more
time to work our proposed new questions into their existing SNP HRAs.
We solicited comments on our proposal and these potential alternatives.
We also solicited comments on when CMS would need to issue sub-
regulatory guidance providing the specific questions to be included in
the HRAs to ensure that MA organizations would have sufficient time to
incorporate the required questions.
We received the following comments on this proposal and respond to
them below:
Comment: Most commenters expressed support for our proposal to
require all SNPs to include questions on housing stability, food
security, and access to transportation as part of their HRAs. Some
commenters noted that inclusion of questions on these topics in HRAs
would improve insight into enrollee needs. Several commenters stated
that collection of information related to the SDOH can also better
inform plans of enrollees' challenges and reduce barriers to optimal
care and quality of life. A few commenters noted the importance of
SDOH-related information in the development of an individualized,
person-centered care plan. Some commenters expressed appreciation that
CMS's proposal acknowledged the influence of the SDOH on health
outcomes. Several commenters noted that social risk factors have a
significant impact on health outcomes for the SNP population in
particular. Several commenters noted that capturing social risk factors
in SNP HRAs can help plans develop targeted interventions and connect
enrollees to available supplemental benefits. A commenter believed
health plans are best suited to collect this information and have the
necessary resources to connect beneficiaries to social support
services. Another commenter believed awareness of SDOH information
improves care and lowers long-term costs. Other commenters noted that
identifying unmet social needs among SNP enrollees could help reduce
health disparities and advance health equity. A few commenters stated
that that answers to HRA questions help capture information on social
risk factors that is not only useful for individual enrollees, but also
can be curated for evaluation at the population level in a way that can
inform policy changes like payment reform. Another commenter believed
HRA data on social risk factors have the potential to inform SNP
supplemental benefit design and could be useful for incorporating
social risk factors into future risk adjustment.
Response: We appreciate the widespread support for inclusion of
questions on housing stability, food security, and access to
transportation as part of SNP HRAs. We agree that requiring SNPs to
collect information on these topics can allow SNPs to better understand
enrollees' needs and challenges. As we noted in the proposed rule, our
proposal would result in SNPs having a more complete picture of the
risk factors that may inhibit enrollees from accessing care and
achieving optimal health outcomes and independence. We also appreciate
the commenters' support for reducing health disparities and advancing
health equity more broadly. We agree that better identifying the needs
of SNP enrollees can be an important first step toward these larger
goals.
Comment: A number of commenters expressed support for the three
question topic areas included in the proposed rule (housing stability,
food security, and access to transportation). A commenter recommended
CMS require all three categories be added to the HRAs. A few commenters
noted these three topics are important indicators of social needs that
are linked to individual health outcomes. A commenter noted that these
three risk factors are issues that SNPs are well-positioned to address.
Another commenter noted they supported the proposal and were already
implementing an assessment tool that covered these three topics. Other
commenters expressed support for all three topics, but noted
transportation in particular. A commenter noted that problems with
transportation can seriously impact access to care, and that advocates
and beneficiaries report that these problems are widespread. Another
commenter noted the importance of transportation for rural populations
that may need to travel significant distances to providers. A commenter
stated that SNPs armed with the knowledge that, for example, many of
their members are experiencing access barriers due to a lack of
transportation may wish to expand the availability of transportation
benefits.
A commenter expressed support for all three proposed topics, but
noted particular support for the inclusion of one or more questions
about food security. The commenter believed that requiring screening
for food insecurity will allow plans to better understand the important
interplay between food insecurity and chronic illness in their enrollee
populations, and will better equip plans to connect enrollees to
critical responsive services such as medically tailored meals.
Response: We appreciate the support for our proposed HRA question
topics. As we outlined in the proposed rule, we focused on housing
stability, food security, and access to transportation because there is
a large evidence base suggesting they have a particularly significant
influence on the physical, psychosocial, and functional needs of the
enrollees. These comments reinforce our belief that these three topics
are the most important factors for which SNPs should be screening their
enrollees.
Comment: Some commenters expressed support for the three topic
[[Page 27729]]
areas included in the proposed rule but recommended that CMS include
questions on additional topics as well. Several commenters recommended
adding a question about family and unpaid caregiver support. A
commenter noted that understanding how much support a SNP member has at
home--or the caregiving responsibilities they may have--has direct
connections to health outcomes of SNP enrollees and may provide
information on the prevalence of family caregivers and the need to
better support them to help ensure members can continue to live in the
community. Another commenter believed that addressing this topic and
expanding supports for caregivers could reduce future reliance on
Medicaid-funded LTSS and limit growth in LTSS expenditures. A few
commenters suggested adding questions about caregiver burden in
particular, noting that early recognition of caregiver burden can lead
to targeted supports, and a lack of recognition of caregiver burden can
prompt an emergency department visit or hospitalization. A commenter
also suggested CMS add an assessment question about symptom burden,
noting that the SNP assessment can be a powerful opportunity to
identify poorly managed pain and symptoms and avoid crises like
potentially preventable emergency department visits. The commenter
recommended that, at minimum, questions about symptom burden as well as
caregiver burden be required for SNP enrollees with certain serious
illnesses, but also believed there are benefits to including those two
topics in HRAs for all SNP enrollees.
Another commenter recommended multiple additional domains such as
such as functional status, frailty, spoken language, and health
literacy. Several other commenters encouraged CMS to include one or
more questions on health literacy. A commenter noted that a question
related to health literacy gets at the individual's ability to
understand and ask questions about health information they receive,
which the commenter suggested could have a significant impact on health
outcomes.
Some commenters recommended CMS include questions on both health
literacy and social isolation. A commenter noted that these two health-
related social needs are prevalent among SNP populations and have
direct impacts on health outcomes and behaviors, and expressed support
for validated, concise screening tools on these topics, such as the
Single Item Literacy Screener and AHC Model HRSN Screening Tool.
Another commenter pointed to research showing that low health literacy
is associated with nonadherence to treatment plans and puts patients at
higher risk for hospitalization and mortality, and noted disparities in
health literacy among different racial and ethnic groups. The commenter
also believed the COVID-19 pandemic has highlighted weaknesses in the
social support systems of older adults and at-risk populations, and
noted that social isolation is associated with increased risk for
premature mortality and significantly influences physical, mental, and
cognitive health outcomes. A few commenters suggested CMS include a
question on social isolation. A commenter recommended CMS include a
question on social isolation rather than one on access to
transportation. The commenter believed transportation has not been as
high on the list of observed needs for SNP enrollees--they noted this
was perhaps because many SNPs provide transportation as a supplemental
benefit.
A few commenters recommended CMS include questions related to
disability and functional limitations. These commenters believed that
information related to the SDOH is not enough and that, without
information on disability status, the assessment is incomplete and will
perpetuate the disparities it seeks to uncover. Another commenter
recommended including questions about interpersonal violence and its
subdomains intimate partner violence and elder abuse, as well as
utilities insecurity, and noted that the AHC HRSN screening tool
includes these topics.
A commenter expressed support for CMS's three proposed topic areas,
but noted some populations may not have those specific needs depending
on individual circumstances or geographic location. The commenter
believed an exclusive focus on these three social needs could miss
other critical social needs that are more relevant, and noted that the
relevance of different social needs questions will vary depending on
individual circumstances, geographic location, populations served, and
resource availability, among other factors. Another commenter noted
that once the proposed HRA questions have been implemented
successfully, CMS could consider adding new questions or expanding to
other social needs topics, such as social isolation and access to
telehealth.
Response: We appreciate the commenters' suggestions and acknowledge
that the domains these commenters suggested are all important
indicators of unmet enrollee needs. However, we maintain that the three
topics we proposed have the strongest currently available evidence base
\32\ suggesting they have a particularly significant influence on
health outcomes, and we still value parsimony in establishing new HRA
requirements. Furthermore, the three topics on which SNP HRAs will be
required to solicit information align with other efforts in this arena,
such as the National Committee for Quality Assurance (NCQA) proposed
Social Need Screening and Intervention HEDIS measure, which measures
the percent of enrollees who were screened for unmet food, housing, and
transportation needs, and received a corresponding intervention if they
screened positive.\33\ As we discuss in more detail later in this
section, the requirement we are finalizing at Sec. 422.101(f)(1)(i)
allows SNPs flexibility to include questions from a list of screening
instruments specified by CMS in sub-regulatory guidance on housing
stability, food security, and access to transportation. The amendment
we are finalizing to Sec. 422.101(f)(1)(i) does not preclude SNPs from
including additional questions in their HRAs as appropriate for their
enrollee populations. The broad language at section 1859(f)(5)(A) of
the Act and at Sec. 422.101(f) provide SNPs a great deal of
flexibility in developing their HRA tools to gather information about
the unique physical, psychosocial, and functional needs of their
enrollee populations in order to better meet those needs and coordinate
care for the specific special needs population enrolled in the plan.
Additionally, we may consider adding more, specific question topics in
future rulemaking. We note that current regulations do not contain any
specific requirements similar to what we are adopting in this rule, and
we believe it is appropriate to first assess experiences implementing
the change we are finalizing in this rule before proposing to require
questions on other topics.
---------------------------------------------------------------------------
\32\ See, for example, Kushel M.B., Gupta R., Gee L., Haas J.S..
Housing instability and food insecurity as barriers to health care
among low-income Americans. J Gen Intern Med. 2006;21(1):71-7. doi:
10.1111/j.1525-1497.2005.00278.x.
\33\ https://www.ncqa.org/blog/hedis-public-comment-period-is-now-open/.
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Comment: Some commenters recommended that CMS require collection of
patient demographic information as part of the HRA, including a variety
of factors, such as race, ethnicity, sex, gender, gender identity,
sexual orientation, language, disability, and others. A few of these
commenters noted collecting this information is important to
understanding how demographic
[[Page 27730]]
characteristics interact with each other intersectionally as well as
with health outcomes, and is important to identifying disparities
within a plan and in the SNP population more broadly. A commenter noted
that collecting demographic information should be accompanied by
quality improvement initiatives to reduce health disparities, such as
improving a plan's ability to provide primary care in a culturally and
linguistically appropriate manner. A commenter noted that demographic
information can help facilitate a culturally sensitive care planning
process for SNP enrollees. Another commenter expressed support for the
proposal, but urged CMS to add safeguards to ensure the questions are
framed and presented, and the answers are received, in respectful and
culturally competent ways. The commenter encouraged all such questions
to be posed only by people who have had training to combat implicit
bias.
A commenter recommended ensuring that SDOH data standards are
inclusive so there is not exclusion and further marginalization of
populations due to limited definitions such as gender being defined as
binary male or female, excluding individuals of other genders including
nonbinary, agender, and transgender. Another commenter believed there
is a need to move beyond individual SDOH factors to incorporate factors
at the neighborhood, community, and zip code level, such as housing
discrimination, to identify systematic and institutionalized forms of
discrimination that may affect health.
A few commenters recommended that CMS include an option for an
enrollee to choose not to respond to the proposed HRA questions to
protect enrollee choice and privacy.
Response: We appreciate the commenters' input and agree that
collecting enrollee demographic and other information can provide the
plan with a more complete picture of the enrollee. We believe that many
SNPs are already collecting demographic and other information as
described in the comments, and therefore we have chosen to focus on the
three topics we proposed for parsimony. The amendment we are finalizing
at Sec. 422.101 requires SNPs to include one or more questions on
housing stability, food security, and access to transportation using
questions from a list of screening instruments specified by CMS in sub-
regulatory guidance. We believe this approach allows SNPs enough
flexibility to choose questions that are the most appropriate for their
enrollee populations while still maintaining some of the benefits of
standardization. We encourage SNPs to ensure HRAs are conducted in a
culturally sensitive manner. We also clarify that enrollees always have
the option to refuse to answer an HRA question if they choose.
Comment: Some commenters suggested CMS require alternative or
additional questions from those discussed in the proposed rule at 87 FR
1859 that cover the same three proposed topics or closely related
topics. A commenter suggested CMS consider the National Comprehensive
Cancer Network's Distress Thermometer assessment, a well-known
screening tool among oncology providers, that includes housing, food
security, and transportation among other topics. Another commenter
noted examples of questions covering these three topics that are
required for D-SNPs in the commenter's State. A commenter believed the
examples in the proposed rule provided a good starting point for the
subsequent sub-regulatory guidance, but also offered additional
questions for consideration on topics related to those in the proposed
rule, including questions about fall risk in the home, barriers to
shopping for healthy food, and whether lack of access to transportation
is persistent or infrequent, among other questions. Another commenter
recommended CMS require SNPs to include in their HRAs questions across
three specific housing specific domains, not just the proposed topic of
housing stability: Homelessness, housing instability, and inadequate
housing, noting that the AHC HRSN screening tool identifies all three
housing topics. A commenter cautioned CMS against utilizing questions
from the PAC assessment instruments. The commenter noted the patient
assessment instruments used in each of the PAC settings are based on a
``medical'' model designed to determine medical care needs and
associated resource use, and believed the information collected in the
PAC assessments is insufficient to address ongoing social or medical
needs.
Response: We appreciate the commenter's suggestions. As discussed
in more detail later in this section, we are finalizing language at
Sec. 422.101(f)(1)(i) to require SNPs to include one or more questions
from a list of screening instruments specified by CMS sub-regulatory
guidance that complies with the Paperwork Reduction Act on housing
stability, food security, and access to transportation (rather than
requiring that all SNPs use the same specific standardized questions on
these topics as proposed). We recognize that a variety of HRA questions
on these topics could allow SNPs to collect meaningful information on
their enrollees' needs. The requirement we are finalizing in this rule
provides SNPs with some flexibility to select the specific questions on
these topics that are most appropriate for their enrollees from the
list of screening tools specified by CMS in sub-regulatory guidance. We
remind SNPs that they may also choose to include additional questions
that are related to the three required topics, but not exactly the
same, such as fall risk in the home, for example.
Comment: A number of commenters expressed concern that the addition
of the proposed questions to HRAs would make the assessments too long
and burdensome. Several commenters suggested that CMS limit the number
of questions SNPs must include in their assessments. A commenter
recommended CMS limit the number of required questions to one question
on each of the three proposed domains. A few commenters stated CMS
should start with just a few questions and/or interoperable codes
relating to housing, food, and transportation. Other commenters
believed adding the proposed questions could reduce HRA completion
rates.
Response: We appreciate the commenters' perspective on this issue.
We believe that the potential benefit of SNPs having a more complete
picture their enrollees' physical, psychosocial, and functional needs
as required at Sec. 422.101(f)(1)(i) outweighs the potential burden of
including these questions in an assessment. Furthermore, because the
requirement we are finalizing allows SNPs some flexibility to choose
questions on housing stability, food security, and access to
transportation from a list of screening tools specified by CMS in sub-
regulatory guidance, SNPs can potentially continue using existing
questions on these topics they already include in their HRAs if they
are from the CMS-specified list, reducing the potential for
administrative burden. We anticipate that the list of tools included in
the CMS sub-regulatory guidance will likely include screening tools
that are widely used in the industry and that SNPs may already be using
for their HRAs. We will seek input on the list of screening instruments
and comply with the Paperwork Reduction Act.
Comment: A commenter suggested that, instead of questions on the
three proposed domains, CMS use a one-to-two-question pre-screener that
asks enrollees their needs or challenges across a wider range of social
needs (such as social isolation, employment, safety, legal needs,
assistance with
[[Page 27731]]
utilities, issues with a person's living or home environment, material
security, and digital access, in addition to housing, food and
transportation). While the commenter recognized that social needs pre-
screeners have not been widely used or vetted, the commenter believed
pre-screeners could allow for a more holistic assessment of enrollee
needs, which can then be followed up by additional questions if needed
and be used to better inform care.
Response: We appreciate the commenter's suggestion; however, as the
commenter noted, this approach has not been widely used or vetted. We
prefer that SNPs use questions from validated or otherwise widely used
assessment instruments (including any required by States), because we
believe they will allow SNPs to collect high-quality, actionable
information on their enrollees--at the individual level as well as at
the population level--to more holistically understand the barriers to
care enrollees face. While we are not familiar with exactly what type
of questions would be included in such a pre-screener, we do not
believe that a question that asks enrollees about their needs across
such a wide range of domains is likely to receive useful responses.
Because we believe using validated or otherwise widely used assessment
instruments is important to understanding and addressing enrollee
needs, we are finalizing a requirement at Sec. 422.101(f)(1)(i) that
SNPs include one or more questions from a list of screening instruments
specified by CMS in sub-regulatory guidance on housing stability, food
security, and access to transportation.
Comment: A few commenters opposed requiring questions about social
risk factors as part of SNP HRAs. A commenter recommended CMS give
health plans the choice to include these questions on their HRAs to
preserve assessment completion rates. Another commenter suggested CMS
consider providing a list of standardized optional HRA questions, and
noted that States could choose to require D-SNPs to include one or more
optional questions in their HRAs, and individual plans could decide to
include them as well. The commenter noted that plans using the optional
questions could provide feedback to CMS on ease of use to help inform a
future CMS decision about requiring these additional questions.
Response: We disagree with the recommendation to make questions
about social risk factors optional for SNPs. We believe it is necessary
to require SNPs to include questions about housing stability, food
security, and access to transportation in order to have a more complete
understanding of enrollees' physical, psychosocial, and functional
needs. Though we are aware that many SNPs may already be asking their
enrollees various questions related to SDOH, we want to ensure that, at
minimum, SNPs are collecting information on these three key topics that
are among the most influential to an enrollee's health outcomes. We
remind commenters that SNPs currently have the option to include
questions about social risk factors on their HRAs; making the proposed
questions optional would not necessarily expand the screening of SNP
enrollees for social risk factors from the level of screening that SNPs
are doing currently.
Comment: A significant number of commenters expressed support for
requiring standardized questions on the proposed topics. A commenter
noted that standardized questions would streamline and facilitate ease
in reporting, leading to improved data collection and higher quality
data that more reliably measures impact and progress across
populations. Another commenter believed that a lack of standardized
data has impaired the ability of policymakers to fully understand the
links between social risk factors and health inequities. Other
commenters believed standardization would better ensure beneficiary
needs are systematically identified and enable SNPs to develop and
implement models of care to address those needs.
Several commenters noted standardized questions could improve SNPs'
ability to understand prevalence and trends in social risk factors
among enrollees. Several commenters also noted that standardized
questions would enhance both SNPs' and CMS's ability to collect,
analyze, and publicly report disparity- and equity-related data.
Another commenter noted that developing standards for collecting and
sharing SDOH-related data can result in actionable insights into
disparities while improving data sharing across sectors. A commenter
noted the importance of standardized data on food security in
particular, stating that the use of standardized screening questions
would provide data needed to better understand the impact of food
insecurity and chronic illness across SNPs as a whole. A few commenters
noted the importance of standardized assessment questions to data
exchange between SNPs.
A commenter noted that there is a key need for standardized data on
SDOH for interoperability purposes, the importance of which has been
further amplified during the COVID-19 pandemic. A few commenters
applauded CMS's intent to align the selected HRA questions with the
SDOH data elements established as part of the USCDI v2. A commenter
noted, however, there is still clarification needed to make certain the
USCDI v2 questions would integrate seamlessly with traditional health
information and result in successful interoperability.
A few commenters stated that implementing standardized questions
such as those from the AHC Model screening tool would ensure that plans
are using screening questions that have been tested for validity and
reliability and to maximize opportunities to compare data across
settings. Another commenter stated that SDOH-related information should
be standardized across plans and Medicare programs to ensure the
screening tools health plans are utilizing to capture this information
are uniformly adopted across SNP, MA, Health Exchange and Medicaid
plans.
A health plan commenter noted that they are already utilizing
questions from the AHC HRSN screening tool to assess their enrollees
and track their needs. The commenter noted that using this standardized
tool has informed how they invested in internal capabilities and formed
community partnerships to meet enrollee needs and improve their health.
A few commenters stated that standardized questions would support
plans' ability to address enrollee needs directly or to make referrals
to social service organizations and programs. Another commenter
believed that SNPs are in a unique position to meet enrollee needs
because they have the flexibility to create unique benefit packages
which can get to the root of many of the most important SDOH.
A commenter noted that they did not have a preference to which
questions are specified (that is, from which standardized screening
tool), but they strongly encouraged CMS to include standardized
questions in sub-regulatory guidance and recommended that CMS
coordinate with other HHS agencies to require the same set of
standardized questions.
A commenter requested that CMS consider standardizing all questions
on SNP HRAs to increase care coordination. Another commenter suggested
CMS should provide clear definitions of housing, food, and
transportation insecurity and word questions in a way to limit any
ambiguity of the responses to increase the probability that MA plans
get quantifiable, actionable data. They encourage CMS to reference
existing tools and assessment questions when developing the
standardized questions so that there is consistency with
[[Page 27732]]
screening tools already in use by providers and social services
organizations.
Response: We appreciate the commenters' support for our proposal to
require standardized questions, and the commenters' perspective that
standardizing the collection of information on SNP enrollees' social
risk factors would improve SNPs' ability to understand their enrollees'
needs, track those needs over time, and improve interoperability and
data exchange between plans as well as between plans and CMS, should
CMS require the SNPs to report this data. We are finalizing an
amendment at Sec. 422.101(f)(1)(i) to require SNPs to include one or
more questions from a list of screening instruments specified by CMS in
sub-regulatory guidance on housing stability, food security, and access
to transportation in their HRAs. However, we are not finalizing the
part of our proposal that required SNPs to use specific standardized
questions identified by CMS. We believe this middle-ground approach
will retain some of the benefits of standardization while mitigating
the potential downsides of using standardized questions, such as
possibly (and unintentionally) limiting the opportunity to adopt
questions that maximize cultural competence, potential increases in
administrative burden and cost, and the potential for redundancy in
States that have similar (but not fully aligned) requirements in their
Medicaid programs. Requiring questions on the three topics from a CMS-
specified list of screening tools, rather than specific standardized
questions, will allow SNPs to choose questions from the specified tools
on these topics that are most relevant to their enrollee populations.
We considered concerns about the administrative burden associated
with modifying an HRA, as discussed in response to comments later in
this section. We recognize that it could be burdensome for a SNP that
is already asking questions on these topics in its current HRA to
replace those questions with new ones from a CMS-specified list of
screening tools. However, we believe that some degree of
standardization helps ensure that SNPs are using validated questions
and gathering high-quality, actionable responses from enrollees.
Therefore, we are finalizing a requirement at Sec. 422.101(f)(1)(i)
for SNPs to include one or more questions from a list of screening
instruments specified by CMS in sub-regulatory guidance on housing
stability, food security, and access to transportation in their HRAs.
In response to commenters who expressed support for standardization
because of its potential for improved data collection and exchange, we
recognize there is a need for greater interoperability in this area.
Though we are not limiting SNPs to specific questions identified by
CMS, we are requiring SNPs to use questions from a list of screening
instruments specified by CMS in sub-regulatory guidance. While this
provides a measure of flexibility for SNPs, by limiting the scope of
available questions on these three domains to specified instruments, we
expect there will be some degree of standardization. We anticipate
including validated, health IT-enabled assessment tools on the CMS-
specified list in order to maximize opportunities for standardized data
collection and analysis. We also anticipate our sub-regulatory guidance
will include screening instruments that have been developed with clear
definitions of housing stability, food security, and access to
transportation and that word questions in a way to limit any ambiguity
of the responses and increase the probability that SNPs gather
quantifiable, actionable data. As we develop the CMS-specified list in
sub-regulatory guidance, we will consider existing requirements in
other HHS programs, and will coordinate with agency partners to
identify opportunities for burden reduction. In addition, the sub-
regulatory guidance will include the option to use State-required
Medicaid screening instruments that include questions on these domains.
In response to the commenter who requested that CMS consider
standardizing all HRA questions, we note that we do not currently
require any specific questions on SNP HRAs, and implementing such a
large-scale requirement is outside the scope of this rulemaking.
We clarify that this requirement only applies to SNP HRAs, though
other MA plans are free to include questions on these topics on the
one-time HRAs they are required to make a best effort to complete
within 90 days of enrollment under Sec. 422.112(b)(4)(i).
Comment: Numerous commenters opposed the requirement to include
standardized questions specified by CMS. A number of commenters
recommended that CMS instead set more flexible guidelines that allow
plans to select their own assessment questions, such as requiring
questions on certain topics rather than dictating the questions
themselves. Some commenters asked CMS to consider allowing SNPs that
are already collecting information on the proposed topic areas in their
HRAs to continue using their existing questions. Another commenter
believed flexibility to select and customize assessment instruments and
questions is the best approach to encourage screening for a broad array
of needs and identifying an enrollee's most salient needs.
A commenter believed that requiring standardized questions would be
expensive and cumbersome to change HRA questionnaires to match the CMS-
specified question wording for plans that already actively work with
SDOH assessment software vendors. Another commenter noted there is
already a robust data collection environment in this area, and that
payers and providers may have existing interoperable systems with their
own definitions and language that encode social needs questions in HRAs
and electronic health records (EHRs). The commenter believed the CMS
proposal could require multiple organizations to modify data collection
and IT systems and have significant spillover impacts into provider
EHRs. Another commenter believed that prescriptive HRA elements would
disrupt SNP operations and have an adverse impact on overall HRA
completion rates. The commenter did not believe that the HRA questions
themselves must be standardized in order for SNPs to have a more
complete picture of their enrollees' risk factors.
A few commenters noted concerns about continuity in HRA data. A
commenter expressed concern that, in the case of States and SNPs that
have already been collecting this information, existing and baseline
data could be lost or marginalized. Another commenter expressed concern
that changes to their existing HRA would prevent them from doing
effective historical data analysis.
Several commenters believed that requiring standardized questions
would be burdensome for SNP enrollees, citing that enrollees may
already be answering similar but slightly different questions in other
assessments, such as in Medicaid programs. A commenter noted that most
D-SNPs actively work with State partners to simplify data collection
tools so that beneficiaries do not have to answer multiple questions
with similar responses, and suggested that this proposal could get in
the way of that coordination and lead to assessment burden among
enrollees. A commenter expressed concern that beneficiaries would be
required to answer multiple related questions solely as a result of
this requirement.
Other commenters believed SNPs should be able to continue using
their own assessment questions on topics
[[Page 27733]]
related to social risk factors because they tailored them to their
specific enrollee populations and developed them over time to obtain
more detailed information from enrollees. A commenter believed that
standardized questions can lead to enrollees not feeling comfortable
sharing information. Another commenter believed that CMS's proposal
would prevent organizations from using validated questions they have
determined work best to elicit information that is most effective in
developing individualized plans of care for their enrollees. Another
commenter believed plans are in the best position to review and revise
their current HRAs to ensure collection of information and avoid
overlap or unnecessary burden on enrollees.
A few commenters expressed concern about standardized assessment
questions needing to be translated. A commenter stated that
expectations of enrollees may differ in certain SNP service areas due
to a range of cultural, linguistic, social, geographic, and economic
factors, and believed that CMS should consider giving plans flexibility
so that information on housing stability, food security, and access to
transportation can be sought in a manner that is culturally and
linguistically appropriate.
Response: We appreciate the commenters' concerns about requiring
standardized questions in SNP HRAs. We recognize the challenge that
CMS-specified standardized questions can pose to SNPs in terms of plan
administrative burden and to enrollees in terms of potentially being
asked multiple similar questions, and we acknowledge the commenters'
perspective that SNPs are best-suited to develop questions that are
most appropriate to their specific enrollee populations. We are also
particularly sensitive to concerns about cultural and linguistic
competence in HRAs. We agree with the commenter who stated that
enrollee expectations may differ in different SNP service areas, and
understand that an assessment question that is appropriate for one
group of enrollees may be irrelevant or insensitive to another group.
As discussed earlier in this section, we believe that the downsides of
requiring specific standardized questions, including the potential
administrative burden and duplication of existing efforts, outweigh the
potential benefits of requiring specific standardized questions.
However, we believe some degree of standardization helps ensure that
SNPs are collecting high-quality, actionable responses from enrollees.
We also believe using questions from a CMS-specified list of screening
instruments increases the likelihood of SNP HRA data being shared in a
meaningful way because the answers can be comparable across populations
that are using the same questions. Therefore, we are finalizing
language at Sec. 422.101(f)(1)(i) that requires SNPs to include one or
more questions from a list of screening tools specified by CMS in sub-
regulatory guidance on housing stability, food security, and access to
transportation in their HRAs. The sub-regulatory guidance will include
the option to use State-required Medicaid screening instruments that
include questions on these domains. We believe the requirement we are
finalizing allows SNPs enough flexibility to choose questions that are
appropriate for their enrollee population, given that they will be able
to choose from a CMS-specified list of assessment tools. We also
believe the requirement we are finalizing addresses commenters'
concerns about the need to make burdensome changes to information
technology (IT) and EHR systems to utilize CMS-specified standardized
questions. We aim to include validated, widely available screening
tools in our sub-regulatory guidance, similar to the tools included in
the proposed NCQA Social Need Screening and Intervention HEDIS measure.
We believe many plans may already be using questions from one or more
of these types of screening tools. As a result, relative to our
proposal, we believe there will be less need for systems, IT, and EHR
changes.
Comment: Many commenters expressed concern that requiring
standardized HRA questions would lead to duplication of efforts, given
existing State and provider SDOH assessment requirements. A commenter
noted that plans, providers, and States have been using a variety of
different screening tools for years that focus on similar SDOH domains
but with questions that may differ slightly. A few commenters stated
they did not fully support the proposal because many providers are
duplicating this work at the clinic level. A commenter cited work that
has gone into building SDOH screening and navigation into provider
offices. Another commenter noted that it is important to continue to
have flexibility for providers to pursue more in-depth screening in the
clinical setting as they deem appropriate.
A number of commenters noted concerns about how the SNP HRA
requirement might overlap with existing efforts, particularly at the
State level. A few commenters stated that dually eligible individuals
may be asked similar, but not identical, questions in Medicaid managed
care and in statewide D-SNP HRAs, and believed that the proposal to
require standardized questions could therefore be challenging to
implement. A commenter believed most D-SNPs already incorporate
questions addressing social risk factors into their HRAs and actively
work with State partners to simplify data collection tools and ensure
the process is not burdensome for beneficiaries. A commenter
recommended CMS give SNPs a menu of potential questions to include in
their HRAs to potentially reduce overlap with other assessments. A few
other commenters believed States should work with CMS on the
development of standardized HRA questions and that CMS's rules should
allow States to require alternative, standardized, State-specific HRA
questions in addition to those CMS may specify in sub-regulatory
guidance. The commenter believed this would improve alignment across
each State's Medicaid program and reduce duplication for enrollees.
Another commenter expressed support for standardization, but
recommended that CMS allow for exemptions in cases where a State
already requires assessments for social risk factors for Medicaid
beneficiaries through other means, such as Health Homes and other
Medicaid programs. The commenter noted that, in cases where community-
based organizations are conducting care coordination activities such as
assessments, standard measures and systems for collection can create a
barrier due to the cost of systems, including updates or changes to
existing systems, to support standardized data collection. A commenter
believed that States would like to retain the right to modify D-SNP HRA
questions to complement Medicaid assessment questions through the State
Medicaid agency contract with D-SNPs required by Sec. 422.107, and
expressed uncertainty about whether that option would remain available
under CMS's proposal.
Another commenter recommended CMS consider how to use information
on social risk factors that is already being collected by different
providers to populate a SNP enrollee's HRA when the information came
directly from the enrollee within a given timeframe, rather than asking
the enrollee to answer multiple similar questions.
A few commenters suggested CMS allow health plans to leverage
community or provider organizations to complete these assessments. A
commenter believed HRAs have a greater likelihood of being completed
when conducted in the community
[[Page 27734]]
rather than by a health plan. Another commenter supported requiring
standardized questions as outlined in the proposed rule, but encouraged
flexibility in how the information would be gathered. The commenter
noted they already require the same information as part of their
State's comprehensive LTSS assessments.
Response: We thank the commenters for their input on how we can
best minimize assessment burden while ensuring SNPs and States are
capturing actionable information on these three social risk factors.
SNPs can choose to utilize community-based organizations or other
entities as subcontractors to conduct HRAs or portions of an HRA, and
we have seen successful examples of this both with SNPs and MMPs. SNPs
and MMPs are responsible for ensuring that their subcontractors meet
all CMS care coordination requirements. As described in Medicare Part C
Plan Technical Specifications for D-SNPs, CMS will accept a Medicaid
HRA that is performed within 90 days before or after the effective date
of Medicare enrollment as meeting the Part C obligation to perform an
HRA, provided that the requirements in Sec. 422.101(f)(1)(i) are met.
We appreciate the commenters' concerns about duplication of efforts. We
recognize that some SNPs, particularly D-SNPs, may already include
questions related to housing stability, food security, and access to
transportation on their HRAs to meet State requirements for assessing
social risk factors. We also recognize that States may require D-SNPs
to use particular assessment tools or questions on these topics to
align with other State Medicaid initiatives or priorities, and that
requiring SNPs to also include similar but not identical CMS-specified
questions could result in redundant assessment questions that do not
necessarily add to SNPs' knowledge of their enrollees' needs. When
considered in combination with other concerns we discuss earlier in
this section, we believe the potential downsides of requiring specific
standardized questions--including potential redundancy and duplication
of effort--outweigh the potential benefits of requiring all SNPs to use
the same standardized questions. However, we maintain that some level
of standardization is necessary to ensure SNPs are using validated
questions and collecting reliable, actionable responses from enrollees.
Therefore, we are finalizing language at Sec. 422.101(f)(1)(i) that
requires SNPs to include one or more questions on housing stability,
food security, and access to transportation from a list of screening
tools specified by CMS in sub-regulatory guidance in their HRAs but
does not require SNPs to adopt standardized questions on these topics.
We will consider State requirements in establishing the list of
screening tools in sub-regulatory guidance. As a result, the sub-
regulatory guidance will include the option to use any State-required
Medicaid screening instruments that include questions on these domains.
This modification to our proposal will allow SNPs to continue to use
questions on social risk factors that States may already require and
will prevent duplication of efforts.
Comment: Some commenters recommended CMS consider the use of
standardized coding of responses rather than standardized responses. A
commenter noted that with standardized data elements, assessment
information would be interoperable to help plans, providers, States,
and community-based organizations collectively identify and address
social needs. Several commenters noted that standardized data elements
would allow CMS to collect the assessment data and suggested that CMS
specify a permissible set of SDOH screening tools to ensure the use of
person-centered and validated tools without mandating specific
standardized questions. A few of these commenters noted that requiring
standardized data elements rather than standardized questions would be
easier for SNPs to implement, potentially allowing them to continue to
use their existing HRA questions that cover housing stability, food
security, and access to transportation. A commenter noted this would
allow SNPs to ensure HRA questions are culturally appropriate when
translated across the many languages that SNP enrollees speak. The
commenter also stated standardized coding would give plans the
flexibility to ask questions in a way that accommodates the specific
communication needs of enrollees, such as individuals with intellectual
disabilities.
A commenter suggested CMS look to the Gravity Project for
standardized value sets, interoperable codes, and HL7 technical
standards to document standardized data on social needs. The commenter
noted interoperable codes could include codes from ICD-10 Z codes,
LOINC codes, and/or SNOMED code sets, among others.
Response: We appreciate the commenters' suggestions and will
consider them as we develop the list of specified screening instruments
in sub-regulatory guidance. We aim for SNPs to utilize questions from
assessment tools that have the capability to facilitate data exchange
as well as systematic analysis of prevalence and trends in their
enrollees' social risk factors.
Comment: A commenter suggested that CMS create a standardized data
submission tool to collect social risk factor-related data in a way
most compatible to how the MA plans currently collect and report that
data. The commenter expressed concern that requiring a standardized
reporting format would cause MA organizations already actively
collecting this data to undertake a potentially costly adjustment to
their HRA operations. Another commenter stated health plans
consistently identify the lack of standardization in SDOH data
definitions and lack of harmony in scaling and scoring between
assessment instruments as challenges. The commenter noted that
requiring a specific instrument across settings and providers could
solve this issue, but noted that another solution would be to allow for
multiple screening instruments where items and scoring are cross-walked
to create a universal scale. Several commenters recommended CMS allow
SNPs to capture the required SDOH data using their own methods,
including but not limited to HRAs, then crosswalk the data to CMS-
specified data elements in order to report it to CMS. A few commenters
specifically recommended that CMS work with experts to conduct a cross-
walk of SDOH risk factor items from validated instruments and then
create an acceptable equivalence to harmonize, calibrate and connect
the items, scaling, scores, and findings from the various instruments
to one standardized universal scale for each SDOH risk item. A
commenter believed multiple data sources would be able to feed into the
SDOH data that CMS could collect.
Response: We thank the commenters for these suggestions. We remind
the commenters that CMS does not currently collect information related
to social risk factors from SNPs. CMS currently only collects
information regarding the number of initial and annual HRAs conducted
as part of the Medicare Part C Reporting Requirements and reviews a
sample of HRAs conducted by SNPs during audits. We will consider this
feedback as we continue to consider whether, how, and when we would
have SNPs report data to CMS.
Comment: A commenter believed that focusing on the annual HRA only
as a source of information on enrollees' social risk factors would miss
opportunities to better understand enrollee needs and would have
limited
[[Page 27735]]
impact. A commenter noted that allowing SNPs to capture SDOH data
outside of the HRA process would be sensitive to the personal nature of
questions about social risk factors and allow the care team member the
enrollee trusts the most to ask the questions. Another commenter
believed CMS should allow collection of social risk factor information
through HRAs or through other screening processes, and that CMS should
require use of that social risk factor data in risk assessment and
navigation to supports.
A commenter suggested that, instead of requiring plans to
incorporate specific questions in their HRAs, CMS could require plans
to include a minimum number of social needs-related questions in their
HRAs, the SNP Model of Care, or as part of the Managed Care Manual
Chapter 5 requirements. The commenter believed this alternative
approach would fulfill the intent of the proposed requirement while
providing plans the flexibility to leverage existing social risk factor
questions they have already incorporated into their HRAs, minimizing
the need for edits to existing HRAs.
Response: We appreciate SNPs' efforts to address their enrollees'
unmet needs through their models of care, quality improvement projects,
and various touchpoints with enrollees. We clarify that the new
requirement at Sec. 422.101(f)(1)(i) does not say that SNPs are to use
the HRA as the only source of information on enrollee social risk
factors. In addition to HRAs, we encourage SNPs to use sources of
information outside of the HRA process in order to ensure that SNPs
have a complete picture of an enrollee's physical, psychosocial,
functional, and social needs and their personal goals. This can
include, but is not limited to, interactions between enrollees and
providers, care coordinators, other members of the integrated care
team, or community-based organizations. This information can assist
with the development of and any updates to an enrollee's individualized
care plan. Though SNPs may use a variety of sources of information to
better understand their enrollees' needs, we are finalizing a
requirement for SNP HRAs to include questions from a list of CMS-
specified screening tools about housing stability, food security, and
access to transportation because all SNPs are required at Sec.
422.101(f)(1)(i) to conduct a comprehensive HRA. Making this
requirement part of the HRA ensures all SNPs are universally collecting
this information, at minimum, in their assessments, regardless of any
other sources of information on enrollee social risk factors they may
use. As described elsewhere in this section, we have considered
commenters' perspectives in coming to a final decision regarding a
requirement to use CMS-specified standardized questions, and are
instead finalizing language at Sec. 422.101(f)(1)(i) that requires
SNPs to include questions from a list of screening tools specified by
CMS in sub-regulatory guidance on housing stability, food security, and
access to transportation in their HRAs.
Comment: Many commenters recommended CMS gather further input from
stakeholders, including enrollees, plans, SDOH assessment tool
developers, and providers, to develop the proposed standardized HRA
questions before releasing sub-regulatory guidance. A few commenters
suggested CMS convene a technical expert panel to consider research on
the comparative effectiveness of existing social needs screening tools
and to develop and test a social needs pre-screener. A commenter noted
that the complexity of capturing social needs requires a thoughtful and
multifaceted understanding of enrollee populations. Another commenter
recommended CMS conduct a landscape review and align requirements to
build off of what plans have already accomplished. A commenter
suggested CMS initially gather information on one or two questions per
SDOH topic so that plans can begin to incorporate standardized
questions into their HRAs while continuing to use most of their own
already-tested questions with enrollees. Another commenter believed CMS
should not dictate specific questions without going through a consensus
process for measure development, such as the National Quality Forum,
and noted that SNPs should be able to incorporate CMS's required
questions into their existing assessment tools.
A commenter urged CMS to seek provider feedback on the wording of
standardized HRA questions. Several commenters suggested CMS
incorporate direct enrollee input into any required HRA questions to
ensure they are understandable and relevant to the intended audience. A
commenter offered to provide CMS input into the development of the
standardized questions that would work well across diverse enrollee
populations. A commenter believed enrollees should have opportunities
for feedback and oversight not only on screening questions, but also on
any navigation and referral system a plan may use to meet the needs
enrollees identify. Another commenter stated that CMS should not rush
to use questions that collect questionable, unreliable, or inconsistent
data.
Response: We thank the commenters for their suggestions. We agree
that the complexity of capturing social needs requires a thoughtful and
multifaceted understanding of enrollee populations. We are not
finalizing the proposed requirement that SNPs use standardized
questions specified by CMS on these topics. Instead, we are finalizing
a requirement that SNPs use questions on these topics from a list of
screening tools specified by CMS in sub-regulatory guidance. In
developing this sub-regulatory guidance, we will consider the extensive
work that health plans, the Federal Government, tool developers, and
other stakeholders have already done to research and validate screening
instruments. We clarify that we did not propose to create new measures,
nor did we intend to require that SNPs adopt new assessment tools
wholesale. Rather, we proposed to require SNPs to incorporate CMS-
specified standardized questions about housing stability, food
security, and access to transportation into their HRAs; we had intended
that existing standardized questions, from existing validated
assessment tools, would be specified by CMS for use by SNPs. Although
we are not finalizing a requirement for SNPs to use CMS-specified
standardized questions, we are finalizing a requirement that SNPs use
questions from a list of screening instruments specified by CMS in sub-
regulatory guidance. We anticipate this list will include validated,
widely used assessment tools that include questions on housing
stability, food security, and access to transportation.
Comment: Several commenters supported CMS's proposal to apply this
HRA requirement across all SNPs. A commenter noted that all SNP
enrollees are at elevated risk of experiencing health-related social
needs. A few commenters recommended that CMS apply a requirement to
screen beneficiaries for social risk factors beyond SNPs. A commenter
suggested that CMS consider how to encourage all MA plans to screen
beneficiaries for social risk. Another commenter encouraged an even
greater expansion of this type of data collection across the Medicare
program, noting that data collection by MA plans could provide a model
for other providers in better understanding gaps in health equity
especially given that racial minorities make up a larger percentage of
MA enrollees than Original Medicare enrollees. Other commenters
recommended that CMS work to implement social risk screening
[[Page 27736]]
consistently across both the Medicare and Medicaid programs.
Response: We appreciate the commenters' support and suggestions for
expanding our proposed requirement beyond SNPs. We agree that greater
prevalence of screening for social risk factors can help providers
better understand health disparities for all MA enrollees and will
consider future rulemaking on this subject. In this final rule, we are
limiting the new requirement to include questions on housing stability,
food security, and access to transportation on HRAs to SNPs because we
believe SNP enrollees are more likely than other MA enrollees to have
particular challenges with unmet social needs.
Comment: A commenter encouraged CMS to consider excluding
institutional special needs plans (I-SNPs) from the requirement to
include questions on housing stability, food security, and access to
transportation in SNP HRAs. The commenter noted that all I-SNP
enrollees reside in nursing facilities, which provide housing, meals,
and transportation. The commenter also noted that nursing facilities
are required to conduct minimum data set assessments and meet other
requirements, and believed that requiring I-SNPs to assess enrollees
for social risk factors would add administrative burden for the plan
and potential confusion for enrollees with no apparent benefit. Another
commenter believed that the proposal to include questions about housing
stability in SNP HRAs was equally important to enrollees who reside in
congregate housing as those who live in the community. The commenter
noted that some residents of congregate housing may be spending down
resources and believed it would be helpful to understand if an
individual's current housing arrangements are precarious, potentially
allowing a plan to connect them with needed services or resources.
Response: We disagree that assessing nursing facility residents for
social risk factors in HRAs provides no apparent benefit. An enrollee
residing in a nursing facility or other congregate housing setting can
have concerns about the stability of their living situation. And, as we
noted in the proposed rule preamble at 87 FR 1860, people may move
between settings, including from an institutional placement to the
community. In addition, I-SNPs may enroll individuals living in the
community who require an institutional level of care, for whom housing
stability could be of particular concern. I-SNPs, like other SNPs, are
required at Sec. 422.101(f)(1)(i) to conduct an initial as well as
annual comprehensive HRA. We believe that the benefit of better
understanding enrollee needs outweighs any potential burden of adding a
few questions to the required assessment. However, we recognize that
the types of questions that may be relevant for community-dwelling SNP
enrollees may be less relevant for I-SNP enrollees who reside in a
nursing facility. Therefore, we are allowing some flexibility for SNPs
by finalizing regulatory language at Sec. 422.101(f)(1)(i) which
requires SNPs to include questions from a list of CMS-specified
screening instruments on these three topics in the initial and annual
HRA.
Comment: Numerous commenters provided feedback on the timing for
enforcement of the proposal. A few commenters recommended requiring HRA
questions on social risk factors as quickly as possibly rather than
delaying until contract year 2025. A commenter noted that the three
proposed question topics are already well-developed in 2022 and
believed the questions are too important to delay beyond 2024. Other
commenters expressed support for implementing the requirement in
contract year 2024. Several commenters recommended CMS consider
delaying implementation beyond 2024. A commenter requested that CMS
make the effective date no earlier than 2025 to allow time for plans to
design, test, evaluate, and operationalize the requirements. Another
commenter recommended CMS provide sub-regulatory guidance on the
specific standardized questions at least one year in advance of the
required implementation to allow SNPs time for IT, system, and process
changes. A few commenters suggested that CMS consider allowing
flexibility in the time granted to implement standardized questions.
Other commenters urged CMS to effectively communicate their
requirements and implementation timeframe to States to allow time for
States to remove any overlapping assessment requirements.
Some commenters stated they were supportive of a 2024 effective
date only if CMS did not require standardized questions, and noted
that, if CMS did require standardized questions, they requested an
effective date no earlier than 2025 to allow SNPs sufficient time for
implementation. A few of these commenters believed the implementation
timeline should depend on the scope and complexity of the questions CMS
ultimately requires.
A commenter encouraged CMS to give plans at least six months'
notice of final requirements before the implementation date. A
commenter noted that any change of assessment questions could have
implications for EHR vendors that would need to implement such changes
within an 18- to 24-month cycle. A plan commenter stated they would
require 90 days to implement additional HRA questions.
Response: We appreciate the commenters' input on the implementation
timeline for our proposal. We are finalizing a requirement at Sec.
422.101(f)(1)(i) that SNPs must include questions from a list of
screening instruments specified by CMS in sub-regulatory guidance on
housing stability, food insecurity, and access to transportation
beginning contract year 2024. We will ensure compliance with the
Paperwork Reduction Act as we strive to post the sub-regulatory
guidance by the end of 2022. This would leave more than a year from
publication of this final rule for SNPs to come into compliance. The
comments we received suggested that many SNPs already include questions
on these topics in their HRAs. We believe many of the SNPs that are
already including questions on these topics are using certain
validated, widely available screening instruments. In our sub-
regulatory guidance, we anticipate including validated tools that are
already widely in use. Because we believe many SNPs are already using
these types of screening tools, and because we are not requiring the
use of specific standardized questions, we believe it is reasonable for
SNPs to implement this requirement in contract year 2024.
Comment: Many commenters expressed concern about SNPs'
responsibility to address social risk factors identified through the
HRA. Several commenters noted that the HRA should be used to inform the
enrollee's individualized care plan as well as to connect enrollees to
covered services and community resources. A commenter noted that
developing the enrollee's plan of care invites the SNP to form
community partnerships that will allow them to address enrollee needs.
The commenter believed these partnerships were crucial to reducing
health disparities. Another commenter believed that assessments must be
paired with strong connections to community-based organizations,
including innovative approaches to payment for these organizations.
A number of commenters recommended CMS take steps to ensure SNPs
are acting on the information they receive in HRAs. A commenter
encouraged CMS oversight to ensure that HRA results are included in
[[Page 27737]]
enrollees' individualized plan of care. Another commenter believed CMS
should emphasize that HRA questions related to social risk factors
would help inform, but not direct, a provider's plan of care. A
commenter expressed concern with CMS's statement, described at 87 FR
1859, that CMS would not be explicitly requiring that SNPs be
accountable for resolving all risks identified in the HRA questions.
The commenter believed CMS should require this type of accountability
for SNPs. A few commenters requested CMS consider going beyond
requiring HRA questions and work with plans to ensure that plans are
not only assessing and referring enrollees to services, but also
confirming that needed social services have been received. A commenter
believed there needs to be a clear level of understanding of who is
responsible for connecting a patient to services, and that there is
potential for doing more harm than good by frequently asking enrollees
about their social risk factors but not addressing them. A few
commenters believed that screening without a strong referral and
navigation system is ineffective, disrespectful, and unethical, and it
can undermine enrollee trust in providers. Another commenter suggested
that assessments for social risk factors be conducted on a monthly
basis and even more frequently based on an enrollee's needs.
A few commenters urged CMS to consider how it can encourage and
support plans to use data collected in HRAs in meaningful ways, and
what guidance and resources it can provide plans on meeting enrollees'
social needs. Another commenter urged CMS to establish oversight
mechanisms and standards to ensure that SNPs have systems in place to
assist enrollees based on the needs identified in the HRA. A commenter
encouraged CMS to track HRA data to identify trends and potentially
compare to the supplemental benefit offerings and utilization. Another
commenter urged CMS to provide not just standardized questions but also
guidance around framing, an explanation of why the questions are being
asked, and expectation setting about how the information will be used
to ensure it is maximally actionable.
Other commenters expressed concern about increasing demand for
community-based services. A commenter noted that, even with services in
place, enrollees may face access challenges, especially in rural areas.
Another commenter believed that increasing screening for social risk
factors would create more demand for an already-taxed community-based
services infrastructure, which would inadvertently create new or
exacerbate existing health disparities. The commenter recommended CMS
work with the Administration for Community Living to continue to build
community-based organizations' capacity to partner with health plans.
The commenter also recommended CMS encourage financial investments in
the community-based services infrastructure through value-based
payments and flexible spending arrangements.
Response: We thank the commenters for their perspective on this
issue. We agree that it is important for SNPs to not only assess their
enrollees for social risk factors, but also connect them to needed
services based on enrollee goals and preferences, whether such services
are plan-covered benefits or referrals to community resources. We
believe requiring all SNPs to include questions on enrollees' housing
stability, food security, and access to transportation will help inform
the comprehensive individualized plan of care required at Sec.
422.101(f)(1)(ii); these individualized plans of care identify goals
developed with the enrollee and measurable outcomes as well as describe
specific services and benefits. At 87 FR 1859 in the proposed rule, we
provided several examples of the ways in which SNPs could consult with
enrollees about their unmet social needs as part of the development of
individualized care plans, such as making a referral to an appropriate
community partner. We appreciate the need for additional technical
assistance on addressing the social needs of enrollees and will
consider it in the future.
Comment: A commenter stated it is important to understand how the
SDOH data that is collected through the new required questions is going
to be used, including what the proposed output would be if those data
elements are required to be reported to CMS.
Response: We clarify that the SDOH data collected as part of an HRA
would be used to inform a SNP enrollee's individualized care plan based
on the enrollee's goals. The language we are finalizing at Sec.
422.101(f)(1)(i) does not require SNPs to submit HRA data to CMS.
However, as we outlined in the proposed rule at 87 FR 1859, we continue
to consider whether, how, and when we could have SNPs report this data
to CMS under other regulations. If SNPs do submit this data to CMS in
the future, we believe having such information could help us better
understand the prevalence and trends in certain social risk factors
across SNPs and consider ways to support SNPs in improving enrollee
outcomes.
Comment: Several commenters suggested that CMS clarify that SNPs
are not responsible for addressing all enrollee social risk factors
identified during the HRA. A commenter requested clarification on
whether CMS's expectation would be that these questions trigger care
management outreach. Another commenter noted that plans often do not
have the ability to address all the systemic barriers to achieving
optimal health outcomes that may be identified in the HRA. A few
commenters believed addressing social risk factors requires resources
beyond what a SNP can offer, or may lie outside a SNP's control. A
commenter believed that an organization's ability to address enrollee
social needs depends on many factors, such as geographic location and
resource availability in their communities, among others. Another
commenter believed HRA questions about social risk factors could cause
enrollee confusion, noting that an enrollee who indicates they are
struggling to afford their rent may expect a health plan to provide a
solution--perhaps a referral to a community housing resource--but then
experience frustration and disappointment when a health plan is unable
to do so.
A commenter expressed concerns about how SNP auditors may interpret
this proposed requirement. The commenter believed that program auditors
have demanded verification that such risks or needs are assessed and
resolved. The commenter strongly encouraged CMS to include language in
the SNP audit protocols emphasizing that the focus of this requirement,
if finalized, is on assessment not resolution.
Response: We appreciate the commenters' perspectives on this issue.
As stated at 87 CFR 1859, our proposal regarding the content of the HRA
would not require SNPs to be accountable for resolving all risks
identified in these assessment questions. The information gathered in
the HRAs must be used to inform the development of the individualized
care plan per Sec. 422.101(f)(1)(i) and (ii). Section 422.101(f)(1)(i)
requires the SNP to ensure that the results from the initial and annual
HRAs are addressed in the individualized care plan. Section
422.101(f)(1)(ii) also provides that the individualized care plan must
be developed and implemented in consultation with the beneficiary. The
SNP must take steps to provide the services or connect the enrollee
with appropriate services in order to accomplish the goals identified
in the individualized care plan. The SNP can
[[Page 27738]]
take these social risk factors into account in the development and
implementation of the individualized care plan, even if the SNP is not
accountable for resolving all social risk factors. For instance,
knowing that an enrollee is homeless or lacks reliable transportation
could change how the SNP delivers covered services, such as by helping
the enrollee find a primary care physician (PCP) that is more
conveniently located or suggesting that the enrollee utilize a
Federally Qualified Health Center (FQHC) in order to get multiple
services delivered at the same time.
We remind the commenter who expressed concerns about how SNP
auditors may interpret this proposed requirement that CMS welcomes
stakeholder feedback on the audit protocols when the collection becomes
available for public comment under the Paperwork Reduction Act of 1995.
We also remind commenters of the requirement at Sec. 422.503(b)(4)(vi)
for MA organizations to adopt and implement an effective compliance
program to prevent, detect, and correct non-compliance with CMS's
program requirements, including the requirement at Sec.
422.101(f)(1)(ii) that SNPs must develop and implement an
individualized care plan.
Comment: Some commenters provided feedback on CMS's intent to
provide the specific HRA questions through sub-regulatory guidance.
Several commenters indicated they were supportive of this approach. A
commenter agreed that it is important for CMS to retain the discretion
to modify questions while still providing SNPs with clear requirements.
Another commenter recommended CMS include a statement in sub-regulatory
guidance to discourage States from adding their own questions and to
encourage data sharing. A few commenters encouraged CMS to provide
additional detail on how SNPs should implement this proposal.
Other commenters did not support CMS's intent to specify the
questions in sub-regulatory guidance. A commenter believed this
information should be standardized across plans and Medicare programs,
rather than being specified in sub-regulatory guidance applicable to
SNPs only. Another commenter strongly suggested CMS include any
questions or specific requirements in regulation text because the
commenter would like as much time as possible to implement changes, and
believed the predictability of the regulatory cycle would allow them to
better plan for policy changes.
Response: We appreciate the commenters' perspectives on use of sub-
regulatory guidance to specify standardized questions. We believe that
specifying the topics in regulation while providing additional
operational detail in sub-regulatory guidance strikes the appropriate
balance between the need for stability and predictability for plans and
the need to be able to revise the specific questions to stay aligned
with similar assessment tools. Although we are not requiring SNPs to
use specific standardized questions, we believe a degree of
standardization is necessary to ensure that SNPs are gathering high-
quality, actionable responses from enrollees on their social risk
factors. We also believe that allowing SNPs to choose questions from a
list of screening instruments may increase opportunities for alignment
with other efforts in this area, including NCQA's proposed Social Need
Screening and Intervention HEDIS measure, as discussed in more detail
later in this section. Therefore, we are finalizing a requirement at
Sec. 422.101(f)(1)(i) that SNPs include one or more questions from a
list of screening instruments specified by CMS in sub-regulatory
guidance on each of these three topics. We believe the requirement we
are finalizing addresses commenters' concerns about the lack of
predictability involved in specifying required HRA questions in sub-
regulatory guidance, since SNPs will be able to choose questions on
these topics from the list of screening instruments in sub-regulatory
guidance that best meet the need to assess housing stability, food
insecurity, and access to transportation for the specific population
they serve. We intend to issue the first sub-regulatory guidance on
this issue by the end of 2022 and will revise and update the guidance
as necessary in the future.
Comment: A few commenters recommended CMS consider privacy and
confidentiality as part of this proposal. A commenter strongly urged
CMS to provide adequate protection for and confidentiality of
information collected through HRAs, noting that the collection and use
of SDOH-related information should be held to the highest standard and
that appropriate oversight and enforcement should restrict
inappropriate use and access. Another commenter recommended CMS
maintain high data security standards to ensure the collection of
demographic information be conducted in a transparent, secure, and
culturally sensitive manner for the targeted populations in question to
reduce systemic bias. Another commenter asked for clarification as to
whether the HRA is intended to be delivered by and stored as part of
the EHR.
Response: We appreciate the commenters' concerns for protecting
enrollee privacy. At a minimum, all MA plans, including the SNPs that
are subject to this new requirement, must ensure the confidentiality of
enrollee records under Sec. 422.118 and the Health Insurance
Portability and Accountability Act (HIPAA) Security and Privacy Rules
at 45 CFR part 164. Enrollee records that must be protected under Sec.
422.118 include the information collected as part of health risk
assessments, and we believe that information gathered through SNP HRAs
is protected health information (as defined in 45 CFR 160.103) subject
to protection under HIPAA rules. We agree that information related to
social risk factors is particularly sensitive and should be handled
accordingly. We do not intend to specify how SNPs store this
information. We remind the commenters that CMS does not currently
collect this type of information from SNPs. Should CMS collect this
information in the future, we will protect enrollee privacy as we do
more broadly when handling beneficiary data.
Comment: Several commenters noted related efforts within and
outside of CMS that they recommended CMS leverage when determining what
questions to include in the HRA. A few commenters noted the Social Need
Screening and Intervention quality measure under development from NCQA.
Several others noted the work of the Gravity Project, supported by the
Office of the National Coordinator for Health Information Technology,
including the USCDI v2. A commenter strongly encouraged alignment with
USCDI v2. A few commenters supported leveraging and aligning with the
work of the Gravity Project, as well as ensuring alignment with other
programs. A commenter noted CMS's proposal is consistent with the
February 1, 2022 National Quality Forum Measure Applications
Partnership recommendations to CMS for screening for social drivers of
health and public data on those screening positive for social drivers
of health. Another commenter cited a proposal for a similar quality
measure for use in the Merit-Based Incentive Payment System for
physicians and Inpatient Quality Reporting program for hospitals. A
commenter also encouraged an approach that utilizes publicly available
tools, such as the AHC HRSN screening tool, and does not require use of
any specific proprietary screening tool.
[[Page 27739]]
Response: We appreciate the additional information and have been
closely reviewing other SDOH efforts both within the Federal Government
and other parts of the industry, including NCQA's proposed new Social
Need Screening and Intervention HEDIS measure and discussion in the
contract year (CY) 2023 Rate Announcement about comments received on
potential future use of that proposed measure in Star Ratings. We
recognize that there are a number of well-developed validated
assessment tools with questions on the three proposed topics already in
use by plans. We agree that our efforts should align with other
programs. As we discussed in responses to earlier comments, we are
finalizing a requirement at Sec. 422.101(f)(1)(i) that SNPs must
include one or more questions from a list of screening instruments
specified by CMS in sub-regulatory guidance about housing stability,
food insecurity, and access to transportation in their HRAs, rather
than requiring specified standardized questions. We believe allowing
some flexibility for SNPs to choose questions best suited to their
enrollee populations is important; however, we also believe some degree
of standardization is necessary to ensure SNPs are collecting high-
quality, actionable responses from enrollees. Furthermore, we believe
this approach better allows us to align with other programs and SDOH
efforts and retains the potential for improved data exchange and
interoperability. For example, in response to the 2023 Advance Notice,
the vast majority of commenters supported the use of NCQA's proposed
screening and referral to services for social needs measure in MA Star
Ratings. We believe our requirement would align well with potential use
of that measure in Star Ratings. The proposed NCQA measure does not
require use of a specific tool or questions, but would allow use of
questions from a list of selected validated assessment instruments,
similar to the new requirement finalized here at Sec.
422.101(f)(1)(i). We anticipate our list of screening instruments in
sub-regulatory guidance will overlap with the list of screening
instruments NCQA includes in the specifications for its proposed
measure, which will provide the opportunity for SNPs to align their
compliance with the new requirement at Sec. 422.101(f)(1)(i) with data
to be used for the proposed NCQA measure. We believe the result will
still be an increased ability for interoperable data exchange among
SNPs.
Comment: A commenter requested clarification on several aspects of
our proposal. The commenter questioned whether the HRA questions should
be included on the initial, reassessment, and transition HRAs and
whether each plan would be required to include the same questions on
the HRA or whether it would be up to the individual plan to determine
wording and how these new question sets fit into other existing
domains.
Response: We appreciate the commenter's request for clarity. We
clarify that the questions should be included in all HRAs used by SNPs.
On the commenter's request for clarification about question
standardization, we clarify that our original proposal would have
required SNPs to use CMS-specified standardized questions. However, as
discussed earlier in this section, we are instead requiring SNPs to use
one or more questions from a list of screening instruments specified by
CMS in sub-regulatory guidance in each of the three required domains.
However, SNPs can determine how any new questions they add to their HRA
in order to meet the new requirement fit into their existing assessment
process.
Comment: A commenter requested CMS clarify how SDOH-related
information may be used if an HRA identifies an issue that is not
identified by a provider and asked how CMS intends to treat that
information for other MA purposes.
Response: We thank the commenter for their questions and note that,
per Sec. 422.101(f)(1), the enrollee's providers should be included as
part of the interdisciplinary care team (ICT) and the information from
HRAs should be shared with the ICT as described in the SNP's MOC. As
discussed in more detail in other comments and responses earlier in
this section, the individualized plan of care for an enrollee must be
developed in consultation with the enrollee and the care plan should
address the results from HRAs. A provider is not required to
independently identify a social health factor for it to be addressed in
the care plan. As to the treatment of the information for other MA
purposes, CMS does not currently intend to collect information about
the responses on these newly required questions from SNPs. CMS may
review HRAs and responses in order to determine compliance with the
regulatory requirement.
Comment: A commenter encouraged CMS to allow for a wider range of
providers who can conduct the HRA without the oversight of physicians
and requested that CMS to continue to allow non-physician clinicians to
conduct the HRA using telehealth under the supervision of a physician.
They asked CMS to provide additional resources to community advocates,
who can facilitate remote provider-patient interactions. A commenter
suggested that enrollees, especially those with nutrition-related
chronic conditions, should receive a referral to registered dietician
nutritionists when food insecurity is identified.
Response: We thank the commenters and note that Sec.
422.101(f)(1)(i) does not stipulate that specific plan personnel must
conduct the HRA. CMS does not require physicians to oversee providers
or other staff when conducting an HRA and allows SNPs flexibility to
determine the level of clinical expertise needed to conduct the HRA.
CMS does not preclude the use of telehealth to conduct HRAs. SNPs must
conduct their HRA in a manner that is consistent with the plan's
approved MOC; approval of the MOC is required by Sec. 422.101(f)(3).
We appreciate the information on community resources for referrals
provided by commenters and will consider providing additional education
on resources available to fill enrollee's needs as determined by the
HRA and ways to support community-based organizations.
Comment: A commenter urges CMS to require that these standardized
questions be made available and accessible in the preferred languages
of the enrollees. They noted that for individuals with limited English
proficiency, the inability to communicate adequately with providers
serves as a barrier to accessing care.
Response: We appreciate the commenter's perspective on this issue.
In Sec. 422.112(a)(8), we require that MA organizations that offer MA
coordinated care plans ensure that services are provided in a
culturally competent manner to all enrollees, including those with
limited English proficiency or reading skills, and diverse ethnic and
cultural backgrounds. The HRAs conducted by SNPs are key to developing
individualized care plans for enrollees and such care plans are the
foundation for furnishing, coordinating, and managing covered services
to the special needs individuals who are enrolled in SNPs. Further,
Sec. 422.2267(a)(2) requires that, for markets with a significant non-
English speaking population, MA organizations translate required
materials into any non-English language that is the primary language of
at least five percent of the individuals in a plan benefit package
(PBP) service area. As HRAs are required by Sec. 422.101(f)(1), SNPs
are obligated to comply with
[[Page 27740]]
Sec. Sec. 422.112(a)(8) and 422.2267(a)(2) in performing these
assessments.
Comment: A commenter requested that CMS review and rewrite the
technical specifications of the existing SNP care management reporting
measure. They stated that, as currently written, a plan is required to
conduct two HRAs (an initial and a reassessment) in the same calendar
year for members who did not complete an HRA the previous year. They
believe that the ``doubling up'' of HRAs in the same year can create
member abrasion.
Response: This comment is out of scope of this final rule; however,
we will consider it in future reporting specifications.
Comment: A few commenters stated that, under current statutory
authority, SDOH cannot be used as primary targeting criteria for
Special Supplemental Benefits for the Chronically Ill (SSBCI), just as
secondary criteria when the three-part eligibility criteria have been
met. The commenters recommend that CMS provide additional flexibilities
to equip plans with the ability to address the social needs for which
standardized data collection is being proposed in this rule. They
recommend CMS consider allowing plans to use indicators of SDOH need
outside of low-income subsidy status as primary targeting criteria
through the Value-Based Insurance Design demonstration under Center for
Medicare and Medicaid Innovation authority. They stated that this
demonstration can serve as a pilot for potentially expanding the
eligibility criteria for SSBCI in the future.
Response: We appreciate the recommendations for using SDOH data for
determining eligibility for SSBCI and will consider it in the future.
With regard to the commenters' recommendation that CMS provide
additional flexibilities to equip plans with the ability to address
social needs, we remind the commenter that, as discussed in more detail
earlier in this section, SNPs must use the information gathered in the
HRA to inform the development and implementation of the individualized
care plan, and to ensure that the results of HRAs are addressed in the
care plan per Sec. 422.101(f)(1)(i) and (ii). We also remind the
commenters that SNPs are not required to furnish housing, food, or
transportation services. Changing the scope and criteria for SSBCI is
outside the scope of this rulemaking.
Comment: A few commenters requested that CMS explore the potential
use of standardized SDOH data more broadly in the Medicare Advantage
program, such as in the Star Ratings program and in the CMS-HCC
(hierarchical condition category) risk-adjustment model. Another
commenter noted that the adoption and optimization of EHR
infrastructure in low-resource settings is vital to increasing
interoperability, as providers in underserved communities typically
have outdated systems unable to integrate with other sources. A
commenter also stated that the software development community is
missing important guidance that would allow them to promulgate
consensus-based standards for the exchange of SDOH data with providers
and community-based organizations. A commenter strongly supported
efforts to promote greater flexibility and alignment of provider
payment incentives for care that address social needs and outcomes that
advance health equity, noting that such measures can include incentives
to increase provider uptake of evidence-based, high-value, low-cost
services known to improve patient health outcomes.
Response: We agree that the use of SDOH data can provide us with a
better understanding of enrollees. We thank commenters for raising
these important issues. However, addressing SDOH and social risk
factors in the context of payment policy, interoperability and EHR
standards, and quality rating programs is outside the scope of this
rulemaking. We note that CMS has discussed SDOH and social risk factors
in other contexts, such as in the CY 2023 Rate Announcement, which
discussed comments received on MA risk adjustment payment policy and
use of a health equity index in MA/Part D Star Ratings. We appreciate
the commenter's perspective on alignment of provider payment incentives
for care to address social needs, but the topic is outside the scope of
this rulemaking. Further, CMS is prohibited from requiring MA
organizations to use particular payment arrangements with their
contracted providers by section 1854(a)(6)(B) of the Act, but we will
take these comments into consideration with regard to the Medicare FFS
program and Innovation Center models.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing a requirement at Sec. 422.101(f)(1)(i) for SNPs to include
one or more questions from a list of screening instruments specified by
CMS in sub-regulatory guidance on housing stability, food insecurity,
and access to transportation in their comprehensive risk assessment
tool. However, we are not finalizing the proposal that SNPs use
specific standardized questions.
5. Refining Definitions for Fully Integrated and Highly Integrated D-
SNPs (Sec. Sec. 422.2 and 422.107)
Dually eligible individuals have an array of choices for how to
receive their Medicare coverage. Those choices vary by market, and not
all dually eligible individuals may qualify for all options, but they
include Original Medicare with a standalone prescription drug plan,
non-D-SNP MA plans, FIDE SNPs, HIDE SNPs, coordination-only D-SNPs, and
Programs of All-Inclusive Care for the Elderly. Those choices can be
complex and, for some, overwhelming.
Our own terminology is complex too. While we have defined terms
through rulemaking in Sec. 422.2, there remains nuance and variation
that may make it difficult for members of the public--and even the
professionals who support them--to readily understand what may be
unique about a certain type of plan or what a beneficiary can expect
from any FIDE SNP, for example. We proposed several changes to how we
define FIDE SNPs and HIDE SNPs, citing our belief that they would
ultimately help to differentiate various types of D-SNPs and clarify
options for beneficiaries.
Comment: Numerous commenters expressed support of CMS's proposed
changes to refine the definitions of FIDE SNPs and HIDE SNPs. MACPAC
echoed this support and expressed the belief that CMS's proposal
furthers integration and clarifies the definitions of FIDE SNPs and
HIDE SNPs. MedPAC supported the proposed changes to the FIDE SNP
requirements, stating that it believed the changes will help ensure
that those plans are fully integrated with Medicaid and make it easier
for beneficiaries to understand how they differ from other, less
integrated D-SNPs. MedPAC also supported the proposed changes to the
HIDE SNP requirements as an incremental step towards greater
integration. Others also believed that CMS's proposal raises the
standards for integration in SNP products. Several commenters agreed
that the proposed refinements increase transparency of the options
available for dually eligible beneficiaries. A commenter appreciated
that CMS's proposal may encourage more States and health plans to
provide integrated care for dually eligible individuals. Another
commenter expressed support that the proposal would allow standards for
quality measures set to be set more accurately, services provided more
effectively, and plans held more accountable. A commenter stated that
[[Page 27741]]
Minnesota Medicaid products continued to meet the proposed definitions.
A commenter urged CMS to require plans to make their status as a FIDE
SNP or HIDE SNP more transparent to ensure beneficiaries and their
advocates can understand the level of alignment and integration they
should expect from their current or potential plan.
MACPAC cautioned that some States may need support to implement the
new requirements and that there is some risk that the new requirements
may lead to fewer FIDE SNP or HIDE SNPs available in the market. MACPAC
suggested that CMS work closely with States and plans to remove
barriers to offering FIDE SNPs and HIDE SNPs to make these integrated
plans more available. Another commenter expressed a similar concern
that States may choose to have less integrated systems due to limited
State capacity and challenges with conflicting timelines for Medicaid
requests for proposal and procurements and for CMS and D-SNP contracts.
The commenter recommended several proposals to ease the burden for
States, including CMS developing educational materials on the benefits
of integrated care and CMS working with Congress to develop formal
requirements and strategies to integrate care and increase State
funding. Another commenter suggested that CMS encourage States to use a
request for proposals process for FIDE SNPs to ensure FIDE SNPs are
best positioned to support State and CMS goals for integration.
Response: We appreciate the robust support for our proposed changes
to the FIDE and HIDE SNP definitions. We agree with commenters that the
changes to the definitions will ultimately help differentiate the types
of D-SNPs, clarify options available to beneficiaries, and improve and
increase integrated coverage options for dually eligible individuals.
We appreciate the comments about States needing support to take
actions that make HIDE SNP or FIDE SNP designation attainable for D-
SNPs that operate in the State. CMS will continue to engage with States
to promote integration, directly as well as by providing education to
States about this final rule through our technical assistance contract
with the Integrated Care Resource Center, which provides a range of
written and live resources targeted to State Medicaid staff, such as
sample contract language for State Medicaid agency contracts with D-
SNPs, tip sheets describing exclusively aligned enrollment and other
operational processes that support Medicare and Medicaid integration,
educational materials and webinars about D-SNPs and highlighting State
strategies for integrating Medicare and Medicaid, and one-on-one and
small group technical assistance.
We acknowledge the suggestion for us to work with Congress on
requirements and strategies to integrate care and increase State
funding. While outside the scope of this rulemaking, we will consider
whether there are additional opportunities to address this in the
future. A Federal requirement for States to use a request for proposal
process is outside the scope of this rulemaking, but nothing in this
rulemaking prohibits States from using a request for proposal process
to select the FIDE SNPs and affiliated organizations with which the
State will contract.
Comment: A commenter recommended that in future rulemaking, CMS
eliminate the distinction between HIDE SNPs and FIDE SNPs and that all
D-SNPs in all States be required to meet a standard definition of full
integration. The commenter also recommended limiting enrollment in full
integration models, such as FIDE SNPs, to full benefit dual eligible
individuals to improve integration in those models. Another commenter
suggested that CMS should establish a glide path for phasing out HIDE
SNPs to instead support FIDE SNPs. The commenter believes that lower
tiers of integration are not sufficient to meet the needs of dually
eligible individuals with disabilities.
Response: We appreciate the perspective shared by the commenters.
We believe the distinction between HIDE SNPs and FIDE SNPs is
meaningful and accounts for variation in State integration strategies,
and therefore we are retaining HIDE SNPs. To clarify, in proposing that
all FIDE SNPs have exclusively aligned enrollment, as discussed later
in this section at II.A.5.a., all FIDE SNPs would be limited to full
benefit dually eligible individuals beginning in 2025.
Comment: A few commenters expressed concern about State or Federal
policies that may result in limiting the number or type of plan
operating in a given market. A commenter requested that CMS continue to
allow for HIDE SNPs and coordination-only D-SNPs to operate alongside
FIDE SNPs required to have exclusively aligned enrollment as it
promotes quality and value through competition and preserves freedom of
choice. Another commenter recommended that CMS discourage any
requirements that limit plan choice to a select few plans, particularly
if these plans have limited or no experience servicing complex
populations.
A few commenters expressed concern about the number of plan choices
currently available to dually eligible beneficiaries. A commenter noted
the number of plan choices and related information provided to
beneficiaries results in a coverage landscape that is overwhelming to
dually eligible individuals. The commenter further noted that more work
is needed to increase awareness around integrated options and their
potential value.
Response: We thank the commenters for sharing their perspectives.
While our proposal makes changes to how we define FIDE SNPs and HIDE
SNPs that we believe will ultimately help to differentiate various
types of D-SNPs and clarify options for beneficiaries, we do not
believe our proposal will directly limit the number or types of plans
available for beneficiaries to choose from. We clarify that our
proposal does not impact the ability for HIDE SNPs and coordination-
only D-SNPs to operate alongside FIDE SNPs.
Comment: A commenter recommended that CMS revise the requirement
that the MA organization offering the D-SNP and the Medicaid MCO
contract holder must be the same legal entity in order to qualify as a
FIDE SNP because, based on the experience of the commenter, there is no
difference in a plan's ability to work with the State or integrate care
for the members based on legal entity or parent organization status.
Another commenter expressed concern that the current definitions of
HIDE and FIDE SNPs restrict plans that are operationally fully
integrated from obtaining a FIDE SNP designation by requiring a
Medicaid contract within the same legal entity that contracts with CMS
to operate as a MA plan, while Medicaid contracts for HIDE SNPs only be
provided by the same parent organization as that offering the MA plan.
The commenter recommended that CMS amend the definition of FIDE SNPs to
allow for the Medicaid contracts to be provided by the same parent
organization that offers the MA plan because, in the commenter's view,
this level of integration is sufficient to allow for full data sharing
and coordination of benefits and is in keeping with the spirit of D-SNP
regulations.
Response: We appreciate the comments but, because we did not
propose to change that aspect of the definitions for FIDE SNPs and HIDE
SNPs, we believe the suggestions are out of the scope this rulemaking.
We believe that providing coverage of Medicare and Medicaid benefits
through a single legal entity constitutes the most extensive
[[Page 27742]]
level of integration, with the greatest potential for holistic and
person-centered care coordination, integrated appeals and grievances,
comprehensive beneficiary communication materials, and quality
improvement. However, we will consider these comments in future
rulemaking.
Comment: A few commenters encouraged CMS to strengthen its
oversight on State Medicaid rate setting to ensure that Medicaid rates
for the MCO contracts held by FIDE SNPs are adequate and appropriately
reflect the scope of the Medicaid services covered. A commenter noted
that in some cases a capitated contract with a State Medicaid agency is
held by a D-SNP's parent company or sister company, while in other
cases the D-SNP entity itself may hold the contract. The commenter
stated that, in the latter situation, Medicaid rules are not clear
about the application of the Medicaid actuarial soundness requirements
at 42 CFR 438.4 to the Medicaid benefits covered by those capitated
contracts. Specifically, 42 CFR 438.4 applies to MCOs with
comprehensive Medicaid contracts, prepaid inpatient health plans, and
prepaid ambulatory health plans. The commenter noted that neither that
rule nor the current CMS Medicaid Managed Care Rate Development Guide
refer to D-SNPs or provide guidance on the applicability of Medicaid
actuarial soundness standards to Medicaid services provided by D-SNPs.
The commenter therefore requests that CMS formally clarify that
capitation rates developed pursuant to State Medicaid agency contracts
with D-SNPs are subject to the actuarial soundness requirements of 42
CFR 438.4.
Response: We appreciate the commenter's perspective on this issue.
We clarify that the phrase ``capitated contract with the State Medicaid
agency'' may be a Medicaid managed care contract for coverage of
Medicaid benefits by a Medicaid MCO, or, for a HIDE SNP, a prepaid
inpatient health plan (PIHP) or prepaid ambulatory health plan (PAHP),
depending on the scope of coverage of Medicaid services. All MCO, PIHP,
and PAHP contracts are subject to the actuarial soundness requirements
of 42 CFR 438.4. When the same legal entity as the MA organization that
offers the D-SNP has the contract for coverage on a risk basis for
Medicaid benefits--that is, when there is a capitated contract between
the D-SNP and the State Medicaid agency--that contract may be an MCO,
PIHP, or PAHP contract depending on the scope of benefits covered; in
such cases, all of the applicable 42 CFR part 438 requirements for the
MCO, PIHP, or PAHP contract, including the requirement for actuarially
sound capitation rates, must be met. For example, Medicaid PIHPs and
PAHPs can serve as the affiliated Medicaid managed care plan for
delivery of Medicaid behavioral health or LTSS for HIDE SNPs.
a. Exclusively Aligned Enrollment for FIDE SNPs
Section 422.2 defines the term ``fully integrated dual eligible
special needs plan''. Under the current definition, FIDE SNPs are plans
that: (i) Provide dually eligible individuals access to Medicare and
Medicaid benefits under a single entity that holds both an MA contract
with CMS and a Medicaid MCO contract under section 1903(m) of the Act
with a State Medicaid agency, (ii) under the capitated Medicaid managed
care contract (that is, the MCO contract), provide coverage, subject to
some limited flexibility for carve-outs, of primary care, acute care,
behavioral health, and LTSS, and coverage of nursing facility services
for a period of at least 180 days during the plan year; (iii)
coordinate delivery of covered Medicare and Medicaid benefits using
aligned care management and specialty care network methods for high-
risk beneficiaries; and (iv) employ policies and procedures approved by
CMS and the State to coordinate or integrate beneficiary communication
materials, enrollment, communications, grievance and appeals, and
quality improvement.
The current definition of a FIDE SNP does not require that the MA
contract limit enrollment to the individuals who are enrolled in the
affiliated MCO. An MA plan designated as a FIDE SNP may qualify for a
frailty adjustment as part of CMS's risk adjustment of its MA
capitation payments under section 1853(a)(1) of the Act and Sec.
422.308(c). Section 422.2 also defines the term ``aligned enrollment''
as referring to when full-benefit dually eligible individuals who are
enrolled in a D-SNP also receive coverage of Medicaid benefits from the
D-SNP or from a Medicaid MCO that is: (1) The same organization as the
MA organization offering the D SNP; (2) its parent organization; or (3)
another entity that is owned and controlled by the D SNP's parent
organization. When State policy limits a D-SNP's membership to
individuals with aligned enrollment, Sec. 422.2 refers to that
condition as exclusively aligned enrollment.
Exclusively aligned enrollment is an important design feature for
maximizing integration of care for all the D-SNP's enrollees. As
discussed on 87 FR 1861, it facilitates the use of integrated
beneficiary communication materials and clarifies overall
accountability for outcomes and coordination of care. FIDE SNPs and
HIDE SNPs with exclusively aligned enrollment are applicable integrated
plans subject to the requirement to use (beginning January 1, 2021)
unified grievance and appeals procedures for both Medicare and Medicaid
benefits.
As explained at 87 FR 1861, the current regulatory definition of
FIDE SNP permits certain forms of unaligned enrollment between Medicare
and Medicaid coverage. That is, a beneficiary may be in one parent
organization's FIDE SNP for coverage of Medicare services but a
separate company's Medicaid managed care plan (or in a Medicaid FFS
program) for coverage of Medicaid services.
We proposed to amend the definition of ``fully integrated dual
eligible special needs plan'' at Sec. 422.2 with a new paragraph (5)
to require, for 2025 and subsequent years, that all FIDE SNPs have
exclusively aligned enrollment. Requiring all FIDE SNPs to have
exclusively aligned enrollment would allow all enrollees to have their
Medicare and Medicaid benefits under the FIDE SNP and affiliated
Medicaid MCO explained clearly, which is made more difficult when some
enrollees are, but others are not, also enrolled in the affiliated
Medicaid MCO. Our proposed change would promote higher levels of
Medicare-Medicaid integration by ensuring that that all FIDE SNPs can
deploy integrated beneficiary communication materials and unify appeals
and grievance procedures for all the Medicare and Medicaid benefits
covered through the FIDE SNP and affiliated Medicaid MCO; such unified
procedures are not feasible when some FIDE SNP enrollees do not receive
their Medicaid benefits from the same organization.
Under our proposed definition, all FIDE SNPs would, by virtue of
the same legal entity holding the MA and the Medicaid MCO contracts,
(1) be capitated for Medicaid services, with some permissible
exceptions proposed at Sec. Sec. 422.107(g) and (h) and discussed
later in this section, for all of their enrollees, and (2) based on
meeting the definition of applicable integrated plans in Sec. 422.561,
operate unified appeals and grievance processes and continue delivery
of benefits during an appeal.
As discussed in the proposed rule, absent a State Medicaid policy
change in select States, our proposal would result in 12 current D-SNPs
losing FIDE SNP status. However, our proposal would not prohibit those
States and plans from operating as they currently
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do but would simply mean that the affected plans would be HIDE SNPs
rather than FIDE SNPs beginning January 1, 2025, and a consequence of
this would be that the MA plans would not qualify for the frailty
adjustment, as described in Sec. 422.308(c)(4). States may also choose
to require, through their State Medicaid agency contracts under Sec.
422.107, that MA organizations create separate MA plan benefit packages
(that is, separate D-SNPs), with one for exclusively aligned enrollment
and the other for unaligned enrollment, the former of which would meet
our proposed criteria and allow the organization to maintain FIDE SNP
status for a share of its current FIDE SNP enrollment while using one
or more new, separate D-SNPs for the unaligned enrollment. MA
organizations would need to submit a request to CMS for a crosswalk
exception under Sec. 422.530(c)(4)(i), which we proposed in section
II.A.6.a. of the proposed rule to redesignate from Sec. 422.530(c)(4)
without substantive change, for such enrollment transitions.
Finally, because the definition of aligned enrollment is specific
to full-benefit dually eligible individuals, our proposal would also
mean that D-SNPs enrolling new or continuing the enrollment of partial-
benefit dually eligible individuals could not achieve FIDE SNP
designation beginning in 2025. As discussed at 87 FR 1861 through 1862,
we do not believe this would have any meaningful impact for plans
currently operating as FIDE SNPs. Further we believe that the benefits
to be achieved with FIDE SNPs having exclusively aligned enrollment for
Medicare beneficiaries eligible for full Medicaid benefits, and the
associated greater levels of integration in the provision and coverage
of benefits and plan administration outweigh the potential negative
effects of excluding partial-benefit dually eligible individuals.
Partial-benefit dually eligible individuals would be limited to
enrollment in HIDE SNPs, coordination-only D-SNPs, other MA plans, or
the original Medicare FFS program.
Comment: Many commenters supported the proposal and noted that
exclusively aligned enrollment advances full integration, strengthens
care coordination between Medicare and Medicaid, improves enrollee
communications, and better allows the FIDE SNP to unify processes that
improve the beneficiary experience, such as through a single set of
member materials and a unified appeals and grievances process. MACPAC
commented that the proposal is consistent with its desire to move more
States toward exclusively aligned enrollment. A few commenters
expressed that FIDE SNPs should represent the highest level of
integration and that this change would help clarify the currently
confusing levels of integration among D-SNP categories.
In supporting the requirement for FIDE SNPs to have exclusively
aligned enrollment, other commenters expressed that the current FIDE
SNP structure is not designed to address the needs of enrollees who
receive Medicaid services through fee-for-service or a misaligned
Medicaid MCO. In these cases, commenters noted that a current FIDE SNP
might be required to coordinate with different Medicaid MCOs or
Medicaid fee-for-service and that lack of exclusively aligned
enrollment is inconsistent with the otherwise-integrated FIDE SNP
model. A commenter indicated including beneficiaries in FIDE SNPs who
receive their Medicaid services elsewhere diverts plan resources, and
another commenter indicated it does not afford a meaningfully
integrated experience for enrollees, providers, or payers.
A few commenters indicated that exclusively aligned enrollment
enabled plans and providers to develop and implement care models that
are payer-agnostic, and a commenter indicated a FIDE SNP may enable a
provider to submit a single claim for all services and cost-sharing.
Some commenters expressed appreciation for CMS's proposal to
provide a crosswalk exception that would allow current FIDE SNPs that
operate in States that do not require exclusively aligned enrollment to
create separate PBPs for aligned and unaligned enrollees to maintain
access to the frailty adjustment for aligned enrollees. Several
commenters asked CMS to provide more detail on how this crosswalk would
be initiated and approved.
A commenter agreed with CMS's analysis that making exclusively
aligned enrollment a criterion for FIDE SNP status would cause minimal
disruption to existing arrangements and leave ample fallback options
for HIDE SNP status for the small number of plans that would be
impacted by this change.
Response: We appreciate the widespread support for requiring
exclusively aligned enrollment for FIDE SNPs. We agree that this
proposed requirement would encourage a deeper level of integration of
Medicare and Medicaid, improve beneficiary communications about covered
Medicare and Medicaid benefits and services, and promote unified
appeals and grievances. As we noted in the proposed rule at 87 FR 1861,
we believe our proposal would clarify overall accountability for
outcomes and coordination of care. We appreciate that it could also
reduce provider administrative burden for contracting with FIDE SNPs.
We agree that transitioning to HIDE SNP status is an option for
existing FIDE SNPs in States where exclusively aligned enrollment is
not in place by 2025 and that a small number of existing plans would be
impacted by this change.
We clarify that the crosswalk exception being redesignated in this
final rule to Sec. 422.530(c)(4)(i) is available under current law.
This crosswalk exception is available when a renewing D-SNP has another
new or renewing D-SNP and the two D-SNPs are offered to different
populations; the crosswalk exception permits within-contract movement
of the enrollees who are no longer eligible for their current D-SNP
into the other new or renewing D-SNP offered by the same MA
organization if the enrollees meet the eligibility criteria for the new
or renewing D-SNP and CMS determines the movement is in the best
interest of the enrollees in order to promote access to and continuity
of care for enrollees relative to the absence of a crosswalk exception.
This existing crosswalk exception may be available to implement a
State's requirement to separate exclusively aligned enrollment from
unaligned enrollment in separate PBPs. Our proposal was only to
redesignate the regulatory provision to a different paragraph. When we
issue the additional information on timelines and procedures for
requesting crosswalks and crosswalk exceptions in sub-regulatory
guidance, we intend to consider current timeframes and procedures for
submission of applications, bids, and other required material to CMS,
in addition to the need for MA organizations to make business decisions
in a timely manner.
Comment: Several commenters opposed our proposal. A few commenters
indicated that finalizing the proposal would limit the ability of
States that exclude coverage of certain Medicaid benefits from their
Medicaid MCO contracts (that is, States with Medicaid carve-outs) from
pursuing more integrated models, may require modification of State-
specific Medicaid processes for managed care enrollment, and could
restrict enrollee choice in coverage. Another commenter discouraged any
requirements that limit FIDE SNP offerings to Medicaid managed care
organizations with contracts under section 1903(m) of the Act. Another
commenter noted that a
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State Medicaid agency decision not to facilitate exclusively aligned
enrollment could lead to loss of FIDE designation and impact the
frailty adjustment for an MA organization.
Another commenter expressed concern that the proposal limits plan
choice where a beneficiary wanted to maintain access to a trusted
provider or case manager in one Medicaid plan, while selecting an
alternative Medicare plan based on supplemental benefits.
MACPAC recognized potential burden on States with FIDE SNPs that do
not have exclusively aligned enrollment (Arizona, Pennsylvania, and
Virginia) to make this adjustment and suggested CMS work with States to
ensure there is a glidepath for these States. A commenter encouraged
CMS to ensure that unaligned individuals and impacted providers in FIDE
SNPs receive notices and counseling about the change and have access to
continuity of care protections in Medicaid.
Response: We thank the commenters. We agree that requiring FIDE
SNPs to have exclusively aligned enrollment would, in the absence of
State policy changes, impact 12 existing FIDE SNPs in a few States (we
identified Arizona, Pennsylvania, and Virginia in the proposed rule).
States may also choose to require--through their State Medicaid agency
contracts under Sec. 422.107--that MA organizations create separate
plan benefit packages, with one for exclusively aligned enrollment and
the other for unaligned enrollment, which would allow the organization
to maintain FIDE SNP status for a share of the existing FIDE SNP
enrollment, as discussed at 87 FR 1861. As discussed in the proposed
rule, these affected plans would be designated as HIDE SNP, rather than
FIDE SNPs, beginning January 1, 2025, if the plans were unable to meet
the new FIDE SNP requirements, and as such, we disagree that the
proposal would limit States pursuing integrated care options, restrict
member choice, or restrict the ability of States to facilitate access
to D-SNPs. States and MA organizations may continue to use other
structures for D-SNPs where enrollment is not exclusively aligned;
those other plans, however, would not be FIDE SNPs.
Unaligned beneficiaries transitioned to a separate PBP would
receive that information in the Annual Notice of Changes. We do not
anticipate all beneficiaries will be disenrolled from existing FIDE
SNPs that do not have exclusively aligned enrollment since an existing
FIDE SNP could become a HIDE SNP or create separate PBPs, with one for
exclusively aligned enrollment and the other for unaligned enrollment.
In cases where an MA organization does transition unaligned
beneficiaries to a separate PBP, we do not expect transitioning
beneficiaries to encounter issues accessing providers since, in our
experience, MA organizations tend to have the same provider networks
across PBPs with overlapping service areas under the same contract. For
these reasons, we disagree that we should require additional
notification to enrollees in the affected plans.
The proposed rule did not ease the requirement in Sec. 422.2 that
FIDE SNPs provide coverage of comprehensive Medicaid benefits under a
capitated contract between a Medicaid MCO and the State Medicaid agency
under section 1903(m) of the Act. States may contract with HIDE SNPs
and coordination-only D-SNPs if their Medicaid contracting strategies
are not consistent with the new FIDE SNP requirements. We seek to move
FIDE SNPs toward greater integration in the provision of Medicare and
Medicaid benefits but this final rule does not eliminate less
integrated approaches for other types of D-SNPs. We believe the
benefits of exclusively aligned enrollment, including simplifying
enrollee communication, allowing Medicare and Medicaid benefits to be
explained more clearly, and unified appeal and grievance processes will
differentiate FIDE SNPs from other plans. It will simplify the ways we,
States, and benefit counselors communicate about FIDE SNPs by
eliminating some of the confusing scenarios related to unaligned
enrollment, as described in 87 FR 1861 of the proposed rule, and will
allow FIDE SNPs to consistently and more clearly be the most integrated
D-SNP option in the market. Exclusively aligned enrollment lays the
groundwork for further integration of Medicare and Medicaid, giving
States and plans the ability to improve the beneficiary experience such
as through access to integrated beneficiary communication materials
that describe available benefits, improve the enrollee experience, and
decrease confusion by providing a simplified set of beneficiary
materials.
Comment: A commenter recommended enrollee communications clearly
articulate the features of integration and be communicated by a neutral
party to support enrollee choice among coverage options. Another
commenter asked CMS to assist States in understanding marketing
materials.
Response: We appreciate the comments and we noted in the proposed
rule that we believe the proposed changes to how we define FIDE SNP and
HIDE SNP will help differentiate the types of D-SNPs and clarify
options for beneficiaries. We will continue to work with States, plans,
advocates, beneficiaries, and providers to improve model MA plan
materials that describe D-SNPs and ensure that the features enabled by
exclusively aligned enrollment are clearly communicated to
beneficiaries. We will also continue to work with States to help them
develop State materials and educate State Health Insurance Assistance
Program (SHIP) counselors and Medicaid choice counselors to assist
beneficiaries in understanding their coverage options. States may also
want to leverage their beneficiary support systems as described in
Sec. 438.71.
Comment: A commenter noted the Massachusetts Senior Care Options D-
SNPs and MMPs also limit enrollment in the Medicaid managed care plan
to those members enrolled for Medicare, explaining that it
substantially improves integration for all enrollees.
Response: We appreciate the commenter's perspective on this issue
and we agree with the commenter that Massachusetts has achieved a high
level of integration through Senior Care Options and One Care. We did
not propose regulations limiting enrollment in the Medicaid managed
care plan. As proposed and finalized, the amendments to the definition
of FIDE SNP do not require that the State limit enrollment in the
capitated Medicaid MCO to only those enrollees in the FIDE SNP for
Medicare. Rather, this amendment limits the FIDE SNP designation to D-
SNPs with State contracts requiring exclusively aligned enrollment.
However, our proposal to require all FIDE SNPs to have exclusively
aligned enrollment would not preclude a State from choosing to
replicate Massachusetts' approach.
Comment: Another commenter encouraged CMS to continue to allow HIDE
SNPs and coordination-only D-SNPs to operate alongside FIDE SNPs.
Response: We thank the commenter and clarify that the proposal
would not restrict a State from allowing HIDE SNPs and coordination-
only D-SNPs to operate in the same market as FIDE SNPs.
Comment: Several commenters supported the January 1, 2025, proposed
effective date of this provision, while several other commenters
suggested a delay to 2025 was not required, particularly for newly
qualifying FIDE SNPs. Another commenter acknowledged the benefits of
full alignment but noted implementation would require plan operational,
policy, and system changes that would be
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burdensome to implement by contract year 2025.
Response: We thank the commenters for their perspectives on the
January 1, 2025 effective date. We believe there is sufficient time for
FIDE SNPs to implement exclusively aligned enrollment for January 1,
2025. Through the Integrated Care Resource Center and CMS Medicare-
Medicaid Coordination Office, we will provide technical assistance to
States and plans interested in facilitating exclusively aligned
enrollment and we are actively planning for upcoming technical
assistance opportunities. We reiterate that MA organizations that are
not interested in offering FIDE SNPs that meet the new requirements
applicable beginning January 1, 2025 are not required by the changes
finalized in this rule to do so because such MA organizations may offer
coordination-only D-SNPs or HIDE SNPs that are subject to lower
integration standards. The new requirement for exclusively aligned
enrollment applies only to FIDE SNPs.
Comment: A commenter requested that the crosswalk option not be
limited to States requiring or requesting exclusively aligned
enrollment, but that the crosswalk option also include MA plan-
initiated implementation of exclusively aligned FIDE SNPs and the
creation of separate MA contracts.
Response: While we appreciate the request for MA organizations to
initiate separate contracts in order to facilitate exclusively aligned
enrollment, we clarify that under Sec. 422.107(e) the separate
contract would only be provided after CMS receives a request from a
State. Section II.A.6.a. of this final rule discusses the proposal
regarding Sec. 422.107(e) and the corresponding crosswalk exception in
more detail. The existing crosswalk exception at Sec. 422.530(c)(4)(i)
(redesignated in this final rule) is not limited to situations where a
State has required or requested exclusively aligned enrollment but is
limited to specific situations described in the regulation text where a
renewing D-SNP has another new or renewing D-SNP under the same overall
contract and the two D-SNPs are offered to different populations. In
such instances, enrollees who are no longer eligible for their current
D-SNP may be crosswalked into the other D-SNP.
Comment: A few commenters expressed support for the proposal to
limit FIDE SNP enrollment to full-benefit dually eligible individuals
and allow separate D-SNP PBPs for partial-benefit dual eligible
individuals. A few commenters indicated that partial-benefit dually
eligible individuals' characteristics are similar to full-benefit
dually eligible individuals and that partial-benefit enrollees can
benefit from access to stronger care coordination models not generally
available in non-SNP MA organizations. The commenter believed this
provision would allow the necessary distinctions in communications and
enrollee materials describing access to Medicaid benefits for partial-
benefit dually eligible enrollees compared to full-benefit dually
eligible enrollees. A few commenters noted that separate PBPs based on
whether enrollees are eligible for partial Medicaid benefits or full
Medicaid benefits allows for targeting supplemental benefits to
partial-benefit dually eligible individuals, and a commenter indicated
it could potentially lead to some financial incentives for States to
support D-SNP enrollment and possible shared savings opportunities.
Another commenter indicated any additional burden these changes may
place on FIDE SNPs is preferable to disallowing enrollment of partial-
benefit dually eligible individuals in D-SNPs as some policy makers
have advocated and are far less restrictive than some other integration
legislative proposals that have been promoted.
A few commenters expressed the proposal may create additional
administrative burden for States, plans, and CMS for oversight and
another commenter indicated that States may not have experience or
processes to track PBPs, particularly when States may have a single
MLTSS contract with a comprehensive benefit package with all enrollees
included. The commenter indicated that having separate MA PBPs could
create the need for additional Medicaid MCO contracts and additional
rate-setting and contract review burdens both internally and with CMS.
Another commenter asked CMS to provide technical assistance to States
on procurement timing, contract support, full- and partial-benefit
dually eligible individuals and applicability of unified appeals and
grievances, and to encourage the use of crosswalks into PBPs for
partial-benefit dually eligible individuals.
Response: We thank the commenters for the feedback. We noted at 87
FR 1861 through 1862 of the proposed rule that for contract year 2021,
no FIDE SNPs enrolled partial-benefit dually eligible individuals. As
such, we do not believe the preclusion of enrollment into FIDE SNPs by
partial-benefit dually eligible individuals places additional burden on
States, MA plans, or CMS for oversight or necessitates any new
notifications to beneficiaries. We intend to provide education and
outreach to States about changes codified in this final rule. To the
extent that this new requirement for exclusively aligned enrollment for
FIDE SNPs causes concerns for MA organizations or States that wish to
have a single PBP for all dually eligible individuals, HIDE SNPs and
coordination-only D-SNPs remain an option.
Comment: Several commenters recommended CMS provide training and
technical assistance around exclusively aligned enrollment and its
processes to States, plans, benefits counselors, and community
partners. A few commenters asked CMS to provide more information and
education to States and plans about operationalizing crosswalks to
separate FIDE SNP PBPs with aligned enrollment with a companion
Medicaid managed care plan from unaligned enrollment, as well as to
separate PBPs for partial-benefit dually eligible individuals. A
commenter recommended an intentional effort to ensure that dually
eligible individuals, including those with limited English proficiency,
understand how their enrollment works. The commenter recommended
Community Catalyst's publication, ``Person-Centered Enrollment
Strategies for Integrated Care Toolkit,'' for additional details on
creating person-centered enrollment practices.
Response: We thank the commenters and agree that it is important
for CMS to provide education and technical assistance to MA
organizations in operationalizing provisions codified in this rule. In
particular, we are working closely with California Department of Health
Care Services to develop their exclusively aligned enrollment policies
and procedures for 2023 and we will offer similar support to other
interested States, regardless whether the use of exclusively aligned
enrollment or FIDE SNPs is tied to transition out of a FAI
demonstration or part of efforts to increase integration for dually
eligible individuals.
Comment: Some commenters encouraged CMS to consider extending the
requirement for exclusively aligned enrollment to HIDE SNPs, expressing
that the rationale for exclusively aligned enrollment for FIDE SNPs is
applicable to HIDE SNPs. MedPAC recommended requiring that HIDE SNPs
have exclusively aligned enrollment, noting integration would depend on
States and plan sponsors, who could either adopt exclusively aligned
enrollment so the existing HIDE SNPs could continue to keep that
designation or instead let those plans meet the lower coordination-only
D-SNP standard for
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integration. Further, MedPAC noted the use of exclusively aligned
enrollment would also entail some disruption for full-benefit dually
eligible beneficiaries who are enrolled in HIDE SNPs but have
misaligned enrollment, as well as for any partial-benefit dually
eligible individuals who are now enrolled in a HIDE SNP. MedPAC went on
to state that requiring HIDE SNPs to use exclusively aligned enrollment
could enable CMS to implement a range of policies that promote
integration (such as requiring more D-SNPs to have Medicaid contracts
to cover Medicare cost-sharing, integrated member materials, and a
unified process for handling appeals and grievances) on a wider scale.
Also, a commenter stated opposition to extending exclusively
aligned enrollment to HIDE SNPs.
Response: We appreciate the support for requiring exclusively
aligned enrollment for both FIDE SNP and HIDE SNP. However, applying
this requirement to HIDE SNPs is outside of the scope of this
rulemaking. Further, additional factors, such as the potential burden
and our goal of adopting requirements to more readily distinguish FIDE
SNPs and HIDE SNPs, warrant continued consideration of this policy. We
will consider these comments for future rulemaking.
Comment: A commenter requested CMS require matching Medicare and
Medicaid effective dates for enrollment and disenrollment into FIDE and
HIDE SNPs, leverage CMS mechanisms that can promote alignment, and
provide technical assistance and encouragement to States to adjust
their processes to ensure matching effective dates.
Response: We appreciate the commenter's perspective and agree that
an important component of exclusively aligned enrollment is aligning
the Medicare and Medicaid effective dates. There are operational
challenges for aligning the timing of Medicaid and Medicare enrollment
and disenrollment processes. States may have annual enrollment periods
or continuous enrollment and many establish a mid-to-late month cutoff
date for processing enrollments into Medicaid managed care plans.
Medicare Advantage plans are required to utilize various election
periods described at 42 CFR 422.62 and often must accept enrollments
through the end of the month. We will work with States to support
operationalizing exclusively aligned enrollment to maximize the ability
to align enrollment and disenrollment dates. We plan to make available
both written resources and technical assistance events promoting best
practices that highlight States that successfully facilitate
exclusively aligned enrollment, as well as offer direct State-specific
technical assistance through the Integrated Care Resource Center. To
maximize flexibility for States that newly implement exclusively
aligned enrollment, we decline to codify in regulation the requirement
that the effective dates are matching. However, we will monitor where
there are misaligned effective dates upon implementation of this rule,
and we will strive to provide technical assistance and share promising
practices.
Comment: A commenter recommended that CMS, instead of finalizing
the proposal, provide guidance and incentives to States to transition
to exclusively aligned enrollment, such as adopting a shared savings
component for FIDE SNPs, noting shared savings was used as an incentive
to encourage States to participate in FAI. The commenter further
recommended CMS consider a request for information to identify
potential options and guardrails to address benefits, access, and
quality.
Response: We appreciate the comment. CMS will continue to provide
guidance and support to States that transition to exclusively aligned
enrollment for FIDE SNPs, leveraging promising practices from States
that already implement it, such as Idaho, Massachusetts, Minnesota, New
Jersey, and New York. We decline to accept the commenter's
recommendation to collect information in lieu of finalizing our
proposal to amend the requirements for FIDE SNPs but instead will
finalize as proposed. We intend to concurrently continue to collect
promising practices and feedback and share it with States and plans.
Finally, we note that payment requirements for MA plans are set by
section 1853 of the Act so we have limited ability outside of the
context of a demonstration or test of a payment model under section
1115A of the Act to change payment parameters in the MA program.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing without modification our proposed amendment to the
definition of FIDE SNP at Sec. 422.2 with a new paragraph (5) to
require FIDE SNPs, beginning January 1, 2025, to have exclusively
aligned enrollment.
b. Capitation for Medicare Cost-Sharing for FIDE SNPs and Solicitation
of Comments for Applying to Other D-SNPs
We proposed to specify in Sec. 422.2 that FIDE SNPs are required
to cover Medicare cost-sharing as defined in section 1905(p)(3)(B),
(C), and (D) of the Act, without regard to how section 1905(n) limits
that definition to qualified Medicare beneficiaries (QMBs), as part of
the FIDE SNP's coverage of primary and acute care; this means that the
proposed amendment would require FIDE SNPs to cover Medicare cost-
sharing for both QMB and non-QMB full-benefit dually eligible FIDE SNP
enrollees. This proposal would cover Medicare cost-sharing in the form
of coinsurance, copayments, or deductibles for Medicare Part A and Part
B benefits covered by the FIDE SNP. Under this proposal, a FIDE SNP
would cover Medicare payment for primary care and acute care covered by
Medicare and the Medicaid payment for any Medicare cost-sharing in such
cases.
We proposed this change only for FIDE SNPs because FIDE SNPs are
the only type of D-SNP that must have capitated Medicaid contracts for
coverage of Medicaid acute and primary care benefits and are better
equipped, compared to other D-SNPs, to make improvements for
coordination of benefits and adjudication of claims. This is especially
true when capitation for Medicare cost-sharing is combined with a
requirement for exclusively aligned enrollment (as discussed in section
II.A.5.a. of this final rule to amend the FIDE SNP definition at Sec.
422.2). Under our proposal, a provider serving a dually eligible
individual enrolled in a FIDE SNP with exclusively aligned enrollment
would submit a single claim to the FIDE SNP for both Medicare and
Medicaid coverage of the service; the FIDE SNP would adjudicate the
claim for a covered service for any applicable Medicare payment,
Medicaid payment, and Medicaid payment of Medicare cost-sharing. As
reflected in paragraph (1) of the definition of FIDE SNPs at Sec.
422.2, the MA organization offering a FIDE SNP is also a Medicaid MCO
with a contract under section 1903(m) of the Act, which must be a
Medicaid managed care comprehensive risk contract as defined in Sec.
438.2. In order to satisfy the new requirement, we proposed for FIDE
SNPs, the Medicaid MCO contract will include capitated coverage of the
Medicare cost-sharing for Medicare Part A and Part B benefits. (Like
all MA plans, the FIDE SNP will cover Medicare Part A and Part B
benefits, subject to limited exclusions for hospice, certain new
benefits, and costs of acquisition of kidneys for transplant.) We
expect the single legal entity to process and pay claims to the extent
there is coverage under its MA contract and its Medicaid managed care
[[Page 27747]]
contract without the need for additional claims filing by providers. In
this way, the additions we proposed to the definition of FIDE SNPs at
Sec. 422.2 would ensure that all FIDE SNPs include elements--
capitation for Medicare cost-sharing and exclusively aligned
enrollment--that result in improved beneficiary and provider
experiences.
As discussed in the proposed rule (87 FR 1863), this policy does
not include Medicare Parts A and B premiums in the requirement for FIDE
SNPs to cover Medicare cost-sharing. The State Medicaid agency would
continue to pay the Medicare Parts A and B premiums on behalf of dually
eligible beneficiaries in accordance with Sec. Sec. 406.26 and
406.32(g) and part 407, subpart C, of the chapter.
We received the following comments on this proposal and respond to
them below:
Comment: All commenters supported the requirement of FIDE SNPs to
cover Medicare cost-sharing for both QMB and non-QMB full-benefit
dually eligible FIDE SNP enrollees as part of the FIDE SNP's coverage
of Medicaid-covered primary and acute care services.
Response: We thank commenters for their support for our proposal.
Comment: A commenter supported the proposal but requested that CMS
delay the applicability date of this provision to allow adequate time
to implement in Tennessee where the capitated contracts do not
currently include Medicare cost-sharing.
Response: In the proposed rule (87 FR 1863), we stated our belief
that all FIDE SNPs already receive Medicaid capitation for Medicare
cost-sharing consistent with our proposal. Therefore, we assumed no
impact on current FIDE SNPs and did not believe there was any reason to
delay the implementation of this new requirement. However, comments and
our subsequent analysis illustrate that, in contrast to our assertion
in the proposed rule, FIDE SNPs in one State (Tennessee) do not
currently cover Medicare cost-sharing. As a result, we anticipate that
there will be a need for the State and those FIDE SNPs to implement
changes to come into compliance with this new requirement. Therefore,
we are finalizing a change to make this provision applicable beginning
in 2025.
Comment: A commenter encouraged CMS to ensure that capitation rates
adequately and appropriately reflect the scope of services covered.
Response: We appreciate the opportunity to clarify that the
requirements that apply to Medicaid capitation rates, including
actuarial soundness requirements at 42 CFR 438.4, are applicable to
Medicaid capitation rates developed for the affiliated Medicaid MCO for
a FIDE SNP. As reflected in paragraph (1) of the definition of FIDE
SNPs at Sec. 422.2, the MA organization offering a FIDE SNP is also a
Medicaid MCO with a contract under section 1903(m) of the Act, which
must be a Medicaid managed care comprehensive risk contract as defined
in Sec. 438.2. As required by section 1903(m)(2)(A) of the Act and
Sec. 438.4, capitation rates for MCO contracts must be actuarially
sound, meaning that the rates are projected to provide for all
reasonable, appropriate, and attainable costs for the enrolled
population that are required under the terms of the contract. CMS
reviews such rates under Medicaid managed care regulations in 42 CFR
part 438. We anticipate that capitated coverage of the Medicare cost-
sharing for Medicare Part A and Part B benefits that will be required
for FIDE SNPs will be included in the MCO contract that the single
legal entity offering both the FIDE SNP and the MCO must have with the
State. As such, the requirement for actuarially sound capitation rates
will apply.
Comment: The commenter requested clarification whether this
proposal is limited to covering Medicare cost-sharing for ``primary
care and acute care'' and excluded providers and suppliers of other
services (for example, pharmacists providing Part B drugs, DME
suppliers, etc.) and, if the exclusion is intentional, why other
providers and suppliers should be excluded.
Response: Thank you for the opportunity to clarify our proposal.
The reference in paragraph (2)(i) of the FIDE SNP definition
encompasses Medicare cost-sharing for all Medicare Part A and B
services, including Part B drugs and DME to the extent the Medicaid
program covers Medicare cost-sharing for full-benefit dually eligible
individuals. We clarify here that in using the definition in section
1905(p)(3)(B) of the Act without regard to the limitation of that
definition to QMB dually eligible beneficiaries, we are not requiring
that a State expand the categories of full-benefit dually eligible
beneficiaries for whom the State covers all Medicare cost-sharing in
order to contract with a FIDE SNP.
Comment: A commenter asked if the Medicare cost-sharing for non-QMB
dually eligible beneficiaries would be the financial obligation of the
FIDE SNP and not included in the calculation of the State's capitated
Medicare cost-sharing payment.
Response: Under this proposal, the FIDE SNP would cover Medicare
cost-sharing, which includes coinsurance, copayments, or deductibles
for Medicare Part A and Part B benefits covered by the FIDE SNP, for
all enrollees of the FIDE SNP beginning January 1, 2025. As detailed in
section B.5.a of this rule, FIDE SNPs must have exclusively aligned
enrollment beginning January 1, 2025, FIDE SNPs will only enroll full-
benefit dually eligible individuals, which can include non-QMB full-
benefit dually eligible beneficiaries, and cover Medicare cost-sharing
for these enrollees beginning January 1, 2025.
For full-benefit QMB dually eligible individuals (that is, QMB+
beneficiaries), ``Medicare cost-sharing'' includes costs incurred with
respect to dually eligible individuals in the QMB program ``without
regard to whether the costs incurred were for items and services for
which medical assistance [Medicaid] is otherwise available under the
plan'' as described in section 1905(p)(3) of the Act. Therefore, under
the new requirement we are finalizing here, the FIDE SNP capitated
contract with the State must include State payment of Medicare cost-
sharing for full-benefit QMB dually eligible beneficiaries. States may
elect to extend coverage of Medicare cost-sharing, including
coinsurance, for Medicare beneficiaries eligible for full Medicaid
benefits who are not QMBs, (such as SLMB+ beneficiaries), as specified
in the Medicaid State plan. For non-QMB full-benefit dually eligible
beneficiaries, the FIDE SNP capitated contract with the State must
include State payment of all Medicare cost-sharing when the State has
elected to extend such coverage for these individuals. Absent such an
election, the FIDE SNP's affiliated Medicaid MCO capitated contract
must cover Medicare cost-sharing for these non-QMB full benefit dually
eligible individuals only for services covered under the State plan. In
this last circumstance, the State might adjust the capitation rate paid
under the Medicaid MCO contract to reflect coverage of Medicare cost-
sharing for non-QMB full-benefit dually eligible individuals only for
those services, such as inpatient hospitalization, that are also
covered under the Medicaid State plan. In our experience, however,
States do not adjust the capitation rate for Medicare cost-sharing for
a FIDE SNP's full-benefit dually eligible enrollees to account for
those few Medicare-covered services not covered under the Medicaid
State plan because the difference in per
[[Page 27748]]
member per month costs is not significant.
Comment: A commenter asked how the State coverage of cost-sharing
occurs in situations where a FIDE SNP makes alternate payment
arrangements with providers (for example, if a FIDE SNP capitates per
patient per month payments, quality bonuses, or within a network with
salaried providers and facilities directly owned by the plan).
Response: When the State contract with the Medicaid MCO affiliated
with a FIDE SNP capitates for Medicaid payment of Medicare cost-
sharing, providers no longer bill the State Medicaid agency for
Medicare cost-sharing; the FIDE SNP assumes responsibility for making
these payments. As proposed and finalized, the requirement for FIDE
SNPs to cover the Medicaid payment of Medicare cost-sharing for their
enrollees under the capitated contract between the Medicaid MCO
affiliated with the FIDE SNP and the State does not dictate the
particular payment amounts for covered services. Nor does this final
policy address all operational details for identifying Medicare cost-
sharing obligations for specific services in the context of specific
provider payment arrangements. This new provision only requires that
the FIDE SNP's coverage of Medicaid benefits include the Medicare cost-
sharing otherwise applicable for Medicare Part A and B benefits for the
FIDE SNP's enrollees, which will result in the FIDE SNP's payment to a
provider including the FIDE SNP's coverage of the service and any
Medicaid-covered Medicare cost-sharing amount.
CMS does not interfere in the negotiations between MA organizations
and their contracted providers and does not directly participate in the
negotiations between FIDE SNPs and States regarding the capitation
amount paid for FIDE SNP's Medicaid coverage (other than to assure that
Medicaid managed care requirements for actuarially sound rates in
Sec. Sec. 438.4 through 438.7 are met). CMS will not be in a position,
nor have the responsibility, to assess payment methodologies for how
the FIDE SNP pays the covered Medicare cost-sharing amounts to their
contracted providers or whether those payments are equivalent to
comparable payments through Medicare and Medicaid FFS. States can
require use of particular payment methodologies for certain providers,
such as primary care, mental health, and other high value providers,
through contracts with D-SNPs to ensure sufficient access and quality
of care meets the needs of D-SNP members. In addition, Medicaid managed
care regulations permit States to direct Medicaid managed care plans to
use certain payment arrangements in connection with Medicaid coverage
provided certain requirements are met at Sec. 438.6(c). Finally, as
previously noted in this rule, we review Medicaid capitation rates to
ensure they are actuarially sound.
Comment: A commenter requested CMS consider clarifying elements of
the Medicare cost-sharing billing process during a beneficiary's
Medicare deeming period to prohibit MA providers from billing Medicare
cost-sharing to dually eligible beneficiaries during the Medicare
deeming period in order to strengthen balance billing protections for
dually eligible beneficiaries.
Response: We share the commenter's concern about the billing of
Medicare cost-sharing during the deeming period when a D-SNP enrollee
has lost Medicaid eligibility. However, the loss of Medicaid
eligibility also means that the prohibition on providers billing the
beneficiary for Medicare cost-sharing has also been lost, since the
individual is no longer dually eligible for Medicare and Medicaid. We
will take this comment into consideration as we work to develop ways to
protect individuals from undue expenses and potential access to care
barriers during the deeming period. Although these individuals have
lost eligibility for Medicaid, they almost always still have very low
income, very few resources, and substantial health care needs.
Comment: A commenter requested clarification on how best to apply
this requirement in instances where the HIDE SNP or FIDE SNP includes
language on capitation for Medicare cost-sharing in the plan's contract
with the State, but the State is not paying the plan for the Medicare
cost-sharing in accordance with the contract language.
Response: As proposed and finalized, capitated coverage of the
Medicare cost-sharing for Medicare Part A and Part B benefits that will
be required for FIDE SNPs will be included in the Medicaid MCO contract
that the single legal entity offering both the FIDE SNP and the
Medicaid MCO must have with the State. Future contract disputes
regarding the implementation of State capitated payment for Medicare
cost-sharing to a FIDE SNP should be addressed per the Medicaid MCO
contract language for dispute resolution. The requirement for capitated
coverage of Medicare cost-sharing does not extend to HIDE SNPs;
however, States and HIDE SNPs (and other MA plans) are free to
negotiate capitated arrangements for facilitating Medicaid coverage of
Medicare cost-sharing for dually eligible individuals.
We appreciate the support for our efforts. We are finalizing our
proposed revisions for paragraph (2)(i) of the definition of a FIDE SNP
at Sec. 422.2 with a delay in the applicability date until the 2025
plan year for the requirement that FIDE SNPs cover Medicare cost-
sharing in their capitated contracts with State Medicaid agencies.
In the proposed rule (87 FR 1862 through 1863) we also solicited
feedback on the feasibility, implementation, estimated time to enact,
and impact of requiring all D-SNPs to have contracts with State
Medicaid agencies for capitated coverage of Medicare cost-sharing to
inform future rulemaking. We received many comments in response to our
request for information. All comments supported the benefits to
requiring capitated Medicare cost-sharing for all D-SNPs, however
commenters expressed substantial concerns regarding the implementation
of such a policy and how to determine if such a policy achieves the
purpose of improving provider access for dually eligible individuals.
Commenters provided suggestions regarding implementation timeline,
development of resources, and technical assistance.
As we discussed in the proposed rule, we also considered proposing
a requirement for State Medicaid data exchanges to provide real-time
Medicaid managed care plan enrollment data to D-SNPs to enable better
coordination between the D-SNP and the State and/or Medicaid managed
care plan. To allow more time for us to consider the operational
challenges for States, we did not propose a requirement. We solicited
feedback on the pros and cons of requiring State Medicaid data
exchanges to provide real-time Medicaid FFS program and Medicaid
managed care plan enrollment data with D-SNPs, and the impact of such a
requirement on States, Medicaid managed care plans, D-SNPs, providers,
and beneficiaries. We received a number of comments in response to our
request for information on the pros and cons of requiring State
Medicaid data exchanges of Medicaid FFS program and Medicaid managed
care plan enrollment data with D-SNPs. All commenters agreed with CMS's
assessment of the importance of this data to enable better coordination
between D-SNPs and the Medicaid FFS program or Medicaid managed care
plan for dually eligible beneficiaries that are not in aligned plans.
Many commenters suggested a technical expert panel of States and plans
to develop the concept and identify considerations, obstacles,
[[Page 27749]]
and implementation timeline for the described data exchange. Finally,
we received a couple comments that were concerned with the uniformity
of individual State Medicaid data exchanges, and a commenter suggested
leveraging the State MMA File Exchange \34\ as a better alternative for
sharing the Medicaid FFS program and Medicaid managed care plan
enrollment data.
---------------------------------------------------------------------------
\34\ Since 2005, State Medicaid agencies have been submitting
files at least monthly to CMS to identify all dually eligible
beneficiaries in each State. This includes full-benefit dually
eligible individuals and partial-benefit dually eligible
individuals. The file is called the ``MMA File'' (after the Medicare
Prescription Drug Improvement and Modernization Act of 2003), or
State Phasedown File. See here for more information.
---------------------------------------------------------------------------
We appreciate the support for our efforts to raise this issue and
will consider comments and suggestions received for future rulemaking,
technical assistance, and related work.
c. Scope of Services Covered by FIDE SNPs
(1) Need for Clarification of Medicaid Services Covered by FIDE SNPs
CMS first defined the term ``fully integrated dual eligible special
needs plan'', or FIDE SNP, at Sec. 422.2 in the ``Medicare Program;
Changes to the Medicare Advantage and the Medicare Prescription Drug
Benefit Programs for Contract Year 2012 and Other Changes'' final rule
(76 FR 21432) (hereinafter referred to as the April 2011 final rule) to
implement section 3205(b) of the Affordable Care Act (which amended
section 1853(a)(1)(B)(vi) of the Act to add a frailty adjustment to the
risk adjustment payments for certain FIDE SNPs). That definition
provided that a FIDE SNP must have a capitated contract with a State
Medicaid agency that includes coverage of specified primary, acute, and
long-term care benefits and services, consistent with State policy.
As discussed in more detail in the proposed rule (87 FR 1864),
despite discussion in the April 2011 final rule that FIDE SNPs would
provide all primary, acute, and long-term care services and benefits
covered by the State Medicaid program, we did not operationalize review
of State Medicaid agency contracts in that way. Over the years, CMS has
determined D-SNPs to be FIDE SNPs even where the State carved out
certain primary care, acute care, and LTSS benefits from the Medicaid
coverage required from the D-SNP. In effect, we allowed States
flexibility in the coverage provided by FIDE SNPs, not only to
accommodate differences in the benefits covered under various State
Medicaid programs but to accommodate differences in State contracting
strategies for managed care broadly, and for FIDE SNPs in particular.
In the April 2019 final rule (84 FR 15706 through 15707), we revised
the FIDE SNP definition at Sec. 422.2 to add Medicaid behavioral
health services to the list of services that a FIDE SNP must include in
its capitated contract with the State Medicaid agency. But, consistent
with how we were operationalizing this definition, we explained that
our amendment would allow plans to meet the FIDE SNP definition even
where the State excluded Medicaid behavioral health services from the
capitated contract.
As discussed in the January 2022 proposed rule (87 FR 1863 through
1864), the way we have applied the definition of FIDE SNPs has not
enabled us to ensure FIDE SNPs fully integrate Medicare and Medicaid
services for dually eligible individuals. We proposed to revise
paragraph (2) of the definition of a FIDE SNP at Sec. 422.2 to clearly
specify which services and benefits must be covered under the FIDE SNP
capitated contract with the State Medicaid agency, and thus bring
fuller integration of Medicaid benefits to individuals enrolled in FIDE
SNPs. Our proposal would revise paragraph (2) of the existing
definition into paragraphs (2)(i) through (v), with each of the new
paragraphs addressing specific coverage requirements. We believe the
proposals described in this section strike the appropriate balance
between flexibility for variations in State Medicaid policy and our
goal of achieving full integration in FIDE SNPs. In addition, as
discussed more fully in section II.A.5.e., our proposed revision of the
definition, in conjunction with a proposal to add Sec. 422.107(g) and
(h), included flexibility for approval of some limited carve-outs of
LTSS and behavioral health services.
As described in the proposed rule (87 FR 1864), we proposed that
the updates to the FIDE SNP definition at Sec. 422.2 would mean that
all Medicaid benefits in these categories would be covered by the MCO
that is affiliated with the FIDE SNP, to the extent Medicaid coverage
of such benefits is available to individuals eligible to enroll in the
FIDE SNP, and we did not propose any exceptions. Because the same legal
entity must have the MA contract with CMS for the D-SNP and the
Medicaid MCO contract with the State, and the enrollment in the FIDE
SNP must be limited to dually eligible individuals who are also
enrolled in the MCO, this entity is functionally all the FIDE SNP.
Comment: Several commenters supported CMS's proposed clarification
of the services that must be covered by a FIDE SNP through a capitated
contract with the State Medicaid agency. Other commenters supported
CMS's proposed changes to the FIDE SNP requirements and believed that
they would help ensure that FIDE SNPs are fully integrated with
Medicaid. Several commenters expressed that the proposed changes would
make it easier for beneficiaries to understand how FIDE SNPs differ
from other, less integrated D-SNPs. A commenter stated that all full
benefit dually eligible individuals should have access to fully
integrated care, which should include one benefit package that
encompasses all Medicare- and Medicaid-covered services, including
primary and acute care benefits, behavioral health, LTSS and dental
benefits. A commenter supported CMS's proposal because they experienced
firsthand in the Financial Alignment Initiative how Medicare-Medicaid
integration greatly benefits enrollees, providers, and payers. Another
commenter believed that providers would experience lower administrative
burden when contracting with FIDE SNPs that provide comprehensive
coverage of all the services described in our proposal. A commenter
supported CMS's proposal because it accounts for variations in State
Medicaid programs, honors beneficiary choice, and promotes quality and
value through competition.
Response: We appreciate the widespread support for our proposal to
clarify the scope of Medicaid-covered services that must be covered by
the affiliated Medicaid MCO for a D-SNP to be a FIDE SNP. We agree that
the proposed changes will help ensure fuller integration of benefits
for FIDE SNP enrollees. We also agree that the proposal will improve
stakeholder understanding of how integrated plan options differ and
improve clarity of what those plans cover.
Comment: A commenter believed that the proposed changes to the
definition of a FIDE SNP would negatively impact Medicaid programs in a
number of States because some plans currently designated as FIDE SNPs
would no longer be considered FIDE SNPs. Another commenter opposed
CMS's proposal because they believed that the proposal would discourage
States wishing to pursue further integration from doing so as it may
not align with the State's other Medicaid contracting priorities. The
commenter noted that Pennsylvania, Virginia, and Arizona have made the
decision to permit D-
[[Page 27750]]
SNPs other than those that have MLTSS contracts to operate in the
State.
Response: We acknowledge the comments and recognize the concern
that some current FIDE SNPs may no longer meet the requirements to be a
FIDE SNP. As we described at 87 FR 1865 through 1866, our analysis
found that if our proposed changes went into effect, relatively few
FIDE SNPs would lose FIDE SNP distinction. D-SNPs that do not meet the
proposed FIDE SNP definition at Sec. 422.2 may still meet the HIDE SNP
definition at Sec. 422.2, which we are also updating in this
rulemaking. In addition, coordination-only D-SNPs remain permissible,
which means that States have flexibility in permitting various types of
D-SNPs with different levels of integration and coordination with the
States' Medicaid managed care programs. We believe the benefits of our
proposed changes outweigh the benefit of continuing to allow FIDE SNP
designation for plans that do not have the level of integration
achieved by the same legal entity covering Medicare Part A and Part B
benefits (subject to limited exclusions required by the Medicare
statute) and comprehensive Medicaid benefits as outlined in our
proposal. Further, we acknowledge that States may take different
pathways toward integrated care, and we believe the proposed change
preserves flexibility for States.
Comment: A commenter requested clarification on how States would
conform to the changes to the FIDE SNP definition. Another commenter
requested clarification on what would happen if a State refused to
clarify their State Medicaid agency contract. The commenter also
requested clarification on how and whether dental benefits would be
considered under this proposal as some State Medicaid programs cover
limited dental benefits.
Response: We appreciate the requests for clarification. As proposed
and finalized, the amendments to paragraph (2) of the definition of
FIDE SNP will require the Medicaid MCO affiliated with the FIDE SNP to
cover specified Medicaid benefits under a capitated contract under
section 1903(m) of the Act. For contract year 2023 and 2024, the
required Medicaid-covered benefits are all primary and acute care
benefits and long-term services and supports, including coverage of
nursing facility services for a period of at least 180 days during the
coverage year, which is consistent with the current regulation and
practice (because we currently permit a complete carve-out of Medicaid
behavioral health benefits). Beginning with contract year 2025, the
required Medicaid-covered benefits are all primary and acute care
benefits (including Medicare cost-sharing for Medicare Part A and Part
B benefits), long-term services and supports, including coverage of
nursing facility services for a period of at least 180 days during the
coverage year, Medicaid home health (as defined in Sec. 440.70),
medical supplies, equipment, and appliances (as described in Sec.
440.70(b)(3)), and Medicaid behavioral health services. We expect that
States that wish to have FIDE SNPs operate in their State will review
and, as necessary, update their MCO Medicaid managed care contracts to
include this full scope of services for the necessary time periods.
If the FIDE SNP's MCO contract with the State Medicaid agency does
not cover the required scope of Medicaid benefits, the MA organization
could still offer a HIDE SNP, as defined at Sec. 422.2, or a
coordination-only D-SNP. Under the proposed regulation, CMS is not
requiring the FIDE SNP to cover Medicaid dental benefits in order to
meet the definition of FIDE SNP, but States may choose to include
dental benefits in their Medicaid MCO contract with a FIDE SNP.
Comment: A commenter urged CMS to exercise the appropriate
oversight to ensure that D-SNP enrollees have access to the full range
of Medicare benefits for which they are eligible, and that D-SNPs
adhere to Medicare requirements for access to medically necessary
services. The commenter stated that MA plans have limited understanding
of Medicare benefit and coverage criteria, leading to inappropriate
denials of medically necessary care for vulnerable enrollees. The
commenter urged CMS to (1) develop and implement a regulatory mechanism
to ensure plan compliance with MA requirements, and (2) allow State
Medicaid agencies greater authority over the operations of D-SNPs on
the level of care determinations and access to medically necessary
services, for example, by including certain reporting requirements in
State contracts and using that information in public reporting and when
establishing ongoing agreements.
Response: We appreciate the comment. CMS conducts regular program
audits of MA plans to assess compliance with Medicare Advantage
requirements, which include coverage of almost all Medicare Part A and
Part B benefits. As discussed in the proposed rule (87 FR 1869),
section 164(c)(4) of MIPPA does not require a State to enter into a
contract with an MA organization with respect to a D-SNP (as described
in section 1859(b)(6)(B)(ii) of the Act), which therefore provides
States with significant control over the availability of D-SNPs in
their markets. The State's discretion to contract with D-SNPs, combined
with the State's control over its Medicaid program, creates flexibility
to require greater integration of Medicare and Medicaid benefits from
the D-SNPs that operate in the State. States have broad authority to
include specific requirements for D-SNPs in their State Medicaid agency
contracts (and some States currently do so). We believe that State
Medicaid agencies have sufficient oversight authority over the
operations of D-SNP plans and flexibility to allow States to require
that MA organizations provide reports to the States under the State
Medicaid agency contracts so long as such reports and information
sharing, and/or specific performance standards are consistent with
applicable law and do not violate 42 CFR part 422 requirements. In the
proposed rule (87 FR 1869 through 1870), we gave examples of States
that require specific care coordination or data sharing activities in
their contracts with D-SNPs.
(2) Requiring FIDE SNPs To Cover Medicaid Primary and Acute Care
Benefits
Primary and acute care benefits for dually eligible beneficiaries
are generally covered by Medicare as the primary payer rather than
Medicaid. We proposed revisions to the FIDE SNP definition in paragraph
(2)(i) of Sec. 422.2 to limit the FIDE SNP designation to D-SNPs that
cover primary care and acute care services and Medicare cost-sharing--
to the extent such benefits are covered for dually eligible individuals
in the State Medicaid program--through their capitated contracts with
State Medicaid agencies. As described in the proposed rule (87 FR
1864), we proposed that this requirement would mean that all primary
and acute care services, including the Medicare cost-sharing covered by
the State Medicaid program (as discussed and finalized for 2025 in
section II.A.5.b. of this final rule) must be covered by the FIDE SNP
under the MCO contract between the State and the organization that
offers the FIDE SNP and the MCO; we did not propose any exceptions or
mechanism for carving out coverage of primary and acute care. However,
we did clarify that Medicaid non-emergency medical transportation
(NEMT) as defined in Sec. 431.53 is not a primary or acute care
service included in the scope of this provision. We solicited comment
on whether we should allow for specific carve-outs of some of these
benefits and services. We welcomed specific
[[Page 27751]]
examples of primary and acute care benefits that are either currently
carved out of FIDE SNP capitated contracts with State Medicaid agencies
or should be carved out and requested that comments include the reason
for the existing and proposed future carve-outs.
Comment: Several commenters supported CMS's proposed requirement
that all primary and acute care benefits must be covered by FIDE SNPs
through a capitated contract with the State Medicaid agency.
Response: We thank the commenters for their support.
Comment: A commenter expressed support and agreement with CMS that
Medicaid non-emergency medical transportation, while a critical
service, should not be considered a primary or acute care service for
the purpose of this definition. Other commenters expressed concern
about excluding Medicaid NEMT from the services that must be included
in a FIDE SNP's contract with a State. A commenter acknowledged that
many States cover NEMT benefit through Statewide contracts with an NEMT
provider, but believed that in many States NEMT does not work well for
beneficiaries, and coordination with doctors and other service
providers has been poor. The commenter believed integrating NEMT, if
done well, should be able to help address some of those current
deficiencies. Other commenters noted that NEMT is vital to ensure
dually eligible individuals with transportation barriers have access to
the care they need. These commenters cited a preliminary study on NEMT
access in the MA program which shows that the use of an NEMT benefit in
MA plans is correlated with an average 1.5 times more primary care
physician visits than for those beneficiaries who didn't use the
benefit.
Response: We appreciate the comments on the inclusion of NEMT. We
acknowledge that NEMT is a critical service for dually eligible
individuals. We note that our proposal does not preclude States from
including NEMT in their contracts with D-SNPs or their Medicaid managed
care plans. However, we continue to believe that it is not a primary or
acute care service and therefore, NEMT is not required to be included
in the Medicaid capitated contract that is necessary for FIDE SNP
designation.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, including
those in section II.A.5.b., we are finalizing our proposed revisions
for paragraph (2)(i) of the definition of a FIDE SNP at Sec. 422.2
with a delay in applicability date until the 2025 plan year for the
requirement that FIDE SNPs cover Medicare cost-sharing in their
capitated contracts with State Medicaid agencies.
(3) Requiring FIDE SNPs To Cover Medicaid Behavioral Health Services
We described at 87 FR 1865 the need for and importance of
behavioral health services among dually eligible individuals. We
explained earlier in this section that, consistent with how we were
operationalizing the FIDE SNP definition since first adopting it at
Sec. 422.2 as established in the April 2011 final rule, we have
allowed plans to meet the FIDE SNP definition even where a State
excluded Medicaid behavioral health services from the capitated
contract with the State Medicaid agency. In the April 2019 final rule,
we added behavioral health services to the list of benefits that a D-
SNP must cover, consistent with State policy, to obtain the FIDE SNP
designation. We stated that complete carve out of behavioral health by
a State from the scope of the Medicaid coverage provided by a FIDE SNP
would be permissible (84 FR 15706 through 15707). We believe that a
revision to that policy is appropriate and proposed to establish in a
new paragraph (2)(iii) in the FIDE SNP definition at Sec. 422.2
requiring that, for 2025 and subsequent years, the capitated contract
with the State Medicaid agency must include coverage of Medicaid
behavioral health services. This proposal would require the Medicaid
MCO that is offered by the same entity offering the FIDE SNP to cover
all behavioral health services covered by the State Medicaid program
for the enrollees in the FIDE SNP. Our proposal to require FIDE SNPs to
cover Medicaid behavioral health services is consistent with sections
1853(a)(1)(B)(iv) and 1859(f)(8)(D)(i)(II) of the Act. We proposed the
2025 date to allow time for MA organizations and States to adapt to our
proposal. In addition, we proposed (as discussed in section II.A.5.e.
of this final rule) an amendment to Sec. 422.107 to add a new
paragraph (h) to adopt a standard for limited exclusions from the scope
of Medicaid benefits coverage by FIDE SNPs and HIDE SNPs of certain
behavioral health services.
Restricting FIDE SNP designation to D-SNPs that cover Medicaid
behavioral health services, as well as other benefits, under a
capitated Medicaid MCO contract with the State Medicaid agency has two
advantages. First, it better comports with a common understanding of
being ``fully integrated''--the term used in sections 1853(a)(1)(B)(iv)
and 1859(f)(8)(D)(i)(II) of the Act--because of the importance of
behavioral health services for dually eligible individuals. Second,
coverage of Medicaid behavioral health services also facilitates
integrating behavioral health and physical health services, which can
result in improved outcomes for dually eligible beneficiaries.\35\ In
addition, our proposal would more clearly distinguish a FIDE SNP--which
would have to cover both LTSS and behavioral health services--from a
HIDE SNP--which must cover either LTSS or behavioral health services.
This would reduce confusion among stakeholders. As we discussed at 87
FR 1865 through 1866, most FIDE SNPs already have contracts with States
to cover Medicaid behavioral health benefits, indicating that the
market has already moved in this direction and relatively few FIDE SNPs
would be impacted by our proposal. We believe the benefit of
restricting FIDE SNP designation to plans that cover Medicaid
behavioral health services in the capitated contract with the State
Medicaid agency outweighs the benefit of continuing to allow FIDE SNP
designation for plans that do not cover these benefits. Increasing the
minimum scope of services that FIDE SNPs must cover in an integrated
fashion is consistent with how section 1859(f)(8)(D) of the Act
identifies Medicaid LTSS and behavioral health services as key areas
for the integration of services. While the statute generally describes
the increased level of integration that is required by referring to
coverage of behavioral health or LTSS or both, we believe that
exceeding that minimum standard is an appropriate goal for FIDE SNPs.
The most integrated D-SNPs--FIDE SNPs--should cover the broadest array
of Medicaid-covered services, including the behavioral health treatment
and LTSS that are so important to the dually eligible population.
---------------------------------------------------------------------------
\35\ Medicaid and CHIP Payment and Access Commission.
``Integration of Behavioral and Physical Health Services in
Medicaid.'' March 2016. Available at: https://www.macpac.gov/wp-content/uploads/2016/03/Integration-of-Behavioral-andPhysical-Health-Services-in-Medicaid.pdf.
---------------------------------------------------------------------------
Further, increasing the minimum scope of services for FIDE SNPs is
not inconsistent with section 1853(a)(1)(B)(iv) of the Act, which
states that such plans are fully integrated with capitated contracts
with States for Medicaid benefits, including LTSS. While section
1853(a)(1)(B)(iv) does not specify coverage of behavioral health
services, it does not exclude coverage of behavioral health services
either given that the section speaks generally to FIDE SNPs having
fully integrated contracts with States for Medicaid benefits. As
[[Page 27752]]
discussed at 87 FR 1865, behavioral health services are critical for
dually eligible individuals and benefit from coordination with Medicare
services and, we believe, coverage of Medicaid behavioral health
benefits by a D-SNP is key to achieving fully integrated status.
Comment: Numerous commenters expressed support for CMS's proposal
to require FIDE SNPs to cover behavioral health services. Several
commenters believed the proposal addresses the intent of the BBA of
2018 to increase Medicare-Medicaid integration. A few commenters stated
that behavioral health is a critical component of a fully integrated
model of care and that inclusion of behavioral health is essential to
providing high-quality, effective care for dually eligible individuals.
A commenter stated that issues related to behavioral health and
substance use have been exacerbated due to the COVID-19 pandemic,
heightening the importance of access to behavioral health and substance
use disorder treatment. Several commenters believed that strengthening
access to behavioral health services is a growing concern that merits
greater attention and that CMS's proposal is an important step in the
direction toward improving and protecting access to behavioral health
services. A commenter supported the proposal for FIDE SNPs to cover
Medicaid behavioral health services along with continued flexibility of
allowing some limited carve-outs. A commenter encouraged CMS to require
all D-SNPs--not just FIDE SNPs--to cover Medicaid behavioral health
services to address misalignment of services for dually eligible
individuals with behavioral health diagnoses or addition, but the
commenter recognized the proposal as a glide path toward greater
integration.
Response: We appreciate the widespread support for our proposal. We
agree that requiring FIDE SNPs to cover Medicaid behavioral health
services as proposed at paragraph (2)(iii) of the definition of FIDE
SNPs in Sec. 422.2 would improve Medicare-Medicaid integration for
beneficiaries.
Comment: A few commenters opposed the proposal because States with
behavioral health carved out of Medicaid managed care, including
California, New York and Pennsylvania, would not be permitted to have
FIDE SNPs if the proposal is finalized. A commenter stated that
operationalizing this change in Pennsylvania would require legislative
action, that a multitude of stakeholder groups would oppose the
proposal, and that the current Commonwealth administration would not
support the proposal. The commenter noted that there would be no way
for the current Pennsylvania FIDE SNPs to meet the proposed CMS
requirements beginning in 2025 to maintain their FIDE SNP status.
Another commenter noted that all D-SNPs in Oregon are required to
coordinate with all Medicaid benefits, including dental and behavioral
health. However, this commenter emphasized that D-SNPs in Oregon would
not be able to easily achieve FIDE SNP status because of statutory
carve-outs of LTSS. Several commenters requested clarification from CMS
to address situations where benefits such as behavioral health or LTSS
are carved out at a State level, including California and Pennsylvania,
which prevents D-SNPs from receiving the HIDE SNP and FIDE SNP
designation despite meeting other criteria. A commenter explained that
some States believe a specialty behavioral health plan with a focused
suite of intense services on the highest utilizers to improve outcomes
among people with serious mental illness is the most effective way to
decrease health care costs and improve quality. The commenter stated
that, should D-SNPs in those States lose the ability to receive the
HIDE SNP and FIDE SNP designation, it would result in the loss of
flexibilities, such as the frailty adjustment, which could limit the D-
SNPs' ability to provide complete care and supplemental benefits to
their enrollees. To assist with any implementation of this provision,
the commenter asked that CMS provide further clarification on the
effect of this provision in States where a carve-out exists.
Response: We appreciate the perspective raised by these commenters.
We recognize that not all States currently include Medicaid behavioral
health and Medicaid LTSS benefits in their capitated Medicaid
contracts. We believe the advantages of restricting FIDE SNP
designation to plans that cover behavioral health and Medicaid LTSS
benefits in the capitated contract with the State Medicaid agency
outweigh the advantages of continuing to allow FIDE SNP designation for
plans that do not cover these benefits. As stated in the proposed rule,
increasing the minimum scope of services that FIDE SNPs must cover in
an integrated fashion is consistent with how section 1859(f)(8)(D) of
the Act identifies Medicaid LTSS and behavioral health services as key
areas for the integration of services. While the statute generally
describes the increased level of integration that is required by
referring to coverage of behavioral health or LTSS or both, we believe
that exceeding that minimum standard is an appropriate goal for FIDE
SNPs. The most integrated D-SNPs--FIDE SNPs-- should cover the broadest
array of Medicaid-covered services, including the behavioral health
treatment and LTSS that are so important to the dually eligible
population. As we discussed in the proposed rule (87 FR 1866), based on
a New York State Medicaid policy change, we expect FIDE SNPs in New
York to cover Medicaid behavioral health services effective January 1,
2023, so we do not anticipate our proposal will negatively impact FIDE
SNPs in New York. If other States choose to keep behavioral health
carved out of their SNP contracts, the remaining FIDE SNPs in those
States would not meet the new requirements for FIDE SNPs that we are
finalizing in the definition at Sec. 422.2. Such plans may still meet
the HIDE SNP definition at Sec. 422.2, which we are also revising in
this rulemaking.
Comment: Some commenters expressed concern about continuity and
quality of care with behavioral health being carved into FIDE SNPs. A
few commenters supported the provision to require FIDE SNPs cover
behavioral health, but cautioned that CMS should require strong steps
to avoid disruption in behavioral health care when transitioning
individuals in the 24 FIDE SNPs that do not currently have behavioral
health in their contracts. A commenter highlighted the importance of
consistency, continuity, and ongoing access to trusted providers in
behavioral health, and that even small disruptions in provider networks
or changes in procedures to access providers can set back progress for
affected beneficiaries.
A commenter urged CMS to consider, when approving carve-ins of
behavioral health in any D-SNP, the importance of ensuring that the
move does not degrade the quality of care. The commenter shared the
following example: Some county systems have experience in behavioral
health for persons with serious mental illness that is difficult to
duplicate. In some jurisdictions, carved-out behavioral service
systems, which serve many individuals who are homeless or in danger of
homelessness, are closely integrated with housing service providers,
working together to bring stability to this high need population. This
commenter stated that, in the States where behavioral services were
integrated into the FAI demonstrations, the path was often rocky,
particularly where plan sponsors had little experience in the area.
Another commenter believed that the agencies with which States
contract to provide behavioral health services often
[[Page 27753]]
provide inadequate support for individuals needing behavioral health
treatment facilities and do not assist with finding community
providers.
Response: We appreciate the comments and agree that continuity of
care is important for enrollees receiving behavioral health care
treatment and the valuable care and supports delivered by behavioral
health providers who operating outside of FIDE SNPs. However, our
proposal to require FIDE SNPs to cover Medicaid LTSS and Medicaid
behavioral health services would not require any enrollees to
transition from their current D-SNPs, nor would it require a State to
carve-in behavioral health services. If the 24 FIDE SNPs do not meet
the proposed FIDE SNP definition at Sec. 422.2 due to a behavioral
health carve-out in 2025, they may still meet the HIDE SNP definition
at Sec. 422.2 or the definition of a coordination-only D-SNP;
therefore, enrollees could remain in these MA plans without disruption.
In addition, States have the ability to establish linkages between
behavioral health providers and D-SNPs to facilitate coordination of
care if the State believes that is preferable to including such
behavioral health services in the Medicaid MCO contract held by the
FIDE SNP (or a less comprehensive Medicaid managed care contract held
by a HIDE SNP). If States decide to carve in behavioral health services
into FIDE SNPs or other D-SNPs, they can work with the plans and
providers to ensure existing delivery systems for behavioral health are
not disrupted.
While we proposed to allow limited carve-outs from the scope of
Medicaid LTSS and Medicaid behavioral health services that must be
covered by FIDE SNPs and HIDE SNP, as discussed in II.A.5.e., we
clarify that we did not propose to establish requirements related to
approving a State's decision to include certain services in their
Medicaid programs. Our proposal, and the provisions finalized on this
point in this rule, are specific to the minimum standards we believe
are necessary for an MA plan to be designated as a fully integrated or
highly integrated special needs plan for dually eligible individuals.
In addition, if a State newly includes Medicaid LTSS and/or
Medicaid behavioral health services into its contract with a D-SNP, the
D-SNPs must ensure continuity of care and integration of services,
including with community programs and social services, as described at
Sec. 422.112(b). This requirement applies to all MA plans, including
all types of D-SNPs.
Comment: A commenter expressed appreciation for the delayed
effective date of 2025 but also suggested considering a longer
timeframe for compliance or additional temporary exclusions from the
scope of Medicaid coverage required for FIDE SNPs to allow for
transitions. Another commenter urged CMS to consider allowing an
extended timeframe beyond 2025 for States that demonstrate commitment
to integrating behavioral health services in FIDE SNPs to account for
the State's procurement strategy, demonstrate commitment to developing
or refining a FIDE SNP model to integrate care for dually eligible
individuals, or demonstrate a commitment to designing a State-specific
solution to fully coordinate behavioral health services with all
Medicare and Medicaid benefits that results in seamless coverage. The
commenter requested that CMS offer supports to States that currently
carve out behavioral health but wish to pursue more integrated models
of care for dually eligible individuals, including technical
assistance, additional resources for identifying the most appropriate
pathway for carving behavioral health benefits into FIDE SNPs or more
generally to Medicaid managed care contracts.
Response: We thank the commenters and appreciate their
perspectives. We appreciate that States will have different pathways
and considerations for including Medicaid behavioral health services in
the MCO contracts held by FIDE SNPs by 2025, but we do not agree with
extending the timeline. As we discuss in the proposed rule (87 FR 1865
through 1866), our review of State Medicaid agency contracts for FIDE
SNPs in contract year 2021 indicates that States include full coverage
of Medicaid behavioral health services for most FIDE SNPs (45 of the 69
FIDE SNPs) and policy changes in New York to be effective in 2023 will
increase this number. If the remaining FIDE SNPs in California and
Pennsylvania do not meet the additional requirements we proposed and
are finalizing as part of the FIDE SNP definition at Sec. 422.2, these
plans may still meet the requirements to be a HIDE SNP, consistent with
the revised definition that we proposed and are finalizing in this rule
at Sec. 422.2. We believe the benefit of restricting FIDE SNP
designation to plans that cover Medicaid behavioral health services in
the capitated contract with the State Medicaid agency outweigh the
benefit of continuing to allow FIDE SNP designation for plans that do
not cover these benefits.
We are available to assist States interested in pursuing more
integrated models of care for dually eligible individuals, and we are
actively planning for upcoming technical assistance opportunities.
Comment: A commenter highlighted the benefits of the behavioral
health carve-out model used in Pennsylvania, in which a wide variety of
behavioral health services are delivered through a specialized Mental
Health and Substance Use Disorder provider network. The commenter
stated that the carve-out model implements evidence-based and promising
practices in the area of behavioral health, ensures a single point of
accountability, better utilization management of services, and overall
better management of costs while ensuring improved outcomes for the
individuals served.
The commenter did not agree with CMS's logic that FIDE SNPs have an
incentive to steer beneficiaries toward behavioral health Medicaid
covered services for which they are not financially responsible. The
commenter wrote that, since Medicaid is always the payor of last
resort, if the service is a covered Medicare service, Medicare would be
the primary payor.
The commenter also believes it is possible that changes in the
health of enrollees or changes in membership over time could change a
FIDE SNP's population mix to the point that it would impact their
frailty score and thus make them eligible for the increased revenue
from the frailty adjustment. The commenter expects this issue
concerning potential future frailty adjustment payments would create
pushback from current FIDE SNPs in Pennsylvania if they no longer
qualify as FIDE SNPs.
Response: We appreciate that, in Pennsylvania and other States,
policymakers may prefer to maintain existing delivery systems for
behavioral health rather than to include those services in the MCO
contracts held by FIDE SNPs. In those States, current FIDE SNPs would
be re-designated as HIDE SNPs in 2025 and thus be ineligible for the
frailty adjustment, even if the level of frailty in those D-SNPs would
otherwise qualify the plan for frailty adjustment. That is a downside
to our proposal but we do not believe it outweighs the other benefits
outlined here of limiting FIDE SNP designation to plans that cover
Medicaid behavioral health services, subject to minimal exclusions that
CMS has approved under proposed Sec. 422.107(h) (which is discussed
and finalized in section II.A.5.e. of this final rule).
[[Page 27754]]
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed revisions for paragraph (2)(iii) of the
definition of a FIDE SNP at Sec. 422.2 without modification.
(4) Requiring FIDE SNPs To Cover Medicaid Home Health and Medical
Supplies, Equipment, and Appliances
We proposed to require that, effective beginning in 2025, each FIDE
SNP must cover additional Medicaid benefits to the full extent that
those benefits are covered by the State Medicaid program. Two
categories of Medicaid benefits we proposed to add include home health
services, as defined in Sec. 440.70, and medical supplies, equipment,
and appliances, as described in Sec. 440.70(b)(3). We believe that
FIDE SNPs should be required to cover the Medicaid home health benefits
and medical supplies, equipment, and appliances (to the full extent
these benefits are covered by Medicaid) because both are critical
services for dually eligible individuals, necessitate coordination due
to being covered by both the Medicare and Medicaid programs, and are
not clearly captured under other parts of the existing definition.
Based on our review of State coverage requirements for Medicaid MCOs
affiliated with FIDE SNPs, all current FIDE SNPs already cover Medicaid
home health services and medical supplies, equipment, and appliances,
so we did not expect our proposal to impact any existing FIDE SNPs.
However, we proposed that this change in the scope of required coverage
by FIDE SNPs would not apply until 2025 in case there were other
circumstances of which we were not aware that would necessitate
additional time to adapt to our proposal.
As such, we proposed to add new paragraphs (2)(iv) and 2(v) to the
FIDE SNP definition at Sec. 422.2 to require that the capitated
contract between the State Medicaid agency and the legal entity that
offers the FIDE SNP must include Medicaid home health services as
defined at Sec. 440.70 and Medicaid DME as defined at Sec.
440.70(b)(3). In this final rule, we are correcting the terminology to
use the phrase ``medical equipment, supplies, and appliances'' to
better track the regulation text at Sec. 440.70(b)(3). As described in
the proposed rule (87 FR 1864), we proposed that this new requirement
would mean that all Medicaid benefits in these categories would be
covered by the MCO that is affiliated with the FIDE SNP, to the extent
Medicaid coverage of such benefits is available to individuals eligible
to enroll in the FIDE SNP, and we did not propose any exceptions.
Because the same legal entity must have the MA contract with CMS for
the D-SNP and the Medicaid MCO contract with the State and the
enrollment in the FIDE SNP must be limited to dually eligible
individuals who are also enrolled in the MCO, this entity is
functionally all the FIDE SNP.
Comment: A number of commenters expressed support for CMS's
proposal to require FIDE SNPs to cover Medicaid home health and DME
under their Medicaid MCO contracts. Several commenters noted that home
health services and DME are critical services for dually eligible
individuals. A commenter noted that home health is important because it
curtails the need for more expensive health care options such as
emergency room visits, hospital readmissions, and skilled nursing
facility stays. The commenter also stated that DME benefits are
important as they can assist with mobility and independence for
beneficiaries and therefore improve quality of life. Several commenters
highlighted that beneficiaries have long faced complex barriers to
acquiring certain DME. A commenter noted that the proposal addresses
the intent of the BBA of 2018 to increase Medicare-Medicaid
integration. A commenter expressed their support and noted that D-SNP
State Medicaid agency contracts in Arizona already conform to CMS's
proposed definition.
Several commenters agreed with CMS that 2025 implementation is
appropriate in case any unforeseen issues arise. A few commenters
suggested that the requirement for integration of home health and DME
go into effect immediately rather than waiting until 2025.
Response: We appreciate the widespread support of our proposal that
FIDE SNPs must cover Medicaid home health and DME under their Medicaid
MCO contracts. We agree with commenters who stated that accessing DME
(that is, medical equipment, supplies, and appliances) can be a
challenge for beneficiaries, and we believe this proposal is a step
towards addressing that issue. While a few commenters questioned if it
is necessary to wait until 2025 to implement the proposal, we believe
waiting until 2025 to require coverage will allow adequate time to
adapt to any unforeseen circumstances that may arise and will not cause
loss of any integration in current FIDE SNPs that already cover
Medicaid home health services and DME.
Comment: A commenter stated that States will need to ensure that D-
SNPs understand the details of Medicaid coverage of the required
services to ensure that enrollees receive the full extent of benefits
they are currently eligible to receive under Medicaid. This will
require State oversight and reporting by D-SNPs to the State.
Response: We thank the commenter. As proposed and finalized, this
new requirement for FIDE SNPs must be met through the Medicaid MCO
contract held by the legal entity that offers both the FIDE SNP and the
Medicaid MCO. We anticipate that the Medicaid MCO contract addresses
reporting by the entity (as would any Medicaid managed care contract
whether associated with a HIDE SNP or coordination-only D-SNP or not)
to the State and oversight by the State over Medicaid benefit delivery
and administration. Medicaid managed care regulations, such as Sec.
438.66, require States to monitor their Medicaid managed care programs.
Further, under current regulation at Sec. 422.107(c)(1), the State
Medicaid agency contract must document the D-SNP's responsibility to
coordinate the delivery of Medicaid benefits for its enrollees. States
and D-SNPs should already be communicating related to Medicaid
benefits. This communication will be important to successful
implementation of this final rule.
Comment: A commenter supported the proposal to require that FIDE
SNPs cover Medicaid home health services and DME as defined in Sec.
440.70(b)(3) but recommended a modification. The commenter highlighted
that the terminology used in Sec. 440.70(b)(3) is ``medical supplies,
equipment, and appliances suitable for use in any setting in which
normal life activities take place.'' The commenter recommended that CMS
require FIDE SNPs to cover ``medical supplies, equipment and
appliances'' as referenced in that subsection to ensure that the
regulation is not interpreted to require coverage of only a subset of
that category of services. The commenter believed that allowing nurse
practitioners to order and certify Medicare and Medicaid home health
services, and Medicaid medical supplies, equipment and appliances for
their patients, as authorized in the CARES Act, has been integral to
patients receiving medically necessary services in a timely fashion.
Response: We appreciate the commenter's support and suggestion. We
believe that it is important to utilize the prevailing Federal
definitions for Medicaid services and therefore will use the
terminology in Sec. 440.70(b)(3),
[[Page 27755]]
``medical supplies, equipment, and appliances,'' along with the
reference to Sec. 440.70(b)(3), in the new paragraph (2)(v) of the
FIDE SNP definition at Sec. 422.2 to clearly identify the mandatory
scope of coverage.
Comment: A commenter stated that the current Puerto Rico D-SNP
program offered with the local government, Platino, is fully
coordinated but the D-SNPs do not cover certain LTSS and nursing home
services because Congress chose not to provide funding to Puerto Rico
for these Medicaid services. The commenter urged CMS to allow plans in
Puerto Rico to be eligible as FIDE SNPs and receive the frailty
adjustment even though those D-SNPs do not cover these benefits.
Response: We appreciate the comment about Puerto Rico's Medicaid
program and understand the lack of Medicaid long term care benefits in
Puerto Rico prevents D-SNPs in Puerto Rico from meeting the FIDE SNP
requirements. As a result, no D-SNPs in Puerto Rico currently meet the
requirements to be a FIDE SNP, and this rulemaking does not change
those circumstances.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing without modification our proposed revisions in paragraph
(2)(iv) of the definition of FIDE SNP at Sec. 422.2. We are finalizing
paragraph (2)(v) of the FIDE SNP definition with a technical change to
clarify that for plan year 2025 and subsequent years, the Medicaid
capitated contract required for a FIDE SNP must cover medical supplies,
equipment, and appliances as described in Sec. 440.70(b)(3).
d. Clarification of Coverage of Certain Medicaid Services by HIDE SNPs
CMS first defined the term ``highly integrated dual eligible
special needs plan'', or HIDE SNP, at Sec. 422.2 in the April 2019
final rule. As currently defined at Sec. 422.2, a HIDE SNP is a type
of D-SNP offered by an MA organization that has--or whose parent
organization or another entity that is owned and controlled by its
parent organization has--a capitated contract with the Medicaid agency
in the State in which the D-SNP operates that includes coverage of
Medicaid LTSS, Medicaid behavioral health services, or both, consistent
with State policy. As stated in the April 2019 final rule (84 FR
15705), the HIDE SNP designation is consistent with section
1859(f)(8)(D)(i)(II) of the Act that recognizes a level of integration
that does not meet the requirements of the FIDE SNP with respect to the
breadth of services provided under a Medicaid capitated contract with
the State.
We proposed to revise the HIDE SNP definition at Sec. 422.2
consistent with proposed changes to the FIDE SNP definition described
earlier in section II.A.5.c. of this final rule to more clearly outline
the services HIDE SNPs must include in their contracts with State
Medicaid agencies. Similar to our proposal for the revised FIDE SNP
definition, we proposed to move away from the current use of
``coverage, consistent with State policy'' language in favor of more
clearly articulating the minimum scope of Medicaid services that must
be covered by a HIDE SNP by using the phrase ``to the extent Medicaid
coverage of such benefits is available to individuals eligible to
enroll in a highly integrated dual eligible special needs plan (HIDE
SNP) in the State.'' In section II.A.5.e. of this final rule, we also
discuss our proposal to adopt new provisions in Sec. 422.107 to permit
limited carve-outs from the required scope of services.
Later in this section, we describe our proposal to require that the
capitated Medicaid contract applies in the entire service area for the
D-SNP in more detail. Otherwise, our proposal was generally a
reorganization and clarification of the scope of Medicaid benefits that
must be covered by a HIDE SNP.
Comment: Numerous commenters supported CMS's proposal for HIDE SNPs
to be required to cover the vast majority of Medicaid behavioral health
services or the vast majority of Medicaid LTSS. MACPAC expressed
support for CMS's proposed changes to the HIDE SNP definition because
the proposed change would further integration and clarify the
definitions of these plans. Several other commenters supported the
proposal and believed that it would further clarify the distinction
between HIDE SNP and FIDE SNP coverage requirements. A commenter
expressed support because they believed that there has been a
significant lack of clarity and comprehension around HIDE SNP
definitions, and, in general, what can be expected of particular types
of SNPs. Another commenter expected that the proposal would reduce
confusion, provide more transparency of State Medicaid agency contract
review, and allow continued flexibility for D-SNPs to provide either
LTSS or behavioral health services. Another commenter expressed support
because CMS's proposal maintains flexibility for States to leverage
integrated plans even if they cannot meet all the requirements for FIDE
SNPs.
Response: We appreciate the numerous comments of support for our
proposal to revise the definition of HIDE SNPs at Sec. 422.2. We agree
that these changes, as proposed and finalized in this rule, and in
conjunction with the proposed changes to Sec. 422.107(g) and (h), will
clarify the scope of responsibilities for HIDE SNPs, better distinguish
them from FIDE SNPs and coordination-only D-SNPs, and provide
flexibility to States in how they use D-SNPs in connection with their
Medicaid programs.
Comment: A commenter expressed concern that the proposed revisions
may not adequately account for variation in State approaches to
Medicaid managed care. The commenter recommended CMS reconsider
limiting the HIDE SNP definition to the extent that it would disqualify
otherwise integrated agreements. The commenter believed the proposed
changes only serve to complicate administration, particularly if States
with carve-outs beyond the proposed limits were required to pivot to
coordination-only agreements to preserve D-SNPs.
Another commenter recommended that CMS permit a HIDE SNP with a
Medicaid MCO contract that covers behavioral health services to
operate, without requiring the contract to include LTSS. The commenter
also suggested that CMS clarify that a HIDE SNP with a State Medicaid
agency contract that includes Medicaid services, including behavioral
health, does not need to also have separate Medicaid MCO contract.
Response: While we appreciate the commenters' perspectives, we
believe that the HIDE SNP designation should be consistent with a high
level of integration in which the vast majority of Medicaid LTSS or the
vast majority of Medicaid behavioral health services are covered by the
capitated contract with the State. These proposed changes are
consistent with our proposal to amend the FIDE SNP definition described
in section II.A.5.c. to more clearly outline the services integrated D-
SNPs, meaning both FIDE SNPs and HIDE SNPs, must include in their
contracts with State Medicaid agencies. We clarify that if the MA
organization offering a D-SNP--or the MA organization's parent
organization, or another entity that is owned and controlled by its
parent organization--has a Medicaid managed care contract with the
State that includes coverage of Medicaid behavioral health benefits but
excludes coverage of Medicaid LTSS, the MA organization may qualify as
a HIDE SNP provided other applicable requirements (such as a compliant
[[Page 27756]]
Medicaid State agency contract, as required by Sec. 422.107 and,
beginning January 1, 2025, minimum service area requirements) are met.
We further clarify that the HIDE SNP definition, either currently or as
amended in this final rule, does not require the affiliated Medicaid
plan to be an MCO contract, it could be a PAHP or PIHP; Medicaid
managed care regulations in 42 CFR part 438 establish the requirements
for a managed care contract (that is, a capitated contract) for
coverage of Medicaid benefits.
Comment: A few commenters requested clarification on whether these
provisions limit HIDE SNP enrollments to exclusively aligned
enrollment. A commenter noted that while they support greater
clarification around alignment for HIDE SNPs, they recognized the
challenges of exclusively aligned enrollment and that States may need
to contract with D-SNPs in ways that promote integration but also allow
States to design programs that meet their specific needs and fit within
the parameters of current State benefit offerings. The commenter
believed additional clarity may be helpful in defining alignment
options for HIDE SNPs.
Response: We welcome the opportunity to clarify our proposal. We
clarify that HIDE SNP plans are not required to have exclusively
aligned enrollment. Please see the discussion in section II.A.5.f. for
more detail about our proposal to require the capitated contract in the
entire service area for the D-SNP.
Comment: Some commenters requested that CMS apply the frailty
adjustment to all highly integrated products, including HIDE SNPs. A
few commenters specifically encouraged CMS to allow HIDE SNPs that
provide LTSS to be eligible for the frailty adjustment. Several
commenters noted that there are strong similarities between enrollees
in HIDE SNPs and FIDE SNPs, and since both plan types serve enrollees
that are generally frailer than the typical Medicare population, both
should be eligible to receive higher adjustment payments if they have a
similar average frailty as the PACE program. A commenter stated that
allowing HIDE SNPs to receive the frailty adjustment would more
appropriately apply the frailty adjustment to integrated plans serving
people dually eligible for both Medicare and Medicaid, while
acknowledging State contracting differences. A few commenters stated
that allowing HIDE SNPs to receive the frailty adjustment would make
the HIDE SNP market more competitive or incentivize further integration
of plans.
Response: We appreciate the comments regarding the frailty
adjustment provided by section 1853(a)(1)(B)(iv) of the Act; however,
they are beyond the scope of this rulemaking.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed revisions for the definition of a HIDE SNP at
Sec. 422.2 without modification.
e. Medicaid Carve-Outs and FIDE SNP and HIDE SNP Status
As discussed earlier, we proposed to require FIDE SNPs and HIDE
SNPs to cover the full scope of the Medicaid coverage under the State
Medicaid program of the categories of services that are specified as
minimum requirements for these plans as outlined in sections II.A.5.c.
and II.A.5.d. We also proposed that coverage of the full scope of the
specified categories of Medicaid benefits is subject to an exception
that may be permitted by CMS under Sec. 422.107(g) or (h). We proposed
to codify at Sec. 422.107(g) and (h), respectively, current CMS policy
allowing limited carve-outs from the scope of Medicaid LTSS and
Medicaid behavioral health services that must be covered by FIDE SNPs
and HIDE SNPs. As discussed in section II.A.5.c.1. of this final rule,
CMS has historically determined D-SNPs to be FIDE SNPs even where the
State carved out certain primary care, acute care, LTSS, and behavioral
health services from the Medicaid coverage furnished by the MCO offered
by the FIDE SNP. CMS has similarly permitted carve-outs of the scope of
Medicaid coverage furnished in connection with HIDE SNPs. We believe
that codifying these policies permitting exclusions from the scope of
Medicaid behavioral health and Medicaid LTSS would improve transparency
for stakeholders and allow us to better enforce our policies to limit
benefit carve-outs. We did not propose to permit exclusions from
coverage of Medicaid primary care or acute care for FIDE SNPs.
Our proposal is consistent with the policy described in a
memorandum CMS issued in January 2020,\36\ with some revisions to
improve clarity and avoid misinterpretations of our policy that might
result from language in the memorandum that differs in the allowed
carve-outs for LTSS and behavioral health services. Like the
memorandum, our proposal was designed to accommodate differences in
State Medicaid policy--for example, the desire to retain delivery
through the Medicaid FFS program of specific waiver services applicable
to a small, specified population, or to retain coverage in the Medicaid
FFS program for specific providers--without significantly undermining
the level of Medicaid integration provided by HIDE SNPs and FIDE SNPs.
While we generally favor integration and worry that Medicaid benefit
carve-outs work against integration, we believe our proposal strikes a
balance between the current realities of State Medicaid managed care
policy, applicable statutory provisions, and our implementation of
those statutory provisions toward the goal of raising the bar on
integration.
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\36\ CMS, ``Additional Guidance on CY 2021 Medicare-Medicaid
Integration Requirements for Dual Eligible Special Needs Plans'',
January 17, 2020. Retrieved from: https://www.cms.gov/httpseditcmsgovresearch-statistics-data-and-systemscomputer-data-and-systemshpmshpms-memos-archive/hpms-memo-5.
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Currently and under our proposal to revise the definition, a D-SNP
may meet the criteria for designation as a HIDE SNP if it covers either
Medicaid LTSS or Medicaid behavioral health services under a State
Medicaid agency contract. We currently grant HIDE and FIDE SNP status
despite Medicaid LTSS carve-outs of limited scope if such carve-outs
(1) apply to a minority of the full-benefit dually eligible LTSS users
eligible to enroll in a HIDE or FIDE SNP who use long-term services and
supports or (2) constitute a small part of the total scope of Medicaid
LTSS provided to the majority of full-benefit dually eligible
individuals eligible to enroll in a HIDE or FIDE SNP who use Medicaid
LTSS. We provided examples of permissible LTSS carve-outs at 87 FR
1867. D-SNPs can currently obtain the HIDE or FIDE SNP designation with
limited carve-outs of Medicaid behavioral health services from their
capitated contracts. A behavioral health service carve-out would be of
limited scope if such a carve-out (that is, exclusion from coverage by
the Medicaid managed care plan affiliated with the D-SNP): (1) Applies
primarily to a minority of the full-benefit dually eligible users of
behavioral health services eligible to enroll in a HIDE or FIDE SNP; or
(2) constitutes a small part of the total scope of behavioral health
services provided to the majority of beneficiaries eligible to enroll
in a HIDE or FIDE SNP. We specified that only a small part of the
Medicaid behavioral health services may be carved out in order to
ensure that the innovative services that many
[[Page 27757]]
Medicaid programs provide to individuals with severe and moderate
mental illness are covered through the D-SNP (through the MA
organization's Medicaid managed care capitated contract) or the
affiliated Medicaid managed care plan (through the Medicaid managed
care capitated contract with the MA organization's parent organization
or another entity that is owned or controlled by the parent
organization). We believe that level of integrated coverage is a
minimum standard for a D-SNP to be considered highly or fully
integrated. We provided examples of permissible LTSS carve-outs at 87
FR 1868.
We described our intent to administer this proposed regulation
consistent with our current policy and therefore anticipated little
disruption to occur because of this proposed change.
Comment: Numerous commenters supported the codification of current
CMS policy allowing limited carve-outs from the scope of Medicaid LTSS
and Medicaid behavioral health services that must be covered by FIDE
SNPs and HIDE SNPs. Several commenters agreed with CMS that limited or
narrow carve-outs of LTSS and behavioral health services are essential
given the wide variation in how States choose to provide those
services. Another commenter suggested the refined definitions of FIDE
and HIDE SNPs could encourage States to carve in LTSS for individuals
who need the services the most. Another commenter recognized that the
proposed revisions to the HIDE SNP and FIDE SNP definitions are
intended to enhance the level of integration in such plans.
Response: We appreciate the widespread support we received for our
proposal. While we generally favor integration and worry that Medicaid
benefit carve-outs work against integration, we believe our proposal
strikes a balance between the current realities of State managed care
policy, applicable statutory provisions, and our current implementation
of those statutory provisions toward the goal of raising the bar on
integration. Our proposal is consistent with the policy described in a
memorandum CMS issued in January 2020, and we believe that these
revisions will improve clarity and avoid misinterpretations of our
policy that might result from language in the memorandum that differs
in the allowed carve-outs for Medicaid LTSS and behavioral health
services. We agree with commenters that monitoring the impact of carve-
outs for impacts on enrollees' access to services and care coordination
processes is important.
Comment: A commenter recommended that CMS standardize Medicaid
benefit carve-out requirements for States implementing a FIDE SNP
model. The commenter further suggested that CMS set rules for how many
benefit carve-outs States will be allowed, whether the carve-outs
include benefits that do not qualify as primary and acute care services
(for example, non-emergency transportation), and how the carve-outs
would integrate operationally with the FIDE SNPs if the underlying
benefit is handled by a delegated vendor.
Response: We thank the commenter for their perspectives. However,
we do not believe it is feasible to establish a uniform set of carve-
out limits or a numerical limit on carve-outs due to the variation
across States. The requirements we are finalizing at Sec. 422.107(g)
and (h) permit only limited carve-outs from the Medicaid LTSS and
Medicaid behavioral health services coverage that HIDE SNPs and FIDE
SNPs must have included in their managed care contract with the State
Medicaid agency. We will apply this evaluation looking at coverage of
Medicaid LTSS benefits and/or Medicaid behavioral health services as a
whole in connection with the scope of coverage in the Medicaid managed
care contract affiliated with the FIDE SNP or HIDE SNP. While the
limits in the regulations we are adopting do not equate to or specify
how many Medicaid LTSS and/or Medicaid behavioral health services
carve-outs a State may have, it does act as a substantive limit when we
make determinations that a D-SNP qualifies as a FIDE SNP or HIDE SNP.
The finalized paragraph (2)(i) of the FIDE SNP definition at Sec.
422.2 (discussed earlier in sections II.A.5.c. of this final rule)
requires each FIDE SNP to cover primary and acute care services,
including Medicare cost-sharing covered by the State Medicaid program
as of 2025, under the MCO contract between the State and the
organization that offers the FIDE SNP. We did not propose and are not
adopting any exceptions or permissible carve-outs for this required
coverage. We solicited comment on whether we should allow for specific
carve-outs of some primary and acute care benefits and welcomed
examples of such benefits that are either currently carved out of FIDE
SNP capitated contracts with State Medicaid agencies or should be
carved out. We did not receive any comments in response to this
solicitation and are finalizing our proposal without modification. We
stated in section II.A.5.c. that Medicaid NEMT as defined in Sec.
431.53 is not a primary or acute care service included in the scope of
this provision, but that goes to identifying the scope of acute and
primary care services, not establishing permissible carve outs for
categories of acute and primary care services.
Comment: Another commenter believed carve-outs interfere with true
integration but indicated that some Medicaid services may have,
historically, not been provided appropriately by managed care plans.
The commenter suggested that a State carve-out may be necessary to
ensure that enrollees have access to the care they need and recommended
that CMS work closely with States to determine why certain carve-outs
exist and what the impact may be on access to care if the carve-outs
are eliminated. Another commenter stated that the application of a
carve-out to a minority of enrollees has less of an impact on
individuals needing Medicaid LTSS services and behavioral health
services, and several commenters advocated that States should monitor
the impact of any service carve-out on enrollees and their quality of
care and life.
Response: We thank the commenters and appreciate their
perspectives. We agree that monitoring and oversight of carve-outs is
important and will work with States to ensure quality of care is not
compromised and enrollees are educated about changes to the scope of
benefits available through a HIDE SNP or FIDE SNP, particularly in the
case of Medicaid LTSS and behavioral health services. We clarify that
our proposal would not require that States carve in benefits if they
prefer not to do so because MA program regulations permit a D-SNP to be
offered without the MA organization (or its parent organization or an
entity also owned by its parent organization) having a capitated
contract for coverage of Medicaid behavioral health or LTSS benefits.
As proposed and finalized, Sec. 422.107(g) and (h) are specific to the
required scope of coverage of Medicaid benefits by FIDE SNPs and HIDE
SNPs with regard to behavioral health and LTSS benefits.
Comment: A commenter provided an example whereby beneficiaries who
may consider enrolling in plans with carve-outs are notified that the
integrated services do not include Medicaid LTSS and/or behavioral
health services to the extent they are carved-out.
Response: We appreciate this comment and example. Per Sec.
422.2267(e)(5)(ii)(D), all D-SNPs must clearly state which services are
included in their plan benefit packages, including
[[Page 27758]]
Medicaid benefits, by either including the description in the required
summary of benefits or putting the description in a separate document
that is provided to enrollees with the summary of benefits. In
addition, Sec. 422.111 requires annual disclosures by all MA plans,
including D-SNPs, of the scope of and rules for coverage under the
plan.
Comment: Another commenter supported full integration and described
experience with State carve-outs of Medicaid behavioral health and LTSS
services, which the commenter indicated prevents D-SNPs from receiving
the HIDE SNP and FIDE SNP designation. The commenter suggested
addressing the needs of the dually eligible population which may
require specialized programs and tailored methods to support recovery-
oriented systems of care.
Response: We thank the commenter and agree that addressing the
needs of the dually eligible population is vital for improving health
outcomes and is greatly facilitated when the broadest scope of Medicaid
behavioral health and LTSS services are integrated into HIDE SNP and
FIDE SNP benefit packages.
Comment: Several commenters requested guidance and technical
assistance in various areas. A commenter suggested guidance to States
to promote interoperability and data sharing between plans specifically
when a benefit is carved out. Another commenter suggested CMS provide
guidance to States on how to implement a model of care that allows for
complete integration.
Response: We thank the commenters and appreciate these suggestions.
We anticipate offering technical assistance and providing sub-
regulatory guidance based on this final rule.
Comment: Several commenters requested clarification on what is
meant by ``a minority of beneficiaries eligible to enroll'' and ``small
part of the total scope of services'' as those phrases are used in
proposed Sec. 422.107(g) and (h). These commenters suggested that CMS
provide additional examples or further description of the review
process that would be utilized to make these determinations.
Response: We appreciate the commenters' desire for additional
clarification. We believe the examples we provided in the proposed rule
at 87 FR 1867 through 1868 are instructive of the type of Medicaid LTSS
and behavioral health carve-outs we would permit under Sec. 422.107(g)
and (h). We prefer to not inadvertently limit the terms ``minority of
beneficiaries eligible to enroll'' or ``small part of the total scope
of services'' by providing additional examples, given the potential
variation across States. We determine the integration status for MA
organizations offering D-SNPs through our annual review of State
Medicaid agency contracts (that is, the contracts between States and D-
SNPs required by Sec. 422.107) in July. As part of that review, we
will assess the scope of existing or proposed carve-outs against the
Sec. Sec. 422.2 and 422.107(g) and (h) requirements and determine
whether a D-SNP meets the FIDE SNP or HIDE SNP designation. Where the
State Medicaid agency contract is a separate contract from the Medicaid
MCO contract, we may review the Medicaid MCO contract available on the
State Medicaid agency's website when that is necessary to our
evaluation. We strongly encourage States and MA organizations to seek
technical assistance from CMS as necessary. As the scope of coverage of
Medicaid benefits must be set in the Medicaid capitated contract with
the Medicaid managed care plan, we anticipate that States may seek
technical assistance outside of the timeline for MA organizations to
submit their State Medicaid agency contracts that are required by Sec.
422.107(a) through (c).
Comment: In addition, a commenter suggested CMS clarify what
happens in certain States that impose caps on Medicaid LTSS eligibility
resulting in enrollment limits and how this carve-out provision would
be applied or affected in those cases. This commenter also urged CMS
take into consideration that, when determining criteria for carve-outs
in applicable integrated plans, even minor Medicaid carve-outs can
greatly complicate the unified grievances and appeals process to which
they are subject, causing more confusion for beneficiaries and
providers as well. The commenter suggested that CMS educate States
about these impacts as part of the process.
Response: We thank the commenter. FIDE SNPs and HIDE SNPs are
required by this rule to provide the minimum required Medicaid benefits
to the extent that Medicaid coverage is available to beneficiaries who
are eligible to enroll in the FIDE SNP or HIDE SNP. So, if the Medicaid
State plan excludes coverage altogether of certain benefits for certain
beneficiaries (that is, there is no Medicaid coverage at all, as
opposed to Medicaid coverage being carved out of a managed care program
or contract), our regulatory provision will not withhold designation of
the D-SNP as a FIDE SNP or HIDE SNP solely based on that. Thus, FIDE
SNPs are required to provide Medicaid LTSS to all who meet the State
eligibility criteria for LTSS (for example, nursing home level of care)
but not to all FIDE SNP enrollees, some of whom might not be eligible
for the Medicaid benefit at all. HIDE SNPs are required to provide
Medicaid LTSS, and/or Medicaid behavioral health services. To the
extent Medicaid LTSS is not available to an enrollee because there is
an enrollment cap or waiting list (for example, such as those related
to Medicaid home and community-based services waivers), then the
enrollee has not met the State eligibility criteria and the D-SNP could
still meet the requirements at proposed Sec. 422.107(g) and (h) to be
a HIDE or FIDE SNP. Regarding applicable integrated plans, only the
services covered by the applicable integrated plans are subject to the
unified appeals and grievances processes. However, all D-SNPs that
receive an appeal for a carved-out Medicaid services have a
responsibility to assist the enrollee in the appeals process for that
service, per Sec. 422.562(a)(5).
Comment: Several commenters expressed concern that carve-outs may
lead to disjointed and uncoordinated care and that carve-outs do not
enhance care coordination. Another commenter indicated that they
believe the proposal at Sec. 422.107(g) and (h) impinges on State
autonomy and flexibility.
Response: We appreciate the commenters' concerns and we acknowledge
the commenters' perspective on this issue. However, we believe that the
requirements proposed at Sec. 422.107(g) and (h) strike an appropriate
balance between the current realities of State managed care policy,
applicable statutory provisions, and our implementation of those
statutory provisions toward the goal of raising the bar on integration,
while permitting State flexibility.
Comment: A commenter expressed concerns regarding the carve-out
examples provided by CMS. Specifically, the commenter questioned use of
substance abuse treatment, rural health clinic (RHC) and FQHC services
as examples of permissible carve-outs, and requested feedback on
whether the examples provided were appropriate. The commenter opined
that these services are not limited in scope and should not be included
as permissible carve-outs. The commenter noted that, according to the
Substance Abuse and Mental Health Administration, dually eligible
beneficiaries have a significantly higher rate of behavioral health and
substance use disorder conditions than the non-dually eligible
population. The commenter noted that, for many dually eligible
individuals, RHCs and FQHCs are their primary source of behavioral
health and
[[Page 27759]]
substance use disorder treatment. Therefore, the commenter requested
that CMS not include these services as permissible carve-outs.
Response: We appreciate the comment and agree that the services
identified are important to dually eligible individuals and care
coordination would be facilitated if these services were not carved out
from FIDE SNP or HIDE SNP Medicaid benefits. However, to our knowledge,
only one State carves out FQHC and RHCs from Medicaid benefits covered
under the FIDE SNP's or HIDE SNP's MCO contract with the State Medicaid
agency. That State, Minnesota, has carved out Medicaid FQHC and RHC
services from the benefits delivered by FIDE SNPs and HIDE SNPs because
of the complexity in adjudicating Medicaid payments for these provider
types and services. The State has implemented a data exchange process
between these providers and the State's FIDE SNPs and HIDE SNPs to
facilitate care coordination. At least six States carve substance use
disorder services out from the services delivered by HIDE SNPs and FIDE
SNPs. We believe the frequency of such carve-outs may be indicative of
the difficulty in subsuming these services under Medicaid managed care.
We do not have any information indicating that Medicaid behavioral
health services or LTSS delivered by FQHCs and RHCs or substance use
disorder services do not constitute a small part of the total scope of
such services provided to the majority of beneficiaries eligible to
enroll in these D-SNPs. Thus, we are finalizing language at Sec.
422.107(g) and (h) that will continue to allow such limited carve-outs
of Medicaid LTSS and Medicaid behavioral health services from the
services covered by FIDE SNPs and HIDE SNPs. We will continue to assess
whether these specific carve-outs meet our criteria in light of the
specific facts in a given situation. In addition, we may consider
future rulemaking to revise the standard in Sec. 422.107(g) and (h) if
necessary.
Comment: A commenter agreed with CMS that personal care services
should not be carved out but also suggested that there could be
instances where FIDE SNPs and HIDE SNPs do carve out services, such as
behavioral health and Medicaid LTSS, and integration could still be
achieved. This commenter provided an example where county personnel
from the In-Home Supportive Services Program, California's carved-out
personal care program, participated in care planning meetings with the
MMP.
Response: We appreciate the comment and an example of engagement
between personal care services staff and the MMP under circumstances
where personal care services are carved out. While we recognize there
may be other similar examples, as we discussed at 87 FR 1867 through
1868, our current policy, which we proposed and are finalizing in the
definitions of FIDE SNP and HIDE SNP in Sec. 422.2 and in Sec.
422.107(g) and (h), is that FIDE SNP or HIDE SNP designation is not
available for D-SNPs where the Medicaid coverage has extensive carve-
outs of Medicaid behavioral health and/or Medicaid LTSS benefits. While
we encourage the use of additional means of coordinating services, we
do not believe that to be the appropriate standard to use.
Comment: A commenter requested additional clarification on how CMS
views Medicaid carve-outs, including how CMS would address
circumstances where a State's configuration of services and coverage
differs from CMS's proposed requirements at Sec. Sec. 422.2 and
422.107(g) and (h) for FIDE SNP and HIDE SNP coverage of Medicaid LTSS
and Medicaid behavioral health services, as is the case in California.
This commenter sought clarification of CMS's expectation that the FIDE
SNP and/or HIDE SNP cover community-based LTSS. Similarly, the
commenter requests information on CMS's view of behavioral health
carve-outs in California, where behavioral health services for
individuals with serious mental illness are the responsibility of the
county mental health plan.
Response: Our proposal at Sec. 422.107(g) through (h) does not
change States' abilities to make decisions about its Medicaid managed
care program or how services are delivered in Medicaid. Instead, our
regulations at Sec. 422.107(g) and (h) as well as the revisions to the
definitions of FIDE SNP and HIDE SNP in Sec. 422.2 limit the HIDE SNP
and FIDE SNP designation based on the extent of carve-outs or
exclusions from Medicaid coverage furnished under the Medicaid
capitated contract required with the D-SNP or an affiliated Medicaid
managed care plan. The current combination of LTSS and behavioral
health carve-outs in California precludes most D-SNPs operating in
California from qualifying for HIDE SNP or FIDE SNP designation.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed provisions at Sec. 422.107(g) through (h)
without modification.
f. Service Area Overlap Between FIDE SNPs and HIDE SNPs and Companion
Medicaid Plans
MA organizations can achieve greater integration when they
maximally align their FIDE SNP and HIDE SNP service areas with the
service areas of the affiliated Medicaid managed care plan (meaning the
entities that offer capitated Medicaid benefits for the same enrollees
under a capitated contract with the State). Service area alignment also
better comports with the minimum Medicare-Medicaid integration
standards established by section 50311(b) of the BBA of 2018, which
amended section 1859 of the Act. We codified the required level of
integration for D-SNPs in paragraph (4) of the definition of D-SNP at
Sec. 422.2 in the April 2019 final rule.
Currently, under Sec. 422.2, a D-SNP can meet the requirements to
be designated as a FIDE SNP or HIDE SNP even if the service area within
a particular State does not fully align with the service area of the
companion Medicaid plan (or plans) affiliated with their
organization.\37\ For FIDE SNP or HIDE SNP enrollees outside the
companion Medicaid plan's service area, this lack of alignment does
little to integrate Medicare and Medicaid benefits as the D-SNP
enrollee does not have the option to join the companion Medicaid plan.
We believe requiring service area alignment in the definitions of FIDE
SNP and HIDE SNP would encourage MA organizations and States to create
better experiences for beneficiaries and move toward greater
integration, which would be consistent with the amendments to section
1859(f) of the Act made by section 50311(b) of the BBA of 2018.
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\37\ CMS has acknowledged this and encouraged MA organizations
to align these service areas in guidance issued on January 17, 2020,
regarding D-SNPs. See https://www.cms.gov/files/document/cy2021dsnpsmedicaremedicaidintegrationrequirements.pdf.
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Under our authority at section 1859(f)(8)(D) of the Act to require
that all D-SNPs meet certain criteria for Medicare and Medicaid
integration, we proposed to amend the FIDE SNP definition at Sec.
422.2 by adding new paragraph (6) and the HIDE SNP definition at Sec.
422.2 by adding new paragraph (3) to require that the capitated
contracts with the State Medicaid agency cover the entire service area
for the D-SNP for plan year 2025 and subsequent years. Requiring the
service area of the D-SNP contract to completely overlap with the
service area of the Medicaid capitated (that is, managed care) contract
will facilitate all
[[Page 27760]]
FIDE SNP and HIDE SNP enrollees having access to both Medicare and
Medicaid benefits from a single parent organization.
Our proposal addressed an unintended loophole to the minimum D-SNP
integration criteria we adopted as part of the definitions of FIDE SNP
and HIDE SNP: Where a D-SNP can qualify as either a FIDE SNP or HIDE
SNP by only having a small portion of its service area (and therefore,
enrollment) in the same service area as the companion Medicaid plan. We
do not believe that the existing definitions are consistent with the
goals and purposes of increasing Medicare-Medicaid integration for D-
SNPs as a whole or particularly for FIDE SNPs and HIDE SNPs, which are
supposed to have more than a bare minimum level of integration.
We did not intend for the proposal to limit State options for how
they contract with managed care plans for their Medicaid programs, but
to require the FIDE and HIDE SNPs to limit their MA service areas to
areas within the service areas for the companion Medicaid plan. We did
not propose to limit the service area of the companion Medicaid plan to
that of the D-SNP service area. Therefore, the companion Medicaid plan
may have a larger service area than the D-SNP. States, in their
contracting arrangements for Medicaid managed care programs, may wish
to limit the service areas of the affiliated Medicaid managed care
plans, but we recognize that States may have other policy objectives
better met with larger service areas in their Medicaid managed care
programs.
In plan year 2022, all FIDE SNPs met the service area requirement
being proposed. Most, but not all, HIDE SNPs also met the proposed
requirement. Of the 219 HIDE SNP plan benefit packages across 18
States,\38\ only 15 HIDE SNPs in four States had service area gaps with
their affiliated Medicaid managed care plans, leaving 106,075 enrollees
in 194 counties with no corresponding Medicaid plan.\39\ As noted in
our proposed rule, an MA organization impacted by our proposal would
have several pathways to comply with the change to the definition of
HIDE SNP at Sec. 422.2. The options include using the crosswalk
exception currently at Sec. 422.530(c)(4) (which we are redesignating
as Sec. 422.530(c)(4)(i) in section II.A.6.a. of this final rule) in
conjunction with dividing an existing FIDE or HIDE SNP into two (or
more) separate D-SNPs, with the service area of the FIDE or HIDE SNP
being within the service area of the affiliated Medicaid managed care
plan. We solicited comment on whether this proposal would likely result
in additional, unintended disruption for current FIDE SNP and HIDE SNP
enrollment. We direct readers to the proposed rule, at 87 FR 1869, for
a more detailed description of our projected impacts on HIDE SNPs and
options available for MA organizations impacted by this change.
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\38\ CMS, SNP Comprehensive report, January 2022. Retrieved at:
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data.
\39\ Internal analysis based on data from: CMS, Monthly
Enrollment by Contract, January 2022. Retrieved from: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly-Enrollment-by-Contract;
CMS, Monthly Enrollment by Contract/Plan/State/County, January 2022.
Retrieved from: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly-Enrollment-by-Contract-Plan-State-County; CMS, D-SNP Integration
Levels for CY 2022. Retrieved from: https://www.cms.gov/files/document/smacdsnpintegrationstatusesdatacy2022.xlsx; and service
area information from State Medicaid agency websites.
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We explained in the proposed rule how we were considering an
alternative of establishing a minimum percentage of enrollment or
service area overlap between the D-SNP affiliated Medicaid plan and
having FIDE SNPs and HIDE SNPs attest to meeting the minimum overlap
requirement. We were also considering an amendment to explicitly codify
how the current requirements permit D-SNPs to be designated as a FIDE
SNP or HIDE SNP even if their service area within a particular State
does not fully align with the service area of the companion Medicaid
plan (or plans). We did not propose either of these alternative
approaches because we believed these alternatives would create greater
operational complexity (in the case of establishing a minimum
percentage overlap) and would fail to help us achieve our objectives of
clarifying options for beneficiaries and creating better coordination
of Medicare and Medicaid benefits for all enrollees of the FIDE SNP or
HIDE SNP compared to current practice.
Comment: A number of commenters supported of the proposal to
require FIDE SNPs and HIDE SNPs have capitated contracts with the State
Medicaid agency covering the entire service area for the D-SNP. A
commenter noted that existing unaligned service areas for HIDE SNPs
resulted in confusion among enrollees, providers, and plan staff and
limited opportunities for integrated notices and appeals. Some
commenters believed that CMS's proposal would increase Medicare-
Medicaid integration. Several commenters noted CMS's proposal would
facilitate the ability to offer exclusively aligned enrollment for D-
SNP and the affiliated Medicaid plan. A commenter believed most, if not
all, beneficiaries enrolled in HIDE SNPs and FIDE SNPs should have
access to companion Medicaid plans. Another commenter noted that dually
eligible individuals should be in Medicare and Medicaid plans under one
parent company. Some commenters stated that CMS's proposal would
clarify the definitions of FIDE SNPs and HIDE SNPs, and prevent less
integrated plans from claiming these designations.
Response: We thank commenters for their support of our proposal. We
agree that this change to the FIDE SNP and HIDE SNP definitions at
Sec. 422.2, and therefore in the requirements for these types of D-
SNPs, will improve Medicare-Medicaid integration for dually eligible
beneficiaries.
Comment: A commenter supported this proposal at the plan benefit
package (PBP) level, rather than the contract level, in States where
Medicare Advantage contracts include non-FIDE and non-HIDE PBPs that
are D-SNPs. Another commenter supported the proposal and encouraged CMS
to extend this requirement to all D-SNPs that operate in the same area
as a Medicaid managed care plan, unless the State requests an
exception. The commenter believed that when a State has risk contracts
with managed care plans to provide Medicaid coverage to the dually
eligible population, D-SNPs should only be permitted to operate if they
have one of these Medicaid managed care contracts. This commenter
believed that allowing integrated D-SNPs to compete with non-integrated
D-SNPs confuses beneficiaries and degrades the definition of a D-SNP.
Response: We appreciate the support from these commenters. We
confirm that the service area requirement we proposed and are
finalizing here applies to FIDE SNPs and HIDE SNPs at the PBP level.
While we did not accept the recommendation to deny D-SNP MA contracts
to plans that do not (themselves or through an affiliated entity) have
a capitated contract for Medicaid benefits with the State Medicaid
agency in States where such contracts exist, we do note that States can
choose to execute State Medicaid agency contract only with those D-SNPs
that also cover Medicaid benefits under Medicaid managed care
contracts, through a direct contract with the State or through an
affiliated Medicaid managed care plan. Our final policy
[[Page 27761]]
provides flexibility for States to permit coordination-only D-SNPs.
Comment: Some commenters opposed the requirement to align the FIDE
SNP or HIDE SNP service area with the affiliated Medicaid plan service
area. A few commenters expressed concern that the requirement will
create significant, unnecessary disruption to existing D-SNP enrollees.
A commenter believed requiring a Medicaid contract to cover the entire
HIDE SNPs service area would limit the ability of small or new plans to
offer a HIDE SNP and this would not be in beneficiaries' best
interests.
Response: We appreciate the commenters' concern about the
disruption to enrollees of FIDE SNPs and HIDE SNPs. We clarify that an
impacted MA organization can keep operating in the existing service
area for both the D-SNP and Medicaid plan; the difference would be that
beginning with plan year 2025, the D-SNP would not qualify for FIDE SNP
or HIDE SNP designation. Therefore, there is no need for a D-SNP to
terminate and disrupt the coverage provided to current enrollees. The
impacted MA organization that is not changing its service area or PBP
offerings as a result of this rule would be required to update the
contract with the State Medicaid agency required by Sec. 422.107 to
include the notification requirement specified at Sec. 422.107(d). We
note that, based on our review of D-SNP contracts for 2022, no FIDE
SNPs are impacted by this requirement, and the States with impacted
HIDE SNPs also offer non-HIDE D-SNPs; therefore, these States have
established and are experienced with the notification requirement at
Sec. 422.107(d).
Comment: Several commenters also noted their concern about how the
new service area requirement would negatively impact the State Medicaid
agencies' contracting priorities and their ability to contract with D-
SNPs. A few commenters requested CMS engage with impacted States to
prevent any potential impacts and beneficiary disruption. A commenter
requested further analysis and explanation of how the proposal would
work with current State laws, and requested CMS research why there may
be regions where a capitated contract does not extend to the entire D-
SNP service area. Another commenter noted States may need some
flexibility to come into compliance with the requirement and design
programs and benefit offerings to meet their needs.
Response: We thank the commenters. However, we do not believe that
this change will impact the flexibility that States have to use their
contracts with D-SNPs to design programs that meet the needs of dually
eligible beneficiaries. States can continue to contract with D-SNPs
that have an affiliated Medicaid managed care plan in only a portion of
the service area. While we agree with MACPAC's recommendation that
States use the State Medicaid agency contracts that are required for D-
SNPs by Sec. 422.107(b) to completely align service areas between a D-
SNP and a Medicaid managed care plan to better integrate coverage and
care,\40\ our proposal only mandates such alignment for HIDE SNP and
FIDE SNPs with their affiliated Medicaid managed care plans.
Coordination-only D-SNPs can continue to operate without alignment of
the service area of the D-SNP with an affiliated Medicaid managed care
plan. We continue to conduct outreach and technical assistance to
States to better understand their use of capitated contracts (that is,
Medicaid managed care contracts under 42 CFR part 438) and their
Medicare-Medicaid integration goals.
---------------------------------------------------------------------------
\40\ MACPAC, Report to Congress on Medicaid and CHIP, ``Chapter
6: Improving Integration for Dually Eligible Beneficiaries:
Strategies for State Contracts with Dual Eligible Special Needs
Plan,'' June 2021. Retreived at https://www.macpac.gov/wp-content/uploads/2021/06/June-2021-Report-to-Congress-on-Medicaid-and-CHIP.pdf.
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Comment: A commenter noted that the proposed changes have already
been implemented in Arizona. Another commenter expressed concern that
the requirement would impact the landscape of D-SNPs in Oregon.
Response: We thank the commenters for offering their perspective.
In our analysis of FIDE SNP and HIDE SNP service areas,\41\ we
identified some service areas in which HIDE SNPs in Arizona do not
offer an affiliated Medicaid plan; however, we believe the impacted
plans and the State have sufficient time to choose an approach to come
into compliance (or default to coordination-only D-SNP status) that is
in line with the State's integration goals. Our analysis also showed
that HIDE SNPs in Oregon would not be impacted by this proposal because
each of Oregon's HIDE SNPs' service areas completely overlap with an
affiliated Medicaid plan. We will reach out to States impacted by this
change to provide technical assistance in advance of the contract year
2025 MA bidding cycle.
---------------------------------------------------------------------------
\41\ Internal analysis based on data from: CMS, Monthly
Enrollment by Contract, March 2021. Retrieved from: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly-Enrollment-by-Contract;
CMS, Monthly Enrollment by Contract/Plan/State/County, March 2021.
Retrieved from: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly-Enrollment-by-Contract-Plan-State-County; CMS, D-SNP Integration
Levels for CY 2021. Retrieved from: https://www.cms.gov/files/document/smacdsnpintegrationstatusesdata.xlsx; and service area
information from State Medicaid agency websites.
---------------------------------------------------------------------------
Comment: A few commenters requested that CMS clarify the scope of
the proposed requirement. A commenter requested clarification on
whether this provision, or others in the rule, would limit HIDE SNP
enrollments to exclusively aligned enrollment or otherwise limit HIDE
SNPs with unaligned enrollment. Another commenter requested
confirmation that an MA organization that has a Medicaid MCO contract
that covers the applicable geography and that includes behavioral
health benefits for dually eligible beneficiaries would be allowed to
operate HIDE SNPs, even if the MA organization does not have a managed
long-term services and supports (MLTSS) contract. The commenter also
requested CMS confirm that an MA organization that offers a HIDE SNP
that includes Medicaid services (including behavioral health) in the
State Medicaid agency contract should not need to also have separate
Medicaid MCO contract. Lastly, the commenter requested CMS clarify that
an MA organization is not required to also have a general Medicaid MCO
contract or MLTSS contract to offer a HIDE SNP if the State has
separate selection process for integrated plans.
Response: We thank the commenters for their request for clarity on
the scope of the proposals. We confirm that this provision and others
being finalized in this rule do not require HIDE SNPs to have
exclusively aligned enrollment. (The definitional change to require
exclusively aligned enrollment beginning in 2025 is limited to FIDE
SNPs.) We also note that in addition to requiring that the capitated
contract with the State Medicaid agency cover the entire service area
for the HIDE SNP starting in plan year 2025, the HIDE SNP definition as
finalized in this rule requires: (1) The capitated contract be between
the State Medicaid agency and the MA organization, it's parent
organization, or another entity that is owned and controlled by its
parent organization; (2) coverage of LTSS or behavioral health
services. HIDE SNPs are not required to have a capitated contract with
the State for both behavioral health and LTSS. These capitated
contracts with the State Medicaid agency are Medicaid managed care risk
contracts between the State and MA organization offering the HIDE SNP,
its parent organization, or another entity owned and controlled by the
[[Page 27762]]
parent organization and the Medicaid managed care risk contracts must
comply with 42 CFR part 438 provisions for Medicaid managed care
contracts. Therefore, the Medicaid managed care plan that is affiliated
with a HIDE SNP may be an MCO, a PIHP, or a PAHP, so long as coverage
of at least Medicaid LTSS or Medicaid behavioral health services is
included. Under this additional amendment, the D-SNP's service area
must be completely overlapped by the service area of this affiliated
Medicaid managed care plan beginning in 2025 in order for the D-SNP to
be a HIDE SNP; actual enrollment in the HIDE SNP and the affiliated
Medicaid managed care plan is not required to be aligned. We note that
some States directly contract with D-SNPs under a single contract that
meets both the managed care contract requirements under 42 CFR part 438
and the D-SNP contract requirements under Sec. 422.107, but this is
not required and a State may use a Medicaid managed care contract under
part 438 and a separate contract for Sec. 422.107 purposes.
Comment: A few commenters supported CMS giving impacted MA
organizations the opportunity to crosswalk enrollees from the existing
D-SNP that includes the service area outside of the companion Medicaid
plan service area into a new D-SNP PBP. However, several commenters
noted creating two different PBPs creates additional burdens for MA
organizations. A commenter also noted there is additional burden for
the States to operate and oversee additional D-SNP PBPs.
Response: We thank the commenters for this feedback and recognize
that creating a new PBP (that is, a new MA plan) creates additional
burden for MA organizations. We reiterate that MA organizations do not
need to change how they operate an impacted HIDE SNP. The HIDE SNP
would lose its HIDE SNP designation and become a coordination-only D-
SNP, which requires compliance with Sec. 422.107(d). However, the D-
SNP's contract with the State Medicaid agency under Sec. 422.107(a)
through (c) would likely need to be amended to include the notification
requirement at Sec. 422.107(d). We believe any burden to the State
from an additional D-SNP PBP due to the notification requirement at
Sec. 422.107(d) or other State oversight of D-SNPs would be minimal.
As noted previously in this section, all States with D-SNPs impacted by
this provision already have coordination-only D-SNPs in their markets.
Comment: Some commenters suggested that CMS delay the proposed 2025
effective date of the requirement for service area overlap. While these
commenters did not suggest an alternative effective date for this
provision, they stated that it may take States and current HIDE SNPs
longer to comply given State legislative and budgetary cycles.
Response: We recognize the commenters' concerns and acknowledge the
difficulty with aligning State Medicaid agency and Medicare Advantage
contracting timelines. However, we decline to make this change. For the
HIDE SNPs that are not able to align their MA service area with the
affiliated Medicaid plan's service area for contract year 2025, they
may be able to continue operating as a non-HIDE D-SNP and regain HIDE
status once the service areas align. We note, however, that this final
rule is effective in 2022, more than two years before the beginning of
2025 when this new service area requirement will apply.
Comment: Several commenters requested CMS provide guidance to
impacted States and MA organizations. A few commenters requested CMS
educate States on how service area alignment impacts integrated care,
and provide resources to help States address challenges such as
different Medicaid procurement and D-SNP contract timelines. A
commenter noted SHIP and MA brokers would also benefit from educational
resources. Another commenter suggested that CMS educate beneficiaries
ahead of this change.
Response: We thank the commenters for their input. We will continue
to engage with States to understand challenges and priorities in
establishing Medicare-Medicaid integration to improve beneficiary
experience and integration options. We will provide education and
outreach to States about changes in this final rule through the
Integrated Care Resource Center (see https://www.integratedcareresourcecenter.com/). We are also exploring ways to
improve awareness of available integrated care options for dually
eligible beneficiaries.
Comment: A few commenters did not support the alternatives CMS
considered to establish a minimum percentage of enrollment or service
area overlap between the D-SNP and affiliated Medicaid plan. A
commenter noted that these alternatives would cause confusion and limit
opportunities for integration. A commenter supported the alternative of
establishing a minimum percentage of enrollment at 75 percent or
higher. This commenter noted that this percent would limit the number
of FIDE SNP or HIDE SNP enrollees who find themselves without access to
both Medicare and Medicaid benefits from a single parent organization
but allow FIDE SNPs and HIDE SNPs in areas of the State where the
companion Medicaid managed care plan may not be able to attract enough
providers to meet network adequacy standards required by the State.
Response: We thank these commenters for their input. We acknowledge
the difficulty for health plans to meet both Medicare and Medicaid
network adequacy standards in rural areas. We are not finalizing the
alternative considered of setting a minimum percentage of enrollment as
we believe requiring FIDE SNPs and HIDE SNPs to have, beginning with
the 2025 plan year, MA service areas that are entirely covered by the
service area of the Medicaid capitated contact will create sufficiently
better coordination of Medicare and Medicaid benefits compared to
current practice.
Comment: Some commenters suggested that CMS allow existing HIDE
SNPs to continue operating as HIDE SNPs and allow beneficiaries to
choose to remain in unaligned plans. A commenter requested that CMS
clarify network requirements to ensure alignment between a FIDE SNP's
Medicare and Medicaid provider network. Another commenter suggested an
attestation process which would require increasing levels of network
alignment to maintain HIDE SNP status, similar to an initiative in
Washington State.
Response: We thank commenters for their recommendations. We decline
to accept the recommendation to allow existing HIDE SNPs to operate as
HIDE SNPs despite not meeting this new requirement because this
alternative may create greater operational complexity for overseeing
HIDE SNPs and would fail to meet the objectives that underpinned our
proposal.
Regarding network requirements to align the D-SNP's and companion
Medicaid plan's provider networks, we will consider issuing future
guidance and rulemaking on this topic. While we recognize the potential
for improved continuity of care for dually eligible enrollees from
State initiatives to increase the proportion of Medicaid plan providers
in the D-SNP network alignment like the example from Washington State,
this alternative is outside of the scope of this rulemaking.
After consideration of the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed amendments at Sec. 422.2 to the
[[Page 27763]]
FIDE SNP definition by adding new paragraph (6) and the HIDE SNP
definition by adding new paragraph (3) to require that the capitated
contracts with the State Medicaid agency cover the entire service area
for the D-SNP for plan year 2025 and subsequent years.
6. Additional Opportunities for Integration Through State Medicaid
Agency Contracts (Sec. 422.107)
Section 164 of MIPPA amended section 1859(f) of the Act to require
that each D-SNP contract with the State Medicaid agency to provide
benefits, or arrange for the provision of Medicaid benefits, to which
an enrollee is entitled. Implementing regulations are codified at Sec.
422.107. Notwithstanding this State contracting requirement for D-SNPs,
section 164(c)(4) of MIPPA does not obligate a State to contract with a
D-SNP, which therefore provides States with significant control over
the availability of D-SNPs in their markets. The State's discretion to
contract with D-SNPs, combined with the State's control over its
Medicaid program, creates flexibility for the State to require greater
integration of Medicare and Medicaid benefits from the D-SNPs that
operate in the State.
Even among States that have used the State Medicaid agency contract
at Sec. 422.107 to promote integration, we believe additional
opportunities exist to improve beneficiary experiences and health plan
oversight.
We proposed a new paragraph (e) at Sec. 422.107 to describe
conditions under which CMS would facilitate compliance with certain
contract terms that States require of D-SNPs that operate in the State.
As discussed in the proposed rule at 87 FR 1870, CMS would take certain
steps when a State Medicaid agency's contracts with D-SNPs require
exclusively aligned enrollment and require the D-SNPs to request (from
CMS) MA contracts that only include one or more State-specific D-SNPs
and that such D-SNPs use integrated member materials. As discussed
below and in the proposed rule beginning at 87 FR 1870, the
requirements described in proposed paragraph (e)(1) require work on the
part of CMS to facilitate compliance by D-SNPs with the State's
requirements. Therefore, proposed paragraphs (e)(2) and (3) described
steps CMS would take when the conditions of proposed paragraph (e)(1)
were met.
a. Limiting Certain MA Contracts to D-SNPs
Special needs plans, including D-SNPs, are currently included as
separate MA plans, also known as ``plan benefit packages (PBPs),''
under the same contract number along with any other MA plans of the
same product type (for example, health maintenance organization (HMO),
preferred provider organization (PPO), etc.) offered by the legal
entity that is the MA organization. As described in the proposed rule
at 87 FR 1870, PBPs under a single contract may offer different benefit
packages and serve multiple populations but still report medical loss
ratios and certain quality measures at the contract level. While some
quality measures are collected at the PBP level, unless a D-SNP is the
only PBP in a contract, it is not possible to ascertain a full and
complete picture of the quality performance of the D-SNP distinguished
from other PBPs in the contract. In addition, there is currently no
formal pathway for States to coordinate with CMS to require D-SNP PBPs
to utilize model materials that integrate information regarding
Medicare and Medicaid coverage.
It has been a long-standing CMS policy that CMS only award a legal
entity one contract for each product type (for example, HMO, PPO,
regional preferred provider organization (RPPO), etc.) it seeks to
offer for all PBPs for the totality of the States, with limited
exceptions.\42\ Given the important distinctions of D-SNPs in
comparison to other MA plans, States and other stakeholders have
expressed an interest in better understanding performance of these
plans without data being combined with non-D-SNPs and tailoring the
information provided in member materials to more aptly suit the dually
eligible population.
---------------------------------------------------------------------------
\42\ The following memo outlines the policy for CY 2020, which
has been in effect for several years: CMS HPMS Memo, ``Release of
Notice of Intent to Apply for Contract Year 2021 Medicare Advantage
(MA), Medicare-Medicaid Plans (MMP), and Prescription Drug Benefit
(Part D) and Related CY 2021 Application Deadlines'', October 17,
2019. Retrieved from https://www.cms.gov/files/document/2021-noia-partcpartd-mmp.pdf.
---------------------------------------------------------------------------
Therefore, we proposed to codify a pathway where if a State
requires an MA organization to establish a MA contract that only
includes one or more D-SNPs with exclusively aligned enrollment within
a State and for that D-SNP to then utilize integrated materials, the MA
organization may apply for such a contract using the existing MA
application process. The proposed language at Sec. 422.107(e)(1)(i)
would give States the flexibility to require an MA organization to
apply and seek CMS approval for one or more D-SNP-only contracts, which
would provide more transparency in D-SNP plan performance within
States. We direct readers to the proposed rule 87 FR 1870 for a more
detailed explanation of the benefits and challenges of this proposal.
We described at proposed Sec. 422.107(e)(2) how the CMS
administrative steps to permit a new D-SNP-only contract would be
initiated by receipt of a letter from the State Medicaid agency
indicating its intention to include the contract requirements under
Sec. 422.107(e)(1) in its contract with specific MA organizations
offering, or intending to offer, D-SNPs with exclusively aligned
enrollment in the State. While we would provide States with additional
information on timelines and procedures in sub-regulatory guidance, we
would follow the steps consistent with existing timeframes and
procedures for the submission of applications, bids, and other required
materials to CMS. Examples of those activities are summarized in the
proposed rule at 87 FR 1871. Our proposal did not include exemptions or
changes in the current regulations and process for contract
applications.
To avoid any significant beneficiary disruption while implementing
the proposed change, we proposed a new crosswalk exception (to be
codified at Sec. 422.503(c)(4)(ii)) to allow MA organizations to
seamlessly move existing D-SNP enrollees into a D-SNP-only contract
created under this proposal. Our proposed crosswalk exception would
apply only for movement between plans of the same product type (HMO,
PPO, etc.) under the same parent organization for the following
contract year when the new D-SNP is created under a new D-SNP-only
contract based on a State requirement as described in proposed Sec.
422.107(e). To add this new crosswalk exception, we proposed
redesignating the existing paragraph (c)(4) as new paragraph (c)(4)(i)
and creating a new paragraph (c)(4)(ii) in Sec. 422.530. Under this
proposal, the processes used for other crosswalk exceptions (for
example, the notice to CMS and CMS's review and approval of the
crosswalk exception) would apply to this new crosswalk exception.
We solicited comment on limiting certain MA contracts to D-SNPs and
whether any additional beneficiary protections should apply.
Comment: Many commenters support this proposal as a step to improve
quality, transparency, plan performance, and oversight of D-SNPs.
Several commenters indicated having D-SNP-only contracts established
under Sec. 422.107(e) would enable a clearer understanding of the
dually eligible population outcomes and needs in each
[[Page 27764]]
State. MACPAC commented that the proposal aligned with prior work
highlighting how States can use authority under the Medicare
Improvements for Patients and Providers Act of 2008 (MIPPA, Pub. L.
110-275) to promote integration in their contracts with D-SNPs.
Response: We thank commenters for their support. We agree that
having D-SNPs with exclusively aligned enrollment separated into
distinct contracts will provide greater transparency into plan
performance and ultimately improve quality for dually eligible
enrollees.
Comment: Several commenters expressed support for efforts to
encourage greater integration; however, they also expressed concerns
with permitting States to request to CMS that D-SNPs with exclusively
aligned enrollment be in separate MA contracts. Some commenters were
concerned that the ability to have D-SNP-only contracts established
under Sec. 422.107(e) complicates State contracting requirements and
could create barriers to new market entrants, thereby limiting enrollee
choice and decreasing competition. A commenter encouraged CMS to ask
States to implement the provisions of D-SNP-only contracts established
under Sec. 422.107(e) in a manner that does not discriminate between
existing and new plans. Another commenter indicated that the proposal
would create more heterogeneity among States in terms of State
requirements for integrated plans and for quality assessments that will
not improve evaluating or comparing plan quality for dually eligible
individuals, indicating that D-SNPs already provide extensive quality
information to States and CMS.
Response: We appreciate the commenters' perspectives on the
potential impacts of having D-SNP-only contracts established under
Sec. 422.107(e); however, we do not believe that this proposal would
cause States to discriminate between new and existing plans. Some
States already limit market entry by only executing State Medicaid
agency contracts with organizations with Medicaid MCO contracts or by
utilizing competitive bidding and procurements to select organizations
to participate as Medicaid MCOs. Our proposal does not change this
existing State flexibility. As noted in the proposed rule at 87 FR
1869, section 164(c)(4) of MIPPA does not obligate a State to contract
with a D-SNP, and therefore provides States with significant control
over the availability of D-SNPs in their markets. States have
flexibility in pursuing D-SNP-only contracts through Sec. 422.107(e),
but that flexibility is not unlimited. As we proposed and are
finalizing, this pathway will only be available for D-SNPs that have
exclusively aligned enrollment (which means that all the D-SNPs'
enrollees are also enrolled in an affiliated Medicaid MCO) and where
both a D-SNP-only contract and a minimum set of integrated materials
are used. We believe in most circumstances it will be most beneficial
if use of D-SNP-only MA contracts is implemented consistently for all
D-SNPs with exclusively aligned enrollment within a State so that all
these D-SNPs are on the same footing and these plan enrollees benefit
from the use of integrated materials and greater transparency of
quality ratings.
We disagree with the commenter that D-SNP-only contracts
established under Sec. 422.107(e) would not provide States with
insight on D-SNP quality and performance. Unless a D-SNP is the only
PBP in a contract, it is not possible to ascertain a complete picture
of performance on HEDIS, CAHPS, HOS, and Star Ratings. As discussed
below, the Star Ratings methodology includes both measure-level
adjustments (where specified by measure stewards) and the CAI to adjust
disparities in performance caused by social risk factors beyond the MA
organizations' control.
Comment: A few commenters requested that CMS revisit the number of
MA contracts a legal entity can hold or this proposal would limit the
viability of some D-SNPs. Some commenters expressed concern that
creating new legal entities is an expensive endeavor, including meeting
State licensure and capital requirements. These commenters sought
clarification if separate entities would be needed to enter into the D-
SNP-only contracts established under Sec. 422.107(e).
Response: We appreciate commenters' concerns regarding the number
of MA contracts a legal entity can hold and agree that establishing new
legal entities may be a burden to MA organizations. In the limited
instance set forth in Sec. 422.107(e), MA organizations with existing
contracts that are required by the State to separate out the D-SNP with
exclusively aligned enrollment would not be required to create a new
legal entity and would be permitted the additional MA contract. CMS has
authority, at Sec. 422.503(e), to sever specific MA plans from a MA
contract that covers multiple MA plans. While we have established an
operational policy of requiring an MA contract to cover all MA plans of
the same type for the same MA organization, we would create exceptions
to that policy when Sec. 422.107(e) applies.
Comment: Some commenters, as further discussed in section
II.A.6.d., indicated that the proposal sets a framework that provides a
clearer assessment of financial performance of D-SNPs.
Response: We thank the commenters for their input related to
assessment of D-SNPs' financial performance. We agree that having D-
SNP-only contracts established under Sec. 422.107(e) will enhance
States' and other stakeholder's ability to examine the financial
performance of D-SNPs.
Comment: Some commenters noted D-SNP-only contracts established
under Sec. 422.107(e) would allow for better oversight of network
adequacy for the dually eligible population.
Response: We thank commenters for their perspective related to
oversight of network adequacy for the dually eligible population. We
agree that having network submissions from D-SNP-only contracts
established under Sec. 422.107(e) will provide better oversight of
network adequacy and insight on patterns of care unique to the dually
eligible population in the covered service areas.
Comment: Some commenters supported the State flexibility in the
proposal. A commenter indicated that the flexibility is necessary since
States are at different points on the D-SNP integration pathway and
noted that the requirements in the proposal would add duties for both
State and D-SNP staff. A few commenters from one State indicated
support for the proposal because current State policy would align with
the ability to limit D-SNPs to D-SNP-only contracts specific to that
State. A commenter acknowledged that they are actively considering
implementing the option for D-SNP contracts established under Sec.
422.107(e) should the proposal be finalized.
Response: We thank commenters for their support towards State
flexibility. We anticipate that different States will implement this
flexibility at different times as they progress along the pathway
towards more integration of Medicaid and Medicare through their D-SNP
contracts and engage with their contracted D-SNPs and CMS on this
issue.
Comment: A commenter indicated that while the proposal could
advance the goal for better alignment, care management, provider
service and quality monitoring, many States will benefit from
additional guidance and support to operationalize the proposal. Another
commenter urged CMS to aid States in making these changes and proposed
that CMS provide that support
[[Page 27765]]
through grants or enhanced Federal medical assistance percentage (FMAP)
to address capacity issues. The commenter indicated that one-on-one
intensive technical assistance and template materials would also be
needed.
Response: We thank the commenters for their input. In addition to
our own direct outreach to States, we will provide education and
resources to States to support implementation of this rule through the
Integrated Care Resource Center.\43\ As discussed in the section that
follows, we will develop template materials (see Integrated Member
Materials).
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\43\ See https://www.integratedcareresourcecenter.com/.
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We appreciate the commenter's request that CMS provide support
through grants or enhanced FMAP to help States develop capacity to
implement D-SNP-only contracts established under Sec. 422.107(e). We
will consider ways that CMS can provide support to States to further
integration but note that there are limits on CMS's ability to issue
grants or change FMAP levels.
Comment: A commenter expressed concern that timing of State
decisions regarding D-SNP-only contracts established under Sec.
422.107(e) will be unclear and inconsistent across markets, resulting
in administrative challenges for plans.
Response: We agree with the commenter that the timing of State
decisions regarding D-SNP-only contracts may not be consistent. To
address this potential issue, we established at Sec. 422.107(e)(2)
that--because the timing of applications, bids, and other contracting
procedures under Sec. Sec. 422.250 through 422.530 remain applicable--
CMS will work in good faith following receipt of a letter from a State
Medicaid agency indicating their intent to pursue D-SNP-only contracts
and the use of integrated materials to implement these provisions for a
future contract year. We further direct the commenter's attention to
the proposed timeline discussed in the proposed rule at 87 FR 1871.
When we issue the additional information on timelines and procedures in
sub-regulatory guidance, we will consider current MA timeframes and
procedures for submission of applications, bids and other required
materials to CMS, in addition to the need for MA organizations to make
business decisions in a timely manner. We anticipate that efforts to
achieve D-SNP-only MA contracts in a State may take two years or more,
depending on current MA and Medicaid managed care contract
arrangements, such as whether a current D-SNP has exclusively aligned
enrollment, and the level of effort needed to develop integrated
enrollee materials.
Comment: A commenter indicated support for the proposal only where
the State and the plans agree to have D-SNP-only contracts established
under Sec. 422.107(e). Another commenter suggested limiting the option
for D-SNP-only contracts established under Sec. 422.107(e)(1) to those
States where separate contracts are needed for additional State quality
programs.
Response: We appreciate the commenter's support for establishing D-
SNP-only contracts under Sec. 422.107(e) where the State and the plans
agree to take such steps. We recommend that the State consult with CMS,
MA organizations, and other stakeholders on whether and how to pursue
this step toward integration, but we recognize that section 164(c)(4)
of MIPPA does not obligate a State to contract with a D-SNP, and
therefore provides the States with significant control over which MA
organizations offer D-SNPs in their markets. We disagree that the State
requirements to establish D-SNP-only contracts under Sec. 422.107(e)
should be limited to circumstances where it is needed for additional
State quality programs. While State quality programs may be facilitated
by D-SNP-only contracts under Sec. 422.107(e), there are other
reasons, including transparency of MLRs and improved State oversight,
that are also valid reasons for States to require such contracts.
Comment: A few commenters opposed the proposal indicating it may
create additional administrative burden. A commenter cited burdens for
the industry including transitioning enrollees to the new contract,
providing separate Star Ratings measure support and reporting, managing
additional HEDIS hybrid sample reviews and supplemental data work
streams, and administering separate HOS and CAHPS surveys. In addition,
the commenter noted that providers could be adversely impacted by
additional HEDIS medical record reviews for hybrid measures and
supplemental data collection efforts.
Response: We acknowledge the concerns raised by commenters that
there may be additional administrative burden for MA organizations and
providers. We anticipate that there will be impacts shared by CMS,
States, and MA organizations as discussed in the proposed rule at 87 FR
1846 and in section V.C.3.b of this final rule; however, we believe the
benefits from having separate D-SNP-only contracts established under
Sec. 422.107(e) outweigh these concerns. Further, we do not expect a
large volume of new contracts would be created in the foreseeable
future because most States do not meet the prerequisite of requiring
exclusively aligned enrollment, and among those States that do, some D-
SNPs are already in D-SNP-only contracts.
Comment: Many commenters expressed concerns regarding quality
measurement for D-SNP-only contracts established under Sec.
422.107(e). Citing anticipated smaller enrollment in D-SNP-only
contracts established under Sec. 422.107(e), many commenters believed
CMS's proposal could create pervasive issues with small sample sizes,
which may diminish reportability and reliability of various quality
measures, thereby producing less visibility into D-SNP performance than
with the current system. Some commenters were concerned that the
variability in measure reporting would also affect the reliability of
Star Ratings. Additionally, many commenters conveyed consternation
based on their expectation that Star Ratings would be lower for D-SNP-
only contracts established under Sec. 422.107(e) because they would be
scored against MA contracts with few or no dually eligible enrollees. A
commenter noted that CMS research has shown a link between the length
of time a contract has been in place and its Star Ratings performance.
A few commenters noted that lower Star Ratings could reduce bonus
payments and therefore rebates and supplemental benefits offered to
beneficiaries. A commenter noted that lower bonus and rebate dollars
may make it harder to address disparities. Finally, several commenters
indicated that the impact to specific components of Star Ratings would
need to be assessed further, including the Categorical Adjustment Index
(CAI). A commenter noted that the CAI is insufficient to address
concerns regarding lower Star Ratings for plans that disproportionately
serve the most vulnerable populations. Additionally, a commenter
expressed concern that moving to a separate contract would impact the
Members Choosing to Leave the Plan measure, and asked CMS to exclude D-
SNP enrollees switching between unaligned and aligned D-SNPs that are
under the same parent organization.
Response: It is not clear to us that measure data from D-SNP-only
contracts established under Sec. 422.107(e) would be unreliable. Under
the FAI demonstrations, MMPs have not experienced pervasive sample size
issues, even with lower enrollment relative to broader MA contracts,
and therefore we do not anticipate
[[Page 27766]]
widespread measurement issues for D-SNP-only contracts established
under Sec. 422.107(e). We also note that we would work with States
interested in this opportunity to be sure they understand whether there
is high risk of sample size problems and possible strategies for
mitigation. That said, there are methodologies that prevent unreliable
data from impacting Star Ratings. Star Ratings measures have minimum
sample size and/or denominator requirements to ensure measure data are
reliable. Further, to improve stability of cut points and prevent cut
points from being influenced by outliers, Tukey outlier deletion will
be implemented beginning with the 2024 Star Ratings. Through the use of
Tukey outlier deletion, extreme outliers will be removed from measure
scores prior to clustering to prevent outliers from impacting cut
points for all contracts.
We do not believe that a new D-SNP-only contract created under
Sec. 422.107(e) would likely have lower Star Ratings by virtue solely
of being a new contract. The lower Star Ratings associated with new
contracts is likely due to the time MA organizations need to implement
quality improvement initiatives that impact Star Ratings. Such quality
improvement initiatives should already be in place for MA contracts
from which the new D-SNP-only contracts are carved out using the
process under Sec. 422.107(e). We anticipate that an MA organization
would continue administrative and operational initiatives that are
currently in place across multiple plans even if the D-SNP(s) in a
particular State are placed into a D-SNP-only contract.
While we understand the concern that D-SNP-only contracts
established under Sec. 422.107(e) would be scored against MA contracts
that may have few or no dually eligible enrollees, the Star Ratings
methodology includes both measure-level adjustments where specified by
measure stewards and the CAI to adjust for within-contract disparities
in performance on social risk factors. There are currently 84 D-SNP-
only contracts, and the CAI methodology works as intended in the
presence of these contracts.\44\ CAI values are assigned to contracts
based on the contracts' percentage of LIS or dual eligible (DE) (LIS/
DE) beneficiaries and the percentage of beneficiaries with
disabilities. The percentage of LIS/DE beneficiaries is set to 100
percent for D-SNP-only contracts.
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\44\ See 2022 SNP Landscape Source Files (v_10_26_21) retrieved
at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn.
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We are aware of the commenters' concern that the CAI does not fully
address the challenge of achieving high Star Ratings for D-SNP-only
contracts whose ratings are based on comparisons to MA contracts with
few dually eligible enrollees. We continue to monitor the impact of the
CAI, particularly to evaluate whether an increase in D-SNP-only
contracts limits the statistical basis for the within-contract
performance differences on which it is based, and whether any
methodological enhancements are necessary. In addition, we refer
commenters to the CY 2023 Advance Notice (https://www.cms.gov/files/document/2023-advance-notice.pdf https://www.cms.gov/files/document/2023-advance-notice.pdf) and CY 2023 Rate Announcement (https://www.cms.gov/files/document/2023-announcement.pdf) for information
regarding a health equity index to potentially replace the current
reward factor. The addition of a health equity index to the Star
Ratings would need to be proposed through rulemaking.
Regarding the commenter's concern about the Members Choosing to
Leave the Plan measure, we note that this measure currently excludes
enrollees that are affected by a PBP termination. Therefore, we do not
anticipate a negative impact to this measure when enrollees are
crosswalked from the non-renewing D-SNP PBP into the new D-SNP-only
contract established as described in Sec. 422.107(e).
Comment: In lieu of creating D-SNP-only contracts established under
Sec. 422.107(e), many commenters suggested that the goals of this
proposal could be met via other strategies. Many commenters recommended
that CMS work with plans and States to either create D-SNP reporting
and quality measures or expand the number of SNP-only measures reported
at the PBP level. A commenter suggested that CMS require more detailed,
stratified reporting of Star Ratings measures for D-SNPs. A commenter
suggested that CMS consider additional reporting requirements in State
Medicaid contracts, while a few commenters noted that States already
have the option to require supplemental reporting for their Medicaid
enrollees. A commenter noted the importance of ensuring that any State-
specific quality measures are collected in a way that does not impose
additional burden on D-SNPs.
Response: While we acknowledge that there are other strategies to
collect quality data regarding D-SNPs other than permitting (or
requiring) use of D-SNP-only contracts as described in Sec.
422.107(e), the commenters' suggestions would not fully meet the goal
of providing States and the public with greater transparency on MA
quality ratings for D-SNPs. This can only be accomplished through
separate Star Ratings specific to the performance of D-SNPs within a
State. Although States may separately collect quality data for D-SNP
enrollees, those data would not feed into Star Ratings. States also
would not be able to collect CAHPS or HOS data specific to a D-SNP PBP,
because the surveys are administered at the contract level.
Furthermore, separate reporting reinforces unaligned measurement
systems that exacerbate burden for plans and States, and may cause
confusion for consumers as they attempt to consider quality information
from different sources.
We note that in the CY 2023 Advance Notice and CY 2023 Rate
Announcement, we discuss confidential stratified reporting of certain
quality measures by dual eligible status, which will aid MA
organizations in focusing quality improvement on dually eligible
enrollees. Such reporting would not, however, feed into Star Ratings at
this time.
Comment: A few commenters requested that CMS delay finalizing the
proposal until a further evaluation can be done to determine all the
consequences, while another commenter requested that CMS apply this
provision prospectively for new D-SNP contracts awarded after the
implementation date rather than requiring existing D-SNP PBPs to
transition to separate D-SNP-only contracts. A commenter suggested that
CMS not finalize the proposal at this time and instead monitor impacts
of the changes occurring in California between 2023 and 2025.
Response: We acknowledge the commenters' interest in seeking a
delay to implement this provision. Because of the timing of MA
applications, bids, and contract execution, the earliest time that a
separate D-SNP-only contract could be established using the process
created by Sec. 422.107(e) would be for the 2024 plan year, and then
only if CMS receives a timely request from a State that is willing to
meet the criteria set forth in Sec. 422.107(e), the MA organization
submits a timely notice of intent to apply and subsequent application
for a D-SNP-only contract for a service area in the State, and the
State and the MA organization successfully negotiate and execute the
State Medicaid agency contract required by Sec. 422.107(a) through
(c). Therefore, we do not
[[Page 27767]]
believe a delay in the implementation of these provisions is necessary.
Further, we believe that only implementing these provisions for new D-
SNPs would constrain States that desire consistency in their
contracting and oversight strategies and would preclude CMS, States, MA
organizations, and other stakeholders from gaining a full understanding
of plan performance to improve the quality of care and level of
integration for the dually eligible population within a State.
Comment: Many commenters indicated that having D-SNP-only contracts
established under Sec. 422.107(e) would provide a complete picture of
plan performance in areas like HEDIS, HOS, CAHPS, and Star Ratings.
Several commenters encouraged transparency on the quality ratings for
D-SNPs to better reflect experiences unique to the population. They
noted that separate reporting will enable CMS, States, and plans to
more fully analyze the data, thereby improving oversight and
accountability. A commenter indicated that the proposal would provide
more accurate benchmarks for plans serving dually eligible individuals.
Another commenter noted that it may also provide insight into whether
D-SNPs are measured on the right outcomes, and whether different or
additional measures should be considered. Another commenter noted that
this change could enable CMS to modify Star Rating criteria in the
future to specifically account for the unique challenges of providing
care for D-SNP beneficiaries.
Response: We thank commenters for their acknowledgement that our
proposal would provide greater transparency on quality measurement for
D-SNPs. We believe that separate reporting for D-SNP-only contracts has
the potential to deliver many benefits, including enhancing oversight
efforts and creating clearer performance expectations. We agree that
separate reporting for D-SNP-only contracts will enable CMS to consider
possible adjustments to the D-SNP measurement strategy in the future.
Comment: A commenter noted that this proposal would allow potential
enrollees to compare Star Ratings more accurately across D-SNPs, since
it would remove the impact of healthier MA membership on the Star
Ratings for D-SNPs that are operated by plans with significant non-SNP
MA membership. Another commenter noted that this proposal would allow
agents and brokers to provide beneficiaries with more accurate plan
metrics and enable better consumer decision-making.
Response: We agree with the commenters that separate Star Ratings
for D-SNP-only contracts will provide valuable insights for consumers
and the professionals who advise them. We believe that Star Ratings
that are specific to local D-SNP(s) would be an important tool for
comparison shopping and enhancing consumer choice.
Comment: Some commenters expressed concern for unintended
consequences of assessing D-SNP-only contracts established under Sec.
422.107(e) separately under the current Star Ratings methodology, and
urged CMS to undergo a thorough evaluation and analysis on the impact
of this proposal on Star Ratings. A few commenters asked CMS to
consider developing modifications that account for differences with MA
plans, while another commenter asked CMS to account for differences in
population rather than quality of care provided by plans. A commenter
wondered if further consideration should be given to comparing D-SNP
performance exclusively to other D-SNPs when assessing Star Ratings,
while another commenter contended that separate baselines and cut
points may need to be created for the D-SNP-only contracts established
under Sec. 422.107(e). A few commenters referenced discussion in the
CY 2023 Advance Notice about potential improvements to quality
measurement to address social risk factors, and encouraged CMS to
complete that effort before trying to measure D-SNP-only contracts
established under Sec. 422.107(e). A commenter urged CMS to work with
plans to identify a long-term and more comprehensive solution to the
impact of beneficiary demographics and social risk factors on Star
Ratings. Another commenter suggested that CMS convene a technical
expert panel to look at options for adjusting Star Ratings for D-SNPs.
Finally, a commenter suggested that CMS evaluate D-SNPs with a
different quality payment structure entirely, similar to the strategy
used for MMPs.
Response: We are aware that for certain Star Ratings measures, it
is challenging for most plans to achieve the same outcomes for groups
with higher rates of disability, functional impairment, or social risk
factors. This may be due to transportation issues, lower health
literacy, communication challenges, residential instability, and other
factors. As noted previously, the Star Ratings methodology includes
both measure-level adjustments where specified by measure stewards and
the CAI to adjust for within-contract disparities in performance on
social risk factors. The CAI is a data-driven approach designed to
improve the accuracy of performance measurement, while not masking true
differences in performance between contracts. Many D-SNP contracts do
well in the Star Ratings with 44 percent of D-SNP-only contracts
earning 4 or more stars for the 2021 Star Ratings.
CMS continually seeks to refine the Star Ratings approach, and we
encourage commenters to review the CY 2023 Advance Notice and CY 2023
Rate Announcement for information regarding potential new
methodological enhancements related to expanding stratified reporting
and developing a health equity index, both of which may help support
efforts to address disparities in care and advance health equity.
Substantive changes to the Star Ratings are adopted through the
rulemaking process, which provides an opportunity for public notice and
comment before CMS finalizes policy changes for the Star Ratings
program.
Regarding the suggestion to create a different quality payment
structure entirely for D-SNP-only contracts, MA payment requirements
are set under statute, specifically section 1853 of the Act. We believe
that Star Ratings are an effective motivator for performance that
incentivize MA and Part D plans to provide quality care for all
enrollees, including those that are socially at-risk. Furthermore,
using the same ratings approach for all contracts helps consumers
understand and compare quality across plan offerings.
Comment: A commenter expressed support that D-SNP-only contracts
established under Sec. 422.107(e) provide a pathway to D-SNP specific
measurement. However, the commenter noted that combining D-SNP-only
contracts established under Sec. 422.107(e) with the transition of
MMPs to D-SNPs would shift which populations are combined in a single
Medicare contract with aggregated Star Ratings. The commenter
recommended maintaining the ability to manage and see reporting at the
product level for each of these distinct offerings to allow States to
effectively measure and manage both programs.
Response: We appreciate the commenter's support that D-SNP-only
contracts established under Sec. 422.107(e) provide a pathway to D-SNP
specific measurement. Our proposal does not preclude a State from
requiring separate D-SNP-only contracts under Sec. 422.107(e) for
separate D-SNP programs serving distinct populations (for example,
separate integrated care programs for dually eligible enrollees over
and under age 65). In discussions
[[Page 27768]]
with States considering requiring such separate contracts, we would
raise the issue with the applicable State(s) whether those contracts
had sufficient enrollment for the calculation of Star Ratings.
Comment: Some commenters indicated that if CMS moves forward with
this proposal, it should remove past performance as a factor in issuing
the D-SNP-only contracts established under Sec. 422.107(e). A
commenter noted that low Star Ratings could prevent an organization
from getting a D-SNP-only contract established under Sec. 422.107(e)
if CMS finalizes the proposal to include Star Ratings in past
performance.
Response: We agree with commenters that MA organizations entering
into a D-SNP-only contract based on the provisions set forth at Sec.
422.107(e) should not be included in the past performance analysis as
described in Sec. Sec. 422.502 and 422.504. MA organizations that
currently offer D-SNPs with exclusively aligned enrollment would not
otherwise be seeking to enter into a D-SNP-only contract. We note that
since the existing regulations at Sec. 422.502(b)(1) provide CMS the
flexibility of when to deny an application related to past performance
that no changes are needed.
Comment: Several commenters, including MACPAC, suggested that CMS
expand the ability of States to request that CMS allow D-SNP-only
contracts established under Sec. 422.107(e) beyond those D-SNPs with
exclusively aligned enrollment. MACPAC and other commenters noted that
a State's ability to assess quality in D-SNPs is important regardless
of whether the D-SNP operates with exclusively aligned enrollment. A
few commenters indicated that in order to ensure disparities between
dual eligible enrollees are assessed on a level playing field, all D-
SNPs should be in separate contracts from non-D-SNP MA plans. A
commenter requested that CMS use the process as a template for a wider
required, not optional, separation of D-SNP contracts in the future.
Response: We thank commenters for sharing their concerns on the
parameters of this proposal to only apply to D-SNPs with exclusively
aligned enrollment; however, we believe starting at this point is an
incremental step on the integration platform. We will consider future
rulemaking on whether to expand the ability for States to request to
CMS separate D-SNP contracts for D-SNPs that do not have exclusively
aligned enrollment.
Comment: A few commenters urged CMS to do more to allow for precise
understanding of the policies, qualities, and obligations of specific
D-SNPs by requiring separate contracts and public posting of model
State Medicaid agency contracts. The commenters believe that this would
improve oversight and allow data to more clearly reflect the outcomes,
needs, satisfaction, and quality of care for people in D-SNPs.
Response: We appreciate the commenters' request that CMS require
separate D-SNP-only contracts and public posting of model State
Medicaid agency contracts in order to increase transparency about D-SNP
obligations. We point the commenters to the Integrated Care Resource
Center for sample language that State Medicaid agencies can use in
their contracts.\45\ As noted in response to other comments, we may
also consider opportunities to expand or modify the approach for D-SNP-
only contracts through future rulemaking.
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\45\ See https://www.integratedcareresourcecenter.com/resource/sample-language-state-medicaid-agency-contracts-dual-eligible-special-needs-plans.
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Comment: A few commenters provided feedback regarding the ability
of the MA organization offering a D-SNP under this proposal to
crosswalk enrollees to the new D-SNP-only contract established under
Sec. 422.107(e). Some commenters expressed support for the new
crosswalk proposed at Sec. 422.530(c)(4)(ii) as it provides a smooth
process for organizations to retain their enrollees. Some commenters
expressed concern that moving the impacted enrollees to the new D-SNP-
only contract would require a new enrollee identification card and
could change bill routing by providers. Another commenter indicated
that it would be important for plans to demonstrate how they will
communicate the shift to beneficiaries in plain language and where to
go for options counseling.
Response: We agree that these enrollees will need to receive a new
identification card with the correct information. Our goal is to
minimize enrollee disruption as we work towards more integrated care
for the dually eligible population. We will work with States and the D-
SNPs with exclusively aligned enrollment to appropriately communicate
to the impacted enrollees why they are receiving new identification
cards.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed provisions at Sec. 422.107(e) regarding the
creation of D-SNP-only contracts without modification, and we are
finalizing our provisions at Sec. 422.530(c)(4) with minor edits for
clarification.
b. Integrated Member Materials
Communicating information to enrollees and potential enrollees is
an important function of MA plans, Part D plans, and Medicaid managed
care plans--and D-SNPs with exclusively aligned enrollment must comply
with all of those rules.\46\ There are advantages for enrollees in D-
SNPs with exclusively aligned enrollment in receiving one set of
communications that integrates all of the required content, as
discussed later in this section. We proposed a mechanism and some
parameters to facilitate a State's election to have D-SNPs with
exclusively aligned enrollment use certain communications materials
that integrate content about Medicare and Medicaid. As proposed and
finalized, a State is only able to elect this if the State has also
required the D-SNP with exclusively aligned enrollment to also apply
for and seek CMS approval for a D-SNP-only MA contract. Under this
rule, the applicable Medicaid managed care and MA requirements and
standards continue to apply to the integrated materials.
---------------------------------------------------------------------------
\46\ Because D-SNPs must offer Part D benefits, they are subject
to both MA requirements in part 422 and Part D requirements in part
423. See Sec. Sec. 422.2 (definition of specialized MA plans for
special needs individuals) and 422.500.
---------------------------------------------------------------------------
CMS requires MA plans and Part D plans to furnish specific
information to enrollees and potential enrollees, with some specific
requirements outlined in Sec. Sec. 422.111 and 423.128 and additional
requirements at Sec. Sec. 422.2261, 422.2267, 423.2261, and 423.2267.
For information that CMS deems vital to Medicare beneficiaries,
including information related to enrollment, benefits, health, and
rights, CMS may develop and provide materials or content for MA
organizations and Part D sponsors in either standardized or model form.
These materials are subject to requirements of the Paperwork Reduction
Act of 1995 (PRA) (44 U.S.C. 3501 et seq.) and the Office of Management
and Budget (OMB) collection of information approval process no less
than every three years.\47\ CMS creates standardized materials and
content that MA organizations and Part D sponsors must use in the form
and manner CMS provides under a separate OMB collection of information
approval process. CMS model materials and
[[Page 27769]]
content are examples of how to convey information to beneficiaries. MA
organizations and Part D sponsors may use CMS's model materials or
craft their own materials or content, provided the MA organization or
Part D sponsor accurately conveys the vital and required information in
the required material or content to the beneficiary and follows CMS's
order of content, when specified. In Sec. Sec. 422.2267 and 423.2267,
we refer to such materials and content collectively as required
materials.
---------------------------------------------------------------------------
\47\ Refer to www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995 and www.govinfo.gov/content/pkg/FR-1995-08-29/pdf/95-21235.pdf.
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CMS also includes similar, minimum Federal requirements in Sec.
438.10 for Medicaid managed care plans (including MCOs) to furnish
certain materials and information to enrollees and potential enrollees
in a manner that is easily understood and readily accessible (OMB
control number 0938-0920). Among the materials that Medicaid managed
care plans must distribute are Enrollee Handbooks, Provider
Directories, and Formularies.
As summarized in our proposed rule at 87 FR 1872 through 1873, the
required materials that MA organizations and Part D sponsors must
provide to current and prospective members and post to their websites
by October 15 prior to the beginning of the plan year include the
Evidence of Coverage (EOC) and the Annual Notice of Changes (ANOC),
which are standardized communication materials. The required model
communications materials include the Summary of Benefits (SB),
Formulary, and Provider and Pharmacy Directories.
CMS encourages D-SNPs to add related Medicaid information in the
EOC, ANOC, SB, and Provider Directory. Further integrating Medicare and
Medicaid information in these required materials, as well as in the
Formulary and Pharmacy Directory, would improve beneficiary experiences
by providing a more seamless description of health care coverage and
enhancing the understanding of, and satisfaction with, the coverage
both programs provide.
In the proposed rule at 87 FR 1873, we described previous studies
that assessed the effectiveness of integrated required materials for
beneficiaries in the MMPs in the FAI and the Minnesota Senior Health
Options (MSHO) plans in the Demonstration to Align Administrative
Functions for Improvements in Beneficiary Experience. Beneficiaries
provided positive feedback on the combined materials, as compared to
separate Medicare and Medicaid materials. In addition, since 2019 CMS
has worked with States and FIDE SNPs that are not demonstration
participants to develop and annually update certain integrated
materials that the States require and issue to plans.
For the States and FIDE SNPs we have worked with, we typically
begin development of integrated national templates and State-specific
models with the SB; a Formulary that contains Medicare Part D,
Medicaid, and over the counter (OTC) drugs as well as non-drug OTC
products; and one combined Medicare and Medicaid Provider and Pharmacy
Directory. As described in our proposed rule, starting with these
materials has several advantages, including that these materials
integrate key Medicare and Medicaid information, they are required
materials but are not standardized and, therefore, are not subject to
the PRA clearance process, and the models are not lengthy or overly
complex. They also offer opportunities for D-SNPs in different States
with different Medicaid requirements to provide prospective and current
dually eligible enrollees a more seamless presentation of essential
information about their Medicare and Medicaid coverage. This would
contribute to increased understanding of and satisfaction with the
coverage both programs provide.
To provide a more coordinated beneficiary experience, we proposed
at Sec. 422.107(e) to codify a pathway by which, following receipt of
a letter from a State Medicaid agency indicating their intent to pursue
D-SNP-only contracts and the use of integrated model materials, CMS
would coordinate with a State that chooses to require, through its
State Medicaid agency contract, that a D-SNP with exclusively aligned
enrollment use an integrated SB, Formulary, and combined Provider and
Pharmacy Directory. CMS will work with States to ensure these
integrated materials comply with Sec. Sec. 422.111, 422.2267(e)(11),
423.128, 423.2267(e), and 438.10(h). Proposed Sec. 422.107(e)(1)
established factual circumstances that would commit CMS to certain
actions under proposed paragraphs (e)(2) and (3). We anticipate that
there would be operational and administrative steps at the CMS and
State level that would be necessary before a D-SNP could implement use
of integrated communications materials, such as collaboration and
coordination by CMS and the State on potential template materials,
identification of potential conflicts between regulatory requirements
at 42 CFR parts 422 and 423 for D-SNPs generally and 42 CFR part 438
and State law for the D-SNP's affiliated Medicaid MCO, and setting up a
process for joint or coordinated review and oversight of the integrated
materials. CMS annually reviews the contracts between States and D-SNPs
that are required by Sec. 422.107(b) each July for the following plan
year. There would generally be insufficient time for the necessary
operational and administrative steps to implement integrated
communications materials between the review of the contract and the
dates by which communications materials must be provided to current
enrollees and made available for prospective enrollees during the
annual coordinated election period that begins October 15 each year.
Additionally, an MA organization would need to apply for a D-SNP-only
contract consistent with existing timeframes for submission of
applications, bids, and other required materials to CMS, and in
accordance with forthcoming sub-regulatory guidance on timelines and
procedures. Therefore, paragraph (e)(2) would require that CMS work in
good faith with States upon receipt of a letter of intent regarding the
State's inclusion of a requirement for a D-SNP with exclusively aligned
enrollment to use integrated materials and apply for a D-SNP-only
contract. We intended that these efforts include the work to develop
model integrated materials before the State Medicaid agency contract
submissions are due for the contract year for which the D-SNP would use
the integrated materials, and before D-SNP-only contracts are
finalized.
We did not intend through this rule to significantly change
timelines for plans to prepare materials nor did we intend to require
any State to mandate that D-SNPs use integrated materials. We intended
for this rule to assure interested States that CMS would do its part to
make it possible for D-SNPs to comply with State Medicaid agency
contract terms to use materials that integrate Medicare and Medicaid
content, including at a minimum the Summary of Benefits, Formulary, and
combined Provider and Pharmacy Directory if a State Medicaid agency
seeks to require D-SNPs with exclusively aligned enrollment to perform
as described at Sec. 422.107(e)(1).
We considered including the EOC and ANOC as part of the minimum
scope of integrated materials identified in Sec. 422.107(e)(1)(ii). We
explained in the proposed rule at 87 FR 1874 why we did not propose to
include these alternative materials but solicited comment on whether
these alternative materials should be included as part of the minimum
scope of integration for D-SNPs. This rule would not preclude CMS and
States from collaborating on
[[Page 27770]]
other integrated materials, including an integrated EOC or ANOC. As
proposed, Sec. 422.107(e) would apply only when a State required D-
SNPs with exclusively aligned enrollment to use the minimum scope of
integrated materials specified in paragraph (e)(1)(ii) and to seek CMS
approval of D-SNP-only contracts. While we proposed minimum parameters,
a State that wishes to require D-SNPs with exclusively aligned
enrollment to do more (for example, use additional integrated
materials) may do so using, or in conjunction with, the process in
Sec. 422.107(e). Further, we did not intend to prohibit or foreclose
the possibility that CMS would work with States on other potential
integration efforts that are not within the scope of Sec.
422.107(e)(1).
Comment: Many commenters expressed support for the proposal to
codify a pathway by which CMS would coordinate with a State that
chooses to require, through its State Medicaid agency contract, that
certain D-SNPs use an integrated Summary of Benefits (SB), Formulary,
and combined Provider and Pharmacy Directory.
Numerous commenters stated that the proposed regulation would lead
to reduced enrollee confusion because integrated materials would
simplify and more clearly articulate the full scope of benefits across
Medicare and Medicaid that are available through a given plan. A
commenter noted that this proposed regulation would also simplify
information for caregivers and advocates. Other commenters also stated
that the proposed regulation would improve enrollee quality of and
access to care and help enrollees understand how plan benefits can work
together.
A commenter stated that integrated materials would create
consistency for beneficiaries when evaluating plan choices. Another
commenter noted that integrated materials would improve beneficiary
awareness of integrated care options. A commenter also stated that
integrated materials would help States and D-SNPs to provide clearer
explanations of the advantages of integrated care, improve navigation
of the health care system, and reduce health system fragmentation and
administrative misalignment. Another commenter stated that the benefit
of having Medicare and Medicaid plan information integrated into the
same document is the reduction in mailings, a common request among
enrollees.
Other commenters noted that States have successfully partnered with
CMS to implement integrated materials. A commenter stated that the
proposed regulation would create a pathway for States to continue to
integrate materials.
Response: We appreciate the widespread support we received for our
proposal to create a pathway for States to require certain D-SNPs with
exclusively aligned enrollment and D-SNP-only contracts to use
integrated materials. We concur that the integration of materials will
increase understanding of available benefits, improve the enrollee
experience, and decrease confusion by providing a simplified set of
beneficiary materials.
Comment: A few commenters recommended that States be required to
use their authority to standardize materials and ensure consistent
messaging wherever possible. Other commenters noted their support of
the flexibility in requiring the use of integrated materials, noting
that States are at different points of integration, and that CMS's
proposal would result in additional responsibilities for State and D-
SNP staff.
Response: We acknowledge the interest in increasing the prevalence
of integrated materials. However, we decline to require that States
integrate materials, recognizing that States are at different phases of
integration, and may have limited resources to devote to integrating
materials. We concur that States should work to integrate materials
when feasible and CMS will coordinate with them when possible.
Comment: A few commenters stated that CMS should provide States
with clear direction and authority to ensure State-specific policies
and requirements are included in integrated materials. A commenter
continued to note that without such State-specific policy and
requirements, integrated materials may not accurately reflect
programmatic realities including important beneficiary-facing
information such as cost-sharing responsibilities and eligibility
rules.
Response: We acknowledge the commenters' concerns and, as we
currently do with D-SNPs and Medicare-Medicaid Plans with integrated
materials, we will work with States to ensure that, when a State
requires a D-SNP to have integrated materials under Sec. 422.107(e),
the integrated materials accurately reflect applicable requirements for
both Medicare Advantage and Medicaid managed care plans.
Comment: A few commenters recommended that States and CMS review
materials in partnership, which is critical to develop comprehensive,
accurate, and clear materials. Another commenter noted that States will
need to provide information to D-SNPs and receive information from D-
SNPs to ensure that information is kept up-to-date for materials such
as integrated Provider Directories and information repositories for
Medicaid.
Response: We thank the commenters for raising the importance of
close collaboration and communication. We agree that coordination
between CMS, States, and D-SNPs is necessary to ensure effective
integration of model materials.
Comment: A commenter noted the operational challenges of
integrating materials such as the different types of materials CMS and
the State Medicaid agency require to be provided and differences in
naming.
Response: We appreciate the comment and note that this rule focuses
on materials which are required by both Medicare Advantage and Medicaid
managed care regulations. We believe that integrating these materials
will eliminate differences in naming and material formats and simplify
the information for enrollees.
Comment: A few commenters noted that unaligned enrollment dates
complicate efficient and timely distribution of integrated materials
and suggested that CMS should work with States to implement necessary
State and Federal changes that support alignment of enrollment dates.
Another commenter urged CMS to limit its proposal to States where
effective dates for Medicare and Medicaid plan years are aligned on the
first day of the month. A commenter noted unaligned enrollment dates
could cause members to receive duplicative information. The commenter
also stated that there is no coordination between CMS and the State
sending enrollment data to plans. They also noted that integrated
materials can be operationally complex, as many plans automate the
generation of enrollee materials on different platforms for Medicare
and Medicaid plans.
Response: We appreciate the commenters' perspectives on this issue.
We understand the potential for differences in enrollment dates between
Medicare Advantage and Medicaid managed care plans and will continue to
work with States to minimize enrollee disruption. In advance of
implementation of integrated materials, CMS will discuss with
participating States any differences in enrollment dates between
Medicare Advantage and Medicaid managed care plans that may result from
annual Medicare Advantage enrollment periods or State-specific
enrollment timelines. Where differences in enrollment dates occur, CMS
and the State will jointly decide on a strategy to implement integrated
materials while
[[Page 27771]]
minimizing beneficiary confusion. Per Sec. 422.107(e)(2), CMS will
continue to work with a State so long as the State chooses to work with
CMS on integrated materials. We believe that requiring integrated
materials for enrollees with exclusively aligned enrollment in
applicable States will help to reduce beneficiary confusion by
providing one set of materials that combines Medicare and Medicaid
information instead of two.
Comment: A commenter requested that CMS consider the challenges
associated with Medicaid benefit and service carve-outs before
implementing a requirement for D-SNPs to use integrated materials.
Response: We acknowledge the commenter's concern. We intend to work
with States to ensure that the model materials include sufficient
flexibility in order to adapt the description of benefits when needed.
Comment: A commenter stated that CMS should require States to
indicate in their letters of intent that they have support from D-SNP
partners to require integrated materials. The commenter believes CMS
should require involvement and cooperation with participating D-SNPs in
this process. The commenter suggested that CMS outline and require a
standardized coordinated process across States for including or
consulting with all plans in a given State with the goal of reaching
consensus with all participating plans on basic models and changes.
Response: We thank the commenter for their input and suggestion. We
intend to raise with States the importance of early and consistent
collaboration with D-SNPs in advance of implementing any requirement
for integrated materials. However, we believe the decision of whether
to include this requirement in the State Medicaid agency contract
should be left to the State.
Comment: A commenter stated that model documents for creating
integrated materials have been invaluable, and especially helpful when
models are developed for a particular State. These materials have
State-specific references and data, which allows States to ensure
enrollees across plans receive the same accurate State-specific
information. Other commenters urged CMS to establish a consistent,
standardized format for integrated materials that have been globally
approved by States, instead of allowing each State to determine for
itself.
Response: We appreciate the commenters perspectives on this issue.
CMS will be creating models based off our experience on the FAI and a
related demonstration in Minnesota for State use and will also
collaborate with States to ensure that they appropriately integrate
Medicare and Medicaid information for beneficiaries.
Comment: A commenter recommended that CMS should collaborate with
States to develop a regulatory or other framework that aligns Medicaid
managed care and D-SNP requirements into one clear set of governing
rules for integrated materials.
Response: We thank the commenter for their suggestion and modified
the regulation text at Sec. 422.107(e)(1)(ii) to require that the
integrated member materials meet Medicare and Medicaid managed care
requirements consistent with applicable regulations in parts 422, 423,
and 438 of the chapter. As we work with States that take advantage of
the new pathway created by Sec. 422.107(e) and we gain additional
experience in developing integrated materials with States, we may
consider future rulemaking to establish integrated disclosure and
communication materials where the applicable statutory authority
permits sufficient flexibility.
Comment: Some commenters expressed concerns or were unsure of the
timeframe for developing and implementing integrated materials. A
commenter expressed concern that if a State is working on the State
Medicaid agency contract during the same timeframe as it is developing
integrated materials, the State may not have the ability to complete
both tasks in a competent and thorough manner. A few commenters noted
that CMS should take into consideration the timeframe of when States
release their model materials, since State timeframes may differ from
CMS timeframes. Another commenter recommended that the production
schedule for integrated notices provide adequate time for use of focus
groups to ensure that information is communicated effectively and meets
the real needs of beneficiaries; the focus groups should consist of a
diverse group of beneficiaries that is representative of each plan's
demographic mix. A few commenters noted that they have experienced
State backlogs in reviewing materials. A commenter requested that CMS
work with the States to ensure State review is timely. Another
commenter recommended that CMS require States to review plan materials
within the existing HPMS platform and minimize template versions used
at the State level. Other commenters believe States do not need to
review all materials, noting that this can lead to backlogs in
materials and place additional administrative burden on plans. MACPAC
stated that States should have the opportunity to review all D-SNP
integrated materials to ensure accuracy and improve beneficiary
understanding of integration.
Response: We thank the commenters for sharing concerns about the
timeline needed to implement integrated materials. We will work in good
faith with participating States, following receipt of a letter from a
State Medicaid agency indicating their intent to pursue D-SNP-only
contracts and the use of integrated materials, to ensure that
integrated models are provided to D-SNPs in a timely manner and intend
to set clear timelines for review with the States. We note that that
this proposal pertains only to those States that choose to require,
through their State Medicaid agency contracts, that D-SNPs with
exclusively aligned enrollment use integrated materials (and that these
D-SNPs also apply for a D-SNP-only MA contract with CMS). We anticipate
that there would be operational and administrative steps at CMS and
each State that would be necessary before a D-SNP could implement
integrated materials, such as collaboration and coordination by CMS and
the State to identify potential conflicts between Federal regulatory
requirements for D-SNPs and Medicaid managed care plans and State law
and setting up a process for coordinated review and oversight of the
integrated materials. Additionally, we modified the regulation text at
Sec. 422.107(e)(1)(ii) to require that the integrated member materials
meet Medicare and Medicaid managed care requirements consistent with
applicable regulations in parts 422, 423, and 438 of the chapter; this
change makes it clearer that Sec. 422.107(e) does not create
exceptions to other laws that govern the content and timing of
materials provided to enrollees. Rather, our intent is to create a
pathway for integrated materials to present all of the required
information to enrollees in a more understandable and streamlined way.
CMS will work with the State to create model integrated materials
before the State Medicaid agency contract submissions are due for the
contract year for which the D-SNP would use the integrated materials
upon a receipt of a letter of intent regarding the State's inclusion of
a requirement to use integrated materials and apply for a D-SNP-only
contract. While these materials will be created based on models that
have been tested as part of the FAI, we will ensure that the timeline
accounts for any additional beneficiary testing, as necessary.
In order to allow sufficient time for the D-SNPs to populate
required materials with plan-specific
[[Page 27772]]
information, submit applicable materials through HPMS, translate into
any non-English language of at least five percent of the individuals in
the service area, and make them available to beneficiaries by the
required dates, we will aim to work with States to issue to the
affected D-SNPs the required materials and instructions annually by the
end of May for the following plan year. While we acknowledge that State
review of only a subset of materials would save time and reduce
administrative burden, we disagree with the suggestion to limit State
review, because we believe that States should determine which
integrated materials they want to review and then clarify this
information with applicable D-SNPs.
Comment: A commenter recommended that CMS pilot this proposal with
a small subset of plans and States before formalizing this proposal as
an option for all States. They asked that CMS make this requirement
effective no earlier than 2024.
Response: We thank the commenter for their suggestion and note that
we have been piloting this approach with several States. Since 2019, we
have worked with Massachusetts and New Jersey to develop and update
certain integrated materials for FIDE SNPs in each State. For contract
years 2020 and 2021, we provided high-level assistance to New York as
the State developed select integrated materials that its exclusively
aligned D-SNPs and Medicaid managed care plans, called Medicaid
Advantage Plus plans, could use. We are also working with California to
develop integrated materials for contract year 2023 for D-SNPs with
exclusively aligned enrollment. We note that, based on the timeframes
involved, the regulatory authority adopted in Sec. 422.107(e) will
apply to integrated materials that D-SNPs create for enrollment dates
beginning with contract year 2024 if CMS receives a timely request from
a State that is willing to meet the criteria set forth in Sec.
422.107(e).
Comment: A few commenters requested more granular details and
implementation guidance on this proposal.
Response: We appreciate the comments and anticipate that there will
be operational and administrative steps at the CMS and State level
before a D-SNP could implement integrated materials. D-SNPs required to
use these integrated materials will receive additional information
through State Medicaid agency contracts and model materials.
Comment: A number of commenters requested that CMS pay particular
attention to linguistic and cultural competence and accessibility for
people with disabilities. A commenter stated that greater effort is
needed to ensure the information itself is more understandable to those
at all levels of health literacy. They suggested that States test
different messaging with dually eligible individuals, including
individuals from diverse backgrounds and/or those with limited English
proficiency, to create understandable materials with consistent
messaging. They also noted that, to design messaging that resonates
with dually eligible individuals, States should collaborate with
community-based organizations and enrollment assisters. Some commenters
stated that CMS should include a provision that accessibility, cultural
competency, and translation requirements for integrated model materials
should follow the standard (either State or Federal) which is more
favorable to the beneficiary. A commenter recommended that CMS consider
incorporating infographics, which may be easier for some enrollees to
understand, into specific model documents. Another commenter noted that
Provider Directories should be updated at least monthly and be
available in multiple formats and languages, including American Sign
Language. The commenter stated that beneficiaries should be able to
access Provider Directories without submitting an account or policy
number and should be able to distinguish between providers who are in
network accepting new patients and providers who are not accepting new
patients. They also noted that beneficiaries should be able to easily
search Provider Directories by tier, product, languages spoken by
provider in addition to languages available by interpreter, disability
accessibility (accessible examination equipment, dressing room, parking
etc.) and information about specialty and subspecialty providers.
Response: We appreciate the commenters' perspective on this issue
and believe these are important goals. We did not propose and are not
finalizing any waiver or exclusion from other, generally applicable, MA
or Part D regulations concerning these mandatory disclosure documents
from D-SNPs. In addition, as discussed in the proposed rule, the
regulation at Sec. 438.10 also addresses disclosure requirements for
Medicaid managed care plans; we did not propose and are not finalizing
exceptions to that regulation or other generally applicable rules for
Medicaid managed care plans that apply to these mandatory disclosures
either. In order to make that clear, we are finalizing a modification
to the regulation text at Sec. 422.107(e)(1)(ii) to require that the
integrated model materials meet Medicare and Medicaid managed care
requirements consistent with applicable regulations in parts 422, 423,
and 423 of the chapter. Because D-SNPs must cover Part D benefits, they
are subject to both the MA and Part D requirements when furnishing
Provider and Pharmacy Directories. We note that Sec. Sec.
422.2267(a)(2) and 423.2267(a)(2) require translation of required
materials and content into any non-English language that is the primary
language of at least 5 percent of the individuals in a plan benefit
package (PBP) service area. Similarly, Sec. 438.10(d)(3) requires that
Medicaid managed care contracts make available written materials that
are critical to obtaining services, including, at a minimum, provider
directories, enrollee handbooks, appeal and grievance notices, and
denial and termination notices, in the prevalent non-English languages
in a Medicaid managed care plan's particular service area. These
requirements will continue to apply to a D-SNP with exclusively aligned
enrollment and its affiliated Medicaid MCO when integrated materials
are used as provided in Sec. 422.107(e).
In Sec. 422.112(a)(8), we require that MA organizations that offer
MA coordinated care plans ensure that services are provided in a
culturally competent manner to all enrollees, including to
beneficiaries with limited English proficiency or reading skills, and
diverse ethnic and cultural backgrounds. In addition, Sec.
422.2267(e)(11)(iv) requires that MA organizations update Provider
Directories any time the MA organization becomes aware of changes.
Integrated materials must also meet requirements at Sec. 438.10(h)(3),
which requires Medicaid managed care plans to update an electronic
provider directory no later than 30 calendar days after receiving
updated provider information. We note that States can choose to include
more stringent requirements for models in their State Medicaid agency
contracts. We will take the additional recommendations regarding the
Provider Directory into consideration when creating a model.
Comment: A commenter requested that CMS amend Sec. 422.629 or
Sec. 422.630 or both to require D-SNPs to have specific publicly
published procedures for making reasonable accommodation requests under
the Americans with Disabilities Act, for D-SNP
[[Page 27773]]
consideration of such requests, and procedures for disputing denials of
reasonable accommodation requests.
Response: While this comment is not strictly within the scope of
this final rule, we note that MA plans, including D-SNPs, must comply
with the applicable Federal civil rights authorities. Section 504 of
the Rehabilitation Act of 1973 prohibits disability discrimination and
includes requirements for effective communication for individuals with
disabilities (45 CFR 84.52), accessibility standards for buildings and
facilities (45 CFR 84.22 and 84.23), and the filing of grievances and
complaints (45 CFR 84.61 and 84.7).
Comment: Some commenters requested that CMS extend this proposal
beyond only those D-SNPs with exclusively aligned enrollment to those
without D-SNP-only contracts or to all FIDE and HIDE SNPs. Other
commenters suggested it apply to all D-SNPs. A commenter noted that
having to implement separate material development and review processes
can present operational challenges. A commenter requested that CMS
define the ``certain D-SNPs'' in the proposal. A few commenters also
requested that CMS clarify which materials require integration as well
as which materials, or sections of materials, would require State
feedback.
Response: We acknowledge that increased integration of materials
for D-SNP enrollees and potential enrollees can help to reduce
confusion and increase satisfaction. However, we proposed and are
finalizing Sec. 422.107(e) to adopt a pathway for States to require,
through their State Medicaid agency contract, the use of integrated
materials (at a minimum, an integrated SB, Formulary, and combined
Provider and Pharmacy Directory) by D-SNPs with exclusively aligned
enrollment, where the State is also requiring the D-SNP to apply for
and request from CMS a D-SNP-only MA contract. By ``certain D-SNPs'' in
the preamble of the proposed rule, we meant the D-SNPs that meet these
specific requirements and are in this specific situation. Our proposal
and final policy are limited to this group of D-SNPs because we believe
exclusively aligned enrollment and a motivated State partner are both
critical to effectively integrate materials. We will clarify through
models and communication with States the sections of materials that
require State feedback. We continue to work to improve current MA
models for all D-SNPs, such as the ANOC and EOC, which allow D-SNPs to
adjust the material to accurately reflect information such as Medicaid
benefits and cost-sharing.
Comment: A number of commenters support the inclusion of the ANOC
and the EOC as part of the minimum scope of integrated materials.
Several commenters noted that they appreciate the ability to use the
Member Handbook as the integrated model, noting that the Member
Handbook is more enrollee-friendly than the EOC. A commenter stated
that the ANOC provides critical information about the changes that
beneficiaries need to consider during the Open Enrollment Period. They
noted that the ANOC is relatively short and most likely to be read by
the beneficiary. In addition, they stated that it helps to prevent
surprises and disruptions because of unanticipated changes in coverage
or providers. Another commenter noted that, since CMS cannot change
timelines for preparation of materials, CMS should start with the SB,
Formulary, and combined Provider and Pharmacy Directory and reassess
integration of ANOCs and EOCs once these first documents are in place,
except in cases where collaboration on those additional documents
already exists. They request that as part of the reassessment of the
ANOC and EOC documents in the PRA process, CMS should facilitate
allowing D-SNPs to use the Member Handbook format and approach upon
request and agreement with the State. If this is not possible, they
request that CMS clarify what additional authorities are needed in
order to do so.
Response: We appreciate the commenters' support for integrated
ANOCs and EOCs. We have determined that we will take an incremental
approach and finalize Sec. 422.107(e)(1)(ii) as identifying the SB,
Formulary, and combined Provider and Pharmacy Directory as the minimum
set of documents to be integrated; these integrated materials must also
meet Medicare and Medicaid managed care requirements in 42 CFR parts
422, 423, and 438. However, as stated in the proposed rule (87 FR
1874), we do not intend to preclude CMS and States from collaborating
on other integrated materials, including an integrated ANOC or EOC.
We intend to develop an integrated Member Handbook (also known as
the EOC) and ANOC for contract year 2024 through the PRA process, which
will include making the documents available to the public for review
and comment during the publication of 60- and 30-day Federal Register
notices. These models will be based off of models that we created for
the FAI and a related demonstration in Minnesota. We intend to make the
integrated versions of these models available for States that want to
collaborate with CMS in furthering the use of integrated materials by
D-SNPs with exclusively aligned enrollment.
Comment: A commenter suggested that CMS consider establishing a
CMS-centralized repository of State information that includes accurate
State agency addresses, phone numbers, and State Pharmaceutical
Assistance Program information that MA organizations can access and
utilize for beneficiary communications such as ANOC and EOC. The
commenter noted that this State information could be displayed in the
same way CMS already provides Quality Improvement Organization
information for each State.
Response: We thank the commenter for this suggestion and may re-
examine it in the future. However, this comment is not within the scope
of this rulemaking, as the proposed rule did not discuss a regulatory
requirement for centralized State information.
Comment: The commenter suggested that an integrated ID card include
information on the beneficiary's dual eligibility status, D-SNP type,
the party that should receive and pay provider claims, and the party
that is responsible for paying the beneficiary's cost-sharing
obligations. The commenter stated that this will reduce administrative
burden and reduce risk that a beneficiary is improperly billed.
Response: We thank the commenter for this suggestion. While setting
new standards for the content of an integrated ID card is outside the
scope of the regulation, we will consider including this information on
ID cards in the future.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the provision at Sec. 422.107(e)(ii) with a modification to
require that the integrated member materials meet Medicare and Medicaid
managed care requirements consistent with applicable regulations in 42
CFR parts 422, 423, and 438.
c. Joint State/CMS Oversight
MA organizations receiving capitated payments through MA and from
the State Medicaid agency must comply with different sets of Medicare
and Medicaid requirements. This includes requirements imposed at the
State level that are not identical to Federal minimum standards for
Medicaid managed care plans in 42 CFR part 438. We explained in the
proposed rule, at 87 FR 1874, three drawbacks to CMS and States'
separate infrastructures to
[[Page 27774]]
monitor compliance: (1) State regulators and CMS may be unaware of
important compliance or performance problems related to the delivery of
Medicare and Medicaid services; (2) State and CMS officials may pursue
different performance improvement priorities; and (3) uncoordinated
oversight by CMS and the States can create inefficiencies for health
plans. We proposed to address these drawbacks by giving States the
opportunity to collaborate with CMS on oversight activities for the
specific D-SNPs that operate under the conditions described at proposed
paragraph (e)(1). We received several comments supporting our overall
approach to provide States an opportunity to collaborate with CMS on
oversight activities.
Comment: Many commenters expressed support for State and CMS
collaboration for joint oversight activities. Several commenters
believed that improved data exchange and transparency would better
align the State and CMS's improvement activities for D-SNPs. These
commenters also noted that joint oversight would help the State and CMS
establish awareness and appropriate accountability for plan
performance. A few commenters noted that joint oversight is needed for
quality of care and providing enrollees with a better integrated care
experience. Several commenters indicated that increased collaboration
would help the D-SNPs better manage staff resources in areas where
there might be duplicative oversight activities. One commenter
generally supports the opportunities for joint oversight and suggested
guardrails to ensure that coordinated oversight activities are limited
to D-SNPs to avoid overreach and promote improved outcomes and
efficiencies.
Response: We thank the commenters for their support on our proposed
rule. We agree that State and CMS collaboration for oversight
activities of D-SNPs can increase transparency and improve efficiency
of integrated care for Medicare and Medicaid services.
(1) State Access to the Health Plan Management System
The CMS Health Plan Management System (HPMS) is web-enabled
information system where health and drug plans, plan consultants, third
party vendors, and pharmaceutical manufacturers work with CMS to
fulfill the plan enrollment, operational, and compliance requirements
of the MA and Prescription Drug programs. We proposed in paragraph
(e)(3)(i) that CMS would grant State access to HPMS to facilitate
monitoring and oversight for D-SNPs operating under the specific
contract terms required by the State that are described in proposed
paragraph (e)(1).
The proposal would permit approved State Medicaid officials to use
HPMS for a number of information sharing and oversight activities for
these D-SNPs. This access would allow State users the ability to
directly view D-SNP information without requiring the D-SNP to send the
information separately.
We proposed that State access would be limited to approved users
and subject to compliance with HHS and CMS policies and standards and
with applicable laws in the use of HPMS data and the system's
functionality. This proposal would not limit CMS's discretion to make
HPMS accessible in other circumstances not described in our proposal.
State access authorization would include access to information about
the MA organization and the applicable D-SNP(s) and D-SNP-only
contract, and information submitted by the MA organization through
HPMS, under the specific circumstances described in the proposed
regulation. We solicited feedback on our proposal, including feedback
from MA organizations about CMS providing approved State officials with
access to HPMS as a means to share information as it relates to the
provisions of this final rule.
Comment: Many commenters expressed support for our proposal to
grant State access to HPMS to facilitate monitoring and oversight of
for D-SNPs operating under the specific contract terms required by the
State that are described in Sec. 422.107(e)(1). Some commenters noted
that HPMS access is important for better information and oversight of
D-SNPs. Other commenters noted that providing States with access to
HPMS will give the State officials important insight into areas such as
marketing materials, models of care, enrollee complaints, plan
benefits, formulary, network, and other basic contract information
without having to ask the D-SNP and as a result will streamline the
oversight process. A commenter noted that granting certain State
Medicaid agency officials access to HPMS, which CMS has identified as a
useful practice, aligns with their recommendation that CMS apply best
practices from the FAI to FIDE SNPs.
Response: We appreciate the commenters' support for providing State
Medicaid officials with HPMS access. We agree that providing States
with access to these areas of HPMS will improve the coordination and
oversight of D-SNPs by States and CMS.
Comment: A commenter supported our proposal to grant States access
to HPMS and suggested that CMS encourage States to update their State
Medicaid agency contracts to reflect State access to this information.
Specifically, the commenter encouraged States to eliminate the
requirement that plans provide notices of audits since States will now
be able to get the information through HPMS and will be able to have
access to audit findings from CMS.
Response: We appreciate the commenter's perspective on this issue.
We are not proposing to limit what States can include in their State
Medicaid agency contracts, which are required by Sec. 422.107(b) for
all D-SNPs, but we hope that this new pathway for sharing information
with States that require certain D-SNPs to use certain integrated
materials and request a D-SNP-only MA contract with CMS will result in
less burden for sharing information among the States that use this
pathway, the affected D-SNPs, and CMS.
Comment: MACPAC and another commenter noted that limiting HPMS
access to D-SNPs meeting the criteria of Sec. 422.107(e) would mean
that States would only be able to view information for a small number
of D-SNPs with exclusively aligned enrollment and requested that CMS
consider allowing States to view information for all D-SNPs. A
commenter stated they understood there could be systems complexities
with allowing States to access information for only a subset of
enrollees when MA contracts include both D-SNP and non-D-SNP plan
benefit packages. They suggest that CMS ensure that any language in the
final rule is flexible enough to allow broader State access to HPMS
without additional rulemaking. They believe that this was CMS's intent
based on the language in the proposed rule stating: ``This proposal
would not limit CMS's discretion to make HPMS accessible in other
circumstances . . .''
Response: CMS appreciates the commenters' support for providing
State Medicaid officials with HPMS access. We will consider other
options for permitting expanded HPMS access for State Medicaid
officials over time. Under Sec. 422.107(e), the regulation we proposed
and are adopting here, access to States is tied to the D-SNP-only
contracts for D-SNPs with exclusively aligned enrollment that are
required to use specified integrated enrollee materials.
Comment: A commenter reiterated the importance of de-identifying
information that could reveal the identity of the enrollee that has
made a complaint, to ensure that their privacy
[[Page 27775]]
is upheld and to prevent any actions that could lead to or be perceived
as enrollee retaliation. Another commenter requested CMS and State
assurance of appropriate safeguards in place so that State employees
accessing HPMS assure protection of proprietary information.
Response: CMS understands the commenters' concerns regarding
enrollee privacy and the protection of proprietary information. Our
experience granting States access to HPMS through the FAI and a related
demonstration in Minnesota suggests that State access is without known
problematic unintended consequences. In addition, we refer readers to
our discussion in the proposed rule (87 FR 1874) that State users would
be subject to compliance with HHS and CMS policies and standards and
with applicable laws in the use of HPMS data and the system's
functionality.
Comment: A commenter proposed that enrollee complaint information
be aggregated and stratified and that the information be utilized by
health plans for quality improvement and performance purposes.
Response: We appreciate the comment. MA organizations have access
to all of their enrollee complaints in HPMS and we encourage them to
utilize the data for quality improvement purposes.
Comment: A commenter strongly recommend interoperability between
State monitoring systems and HPMS.
Response: We appreciate the comment; however, it is outside the
scope of this rulemaking.
After consideration of the comments received and for the reasons
provided in the proposed rule and our responses to comments, we are
finalizing Sec. 422.107(e)(3)(i) as proposed to provide State Medicaid
officials with access to HPMS for purposes of oversight of D-SNP
contracts described in Sec. 422.107(e)(1). We are also finalizing
Sec. 422.107(e)(1) and (2) as discussed elsewhere in this final rule.
(2) State-CMS Coordination on Program Audits
We proposed in paragraph (e)(3)(ii) that CMS would coordinate with
State Medicaid officials on program audits. This coordination would
include sharing major audit findings for State awareness related to the
D-SNPs subject to proposed paragraph (e)(1).
As summarized in the proposed rule at 87 FR 1874 through 1875, we
believe that there are benefits for CMS, States, and MA organizations
to increasing coordination in connection with such audits. As proposed,
CMS would also offer to work with States to attempt to avoid scheduling
simultaneous State and Federal audits. This process would reduce the
likelihood of concurrent Medicare and Medicaid program audits, thereby
reducing the risk that an MA organization is insufficiently responsive
to auditors or its performance slips because it is managing concurrent
audits. While we described examples of how we may coordinate activities
under the proposal, we did not intend to limit our discretion to
coordinate with States in the audit process outside of the parameters
in proposed Sec. 422.107(e)(3)(ii); we would evaluate the extent of
coordination in each circumstance relevant to the D-SNP-only contract
established as a result of the State's contract requirements described
in paragraph (e)(1).
Comment: Many commenters expressed support for the proposal for
CMS-State coordination on program audits. Some commenters noted that
greater State involvement provides States with valuable information and
provides a stronger vantage point to determine plan performance. A few
commenters indicated that program audits are resource intensive and
plans face administrative burdens and challenges when State and Federal
audits are concurrent. A commenter noted that when audits are
concurrent this may decrease the plan's ability to respond
appropriately and timely to audit inquires.
Response: CMS appreciates the commenters' support and agrees that
there are benefits in increasing CMS, State, and MA organization
coordination.
Comment: A few commenters recommended additional steps to
coordinate audits across Medicare and Medicaid. A commenter suggested
that CMS provide States with additional guidance on current Federal
audits and NCQA model of care review requirements. The commenter
believed that this type of coordination would allow regulators to
consider if one audit could satisfy the requirements for both a Federal
and State audit. The commenter also urged CMS to consider collaborating
with States to develop a crosswalk for auditors and plans to reference
to ensure all audit parameters are clear and not in conflict. Another
commenter encouraged States to consider what audits have been performed
by CMS and whenever possible the audits should be linked, deeming the
D-SNPs that have clean audits as meeting standards. A commenter
suggested that CMS improve coordination with States for other audit
types and between audit divisions in CMS. This commenter indicated that
it would be advantageous to have an increased level of scheduling
coordination between Federal audit types; for example, between program
audits and other routine reviews such as the one-third financial audit.
Response: CMS appreciates the perspectives and recommendations of
the commenters for additional ways to coordinate audits and will take
these into consideration for future audit-related work.
After consideration of the comments received and for the reasons
provided in the proposed rule and our responses to comments, we are
finalizing Sec. 422.107(e)(3)(ii) as proposed address how CMS will
coordinate with States on program audits for the D-SNP contracts
described in Sec. 422.107(e)(1).
(3) State Input on Provider Network Exceptions
As described in the proposed rule at 87 FR 1875, CMS expects to use
existing authority and flexibility as it pertains to the review of MA
plan provider networks, particularly in CMS's review of network
exceptions, to solicit and receive input from State Medicaid agencies.
CMS requires all MA organizations to maintain a network of appropriate
providers that is sufficient to provide adequate access to covered
services. Currently, MA organizations submit their provider networks to
CMS for review at the overall contract level on a triennial basis or
when there is a triggering event such as an application or a
significant provider/facility termination.\48\ As discussed in the
proposed rule at 87 FR 1875, if an MA organization that offers one or
more D-SNPs seeks an exception to our network adequacy standards in
Sec. 422.116, State Medicaid officials may be uniquely positioned to
provide relevant information to CMS. We did not propose to adopt
specific regulation text in Sec. 422.107(e)(3) regarding potential
collaboration with State Medicaid agencies in connection with
adjudicating requests for an exception to network adequacy requirements
for D-SNPs that operate under the conditions described at proposed
paragraph (e)(1) because a regulatory amendment is not necessary to
support this process; however, the proposed rule outlined how we expect
this type of engagement between CMS and States to work.
---------------------------------------------------------------------------
\48\ Medicare Advantage and Section 1876 Cost Plan Network
Adequacy Guidance (Last updated: June 17, 2020). Retrieved at
Medicare Advantage and Section 1876 Cost Plan Network Adequacy
Guidance (cms.gov).
---------------------------------------------------------------------------
When an MA plan fails to meet the network adequacy criteria in
Sec. 422.116(b) through (e), the MA plan
[[Page 27776]]
may request an exception. Exceptions are limited to specific situations
and conditions identified in Sec. 422.116(f)(1) and, in considering
whether to grant an exception, CMS considers whether current access to
providers and facilities is different from what appears to be indicated
by the data CMS uses to evaluate and set minimum standards for network
adequacy for MA plans.
In the proposed rule, CMS proposed to amend Sec. 422.116(a)(1)(ii)
to require compliance with network adequacy standards as part of an
application for a new or expanding MA service area (see section II.C.
of this final rule). In addition, we described our intent to reach out
to States to learn if there is any information that would meet the
requirement at Sec. 422.116(f)(2)(ii) when a MA organization with a D-
SNP contract described in Sec. 422.107(e) submits an exception
request. CMS may consult with the respective State to identify if there
are other factors, as described at Sec. 422.112(a)(10), that may be
relevant before making a determination on the exception request. We
solicited comment on this approach.
Comment: We received a number of comments expressing support for
our efforts to consult with States when an MA organization with a D-SNP
contract described in Sec. 422.107(e)(1) submits an exception request
that does not meet the requirements at Sec. 422.116(f)(1). A few
commenters indicated that the States have information that would be
pertinent to CMS's determinations. Some commenters noted that States
have a deep knowledge of their local markets and can help CMS determine
the validity of plans' exception requests. A commenter also suggested
that States' involvement in the network exception process can highlight
provider shortages.
Response: CMS appreciates the commenters' support for our efforts
to consult with and solicit input from States in these circumstances.
Comment: A few commenters recommended that we add a provision that
CMS notify the D-SNP of the consultation with the State so that the D-
SNP is fully informed of additional factors being considered in the
exception request.
Response: We appreciate the commenters' interest in having CMS
notify a D-SNP when CMS consults with or solicits input from a State on
a specific exception request. We decline to adopt a requirement that
CMS notify the D-SNP whenever we consult with a State on an exception
request because it would be too burdensome given the short timeframe we
take to review all exception requests, in general. The D-SNP will
ultimately be informed of the basis for CMS's approval or denial of the
exception request, and we do not believe there is any added benefit to
the D-SNP knowing about the State outreach during the exception review
process.
Comment: A commenter requested that we consider the timeliness in
receiving responses from the State(s).
Response: We thank the commenter for their request and note that we
expect States to respond timely to our requests to engage with CMS and
to provide us with information that will be relevant to our
determinations on exception requests submitted by MA organizations with
D-SNP contracts described in Sec. 422.107(e). To the extent States are
not willing or able to provide information in a timely fashion, we will
proceed with the network adequacy determination with the information
available to us.
Comment: We received a few comments that did not support the
proposal for State input of Medicare network exception requests on the
grounds that States already have network standards in place and may not
have specific insights into the Medicare requirements.
Response: We believe the commenters misinterpreted the discussion
of CMS's authority under Sec. 422.116(f) and our intent to solicit and
receive input from State Medicaid agencies. Our consultations with
States in the context of our proposal are limited to exception requests
to the MA network adequacy standards and do not involve State Medicaid
network standards. The purpose of the consultation with the State is to
help CMS gain access to information that may be relevant to our
determinations on exception requests from MA organizations with D-SNP
contracts described in Sec. 422.107(e).
The discussion in the proposed rule on this topic was not a
proposal, and we are not finalizing any rules or regulations about
CMS's ability to solicit comment from and consult with a State
regarding a request from certain MA organizations (specifically, MA
organizations with a D-SNP-only MA contract described in Sec.
422.107(e)) for an exception from the MA network adequacy requirements
in Sec. 422.116. As described in the proposed rule and our responses
to comments, we intend to solicit comment from and engage with States
as appropriate and necessary when evaluating requests for exceptions
from the network adequacy requirements in Sec. 422.116.
d. Comment Solicitation on Financing Issues
Based on our experience in the FAI, we solicited comments on two
opportunities to advance financial integration for integrated plans:
(1) Medicare medical loss ratios (MLRs) that include only D-SNP
experience and other options to evaluate the financial performance of
integrated plans; and (2) consideration of the expected impact of
benefits provided by MA organizations on Medicaid cost and utilization
in the evaluation of Medicaid actuarial soundness.
We did not propose new Medicare or Medicaid policies in this
discussion. Instead, we requested public comments on possible future
initiatives. In this section of this rule, we summarize our requests
for comments, comments received, and provide our responses.
At 86 FR 1870, we proposed at Sec. 422.107(e) to make an option
available through which States could require D-SNPs with exclusively
aligned enrollment to operate under MA contracts that only include one
or more D-SNPs that operate in that State. Such D-SNPs would still have
to calculate and report separate Medicare and Medicaid MLRs, and having
a separate contract for certain D-SNPs would better allow evaluation of
MLRs and financial performance specific to that D-SNP product. We
solicited feedback on the extent to which the proposal at Sec.
422.107(e) would better allow States to evaluate the performance of
integrated plans.
In the discussion at 87 FR 1877, we noted that we believe that
Medicaid managed care capitation rates can be actuarially sound as
required by Sec. 438.4 when those rates consider the impact of MA
supplemental benefits and any State-specific requirements for dually
eligible individuals on the projected costs and utilization of the
Medicaid benefits covered by the Medicaid managed care capitation
rates. We solicited feedback on the extent to which this consideration
of the impact of Medicare-covered benefits on costs and utilization of
Medicaid services advances integration goals and is consistent with
actuarial standards of practice. We also requested input on what
information States, actuaries, and others would need to evaluate
actuarial soundness under this approach.
Finally, we solicited feedback on other options related to
financing for integrated plans CMS should evaluate and consider for
future rulemaking or sub-regulatory clarification.
Comment: Several commenters expressed support for approaches to
[[Page 27777]]
MLR reporting that meaningfully improve stakeholders' visibility into
the financial performance of integrated plans. Some commenters agreed
that the proposal at Sec. 422.107(e) would provide for MLR results
exclusive to D-SNPs with exclusively aligned enrollment, thus enhancing
transparency and relevancy of the MLR data used to assess and oversee
financial performance for these plans in a way not currently possible.
A commenter noted stakeholders already collect and analyze Medicare and
Medicaid financial data and the benefits of the proposal would depend
on the extent to which CMS facilitated or standardized analysis of MLR
data in ways not possible today. Finally, a commenter recommended CMS
explore how MLR calculations can improve services and outcomes for
dually eligible individuals, especially those enrolled in HIDE and FIDE
SNPs.
Response: We thank the commenters for their input and suggestions
and will take them under advisement for future rulemaking and in
developing technical assistance for States in analyzing MLR data.
Comment: Some commenters stated separate Medicaid and Medicare MLR
requirements create challenges to meeting integration goals, such as
inhibiting flexibility and not incentivizing integrated care, while
another commenter stated the inconsistent availability of encounter
data and lack of framework for allocating cost to Medicare versus
Medicaid pose significant challenges.
A commenter objected to CMS ending the FAI capitated financial
alignment model and expressed that this represents an undesirable move
away from an integrated MLR, a change they believed would erode
transparency in medical spending and increase the risk that plans will
pad allowable administrative costs.
Response: We thank the commenters for their input and suggestions
and will take them under advisement for future rulemaking. We address
other comments on the FAI later in this final rulemaking.
Comment: Many commenters supported maintaining separate Medicare
and Medicaid MLR requirements and several commenters expressed
opposition to any changes. A few commenters expressed uncertainty that
the benefits of an integrated MLR would outweigh the burden of
reporting integrated MLR data. A commenter opposed any requirement for
D-SNPs to report an integrated MLR or any other changes to current D-
SNP financing and infrastructure. Many commenters also noted barriers
to or concerns with integrated MLR reporting that they believe CMS
should take into consideration, including misalignments between
Medicare and Medicaid funding, cost reporting definitions, and program
requirements; the lack of a standardized methodology for calculating an
integrated MLR; and the fact that current Medicaid rate development
guidance does not provide for an integrated MLR to be used in Medicaid
rate development for an integrated D-SNP. Some commenters indicated
plans' operational and financial workflows are not currently structured
to support or yield encounter or financial data of sufficient quality
to support integrated MLR reporting.
A few commenters expressed support for integrated MLR reporting. A
few commenters responded that they do not believe the current MLR
approach provides sufficient data for State decision making and policy
development; they instead supported an integrated MLR approach,
including CMS requiring an integrated MLR for integrated products, as a
better way to track and oversee plan spending, set actuarially sound
rates, and establish plan performance targets. Several commenters
supported States having the flexibility to determine MLR requirements.
A commenter stated the integrated MLR reports that MMPs submit under
FAI offer a more complete picture of plan financial performance than
would otherwise be available. Another commenter acknowledged what while
there are significant technical and legal hurdles to achieving
integrated MLR reporting, overcoming these would support data-driven
decision making and policy. A commenter noted the potential benefit to
States of CMS's proposed requirement to reinstate the detailed MLR
reporting requirements under Sec. Sec. 422.2460 and 423.2460 (87 FR
1902 through 1906) as it may better support States to compare Medicare
and Medicaid MLR reporting under a D-SNP contract.
Response: We would like to clarify that we did not propose to
require an integrated MLR for integrated products; as we stated at 87
FR 1876, we do not believe we have the statutory authority to include
Medicaid experience as part of the Medicare MLR requirement. We thank
the commenters for providing thoughtful input on these issues. We will
take these comments and concerns into consideration for any future
guidance on this topic.
Comment: Several commenters agreed with CMS's interpretation that
Medicaid managed care capitation rates can be actuarially sound, as
required by Sec. 438.4, when those rates consider the impact of MA
supplemental benefits and State-specific requirements for dually
eligible individuals, as included in the State Medicaid agency
contract, D-SNP MOC, or MMP contract, on Medicaid costs and
utilization. A few other commenters did not reference Medicaid
actuarial soundness requirements but stated that MA supplemental
benefits and State-specific requirements should be considered in
setting Medicaid managed care capitation rates or supported States
having the flexibility to consider the impact of such benefits and
requirements when setting Medicaid managed care capitation rates.
Several commenters indicated they expect MA supplemental benefits or
other State-specific requirements to have minimal impact on the cost
and utilization of Medicaid benefits. A commenter recommended that
Medicaid actuaries be required to consider the impact of Medicare costs
and utilization in Medicaid rate setting.
A few commenters expressed concern with States considering the
impact of MA supplemental benefits and other State-specific
requirements for dually eligible individuals when establishing Medicaid
managed care capitation rates, citing potential negative impacts
including: Reductions in Medicaid managed care capitation rates without
sufficient transparency; Medicaid rates not meeting actuarial soundness
requirements; and States offering less robust Medicaid benefits by
substituting these benefits with MA supplemental benefits. A few
commenters expressed concern about the impact of these Medicaid-rate
setting considerations on MA market dynamics or beneficiaries' access
to certain benefits, including: the potential for D-SNPs to be less
competitive; or for such benefits to only be made available in MA
plans, resulting in less beneficiary choice. For example, a commenter
stated that significant expansion of MA supplemental benefits could
give States less incentive to expand their Medicaid benefit package if
coverage, such as for dental care, were widely provided in MA plans
that are available to dually eligible individuals; in such scenario,
beneficiary choice could be limited if needed dental coverage were only
available in MA plans. A commenter also expressed concern that for
integrated products, Medicare financial information alone might suggest
funds are available to support funding Medicaid benefits, but that
combined Medicare and Medicaid funding could indicate otherwise,
limiting an
[[Page 27778]]
integrated plan's ability to fund investments in Medicaid services with
savings from reduced Medicare acute care utilization. A few commenters
stated that CMS should also consider the impact of Medicaid benefits in
lowering Medicare costs and utilization.
Response: We thank the commenters for providing thoughtful input on
this issue. We appreciate the support for CMS's interpretation that
Medicaid managed care capitation rates can be actuarially sound when
those rates consider the impact of MA supplemental benefits and any
State-specific requirements on the projected costs and utilization of
the Medicaid benefits. We thank the commenters for providing input on
the potential unanticipated impacts of such an approach. We will take
these comments and concerns into consideration for any future guidance
on this topic.
Comment: A number of commenters provided input on the types of
information States, actuaries, and others would need to evaluate
actuarial soundness under this approach. A commenter noted that
Medicaid rate development for programs with enrollment aligned across
Medicare and Medicaid may currently use a wide variety of information
that generally meets actuarial soundness needs. However, this commenter
and a number of others provided feedback on potential implementation
challenges CMS should consider that could impact States' and actuaries'
ability to estimate the impact of such supplemental benefits on
Medicaid costs and utilization. Commenters noted barriers including:
Timing differences between the MA bidding cycle and Medicaid rate-
setting periods; the lack of uniformity and sameness in supplemental
benefits across MA plans or within MA plans as a result of MA
uniformity flexibility or provision of SSBCI; States not having
sufficient MA bid data that describes supplemental benefits, and the
lack of a consistent framework for allocating Medicare versus Medicaid
costs or claims.
Some commenters encouraged CMS to provide additional guidance to
ensure consistency in how States and actuaries consider of the impact
on MA supplemental benefits or State-specific requirements in Medicaid
managed care rate setting, in areas including: CMS's expectations for
plan-specific Medicaid rates to account for plan differences in MA
supplemental benefits; using a historical MA benefits package to
establish Medicaid rates; and what quantitative support would be
necessary to support CMS' review of Medicaid rates in these scenarios.
Response: We appreciate the feedback on the additional information
States, actuaries and others would need to evaluate actuarial soundness
under this approach, as well as other potential implementation
challenges. We also thank the commenters for their input concerning
what guidance would be useful for States and Medicaid actuaries. We
will take this input into account as we consider updates to CMS's
Medicaid Managed Care Rate Development Guide, as well as other avenues
to provide guidance and technical assistance on this topic.
Comment: We received many comments on other options related to
financing for integrated plans. For any future rulemaking, a commenter
requested CMS collaborate with stakeholders in advance, while another
commenter requested CMS take into consideration plans' need for
flexible deadlines and written guidance.
Many commenters recommended that CMS work with States, managed care
organizations, and actuaries on opportunities to improve financial
alignment between Medicare and Medicaid. Other commenters expressed
interest in CMS sharing best practices, such as how experience from the
FAI could be applied in the context of a D-SNP or a FIDE SNP, or
continuing to explore topics related to financial alignment, such as
curbing incentives for cost shifting, methodologies to value
supplemental benefits, and investments that target social determinants
of health. A commenter that believes CMS should increase the level of
coordination between CMS and States regarding community supports and
in-lieu-of services that impact Medicare costs and utilization
requested a new requirement for advance notification of changes in
community support services.
A few commenters emphasized their support for CMS examining
experienced-based rate setting approaches for adoption in integrated
products outside of FAI, where cost neutrality was required. A
commenter noted States participating in other aligned approaches may
want to consider requesting more explicit cost offsets from CMS, such
as sharing in the Medicare MLR remittances. A few commenters encouraged
CMS to continue to offer States financial incentives for integration,
with a commenter suggesting CMS offer States alternative value-adds
such as access to implementation resources; ongoing increased FFP for
administrative and IT changes; and improved coordination, quality,
access, and simplification for beneficiaries.
Finally, a few commenters disagreed with the degree of emphasis
they believe is placed on financial savings derived from integrated
products, arguing CMS should pursue integration because it is an
alternative to the current fragmented, inefficient system. A commenter
disagreed with designing integrated approaches under a standard of
budget neutrality, noting this is a standard to which MA organizations
and Medicaid capitation payments for D-SNPs are not likewise held.
Another commenter expressed support for replacing Titles 18 and 19 of
the SSA to fund integrated services through a single source of
financing used to fund benefits; this commenter stated this alternative
model should feature State contracting with administering entities,
financing mechanisms to ensure accountability and eliminate incentives
for cost shifting, and required reinvestments of savings into efforts
to support the population.
Response: We appreciate the commenters' input and suggestions on
how to improve financial alignment across the Medicare and Medicaid
programs and will take them under advisement for future rulemaking.
7. Definition of Applicable Integrated Plan Subject to Unified Appeals
and Grievances Procedures (Sec. 422.561)
In Sec. 422.561, we proposed to expand the universe of D-SNPs that
are required to have unified grievance and appeals processes by
revising the definition of an applicable integrated plan. The April
2019 final rule introduced the concept of applicable integrated plans,
which we defined as FIDE SNPs and HIDE SNPs in which Medicare and
Medicaid enrollment is exclusively aligned (meaning State policy limits
a D-SNP's enrollment to those whose Medicare and Medicaid enrollment is
aligned as defined in Sec. 422.2) and the companion Medicaid MCOs for
those D-SNPs, thereby making it feasible for these plans to implement
unified grievance and appeals processes. We limited the universe of
potential applicable integrated plans to FIDE SNPs and HIDE SNPs with
exclusively aligned enrollment to ensure, first, that all enrollees are
covered with the same scope of benefits and, second, that the plans
implementing unified grievances and appeals offered a sufficiently
substantial range of Medicaid benefits to make the unification of
Medicare and Medicaid processes meaningful for beneficiaries and
worthwhile for States and plans.
Because the landscape of integrated plans has evolved in the past
several
[[Page 27779]]
years, we believe there are integrated D-SNPs other than FIDE SNPs and
HIDE SNPs for which a unified grievance and appeals process is
feasible. Expanding the process to these plans would simplify the
grievance and appeals steps for beneficiaries enrolled in these plans
for their Medicare and Medicaid benefits and extend the protection of
continuation of benefits pending appeal as described in Sec. 422.632
to additional beneficiaries. Accordingly, we proposed, effective
January 1, 2023, to expand the definition of the term applicable
integrated plan to include an additional type of D-SNP and the
affiliated Medicaid managed care plan subject to the rule.
We proposed to include as applicable integrated plans certain
combinations of Medicaid managed care plans and D-SNPs that are not
FIDE SNPs or HIDE SNPs but meet three other conditions. First, State
policy must limit the D-SNP's enrollment to beneficiaries enrolled in
an affiliated Medicaid managed care plan that provides the
beneficiary's Medicaid managed care benefits. Second, each enrollee's
Medicaid managed care benefits must be covered under a capitated
contract between (1) the MA organization, the MA organization's parent
organization, or another entity that is owned and controlled by its
parent organization, and (2) a Medicaid MCO or the State Medicaid
agency. Third, the Medicaid coverage under the capitated contract must
include primary care and acute care, including Medicare cost-sharing as
defined in section 1905(p)(3)(B), (C) and (D) of the Act, without
regard to the limitation of that definition to qualified Medicare
beneficiaries, and must include at least one of the following: Medicaid
home health services (as defined in Sec. 440.70), Medicaid medical
supplies, equipment and appliances (as described in Sec.
440.70(b)(3)), or Medicaid nursing facility services. The affiliated
Medicaid MCO in which all of the D-SNP's enrollees are also enrolled in
this scenario would also be included in our proposed expansion of
applicable integrated plans. As a result, the following arrangements
would be applicable integrated plans under our proposal, where both
plans include membership that is fully aligned between the D-SNP and an
affiliated MCO: (1) A D-SNP and affiliated Medicaid MCO where the D-SNP
holds a contract with a separate Medicaid MCO to cover all capitated
managed care benefits in the State and the separate Medicaid MCO holds
the contract with the State for those benefits (2) a D-SNP and
affiliated Medicaid MCO where the affiliated Medicaid MCO holds a
contract with the State for the capitated Medicaid benefits.
Where each of these conditions is met, enrollees receive all of
their Medicare and Medicaid benefits that are available through managed
care in the State through a D-SNP and affiliated Medicaid managed care
plan.
We proposed to reorganize the definition of applicable integrated
plan in Sec. 422.561 by adding new subsections to the definition in
Sec. 422.561 to show separate definitions before and after January 1,
2023. The proposed definition after January 1, 2023, expands the
universe of applicable integrated plans to include a D-SNP and
affiliated Medicaid managed care plan that meets these three criteria.
Under the proposed revisions to Sec. 422.561, current paragraphs (1)
and (2) would become paragraphs (2)(i)(A) and (B) and apply before
January 1, 2023. Proposed new paragraph (2) of the definition would
apply beginning January 1, 2023, and would include the current
definition and the proposed new category of D-SNPs and affiliated
Medicaid managed care plans that would qualify as an applicable
integrated plan.
Comment: We received numerous comments in support of our proposal
to expand the unified plan-level appeals and grievance processes to
cover additional D-SNPs and enrollees where the State Medicaid managed
care program may have carve-outs of LTSS and behavioral health services
that prevent the plans from qualifying as FIDE or HIDE SNPs. In support
of our proposal and covering more enrollees with the unified
procedures, several commenters noted that the unified processes are
simpler and easier to navigate for enrollees and will expand access to
Medicare services while an appeal is pending. A commenter also noted
that our proposed benefit coverage criteria for affected plans are
largely areas where overlap is most common, including specifically
durable medical equipment and home health. Some commenters, while
supportive of our proposal, encouraged CMS to extend the unified
processes to additional D-SNPs to cover more enrollees, including D-
SNPs that do not have exclusively aligned enrollment.
Response: We appreciate the broad support for our proposal to
expand the definition of applicable integrated plans to encompass more
plans and cover more enrollees. We agree with those commenters who
stated that the unified processes are clearer and easier to navigate
for enrollees and provide additional benefits such as continuing
Medicare services while an appeal is pending. As we noted in the April
2019 final rule (CMS-4185-F), we do not think it is feasible to align
appeals and grievance processes where the D-SNP is not affiliated with
the Medicaid MCO covering the enrollee's Medicaid benefits. This
includes a plan where some enrollees are aligned but not all. We will
continue to monitor for additional opportunities for streamlining and
clarifying the process for enrollees. We also remind D-SNPs that they
have obligations under Sec. 422.562(a)(5) to assist enrollees with
obtaining and appealing Medicaid benefits covered by Medicaid,
including when those Medicaid benefits are covered by unaffiliated
Medicaid managed care plans or Medicaid FFS programs, as discussed in
the April 2019 final rule (84 FR 15723), and that States may include
additional integration requirements in their State Medicaid agency
contracts with D-SNPs.
Comment: Some commenters, while supportive of our proposal,
requested that CMS delay the implementation date. A commenter also
asked how CMS would work with States that resist modifying appeals and
grievance procedures to comply with the rule.
Response: We acknowledge that plans newly covered by the definition
of applicable integrated plan will have less than a year to ensure that
they have appropriate processes in place. However, most of the plans
that we anticipate will be covered by the revised definition in 2023
currently operate as MMPs in California, and thus have several years'
experience operating very similar unified appeals and grievance
processes. With the transition of Cal MediConnect, we would like for
enrollees who transition to D-SNPs and MCOs operated by the same parent
organization to continue to benefit from the unified appeals and
grievance processes that they have come to know in Cal MediConnect. We
also note that materials and guidance already exist for applicable
integrated plans \49\ and the Medicare-Medicaid Coordination Office
provides technical assistance to States on integration issues. We will
continue to engage States, plans, and other stakeholders as we
implement the unified appeals and grievance processes for additional
plans, particularly in
[[Page 27780]]
California. We are also committed to continuing our work with States to
gather and disseminate best practice information and to engage
stakeholders to ensure a successful implementation.
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\49\ The Addendum to the Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance, Coverage
Decision Letter (Form CMS-10716), Letter about Your Right to Make a
Fast Complaint, and Appeal Decision Letter can be found at https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/D-SNPs.
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Comment: Some commenters requested clarification, or through their
comments suggested a need for clarification, with respect to whether
the applicable integrated plans must have exclusively aligned
enrollment to be covered under our proposed expansion of the definition
of applicable integrated plans. A few commenters specifically suggested
that we apply the applicable plan definition to HIDE SNPs, in addition
to FIDE SNPs.
Response: We clarify that only D-SNPs with exclusively aligned
enrollment, as defined in Sec. 422.2 as those D-SNPs where State
policy limits enrollment to full-benefit dual eligible individuals also
covered by the affiliated Medicaid managed care organization, will be
newly covered by the expanded definition of applicable integrated
plans. Exclusively aligned enrollment, as a practical matter, generally
refers to HIDE SNPs and FIDE SNPs. In this rule we are including in the
definition of applicable integrated plans a subset of D-SNPs that are
not HIDE SNPs or FIDE SNPs but still share membership with the Medicaid
MCO. Plans covered under the existing definition of applicable
integrated plans at Sec. 422.561, meaning FIDE and HIDE SNPs that have
exclusively aligned enrollment, will continue to be applicable
integrated plans.
Comment: Several commenters opposed finalizing our proposal based
on the misunderstanding that the unified procedures would apply to
benefits beyond those covered by the D-SNP and Medicaid capitated
contracts, potentially making the unified processes unworkable for
plans. A few commenters requested clarification on how Medicaid
benefits that are carved out of managed care in a State would be
covered by the unified appeals and grievance process, and suggested
that CMS facilitate data sharing between States and plans so that plans
know what Medicaid benefits are covered and what the State requirements
are for processing Medicaid appeals. A commenter also questioned the
value of unified appeals and grievance processes that do not cover all
of an enrollee's benefits due to benefits being carved out of managed
care in the State.
Response: The Medicaid benefits covered by the applicable
integrated plan will be delineated as covered benefits in the Medicaid
managed care contract that the D-SNP has with the State Medicaid agency
or other Medicaid MCO. These will be the only Medicaid benefits subject
to the unified appeals and grievance process. To the extent that the
Medicaid MCO covering the Medicaid managed care benefits is not the
same legal entity as the D-SNP, both the Medicaid MCO and the D-SNP
must collaborate to implement a unified appeals and grievance process
to cover the enrollees' full capitated Medicaid and Medicare benefits,
and ensure they are complying with the regulations at Sec. Sec.
422.629 through 422.634. The appeals and grievances processes for
Medicaid benefits that are not capitated to the applicable integrated
plan (that is, the plan is not responsible for covering) remain
unchanged. For example, if an enrollee appeals the denial of a Medicaid
service that is carved out, that appeal would continue to be processed
and decided through the State's appeal process as it is today.
Similarly, Medicare benefits that are not covered by the D-SNP,
specifically hospice benefits, acquisition costs of kidneys for
transplant, and certain new benefits that are the subject of an NCD or
legislative change in benefits, will not be subject to the unified
appeal and grievance process. Benefits that are not covered by the D-
SNP or MCO contract will not be covered by the unified grievance and
appeals procedures. However, we believe that bringing as many benefits
as the plans cover, under the MA contract and under the capitated
contract for Medicaid managed care benefits, into the unified
procedures still benefits the enrollee by providing the enrollee a
single pathway for appeals and grievances for those overlapping
benefits, as opposed to separate paths for appeals and grievances based
on Medicare or Medicaid coverage. We note that, with respect to the
workability of unified appeals and grievance procedures generally, 95
applicable integrated plans in eleven states are currently operating,
and we have heard very few questions or concerns. We also reiterate the
requirement for all D-SNPs to assist enrollees with obtaining,
including appealing, access to all Medicaid benefits, including those
that the plan does not cover, per Sec. 422.562(a)(5).
Comment: We received a comment requesting that applicable
integrated plans be permitted to use the MA Integrated Denial Notice
for ease of plan process and for less enrollee confusion. Another
commenter raised questions about the impact of the unified processes on
Part C reporting.
Response: We decline to allow applicable integrated plans to use
the Integrated Denial Notice (Form CMS-10003-NDMCP) and note that we
have issued a specific denial notice for applicable integrated plans,
the Coverage Decision Letter (Form CMS-10716). The Coverage Decision
Letter \50\ is tailored to the unified process and appeal rights and
covers the requirements at Sec. 422.631. It is currently in use by
existing applicable integrated plans. We have not heard concerns about
difficulties in using this notice or confusion on the part of
enrollees. As far as Part C reporting requirements, we can confirm that
we previously reviewed these requirements and made minor adjustments
prior to the implementation of the unified appeals and grievance
processes in 2021.
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\50\ The Coverage Decision Letter (Form CMS-10716) can be found
at https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/D-SNPs.
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After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the amendment to the definition of applicable integrated
plans in Sec. 422.561 with slight modifications to increase clarity.
We are revising the definition to be clearer where there are references
to other paragraphs within the definition and to clarify in paragraph
(2)(ii)(C) that, in addition to primary care and acute care (including
Medicare cost-sharing), the capitated contracts for Medicaid coverage
must cover at a minimum, one of the following categories of Medicaid
benefits: Home health services as defined in Sec. 440.70 of the
chapter, medical supplies, equipment, and appliances as described in
Sec. 440.70(b)(3) of the chapter, or nursing facility services as
defined in Sec. 440.155 of the chapter.
8. Permitting MA Organizations With Section 1876 Cost Contract Plans To
Offer Dual Eligible Special Needs Plans (D-SNPs) in the Same Service
Area (Sec. 422.503(b)(5))
Section 1876(h) of the Act established reasonable cost
reimbursement contracts or ``cost contracts,'' as defined at Sec.
417.401, as Medicare contracts under which CMS pays an HMO or
competitive medical plan on a reasonable cost basis. By contrast, MA
plans bear the risk of coverage of Medicare and supplemental benefits
for their enrollees and are paid risk adjusted capitation by CMS. Cost
contracts arrange for Medicare services and provide enrollees several
flexibilities not offered to MA plan enrollees, such as the ability to
enroll in a plan that offers only Part B benefits and to receive health
care services outside of the cost contract plan's
[[Page 27781]]
network of providers through original Medicare. As of March 2022,
approximately 184,000 beneficiaries were enrolled in six cost contracts
offered in nine States.\51\
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\51\ Retrieved from: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly-Enrollment-by-Contract.
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We direct readers to the proposed rule, 87 FR 1878, for discussion
of how Federal statute and regulation restrict cost contracts in
several ways. We proposed to modify the prohibition at Sec.
422.503(b)(5) on an entity accepting new enrollees in a cost contract
plan while offering an MA plan in the same service area applicable to:
(1) A parent organization owning a controlling interest in a separate
legal entity accepting new enrollees under a cost contract plan, and
(2) another separate legal entity owned by the same parent organization
as the legal entity accepting new enrollees under a cost contract plan.
As described in our proposed rule, since CMS finalized the policy
at Sec. 422.503(b)(5), we have gained more experience relevant to this
D-SNP policy decision through the Demonstration to Align Administrative
Functions for Improvements in Beneficiary Experience conducted in
partnership with the State of Minnesota.\52\ Three of the seven MA
organizations offering Minnesota D-SNPs participating in the
demonstration--comprising almost 60 percent of the demonstration
enrollment--also sponsored cost contract plans in overlapping counties.
To prevent potential disruption to the demonstration, we waived Sec.
422.503(b)(5) for these entities, using our authority under section
1115A of the Act. This waiver avoided the risk that these entities
would, instead of closing the cost contract plans to new enrollment
where the service areas overlapped with D-SNPs, non-renew their D-SNPs
during the demonstration, which would undermine our ability to carry
out successfully the model test. In addition, non-renewal of these D-
SNPs could potentially have led to large-scale disenrollment from
Minnesota Senior Health Options, a D-SNP and Medicaid MCO program with
evidence of strongly favorable outcomes for dually eligible older
adults.\53\
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\52\ See https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/Minnesota.html.
\53\ Anderson, W.L., Feng, Z., & Long, S.K. Minnesota Managed
Care Longitudinal Data Analysis, prepared for the U.S. Department of
Health and Human Services Assistant Secretary for Planning and
Evaluation (ASPE) (March 31, 2016). Retrieved from https://aspe.hhs.gov/report/minnesota-managed-care-longitudinal-data-analysis.
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Although the waiver and model were not designed to test this
specific issue, the waiver of Sec. 422.503(b)(5) provided an
opportunity to test whether creating an exception for D-SNPs would
result in substantial shifts of D-SNP enrollees to cost contract plans
offered under the same parent organization. We direct readers to the
proposed rule, 87 FR 1878 through 1879, for a more detailed description
of the data reported by D-SNPs with cost contract plans in Minnesota.
The data from the Minnesota demonstration showed allowing both a D-SNP
and a cost contract plan under the same parent organization did not
result in a substantial number of enrollees moving from the D-SNP to
the cost contract plan.
Based on this evidence, we believe that allowing a parent
organization to accept new enrollees in a cost contract plan it offers
in the same service area as the entity offers a D-SNP or seeks to offer
a new D-SNP would not undermine the policy goals that underlie Sec.
422.503(b)(5)--that is, prohibiting entities from steering high-cost
enrollees to their cost contract plans and lower cost enrollees to
their risk-bearing MA plans. In addition, creating an exception to
Sec. 422.503(b)(5) for D-SNPs would allow the entities in Minnesota
that currently offer both D-SNPs (through the demonstration) and cost
contract plans in the same market to continue enrollment in both plans
after the end of the demonstration, thus avoiding potentially
significant disruption to Medicare beneficiaries that would result from
each MA organization's non-renewal of one of the two types of products.
More broadly, the exception removes a regulatory barrier that, in
Minnesota and several other States, can impede D-SNPs from entering a
market where cost contract plans remain. Therefore, we proposed to
revise paragraph Sec. 422.503(b)(5)(i) and (ii) to allow an MA
organization to offer a D-SNP and also--
Offer an 1876 reasonable cost plan that accepts new
enrollees;
Share a parent organization with a cost contract plan that
accepts new enrollees;
Be a subsidiary of a parent organization offering a cost
contract plan that accepts new enrollees; or
Be a parent organization of a cost contract plan that
accepts new enrollees.
In our proposed rule, we solicited comment on the proposed
exception for D-SNPs and our process for monitoring for unintended
consequences. We also explained how we were considering more limited
exceptions to the requirements at Sec. 422.503(b)(5) that may more
closely fit our policy goal of removing regulatory obstacles to the
availability of D-SNPs that further Medicare-Medicaid integration.
Specifically, we were considering limiting the exception to:
D-SNPs designated as HIDE SNPs, as defined at Sec. 422.2,
and FIDE SNPs, as defined at Sec. 422.2;
D-SNPs that only enroll full-benefit dually eligible
individuals;
D-SNPs that charge no beneficiary premium for individuals
eligible for the full Part D low income subsidy;
D-SNPs that are affiliated with cost contract plans that
charge premiums for enrollees eligible for the full Part D low income
premium subsidy; or
Combinations of these types of D-SNPs.
We did not propose these alternatives, citing our belief that they
would add complexity to the regulation that we did not believe would be
necessary to achieve our primary aim of removing regulatory obstacles
to the availability of D-SNPs that integrate Medicare and Medicaid
services and improve care for dually eligible individuals. However, we
solicited comment on whether inclusion of some or all of these
additional alternative criteria in the revisions to Sec. 422.503(b)(5)
would strengthen the overall policy.
Comment: A few commenters supported our proposal to allow a parent
organization to accept new enrollees in a cost contract plan it offers
in the same service area as the entity offers a D-SNP or seeks to offer
a new D-SNP. No commenters opposed the proposal. A few commenters noted
that the proposal would ensure continuity of care for Minnesota's D-SNP
enrollees as the Minnesota administrative alignment demonstration
phases out. A commenter noted that the proposal would reduce potential
barriers to integrated care for Medicare and Medicaid, allow for the
expansion of coverage options in other geographies, and ease
administrative burden on States. Another commenter expressed general
support for policies that address barriers to integration across
States, particularly in rural areas, and those that apply best
practices from demonstrations.
Response: We thank the commenters for their support of this
proposal and agree it would reduce barriers to integration of Medicare
and Medicaid.
Comment: A commenter expressed support for CMS's close monitoring
of
[[Page 27782]]
enrollment, should we finalize the proposed regulation.
Response: We appreciate the commenter's statement. We will monitor
patterns of dually eligible enrollment and disenrollment in applicable
cost contract plans and D-SNPs. To the extent we see any pattern that
suggests that plan sponsors are persuading D-SNP enrollees to move into
cost contract plans, we would investigate and pursue corrective actions
or additional rulemaking, potentially removing or restricting the
exemption finalized in this rule.
Comment: A commenter suggested that organizations should be
permitted to offer both a national MA Employer Group Waver Plan (EGWP)
option and continue to offer an individual cost contract plan in
certain rural areas of the Midwest with limited Medicare options. The
commenter posited that cost contract plans and EGWPs would not compete
for the same beneficiaries since, unlike cost contract plans, EGWPs are
offered specifically to Medicare-eligible retirees of a particular
employer.
Response: We thank the commenter for this suggestion. We note that
we limited our proposal to D-SNPs operating in the same area as a cost
contract plan to remove regulatory obstacles to the availability of D-
SNPs that further Medicare-Medicaid integration. Therefore, this
comment is not strictly within the scope of the rulemaking, as the
proposed rule does not discuss limitations on EGWPs. Although we are
not offering an opinion on the merits of the commenter's suggestion, we
would clarify that EGWPs need not restrict enrollment to the Medicare-
eligible retirees of a particular employer. For example, Chapter 9 of
the Medicare Managed Care Manual provides that professional or other
types of group associations with members that do not all have the same
employer are not precluded from enrolling Medicare beneficiaries in
EGWPs, provided the members of the association are eligible for
employment-based health coverage. Further, our regulations do not
preclude a Medicare beneficiary who would be eligible for an MA EGWP
from electing to enroll in a different coverage option, like a cost
plan offered in the area where the beneficiary lives. As a result, it
is not as clear as the commenter suggests that the concerns underlying
our original adoption of Sec. 422.503(b)(5) would not apply in the
context of an EGWP.
After consideration of the comments and for the reasons provided in
the proposed rule and our responses to the comments, we are finalizing
without modification our proposal to allow a parent organization to
accept new enrollees in a cost contract plan it offers in the same
service area as the entity offers a D-SNP, or seeks to offer a new D-
SNP.
9. Requirements To Unify Appeals and Grievances for Applicable
Integrated Plans (Sec. Sec. 422.629, 422.631, 422.633, and 422.634)
Section 50311 of the BBA of 2018 amended section 1859 of the Act to
add new requirements for D-SNPs to unify Medicare and Medicaid appeals
and grievance procedures for integrated D-SNPs. We codified the
regulations for unified appeal and grievance procedures Sec. Sec.
422.629 through 422.634 (84 FR 15720). These procedures apply to
applicable integrated plans, which are currently defined at Sec.
422.561 as FIDE SNPs and HIDE SNPs with exclusively aligned enrollment.
We are finalizing an amendment to the definition of applicable
integrated plan in section II.A.7. of this final rule, which will add
new categories of applicable integrated plans beginning January 1,
2023. Based on our initial implementation experience and feedback from
stakeholders, we proposed several adjustments, clarifications, and
corrections to the regulations governing unified appeal and grievance
procedures at Sec. Sec. 422.629 through 422.634.
Comment: Numerous commenters expressed general support of our
proposals for updates to the unified appeals and grievance rules with
commenters noting the benefits to enrollees of having a single pathway
for Medicare and Medicaid appeals and grievances, integrated notices,
and access to continuation of benefits while the appeal is pending for
Medicare.
Response: We appreciate the broad support for unified appeals and
grievance processes and agree that the unified process is simpler and
provides more protections for enrollees.
Comment: Several commenters requested that we delay implementation
of the proposed changes until at least 2024 to give plans more time to
implement the updates, and to provide more time for CMS to release
additional guidance and best practices on the unified appeals and
grievance processes.
Response: While we acknowledge the commenters' concern, the updates
we proposed are relatively minor, so we are not delaying the
implementation date.
Comment: We received several comments requesting that CMS work with
States to ensure State-specific requirements are clear and conveyed
timely, and additional guidance to plans is released. Commenters also
requested that CMS share best practices and additional materials about
integrated appeals and grievance processes.
Response: We appreciate the commenters' request for clarity. We
will make timely updates to the Addendum to the Parts C & D Enrollee
Grievances, Organization/Coverage Determinations, and Appeals Guidance
\54\ to incorporate the updates made in this rule. CMS is also
committed to continuing to engage States, plans, and other stakeholders
as we gather and disseminate best practice information, providing
technical assistance on integration issues as needs arise.
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\54\ The Addendum to the Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance, Coverage
Decision Letter (Form CMS-10716), Letter about Your Right to Make a
Fast Complaint, and Appeal Decision Letter can be found at https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/D-SNPs.
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Comment: Several commenters proposed changes to the existing
unified and grievance rules. A commenter suggested that CMS revise
Sec. 422.629(e) to require plans to assist providers in filing
appeals. A commenter suggested additional information should be
required to be included in each organization determination, some of
which is already included (for example, the enrollee's right to get a
free copy of the information used in making the decision and how to get
it and how to continue services while and appeal is pending, and
receiving the notice in alternate formats), and details on the second
level appeals process (to the Independent Review Entity (IRE) or a
State fair hearing). A commenter requested that we add additional
specificity on how plans should consider, approve, and provide for
appeals of reasonable accommodation requests. A commenter requested
clarification on how continuation of benefits work while and appeal is
pending. A commenter requested changes to Sec. 422.633(e)(3) to no
longer allow circumstances where an enrollee's payment request appeal
may be expedited. A commenter requested clarification related to the
language in Sec. 422.633(e)(3) on how a plan should determine if non-
payment will create material life or health consequences and how
quickly decisions and payments must be processed in these cases.
Response: We appreciate the commenters' suggestions. We note,
generally, that these comments are on regulations for which we did not
propose changes and therefore are
[[Page 27783]]
beyond the scope of this rulemaking. We included an extensive
discussion of the unified appeals and grievance process in the April
2019 final rule (84 FR 15727 through 15744) and in the Addendum to the
Parts C & D Enrollee Grievances, Organization/Coverage Determinations,
and Appeals Guidance. We direct readers to those documents for
additional information and explanation of the existing appeals and
grievance system rules for applicable integrated plans, and how to
operationalize them.\55\ We also direct commenters to the current model
notices for applicable integrated plans for reference as to what is
currently covered in the notices.\56\ We also note that this rule does
not impact the requirements for applicable integrated plans to continue
benefits while an appeal is pending (please see the April 2019 final
rule (84 FR 15737) for more information on how continuation of benefits
works in the unified process). These continuation of benefits
requirements will be applied to additional applicable integrated plans
and their enrollees, per our discussion related to the revised,
expanded definition of applicable integrated plans in section II.A.7.
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\55\ The guidance can be found at https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/DSNPs.
\56\ The Coverage Decision Letter (Form CMS-10716), Letter about
Your Right to Make a Fast Complaint, and Appeal Decision Letter can
be found at https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/D-SNPs.
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We urge commenters to review the April 2019 final rule (84 FR
15741) for a discussion of expedited payment appeals, which provides
the rationale for inclusion of the right for an enrollee to request
one. In addition, with respect to the language in Sec. 422.633(e)(3)
related to considering whether the standard timeframe could seriously
jeopardize the enrollee's life, physical or mental health, or ability
to attain, maintain, or regain maximum function, we note that all MA
organizations and Medicaid managed care organizations must apply this
standard today in various contexts of appeals cases, since this
language also exists in Sec. Sec. 422.566, 422.570, 422.584, 438.210,
and 438.410.
Finally, we note that MA plans, including D-SNPs, must comply with
applicable Federal civil rights authorities. Section 504 of the
Rehabilitation Act prohibits disability discrimination and includes
requirements for effective communication for individuals with
disabilities (45 CFR 84.52), accessibility standards for buildings and
facilities (45 CFR 84.22, 84.23), and filing of grievances and
complaints (45 CFR 84.61, 84.7).
a. Providing Enrollees Information on Presenting Evidence and Testimony
(Sec. 422.629(d))
We proposed adding additional language to Sec. 422.629(d) to
codify in regulation a provision from existing sub-regulatory
guidance.\57\ We proposed to revise Sec. 422.629(d) to require that,
as part of its responsibilities pertaining to an enrollee's presenting
evidence for an integrated grievance or appeal, an applicable plan
provide an enrollee with information on how evidence and testimony
should be presented to the plan. In addition, our proposal would
reorganize Sec. 422.629(d) to improve the readability of the
provision.
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\57\ CMS, ``Addendum to the Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance for
Applicable Integrated Plans''. Retrieved from: https://www.cms.gov/files/document/dsnpartscdgrievancesdeterminationsappealsguidanceaddendum.pdf.
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Comment: Several commenters requested that CMS clarify when, in the
appeals process, applicable integrated plans should offer enrollees the
opportunity to provide live testimony, and how long such testimony
should be allowed to be.
Response: We note that the requirement to provide enrollees with an
opportunity to present evidence and testimony is an existing rule, at
Sec. 422.629(d). This same requirement to provide an opportunity for
evidence and testimony also exists in both the Medicaid managed care
requirements at Sec. 438.406(b)(4) for appeals, and for MA plans at
Sec. 422.586 for reconsiderations. Our proposed update is to require
that applicable integrated plans provide enrollees information on how
to present the evidence and testimony. For the evidence and testimony
to be meaningful to the plan's decision, it must be accepted prior to
the plan's decision and taken into account in that decision. The
regulation does not set forth a specific amount of time that must be
provided for an enrollee to provide evidence, including testimony, but
enrollees must be provided a reasonable opportunity and sufficient
flexibility in terms of what is presented as needed to provide relevant
information.
After consideration of the comments and for the reasons provided in
the proposed rule and our response to the comments, we are finalizing
this provision as proposed without modification.
b. Technical Correction (Sec. 422.629(k))
We proposed technical changes to Sec. 422.629(k)(4)(ii) to correct
a minor error from the April 2019 final rule (84 FR 15835). We proposed
to replace the word ``organization'' with ``reconsideration'' and
remove the word ``decision'' from the end of the sentence in Sec.
422.629(k)(4)(ii) for clarity and consistency in the text.
We received no comments on this proposal. For the reasons outlined
in the proposed rule, we are finalizing the proposed change without
modification.
c. Accommodate State Medicaid Representation Rules (Sec. 422.629(l))
At Sec. 422.629(l)(1), we proposed adding additional language to
codify in regulation current sub-regulatory guidance \58\ regarding the
appointment of a representative. We proposed to add language to clarify
that an enrollee's representative includes any person authorized under
State law to accommodate State Medicaid program appointments. We
proposed to reorganize paragraph (l)(1) as part of this amendment.
Specifically, we proposed to revise paragraph (l)(1)(i) to list the
enrollee and to revise paragraph (l)(1)(ii) to list the enrollee's
representative, including any person authorized under State law. We
also proposed to move the content of current paragraph (l)(1)(ii) that
deals with rights of assignees to a new Sec. 422.629(l)(4) as
discussed in section II.A.9.d. of this final rule.
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\58\ CMS, ``Addendum to the Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance for
Applicable Integrated Plans''. Retrieved from: https://www.cms.gov/files/document/dsnpartscdgrievancesdeterminationsappealsguidanceaddendum.pdf.
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Comment: A commenter requested that CMS clarify the types of
documentation applicable integrated plans should accept, and if the
documentation requirements would be different depending on whether the
underlying benefit is covered by Medicaid or Medicare.
Response: We appreciate the commenters' requests for clarity.
Applicable integrated plans should treat all appeals and grievances
subject to the rules at Sec. Sec. 422.629 through 422.634, and
authorization of representation documentation, the same whether the
underlying benefit is covered by Medicare, Medicaid, or both. If the
documentation that the applicable integrated plan receives from a
representative meets either State Medicaid or Medicare standards for
representation, the plan should accept the documentation. For example,
even if the underlying benefit at issue in the
[[Page 27784]]
appeal is covered only by Medicare, and the representation
documentation meets State Medicaid representation requirements, the
plan should accept the authorization as sufficient. This is consistent
with how the appeal processes for applicable integrated plans were
designed to take into account differences in Medicaid State programs,
be easily navigable by enrollees, and provide unified procedures and
processes.
We did not receive any comments recommending changes to this
proposal. For the reasons outlined in the proposed rule, we are
finalizing this provision without modification.
d. Clarifying the Role of Assignees and Other Parties (Sec.
422.629(l))
In the April 2019 final rule, we finalized Sec. 422.629(l)(1)(ii)
to include assignees of the enrollee and other providers with
appealable interests in the proceedings as individuals who could file
an integrated grievance, request an integrated organization
determination, or request an integrated reconsideration to clarify the
rights of non-contracted providers. We therefore proposed to move the
content of Sec. 422.629(l)(1)(ii) to new paragraph (l)(4). As noted in
section II.A.9.c. of this final rule, we proposed to add new language
at Sec. 422.629(l)(1)(ii) in its place addressing who can be an
enrollee's representative.
In new paragraph (l)(4) we proposed to clarify which individuals or
entities can request an integrated reconsideration and are considered
parties to the case but who do not have the right to request an
integrated grievance or integrated organization determination. In
paragraph (l)(4)(i), we proposed to permit an assignee of the enrollee
(that is, a physician or other provider who has furnished or intends to
furnish a service to the enrollee and formally agrees to waive any
right to payment from the enrollee for that service) to request an
integrated reconsideration. In paragraph (l)(4)(ii) we proposed to
permit any other provider or entity (other than the applicable
integrated plan) who has an appealable interest in the proceeding to
request an integrated reconsideration.
Comment: A few commenters requested that CMS clarify what an
appealable interest means and clarify the language in Sec.
422.629(l)(1)(ii) that provides that ``parties with appealable
interest'' may appeal.
Response: We appreciate the commenters' request for clarity and
note that we did not propose any changes to the language in Sec.
422.629(l) related to appealable interest (that is, any other provider
or entity--other than the applicable integrated plan--who has an
appealable interest). This is existing language in Sec. 422.629(l) and
in the longstanding MA appeal rules at Sec. 422.574(d). We point
commenters to the discussion on Sec. 422.574 in the June 1998 final
rule titled ``Medicare Program; Establishment of the Medicare+Choice
Program'' (63 FR 35026) which noted that the phrase includes not just
the enrollee, but also allows other parties to exercise appeal rights
(excluding the MA organization). As noted in that discussion, parties
who may have an appealable interest in a case may include certain
physicians and other providers who are assignees of the enrollee, legal
representatives of a deceased enrollee's estate, and the broad category
of any other entity determined to have an appealable interest in the
proceeding. These parties can continue to have an interest in the
proceedings throughout each level of an appeal. We decline to add a
definition for this phrase in this rule. In our proposal we are only
reorganizing where this language is in Sec. 422.629(1).
We did not receive any comments recommending changes to this
proposal. After consideration of the comments and for the reasons
outlined in our responses, we are finalizing this provision without
modification.
e. Timelines for Processing Payment Requests (Sec. 422.631)
In the April 2019 final rule, we neglected to specify how the MA
``prompt payment'' rules at Sec. 422.520 governing payment of claims
apply to applicable integrated plans.
Accordingly, at Sec. 422.631(d), we proposed to add a new
paragraph (d)(3) to require applicable integrated plans to process
payment requests according to the prompt payment provisions set forth
in Sec. 422.520, which would mirror the current provision at Sec.
422.568(c).
We did not receive any comments recommending changes to this
proposal. For the reasons provided in the proposed rule, we are
finalizing the proposed amendment without modification.
f. Clarifying Integrated Reconsideration Request (Sec. 422.633(e) and
(f))
We proposed changes to Sec. 422.633(e)(1) to clarify who may file
a request for an expedited post-service integrated reconsideration
(that is, one that is related to payment). Our proposal would clarify
that an enrollee may request an expedited integrated reconsideration
related to payment that can qualify as expedited, but a provider's
right to request an expedited integrated reconsideration on behalf of
an enrollee is limited to pre-service integrated reconsideration
requests. We proposed to specify in Sec. 422.633(e)(1)(i) that
expedited post-service integrated reconsideration requests are limited
to those requested by an enrollee, and in Sec. 422.633(e)(1)(ii) that
providers acting on behalf of an enrollee may only request pre-service
expedited integrated reconsiderations.
We solicited comment regarding whether allowing a 60-day timeframe
for non-contracted provider payment requests where the provider has
obtained a waiver of liability from the enrollee would simplify plan
operations without adversely affecting beneficiaries or access to care.
We noted that any changes to this timeframe would impact Sec.
422.633(f), and the timing for applicable integrated plans to make
integrated reconsideration determinations in cases involving payment
requests from providers where the provider has obtained and filed a
waiver of liability from the enrollee. We also solicited comment
regarding whether adopting such a timeframe for non-contracted provider
payment requests would conflict with any State-specific Medicaid rules
or processes concerning provider appeals.
Lastly, we proposed at Sec. 422.633(f)(3) to add language to
clarify that extensions of up to 14 days are available for any
integrated reconsiderations (either standard and expedited) other than
those regarding Part B drugs. We proposed to exclude integrated
reconsiderations about Part B drugs from the authority for extensions
in order to be consistent with current Sec. 422.633(f), which provides
that integrated reconsidered determinations regarding Part B drugs must
comply with the timelines governing Part B drugs established in
Sec. Sec. 422.584(d)(1) and 422.590(c) and (e)(2). Our current sub-
regulatory guidance addresses this as well.
Comment: A few commenters requested that CMS add language
clarifying that when providers are appealing on behalf of enrollees,
and the services have been rendered and the enrollee is not financially
responsible, they should not be doing so for purposes of their own
(provider) reimbursement. A commenter also requested that CMS confirm
whether enrollees would need to provide a waiver of liability in these
cases.
Response: We appreciate the commenters' perspective on this issue,
but we decline to add further detail in the rule on this issue. If a
provider is acting on behalf of the beneficiary in the appeals process,
the provider's motive
[[Page 27785]]
for assisting the enrollee is not relevant; beneficiaries are permitted
to have a provider act on their behalf consistent with these rules. In
addition, a non-contract provider may appeal in their own right
consistent with these rules when a waiver of liability is properly
filed. If the provider is acting on behalf of the enrollee, the
enrollee does not need to provide a waiver of liability. A waiver of
liability would only be provided if the non-participating provider is
appealing on their own behalf (not on behalf of the enrollee). We
decline to add the suggested additional detail to the regulation at
this time.
After consideration of the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the amendments to Sec. 422.633(e) and (f) as proposed
without substantive modification. We are finalizing a grammatical
revision to paragraph (e)(1)(ii).
g. Timeframes for Service Authorization After a Favorable Decision
(Sec. 422.634(d))
We proposed changes, in Sec. 422.634(d), to more clearly describe
timeframes for authorizing services in all situations where an
applicable integrated plan's decision is reversed. We proposed
reorganizing Sec. 422.634(d) to more explicitly address each scenario
that an applicable integrated plan would face when effectuating a
reversal. In proposed paragraph (d)(1), we proposed to address cases
where the applicable integrated plan reverses its own decision in an
appeal for services that were not furnished while the appeal was
pending. We proposed that an applicable integrated plan must authorize
or provide the service as expeditiously as the enrollee's condition
requires and within the sooner of: (1) 72 hours from the date of the
reversed decision; or (2) 30 calendar days (7 calendar days for a Part
B drug) after the date that the applicable integrated plan received the
integrated reconsideration request.
We also proposed to include the Part B drug timeframe from Sec.
422.618(a)(3) in Sec. 422.634(d)(1)(ii)(B) to ensure enrollees of
applicable integrated plans get the same timely effectuation of a
favorable appeal decision on coverage of a Part B drug; this is
consistent with how current Sec. 422.633(f) provides that integrated
reconsidered determinations regarding Part B drugs must comply with the
timelines governing reconsidered determinations regarding Part B drugs
established in Sec. Sec. 422.584(d)(1) and 422.590(c) and (e)(2),
which apply to other MA plans.
In proposed paragraph (d)(2), for the sake of clarity we proposed
to place in its own paragraph the requirement for the applicable
integrated plan to authorize or provide a Medicaid-covered service no
later than 72 hours from the date the plan is notified of a decision
reversed by a State fair hearing. We proposed no changes to this
effectuation timeline.
Lastly, we proposed to add a new paragraph (d)(3) to require the
same timelines for an applicable integrated plan to effectuate
reversals by the Medicare IRE, an administrative law judge or attorney
adjudicator at the Office of Medicare Hearings and Appeals, or the
Medicare Appeals Council as apply to other MA plans at Sec. Sec.
422.618 and 422.619.
We requested comment on whether the additional language provides
clarity to applicable integrated plans on their responsibility to
provide a service after an integrated organizational determination or
integrated reconsideration is overturned.
Comment: A commenter recommended that Sec. 422.634 more fully
integrate the Medicare and Medicaid processes, specifically requesting
that the regulations parallel the integrated process in the
Massachusetts One Care FAI demonstration since some services are
covered by both programs. The commenter further noted, as an example,
that the One Care contract requires the IRE to review both the Medicare
and MassHealth medical necessity criteria.
Response: We thank the commenter for this suggestion, but we did
not propose, and therefore will not finalize, a further integration of
the appeals process at this time. We leave open the future possibility
of furthering the integration of the unified appeals and grievance
process to include the post-plan appeal procedures, as we noted in the
April 2019 final rule (84 FR 15743). With respect to the unique aspects
of the One Care demonstration three-way contract, though the IRE cannot
review Medicaid cases for Medicaid benefits, it does use Medicaid
medical necessity criteria, along with Medicare criteria, when
reviewing Medicare supplemental benefit cases under One Care because,
in the One Care demonstration, Medicare supplemental benefits are
defined by State Medicaid criteria. Applicable integrated plans are not
subject to the same requirements in designing and offering MA
supplemental benefits. We would need to further evaluate whether there
are any viable scenarios in which the IRE may be required to review any
particular State's Medicaid coverage criteria in reviewing coverage for
a Medicare benefit.
Comment: A commenter requested that CMS clarify whether the
timeframes in Sec. 422.634 apply to expedited appeal decisions, and
whether CMS intends to issue further guidance on timelines for
effectuating reversals after the plan has issued an authorization and
when the plan seeks next-level review of the initial appeal decision.
Response: Timeframes for applicable integrated plans to effectuate
all decisions are covered in Sec. 422.634; this includes effectuation
after reversal by the applicable integrated plan, the IRE, a State fair
hearing, or at the Office of Medicare Hearings and Appeals, or the
Medicare Appeals Council. With the amendments made by this final rule,
timeframes for effectuation are as follows:
As expeditiously as the enrollee's health condition requires, but
no later than:
1. For a reversal by the applicable integrated plan (reversing its
integrated organization determination), no later than the earlier of:
(1) 72 hours from the date it reverses its decision or, (2) with the
exception of a Part B drug, 30 calendar days after the date the
applicable integrated plan receives the request for the integrated
reconsideration (or no later than upon expiration of an extension
described in Sec. 422.633(f)). For a Part B drug, 7 calendar days
after the date the applicable integrated plan receives the request for
the integrated reconsideration.
2. For reversals by the IRE, in accordance with MA requirements at
Sec. 422.618 the applicable integrated plan must, for standard, non-
Part B drug, and non-payment cases, authorize the service under dispute
within 72 hours from the date it receives notice reversing its
determination, or provide the service under dispute as expeditiously as
possible no later than 14 calendar days from that date; for standard
Part B drug cases, 72 hours from the date it receives notice reversing
the determination; and payment cases, pay for the service no later than
30 calendar days from the date it receives notice reversing the
integrated organization determination; and, in accordance with MA
requirements at Sec. 422.619, for expedited, non-Part B drug cases,
authorize or provide the service under dispute as expeditiously as the
enrollee's health condition requires but no later than 72 hours from
the date it receives notice reversing the determination, and for
expedited Part B
[[Page 27786]]
drug cases, authorize or provide the Part B drug no later than 24 hours
from the date it receives notice reversing the determination.
3. If a State fair hearing reverses the applicable integrated
plan's integrated reconsideration regarding a Medicaid benefit not
furnished while the appeal was pending, the applicable integrated plan
must provide or authorize the item or service as expeditiously as the
enrollee's health condition requires but no later than 72 hours from
the date it receives notice reversing the determination for all cases,
both standard and expedited, in accordance with Sec. 422.634(d)(2)
(which is the same timeframe as required under Medicaid regulations at
Sec. 438.424).
4. For a reversal by an administrative law judge or attorney
adjudicator at the Office of Medicare Hearings and Appeals, or the
Medicare Appeals Council, the applicable integrated plan must
effectuate a reversal under same timelines applicable to other MA plans
as specified in Sec. Sec. 422.618 and 422.619.
With respect to a MA plan's appeal rights, these proposed changes
do not impact plans' appeal rights, and CMS does not anticipate issuing
guidance on that topic as a result of this rule. Sections 422.592 and
422.600 of the MA rules apply to applicable integrated plans that have
issued an integrated reconsideration that is adverse, in whole or in
part, to the enrollee with regard to coverage or provision of a
Medicare benefit. We note that Sec. 422.634(b) addresses adverse
integrated reconsiderations; this rulemaking does not revise Sec.
422.634(b). An applicable integrated plan, like all other MA plans,
must effectuate a decision in favor of the enrollee from the IRE; the
plan does not have the authority to appeal the decision to an
administrative law judge.
After consideration of the comments and for the reasons outlined in
the proposed rule and our responses to comments, we are finalizing the
proposed amendment to Sec. 422.634(d) without modification.
10. Technical Update to State Medicaid Agency Contract Requirements
(Sec. 422.107)
Section Sec. 422.107(c) lists minimum requirements for State
Medicaid agency contracts. Paragraph (c)(6) requires that the contract
document the verification of an enrollee's eligibility for ``both
Medicare and Medicaid.'' We proposed to strike the reference to
Medicare in paragraph (c)(6) as it is not essential for the contract
between the State Medicaid agency and the D-SNP to document how the D-
SNP verifies Medicare eligibility. All MA plans, including D-SNPs,
already verify Medicare eligibility as part of accepting beneficiary
coverage elections under Sec. 422.60. See also Chapter 2 of the
Medicare Managed Care Manual for additional details.\59\
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\59\ See https://www.cms.gov/medicare/health-plans/healthplansgeninfo/downloads/mc86c02.pdf.
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Comment: Several commenters expressed support for this technical
update as it is a logical simplification of the State Medicaid agency
contract minimum requirements.
Response: We thank the commenters for their support of this
technical update.
Comment: A few commenters recommended that CMS should not finalize
this proposal but should retain the contract requirement that a D-SNP
must verify an enrollee's Medicare eligibility. These commenters
believed that the existing regulatory text clarifies the State's
obligation to identify dually eligible individuals and provide MA
organizations with information that distinguishes between types of dual
eligibility, such as full-benefit, and partial-benefit dually eligible
individuals. A few commenters recommend that CMS require States to
provide a crosswalk or translations to category identifiers, such as
eligibility for Medicare Savings Programs (MSP), needed to manage
benefits for enrollees. This would also serve as a tool to better
understand differences in dual eligibility categories for D-SNPs,
including partial-benefit dually eligible individuals.
Response: We thank commenters for raising their concerns. We note
that we did not propose a change to the contract requirement that the
D-SNP validate the enrollee's Medicaid eligibility. As noted in our
proposal, all MA plans, including D-SNPs, already verify Medicare
eligibility as part of accepting beneficiary coverage elections under
Sec. 422.60. See also Chapter 2 of the Medicare Managed Care Manual
for additional details. Therefore, it is not essential for the contract
between the State Medicaid agency and the D-SNP to document how the D-
SNP verifies Medicare eligibility.
We note that Sec. 422.107(c)(2) states that the contract must
document the categories and criteria for eligibility for dually
eligible individuals to be enrolled under the SNP, including as
described in sections 1902(a), 1902(f), 1902(p), and 1905 of the Act.
Therefore, the D-SNP contracts with States should describe how States
provide D-SNPs with information needed to enroll dually eligible
individuals. For example, if a State limits D-SNP enrollment to full-
benefit dually eligible individuals, that State should note in the
contract with a D-SNP how the D-SNP will determine an enrollee's
status. We encourage D-SNPs to discuss with States any issues in
obtaining this information.
After consideration of the comments we received and for the reasons
outlined in the proposed rule, we are finalizing our proposed
amendments to Sec. 422.107(c)(6) to strike the reference to Medicare.
11. Compliance With Notification Requirements for D-SNPs That
Exclusively Serve Partial-Benefit Dually Eligible Beneficiaries (Sec.
422.107(d))
We codified minimum Medicare-Medicaid integration requirements for
D-SNPs at Sec. 422.2, stating that a D-SNP must either (i) be a HIDE
SNP or FIDE SNP or (ii) meet the additional requirement specified in
Sec. 422.107(d) that requires that the D-SNP notify the State Medicaid
agency, or individuals or entities designated by the State Medicaid
agency, of hospital and skilled nursing facility (SNF) admissions for
at least one group of high-risk full-benefit dually eligible
individuals, as determined by the State Medicaid agency.
While implementing these minimum integration standards, CMS
identified some MA organizations that have separate D-SNP PBPs for
partial-benefit and full-benefit dually eligible individuals, which
enable the MA organizations to more clearly explain and coordinate the
Medicaid benefits that those enrollees are entitled to receive.
However, the D-SNP PBPs for partial-benefit dually eligible individuals
(hereinafter referred to as ``partial-benefit-only D-SNPs'') have no
explicit pathway to meaningfully meet one of the three integration
standards under Sec. 422.2. In a partial-benefit-only D-SNP, no plan
enrollees are eligible for the minimum set of Medicaid services that a
D-SNP must cover to qualify as a HIDE SNP or FIDE SNP. Additionally,
there are no full-benefit dually eligible individuals that the plan
could identify for notification of hospital and SNF admissions (and no
Medicaid services to coordinate post notification) as required by Sec.
422.107(d).
We proposed to largely codify the guidance issued in January 2020
\60\ that would allow the partial-benefit-only D-
[[Page 27787]]
SNP to be considered as meeting the integration requirements. We
proposed revising Sec. 422.107(d) to provide that partial-benefit-only
D-SNPs are not required to meet the notification requirement in Sec.
422.100(d) when the MA organization also offers a D-SNP with enrollment
limited to full-benefit dually eligible individuals that meets the
integration criteria at Sec. 422.2 and is in the same State and
service area and under the same parent organization.
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\60\ CMS Medicare-Medicaid Coordination Office, ``Additional
Guidance on CY 2021 Medicare-Medicaid Integration Requirements for
Dual Eligible Special Needs Plans'', January 17, 2020. Retrieved
from: https://www.cms.gov/httpseditcmsgovresearch-statistics-data-and-systemscomputer-data-and-systemshpmshpms-memos-archive/hpms-memo-5.
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As discussed in the proposed rule, we believe our proposal is
consistent with the minimum integration required by section 1859(f)(8)
of the Act because it achieves the same level of coordination with
State Medicaid agencies for partial-benefit dually eligible enrollees
as would be achieved if there were one D-SNP PBP covering both full-
benefit and partial-benefit dually eligible individuals. Additionally,
for full-benefit dually eligible enrollees, the two-PBP structure
facilitates a higher level of integration of Medicare and Medicaid
benefits (for example, where the two-PBP structure would result in more
applicable integrated plans with unified appeals processes). We did not
anticipate any negative impact for beneficiaries or partial-benefit-
only D-SNPs as a result of this rule.
Comment: Some commenters supported this provision, and no
commenters opposed it. A few commenters noted the proposal supports
continued enrollment of partial-benefit dually eligible beneficiaries
in D-SNPs where they have access to additional care coordination. A
commenter noted that partial-benefit dually individuals often can
experience a change in circumstances making them eligible for the full
Medicaid benefit; this proposal that a plan sponsor also operate a D-
SNP serving full-benefit dually eligible individuals could be helpful
for care continuity in a transition. Another commenter noted that this
provision would allow D-SNP sponsors to continue providing supplemental
benefits to partial-benefit dually eligible enrollees.
Response: We thank the commenters for their support.
Comment: A commenter noted CMS should continue to allow States the
option to authorize an MA organization to offer a D-SNP that enrolls
only partial-benefit dually eligible individuals, with the inclusion of
the notification requirement in the State Medicaid agency contract, to
meet the integration requirements outlined in the BBA of 2018. This
commenter noted that as States move to more integrated FIDE SNP or HIDE
SNP models for full-benefit dually eligible individuals, they continue
to seek opportunities for partial-benefit dually eligible individuals
that provide the best level of care for this population, including by
allowing these beneficiaries to remain with carriers that do not have a
Medicaid contract.
Response: We appreciate the commenter's concern and confirm that a
D-SNP that serves partial-benefit dually eligible individuals without a
corresponding full-benefit-only D-SNP in the same service area would be
able to continue operating as long as the contract with the State
Medicaid agency includes the notification requirement at Sec.
422.107(d)(1).
Comment: Another commenter questioned whether, if the proposal is
adopted, States could continue to require MA organizations to submit
hospital or skilled nursing facility admissions for partial-dually
eligible enrollees if such a requirement in the State Medicaid agency
contract.
Response: We thank the commenter for their question and confirm
that States remain able to use their contracts with D-SNPs to require
MA organizations to notify the State Medicaid agency of admissions for
partial-benefit dually eligible enrollees.
Comment: A commenter noted that they have concerns about D-SNPs'
ability to comply with this requirement due to Federal and State health
information privacy laws regarding the disclosure of particular
sensitive health information without an individual's consent. The
commenter requested that CMS provide comprehensive guidance on how D-
SNPs should reconcile the admission notification requirement with the
limitations presented by 42 CFR part 2 and State health information
privacy laws, especially as they relate to substance use disorder and
mental health services. Alternatively, the commenter suggested that CMS
amend Sec. 422.107(d) to relieve D-SNPs of the obligation to submit
admission notifications when doing so is not authorized by applicable
law or would require an enrollee's consent.
Response: We thank the commenter for expressing their concerns. We
emphasize that States must implement the notification requirement at
Sec. 422.107(d) in a way that complies with all applicable State and
Federal laws. We acknowledge there are limitations to D-SNPs' ability
to notify States of certain inpatient admissions for high-risk
enrollees with substance use disorder, as well as to their ability to
coordinate these individuals' care, absent enrollee consent for the
disclosure of such information. We encourage D-SNPs to collaborate with
their States to identify and address concerns regarding compliance with
other statutes and regulations, including the Health Insurance
Portability and Accountability Act HIPAA of 1996 and 42 CFR part 2.
We are still gathering information on the initial implementation of
the data notification requirement at Sec. 422.107(d). We will use
feedback received in response to the request for information described
in section III.C. of this final rule and our work with States and D-
SNPs to update technical guidance and consider any needed changes to
the regulation.
Comment: A commenter expressed concern with enrolling partial-
benefit dually eligible individuals in D-SNPs. This commenter noted
that there has not been an analysis to determine if the supplemental
benefits offered by some D-SNPs are relevant to partial-benefit dually
eligible individuals. The commenter urged CMS to undertake such an
analysis and establish minimum criteria to ensure that D-SNPs have
relevance and value to partial-benefit dually eligible enrollees.
Response: We thank the commenter and will consider an analysis on
the relevance of supplemental benefits to partial-dually eligible
individuals enrolled in D-SNPs to determine if establishing minimum
criteria through rulemaking is warranted.
After consideration of the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed amendments to Sec. 422.107(d) to provide that
partial-benefit-only D-SNPs are not required to meet the notification
requirement in new Sec. 422.107(d)(1) when the MA organization also
offers a D-SNP with enrollment limited to full-benefit dually eligible
individuals that meets the integration criteria at Sec. 422.2 and is
in the same State and service area and under the same parent
organization.
12. Attainment of the Maximum Out-of-Pocket (MOOP) Limit (Sec. Sec.
422.100 and 422.101)
Section 1852(b)(1) of the Act prohibits discrimination by MA
organizations on the basis of health status-related factors and directs
that CMS may not approve an MA plan if CMS determines that the design
of the plan and its benefits are likely to substantially discourage
enrollment by certain MA eligible individuals. Under the authority of
sections 1852(b)(1)(A), 1856(b)(1), and 1857(e)(1) of the Act, CMS
added Sec. Sec. 422.100(f)(4) and (5) and 422.101(d)(2) and (3),
effective for
[[Page 27788]]
coverage in 2011, to require all MA plans (including employer group
waiver plans (EGWPs) and special needs plans (SNPs)) to establish
limits on enrollee out-of-pocket cost-sharing for Parts A and B
services that do not exceed the annual limits established by CMS (75 FR
19709 through 19711). Section 1858(b)(2) of the Act requires a
catastrophic limit on in-network and out-of-pocket expenditures for
enrollees in Regional Preferred Provider Organization (RPPO) MA plans.
In addition, MA Local PPO plans, under Sec. 422.100(f)(5), and RPPO
plans, under section 1858(b)(2) of the Act and Sec. 422.101(d)(3), are
required to have two maximum out-of-pocket (MOOP) limits (also referred
to as catastrophic limits) established by CMS annually, including (a)
an in-network and (b) a total catastrophic (combined) limit that
includes both in-network and out-of-network items and services covered
under Parts A and B. After the MOOP limit is reached, the MA plan pays
100 percent of the costs of items and services covered under Parts A
and B.
In the April 2011 final rule (76 FR 21508), CMS established the
approach MA organizations must use to track an enrollee's progress
toward the plan MOOP limit. Under this policy, the in-network
(catastrophic) and combined (total catastrophic) MOOP limits consider
only the enrollee's actual out-of-pocket spending for purposes of
tracking the enrollee's progress toward the plan MOOP limit. This
approach also applies to D-SNPs. Thus, for any D-SNP enrollee, MA plans
currently have the option to count only those amounts the individual
enrollee is responsible for paying net of any State responsibility or
exemption from cost-sharing toward the MOOP limit rather than the cost-
sharing amounts for services the plan has established in its plan
benefit package. As a result, in practice, the MOOP limit does not cap
the amount a State could pay for a dually eligible MA enrollee's
Medicare cost-sharing, nor does it cap the amount of Medicare cost-
sharing that remains unpaid for providers serving dually eligible
enrollees because of the prohibition on collecting Medicare cost-
sharing from certain dually eligible individuals and the limits on
State payments of Medicare cost-sharing under State lesser-of
policies.\61\ Thus, MA plans are paying amounts for non-dually eligible
enrollees that they do not pay for dually eligible enrollees, even when
different enrollees use the same volume of services; States, in certain
circumstances, pay cost-sharing for dually eligible enrollees that is
otherwise covered by the MA plans for non-dually eligible enrollees;
and providers serving dually eligible MA enrollees are systemically
disadvantaged relative to providers serving non-dually eligible MA
enrollees, which we believe, based on the evidence described below, may
negatively affect access to Medicare providers for dually eligible
enrollees.
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\61\ Section 1902(n)(2) of the Act permits the State to limit
payment for Medicare cost-sharing for QMBs to the amount necessary
to provide a total payment to the provider (including Medicare,
Medicaid State plan payments, and third-party payments) equal to the
amount a State would have paid for the service under the Medicaid
State plan. For example, if the Medicare (or MA) rate for a service
is $100, of which $20 is beneficiary coinsurance, and the Medicaid
rate for the service is $90, the State would only pay $10. If the
Medicaid rate is $80 or lower, the State would make no payment. See
Chapter II, sections E.4 through E.6 of the Medicaid Third Party
Liability Handbook at https://www.medicaid.gov/medicaid/eligibility/downloads/cob-tpl-handbook.pdf.
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We proposed to revise the regulations governing the MOOP limits for
MA plans to require that all costs for Medicare Parts A and B services
accrued under the plan benefit package, including cost-sharing paid by
any applicable secondary or supplemental insurance (such as through
Medicaid, employer(s), and commercial insurance) and any cost-sharing
that remains unpaid because of limits on Medicaid liability for
Medicare cost-sharing under lesser-of policy and the cost-sharing
protections afforded certain dually eligible individuals, is counted
towards the MOOP limit. This would ensure that once an enrollee,
including a dually eligible individual with cost-sharing protections,
has accrued cost-sharing (deductibles, coinsurance, or copays) that
reaches the MOOP limit established by the plan (whether at the annual
limit set by CMS under Sec. 422.100(f) or some lesser amount), the MA
plan must pay 100 percent of the cost of covered Medicare Part A and
Part B services. As a result, the State Medicaid agency and other
secondary payers would no longer be billed for any Medicare cost-
sharing for the remainder of the year. To ensure clarity in the
regulation text for the policy on what costs are tracked for purposes
of the MOOP limit, we proposed to amend the regulations to specify that
MA organizations are responsible for tracking out-of-pocket spending
accrued by the enrollee, and must alert enrollees and contracted
providers when the MOOP limit is reached. In addition, we proposed to
amend Sec. 422.101(d)(4) to substitute ``accrued'' for ``incurred'' in
the description of how regional plans must track beneficiary out-of-
pocket spending towards the MOOP limit. We intend this amendment to
have only the substantive affect described here: That cost-sharing paid
by any applicable secondary or supplemental insurance (such as through
Medicaid) and any cost-sharing that remains unpaid because of limits on
Medicaid liability for Medicare cost-sharing under lesser-of policy and
the cost-sharing protections afforded certain dually eligible
individuals, is counted towards the MOOP limit by MA plans. This
proposal was not intended to and would not change how the word
``incurred'' is otherwise used in the regulation. We believe that using
a different term in the regulation text is appropriate to mark this
change in policy from the policy, first adopted in the April 2011 final
rule, permitting MA organizations not to count towards the MOOP limit
any Medicare cost-sharing amounts paid by Medicaid programs and cost-
sharing that remains unpaid under current law because the enrollee is a
dually eligible individual. We noted that the specific regulatory
amendments would have to change if we finalized the MOOP limit
provisions from the proposed rule titled ``Medicare and Medicaid
Programs; Contract Year 2021 and 2022 Policy and Technical Changes to
the Medicare Advantage Program, Medicare Prescription Drug Benefit
Program, Medicaid Program, Medicare Cost Plan Program, and Programs of
All-Inclusive Care for the Elderly'' which appeared in the Federal
Register on February 18, 2020 (85 FR 9002).
For the reasons discussed in the proposed rule (87 FR 1884), we
proposed to amend Sec. Sec. 422.100(f)(4) and (5) and 422.101(d)(4) to
provide that MA organizations are responsible for tracking out-of-
pocket spending accrued by enrollees and must alert both the enrollee
and the contracted provider(s) if an enrollee has reached the MOOP
limit. For purposes of this amendment, accrued cost-sharing includes
all Medicare Parts A and B cost-sharing under the plan, regardless of
whether the enrollee or another party or entity pays the cost-sharing,
and regardless whether the cost-sharing is actually paid. Our proposed
regulation text did not distinguish between cost that is left unpaid
because the provider is prohibited from collecting cost-sharing from
certain dually eligible enrollees or for other reasons. As noted in the
proposed rule, in our experience, MA organizations do not impose
additional cost-sharing liability above the MOOP limit on their
Medicare-only enrollees if some of the pre-MOOP cost-sharing remains
unpaid. We received 58 comments on the proposal.
[[Page 27789]]
Comment: We received broad support, including from State Medicaid
agencies, beneficiary advocacy organizations, and providers of primary,
specialty, hospital, and long-term services and supports, for our
proposal to require MA plans to calculate attainment of the MOOP limit
based on the accrual of cost-sharing in the plan benefit. The reasons
commenters gave for their support mirror the rationale we provided for
the proposal in the NPRM.
Supportive commenters noted the proposal would increase payments to
providers serving dually eligible MA enrollees with cost-sharing above
the MOOP limit and thereby mitigate disincentives to serve dually
eligible MA enrollees and increase provider incentives to join D-SNP
provider networks. One State commenter noted that the proposal would
make it more financially sustainable for physicians to serve dually
eligible MA enrollees. One provider commented that the proposed
requirement would reduce the amount of bad debt that providers incur
when MA plan cost-sharing goes unpaid due to the combination of limits
on State cost-sharing payments and prohibitions on providers collecting
cost-sharing from certain dual eligible individuals. Another provider
organization commented that the proposed revision to how attainment of
the MOOP limit is calculated would capture more dually eligible
enrollees with very high medical costs and thereby reduce the
administrative burden on providers of having to seek State payment of
cost-sharing once the MOOP limit was attained. Numerous commenters
wrote that they expected the financial benefits to providers from the
proposal would improve provider access for dually eligible MA
enrollees.
Many commenters supportive of our proposal stated that it would
improve health equity by requiring that dually eligible MA enrollees,
and the providers who serve them, are treated the same as non-dually
eligible MA enrollees under the MOOP policy. A commenter noted that the
proposal would effectively ensure that MA plans face the same liability
to pay 100 percent of the cost of services over the MOOP limit just as
they are required to do for non-dually eligible enrollees.
A number of commenters supported the proposal because they expect
it would reduce State expenditures by ensuring the MOOP limit for
dually eligible enrollees would be attained by high cost enrollees,
thereby limiting State responsibility for payment of cost-sharing. One
beneficiary advocacy organization wrote that current policy, by
allowing MA organizations to exclude State paid or unpaid cost-sharing
by dually eligible enrollees toward attainment of the MOOP limit,
represented an unfair burden on State budgets.
Response: We thank the commenters for their support of this
proposal. In particular, we are grateful for their comments, based on
their experience serving dually eligible individuals as providers,
advocates, or State Medicaid agencies, that finalizing the proposal
would reduce provider disincentives to serve dually eligible MA
enrollees and potentially improve access to care. We agree with
commenters that the proposal results in more equitable treatment of
dually eligible MA enrollees in administration of the MOOP protection.
Comment: Both MedPAC and MACPAC supported this proposal. MedPAC
wrote that MA organizations should administer the MOOP limit in a
consistent manner for all MA enrollees. MedPAC also noted that dually
eligible beneficiaries may benefit from improved access to care in MA
plans that change how they administer the MOOP to be consistent with
the proposed requirement. MACPAC supported the proposal as it would
ensure that MA organizations rather than States cover cost-sharing for
dually eligible MA enrollees above the MOOP limit.
Response: We thank MedPAC and MACPAC for their comments and value
their expertise on this issue.
Comment: Many of the opposing comments stated that dually eligible
enrollees would receive no benefit from the proposal because providers
in MA plans are already prevented from charging QMBs and full-benefit
dually eligible individuals for Medicare cost-sharing for Parts A and B
services. Rather, these commenters stated that the result of
implementing the proposal would be a reduction in supplemental benefits
for dually eligible enrollees, particularly enrollees in D-SNPs, as MA
organizations would have to increase their bids to pay for effectively
providing a MOOP to dually eligible enrollees and as a result have
fewer rebate dollars available to fund supplemental benefits. According
to these commenters, if CMS finalized the proposal, the supplemental
benefits that MA organizations would have to reduce or eliminate as a
result would include dental, hearing, vision, transportation, health
food and meals benefits, over-the-counter medical items, health home
services and care managers, benefits for individuals with serious
mental illness, adult day care, tele-physical health, and benefits
addressing health care disparities and social determinants of health. A
commenter in particular noted an MA organization had recently added a
service to address social isolation and, through an Innovation Center
model,\62\ cash benefits being provided to enrollees in select D-SNPs
in contract year 2022. Several commenters also wrote that the
additional cost of implementing the MOOP proposal would make it
difficult for D-SNPs to offer zero-premium plans as it would reduce
rebate revenues now used to pay down Part D premiums.
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\62\ For information on the Value Based Insurance Design Model,
see https://innovation.cms.gov/innovation-models/vbid.
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Commenters provided a range of estimates for the increases in bid
costs and rebate reductions that would flow from implementation of the
proposal. A commenter cited analysis estimating that the additional
cost for Part A and B benefits for D-SNPs if implemented in 2022 would
be $23.90 per member per month or a 2.3 percent increase in plan bids.
A commenter estimated that its per member costs would be 20 to 25
percent higher than this estimate, while another commenter stated this
level additional costs would be shouldered by all D-SNPs. Another D-SNP
sponsor projected the proposal would reduce by half the available funds
for supplemental benefits. A commenter estimated the added cost could
be as high as 2 percent of plan revenue. Another commenter cited the
cost of the MOOP proposal estimated in the proposed rule. Some
commenters noted that smaller, regional D-SNPs would be less able to
absorb these added bid costs than larger MA organizations.
Response: We recognize that implementation of this proposal would
raise MA bids for basic benefits, especially for D-SNPs and other MA
plans with a high percentage of dually eligible enrollees, and thereby
potentially reduce rebates available for a range of supplemental
benefits to the extent MA organizations are unable or unwilling to
reduce profit margins or other costs to account for the added MA plan
costs for services provided after an enrollee meets the MOOP limit.
Along with many of the commenters who supported our proposal, we
appreciate the value to dually eligible enrollees of certain
supplemental benefits offered through D-SNPs and other MA plans. We
disagree that the MOOP proposal provides no benefit to dually eligible
enrollees. We address the potential benefit to improved provider access
later in this rule.
In the proposed rule, using contract year 2022 bid data to estimate
the Medicare cost-sharing accrued by dually
[[Page 27790]]
eligible beneficiaries with cost-sharing protections (full-benefit
dually eligible and QMB enrollees) above the mandatory MOOP level
($7,550 in 2022), we estimated the cost of Medicare cost-sharing above
this MOOP level to be on average $22.99 per member per month. This
estimate is very similar to the $23.90 estimate provided by an analysis
cited, but not provided, by several commenters. Both estimates are
based on D-SNP bid data, and as such already reflect the higher medical
costs of dually eligible enrollees.
We believe that for most MA organizations, most (if not all) of the
added costs for implementation of the MOOP proposal could be absorbed
by reductions in plan profit margins and still allow MA organizations
to achieve D-SNP profit margins that are comparable to the overall MA
profit margins. According to MedPAC, D-SNPs had average profit margins
of 7.8 percent for the 2019 contract year, while the overall MA plan
profit margin averaged 4.5 percent.\63\ A 2 percent increase in bid
costs represents a less-than-two percent increase in revenue, as plan
revenue also includes rebate dollars and increases due to risk
adjustment of MA payments. Thus, based on recent years of experience, a
2 percent increase in bid costs could be fully absorbed in D-SNP profit
margins while still allowing average D-SNP profit margins to exceed
average MA plan margins.
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\63\ See chapter 12 of Medicare Payment Advisory Committee,
March 2021 Report to the Congress: The Medicare Advantage Program:
Status Report. Retrieved from: https://www.medpac.gov/wp-content/uploads/2021/10/mar21_medpac_report_ch12_sec.pdf.
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We recognize that MA organizations with smaller D-SNP margins,
including some regional and nonprofit organizations, may have more
difficulty absorbing the full costs of the proposal by reducing
margins. MedPAC noted that nonprofit D-SNPs had lower average 2019
gain/loss (profit) margins of 2.5 percent (still higher than the
overall nonprofit MA margin of 0.9 percent).\64\ Although we value the
participation of these organizations in the D-SNP program, we believe
that the benefits of our proposal outweigh the downsides, including the
differential difficulty that smaller, nonprofit MA organizations may
face to come into compliance. Such organizations also have less revenue
to comply with a range of MA requirements, including provision of the
Part A and B benefit, yet we do not differentiate between the types of
MA organizations in requiring delivery of such benefits. In sum, we are
not convinced that the added bid costs attributable to the proposal
would necessarily translate into reductions in valuable supplemental
benefits for dually eligible enrollees. We also do not believe the
costs of implementing the MOOP proposal would jeopardize the ability to
pay down Part D premiums and offer zero-premium plans. For contract
years 2021 and 2022, D-SNPs allocated an average of $7.50 per member
per month to pay down the Part D premium to the amounts covered by the
Part D Low Income Premium Subsidy, amounts that we believe D-SNPs would
be able to continue to allocate as they implement this proposal.
Finally, since promulgation of our proposed rule, we issued a final
rule with comment period to finalize regulations regarding the MA MOOP
and cost-sharing limits for Medicare Parts A and B services titled
``Medicare Program; Maximum Out-of-Pocket (MOOP) Limits and Service
Category Cost-Sharing Standards'' (CMS-4190-FC4; 87 FR 22290, April 14,
2022) (``MOOP April 2022 final rule''), which will raise the in-network
mandatory MOOP limit to $8,300 starting in 2023. This regulatory change
will reduce the costs of this proposal to D-SNPs and other MA plans
that adopt the mandatory MOOP limit.
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\64\ Ibid.
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Comment: Many commenters opposing this proposal disagreed with CMS
that its implementation would improve access to providers in D-SNPs and
other MA plans and noted that CMS had provided no evidence of dually
eligible MA enrollees having problems with access to providers. A
commenter cited data from the Medicare Current Beneficiary Survey that
showed that a higher percentage of dually eligible MA enrollees than
dually eligible individuals in Original Medicare had a usual source of
care (91 percent compared to 86 percent). Other commenters believed
that, because D-SNPs and other MA plans must meet CMS provider network
access requirements, CMS's concerns about dually eligible enrollees'
access to care were misplaced. Another commenter opined that, to the
extent that there are problems with access to specialists for dually
eligible MA enrollees, the reasons underlying such access problems are
more complicated than whether MA plans pay providers 100 percent of the
cost of services above the MOOP level, as they do for non-dually
eligible enrollees.
Response: We thank the commenters for their input. We recognize
that D-SNPs and other MA plans must meet CMS network requirements but
note that the number of providers who are participating in Original
Medicare is much larger than the number of providers in the network
typical of MA plans, and the access problems facing dually eligible
individuals in Original Medicare in States where lesser-of policies
limit payment of Medicare cost-sharing are well established.\65\
According to one study, the reductions in Medicare cost-sharing under
these policies decreased the odds that a dually eligible individual
would have an outpatient physician visit or mental health treatment
visit in comparison to non-dually eligible Medicare beneficiaries.\66\
MACPAC found that, relative to non-dually eligible Medicare
beneficiaries, lower payment of cost-sharing correlated with a
decreased likelihood of evaluation and management visits, use of
outpatient psychotherapy, and increased likelihood of using a safety
net provider such as an FQHC or rural health clinic.\67\ A third study
found decreased use of outpatient services among QMB-only beneficiaries
and decreased utilization of office evaluation and management services
and hospital outpatient services among QMB-plus beneficiaries compared
to non-dually eligible Medicare beneficiaries.\68\ Although these
studies all draw from Medicare FFS data, they establish that Federal
and State policies on coverage of Medicare cost-sharing, and the
amounts paid providers for Medicare cost-sharing, impact access to care
for dually eligible individuals. Our current policy on attainment of
the MOOP limit allows for a disparity in MA plan payment of cost-
sharing for dually eligible compared to non-dually eligible MA
enrollees. We believe that, to the extent that D-SNPs and other MA
plans replicate the Medicare FFS structure, including by effectively
never providing a MOOP above which the MA organization pays 100 percent
of costs, that similar differences in access
[[Page 27791]]
between dually eligible and non-dually eligible would be replicated in
MA plans, and especially in D-SNPs that largely replicate Original
Medicare in their plan benefits. We are under no illusion that
implementation of our MOOP proposal would eliminate all access barriers
facing dually eligible MA enrollees, but, to the extent it provides
greater parity in plan benefits between dually eligible and non-dually
eligible MA enrollees, we are confident that it would at least
incrementally improve dually eligible MA enrollees' access to care. As
previously noted in this rule, a range of providers commented that they
expected parity in payment over the MOOP limit between non-dually
eligible MA enrollees and dually eligible MA enrollees would improve
access to care.
---------------------------------------------------------------------------
\65\ See https://www.kff.org/medicare/report/medicare-advantage-how-robust-are-plans-physician-networks/ MA plan networks on average
include 46 percent of physicians in a county, with lower averages
for some specialists, such as oncologists, and for ``narrow-
network'' plans. By contrast, 97 percent of physicians participate
in Original Medicare. See: https://www.kff.org/medicare/issue-brief/how-many-physicians-have-opted-out-of-the-medicare-program/.
\66\ https://www.rti.org/sites/default/files/resources/StatePaymentLimits.pdf.
\67\ https://www.macpac.gov/publication/effect-of-state-medicaid-payment-policies-for-medicare-cost-sharing-on-access-to-care-for-dual-eligibles/.
\68\ https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/Downloads/Access_to_Care_Issues_Among_Qualified_Medicare_Beneficiaries.pdf.
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Because of the strong evidence, cited above, of access challenges
for dually eligible beneficiaries (relative to non-dually eligible
beneficiaries) in Original Medicare, we are unpersuaded by the MCBS
data showing a four percentage point differential between dually
eligible MA enrollees who have a usual source of care and their
counterparts in Original Medicare. We think the more salient comparison
for access to care is between dually eligible and non-dually eligible
MA enrollees. We acknowledge that the body of evidence directly
comparing access to care in MA between the two cohorts is limited. This
is because one important source of data on this issue, the self-
reported beneficiary experience measures in the MA CAHPS surveys, is
reported at the contract level and thereby often comingles data on D-
SNP performance within larger contracts that include non-D-SNP MA plans
as well. We are finalizing a policy that can begin to address the scope
of available quality measurement data in section II.A.6.a. in this
final rule in our discussion of D-SNP-only contracts under proposed
Sec. 422.107(e). We note, however, that in the 2022 Star Ratings, 14
percent of the universe of D-SNP-only MA contracts had a low star
rating--one or two stars--compared to 10 percent of MA contracts with
no D-SNP enrollment on the CAHPS measure C18--Getting Appointments and
Care Quickly. Fifty percent of MA contracts with 100 percent D-SNP
enrollment had high star ratings on this measure--4 or 5 stars--but 65
percent of contracts with no D-SNP enrollment had high star ratings on
this measure. Although imperfect, this data substantiates our concerns
that access to and availability of healthcare for dually eligible
individuals in D-SNPs is less than that for MA enrollees who are not
dually eligible. These concerns support finalizing this provision as
proposed.
Comment: A commenter wrote that implementation of this proposal
would have a significant impact on D-SNP enrollees, who constitute 35
percent of Medicare beneficiaries in Puerto Rico, and would result in
higher premiums and/or reductions in supplemental benefits such as
dental coverage and other benefits that address social barriers to
health.
Response: We appreciate the commenter drawing our attention to the
issues affecting D-SNP enrollees in Puerto Rico but do not agree with
this assessment of the potential impact to these enrollees. All Puerto
Rico D-SNPs, in the Platino contracts they sign with ASES (Puerto
Rico's Medicaid agency), certify that they have no cost-sharing for
Medicare Parts A and B services. Unlike States, Puerto Rico does not
have a QMB program under which the State pays Medicare cost-sharing for
Medicare services provided by these D-SNPs or that provides protections
against providers billing for unpaid Medicare cost-sharing under the D-
SNP benefit. That means the full cost of Medicare services, both before
and after attainment of the MOOP limit, is already paid by the D-SNPs
and funded by a combination of Medicare bid and rebate payments for the
D-SNP bids and payments from ASES. Therefore, we do not believe this
proposal will have an impact on the Puerto Rico D-SNPs' costs for
covering Medicare services.
Comment: A commenter noted that there would be minimal to no impact
on its provider payments above the MOOP limit because the D-SNP does
not charge cost-sharing and pays providers a set percentage of the
Medicare fee schedule regardless of the claim. Another commenter stated
that FIDE SNPs with a negotiated single fee schedule for providers
would also see no impact on provider payments under the MOOP provision.
Response: We thank the commenters for this analysis as it provides
an opportunity to better explain our proposal. FIDE SNPs and other D-
SNPs that are capitated by the State for Medicare cost-sharing for all
their full-benefit dually eligible QMB members have the ability to
negotiate a single fee schedule for providers that encompasses both the
Medicare and Medicaid responsibility for any claim. If implementation
of the proposal has no impact on these D-SNPs' payments to providers
above the MOOP, then there should be no increase in these D-SNPs' bids
unless there is a reduction in the capitation rate that the Medicaid
agency pays for coverage of Medicare cost-sharing and MA organizations
must make up the difference in their bids. We note that less than one
third of total D-SNP enrollment are in D-SNPs with exclusively aligned
enrollment that are capitated by the State Medicaid agency for Medicaid
payment of cost-sharing for Medicare Part A and B benefits, and a
smaller proportion still of dually eligible enrollees in all MA plans
are in such D-SNPs. We do not know, however, whether all these D-SNPs
with exclusively aligned enrollees negotiate a single fee schedule for
Medicare services encompassing both Medicare and Medicaid payments.
Comment: A few commenters believed implementation of the proposal
would have a negative impact on MA organizations' ability to negotiate
value-based payment arrangements with providers or implement State-
directed value-based payment initiatives in connection with Medicaid
managed care contracts also held by the MA organizations. Another
commenter wrote that the MOOP provision would incentivize providers to
run unnecessary tests and procedures to speed their patients' progress
toward the MOOP limit, after which the providers would receive full
payment from the MA plan for the care they provide. A separate
commenter stated that the chief beneficiaries of the proposal would be
dialysis providers that have a duopoly on dialysis clinics and
providers of Part B drugs and CMS should determine which providers
would benefit from the MOOP proposal and whether access to these
providers would be improved.
Response: We thank commenters for this input but do not find it
persuasive. We do not believe changes to the calculation of the MOOP to
take into account the particular cost-sharing circumstances for dually
eligible enrollees and making effective the requirement that MA plans
pay 100 percent of the cost of services above the MOOP limit would in
any way limit the ability of MA plans to negotiate value-based payment
structures with their providers. As proposed and finalized, this policy
would in no way restrict the ability of MA organizations to negotiate
payment rates with their providers, including the ability to negotiate
capitated or semi-capitated payment arrangements. Regarding incentives
for providers to perform unnecessary tests and procedures to advance
patients towards the MOOP, we expect that MA organizations would employ
appropriate utilization management and fraud prevention techniques to
prevent any such provider behavior, both to ensure program integrity
and for the
[[Page 27792]]
health of their dually eligible enrollees. Lastly, we are not in a
position to judge whether special classes of providers are deserving of
the extra payments that may flow to them under this new policy, but do
not believe the evidence supports the belief that dialysis providers
and providers of Part B drugs will be the primary recipients of
additional MA payments above the MOOP limit. Nor does this amendment to
how costs are counted toward the MOOP impact the relative market power
of MA organizations and providers in connection with their respective
ability to negotiate payment arrangements.
Finally, we note that skilled nursing facilities may also be
recipients of higher payments for their dually eligible patients that
have exceeded the MOOP limit. These higher payments may reduce SNF
incentives to encourage their patients to disenroll from their MA plan,
despite the prohibition on such provider interference with beneficiary
plan choice, a practice described to CMS in anecdotal reports.\69\ To
the extent dually eligible enrollees remain in their MA plan,
particularly in FIDE SNPs, after a SNF admission, the MA organization
would be better able to participate in discharge planning and ensure
the individual has the appropriate supports to return to the community.
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\69\ https://www.cms.gov/files/document/ltcfdisenrollmentmemo.pdf.
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Comment: A few commenters objected to the proposal, citing their
belief that it would use Medicare funds to subsidize Medicaid, by
requiring MA organizations to pay 100 percent of the costs of care
after cost-sharing in the plan benefit had accrued to reach the MOOP
limit, substituting Medicare dollars in the form of MA capitation
payment for the state Medicaid dollars that now continue to pay cost-
sharing for dually eligible enrollees with no effective limit provided
by the MOOP.
Response: We disagree that the provision constitutes an
inappropriate subsidization of Medicaid by Medicare. Any policy that
impacts Medicare coverage of services or payment rates for which
Medicaid is responsible to pay dually eligible individuals' cost-
sharing necessarily has the impact of increasing or decreasing the
amount of cost-sharing paid by Medicaid. The fact that this proposed
Medicare policy does result in significant savings to States should not
by itself constitute a reason not to pursue it.
Comment: A commenter disagreed with the concern we expressed in the
proposed rule that the current policy may not be fully consistent with
section 1902(a)(25)(G) of the Act by allowing MA organizations to
calculate attainment of the MOOP limit differently for non-dually
eligible beneficiaries, for whom MA organizations accrue all cost-
sharing in the plan benefit towards the MOOP limit, from dually
eligible enrollees, for whom no cost-sharing in the plan benefit,
whether paid by the State or unpaid because of prohibitions on
collection of such cost-sharing, counts toward attainment of the MOOP.
As the commenter notes, section 1902(a)(25) of the Act requires
Medicaid State plans to prohibit any insurer from taking into account
that an individual the insurer covers is eligible for or receives
assistance from Medicaid. The commenter acknowledges that the current
policy does allow MA organizations to take into account dually eligible
enrollees' receipt of Medicaid assistance by disregarding any the cost-
sharing actually paid by the State. However, the commenter stated that
dually eligible enrollees' cost-sharing is similarly not counted
towards attainment of the MOOP, not because of the enrollee's
eligibility for Medicare, but because it is in fact not owed by the
enrollee or ever paid, in contrast to other MA enrollees who typically
are billed for cost-sharing and pay those bills. The commenter
suggested that CMS's proposal was internally inconsistent by requiring
MA plans to count towards the MOOP limit cost-sharing that remains
unpaid because the enrollee is also eligible for Medicaid, which
requires the MA plan to take into consideration Medicaid eligibility in
a way that is not aligned with section 1902(a)(25) of the Act. The
commenter also suggested, if CMS should change the basis on which MA
plans calculate attainment of the MOOP limit, the agency should only
require MA organizations to count amounts the State actually pays in
cost-sharing toward attainment of the MOOP.
Response: We appreciate the commenter's acknowledgement that MA
organizations' disregard of Medicaid cost-sharing does in fact ``take
into account'' their enrollees' receipt of Medicaid benefits in
administration of the MOOP limit. We do not agree that the disregard of
cost-sharing that is unpaid because of the protection afforded dually
eligible beneficiaries does not similarly raise concerns about section
1902(a)(25)(G) of the Act, which also requires the State plan to
prohibit insurers' administration of plan benefits because of an
individual's eligibility for Medicaid. As the commenter recognizes, the
protection against being billed Medicare cost-sharing is conferred on
the individual by virtue of their eligibility for QMB or full Medicaid
benefits. Further, disregarding unpaid cost-sharing in calculating
attainment of the MOOP has the effect of delaying attainment of the
MOOP and shifting costs onto Medicaid that would not be borne by non-
Medicaid enrollees, which is the very scenario that section
1902(a)(25)(G) is designed to prevent. For this reason, we disagree
with the alternative suggested to have MA organizations count only
Medicaid-paid amounts toward the MOOP limit. This would undermine the
goal of providing the same plan benefit under the MOOP policy for both
dually eligible and non-dually eligible MA enrollees; the limits of
State cost-sharing payments under lesser-of policies would mean that
the effective MOOP limit for dually eligible MA enrollees in most
States would be much higher than for non-dually eligible MA enrollees.
Finally, we note that, while it is true that MA beneficiaries typically
do pay their MA cost-sharing, it is also true that dually eligible
beneficiaries, despite the prohibition against providers billing them
for cost-sharing, do get billed and do pay such cost-sharing.\70\ The
current policy, under which MA organizations assume no dually eligible
enrollee pays cost-sharing, might not result in counting these
vulnerable beneficiaries' payment of improperly billed cost-sharing
toward the MOOP limit.
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\70\ See: https://www.cms.gov/sites/default/files/repo-new/42/Access_To_Care_Issues_Among_Qualified_Medicare_Beneficiaries.pdf.
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Comment: A few commenters questioned whether CMS's proposal was
usurping the authority Congress granted States to establish lesser-of
policies. Other commenters questioned whether, by changing the method
MA plans must use to calculate the MOOP limit, CMS was superseding the
authority granted by Congress in MIPPA to establish state Medicaid
agency contracts with D-SNPs.
Response: We respectfully disagree with the commenters' assertions
that this proposal would usurp or supersede authority granted States by
Congress. Our proposal would not limit State flexibility to establish
rates, including lesser-of rates, that set limits on state Medicaid
payment of Medicare cost-sharing. Instead, we proposed requirements for
the MOOP limits established by MA plans and how cost-sharing is counted
toward the MOOP limit, particularly with regard to cost-sharing for
dually eligible enrollees. As Medicare is primary to Medicaid, the
policy necessarily impacts Medicaid as
[[Page 27793]]
a secondary payer. We are not superseding State authority to establish
the methods a State requires D-SNPs that operate in the State to employ
in the administration of Medicaid's responsibility for cost-sharing.
Again, our proposal is focused on how MA organizations administer the
MOOP limit, which is a benefit required, under Sec. Sec. 422.100(f)
and 422.101(d), from MA plans in connection with basic benefits (that
is, the Medicare Part A and Part B benefits covered by MA plans). The
authority Congress has granted under section 1859(f) of the Act States
for their D-SNP contract is not limited to administration of Medicaid
benefits that D-SNPs are contracted to provide. Such contracts can
include requirements on D-SNPs relative to the Medicare cost-sharing
they impose in plan benefits; our proposal does not impinge on or limit
that authority.
Comment: A few commenters questioned whether CMS has the legal
authority to impose a mandatory MOOP limit on any MA plan other than
regional PPOs, which are the only MA plans that the Part C statute
specifically requires to have MOOP limits. A commenter wrote that CMS
instituted a MOOP requirement for all plans on the basis of its
authority to ensure MA organizations do not design plan benefits to
discourage enrollment by Medicare beneficiaries with higher costs. The
commenter notes that CMS provides no evidence that the current policy
on dually eligible individuals' attainment of the MOOP is discouraging
enrollment in MA plans or D-SNPs. Moreover, the commenter argues that
the rationale we provided for this proposal is not the same as the
rationale underlying the MOOP requirement.
Response: The overall legal underpinning for the current MOOP
rules, established through notice-and-comment rulemaking over a decade
ago, is beyond the scope of this final rule. In adopting the MOOP
requirements in the April 2010 final rule titled ``Medicare Program;
Policy and Technical Changes to the Medicare Advantage and the Medicare
Prescription Drug Benefit Programs'' (75 FR 19804), CMS also relied on
its authority in section 1856(b)(1) of the Act to establish standards
for MA organizations and MA plans and in section 1857(e)(1) of the Act
to adopt additional terms and conditions for MA contracts that are not
inconsistent with the Part C statute and that are necessary and
appropriate for the MA program. CMS's authority under the statute for
the MA program is not limited to implementing only the specific
requirements listed in the statute.
Regarding the assertion that CMS has provided no data to support
the claim that the current way that some MA organizations calculate
attainment of the MOOP limit for dually eligible individuals
substantially discourages enrollment by these individuals, our proposed
rule makes no such claim to justify our proposal. In addition to the
responsibility to deny an MA plan design that we determine is likely to
substantially discourage enrollment by certain beneficiaries, CMS also
has authority under section 1854(a) of the Act to negotiate MA bids
similar to the authority given the Office of Personnel Management to
negotiate health benefits plans under the Federal Employees Health
Benefits Program, and we are not obligated to accept every bid. CMS
also has established the authority, under Sec. 422.100(f)(2) to review
and approve MA benefits and cost-sharing to ensure that MA
organizations are not designing benefits to discriminate against
beneficiaries or inhibit access to services. Our MOOP proposal, which
requires that MA organizations' MOOP limit is administered the same way
for dually eligible enrollees and non-dually eligible enrollees, is
consistent with this authority. In addition, by preventing a method of
adjudicating the MOOP benefit that now results in providers serving
dually eligible enrollees never receiving the same level of payment as
providers serving non-dually eligible enrollees, our proposal prevents
MA organizations from implementing a cost-sharing structure that has
the potential to inhibit access to services for dually eligible
enrollees. In addition, Sec. 422.100(d)(2)(i) requires MA
organizations to offer uniform benefits and level of cost-sharing
through the plan's service area. This is not the case when the MA
organization adjudicates attainment of the MOOP one way for non-dually
eligible beneficiaries (by accruing all cost-sharing in the plan
benefit) and another way for dually eligible beneficiaries (by accruing
none of the cost-sharing accrued by dually eligible beneficiaries with
cost-sharing protections). Similarly, D-SNPs that enroll both dually
eligible individuals with cost-sharing protections and dually eligible
individuals whose only Medicaid benefit is payment of their Part B
premiums, also do not adjudicate the MOOP uniformly. For the dually
eligible enrollees with cost-sharing protections, none of the cost-
sharing accrues toward the MOOP limit; for the dually eligible
enrollees without such projections, all of the cost-sharing in the plan
benefit accrues toward the MOOP limit.
Finally, we have learned since promulgation of the proposed rule
that some MA organizations have used the flexibility afforded to MA
organizations with a lower voluntary plan MOOP to design a benefit with
higher service-specific cost-sharing, even though the MOOP limit is
never attained because no cost-sharing in the D-SNP plan benefit counts
toward the MOOP. For example, some MA organizations have established D-
SNPs with a lower, voluntary MOOP and subsequently raised cost-sharing
for other Part A and B services above levels that are actuarially
equivalent to the Original Medicare benefit for those services. These
MA organizations have raised cost-sharing for services including
inpatient and mental health hospital stays and imposed cost-sharing for
home health services. In D-SNPs for which the bid information shows no
cost associated with payment of cost-sharing above the MOOP limit,
indicating that the MOOP is almost never attained by enrollees, these
MA organizations have raised cost-sharing for emergency and post
stabilization services. We believe this practice is manipulative of our
benefit review process and has the potential to violate the requirement
at Sec. 422.254(b)(4) that MA plans provide a benefit that is at least
actuarially equivalent to Original Medicare. Implementation of our MOOP
proposal would ensure that the flexibility we allow to raise service-
specific cost-sharing to encourage use of the lower, voluntary MOOP
would ensure that use of the MOOP limit actually limited cost-sharing
under the plan benefit.
Comment: A few commenters stated that they were grateful that the
proposal did not exclude charitable contributions to cost-sharing from
applying toward the MOOP limit. A commenter asked CMS to identify what
beneficiary costs may be waived by providers. Another commenter noted
that the proposal did not specifically exclude cost-sharing paid by
pharmaceutical manufacturer patient assistance programs from counting
as cost-sharing toward the MOOP limit and requested that similar
pharmaceutical manufacturer assistance count toward the MOOP limit
employed by Marketplace plans.
Response: Although it is accurate that charitable contributions to
MA enrollees' cost-sharing would count toward the MOOP limit for MA
plans under our proposal, we remind commenters that the reduction or
waiver of cost-sharing by providers implicates the Federal Anti-
kickback Statute (AKS), found in section 1128B(b) of the Social
Security Act
[[Page 27794]]
(Act), and the civil monetary penalties provision prohibiting
inducements to beneficiaries (Beneficiary Inducements CMP), found in
section 1128A(a)(5) of the Act. Whether any particular arrangement
violates the AKS or the Beneficiary Inducements CMP would be based on
the specific facts and circumstances. Similarly, subsidies provided by
pharmaceutical manufacturer assistance programs that induce the
purchase of federally reimbursable items, such as drugs paid for by
Medicare Part B, also implicate the AKS. A subsidy for cost-sharing
obligations provided by a pharmaceutical manufacturer assistance
program may implicate the Beneficiary Inducements CMP, if the subsidy
is likely to influence a Medicare or State health care program
beneficiary's selection of a particular provider, practitioner, or
supplier. The comments seeking CMS guidance on what beneficiary costs
may be waived by providers and seeking to require that pharmaceutical
manufacturer patient assistance counts toward the MOOP limit used by
Marketplace plans are out of the scope of this rule.
Comment: Other comments we received asked for the MA MOOP
protection to be extended to Part D, that CMS increase payment rates to
MA plans, that CMS change the cost-sharing applicable to physical
therapy and that CMS allow hospitals to collect bad debt for unpaid
cost-sharing under MA plans.
Response: These comments are outside the scope of this rulemaking.
Comment: Several commenters asked CMS to prohibit States from using
lesser-of policies in establishing the amounts paid for Medicare cost-
sharing.
Response: We do not have the statutory authority to prohibit States
from using lesser-of policies in establishing the amounts paid for
Medicare cost-sharing.
Comment: We received numerous comments concerning how MA
organizations would operationalize the proposal and how States would
know when the MOOP limit was attained and should no longer be billed by
providers for dually eligible MA enrollees' cost-sharing. Several
commenters questioned how they would obtain information on non-Medicaid
secondary coverage in accruing cost-sharing toward the MOOP limit. A
few commenters questioned how the cost-sharing that has accumulated
toward the MOOP would be transferred to another MA organization if
enrollees switch plans mid-year. A commenter objected to the proposed
requirement to notify dually eligible beneficiaries when the MOOP limit
is reached, stating that it would be confusing to these enrollees
because they do not themselves owe cost-sharing. The commenter also
opposed a requirement that MA organizations notify providers that an
enrollee has reached the MOOP limit because providers have other means
to access MOOP information.
Response: We thank the commenters for this input. MA organizations
would not need to engage in tracking non-Medicaid secondary coverage
because all cost-sharing, whether or not paid by secondary coverage,
that is in the plan benefit package for Parts A and B services would
accumulate toward the MOOP limit. MA organizations can rely entirely on
the claims for services they receive from providers and accumulate the
cost-sharing in the plan benefit for those services toward the MOOP
limit.
Longstanding CMS guidance, as described at 50.1 of Chapter 4 of the
Medicare Managed Care Manual, is that when an enrollee switches to
another plan of the same type (for example, from one HMO to another
HMO) offered by the same MA organization, their accumulated annual
contribution toward the annual MOOP limit in the previous plan to date
is to be counted towards their MOOP limit in the new MA plan. As
applicable, this transfer of MOOP applies to both in-network and out-
of-network MOOP. The MOOP limit is not now a transferrable benefit when
a MA enrollee changes to a plan offered by a different MA organization.
The cost-sharing that counts toward the MOOP limit starts anew with the
cost-sharing that is incurred or accrued under the new plan offered by
the different MA organization. Our proposal does not change that.
We disagree that we should eliminate the requirement to alert
dually eligible enrollees and providers when enrollees have reached the
MOOP limit. We note that this requirement is already in Sec.
422.101(d)(4) (and has been for several years) and was explicitly added
to Sec. 422.100(f)(4) and (5) in a recent MOOP April 2022 final rule,
CMS-4190-FC4. Our proposal only changes how attainment of the MOOP
limit is calculated. We will consider for future rulemaking whether
there are circumstances where alerting enrollees may be unnecessary. In
the interim, we believe providing the identical notification to a
dually eligible beneficiary with cost-sharing protections as is
provided to a non-dually eligible enrollees has the potential to be
confusing. The notification to dually eligible enrollees should be
tailored to their circumstance. If the dually eligible enrollee should
not ever be charged cost-sharing by MA plan providers, any notification
alerting these enrollees that they attained the MOOP limit should
reflect that. Attainment of the MOOP limit can be accurately described
by telling enrollees they have reached the stage in their benefit when
their plan will pay all the cost of your care, and that their providers
no longer need to bill Medicaid.
We disagree that providers serving dually eligible enrollees should
not be alerted when the MOOP limit is attained, a requirement that was
finalized in CMS-4190-FC4 at Sec. 422.100(f)(4) and (f)(5)(iii).
Alerting providers that the MOOP limit has been attained, that the MA
organization will cover 100 percent of the cost of services for the
remainder of the year, and that State Medicaid agencies should no
longer be billed for Medicare cost-sharing, is essential for
administration of the MOOP limit. Remittance advice indicating
attainment of the MOOP limit and the absence of any additional cost-
sharing charges may fulfill the requirement. If providers have accurate
remittance advice from MA organizations, they will have no claim for
Medicaid payment of Medicare cost-sharing over the MOOP limit to submit
for State payment.
We note that remittance advice to providers serving dually eligible
MA enrollees with cost-sharing protections under the MA plan--QMBs,
SLMB+, and other full-benefit dually eligible enrollees--should explain
that no cost-sharing may be billed whether the enrollee has attained
the MOOP limit or not.
Comment: Numerous commenters urged CMS, if we finalize the
proposal, to delay the effective date until 2024 or 2025.
Response: We disagree that a delay is necessary for MA
organizations to implement the proposal or to submit accurate bids for
contract year 2023 that take this change into account. MA organizations
already have experience projecting costs and utilization for their
enrollees for purposes of bids and accumulating the cost-sharing
accrued under the plan benefit; annual bids require projections of cost
and utilization and MA plans must accumulate cost-sharing and process
claims after the MOOP limit is reached now for non-dually eligible
enrollees. There is also sufficient time before the start of the plan
year to develop tailored notices for dually eligible enrollees and
their providers.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to
[[Page 27795]]
comments, we are finalizing the provision as proposed with technical
changes to reflect changes to regulation text made by the MOOP April
2022 final rule, CMS-4190-FC4. Specifically, in paragraphs Sec.
422.100(f)(4) and (f)(5)(iii) and in paragraph Sec. 422.101(d)(4), we
are removing the word ``incurred'' and adding in its place the word
``accrued''.
13. Comment Solicitation on Coordination of Medicaid and MA
Supplemental Benefits
Section 422.107 requires each MA organization offering a D-SNP to
have a contract with the State Medicaid agency that describes, among
other things, the organization's responsibility to coordinate Medicaid
benefits. State Medicaid agencies have broad flexibility to include
provisions in their D-SNP contracts.
In the proposed rule, we described a number of ways that State
Medicaid agencies can use their D-SNP contracts under Sec. 422.107 to
coordinate D-SNP supplemental benefits with Medicaid benefits. The
proposed rule described specific examples of potential coordination of
MA supplemental benefits and Medicaid coverage, including Medicaid
benefits that are delivered through Medicaid FFS, through a separate
Medicaid managed care contract, or by the State capitating the D-SNP
for delivery of these benefits. The examples demonstrated how this
coordination can ensure the overlapping D-SNP supplemental benefits are
primary to Medicaid, how to ensure D-SNPs and Medicaid providers do not
receive duplicative payments for delivery of the identical benefits to
the same individuals, how D-SNP supplemental benefits can extend or
expand on similar Medicaid benefits, and how D-SNP enrollees can have a
more integrated experience of care. The examples included discussion of
typical D-SNP supplemental benefits, such as coverage of dental
services and non-emergency transportation, as well as delivery of
supports for community living. We described how CMS considers a FIDE
SNP's supplemental benefits as meeting the uniformity requirements in
cases where some dually eligible individuals receive the benefit under
the FIDE SNP's Medicaid managed care contract while other enrollees
receive the benefit as an MA supplemental benefit because they are not
eligible for Medicaid benefits under State Medicaid eligibility
criteria. We noted that we were considering whether an amendment to
Sec. 422.100(d)(2) would be appropriate regarding this approach to
uniformity for supplemental benefits when a FIDE SNP arranges
supplemental benefits this way and sought comments on that issue. We
also solicited comment on other potential ways that D-SNPs and States
can work together to coordinate Medicare and Medicaid benefits in order
to improve D-SNP enrollee experiences and outcomes.
Comment: Several commenters supported the use of D-SNP contracts to
coordinate MA supplemental benefits with Medicaid. A few commenters
expressed concerns with operationalizing the coordination of
supplemental benefits because of the complexity and limitations in data
sharing and inadequate data systems. Other commenters recommended
increasing information sharing to better integrate coordination of
Medicare and Medicaid services. Several commenters also requested more
oversight and data collection of supplemental benefits. A commenter
believed that the use of D-SNPs to coordinate Medicare and Medicaid
benefits would place much of the responsibility on the D-SNPs and would
require expensive sophisticated integrated IT systems for the exchange
of data. A few commenters raised concerns with enrollee access to
services and enrollee confusion about D-SNP supplemental benefits when
they overlap with Medicaid benefits.
Response: We appreciate the commenters' perspectives and thank the
commenters for their input. These comments will inform our
collaboration with States on D-SNP integration.
(a) Using the D-SNP MOC To Coordinate Medicaid Services
As described in the proposed rule, the D-SNP MOC, required by Sec.
422.101(f), also provides a vehicle for State Medicaid agencies to work
with D-SNPs to meet State goals to improve quality of care and address
social determinants of health. State Medicaid agencies may work with D-
SNPs with service areas in the State to include (and, through the State
Medicaid agency contract at Sec. 422.107, require inclusion of)
specific elements in the MOC and how the D-SNP delivers covered items
and services consistent with the MOC. There is no prohibition on a
State Medicaid agency imposing specific requirements for the D-SNP MOC
that are in addition to the minimum requirements at Sec. 422.101(f);
compliance with the approved MOC is included in the D-SNP's bid to
provide basic benefits under Sec. 422.101(f). For example, the State
Medicaid agency contract under Sec. 422.107 could require the D-SNP to
have specific community-based providers involved in development of
individualized care plans, deploy nurse practitioners for in-home care
for high-risk enrollees when in-home services are required by the
individualized care plans, use health care providers (rather than plan
staff) for care coordination functions, and/or set minimum payment
amounts for such providers. We solicited comments on CMS guidance or
regulations that may warrant clarification, and whether using D-SNP MOC
to coordinate Medicaid services create any unintended obstacles to
accessing services among dually eligible beneficiaries.
Comment: A few commenters supported using the D-SNP MOC to
coordinate Medicaid services and a commenter supported more
transparency by incorporating the MOC process into the regulatory and
contractual oversight regime. Several plan sponsors and their trade
associations expressed concern with the State's ability to leverage the
MOC with Medicaid requirements and the possible addition of any State
requirements that may be duplicative or in conflict with the MOC-
specific requirements. A few commenters suggested potential ways to
improve coordination such as training for States on Federal
requirements, a national State specific requirements repository, and
better alignment of MOC reviews.
Response: We appreciate the commenters' support and will take into
consideration the additional comment on enhancing transparency. We also
thank the commenters for suggesting ways to improve MOC alignment with
the State coordination process and will take these into consideration
in future rulemaking and guidance.
(b) Coordinating Coverage of Medicare Cost-Sharing
As stated in the proposed rule (87 FR 1887), the same prohibition
on duplicate Medicare and Medicaid payments for identical benefits
applies when a D-SNP covers MA supplemental benefits that reduce
Medicare Parts A and B cost-sharing, such as deductibles and
coinsurance, as described for overlapping coverage of other Medicaid
and MA supplemental benefits. How it works depends on whether the State
Medicaid agency pays for Medicare cost-sharing through the Medicaid FFS
program or pays the D-SNP a capitated amount to cover the State's
obligation to pay MA cost-sharing. The proposed rule included examples
(87 FR 1887) of both State payment arrangements for MA cost-sharing. We
solicited comments on State and MA organization experiences and
challenges in coordinating benefits, CMS guidance or regulations that
may warrant clarification, and whether our current policies create any
unintended
[[Page 27796]]
obstacles to accessing services among dually eligible beneficiaries.
Comment: A few commenters supported coordinating coverage of
Medicare cost-sharing and noted that Medicaid capitation for coverage
of Medicare cost-sharing will need to be projected accurately and
actuarially sound.
Response: We thank commenters for raising this issue. We will
consider opportunities for future Medicaid rate-setting guidance on the
issue.
14. Solicitation of Comment on Converting MMPs to Integrated D-SNPs
In the 10 years since the creation of the FAI, the integrated care
landscape has changed substantially. Congress made D-SNPs permanent in
2018 and established, beginning in 2021, new minimum integration
standards and directed the establishment of unified appeals and
grievance procedures (which we tested through the MMPs). Changes in MA
policy have also created a level of benefit flexibility that did not
previously exist outside of the capitated model demonstrations, with MA
plans increasingly offering supplemental benefits that address social
determinants of health and long-term services and supports.\71\ These
factors, in combination with the proposals discussed earlier in this
final rule, offer the opportunity to implement integrated care at a
much broader scale than existed when MMPs were first created. As a
result, we described in the proposed rule at 87 FR 1888 our intent,
contingent on finalizing other proposals in the rule, to work with the
States participating in the capitated financial alignment model during
CY 2022 to develop a plan for converting MMPs to integrated D-SNPs.
Table 1 summarizes how our proposals finalized in this rule relate to
MMP policies.
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\71\ ATI Advisory. New, Non-Medical Supplemental Benefits in
Medicare Advantage in 2021. May 2021. https://atiadvisory.com/wp-content/uploads/2021/06/2021-Special-Supplemental-Benefits-for-the-Chronically-Ill.pdf.
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[GRAPHIC] [TIFF OMITTED] TR09MY22.005
BILLING CODE 4120-01-C
We described in the proposed rule at 87 FR 1888 the process for
transitioning MMPs to D-SNPs and the potential advantages and
disadvantages of such a transition. In order to mitigate any
disruptions that could result from converting MMPs to D-SNPs, we intend
to work closely with States and other stakeholders to ensure the
transition is as seamless as possible for MMP enrollees, including
facilitating the transition of MMP enrollees to D-SNPs
[[Page 27797]]
operated by the same parent organization, subject to State approval,
unless enrollees choose otherwise. This could minimize disruption of
services and ensure continuity of care to the greatest extent possible.
As discussed in the proposed rule, we already have experience with
similar transitions at the end of the Virginia \72\ and New York MMP
demonstrations \73\ and are working closely with the California
Department of Health Care Services and MMPs to facilitate such a
transition when the Cal MediConnect demonstration concludes at the end
of 2022.\74\ We solicited comment on this contemplated approach to
working with States to convert MMPs to integrated D-SNPs.
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\72\ Centers for Medicare & Medicaid Services and Virginia
Department of Medical Assistance Services. Commonwealth Coordinated
Care (CCC) Phase-Out Plan. https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/Downloads/VAPhaseOutPlan.pdf.
\73\ Centers for Medicare & Medicaid Services and New York
Department of Health. New York Fully Integrated Dual Advantage
Demonstration Phase-Out Plan. September 2019. https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/Downloads/NYFIDAPhaseOutPlan.pdf.
\74\ California Department of Health Care Services. Expanding
Access to Integrated Care for Dual Eligible Californians. March
2021. https://www.dhcs.ca.gov/provgovpart/Documents/6422/Expanding-Access-to-Integrated-Care-for-Dual-Eligible-Californians-03-01-21.pdf.
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Comment: Several commenters expressed support for our approach to
work with States to develop a plan for converting MMPs to integrated D-
SNPs. A few commenters stated that this approach would simplify the
number of products offered to dually eligible individuals and would be
easier for States to administer and for beneficiaries and providers to
understand while providing long-term predictability for stakeholders.
Another commented that D-SNP models have been effective at managing
hospitalizations and providing access to primary care and MLTSS
services even without the promise of shared savings offered through
MMPs.
Response: We appreciate the support we received for our intended
approach. As discussed in the proposed rule, current law as well as the
new and amended regulations finalized in this rule provide
opportunities and potential for streamlining and strengthening
integrated care options for dually eligible beneficiaries. We look
forward to working with States to address their unique circumstances in
planning for a transition of MMPs to integrated D-SNPs.
Comment: Numerous commenters opposed our approach to work with
States to develop a plan for converting MMPs to integrated D-SNPs and
instead asked to continue the FAI. Many commenters expressed concern
that certain aspects of integrated coverage in the MMPs may be hard to
replicate or are otherwise not currently available in integrated D-
SNPs, including integrated enrollment processing in which enrollment
and disenrollment functions are operationalized through State Medicaid
agencies; the ability to passively enroll beneficiaries into integrated
plans; integrated financing that blends Medicare and Medicaid
capitation payments; and/or opportunities for States to share in
Medicare savings. Several commenters recommended CMS provide additional
guidance and opportunities for comment on how such a transition would
work in States where D-SNPs are not offered or where certain benefits
are carved out before making a final decision regarding the future of
MMPs. A number of commenters, including States, plan sponsors, and
advocates, expressed concern that ongoing funding for dedicated
ombudsman and one-on-one options counseling services would be lost as
part of the transition out of the FAI and urged CMS to continue support
for these programs.
Response: We thank the commenters for the feedback on our intended
approach for working with States. Several of the new and amended
regulations adopted in this final rule create mechanisms and new
requirements to replicate much of the programmatic or administrative
integration found in MMPs including integrated member materials,
unified appeals and grievances, continuation of Medicare benefits
pending appeals, elements of joint CMS/state oversight, and contract-
specific quality ratings. States can also use their State Medicaid
agency contracts with D-SNPs, as described throughout this final rule,
to establish parameters that promote person-centered and integrated
care, including exclusively alignment enrollment, additional
requirements for care planning and self-direction, and enrollment
limited to certain age groups or other variables. Other aspects of
integration tested in the FAI will not be possible under current law or
the new and amended regulations adopted here, and we acknowledge
commenters' concerns to that end. However, we believe that the ability
to maintain most, if not all, aspects of integration outside the
confines of time-limited demonstrations outweighs the potential loss in
the identified areas. Although outside the scope of this rule, we will
consider whether there are additional opportunities to further
integrate enrollment and/or financing in the future.
We intend to work closely with States and other stakeholders not
only to develop a transition plan that would allow States to preserve
the integration currently available through MMPs to the greatest extent
possible but also to provide subsequent technical assistance and
resources to support these efforts, including in scenarios where States
do not currently contract with D-SNPs or where certain benefits are
carved out.
We agree with commenters that dedicated ombudsman and one-on-one
options counseling services provide important beneficiary protections.
Existing grant awards already include a transition period as part of
the cooperative agreements currently in place, and we will work closely
with States on potential sustainability plans. We note that Virginia,
for example, was able to continue its ombudsman services at the end of
its FAI demonstration without grant assistance.
Comment: We received numerous comments in support of the
Massachusetts One Care demonstration. Several commenters expressed
concern that the elements unique to this demonstration would not be
applied to the D-SNP model of care or contracting requirements and, as
a result, key attributes of the One Care model would be lost in such a
transition. Several commenters highlighted the value the consumer-led
Implementation Council provides in plan oversight and to ensure the
demonstration retains its person-centric, independence-driven approach,
and expressed concerns that the Council would be diminished or
eliminated in an integrated D-SNP environment.
Response: We appreciate the ongoing support for the One Care
demonstration. We look forward to working with the State and other
stakeholders, including the Implementation Council, on how to sustain
and strengthen the person-centric, independence approach for which One
Care is known.
Comment: Numerous commenters, including States, plan sponsors, and
advocates, urged CMS to take steps to ensure a smooth transition for
enrollees if CMS moves forward with transitioning MMPs to integrated D-
SNPs. Such steps included: Use of passive enrollment to transition MMP
enrollees to corresponding D-SNPs; requiring continuity of care
provisions to ensure stability of coverage and access to providers;
and/or ongoing stakeholder engagement that includes
[[Page 27798]]
advocates, MMPs, and D-SNPs to promote collaborative discussion on the
planning and implementation of integrated D-SNPs and ensure aligned
messaging and coordination. Many commenters recommended that CMS
provide technical assistance and resources for States on topics related
to Medicaid managed care authorities, contracting options, and
operational steps to assist with the transition from MMPs to D-SNPs. A
few commenters strongly supported using 1115A authority to facilitate
the transition of MMP enrollees to D-SNPs operated by the same parent
organization, subject to State approval, unless enrollees choose
otherwise.
Response: We appreciate the feedback on the necessary transition
steps, and we agree that ensuring an MMP to D-SNP transition is as
seamless as possible for MMP enrollees is critical to successfully
implementing this approach. We continue to think through our ability to
use waiver authority under section 1115A of the Act as part of any MMP
transition. We are committed to working closely with States and other
stakeholders and intend to utilize and build from the technical
assistance resources we already have in place, including the Integrated
Care Resource Center.
Comment: The majority of commenters on this section of the proposed
rule, including States, advocates, and plan sponsors, stated that
additional time would be needed beyond the current end date in order to
allow sufficient runway for a seamless transition of operations and
enrollment. Commenters made this statement regardless of whether or not
they supported the overall approach. Most suggested at least two
additional years would be needed for States to evaluate options and
obtain necessary authorities, vet policy proposals with stakeholders,
make necessary State system changes, and conduct procurements, if
necessary, in order to ensure that MMP enrollees experience a seamless
and easy transition from their MMP to a successor FIDE SNP or HIDE SNP.
Response: We thank the commenters for these comments. We
acknowledge the commenters' concerns about the time necessary to ensure
a seamless transition for all parties involved.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we intend
to adjust our approach to working with the States participating in the
capitated financial alignment model to develop a plan for converting
MMPs under the FAI model test to integrated D-SNPs. We will offer
States the opportunity to continue demonstrations under the FAI, under
conditions described in this section and where authorized by section
1115A of the Act.
States interested in this opportunity will need to convert all MMPs
to integrated D-SNPs as early as possible, but no later than December
31, 2025. This timeframe reflects the perspectives expressed in public
comments related to the time needed for a smooth transition.
States pursuing converting their MMPs into integrated D-SNPs should
submit a transition plan to CMS by October 1, 2022. This transition
plan should reflect each State's individual circumstances and outline,
for example, the State's commitment to (a) maximize integration
attained through the capitated financial alignment demo and a seamless
transition to integrated D-SNPs, (b) sustain dedicated ombudsman
support without Federal grant funding, and (c) a stakeholder engagement
process to promote collaborative discussion on the planning and
implementation of the transition to integrated D-SNPs. The transition
plan should also identify specific policy and/or operational steps that
need to occur to fulfill the commitments. These could include, but are
not limited to, executing Medicaid procurement and/or D-SNP contracting
processes; obtaining necessary State legislative or additional Medicaid
authorities, if applicable; and/or identifying and executing system
changes and processes to implement exclusively aligned enrollment.
If a State chooses not to convert MMPs to integrated D-SNPs, CMS
will work with the State on an appropriate MMP conclusion by December
31, 2023. In all cases, we look forward to working with States,
beneficiaries, advocates, and other stakeholders to continue our work
to improve outcomes and experiences for dually eligible individuals.
B. Special Requirements During a Disaster or Emergency for Medicare
Advantage Plans (Sec. 422.100(m))
In the February 12, 2015, final rule titled ``Medicare Program;
Contract Year 2016 Policy and Technical Changes to the Medicare
Advantage and the Medicare Prescription Drug Benefit Programs'' (80 FR
7959) (hereinafter referred to as the 2015 final rule), CMS finalized a
new paragraph (m) in Sec. 422.100 to codify and clarify an MA
organization's responsibilities when health plan services are affected
by disasters or emergencies, including public health emergencies
(PHEs), to ensure that MA enrollees continue to have access to care
when normal business operations are disrupted and to ensure out-of-
network providers are informed of the terms of payment for furnishing
services to affected enrollees during disasters or emergencies. During
the Coronavirus 2019 Disease (COVID-19) PHE, we have received questions
about the applicability of the special requirements at Sec.
422.100(m), which prompted us to review the regulation and the laws
related to the declaration of disasters and emergencies. In light of
this review, we proposed changes to clarify potential ambiguities in
the regulation text, to further clarify the basis for determining the
end of an MA organization's obligations to comply with special
requirements during a disaster or emergency and codify our previous
guidance in Chapter 4 of the Medicare Managed Care Manual (MMCM).
Specifically, we proposed to revise Sec. 422.100(m) to more clearly
specify when MA organizations must begin ensuring access to covered
benefits by meeting the requirements in paragraphs (m)(1)(i) through
(iv) and when MA organizations are permitted to stop meeting those
requirements.
Section 1852(d) of the Act requires MA organizations to provide
continued availability of and access to covered benefits, including
making medically necessary benefits available and accessible 24 hours a
day and 7 days a week; the ability to limit coverage to benefits
received from a plan's network of providers is contingent on fulfilling
this obligation. When a disaster or emergency occurs, enrollees may
have trouble accessing services through network providers or sometimes
must physically relocate to locations that are outside of their MA
plan's service area. Currently, Sec. [thinsp]422.100(m) requires MA
organizations to ensure access, at in-network cost-sharing, to covered
services even when furnished by noncontracted providers when disruption
in their MA plan's service area during a state of disaster or emergency
impedes enrollees' ability to access covered healthcare services from
contracted providers. Consistent with uniformity requirements for MA
plans at Sec. 422.100(d) and other regulations, these special
requirements must be uniformly provided to similarly situated enrollees
who are affected by the state of disaster or emergency.
First, we proposed to amend the regulation to explicitly limit the
application of the special requirements to when there is a disruption
in access to health care. In the 2015 final rule, we stated in the
preamble that the regulations at Sec. 422.100(m) were added to require
MA organizations to ensure
[[Page 27799]]
access, at in-network cost-sharing, to covered services even when
furnished by noncontracted providers ``when a disruption of care in the
service area impedes enrollees' ability to access contracted providers
and/or contracted providers' ability to provide needed services.'' (80
FR 7953) We proposed to revise Sec. 422.100(m)(1) to include that
there must also be a disruption of access to health care in addition to
a disaster or emergency declaration for the MA organization to be
required to ensure access to covered benefits consistent with the
special requirements described in Sec. 422.100(m)(1). We proposed to
define ``disruption of access to health care'' for purposes of these
special requirements by adding a new paragraph (m)(6); as proposed, a
``disruption of access to health care'' for the purpose of Sec.
422.100(m) is an interruption or interference in access to health care
throughout the service area such that enrollees do not have the ability
to access contracted providers or contracted providers do not have the
ability to provide needed services causing MA organizations to fail to
meet the prevailing patterns of community health care delivery in the
service area under Sec. 422.112(a). The intent of these modifications
is to clarify that if there is a current state of disaster or emergency
that is not contributing to a disruption in health care services, then
MA organizations would not be required to follow the requirements at
Sec. 422.100(m)(1)(i) through (iv). During a state of disaster or
emergency, MA organizations must continue to meet MA access and
availability requirements consistent with the normal prevailing
community pattern of health care delivery in the areas where the
network is being offered. During a state of disaster or emergency,
disruptions caused by the disaster or emergency may prevent contracted
providers from providing services to enrollees. If enough contracted
providers are unavailable to enrollees, then the MA plan would not have
enough contracted providers consistent with the normal prevailing
community pattern of health care delivery in the service area. Per the
proposed definition, this would indicate that there is a disruption in
access to health care in the service area, and MA organizations would
be required to follow the special requirements at Sec. 422.100(m)(1).
This definition is not intended to be limited to physical barriers to
access (such as electrical outages or transportation difficulties
caused by hurricanes or wildfires) but to be broad enough to encompass
any interruption or interference caused by a disaster or emergency such
as a lack of available hospital beds or quarantine restrictions.
Therefore, under our proposal, when a disaster or emergency interrupts
that level of access to and availability of services, MA organizations
must ensure access by covering basic and supplemental benefits
furnished at non-contracted facilities; waiving, in full, requirements
for gatekeeper referrals where applicable; providing in-network cost-
sharing even if the enrollee uses out-of-network providers; and making
changes that benefit the enrollee effective immediately without the 30-
day notification requirement at Sec. 422.111(d)(3). Limits in other
regulations, such as Sec. Sec. 422.204(b)(3) and 422.220 through
422.224, on which healthcare providers may furnish benefits remain in
place and are not eliminated by Sec. 422.100(m).
In the definition, we refer to the normal prevailing community
pattern of health care delivery in the service area as it usually is
when a state of disaster or emergency does not exist, not the
prevailing community pattern of health care delivery in the service
area during the state of disaster or emergency. During a state of
disaster or emergency, it is possible that access to health care will
be disrupted affecting more than MA enrollees, including access to care
for enrollees in commercial plans and Original Medicare. To provide an
extreme example, an MA organization could indicate that its MA plans
are meeting the prevailing community pattern of health care delivery
when all of the primary care providers in the service area are closed
due to a state of disaster, and the MA plans are therefore meeting the
standard because everyone in the service area, no matter the type of
insurance they have, cannot access primary care providers. As explained
above, this would not be acceptable, as CMS is measuring the prevailing
community pattern of health care by reference to the pre-disaster
period. Under the proposed regulation, MA organizations would be
required to ensure access for their enrollees by complying with the
special requirements listed at Sec. 422.100(m)(1)(i) through (iv).
While we consider the standard to be the normal prevailing community
pattern of health care delivery, we understand this standard broadly in
the context of disasters and emergencies. Some examples that would
constitute a disruption in access to health care include physical
barriers to accessing health care such as road disruptions or
electrical outages, as well as other barriers to accessing health care
such as provider offices being closed due to quarantine requirements
from the Centers for Disease Control and Prevention (CDC) or state or
local health departments, or hospitals beds being unavailable as
occurred during the COVID-19 pandemic. This list is not intended to be
exhaustive as many unforeseen circumstances may arise during states of
disaster or emergencies that may cause enrollees to have trouble
accessing services through normal channels or force them to move to
safer locations that are outside of their plan's service areas. A
disruption in access to health care could include disruptions in access
to Medicare Part A or Part B services or to supplemental benefits
offered by the plan, or any combination of those. Our proposal is
intended to be broad and to focus on actual access to and availability
of services for enrollees in a service area affected by a disaster or
emergency. Whether the MA plan network continues to meet evaluation
standards specified in Sec. 422.116 is not the only relevant
consideration. For example, regarding a hospital with beds or other
equipment unavailable to treat additional patients (as has occurred
during COVID-19 pandemic), the hospital remains part of the MA
organization's network, and therefore the network may be consistent
with CMS's network adequacy standards for MA plans, but enrollees would
not be able to access the hospital and may need to go to out-of-network
providers to access their covered benefits. Similarly, physical
barriers that enrollees may experience during a disaster or emergency
(road closures, flooding, etc.) may affect enrollees unevenly,
preventing some enrollees from accessing in-network providers. The
provider may be part of the MA organization's network and therefore the
network may meet the time and distance evaluation standards in Sec.
422.116 and appear to be capable of furnishing services consistent with
the prevailing community pattern of health care, but some enrollees may
experience difficulty accessing that provider to obtain needed health
services. Further, if an enrollee had to leave their home to move to a
different location due to a disaster or emergency, the MA organization
may still have a network that meets the prevailing community pattern of
health care in the service area of the enrollee's home, but the
enrollee may not be able to access health care in their different
location without being able to access out-of-network care. We requested
comments from stakeholders on our proposed definition to determine
whether there are circumstances CMS is
[[Page 27800]]
not considering or additional standards that we should be using to
identify when a disruption of access to health care is occurring.
We proposed to add a disruption of access to health care as a
condition that must be met before the special requirements in Sec.
422.100(m)(1) apply in order to ensure that this regulation is not
overly broad and is appropriately tailored to address our concerns that
MA enrollees have adequate access to medically necessary care and are
not unduly restricted to the MA plan's network of providers. As an
illustrative example of a situation where a disruption of access to
health care was not present even though a state of emergency was in
effect, the Governor of Hawaii issued a state of emergency \75\ to
fight the Zika virus in February of 2016. This state of emergency did
not require all MA organizations operating in Hawaii to comply with the
requirements at Sec. 422.100(m)(1) because all provider offices were
operating as usual, contracted providers continued in their ability to
provide needed services, and enrollees did not face barriers in
accessing needed services. The Opioid PHE, which began in 2017, is
another example where there is a declared PHE by the Secretary that has
been ongoing, but it does not necessarily constitute a disruption of
access to health care. However, in 2017, Hurricane Maria in Puerto Rico
led to substantial issues with access to covered services for MA
enrollees. In connection with the Hurricane Maria, there was a
Presidential declaration of a major disaster under the Stafford Act on
September 20, 2017 \76\ and a Public Health Emergency declaration by
the Secretary as of September 17, 2017.\77\ Under our proposal, MA
organizations would be required to meet the special requirements at
Sec. 422.100(m)(1) for the duration of similar disasters and
emergencies where access to covered benefits is disrupted.
---------------------------------------------------------------------------
\75\ https://governor.hawaii.gov/wp-content/uploads/2016/02/160212_EmergencyProclamation_Dengue.pdf.
\76\ https://www.govinfo.gov/content/pkg/FR-2017-10-06/pdf/2017-21649.pdf.
\77\ https://www.cms.gov/About-CMS/Agency-Information/Emergency/Downloads/Puerto-Rico-and-US-Virgin-Islands-PHE-Determination.pdf.
---------------------------------------------------------------------------
We proposed that MA organizations would be initially responsible
for evaluating whether there is a disruption of access to health care
under Sec. 422.100(m). We believe MA organizations are best positioned
to evaluate if a state of disaster or emergency is disrupting access to
health care for enrollees in their service area. MA organizations would
know the status of their in-network providers (for example, whether
they are operational or not, how many beds are filled, etc.) and would
be in communication with their providers as issues at the provider's
facilities or with an MA organization's enrollees arise. MA
organizations should be guided by the explanations here, including the
examples, as well as their particular and detailed knowledge and
understanding of their enrollees, service areas, and networks, to
reasonably assess if there is a disruption in access to health care in
the service area. CMS expects that MA organizations should be aware of
these and other facts regarding access to health care in the service
areas where they offer plans, and should be able to evaluate those
facts and apply the standard in the regulation to know when they must
comply with the special requirements at Sec. 422.100(m). CMS will
monitor access during disasters or emergencies to ensure MA
organizations are applying the standard in Sec. 422.100(m)(1)
correctly and complying with this regulation to avoid any disruptions
in access to care. As we monitor, we will evaluate whether and when the
standard in Sec. 422.100(m)(1) as proposed to be amended here is met.
If CMS discovers that there are problems with access for enrollees, we
will direct MA organizations in the affected area to comply with Sec.
422.100(m). However, we reiterate that an MA organization should be
able to apply the standard in the regulation to the relevant facts
related to a potential disruption in access to care during a disaster
or emergency and to know the regulatory standard with regard to
disruption in access to care during a disaster or emergency and when
compliance with the special requirements during a disaster or emergency
at Sec. 422.100(m) is required. MA organizations are required to meet
the network adequacy requirements at Sec. Sec. 422.112(a) and 422.116
at all times to ensure enrollees have sufficient access to covered
benefits. MA organizations that fail to meet network adequacy
requirements must ensure access to specialty care by permitting
enrollees to see out-of-network specialists at the individual
enrollee's in-network cost-sharing level under Sec. 422.112(a)(3). In
addition, MA organizations may need to make alternate arrangements if
the network of primary care providers is not sufficient to ensure
access to medically necessary care under Sec. 422.112(a)(2). This
proposal would not change these existing and continuing regulatory
requirements.
Similar to what was experienced by MA enrollees during the COVID-19
PHE, CMS expects that there will be situations where disruptions are
intermittent and access to health care is disrupted for some period of
time during a disaster or emergency, but not at other times. Under our
proposed regulation, MA organizations would follow the special
requirements imposed by Sec. 422.100(m)(1) for 30 days after the
disruption of access to health care ends while the disaster or
emergency is ongoing and for 30 days after the end of the disaster or
emergency if the disruption of access to health care, as defined in
Sec. 422.100(m)(6), continues until the end of the disaster or
emergency. MA organizations may also find that at a later time period,
during the same declared disaster or emergency, there is another
disruption of access to health care and therefore that the MA
organization must again follow the special requirements imposed by
Sec. 422.100(m)(1). We also recognize that there may be circumstances
when a state of disaster or emergency is declared for an area
containing multiple service areas (for example, the entire United
States), but the disaster or emergency may unequally affect the various
service areas contained in the larger area for which it is declared. It
may be that some service areas experience a disruption of access to
health care, but other service areas do not, or that the disruption in
care ends for certain service areas but continues in others. Under our
proposed regulation, in situations where a disruption of access to
health care ends in a particular service area, but the state of
disaster or emergency continues to be in effect for an area that
includes that particular service area, the special requirements imposed
by Sec. 422.100(m)(1) would be in effect for the service areas in
which there is a disruption of access to health care (until 30 days
after the disruption of access to health care ends) and would not be in
effect for services in which there has not been any disruption of
access to health care.
We also proposed two technical changes to our regulations at Sec.
[thinsp]422.100(m)(2) to correct some numbering issues that occurred in
the 2015 final rule. First, we proposed to move the text from the
fourth-level paragraph at (m)(2)(ii)(A) to the third-level paragraph at
(m)(2)(ii), which currently does not have text associated with it. As
amended, the regulation at Sec. [thinsp]422.100(m)(2)(ii)(A) would
state that the Secretary of Health and Human Services (hereinafter
referred to as the Secretary) may declare a PHE under section 319 of
the Public Health Service
[[Page 27801]]
Act. Second, we proposed to remove the fourth-level paragraph at
(m)(2)(ii)(B) because this paragraph only provides information about
the Secretary's section 1135 waiver authority which is not an authority
under which the Secretary may declare PHEs. In addition to these
technical changes, we proposed several clarifying revisions to our
language in Sec. [thinsp]422.100(m) to ensure that we are consistently
referring to disasters and emergencies. Currently, the language
sometimes refers only to disasters (as in the introductory text to
paragraphs (m)(1) and (2)), but also refers to disasters and public
health emergencies (as in the text to paragraphs (m)(3) and (4) and
(m)(5)(i)). We therefore proposed to update the language throughout to
reference disasters and emergencies with the aim of being consistent in
referring to the various types of declarations listed at Sec.
422.100(m)(2).
Lastly, we proposed revisions to clarify the basis for determining
when MA organizations are no longer required to comply with the special
requirements for a disaster or emergency. We proposed to modify the
text at Sec. [thinsp]422.100(m)(3) to clarify that it refers to the
end of the special requirements for a state of disaster or emergency
stipulated at Sec. [thinsp]422.100(m)(1), not to the end of the state
of disaster or emergency itself. We also proposed to add a 30-day
transition period to Sec. 422.100(m)(3). Our current regulation at
Sec. 422.100(m)(3)(iii) provides a period of 30 days from the initial
declaration for the special requirements imposed by Sec. 422.100(m)(1)
to be in effect if the initial declaration of the disaster or emergency
does not contain a specific end date or if the official or authority
that declared the disaster or emergency does not separately identify a
specific end date, and CMS has not indicated an end date to the
disaster or emergency. This means that, under the current regulation,
there is usually a 30-day minimum period during which MA plans are
providing access to covered benefits with the additional beneficiary
protections specified in paragraphs (m)(1)(i) through (iv), unless an
explicit announcement of the end of the disaster or emergency has been
declared sooner than the end of the 30 days. We believe that having a
minimum period for these protections is important and appropriate. A
transitional period from when an MA organization must comply with the
access requirements in Sec. 422.100(m)(1) to when the MA organization
must furnish services are required by normal coverage rules will
protect enrollees who need time and assistance from the MA organization
to find a contracted provider after having been treated by a non-
contracted provider during the disaster or emergency. We intend for
this period to serve as a protection for enrollees so they are not
immediately responsible for the total cost of services received from a
non-contracted provider that they have been seeing for a period of time
due to the state of disaster or emergency. MA organizations may also
find a transitional period helpful if they must contract with
additional providers or otherwise make changes to their network to
assist with their return to normal operations. We therefore proposed to
revise the regulation text at Sec. 422.100(m)(3) to require a 30-day
transition period after the points in time identified in the regulation
for the end of the special requirements. Specifically, we proposed to
revise paragraph (m)(3) to provide that the applicability of the
special requirements for a disaster or emergency in paragraphs
(m)(1)(i) through (iv) end 30 days after the latest of the events
specified in paragraph (m)(3)(i) or (ii) occur (that is, the latest end
date in a case where there are multiple disasters/emergencies) or end
30 days after the condition specified in paragraph (m)(3)(iii) occurs
(that is, there is no longer a disruption of access to health care).
In the 2015 final rule, we finalized three circumstances as
determining the end of the special requirements for a disaster or PHE
in the regulations at Sec. [thinsp]422.100(m)(3). First, as currently
provided in Sec. [thinsp]422.100(m)(3)(i), the source that declared
the disaster or PHE declares an end to it. As explained in Sec.
422.100(m)(2), disasters or emergencies may be declared by the
President of the United States under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (Stafford Act) or the National
Emergencies Act, by the Secretary who may declare a PHE under section
319 of the Public Health Service Act, or by Governors of States or
Protectorates. We intend paragraph (m)(3)(i) to address circumstances
when the initial declaration contains a specific end date or when the
official or authority who declared the disaster or emergency separately
identifies a specific end date. We proposed to revise Sec.
[thinsp]422.100(m)(3)(i) to address situations that may arise where
there is more than one declaration of a disaster or emergency at the
same time for the same service area(s). This proposed revision
clarifies that MA organizations must follow the special requirements
until the latest applicable end date when multiple declarations apply
to the same geographic area by specifying that all sources that
declared a disaster or emergency that include the service area have
declared an end. For example, if a Governor of a State declares a state
of disaster or emergency and the President also later declares a state
of disaster, both the state and Federal disasters must be declared at
an end to trigger Sec. 422.100(m)(3)(i). If the President's disaster
declaration ends after 20 days, but the Governor maintains the state of
disaster for 30 days, then the special requirements imposed by Sec.
422.100(m)(1) would apply for MA plans in that area through the end of
the emergency declared by the Governor, plus an additional 30 days for
the transition period we proposed.
Second, the regulation currently provides that CMS may declare an
end to the state of disaster or PHE per Sec. 422.100(m)(3)(ii). Upon
review, we intended for this regulation text to refer to the
Secretary's authority, which is consistent with the current practice of
the Secretary to declare an end to PHEs. However, since the Secretary
is already considered a source under Sec. [thinsp]422.100(m)(3)(i), we
believe that modifying this requirement to refer to the Secretary is
unnecessary and therefore we proposed to remove this text.
Third, our current regulation at Sec. 422.100(m)(3)(iii) addresses
circumstances where a state of disaster or PHE is declared with no end
date identified. Because Sec. 422.100(m)(3) provides that the end of
the emergency or state of disaster ends when ``any'' of the three
listed, if the declaration disaster or emergency timeframe has not been
identified by the authority or official who declared the disaster or
emergency and CMS has not indicated an end date to the disaster or
emergency, MA plans should resume normal operations 30 days from the
initial declaration. However, this does not properly account for how
declarations of disasters or emergencies may be renewed with continued
disruptions to access to health care services for enrollees. Further,
our experiences with declarations of disasters and emergencies have
demonstrated that the 30-day timeframe for the special requirements in
Sec. 422.100(m)(1)(i) through (iv) may not be enough time to address
concerns about enrollees being able to access benefits during disasters
or emergencies, especially in cases where a disaster or emergency
declaration has been renewed. There are circumstances where a 30-day
time period does not cover the full length of a declared
[[Page 27802]]
disaster or emergency and the current regulation is not well suited to
ensure access for enrollees during the entire period of a disaster or
emergency. For example, a PHE declared by the Secretary under section
319 of the Public Health Service Act is in effect for 90 days unless
the Secretary terminates it earlier, and the Secretary may renew the
declaration at the end of the 90-day period.
We proposed to revise Sec. 422.100(m)(3)(ii) to address when no
end date is identified under Sec. 422.100(m)(3)(i); in such cases, the
applicability of the special requirements ends 30 days after the
expiration of the declared disaster or emergency and any deadline for
renewing the state of disaster or emergency. This modification
clarifies that when a state of disaster or emergency is declared
without an end date, Sec. 422.100(m)(1) will continue to apply for the
entire duration of the declared disaster or emergency, as determined
under the relevant authority under which it was declared, if a
disruption of access to health care continues. Stafford Act
declarations do not have a defined end date. When the President
declares a national emergency under the National Emergencies Act, the
declaration of a national emergency lasts for a year unless terminated
earlier by the Presidential proclamation or a joint resolution of
Congress. The President can renew the declaration for subsequent one-
year periods. When the Secretary declares a PHE under section 319 of
the Public Health Service Act, it lasts for 90 days unless the
Secretary terminates it earlier, and it can be renewed for 90-day
periods. For example, if the Secretary declared a PHE under section 319
of the Public Health Service Act, then the end date of the PHE would be
in 90 days, unless renewed. If the Secretary chose to declare an end
before the 90-day period ended, then the public health emergency would
end according to the declared end date. CMS does not have the expertise
to know whether all state declarations of emergency have a defined end
date. Therefore, we did not propose specific time periods but proposed
to amend Sec. 422.100(m)(3)(ii) to account for extensions or renewals
of declarations of the type identified in paragraph (m)(2).
Lastly, we proposed to add the disruption of access to health care
as a limitation under revised Sec. 422.100(m)(3)(iii) to indicate that
the special requirements associated with a state of disaster or
emergency may end when the disruption of access to health care ends,
even if one of the circumstances in Sec. 422.100(m)(3)(i) or (ii) to
end the state of disaster or emergency has not yet occurred.
We intend to continue to issue sub-regulatory guidance as
appropriate for MA organizations to explain how Sec. 422.100(m) works,
both through the HPMS system and through the CMS Current Emergencies
web page at https://www.cms.gov/About-CMS/Agency-Information/Emergency/EPRO/Current-Emergencies/Current-Emergencies.-page. Further, we note
that the Secretary may exercise the waiver authority under section 1135
of the Social Security Act during an emergency period (defined in
section 1135(g) of the Act), which exists when the President declares a
disaster or emergency pursuant to the National Emergencies Act or the
Stafford Act, and the Secretary declares a PHE pursuant to section 319
of the Public Health Service Act. Under the Secretary's section 1135
waiver authority, CMS may authorize DME and A/B Medicare Administrative
Contractors (MACs) to pay for Part C-covered services furnished to MA
enrollees and seek reimbursement from MA organizations for those health
care services, retrospectively. Detailed guidance and requirements for
MA organizations under the section 1135 waiver, including timeframes
associated with those requirements and responsibilities, would be
posted on the Department of Health and Human Services website, (https://www.hhs.gov/) and the CMS website (https://www.cms.hhs.gov/). MA
organizations are expected to check these sites frequently during such
disasters and emergencies.
We proposed the following changes to our regulations at Sec.
422.100(m):
Revise Sec. 422.100(m)(1) to state that when a disaster
or emergency is declared as described in Sec. 422.100(m)(2) and there
is disruption of access to health care as described in Sec.
422.100(m)(6), an MA organization offering an MA plan must, until one
of the conditions described in Sec. 422.100(m)(3) of this section
occurs, ensure access to benefits as described in Sec.
422.100(m)(1)(i) through (iv).
Revise Sec. [thinsp]422.100(m)(2) to refer to emergencies
and disasters.
Move the current text of Sec.
[thinsp]422.100(m)(2)(ii)(A) to Sec. [thinsp]422.100(m)(2)(ii).
Remove Sec. [thinsp]422.100(m)(2)(ii)(B).
Revise Sec. 422.100(m)(3) to specify that it addresses
the end of the applicability of the special requirements rather than
the end of the disaster or emergency.
Revise Sec. 422.100(m)(3) to add a transition period of
30 days after the earlier of the conditions described in Sec.
422.100(m)(3)(i) and (ii) occurs or after the condition described in
Sec. 422.100(m)(3)(iii) occurs; during the transition, MA
organizations must continue to comply with Sec. 422.100(m)(1).
Revise Sec. 422.100(m)(3)(i) to clarify that MA
organizations must follow the special requirements until all of the
sources that declared a disaster or emergency in the service area
declare it ended.
Revise Sec. [thinsp]422.100(m)(3)(ii) to state that no
end date was identified in Sec. [thinsp]422.100(m)(3)(i) of this
section, and all applicable disasters or emergencies have ended,
including through expiration of the declaration or any renewal of such
declaration.
Revise Sec. 422.100(m)(3)(iii) to state that the special
requirements identified in Sec. [thinsp]422.100(m)(1) of this section
may also end if the disruption in access to health care services ends.
Revise Sec. 422.100(m)(4) to refer to disasters and
emergencies.
Revise Sec. 422.100(m)(5)(i) to refer to disasters and
emergencies.
Add a new paragraph at Sec. 422.100(m)(6) to define
``disruption of access to health care'' as an interruption or
interference throughout the service area such that enrollees do not
have ability to access contracted providers or contracted providers do
not have the ability to provide needed services, resulting in MA
organizations failing to meet the normal prevailing patterns of
community health care delivery in the service area under Sec.
422.112(a).
We thank commenters for helping inform Special Requirements during
a Disaster or Emergency. We received approximately 35 comments on this
proposal; we summarize them and our responses follow:
Comment: Comments were very supportive of our proposal that there
must also be a disruption of access to health care in addition to a
declared disaster or emergency for special requirements during a
disaster or emergency to apply.
Response: CMS thanks comments for their feedback.
Comment: Some commenters agreed that MA plans are in the best
position to determine when there is a disruption in care and supported
our proposal. Many of these commenters requested CMS release further
guidance providing additional examples and objective criteria for MAOs
to use in further determining ``disruption of access to care.''
[[Page 27803]]
Response: We thank commenters for their feedback. We proposed that
a ``disruption of access to health care'' for the purpose of Sec.
422.100(m) mean an interruption or interference in access to health
care throughout the service area such that enrollees do not have the
ability to access contracted providers or contracted providers do not
have the ability to provide needed services causing MA organizations to
fail to meet the prevailing patterns of community health care delivery
in the service area under Sec. 422.112(a). We are finalizing this
definition with a slight change to provide that a disruption of access
to health care occurs when the interruption or interference in access
to health care occurs ``in'' the service area such that the standard we
proposed is met. This revision is to be more consistent with our intent
and discussion in the proposed rule that a disruption of access to
health care may be targeted or specific to a limited area. Service
areas are generally a county or larger and while many disruptions of
access to health care may be county-wide or cover multiple counties,
not all emergencies or disasters will result in such scope. Specific
disruptions, such as those involving physical access (such as road
damage or flooding that block access to or damage a hospital or larger
provider group serving many enrollees) or damage to electrical supply
or utilities, may be more limited in scope. So long as interruption or
interference in access to health care in the service area is such that
enrollees do not have the ability to access contracted providers or
contracted providers do not have the ability to provide needed services
causing MA organizations to fail to meet the prevailing patterns of
community health care delivery in the service area under Sec.
422.112(a) during a declared emergency or disaster as described in
Sec. 422.100(m)(2), it does not matter if that interruption or
interference is limited to a specific area. In addition, we are
clarifying in the regulation text that the term ``service area'' has
the meaning provided in Sec. 422.2.
Under this final rule, MA organizations must interpret and apply
this regulatory standard (for when the special coverage requirements in
Sec. 422.100(m)(1) apply) by the explanations in the proposed rule and
this final rule, including the examples, as well as their particular
and detailed knowledge and understanding of their enrollees, service
areas, and networks. Applications of Sec. 422.100(m) are to be based
on reasonable assessments whether and when there is a disruption in
access to health care in the service area for enrollees in an MA plan.
MA organizations must take into account available information regarding
access to health care in the service areas where they offer MA plans
and must reasonably evaluate those facts and apply the standard in the
regulation to know when they must comply with the special requirements
at Sec. 422.100(m). CMS will similarly be guided by the same things
when evaluating MA organization compliance with Sec. 422.100(m) and
when issuing instructions if CMS has determined that a disruption of
access to health care has occurred in an area where a declaration of
disaster or emergency has been made as described in Sec.
422.100(m)(2).
As previously stated in this final rule, per Sec. 422.112(a), MA
plans must ensure that all covered services are available and
accessible to enrollees under the plan. Additionally, we note CMS
quantifies the prevailing patterns of care standard in network adequacy
with the specific time and distance and minimum number of provider
requirements at Sec. 422.116. Per CMS regulations at Sec. 422.112, MA
plans are currently required to maintain and monitor a network of
appropriate providers, supported by written arrangements, that is
sufficient to provide adequate access to covered services to meet the
needs of the population served. The delivery of services in particular
geographic areas must be consistent with local community patterns of
care. Simply put, MA plans must currently ensure that contracted
providers are distributed so that no enrollee residing in the service
area must travel an unreasonable distance to obtain covered services.
Given that MA plans must already follow and monitor these existing
requirements, we believe that MA organizations are in the best position
to determine when and whether access to network providers has been
compromised. We also encourage plans to look at how they ensure
compliance with current access requirements when determining whether
and when access to health care services has been disrupted.
Finally, to provide greater clarity, we are changing the term
``throughout the service area'' to ``in the service area'' at in the
regulation text at Sec. 422.100(m)(6). If the service area is several
counties or an entire state but the natural disaster is limited to one
county, ``throughout the service area'' could be interpreted to signify
that there has not been a disruption sufficient to trigger Sec.
422.100(m) if only one county is affected. That is not our intention.
As discussed in the proposed rule, some examples that would constitute
a disruption in access to health care include physical barriers to
accessing health care such as road disruptions or electrical outages,
as well as other barriers to accessing health care such as provider
offices being closed due to quarantine requirements from the Centers
for Disease Control and Prevention (CDC) or state or local health
departments, or hospitals beds being unavailable as occurred during the
COVID-19 pandemic. Any disruption of service within a given service
area, whether it is multiple counties or one county, is sufficient to
trigger the requirements at Sec. 422.100(m). MA plans must follow
422.100(m) for all impacted enrollees. Additionally, we added a
reference to the statutory definition of ``service area'' to provide
further clarity on what CMS means by service area. Specifically, we
define ``service area'' as it is defined at 42 CFR 422.2: a geographic
area that for local MA plans is a county or multiple county, and for MA
regional plans is a region approved by CMS within which an MA-eligible
individual may enroll in a particular MA plan offered by an MA
organization.
Comment: Some commenters expressed concern that allowing plans to
determine whether there is a disruption in care may not sufficiently
guarantee beneficiary protections. A few expressed concern that
allowing each plan to make their own determination may lead to
inconsistency (for example, different determinations by different
plans) and confusion among enrollees. Others expressed concern that
providers and MA plans in the same service area may disagree and asked
CMS for clarification if these scenarios were to occur. Some commenters
expressed concern that MA plans may have financial incentive to not
apply or delay compliance with these special requirements.
Response: We thank commenters for expressing their concern. We
reiterate that MA plans must provide enrollees health care services
through a contracted network of providers that is consistent with the
prevailing community pattern of health care delivery in the network
service area (42 CFR 422.112(a)). Further, we note that that MA plans
must meet current network adequacy requirements as defined under 42 CFR
422.116. Per Sec. 422.112(a)(1), CMS requires that organizations
monitor their contracted networks throughout the respective contract
year to ensure compliance with the current network adequacy criteria.
Given that plans are already required to ensure adequate access, we
believe that
[[Page 27804]]
plans are best equipped to determine whether these existing standards
have been compromised in a given service area or not.
Additionally, MA organizations must consider the extent to which
services are accessible in the network (meaning, from network
providers) and whether that access is consistent with normal community
patterns of health care delivery and with access during periods when
there is no declaration of disaster or emergency in effect. For
example, if a plan has a sufficient network per CMS requirements, but
enrollees are not able to access those contracted providers or those
providers are unavailable or otherwise unable to furnish services to
enrollees, this would be a disruption in access. As stated in the
proposed rule, some examples of a disruption in access to health care
include physical barriers to accessing health care providers, road
disruptions or electrical outages, as well as other barriers to
accessing health care such as provider offices being closed due to
quarantine requirements from the Centers for Disease Control and
Prevention (CDC) or state or local health departments, or hospitals
beds being unavailable as occurred during the COVID-19 pandemic. A
disruption of access has occurred if the existing network adequacy
requirements and requirements for access to and availability of
services cannot be met and/or enrollees cannot access the providers in
this network. Given that plans are already required to monitor adequate
access as discussed above, we believe MA plans are already in a
position to determine if a disaster or emergency has compromised or
disrupted normal patterns of access to, availability of, and delivery
of covered services when those services are medically necessary. We
encourage plans to evaluate whether an emergency or disaster has
compromised their ability to meet these existing requirements when
determining whether a disruption of access to health care as defined in
Sec. 422.100(m)(6) is occurring for purposes of meeting the special
requirements in Sec. 422.100(m).
Comment: A commenter suggested CMS change the 30-day transition
period to one full month for additional clarity and to better align
with plans' claims processing systems. Some suggested CMS extend the
30-day transition period, suggesting that 30 days may not be sufficient
for enrollees to find new or alternative care. A commenter suggested 60
days instead of 30 days.
Response: We thank commenters for their feedback. Under our current
regulations there is no explicit transition period but the general
minimum period of time when an MA organization must comply with the
special requirements in Sec. 422.100(m)(1) is 30 days, and we believe
that 30 days is sufficient in establishing how long an MA plan must
continue to provide access to services as described in Sec.
422.100(m)(1) after the end of an emergency or disaster period or end
of a disruption of access to health care. However, we will consider
revising this duration in future rulemaking if we determine that it is
necessary. We note that MA organizations that find it more
operationally feasible to maintain compliance with the special
requirements in Sec. 422.100(m)(1)(i) through (iv) for a full month or
until the end of a month when that it is longer than the 30 days
transition period are free to do so. As proposed and finalized, the 30-
day transition period is the minimum requirement.
Comment: A commenter asked CMS to clarify how to determine the end
point from which to begin calculating the 30 days transitional period.
Response: As stated in the proposed rule, MA plans are required to
continue to apply special requirements for 30 days (the 30-day
transitional period) after the points in time identified in the
regulation at Sec. 422.100(m)(3) for the end of the special
requirements. For example, if the only applicable declaration of a
public health emergency expires without renewal on April 30, the 30-day
transition period ends on May 30 of the same year. If an MA
organization reasonably determines, consistent with the regulation as
it is adopted and explained in this final rule, that a disruption of
access to health care has ended on January 1, the 30-day transition
period will end on January 31.
Comment: Many commenters supported CMS's intention to continue to
issue sub- regulatory guidance to further explain Sec. 422.100(m) as
appropriate and requested that CMS release guidance regarding events
that might trigger special requirements and timeframes associated with
those requirements.
Response: We thank commenters for their comments and plan to
release additional sub-regulatory guidance on this subject as
appropriate and as needed in the future.
Comments: We received some comments asking CMS to ensure
transparency to providers and beneficiaries when these special
requirements are put into place.
Response: We thank commenters for their concern. We remind MA plans
that in addition to annual disclosure requirements at Sec. 422.111,
plans must follow emergency and disaster disclosure requirements at
Sec. 422.100(m)(5), which include indicating the terms and conditions
of payment during the public health emergency or disaster for non-
contracted providers furnishing benefits to plan enrollees residing in
the state-of-disaster area, annually notifying enrollees of information
on the coverage requirements related to declarations of emergencies and
disasters and providing this information on plan websites.
Additionally, per CMS regulations at Sec. Sec. 422.111 and 422.202(b),
MA plans must establish policies and procedures to educate and fully
inform contracted health care provider and, as appropriate, to
enrollees concerning plan utilization policies, which should include
any necessary information related to emergencies and disasters. We
reiterate that we believe that MA organizations are generally in the
best position to determine when and whether access to network providers
in a service area has been compromised, so they will be expected to
initiate compliance with Sec. 422.100(m) as necessary and appropriate.
We believe that the disaster disclosure requirements at Sec.
422.100(m)(5) and general provider disclosure requirements at Sec.
422.202(b) provide adequate transparency.
Comment: A commenter expressed concern that the special
requirements will increase plan costs, noting that out of network
coverage for an extended period is not included in plan rates. Another
commenter requested OACT provide guidance on whether MA plans should
include actuarial assumptions related to disaster and emergency events
when developing prices for their contract year bids.
Response: We thank commenters for their feedback. When pricing a
bid, the actuary should refer to the Actuarial Standards of Practice
(ASOP). For example, ASOP No. 5 Incurred Health and Disability Claims
says that when estimating incurred claims, the actuary should consider
items such as changes in price levels, unemployment levels, medical
practice, managed care contracts, cost shifting, provider fee schedule
changes, medical procedures, epidemics or catastrophic events, and
elective claims processed in recessionary periods or prior to contract
termination (section 3.2.2 ECONOMIC AND OTHER EXTERNAL INFLUENCES).
Comment: A few commenters asked CMS to clarify whether special
requirements should apply in other situations beyond national or state
[[Page 27805]]
emergencies, such as shortage of health care staff or other scenarios
that may still impact normal patterns of community health care
delivery.
Response: We thank commenters for their feedback. Section 422.112
requires MA plans to provide continued availability of and access to
covered benefits for enrollees, including making medically necessary
benefits available and accessible 24 hours a day and 7 days a week.
Additionally, Sec. 422.113 provides that urgently needed services must
be provided when an enrollee is temporarily absent from the plan's
service (or, if applicable, continuation) area and therefore cannot
obtain the needed service from a network provider and/or when the
enrollee is in the service or continuation area but the network is
temporarily unavailable or inaccessible. CMS has issued guidance about
these requirements in section 20.2 of Chapter 4 of the Medical Managed
Care Manual (MMCM). Further, per CMS regulations at Sec.
422.112(a)(3), MA plans are required to arrange for specialty care
outside of the plan provider network when network providers are
unavailable or inadequate to meet an enrollee's medical needs. Finally,
MA plans are also currently required to meet network adequacy
requirements at Sec. 422.116(a)(2) all year, regardless if there is a
declared state of emergency or not. Given these existing standards, we
do not believe the special requirements discussed in this rule are
necessary to apply outside of an emergency or disaster.
Comment: A commenter asked for more information on who has the
authority to declare a state of disaster/emergency where these special
requirements would apply. Another commenter asked CMS to remind state
governors of their authority under 42 CFR 422.100(m). Another commenter
stated that CMS should consider the state's role in determining when
determinations the special requirements apply.
Response: The relevant types of disasters and emergencies are
discussed in the proposed rule and reflected in Sec. 422.100(m)(2) and
include: (i) A Presidential declaration of a disaster or emergency
under either the Stafford Act or the National Emergencies Act, (ii) a
Secretarial declaration of a public health emergency under section 319
of the Public Health Service Act, and (iii) a declaration by the
Governor of a State or Protectorate. To further clarify, the special
requirements discussed here do not impose any requirements on state
governors. Rather, MA organizations are responsible for being aware of
events discussed here, including an emergency or disaster declared by a
Governor, in a given service area and knowing the status of their in-
network providers and to applying requirements accordingly. We
encourage MA plans to liaison with local and state authorities as
appropriate when making a determination.
Comment: A commenter asked CMS to clarify whether waiving of
``gatekeeper'' referrals described at Sec. 422.100(m)(1)(ii) includes
the waiving of prior authorization (PA) in hospital discharges to other
settings. Another commenter suggested CMS extend the requirements at
Sec. 422.100(m) to include waiving prior authorization for hospitals
and post-care settings in general.
Response: As discussed in Chapter 4 of the MCM, the primary purpose
of a gatekeeper is to ensure compliance with plan requirements for
medically necessary referrals to in-network specialists. Under special
requirements during an emergency or disaster, MA plans must cover
Medicare Parts A and B services and supplemental Part C plan benefits
furnished at non-contracted facilities. Thus, such referrals are not
applicable and must be waived during a qualifying disaster or emergency
as described in this provision. We do not believe that adding a
requirement that MA organizations waive prior authorization for
hospitals and post-care settings at Sec. 422.100(m)(1) is within the
scope of our proposal to clarify and revise the time frame during which
Sec. 422.100(m)(1)(i) through (iv) apply. MA plans are permitted and
encouraged to waive or relax plan prior authorization requirements at
any time during disasters or emergencies in order to facilitate access
to services and alleviate burden on enrollees, plans, and providers.
Comment: A commenter asked CMS to release guidance to address the
needs of individuals who are required to evacuate from a disaster area,
particularly those whose homes are damaged or destroyed in the
disaster. Another commenter asked CMS to consider the special needs of
the ESRD population.
Response: The emergency requirements at Sec. 422.100(m) currently
address coverage for people who have been evacuated or who had to move
temporarily as a result of a disaster or emergency declaration by
requiring plans to cover Parts A and B services and supplemental Part C
benefits out-of-network. Also, Sec. 422.100(b)(1)(iv) requires
coverage of renal dialysis services provided while the enrollee was
temporarily outside the plan's service area. Further, there is a
Special Enrollment Period (SEP) for people who move out of the service
area permanently. Thus, enrollees who cannot move back to the area of
the disaster or emergency are permitted to change plans.
Additionally, we remind commenters that Sec. 422.112(b) requires
MA plans to ensure continuity of care and integration of services for
enrollees through arrangements with contracted providers. Requirements
in Sec. 422.112(b)(1) through (6) detail specific methods by which MA
organizations are to ensure an effective continuity and integration of
health care services. This includes requiring MA plans to have policies
and procedures that provide enrollees with an ongoing source of primary
care and to have programs for coordination of plan services with
community and social services.
Comment: A commenter asked CMS to clarify the rate a non-contracted
provider must be paid.
Response: As discussed in section 1852(a)(2) of the Act, CMS
regulations at Sec. 422.100(b)(2), and the MA Payment Guide for Out of
Network Payments,\78\ MA plans must pay non-contracted providers the
amount that the provider would have received from Original Medicare
amount for covered services (including balance billing permitted under
Medicare Part A and Part B). The total payment must take into account
cost-sharing and the MA plan payment to equal cost-sharing and Medicare
payment in the Original Medicare program.
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\78\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/downloads/oonpayments.pdf.
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Comment: A few commenters suggested CMS align criteria related to
special emergency requirements with the conditions for the Star Rating
Extreme and Uncontrollable Circumstances adjustment.
Response: We thank commenters for their suggestion and will
consider ways to align CMS policies if and when appropriate in the
future.
Comment: A few commenters asked CMS to consider staffing, drug, and
supply shortage issues to identify when a disruption of access to
health care is occurring and when making decisions on timeframes and
standards.
Response: We thank commenters for these suggestions and remind MA
plans to also consider these conditions when making a determination
whether a disruption of access to health care has occurred. The
definition we proposed and are adopted in this final rule permits
consideration of these conditions and factors when determining whether
there is a
[[Page 27806]]
disruption in access. Therefore, we believe that further edits to the
proposed regulation text Sec. 422.100(m)(6) is unnecessary.
After consideration of the comments received and for the reasons
outlined in the proposed rule and our responses to comments, we are
changing the term ``throughout the service area'' to ``in the service
area'' at in the regulation text at Sec. 422.100(m)(6). Also, to
provide further clarity on what CMS means by service area, we added a
reference to the statutory definition of ``service area'' in
parenthesis at Sec. 422.100(m)(6). Lastly, we edited some repetitive
language at Sec. 422.100(m)(1). Specifically, we revised ``until one
of the conditions described in paragraph (m)(3)'' to ``until the end
date specified in paragraph (m)(3) of this section occurs'', which is a
non-substantive, clarifying edit only. We are finalizing all other
changes proposed to Sec. 422.100(m) without modification.
C. Amend MA Network Adequacy Rules by Requiring a Compliant Network at
Application (Sec. 422.116)
In the ``Medicare Program; Contract Year 2021 Policy and Technical
Changes to the Medicare Advantage Program, Medicare Prescription Drug
Benefit Program, and Medicare Cost Plan Program'' final rule, which
appeared in the Federal Register on June 2, 2020 (85 FR 33796)
(hereinafter referred to as the June 2020 final rule), CMS added new
Sec. 422.116, which sets forth standards and criteria for determining,
whether an MA organization limits the providers from which its MA plan
members may receive covered benefits, and satisfies the requirement
under section 1852(d)(1) of the Act that such benefits be made
available and accessible in an MA plan's service area with reasonable
promptness.\79\ New Sec. 422.116 codified, with some modifications,
network adequacy criteria and access standards that CMS had previously
outlined in sub-regulatory guidance. In addition, the regulation
codified our then-existing policy, that CMS does not deny an
application based on CMS's evaluation of the applicant's network for a
new or expanding service area. Under our policy as set forth in the
June 2020 final rule and Sec. 422.116(a)(2), an applicant is required
to attest that it has an adequate network for access and availability
of applicable provider and facility types at the time of the
application for a new or expanding service area.
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\79\ As noted in the proposed rule at 87 FR 1893, CMS has also
codified network access requirements and standards at Sec. Sec.
422.112(a) and 422.114(a)(1).
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In the proposed rule (87 FR 1893 through 1895), we proposed to
require compliance with applicable network adequacy standards set forth
in Sec. 422.116 as part of an application for a new or expanding
service area. As indicated in the June 2020 final rule, we currently
rely on our existing triennial network review process and timeline to
evaluate compliance with network adequacy standards for organizations
applying for a new or expanding service area and we removed network
adequacy reviews from the application process beginning in 2018 for
contract year 2019. We explained in the proposed rule that while the
process of reviewing provider networks as part of the triennial review
has thus far been adequate and efficient operationally, we have also
experienced unintended consequences, and therefore proposed to improve
our oversight and effectiveness of network adequacy reviews for initial
and services area expansion (SAE) applicants by requiring provider
networks be reviewed by CMS when these MA applications are submitted to
CMS for consideration.
Currently, consistent with Sec. 422.116(a)(1)(i) and our
application process, applicants must attest that they meet provider
network standards, but do not have to demonstrate that they meet CMS
network requirements before submitting a bid for the following contract
year. CMS's experience has shown that since adopting the attestation-
only approach for the 2019 contract year, organizations are requesting
to remove a county (or multiple counties) from their service area (that
is, service area reduction) after bids are submitted because the
organization realizes that it does not have a sufficient network for
the entire service area. For example, five organizations have requested
to make changes to the service area of a total of 10 plans after bid
submission deadlines since 2019.
Bid integrity is a priority for CMS. A request by an organization
to make service area reductions related to provider networks after the
bid submission deadline, calls into question the completeness and
accuracy of the bid(s). The provider network is an important
consideration in preparing the bid submission. Permitting the MA
organization to make changes to the bid submission because of the
inability to establish an adequate network, which is reviewed after the
first Monday in June (the bid deadline), would subsequently allow the
MA organization to introduce revised information into the bidding
process. The introduction of this revised information after the first
Monday in June implies that the initial bid submission was not
complete, timely, or accurate. The proposed requirement that MA
networks be submitted for review as part of the application mitigates
this issue, as CMS's review of these networks as part of the
application is complete before bids are due.
Furthermore, network adequacy reviews are a critical component for
confirming that access to care is available for enrollees. Our network
evaluations ensure that MA organizations have networks that are
sufficient to provide enrollees with access to providers and facilities
without placing undue burden on enrollees seeking covered services. We
indicated that adding network reviews back to the application process
will help ensure overall bid integrity, result in improved product
offerings, and protect beneficiaries.
After we adopted the current policy, failures detected during
network reviews were not a basis for CMS to deny an application and CMS
expected plans to cure deficiencies and meet network adequacy standards
once coverage began on January 1 of the following year. In analyzing
the network adequacy review determinations for the years since we
removed network adequacy requirements from the application, we have
observed a pattern across these network review outcomes: Organizations
continue to have failures in their networks even after the contract is
operational. For example, we found that 19 initial applicants who
submitted provider and facility Health Service Delivery (HSD) tables
since contract year 2019 continued to have deficiencies upon review of
their networks once the MA plans were operational. We explained that by
changing the process and reviewing the provider networks as part of the
application, CMS will be able to better understand whether the failures
are due to the timing of the reviews, which we hope the 10-percentage
point credit (discussed later in this section of this final rule) will
account for, or whether they are failures that the organization cannot
cure. Establishing and maintaining adequate provider networks capable
of providing medically necessary covered services to enrollees is
fundamental to participation in the MA program.
Our current process and Sec. 422.116(a)(1)(i) do not prohibit us,
when evaluating an application, from considering information related to
an organization's previous failure to comply with an MA contract due to
previous failures associated with access to services or network
adequacy
[[Page 27807]]
evaluations resulting in intermediate sanction or civil money penalty
under to part 422, subpart O, with the exception of a sanction imposed
under Sec. 422.752(d). This will continue to be applicable to our
evaluation of initial or SAE applications. The changes we proposed,
which require compliance with network adequacy standards during the
application process, will help us assess which organizations are not
capable of meeting CMS standards in a given service area. As a result,
we proposed to broaden our ability to safeguard the MA program by
permitting evaluations of network adequacy in connection with our
review and approval of applications for new and expanding service
areas. This ability will help us avoid approving organizations that
could have issues providing access to care in these new or expanded
service areas.
We found that the current timing of the network adequacy reviews
impacts applicants' ability to make timely decisions regarding the
service area in which they intend to provide coverage. The operational
process for conducting network adequacy reviews is outlined in the
``Medicare Advantage and Section 1876 Cost Plan Network Adequacy
Guidance''.\80\ The guidance currently directs initial and SAE
applicants to upload their HSD tables containing pending service areas
into the Health Plan Management System (HPMS) Network Management Module
(NMM) in mid-June for CMS review. Regulations under Sec. 422.254(a)(1)
require organizations to submit bids no later than the first Monday in
June of each year and authorize CMS to impose sanctions or choose not
to renew an existing contract if the bid is not complete, timely and
accurate. CMS has issued guidance to remind MA organizations of this
obligation that bids be complete and accurate at the time of
submission, such as in the CY 2014 through CY 2020 Final Call Letters
(provided as attachments to the annual Rate Announcements \81\) and the
CY 2022 MA Technical Instructions, released in an HPMS memo on May 12,
2021. Providing organizations with network adequacy determinations
ahead of the bid deadline (within the application timeline) will
provide them the opportunity to make decisions regarding their intended
service areas before submitting bids. This practice would also help
mitigate operational issues CMS has experienced related to requests for
service area changes after the deadline has passed, as these kinds of
requests may affect the MA organization's submissions on the bid
pricing tool. For these reasons, we are finalizing our proposal to
revise paragraph (a)(1)(ii) of Sec. 422.116 to require an applicant
for a new or expanding service area to demonstrate compliance with
Sec. 422.116 and to explicitly authorize CMS to deny an application on
the basis of an evaluation of the applicant's network for the new or
expanding service area.
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\80\ https://www.cms.gov/files/document/medicareadvantageandsection1876costplannetworkadequacyguidance6-17-2020.pdf.
\81\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.
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We also proposed to amend Sec. 422.116 by adding a new paragraph
(d)(7), which provide applicants with a temporary 10-percentage point
credit towards the percentage of beneficiaries residing within
published time and distance standards for all of the combinations of
county designations and provider/facility types specified in Sec.
422.116(d), for the proposed contracted network for a new service area
or a service area expansion (SAE). Current CMS procedures (see ``The
Part C--Medicare Advantage and 1876 Cost Plan Expansion and 1876 Cost
Plan Expansion Application'' \82\) require completed applications to be
submitted by mid-February. We understand that organizations may have
difficulties meeting this timing for submission of a full provider
network that the proposed change in Sec. 422.116(a)(1)(i) would
require. We previously separated the network adequacy reviews from the
application process due to the potential challenge of applicants
securing a full provider network almost a year in advance of the
contract becoming operational. In order to provide flexibility to
organizations as they build their provider networks, we proposed to
allow the 10-percentage point credit towards the percentage of
beneficiaries residing within published time and distance standards for
the contracted network in the pending service area, at the time of
application and for the duration of the application review. At the
beginning of the applicable contract year (that is, January 1), the 10-
percentage point credit would no longer apply, and plans would need to
be in full compliance for the entire service area. This aspect of our
proposal will balance the burden on applicants of having network
contracts in place close to a year before the beginning of the coverage
year with the need to ensure that the MA plans have adequate networks
for furnishing covered benefits to their enrollees.
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\82\ https://www.cms.gov/files/document/cy-2022-medicare-part-c-application-updated-1-12-2021.pdf.
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Starting with the contract year 2024 application cycle, initial and
service area expansion applicants will be required to submit their
proposed contracted networks during the application process. Applicants
will upload their HSD tables to the NMM by the application deadline,
and CMS will generally follow the current operational processes for
network reviews, which include an opportunity to submit exception
requests as outlined in Sec. 422.116(f). The disposition of the
exception request would be communicated as part of the opportunity to
remedy defects found in the application under Sec. 422.502(c)(2).
Applicants for SAEs who are also due for a triennial review would be
required to submit their pending new service area during the
application process, and their existing network service area(s)
separately, during the triennial review in mid-June.
We acknowledge and thank commenters for providing their
perspectives regarding our proposals to amend our network adequacy
policy. We received a number of comments related to these proposals,
and have summarized them and included our responses.
Comment: Numerous commenters expressed support for our proposal to
require compliance with network adequacy standards as part of an
application for a new or expanding service area. Commenters agreed that
network adequacy is critical to enrollees' access to care. Commenters
noted that improving our oversight of provider networks would
strengthen beneficiary protections and ensure timely access to
providers without placing undue burden on enrollees. Other commenters
also noted that our proposal would hold plans accountable for providing
access to care, especially in underserved communities.
Response: We thank the commenters for their support of our
proposal. As previously noted, we believe that requiring MA
organizations to demonstrate compliance with network adequacy standards
during the application process for a new or expanding service area will
improve our oversight and effectiveness of network adequacy reviews and
our ability to safeguard the Medicare program.
Comment: Some commenters expressed support for our proposal to
require that applicants demonstrate compliance with network adequacy
standards during the application process because they believed this
would help ensure bid integrity, which
[[Page 27808]]
the commenters agreed should be a priority for CMS.
Response: We thank the commenters for their comments regarding bid
integrity. As indicated in our proposal, we believe that providing MA
organizations with information regarding their ability to provide
coverage in a proposed service area ahead of the bid deadline would
mitigate issues with service area reduction requests and ensure overall
bid integrity.
Comment: A commenter suggested that requests to make service area
reductions after the bid deadline are relatively rare based on the
number of new and service area expansion applications that are
submitted, thus our proposal would needlessly increase burden on the
entire industry for few occurrences.
Response: While there may be fewer instances of service area
reduction requests relative to MA applications submitted, we believe
that any such request has the potential to compromise the overall
integrity of the bidding process. As we have previously indicated,
ensuring overall bid integrity is a priority for CMS. In addition, we
note that this provision helps improve our oversight of provider
networks, which strengthens beneficiary protections. Therefore, we
believe the added burden of requiring applicants to demonstrate
compliance with network adequacy standards is justified, particularly
in light of the flexibilities, discussed later in this section, that we
are adopting for how applicants for new MA contracts or expanded
service areas can demonstrate compliance with the network adequacy
requirements.
Comment: Many commenters did not support our proposal. Commenters
expressed concerns over the proposed timing for the submission and
review of initial and service area expansion applicants' networks
(during the time of application in mid-February of each year). The
commenters believed this timing would be insufficient for MA
organizations to build high-quality provider networks, and would
negatively impact negotiations with provider groups, giving providers
leverage to negotiate higher rates that could increase healthcare costs
and reduce benefits. Commenters also suggested that our proposal would
disproportionately impact smaller organizations working to expand to
certain regional, rural, and medically underserved areas, thereby
inhibiting competition among plans and ultimately limiting choice for
beneficiaries; some of these commenters also expressed that the
proposal would provide an unfair advantage to large health plans with
an existing presence in these areas. Several commenters posited that
our proposal would place a substantial administrative burden on MA
organizations and on providers, and that establishing contracts with
organizations takes a significant amount of time. Finally, a number of
commenters asked CMS to consider allowing MA organizations to use
Letters of Intent (LOIs) to contract with providers as a means to meet
network adequacy standards, and in order to provide flexibility as they
work to come into compliance for the coverage year.
Response: We appreciate the commenters' feedback regarding our
proposal. As we noted in the proposed rule, we understand that
requiring an MA organization to establish a full provider network
almost a year in advance of the contract becoming operational will be
difficult. We also indicated that we previously separated the network
adequacy reviews from the application process due to the potential
challenge of applicants securing a full provider network almost a year
in advance of the contract becoming operational. While we believe
evaluating provider networks at the time of application is important,
we agree that some flexibility is appropriate to address this challenge
for applicants.
Therefore, based on the comments received, we are modifying the
regulation to allow LOIs to be used in lieu of signed provider
contracts, at the time of application and for the duration of the
application review. The LOI must be signed by both the MA organization
and the provider with which the MA organization intends to negotiate.
Further, applicants must notify CMS of their use of LOIs to meet
network standards and submit copies (upon request) of the LOIs in the
form and manner directed by CMS. At the beginning of the contract year,
the MA organization must be in full compliance with the section,
including having signed provider and facility contracts in place of the
LOIs.
CMS would also require any MA organization that utilized LOIs for
the application of a new or expanding service area to participate in
the triennial review to evaluate compliance with network adequacy
standards. This triennial review by CMS will occur during the first
year a plan is operational in its new service area.
Comment: Many commenters supported our proposal to allow a 10-
percentage point credit at the time of an MA organization's application
and during the application review. Some of these commenters recommended
that the credit no longer apply once the contract is operational. Some
of the commenters expressed the view that the proposed 10-percentage
point credit struck the right balance between showing sensitivity to
the challenges for MA organizations in developing and submitting
provider networks on a much earlier timeline as part of the application
process and demonstrating awareness of the need for CMS to monitor the
adequacy of MA organizations' provider networks.
A number of commenters noted that the 10-percentage point credit
would not be sufficient to make an impact on meeting network standards,
especially in rural and other areas with limited providers. Some
commenters suggested that we increase the 10-percentage point credit
without specifying what percentage point they would prefer, whereas
others suggested that we increase the credit to a 20-, 30-, or higher
percentage point credit. A commenter noted that the credit undermines
CMS's effort to improve network adequacy. A commenter requested
clarification on whether other credits would be affected by the
proposed 10-percentage point credit for initial and service area
expansion applicants.
Response: We thank commenters for their support of this proposal
and acknowledge the concerns that were raised by other commenters. As
we indicated in our proposal, we understand that organizations may have
difficulties meeting this timing for submission of a full provider
network. Therefore, in order to provide flexibility to organizations as
they build their provider networks, we proposed to allow the 10-
percentage point credit towards the percentage of beneficiaries
residing within published time and distance standards for the
contracted network in the pending service area, at the time of
application and for the duration of the application review. We believe
a 10-percentage point credit, in conjunction with use of Letters of
Intent (LOIs), as discussed above, will provide MA organizations with
enough flexibility to meet network adequacy standards within the
application timeframe.
We also clarify that the 10-percentage point credit would be
separate from and in addition to any other applicable credit
established in Sec. 422.116(d).
Comment: A few commenters suggested that CMS allow MA organizations
to apply for additional time to meet network adequacy standards for
initial and service area expansion applicants. A few commenters
suggested that CMS delay
[[Page 27809]]
implementation of this proposal until 2025.
Response: We believe that allowing the 10-percentage point credit
towards the percentage of beneficiaries residing within published time
and distance standards and allowing the use of LOIs in lieu of signed
contracts, as discussed previously in this rule, for the contracted
network in the pending service area, at the time of application and for
the duration of the application review, provide sufficient flexibility
for MA organizations. We also believe that establishing these changes
for the 2024 coverage year will allow us to improve our oversight and
effectiveness of network adequacy reviews in a timely fashion.
After careful consideration of the comments received from various
stakeholders and for the reasons set forth in our responses and in the
proposed rule, we are finalizing, with modifications, the following
changes to Sec. 422.116:
Revise Sec. 422.116(a)(1)(ii) to provide that beginning
for contract year 2024, an applicant for a new or expanding service
area must demonstrate compliance with this section as part of its
application for a new or expanding service area and CMS may deny an
application on the basis of an evaluation of the applicant's network
for the new or expanding service area.
Add a new paragraph at Sec. 422.116(d)(7), with the
heading ``New or expanding service area applicants.'', to provide that
beginning for contract year 2024, an applicant for a new or expanding
service area receives a 10-percentage point credit towards the
percentage of beneficiaries residing within published time and distance
standards for the contracted network in the pending service area, at
the time of application and for the duration of the application review.
In addition, applicants may use an LOI, signed by both the MA
organization and the provider or facility with which the MA
organization has started or intends to negotiate, in lieu of a signed
contract at the time of application and for the duration of the
application review, to meet network standards. As part of the network
adequacy review process, applicants must notify CMS of their use of
LOIs to meet network standards, in lieu of a signed contract and submit
copies upon request and in the form and manner directed by CMS. At the
beginning of the applicable contract year, the credit and the use of
the LOIs no longer apply, and if the application is approved, the MA
organization must be in full compliance with this section, including
having signed contracts with the provider or facility.
D. Part C and Part D Quality Rating System
This final rule finalizes a technical change at Sec.
422.166(i)(12) proposed in the January 2022 proposed rule to enable CMS
to calculate 2023 Star Ratings for three Healthcare Effectiveness Data
and Information Set (HEDIS) measures that are based on the Health
Outcomes Survey (HOS). It also finalizes provisions adopted in the
March 31st COVID-19 IFC and the September 2nd COVID-19 IFC to enable us
to calculate the 2021 and 2022 Star Ratings due to the COVID-19
pandemic.
1. Background
CMS develops and publicly posts a 5-star rating system for Medicare
Advantage (MA) and Part D plans based on the requirement to disseminate
comparative information, including information about quality, to
beneficiaries under sections 1851(d) and 1860D-1(c) of the Act and the
collection of different types of quality data under section 1852(e) of
the Act. The Star Rating system for MA and Part D plans is used to
determine quality bonus payment (QBP) ratings for MA plans under
section 1853(o) of the Act and the amount of beneficiary rebates under
section 1854(b) of the Act. Cost plans under section 1876 of the Act
are also included in the MA and Part D Star Rating system, as codified
at Sec. 417.472(k). We use different data sources to measure quality
and performance of contracts, such as CMS administrative data, surveys
of enrollees, information provided directly from health and drug plans,
and data collected by CMS contractors. Various regulations require
plans to report on quality improvement and quality assurance and to
provide data which help beneficiaries compare plans (for example,
Sec. Sec. 417.472(j) and (k), 422.152(b), 423.153(c), and 423.156).
The methodology for the Star Ratings system for the MA and Part D
programs is codified at Sec. Sec. 422.160 through 422.166 and 423.180
through 423.186, respectively.
The Star Ratings are generally based on measures of performance
during a period that is 2 calendar years before the year for which the
Star Ratings are issued; for example, 2023 Star Ratings will generally
be based on performance during 2021. For some measures, such as the
cross-sectional measures collected through the HOS, Star Ratings are
based on performance up to 3 calendar years prior to the Star Ratings
year. For example, the HOS administered in 2021 asked about care
received (for example, whether a healthcare provider advised the member
to start, increase, or maintain their level of exercise or physical
activity) in the 12 months prior to the survey's administration--that
is a period of time covering parts of the 2020 and 2021 calendar
years--and the data will be used for the 2023 Star Ratings.
In the March 31st COVID-19 IFC (85 FR 19230), we adopted a series
of changes to the 2021 and 2022 Star Ratings to address the disruption
to data collection and impact on performance for the 2020 measurement
period posed by the public health emergency (PHE) for COVID-19. The
Star Ratings changes adopted in that rule addressed both the needs of
health and drug plans and their providers to curtail certain data
collections and adapt their current practices in light of the COVID-19
PHE and the need to care for the most vulnerable patients, such as the
elderly and those with chronic health conditions. As explained in the
March 31st COVID-19 IFC, we expected to see changes in measure-level
scores for the 2020 measurement period due to COVID-19-related
healthcare utilization, reduced or delayed non-COVID-19 care due to
advice to patients to delay routine and/or elective care, and changes
in non-COVID-19 inpatient utilization. The March 31st COVID-19 IFC made
some adjustments to account for potential changes in measure-level
scores so health and drug plans could have some degree of certainty
that the Star Ratings would be adjusted and could continue their focus
on patients who were most in need. (See 85 FR 19269 through 19275 for a
description of the various adjustments.)
The March 31st COVID-19 IFC amended, as necessary, certain
calculations for the 2021 and 2022 Part C and D Star Ratings to address
the expected impacts of the COVID-19 PHE on data collection and
performance in 2020 that were immediately apparent. As the PHE for
COVID-19 progressed in 2020 with ultimately all areas across the
country eligible for Star Ratings disaster adjustments for extreme and
uncontrollable circumstances under the current regulations (Sec. Sec.
422.166(i) and 423.186(i)) for the 2022 Star Ratings, it became
apparent that a modification to the existing disaster policy was
required in order to calculate cut points for non-CAHPS measures for
the 2022 Star Ratings.
We adopted regulations for how Star Ratings would be calculated in
the event of extreme and uncontrollable circumstances in the April 2019
final rule. Under Sec. Sec. 422.166(i)(9)(i) and
[[Page 27810]]
(i)(10)(i) and 423.186(i)(7)(i) and (i)(8)(i), the numeric scores for
contracts with 60 percent or more of their enrollees living in Federal
Emergency Management Agency (FEMA)-designated Individual Assistance
areas at the time of the extreme and uncontrollable circumstance are
excluded from: (1) The measure-level cut point calculations for non-
CAHPS measures and (2) the performance summary and variance thresholds
for the reward factor. The 60 percent rule ensures that any impact of
an unforeseen and uncontrollable circumstance on a particular contract
(or group of contracts) in a specific geographic area does not affect
the ratings for other contracts. As explained in the April 2019 final
rule (84 FR 15777), CAHPS measures use a relative distribution and
significance testing, rather than clustering, to determine Star Ratings
cut points; our testing indicated that when affected contracts were
removed from the distribution of measure-level scores, the distribution
of the remaining contracts looked very similar, suggesting that the
affected contracts are randomly distributed among the rating levels.
Additionally, the CAHPS methodology to assign cut points is less
sensitive to extreme outliers that may result from the impact of a
disaster on contract-level measure scores; thus, the 60 percent rule
does not apply to the calculation of cut points for CAHPS measures.
When only a small number of counties are designated by FEMA as
Individual Assistance areas, application of the 60 percent exclusions
means that the performance of other contracts serving larger or other
service areas is used to establish the necessary thresholds for Star
Ratings for non-CAHPS measures and the reward factor.
Up until the 2022 Star Ratings, disasters for which any Star Rating
adjustments had been made were localized, and the 60 percent rule had
removed scores from only a small fraction of contracts (that is, less
than 5 percent of contracts on average). The unprecedented impact of
COVID-19 created a new methodological issue where, without a revision
to the existing disaster policy rules for calculating the measure-level
cut points for the 2022 Star Ratings, we would not have had enough
contracts to reliably calculate the non-CAHPS measure-level cut points.
Consequently, CMS would not have been able to assign Star Ratings for
all non-CAHPS measures. Similarly, we would not have had enough
contracts to reliably calculate the performance summary and variance
thresholds for the Reward Factor.
For most measures, the extreme and uncontrollable circumstance
adjustment applies for disasters from 2 years prior to the Star Ratings
year (that is, a disaster that begins \83\ during the 2020 measurement
period results in a disaster adjustment for the 2022 Star Ratings). For
Part C measures derived from the HOS, the disaster adjustment is
delayed an additional year due to the timing of the survey and 1 year
recall period. (See 84 FR 15772 through 15773 for an example of the
timing of disaster adjustments for measures from the HOS.) Although the
CAHPS surveys and HEDIS data collection were not completed in 2020 (we
did conduct the HOS in 2020 on a later schedule than usual), CAHPS
surveys and HEDIS data collection completed in 2021 reflected
performance by plans in 2020 during the PHE for COVID-19 and were used
in the 2022 Star Ratings.
---------------------------------------------------------------------------
\83\ We use the start date of the incident period to determine
which year of Star Ratings could be affected, regardless of whether
the incident period lasts until another calendar year.
---------------------------------------------------------------------------
In the September 2nd COVID-19 IFC (85 FR 54820), we revised the
disaster policy rules for calculating the non-CAHPS measure-level cut
points for the 2022 Star Ratings so we would be able to calculate the
2022 Star Ratings for these measures (85 FR 54844-47) since all
contracts qualified for the extreme and uncontrollable circumstance
adjustments due to COVID-19. The change adopted by the September 2nd
COVID-19 IFC at Sec. Sec. 422.166(i)(11) and 423.186(i)(9) removed
application of the 60 percent rule and avoided the exclusion of
contracts with 60 percent or more of their enrollees living in FEMA-
designated Individual Assistance areas from calculation of the non-
CAHPS measure-level cut points for the 2022 Star Ratings. The September
2nd COVID-19 IFC also modified the calculation of the performance
summary and variance thresholds for the reward factor so that the
threshold calculation would not exclude the numeric values for affected
contracts with 60 percent or more of their enrollees in FEMA-designated
Individual Assistance areas at the time of the extreme and
uncontrollable circumstance. These changes ensured that CMS was able to
calculate measure-level cut points for those measures that qualified
for the disaster adjustment for the 2022 Star Ratings; calculate
measure-level 2022 Star Ratings; apply the ``higher of'' policy for
non-CAHPS measures as described at Sec. Sec. 422.166(i)(3)(iv),
(i)(4)(v), (i)(5), and (i)(6)(i) and (iv) and 423.186(i)(3) and
(i)(4)(i) and (iv); calculate the reward factor; and ultimately
calculate 2022 overall and summary ratings for 2022 Star Ratings and
2023 QBPs. It was critical to adopt these changes to avoid an
unworkable result from the current policy in these extraordinary
circumstances and so that CMS could measure actual performance for the
2020 measurement period so plans had an opportunity to demonstrate how
they were tailoring care in innovative ways to meet the needs of their
enrollees during the PHE for COVID-19. Given the unprecedented impacts
of the COVID-19 PHE, it was important to be able to calculate the 2022
Star Ratings to help to continue to drive quality improvement for plans
and providers.
We proposed in the January 2022 proposed rule a specific provision
for 2023 Star Ratings for HEDIS measures derived from the HOS data
collection administered in 2021 covering the 2020/2021 period. We
address the comments we received on that proposal in section II.D.2. of
this final rule. We also address the changes and comments we received
in response to the March 31st COVID-19 IFC and the September 2nd COVID-
19 IFC in sections II.D.3. and II.D.4., respectively, of this final
rule. Per section 1871(a)(3)(C) of the Act, CMS responds to comments on
an interim final rule regarding the Medicare program and finalizes the
interim rules within 3 years of the issuance of the IFC.
2. Provision Related to the HEDIS Measures Calculated From the HOS From
the January 2022 Proposed Rule
In response to the September 2nd COVID-19 IFC, some commenters
requested clarification about the measures that come from the HOS and
when the disaster policy would be applied in light of how HOS measures
receive adjustment after an extreme and uncontrollable circumstance. A
few commenters questioned, based on previous logic for disasters and
HOS measures, whether we anticipated that the impacted HOS data
collection period would not be until 2021 and the ``higher of''
methodology would be applicable to reporting year 2023 for HOS
measures. Another commenter noted that using the 2020 Star Ratings as
an example, the contracts affected by 2018 disasters received the
``higher of'' logic for most measures; however, the HOS and HEDIS-HOS
measures used the ``higher of'' logic only for contracts affected by
2017 disasters. The commenter stated if this timing applies to 2020
disasters, the HOS and HEDIS-HOS measures will receive the higher of
current or prior year measure-level Star Ratings in the 2023 Star
Ratings. The
[[Page 27811]]
commenters requested clarification since the September 2nd COVID-19 IFC
adopted a regulatory change to the 60 percent rule for only the 2022
Star Ratings. We proposed in the January 2022 proposed rule to address
the HEDIS measures derived from the HOS used in the 2023 Star Ratings.
As described in the April 2019 final rule (CMS-4185-F) (84 FR 15772
through 15773), for measures derived from the HOS, the disaster policy
adjustment is for 3 years after the extreme and uncontrollable
circumstance. Thus, we noted in the preamble to that rule that the 2023
Star Ratings would adjust measures derived from the HOS for 2020
extreme and uncontrollable circumstances (85 FR 15772 through 15773).
Based on the comments received and the timing of the HOS
administration, we proposed to amend Sec. 422.166(i) to specifically
address the 2023 Star Ratings, for measures derived from the 2021 HOS
only, by adding Sec. 422.166(i)(12) to remove the 60 percent rule for
affected contracts. This amendment would ensure that we are able to
calculate the Star Ratings cut points for the three HEDIS measures \84\
derived from the HOS and are able to include these measures in the
determination of the performance summary and variance thresholds for
the reward factor for the 2023 Star Ratings. Without removing the 60
percent rule for HEDIS measures derived from the HOS, we would not be
able to calculate these measures for the 2023 Star Ratings or include
them in the 2023 reward factor calculation. By removing the 60 percent
rule, all affected contracts (that is, contracts affected by the 2020
COVID-19 pandemic) with at least 25 percent of their enrollees in FEMA-
designated Individual Assistance areas at the time of the disaster will
receive the higher of the 2022 or 2023 Star Rating (and corresponding
measure score) for each of the HEDIS measures collected through the HOS
as described at Sec. 422.166(i)(3)(iv) for the 2023 Star Ratings.
---------------------------------------------------------------------------
\84\ The HEDIS measures derived from the HOS include Monitoring
Physical Activity, Reducing the Risk of Falling, and Improving
Bladder Control.
---------------------------------------------------------------------------
Below we summarize the comments we received and provide our
responses.
Comment: Most commenters expressed support for removing the 60
percent rule for the 2023 Star Ratings for the three HEDIS measures
(Monitoring Physical Activity, Reducing the Risk of Falling, and
Improving Bladder Control) derived from the HOS due to the COVID-19
PHE. Commenters noted the detrimental effects of the COVID-19 pandemic
on beneficiaries and health care providers and appreciated that this
proposed policy would ensure plans are not penalized on these three
measures because of the effects of the pandemic.
Response: We thank commenters for their support of this provision.
This change to the calculation of ratings for these three HEDIS-HOS
measures will permit CMS to calculate these measures for the 2023 Star
Ratings and include them in the 2023 reward factor calculation.
Comment: A few commenters requested that HEDIS measures derived
from the HOS be removed entirely from the 2023 Star Ratings. They
expressed concern that the proposed policy may be inadequate to account
for the impacts of the COVID-19 PHE on these measures and that they
would be penalized for factors outside of their control.
Response: These three areas--bladder control, physical activity,
and reducing falls risk--are important for beneficiaries' health and
well-being, even during a PHE. Removing the 60 percent rule will allow
most contracts to receive the higher of the 2022 or 2023 Star Ratings
(and corresponding measure score) for each of the HEDIS measures
collected through the HOS, following the rules at Sec. 422.166(i).
This will minimize the impact of the PHE on these measures. It is CMS's
view that including these measures in Star Ratings will provide
valuable information for people with Medicare on important areas of
focus for avoiding serious health problems. As a reminder, as required
at Sec. 422.504(o), MA organizations must develop, maintain, and
implement business continuity plans, including policies and procedures
for disaster or emergency situations. Therefore, we do not believe it
is appropriate to eliminate use of these measures entirely in the Star
Ratings.
After considering the comments we received, and for the reasons set
forth in the proposed rule and in our responses, CMS is finalizing
without modification the provision at Sec. 422.166(i)(12) to codify
special rules for the calculation of the 2023 Star Ratings for the
three HEDIS measures that are collected through the HOS.
3. Provisions in the March 31st COVID-19 IFC
This final rule also responds to comments on and finalizes a series
of changes to the 2021 and 2022 Star Ratings to accommodate the
disruption to data collection posed by the COVID-19 pandemic (FR 85
19271-19275) that were established in the March 31st COVID-19 IFC. The
following is a summary of the provisions and the public comments
received on those changes to Part C and D Star Ratings policies
included in the March 31st COVID-19 IFC.
a. HEDIS, CAHPS, and HOS Data Collection and Submission for 2021 Star
Ratings and 2022 Star Ratings
The March 31st COVID-19 IFC eliminated the requirement to submit
HEDIS and CAHPS data at Sec. 422.152(b)(6) for MA contracts and at
Sec. 417.472(i) and (j) for cost plans, and to submit CAHPS data at
Sec. 423.182(c)(3) for Part D contracts. CMS suspended the collection
and submission of HEDIS and CAHPS measures to allow health plans,
providers, and physician offices to focus on caring for Medicare
beneficiaries during the early stages of the PHE for COVID-19. These
actions were adopted to minimize the risk of the spread of infection by
eliminating travel and in-person work for the collection of HEDIS data
and ensure the safety of CAHPS survey vendor staff by aligning with the
CDC's social distancing guidance. Both Part C and D plans could use any
data already collected for their internal quality improvement efforts.
CMS also delayed the administration of the HOS until late summer.
To address the potential that CMS might not be able to complete HOS
data collection in 2020 (for the 2022 Star Ratings), the March 31st
COVID-19 IFC also adopted a provision at Sec. 422.166(j)(2)(i) to
replace, if the HOS was not conducted in 2020, any measures calculated
based on HOS data collections with earlier values from the 2021 Star
Ratings that were not affected by the public health threats posed by
COVID-19. This specific provision was designed to address any gaps in
the necessary HOS data if the HOS could not be administered in 2020.
The Star Ratings measures from the HOS include the following: Improving
or Maintaining Physical Health; Improving or Maintaining Mental Health;
Reducing the Risk of Falling; Improving Bladder Control; and Monitoring
Physical Activity.
Comment: Some commenters commended CMS for curtailing HEDIS and
CAHPS data collection so that plans and providers could focus on
providing care and not put their employees at risk. Other commenters
appreciated that by completely eliminating the submission requirements
and removing the possibility of a competitive disadvantage as a result
of ceasing data retrieval efforts, CMS enabled plans to better focus on
patient care and the safety of plans' employees. Commenters
[[Page 27812]]
expressed a general understanding of the sensitivity around data
collection during this time and the need to focus plans and providers
on caring for Medicare beneficiaries.
Response: CMS appreciates the support and emphasis on plans' focus
on providing care to Medicare enrollees from the onset of the COVID-19
pandemic.
Comment: Some commenters argued that the HEDIS and CAHPS data
collections were already well advanced before shutdowns occurred so
there would be little risk to personnel involved in finishing data
collection. These commenters stated that HEDIS data collection could be
done electronically or through claims analysis and not through in-
person contact, thus maintaining social distancing guidance. They also
argued that CAHPS survey response rates do not increase much in the
last few months of data collection.
Response: The intent of these changes was to eliminate some of the
data collection requirements given the public health and safety
concerns with collecting the data and to enable plans to focus on the
care and safety of their employees and Medicare beneficiaries. Given
the extraordinary circumstances under which the healthcare system was
operating, CMS wanted plans to have some degree of certainty related to
Star Ratings program requirements and wanted to make sure plans would
be able to focus on ensuring that Medicare beneficiaries received the
care and treatment they needed. The issues facing the healthcare
system, including significant differences across regions and
demographic groups, created unique challenges for the 2021 and 2022
Star Ratings calculations. Given these concerns, CMS believes that, had
the 2020 submission requirements for HEDIS and CAHPS data remained in
force, we would not have had complete data for HEDIS and CAHPS across
all contracts as needed in order to accurately calculate Star Rating
measure cut points for the 2021 Star Ratings. Data collection was
ongoing for HEDIS, including medical record review, so not all
contracts were near completion.
Data collection was curtailed for CAHPS after the first survey
mailing so the data were not complete or representative of all
enrollees. In general, for the MA and PDP CAHPS Survey, approximately
40 percent of responses come from the second mailing and telephone
follow-up. Further, approximately 50 percent of responses from younger
beneficiaries (those under age 55) and black beneficiaries, and 60
percent of Spanish language beneficiary responses, come from the second
mailing and telephone follow-up, which were not yet completed at the
time the March 31st COVID-19 IFC was issued.
Comment: Commenters were generally supportive of CMS's decision to
delay 2020 HOS data collection until late summer 2020, although some
commenters wanted all 2020 HOS data collection to be halted. Other
commenters recommended CMS move forward with the 2020 administration of
HOS, with the stipulation that any data collected be used for internal
plan purposes only and not used in the 2022 Star Ratings.
Response: We appreciate the support for delaying the 2020 HOS
administration until late summer. The HOS data collection was
successfully completed in the fall of 2020. Although the survey was
successfully administered, two measures from the HOS, Improving or
Maintaining Physical Health and Improving or Maintaining Mental Health,
were moved to the display page for the 2022 and 2023 Star Ratings due
to data validity concerns as described in the HPMS memorandum
``Medicare Health Outcomes Survey (HOS) Outcome Measures Moved to
Display for 2022 and 2023 Star Ratings,'' released on August 5,
2021.\85\
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\85\ HPMS Memos for WK 1 August 2-6, 2021. CMS.
---------------------------------------------------------------------------
Comment: A few commenters agreed with CMS's plan to replace the
2022 Star Ratings for HOS measures with the 2021 Star Ratings if the
HOS could not be administered, but some commenters argued plans should
have the choice of receiving either the 2021 or 2022 Star Ratings and
corresponding scores.
Response: CMS did not have to replace the 2022 Star Ratings with
the 2021 Star Ratings for the measures from the HOS since the survey
was administered in fall 2020. CMS could not select the higher measure-
level star and corresponding numeric data for the measures from the HOS
for the 2022 Star Ratings since HOS measures did not qualify for the
extreme and uncontrollable circumstances adjustment due to COVID-19 due
to the timing and recall periods for the HOS. We are therefore not
finalizing the provision at Sec. 422.166(j)(2)(i) which authorized
replacement of measures calculated based on HOS data collections for
the 2022 Star Ratings with earlier values from the 2021 Star Ratings.
Because the HOS was completed in 2020, the provision at Sec.
422.166(j)(2)(i) is moot and it is not necessary to finalize it
permanently.
Comment: Some commenters requested that the HOS measures be moved
to the display page until at least 2023 or 2024. Additionally, some
commenters urged CMS to consider the impact of COVID-19 not only on the
2020 and 2021 HOS data but also on the 2022, 2023, and 2024 Star
Ratings. Many commenters stated that even if current conditions
improved enough to allow HOS to be fielded in 2020, comparisons of
previous and future year scores, as well as comparisons across
contracts, would not be valid during the COVID-19 pandemic. A few
commenters pointed out that trends will likely vary by region or state
based on the prevalence of COVID-19 and the presence or absence of
state governments' constraints on patient travel and provider
operations. Some commenters argued that it would not be feasible for
CMS to adjust HOS outcome measures to account for all COVID-associated
factors (for example, social isolation, loneliness, fear of death,
national rhetoric regarding the value of elders, economic impacts, and
decreased opportunity for physical activities) and pointed out that the
negative impacts may last for years. Some commenters did not believe
HOS data collected in 2020 would be indicative of overall plan quality,
but would instead reflect the massive disruption to the healthcare
system caused by the COVID-19 pandemic. To avoid unfairly penalizing
plans for circumstances outside their control, most commenters
recommended that CMS continue to collect HOS data in 2020 but remove
the measures from the Star Ratings for up to 3 years. In particular,
commenters were concerned about the two HOS outcome measures, Improving
or Maintaining Physical Health and Improving or Maintaining Mental
Health.
Response: Although the HOS data collection was completed as
scheduled in fall 2020, CMS agrees that the COVID-19 PHE significantly
impacted the validity of the two HOS outcome measures. CMS issued the
HPMS memorandum ``Medicare Health Outcomes Survey (HOS) Outcome
Measures Moved to Display for 2022 and 2023 Star Ratings,'' on August
5, 2021 announcing that the Improving or Maintaining Physical Health
and Improving or Maintaining Mental Health measures would be moved to
the display page on CMS.gov with a note that the comparisons were pre-
and post-pandemic and that the measures would not be included in the
2022 and 2023 Star Ratings because of validity concerns related to the
COVID-19 PHE. These two measures were therefore not included in the
2022 Star Ratings, and
[[Page 27813]]
they will not be included in the 2023 Star Ratings.
After consideration of the public comments we received, we are
finalizing without modification the provisions eliminating for 2020 the
requirement to submit HEDIS and CAHPS data for MA contracts at Sec.
422.152(b)(6) and for cost plans at Sec. 417.472(i) and (j), and to
submit CAHPS data for Part D contracts at Sec. Sec. 423.156 and
423.182(c)(3). HOS data collection was completed as scheduled in fall
2020; thus, we are not finalizing the provision at Sec. 422.166(j)(2)
to replace any measures calculated based on HOS data collections for
the 2022 Star Ratings with earlier values from the 2021 Star Ratings
that were not affected by the public health threats posed by COVID-19.
b. Adjustments to the 2021 Star Ratings Methodology Due To Lack of
HEDIS and CAHPS Data
The March 31st COVID-19 IFC replaced the 2021 Star Ratings measures
calculated based on HEDIS and Medicare CAHPS data collections with
earlier values from the 2020 Star Ratings (which were not affected by
the public health threats posed by COVID-19) at Sec. Sec.
422.166(j)(1) and 423.186(j)(1).
Comment: Some commenters agreed with CMS that given the impact of
the COVID-19 pandemic, CMS should use the 2020 Star Ratings scores and
stars in place of 2021 Star Ratings scores and stars. Some commenters
stated that such an approach would lessen the impact of any declines in
performance that were driven by the PHE and outside of the control of
Part C and D sponsors. Further, given that COVID-19 had differential
geographic impacts throughout the country, commenters expressed that
keeping all plans to the 2020 ratings would keep scoring more stable.
Other commenters recommended that CMS use the 2021 Star Ratings
scores and stars. They stated that to not do so would not align with
the goal of the program, which is to provide current unbiased and
accurate information on the quality performance of a health or drug
plan for consumers to make their best health care decisions.
Some commenters also argued that to not use the 2021 Star Ratings
would ignore the efforts plans had made during the previous year to
significantly improve their HEDIS and CAHPS measure scores. Some
commenters stated they disagreed with CMS's statement that measure
scores and stars do not fluctuate significantly year to year. They
argued that not using 2021 Star Ratings could negatively impact
contracts demonstrating year-over-year improvement and ``new'' plans.
Some commenters wanted the choice to use either their 2020 or 2021
Star Ratings. A few commenters suggested that if the 2021 HEDIS and
CAHPS measures were not going to be used, these measures should be
removed from the 2021 Star Ratings program or moved to the display
page.
Response: We believe that the provisions in the March 31st COVID-19
IFC were necessary to ensure public health and safety during this
unprecedented time. If we had required plans to collect HEDIS and CAHPS
data, plans would have been forced to choose between protecting the
safety of those collecting data, potentially diverting resources away
from the urgent care needs of Medicare beneficiaries impacted by COVID-
19, and collecting data needed by the Star Ratings program.
For the 2021 Star Ratings, there was no reason not to use the most
recent data available from all applicable sources. Unlike HEDIS and
CAHPS, other data sources for the 2021 Star Ratings were not impacted
by COVID-19 and could continue to be used to show recent plan
performance. Given that not all data sources were impacted by COVID-19
for the 2021 Star Ratings, and CMS had the ability to calculate the
2021 Star Ratings with the most recent data available for all measures,
there was no reason to allow plans to choose if they wanted the 2020
Star Ratings or the 2021 Star Ratings. CMS did not consider moving both
HEDIS and CAHPS data to the display page for the 2021 Star Ratings,
since that would have resulted in all contracts being rated on only 10
out of 32 Part C measures, which would not reflect the full range of
care and services plans provide.
After consideration of the public comments we received, we are
finalizing without modification the provisions, as codified at
Sec. Sec. 422.166(j)(1) and 423.186(j)(1), to use the 2020 Star
Ratings HEDIS and CAHPS data for the 2021 Star Ratings.
c. Use of 2020 Star Ratings To Substitute for 2021 Star Ratings in the
Event of Extraordinarily Compromised CMS Capabilities or Systemic Data
Issues
In the March 31st COVID-19 IFC, CMS established a process for the
calculation of the 2021 Star Ratings in the event that the impact of
the COVID-19 pandemic made it necessary for CMS to focus exclusively on
the continued performance of essential agency functions, and the agency
did not have the ability to calculate valid and accurate 2021 Star
Ratings at Sec. Sec. 422.164(i), 422.166(j)(1)(v), 423.184(i), and
423.186(j)(1)(iv).
CMS's top priority at the beginning of the pandemic was to ensure
public health and safety, including that of beneficiaries, health and
drug plan staff, and providers, and to allow health and drug plans,
providers, and physician offices to focus on the provision of care.
Adopting this provision to address such extraordinary circumstances
before they potentially could come to pass in connection with the
COVID-19 pandemic ensured that Medicare health and drug plans were
aware of the steps CMS would take if we were unable to calculate the
2021 Star Ratings.
Comment: Some commenters supported CMS's proposal to establish
modified methods of calculating or assigning 2021 Star Ratings if
needed due to potential concerns over the impact of the COVID-19
pandemic on agency functions and the ability to calculate the Star
Ratings.
Response: CMS appreciates commenters' understanding of our proposal
to establish modified methods for calculating or assigning 2021 Star
Ratings in the event that the impact of the COVID-19 pandemic made it
necessary for CMS to focus exclusively on the continued performance of
essential agency functions, or there were systematic measure-level data
issues.
We are not finalizing the proposed provisions at Sec. Sec.
422.166(j)(1)(v) and 423.186(j)(1)(iv) in this final rule, as CMS was
able to calculate the 2021 Star Ratings. We are also not finalizing the
special rules for 2021 Star Ratings at Sec. Sec. 422.164(i) and
423.184(i), as CMS did not identify any data quality issues for non-
HEDIS and non-CAHPS measures for the 2021 Star Ratings.
d. Guardrails
CMS modified Sec. Sec. 422.166(a)(2)(i) and 423.186(a)(2)(i) to
delay the application of the guardrails for non-CAHPS measures until
the 2023 Star Ratings are issued in October 2022. To increase the
predictability of the cut points used for measure-level ratings, in the
April 2019 final rule (84 FR 15761), we adopted a rule that, starting
with the 2022 Star Ratings, guardrails would be implemented for
measures that have been in the program for more than 3 years. As
specified at Sec. Sec. 422.166(a)(2)(i) and 423.186(a)(2)(i), the
guardrails ensure that the measure threshold-specific cut points for
non-CAHPS measures do not increase or decrease more than 5 percentage
points from 1 year to the next. As noted in the April 2019 final rule,
the trade-off for the predictability provided by the bi-directional cap
is the inability to fully
[[Page 27814]]
keep pace with changes in performance across the industry. While cut
points that change less than the cap would be unbiased and keep pace
with changes in the measure score trends, changes in the overall
performance that are greater than the cap would not be reflected in the
new cut points. We anticipated that most, if not all, contracts could
have had performance changes on certain measures as they dealt with the
demands of the COVID-19 pandemic that would result in the guardrails
not keeping pace with changes in measure scores across the industry.
Given the enormity of the COVID-19 pandemic, CMS believed it was
important for plans to be able to focus on patients who were in the
most need during the outbreak, and our guardrails, as currently
constructed, could have had unintended incentives to the contrary.
Comment: Many commenters agreed with our provision delaying the
application of guardrails for non-CAHPS measures until the 2023 Star
Ratings. These commenters appreciated that CMS recognized the
significant changes in health care utilization that have occurred
during the pandemic and that these changes in utilization might persist
for some time.
Response: CMS appreciates commenters' support for this provision.
After consideration of the public comments and for the reasons
provided in the March 31st COVID-19 IFC and our responses to comments,
CMS is finalizing without modification the provisions at Sec. Sec.
422.166(a)(2)(i) and 423.186(a)(2)(i) to delay the use of guardrails
until the 2023 Star Ratings.
e. Improvement Measures
Another provision of the March 31st COVID-19 IFC expanded the
existing hold harmless adjustment for the Part C improvement measures
at Sec. 422.166(f)(1)(i) and (g)(3), and for the Part D improvement
measures at Sec. 423.186(f)(1)(i) and (g)(3), to include all contracts
for the 2022 Star Ratings, not just those with 4 or more stars for
their highest rating. At the start of the COVID-19 pandemic, CMS
anticipated that the pandemic could cause plan performance during the
2020 measurement period to decline across the nation. Therefore, we
believed it was appropriate to adopt a provision to minimize the impact
of potential declines in the Part C and D improvement measures. Namely,
for the 2022 Star Ratings, if the inclusion of the Part C improvement
measure reduced the Part C summary Star Ratings, it would be excluded
from the calculation of the summary rating; if the inclusion of the
Part D improvement measure reduced the Part D summary Star Rating, it
would be excluded from the calculation of the summary rating; and if
the inclusion of the Part C and Part D improvement measures reduced the
overall Star Ratings, they would be excluded from the overall rating
calculation.
Comment: Many commenters supported the hold harmless provision for
the Part C and D improvement measures to include all contracts for the
2022 Star Ratings. Some commenters noted that the chaos and disruption
brought about by COVID-19, which created unparalleled uncertainty and
fear for members regarding health and health care, were likely to
eclipse any quality improvement efforts implemented by MA plans during
the performance year.
Response: CMS thanks the commenters for their support of this
provision.
After consideration of the public comments and for the reasons
outlined in the March 31st COVID-19 IFC, CMS is finalizing without
modification the provisions at Sec. Sec. 422.166(g)(3), 423.186(g)(3),
422.166(f)(1)(i), and 423.186(f)(1)(i), to apply the higher ratings
after calculating the overall and summary ratings with and without the
Part C and/or D improvement measures for all contracts only for the
2022 Star Ratings.
f. QBP Calculations for New Contracts
For the 2021 Star Ratings only, CMS modified the definition of a
new MA plan to treat an MA plan as a new MA plan if it was offered by a
parent organization that had not had another MA contract for the
previous 4 years. New plans that started in 2019 and reported HEDIS and
CAHPS data to CMS for the first time in 2020 for the 2021 Star Ratings,
because of our elimination of the HEDIS and CAHPS data submissions to
CMS, would not have had enough measures to calculate the 2021 Star
Ratings and, consequently, the 2022 QBP. A new contract with an
effective date of January 1, 2019 would normally have been treated as
new for QBP purposes for 2019, 2020, and 2021. The 2022 QBP rating was
based on the 2021 Star Ratings, which these new contracts did not have.
Comment: Some commenters supported the modifications made to the
definition of a new MA plan for purposes of 2022 QBPs based on 2021
Star Ratings only. However, some commenters stated this modified
definition of a new MA plan would penalize new plans, denying them the
potential to receive 2022 QBPs. A commenter stated that with respect to
placement on the Medicare Plan Finder, new plans would not have the
option of earning top billing and placement if they are forced to
remain unrated for 2021.
Response: Modifying the definition of a new MA plan as we did in
the March 31st COVID-19 IFC does not preclude a plan from receiving a
QBP. In the March 31st COVID-19 IFC, we modified the definition of a
new plan such that, for purposes of 2022 QBPs based on 2021 Star
Ratings only, an MA plan is considered a new MA plan if it is offered
by a parent organization that has not had another MA contract for the
previous 4 years (rather than 3 years). New plans under parent
organizations with other MA contracts would continue to get the
enrollment-weighted average of the ratings of the other MA contracts
under the parent organization, while new plans under parent
organizations that did not have other MA contracts with ratings would
continue to be treated as qualifying plans for the purposes of QBPs and
would be eligible to receive a QBP percentage increase to the county
rate of 3.5 percentage points.
In terms of placement on Medicare Plan Finder, we note that plans
are currently sorted first by premium, not by Star Rating.
After consideration of the public comments and for the reasons
outlined in the March 31st COVID-19 IFC and our response to comments,
CMS is finalizing the definition at Sec. 422.252 without modification,
such that for only the 2022 QBP ratings that are based on 2021 Star
Ratings, a new MA plan is defined as one that is offered by a parent
organization that has not had another MA contract for the previous 4
years.
4. Provisions in the September 2nd COVID-19 IFC
In addition to the provisions discussed in section II.D.3. of this
final rule, the September 2nd COVID-19 IFC also adopted a modification
to the application of the extreme and uncontrollable circumstances
policy for calculation of the 2022 Star Ratings to address the effects
of the COVID-19 PHE (85 FR 54844-47). The September 2nd COVID-19 IFC
revised the current disaster policy, codified at Sec. Sec. 422.166(i)
and 423.186(i), for 2022 Star Ratings only by: (1) Removing the 60
percent exclusion rule for cut point calculations for non-CAHPS
measures; and (2) removing the 60 percent exclusion rule for the
determination of the performance summary and variance thresholds for
the Reward Factor. As established by the IFC, new Sec. 422.166(i)(11)
provides that CMS does
[[Page 27815]]
not apply the provisions of Sec. 422.166(i)(9) or (10) in calculating
the 2022 MA Star Ratings; and new Sec. 423.186(i)(9) provides that CMS
does not apply the provisions of Sec. 423.186(i)(7) or (8) in
calculating the 2022 Part D Star Ratings. This change ensured that CMS
could: (1) Calculate measure-level cut points for the 2022 Star
Ratings; (2) calculate measure-level Star Ratings for the 2022 Star
Ratings; (3) apply the ``higher of'' policy for non-CAHPS measures, as
described at Sec. Sec. 422.166(i)(3)(iv) and (i)(4)(v) and
423.186(i)(4)(i), for all contracts with 25 percent or more of their
enrollees living in FEMA-designated Individual Assistance areas which
included all Part C and Part D contracts operational during the 2020
measurement period; and (4) ultimately calculate overall and summary
ratings for 2022 Star Ratings and 2023 QBPs.
The following is a summary of the public comments received on these
Part C and Part D Star Ratings policies included in the September 2nd
COVID-19 IFC.
Comment: Most commenters supported dropping the 60 percent rule to
be able to calculate 2022 non-CAHPS measure cut points and apply the
existing adjustment for extreme and uncontrollable circumstances. They
expressed support for modifying the disaster policy so that measure-
level data for affected contracts with 60 percent or more of their
enrollees in FEMA-designated Individual Assistance areas during the
2020 performance and measurement period are not excluded from the
measure-level cut point calculations for non-CAHPS measures and the
performance summary and variance thresholds for the Reward Factor.
Given the enormous impact the COVID-19 pandemic has had on the delivery
of health care, commenters noted that allowing plans to receive the
higher of their measure-level rating from 2021 or 2022 Star Ratings
would help ensure that plans are not penalized for declines in
performance due to the pandemic.
Response: We thank commenters for their support of these
provisions.
Comment: Some commenters requested clarification as to whether the
adjustment for extreme and uncontrollable circumstances would apply to
the CAHPS measures for the 2022 Star Ratings.
Response: Under Sec. Sec. 422.166(i)(9) and 423.186(i)(7), CMS
excludes the numeric values for affected contracts with 60 percent or
more of their enrollees in FEMA-designated Individual Assistance areas
at the time of the extreme and uncontrollable circumstance from the
clustering algorithms. This rule is limited to non-CAHPS measures since
CAHPS measures do not use the clustering algorithm. Because the
calculation of CAHPS cut points was not impacted by the 60 percent
rule, it was not included in the IFC provisions. We did not propose or
make any changes to the extreme and uncontrollable circumstance rules
for the 2022 Star Ratings for CAHPS measures in Sec. Sec.
422.166(i)(2) and 423.186(i)(2).
Comment: Some commenters requested clarification about when the
disaster policy would apply for the measures from the HOS. A few
commenters questioned, based on how the disaster policy has previously
applied for the HOS measures, whether CMS anticipated that the impacted
HOS data collection period would not be until 2021 and the ``higher
of'' methodology would be applicable to the 2023 Star Ratings for HOS
measures. Another commenter noted that for purposes of the 2020 Star
Ratings, the contracts affected by 2018 disasters received the ``higher
of'' logic for most measures; however, the HOS and HEDIS-HOS measures
used the ``higher of'' logic only for contracts affected by 2017
disasters. The commenter observed that if this timing applied to 2020
disasters, the HOS and HEDIS-HOS measures would receive the higher of
current or prior year measure-level Star Ratings in the 2023 Star
Ratings.
Response: We agree with these commenters that the HEDIS-HOS
measures should receive the adjustment for extreme and uncontrollable
circumstances for the 2023 Star Ratings. We proposed in the January
2022 proposed rule a specific provision for 2023 Star Ratings for HEDIS
measures derived from the HOS data collection administered in 2021
covering the 2020/2021 period. In section II.D.2. of this final rule,
we finalize these changes for the 2023 Star Ratings for the HEDIS-HOS
measures.
Comment: A few commenters suggested that not all plans may be
eligible for the extreme and uncontrollable circumstances policy.
Response: All Part C and Part D contracts that were operational
during 2020 qualified for the relevant disaster adjustments for the
2022 Star Ratings.
After consideration of the public comments and for the reasons
outlined in the September 2nd COVID-19 IFC and our responses to
comments, CMS is finalizing without modification the provisions at
Sec. Sec. 422.166(i)(11) and 423.186(i)(9) to codify special rules for
the calculation of the 2022 Star Ratings.
E. Past Performance (Sec. Sec. 422.502, 422.504, 423.503, and 423.505)
CMS has an obligation to ensure the organizations with whom it
contracts are able to provide health care services to beneficiaries in
a high-quality manner. CMS does not want organizations entering into or
expanding in the MA and Prescription Drug programs that are poor
performers. Currently, if an organization meets all of the requirements
of CMS' MA or Prescription Drug program application, CMS approves the
application. However, the application requirements do not look at an
organization's prior performance in existing contracts. Therefore, if
an organization fails to provide key services or administers the
program poorly, their application for a new contract or a service area
expansion would still be approved. Allowing poor performers into the MA
and Prescription Drug programs puts beneficiaries at risk for
inadequate health care services and prescription drugs. To avoid poor
performers from entering or expanding, CMS first addressed this issue
in the MA and Part D program regulations in 2005. CMS has established,
at Sec. Sec. [thinsp]422.502(b) and 423.503(b), that we may deny an
application submitted by an organization seeking an MA or Prescription
Drug program contract, including for a service area expansion, if that
organization has failed to comply with the requirements of a previous
MA or Prescription Drug contract. In the April 2011 final rule (75 FR
19684 through 19686), we completed rulemaking that placed limits on the
period of contract performance that CMS would review (that is, 14
months preceding the application deadline) and established that CMS
would evaluate contract compliance through a methodology that would be
issued periodically through sub-regulatory guidance. In the April 2018
final rule (83 FR 16638 through 16639), we reduced the review period to
12 months. In the January 2021 final rule (86 FR 5864), we established
that CMS would only have the authority to deny applications based on an
organization's past performance if an organization was subject to an
intermediate sanction and/or failed to maintain a fiscally sound
operation during the performance review period. Up until the January
2021 final rule (86 FR 5864) CMS issued a sub-regulatory methodology
consisting of eleven areas of poor performance, including negative net
worth and being under intermediate sanctions during the performance
timeframe. The prior methodology assigned ``performance
[[Page 27816]]
points'' to organizations for each area the organization failed (for
example, had a negative net worth resulted in a performance point). If
the total number of performance points reached CMS' threshold the
organization's application would be denied based on past performance.
Historically, only a handful of applications have been denied based on
prior past performance, with three denials since 2017. The low number
of denials has not impacted access to MA plans nor do we believe
expanding the bases for denials will impact access. In fact, the
average number of plans that a beneficiary has access to has been
increasing since 2015 with approximately 99.7 percent of beneficiaries
currently having access to an MA plan. In addition, 97.7 percent of
eligible beneficiaries have access to ten or more plans in CY 2022.
As stated in the January 2021 final rule, CMS' overall policy with
respect to past performance remains the same. We have an obligation to
ensure MA organizations and Prescription Drug sponsors can fully manage
their current contracts and books of business before expanding. CMS may
deny applications based on past contract performance in those instances
where the level of previous non-compliance is such that granting
additional MA or Prescription Drug business to the organization would
pose a high risk to the success and stability of the MA and
Prescription Drug programs and their enrollees.
The January 2021 final rule limited the bases for denial based on
past performance to intermediate sanctions and failure to maintain
fiscal soundness. In the proposed rule, CMS sought to expand the bases
for application denial to include Star Ratings history, bankruptcy
proceedings, and certain CMS compliance actions. CMS also proposed to
codify the types of compliance notices which would be used as a factor
in CMS' review of an organization's past performance. These notices are
Notices of Non-Compliance (NONCs), Warning Letters (WLs), and
Corrective Action Plans (CAPs).
We are codifying the new bases for application denial based on past
contract performance as paragraphs (b)(1)(i)(C)--Bankruptcy filing or
under bankruptcy proceedings, (b)(1)(i)(D)--low Star Ratings, and
(b)(1)(i)(E)--Compliance Actions. We are also codifying CMS' compliance
actions which are NONCs, WLs, and CAPs in Sec. Sec. [thinsp]422.504(m)
and 423.505(n). We note that the basis for application denial based on
past contract performance is not applicable for MA organizations
establishing new D-SNP-only contracts under Sec. 422.107(e) as
described in section II.A.6.a.
We proposed to correct a few technical issues identified since the
final rule was published in January 2021 and will be codifying those
proposals. Specifically, we proposed to correct a drafting error in
Sec. [thinsp]422.502(b)(1)(i)(A) that did not include enrollment
sanctions based on medical loss ratios (MLRs) as a basis for an
application denial. The technical correction revises Sec.
422.502(b)(1)(i)(A) to also provide for the denial of an application if
the organization failed to meet MLR requirements and was prohibited
from enrolling pursuant to Sec. [thinsp]422.2410(c). Secondly, we
proposed to correct a minor technical error in Sec.
[thinsp]423.503(b)(1)(i)(A) to remove the word ``to'' when referencing
subpart O. Finally, we proposed to modify Sec. Sec.
[thinsp]422.502(b)(1) and 423.503(b)(1) by deleting ``. . . or fails to
complete a corrective action plan during the 12 months preceding the
deadline established by CMS for the submission of contract
qualification applications. . .'' References to CAPs in Sec. Sec.
[thinsp]422.502(b)(1) and 423.503(b)(1) were codified more than 15
years ago. Since the original provisions, CMS' corrective action
process has changed and is no longer a reason, by itself, to deny an
application.
As discussed, we proposed to include in Sec. Sec.
[thinsp]422.502(b)(1)(i)(C) and 423.503(b)(1)(i)(C), as a reason for
application denial, organizations that have filed for bankruptcy or are
currently in bankruptcy proceedings. Failure to maintain a fiscally
sound operation results in enrollees being at risk of not being able to
obtain needed medical resources if the organization cannot or will not
pay its providers. Similar to being fiscally unsound, an organization
that will potentially be declared bankrupt may result in beneficiaries
not having access to needed services as providers may terminate
contracts when the plan fails to pay for their services or items. Since
bankruptcy may result in the closure of an organization's operations,
permitting an organization to expand while under bankruptcy proceedings
is not in the best interest of the MA or Prescription Drug program.
Based on this, we believe that any organization that has filed or is in
bankruptcy proceedings should not be permitted to expand their current
service area or enter into a new contract.
We also sought to include, in Sec. Sec.
[thinsp]422.502(b)(1)(i)(D) and 423.503(b)(1)(i)(D), a recent history
of low Star Ratings as a reason for application denial. We proposed
that CMS would deny an application for a new contract or a service area
expansion from any organization that received 2.5 or fewer Stars.
CMS' Star Ratings are provided to beneficiaries to help them make
informed health care choices. Moreover, MA organizations and
Prescription Drug sponsors are required by Sec. Sec.
[thinsp]422.504(b)(17) and 423.505(b)(26) to maintain summary Part C
and/or Part D Star Ratings of at least 3 Stars. Contracts that have 2.5
or less Stars are considered to be ``low performers.'' Regulations at
Sec. Sec. [thinsp]422.510(a)(4) and 423.509(a)(4) permit CMS to
terminate a contract for having less than 3 Stars for 3 consecutive
years in a row for Part C summary ratings or for having less than 3
Stars for 3 consecutive years in a row for Part D summary ratings. Such
a termination carries with it an exclusion from future MA or
Prescription Drug application approvals for 38 months under Sec. Sec.
[thinsp]422.502(b)(3) and 423.503(b)(3), a more significant consequence
than the 1-year application denial we are discussing in this rule. We
have decided, based on comments, that a 2-year history of low Star
Ratings is a better indicator of poor performance. However, we are
clarifying that the applicant' that have 2.5 or less stars for their
Part C Summary rating, their Part D Summary rating, or a combination of
Part C and Part D Summary ratings for two years be subject to
application and service area expansion denials.
Finally, we proposed to codify our practice of issuing compliance
notices in Sec. Sec. [thinsp]422.504(m) and 423.505(n). CMS also
proposed, in Sec. Sec. [thinsp]422.502(b)(1)(i)(E) and
423.503(b)(1)(i)(E), to include the receipt of specific types of
compliance notices as a reason to deny new applications or applications
for service area expansions.
Prior to the January 2021 final rule, CMS included compliance
letters as a category in our sub-regulatory past performance
methodology. This methodology included NONCs, WLs, Warning Letters with
Business Plans, and CAPs. These notices are CMS' formal way of
recording an organization's failure to comply with statutory and/or
regulatory requirements as well as providing notice to the organization
to correct their deficiencies or risk further compliance and
enforcement actions.
Of these three types of notices, requests for CAPs are the most
serious of the notice types. CMS issues these notices pursuant to
Sec. Sec. [thinsp]422.510(c) and 423.509(c), which require CMS to
afford non-compliant organizations the opportunity to develop and
implement a corrective action plan prior to terminating an MA or
Prescription Drug
[[Page 27817]]
contract. CMS may request CAPs for a one-time egregious error or an
organization's continued failure to correct previously identified
deficiencies. The non-compliance resulting in a CAP request usually has
beneficiary impact, such as failure to process appeals timely or
marketing misrepresentation. In cases where CMS requests a CAP where
there is no beneficiary impact, the majority are for continued non-
compliance with requirements.
WLs are an intermediate level of compliance action, between a NONC
and a CAP. WLs, similar to CAPs, are issued for more egregious
instances of non-compliance or continued non-compliance. However, the
egregiousness or continued non-compliance, at the time of the notice,
would not warrant a request for a CAP. Examples include continued
failure to timely send Explanation of Benefits, multiple cost/benefit
errors on required beneficiary communication documents, and instances
of unsolicited marketing.
NONCs are the lowest form of a compliance action issued by CMS.
These notices are issued for the least egregious failures. These
failures are often a first-time offense, affect a small number/
percentage of beneficiaries, or issues that have no beneficiary impact.
Examples may include failure to submit and/or attest to agent/broker
compensation data or failure to upload or correctly upload marketing
materials.
In determining the level of severity of a compliance action, CMS
considers whether an organization self-reported the non-compliance. CMS
considers items self-reported when CMS would not have otherwise known
about the issue. In cases where we direct organizations to take a
specific action, such as reviewing and reporting errors in Summary of
Benefits (SB) and Evidence of Coverage (EOC) documents, CMS does not
consider this self-reporting.
As mentioned above, self-reporting can affect the level of
compliance action issued. CMS reviews the organization's non-compliance
and whether the organization self-reported the issue or CMS found the
issue through means such as, complaint reviews, notification by a State
entity, or a review of requested data. Based on the issue involved, CMS
determines the appropriate level of compliance that should be issued,
such as a WL or a NONC. If the organization did self-report, CMS will
consider lowering the level of compliance (for example, issuing a NONC
instead of a WL). However, CMS is not required to lower the level of
compliance action if the issue was self-reported. This is especially
the case with respect to NONCs, where the non-compliance is significant
enough to warrant a NONC even if self-reported.
We proposed to assign points to each type of compliance action
based on the type of notice and then apply a compliance action
threshold to determine if the application should be denied. The
following points would be assigned: CAP--6 points, WL--3 points, NONC--
1 point. CMS will then total the points accrued for each contract, and
those applicants that have any single contract with 13 or more
compliance action points may have applications for new contracts or
service area expansions denied on the basis of past performance.
CMS determined the threshold, by reviewing compliance actions taken
from 2017 through November 2021. In the review of this data no more
than three organizations, out of over three hundred organizations,
scored 13 or more compliance action points in any one year. When
looking at a percentile, based on historical data, an organization
would need be in the top 2 percent of plans based on compliance action
points to accrue 13 compliance action points.
For these reasons, we are finalizing the regulations as proposed,
with clarifications regarding compliance actions and modifications to
Star Ratings. Below we summarize the comments received and our
responses.
Comment: We received numerous comments supporting our provisions.
Response: We appreciate the support for our proposals.
Comment: A few of the commenters who supported our provisions
requested CMS take stronger action against plans including reviewing
plan governance, civil and criminal penalties, ensuring plans have
enough liquid assets to cover liabilities to providers, and reviews of
consumer complaints.
Response: CMS appreciates the recommendations and will continue to
review performance areas to determine if additional reasons for service
area expansions and application denials should be added to future
regulations.
Comment: A few commenters suggested that the overall methodology
was too harsh and that it would penalize too many plans. A commenter
suggested that we limit denials to one contract per Parent organization
and do not deny applications of contracts that have less than 10
percent of the Parent organization's total enrollment.
Response: CMS appreciates the suggestion but does not believe it is
in the best interest of the program to limit denials to one contract
per Parent organization or those contracts with less than 10 percent of
the Parent organization's enrollment. The purpose of past performance
is to limit the expansion of all poor performing applicants, not just
one poor performing contract or only those contracts with significant
enrollment. The goal of past performance assessments would be
undermined should a Parent organization be allowed to choose which
contracts are subject to the past performance evaluation and which are
not. The purpose of our past performance evaluation is to ensure that
all applicants, regardless of enrollment numbers, are sufficiently
qualified to expand into a new service area or enter into a new
contract.
Comment: A commenter suggested CMS go back to the past performance
methodology prior to the January 2021 final rule, specifically using
the outlier percentage threshold for compliance letters and requiring
poor performance in more than one category.
Response: CMS appreciates the comment. However, we believe the
current and proposed methodology sufficiently identifies poor
performers. The previous methodology, using an 80 percent and 90
percent outlier resulted in ``poor performers'' in the compliance
category regardless of the number of compliance actions received. A
contract with few compliance actions could be considered an outlier
based on other contracts having one or two fewer compliance actions.
The prior methodology also failed to identify poor performers if many
contracts received a significant number of compliance actions. We
believe the threshold number appropriately identifies all contracts
that are poor performers in the compliance action category. We also do
not agree that an applicant should be required to have poor performance
in more than one category. We believe failing to meet CMS' requirements
for any of our categories is sufficient to determine that the applicant
is not qualified to enter into new contracts or expand existing service
areas based on their past performance. Therefore, we will continue to
deny applications when the applicant fails to achieve sufficient
performance in any one category.
Comment: We received a few comments requesting clarification or
asking that CMS' Program Audit Corrective Action Plans be excluded from
the compliance category.
Response: CMS is clarifying that CAPs resulting from CMS' Program
Audits were not included in the compliance action category of our
proposal or this final rule.
[[Page 27818]]
Comment: We received comments regarding the inclusion of Star
Ratings as one of the bases for application denials. A few commenters
asked if the Star Ratings used for past performance were the overall
Star Ratings or the summary Star Ratings for Part C and Part D. A few
commenters requested that CMS use the overall Star Ratings and a few
commenters requested that CMS average the parent organization's Star
Ratings instead of using the contract-level Star Ratings.
Response: CMS notes that Star Ratings are calculated at the
contract level and not the parent organization level. In addition, we
note that CMS contracts with a legal entity, not a parent organization.
Therefore, averaging all Star Ratings for all contracts under a parent
organization would be inconsistent with how CMS contracts with
organizations. As for using the overall Star Rating instead of the Part
C or Part D Summary rating, CMS notes that our existing termination
authority at Sec. Sec. 422.504(a)(17) and 423.505(b)(26) is based on
low ratings for either the Part C or Part D summary rating. Using the
overall Star Rating for past performance would be inconsistent with the
application of Star Ratings for termination. To ensure clarity, we have
modified the regulatory text to clarify that CMS will use the Part C or
Part D summary Star rating for past performance purposes.
Comment: Commenters had various concerns regarding Star Ratings in
the past performance methodology. A few commenters opposed including
Star Ratings in the methodology. Commenters expressed concern that
public health emergencies, such as COVID-19, had a negative effect on
Star Ratings. A few commenters believe the inclusion of Star Ratings
would disincentivize high performing plans from acquiring low
performing plans and decrease plan options. Other commenters stated
that CMS already has the authority to terminate contracts after three
years of low ratings and that should be sufficient. A few commenters
suggested that CMS use two years, instead of one year, of Star Ratings
in the past performance methodology.
Response: CMS appreciates the commenters' concerns regarding the
inclusion of Star Ratings in the past performance methodology. Based on
the comments received, we are finalizing our proposal with a
modification to require that a contract have two consecutive years of
Part C Summary, Part D Summary, or a combination of Part C and Part D
Summary ratings of 2.5 or below to receive a denial of new applications
or service area expansions. CMS will use the two most recent Star
Ratings period--that is, those that fall in the 12-month lookback
period as specified in 42 CFR 422.502(b)(1) and 423.503(b)(1). More
specifically, if an organization received a Part C summary rating of
2.5 or below for both of the most recent Star Rating periods, CMS will
deny a new application or a service area expansion. The same holds true
if an organization received a Part D summary rating of 2.5 or below for
both of the most recent Star Rating periods. If an organization
received a Part C summary rating of 2.5 or below for one of the Star
Rating periods during the most recent lookback period and received a
Part D summary of 2.5 or below for the other Star Rating period during
the most recent lookback period, CMS will also deny new applications or
service areas expansions. For example, for a 2024 application submitted
in February 2023, the lookback period will be March 1, 2022 through
February 28, 2023, which includes the 2022 and 2023 Star Ratings
periods. If the applicant received a summary Star Rating of 2.5 or
below for Part C or Part D for the 2022 Star Rating period AND for the
2023 Star Rating period, then the application will be denied. If the
organization received a Part C/or Part D summary Star Rating of 2.5 or
below only for the 2022 Star Rating period or only for the 2023 Star
Rating period, then the application will not be denied.
With respect to commenters' concern that emergencies, such as the
COVID-19 pandemic, negatively affect Star Ratings, we note that CMS
addresses emergencies, such as COVID-19, in the calculation of Star
Ratings using an adjustment for extreme and uncontrollable
circumstances policy codified at Sec. Sec. 422.166(i) and 423.186(i)
to mitigate the impact of the disaster on Star Ratings. CMS adopted a
number of changes to address expected changes in plan performance due
to the COVID-19 public health emergency (PHE) on Star Ratings in the
March 31stCOVID-19 IFC (85 FR 19230) and September 2nd COVID-19 IFC (85
FR 54820). Although we expected a decline in measure scores across Star
Ratings measures for the 2020 measurement year, we did not see a
decline across all measures and saw an increase in scores for a number
of measures (see the Fact Sheet--2022 Part C and D Star Ratings\86\).
Based on CMS's authority to account for extreme and uncontrollable
circumstances, such as the COVID-19, we do not believe the methodology
needs to be modified based on issues related to disasters.
---------------------------------------------------------------------------
\86\ Part C and D Performance Data CMS.
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Finally, in response to the commenters who believe that plan
choices will decrease as a result of our proposed inclusion of low Star
Ratings as a basis for application denial, we believe the commenters do
not fully understand the proposed methodology. The purpose of the
methodology is to prohibit expansions of contracts, not to terminate or
decrease the service area of contracts. Based on this, beneficiaries
will still be able to enroll or stay enrolled in an existing contract,
even though the contract has low Star Ratings. However, the legal
entity will not be able to expand into new service areas or add new
contracts.
Comment: A few commenters were unsure if the methodology was at the
Parent organization level, the legal entity level, or the contract
level.
Response: CMS' contract and past performance methodology is
calculated at the legal entity level. CMS contracts with a legal entity
that covers one or more contracts. If any one of the contracts under
the legal entity meets any one of the reasons for denial, all new
applications and service area expansions under that legal entity will
be denied.
Comment: A few commenters suggested CMS provide MA organizations
with an appeal process for compliance actions.
Response: CMS appreciates the need to ensure that compliance
actions taken against MA organizations are accurate and appropriate.
However, we do not believe an appeal process is necessary. The majority
of our compliance actions are data driven, with formal thresholds that
define whether an organization receives a compliance action and what
level of action is issued. CMS also has an organized process which all
potential compliance actions must go through, resulting in greater
consistency in the issuance of compliance actions. In addition, when
requested by an organization, CMS reviews information provided by the
organization and re-reviews the compliance action to determine if the
action was appropriate. CMS has a long-standing history of discussing
compliance actions with organizations and retracting or modifying
compliance actions when necessary. Based on our existing process we do
not feel a formal appeals process is necessary for compliance actions.
CMS notes that a formal appeal process is available for applicants
whose application has been denied for past performance reasons
specified in this rule.
Comment: A few commenters were unsure if the compliance action
threshold was at the contract level or if
[[Page 27819]]
all contract points for the legal entity were added together.
Response: The compliance action point threshold of 13 is at the
contract level. We have modified the regulatory text to ensure clarity
regarding the point threshold. CMS will review all of the compliance
actions and total the points for each contract. If any particular
contract under a legal entity has 13 or more compliance action points
new applications and service area expansions for that legal entity will
be denied.
Comment: A few commenters were concerned that one small contract
could affect the entire organization.
Response: CMS acknowledges that one poor performing contract could
prohibit an applicant from service area expansions of other contracts
or prohibit the applicant from entering into a new contract. As
previously stated, if an organization has a poor performing contract it
is in the best interest of the program for that organization to focus
on improving the performance of the poor performing contract, no matter
how small or how few enrollees are in the contract, instead of
expanding their footprint. CMS believes all contracts under a legal
entity should meet our requirements before that legal entity is
permitted to expand into new service areas or add new contracts.
Comment: A commenter stated that CMS should only consider the
financial health of the acquiring organization and not of the financial
health of the organization being acquired.
Response: Organizations that acquire a poor performing organization
are provided a 24-month grace period preceding the subsequent
application deadline, after which the performance of the acquired
organization will be factored into the acquiring organization's
performance. Based on this, if a fiscally sound organization acquires
an organization that fails to meet CMS' net worth requirements, the
acquiring organization will not be denied the opportunity to expand
into new service areas or add new contracts, if the entity was acquired
within the 24-month period prior to the application deadline. However,
the acquired organization will still be denied. Given the acquired
organization has significant fiscal soundness issues, the acquiring
organization should be putting all necessary resources into the
acquired organization's fiscal soundness issues, rather than trying to
expand or enter into new contracts under that legal entity.
Based on the comments received, we are finalizing as proposed with
a few modifications. The first modification is to use 2 years of Star
Ratings for Part C Summary, Part D Summary, or a combination of Part C
and Part D Summary ratings. The second modification is to clarify that
CMS is using the Part C Summary and Part D Summary Star ratings. The
final modification is to clarify that the 13 compliance action points
are allotted on a per contract basis.
F. Marketing and Communications Requirements on MA and Part D Plans To
Assist Their Enrollees (Sec. Sec. 422.2260 and 423.2260, 422.2267, and
423.2267)
As discussed in the proposed rule, sections 1851(h) and (j) of the
Act provide a structural framework for how MA organizations may market
to beneficiaries and direct CMS to adopt standards related to the
review of marketing materials and limitations on marketing activities.
Section 1860D-1(b)(1)(B)(vi) of the Act directs that the Secretary use
rules similar to and coordinated with the MA rules at section 1851(h)
of the Act for approval of marketing material and application forms for
Part D plan sponsors. Section 1860D-4(l) of the Act applies certain
prohibitions under section 1851(h) of the Act to Part D sponsors in the
same manner as such provisions apply to MA organizations. In addition,
sections 1852(c) and 1860D-4(a) of the Act provide that MA
organizations and Part D sponsors must disclose specific types of
information to each enrollee. Based on these authorities, CMS has
promulgated regulations related to marketing and mandatory disclosures
by MA organizations and Part D sponsors in 42 CFR part 422, subparts C
(at Sec. 422.111) and V; as well as 42 CFR part 423, subparts C (at
Sec. 423.128) and V, as directed in the statutory authority granted to
the agency. Additionally, as we noted in the proposed rule, under 42
CFR 417.428, most marketing requirements in subpart V of part 422 also
apply to section 1876 cost plans. Finally, CMS has authority to adopt
additional contract terms for cost plans (section 1876(i)(3)(D of the
Act)), MA plans (section 1857(e)(1)) of the Act), and Part D plans
(section 1860D-12(b)(3)(D) of the Act) where such terms are not
inconsistent with the Medicare statute and that we determine are
necessary and appropriate.
As we did in the proposed rule, because the changes that CMS is
finalizing in this section are, unless otherwise noted, applicable to
MA organizations, Part D plan sponsors, and section 1876 cost plans, we
collectively refer to these entities in this section as ``plans.''
In the January 2021 final rule, entitled ``Medicare and Medicaid
Programs; Contract Year 2022 Policy and Technical Changes to the
Medicare Advantage Program, Medicare Prescription Drug Benefit Program,
Medicaid Program, Medicare Cost Plan Program, and Programs of All-
Inclusive Care for the Elderly'' (86 FR 5864), we codified much of the
communications and marketing guidance previously found in the Medicare
Communications and Marketing Guidelines (MCMG). In this final rule, we
are codifying additional guidance and standards from the MCMG that was
not part of the January 2021 final rule related to member ID card
standards, the limited access to preferred cost-sharing pharmacies
disclaimer, plan website instructions on how to appoint a
representative, and the website posting of enrollment instructions and
forms. In addition, we are codifying several new communications and
marketing requirements aimed at further safeguarding Medicare
beneficiaries, including reinstating the requirement that plans include
a multi-language insert with specified required materials. Finally, we
are codifying requirements to address concerns associated with third-
party marketing activities.
1. Required Materials and Content
Under Sec. 422.111(i), MA plans must issue and reissue (as
appropriate) member identification cards that enrollees may use to
access covered services under the plan. Likewise, under 1860D-
4(b)(2)(A) of the Act and Sec. 423.120(c)(1), a Part D plan sponsor
must issue a card or other type of technology that its enrollees may
use to access negotiated prices for covered Part D drugs. In the
proposed rule, we proposed to codify CMS's current guidance for
additional ID card standards, which has historically been issued in the
MCMG.
Comment: Most comments that we received on this proposal were
supportive. Commenters indicated that including ID cards as required
materials will ensure consistency for beneficiaries regardless of the
plan in which they enroll.
Response: We acknowledge and appreciate the support for this
provision as well as the awareness of the vital nature of the
provision.
Comment: We received a comment that pursuant to the existing
standards for required materials and context, the ID card would, as a
required material, be subject to the 12-point font requirement whereas
CMS guidance has previously excluded ID cards from that requirement.
Such comment requested
[[Page 27820]]
that we continue to exclude the ID card from the 12-point font
requirement to which required materials are subject.
Response: We thank the commenter and acknowledge that it would be
impractical to require a 12-point font on an ID card. Furthermore, we
acknowledge that we have previously (in the MCMG) excluded the ID card
from the 12-point font requirement. In addition, we note that CMS has
followed the guidance of the Workgroup for Electronic Data Interchange
(WEDI) in crafting our required formatting for communications
materials. However, as WEDI does not stipulate any requirements for
font size, we will not extend our font size requirement to ID cards.
We are codifying the guidance for ID card requirements under
Sec. Sec. 422.2267(e)(30) and 423.2267(e)(32) as proposed, except that
in response to the aforementioned comment we are including an
additional clarifying at Sec. Sec. 422.2267(e)(30)(vii) and
423.2267(e)(32)(vii) to exclude the ID cards from the 12-point font
size requirement under Sec. Sec. 422.2267(a)(1) and 423.2267(a)(1). In
addition, we have renumbered the remaining required content beginning
with the Federal Contracting statement, previously at Sec. Sec.
422.2267(e)(30) and 423.2267(e)(32).
In the January 2021 final rule, when codifying several other
required disclaimers previously provided in the MCMG, Appendix 2, at
Sec. Sec. 422.2267(e) and 423.2267(e), CMS inadvertently left out the
disclaimer for Part D sponsors with limited access to preferred cost-
sharing pharmacies. In the January 2022 proposed rule, we discussed the
importance of this disclaimer and the impact of its omission on
Medicare beneficiaries enrolled in Part D plans that only provide
access to preferred cost-sharing through a limited number of
pharmacies.
Comment: The comments we received on this proposal were supportive.
Response: We acknowledge and appreciate the support for this
proposal.
For the reasons set forth in the proposed rule and in response to
the supportive comments we received, we are codifying this disclaimer
requirement at Sec. 423.2267(e)(40), as proposed.
2. Website Requirements
The regulations at Sec. Sec. 422.111(h)(2) and 423.128(d)(2)
require plans to have an internet website and include requirements
regarding posted content. In the January 2021 final rule, we codified
additional requirements for plan websites at Sec. Sec.
[thinsp]422.2265 and 423.2265 based on section 70.1.3 (Required
Content) of the MCMG. In doing so, we inadvertently failed to include
the requirement that plans post instructions about how to appoint a
representative and include a link to a downloadable version of the CMS
Appointment of Representative Form (Control Number 0938-0950)), as well
as enrollment instructions and forms.
Comment: We received comments supporting this proposal.
Response: We acknowledge and appreciate the support for this
provision.
Comment: A commenter noted that CMS did not include the Notice of
Dismissal of Appeal in part 423. Additionally, CMS has not included the
Notice of Dismissal of Coverage Request in either part 422 or 423. The
comment requested that CMS codify both of these notices as indicated.
Response: This comment is outside the scope of the current rule.
However, CMS appreciates the observation and will consider this
suggestion in future rulemaking. We note that the appeal regulations in
subparts M of parts 422 and 423 (for example Sec. Sec. 422.568(h) and
423.568(j)) address the content requirements for notices of dismissal.
In this final rule, after consideration of the comments received in
response to this proposal and for the reasons described in the proposed
rule, we are codifying these two requirements as proposed under
Sec. Sec. 422.2265(b)(13), 423.2265(b)(14), 422.2265(b)(14), and
423.2265(b)(15), respectively.
3. Multi-Language Insert
In the proposed rule, we explained the history of the multi-
language insert (MLI) (a standardized document that informs the reader
that interpreter services are available in the 15 most common non-
English languages in the United States), CMS's previous requirement in
the Medicare Marketing Guidelines (MMG) that plans include the MLI with
certain materials, and why CMS eventually removed from this requirement
for MA plans, Part D sponsors, and 1876 cost plans because it was
duplicative of certain notice and tagline requirements implemented by
the Office for Civil Rights (OCR) in 2016. Specifically, on May 18,
2016, the OCR published a final rule (81 FR 31375; hereinafter
referenced to as the section 1557 final rule) implementing section 1557
of the Patient Protection and Affordable Care Act (ACA) (Pub. L. 111-
148). Section 1557 of the ACA provides that an individual shall not be
excluded from participation in, be denied the benefits of, or be
subjected to discrimination on the grounds prohibited under Title VI of
the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq. (race, color,
national origin), Title IX of the Education Amendments of 1972, 20
U.S.C. 1681 et seq. (sex (including pregnancy, sexual orientation, and
gender identity)), the Age Discrimination Act of 1975, 42 U.S.C. 6101
et seq. (age), or section 504 of the Rehabilitation Act of 1973, 29
U.S.C. 794 (disability), under any health program or activity, any part
of which is receiving Federal financial assistance; any health program
or activity administered by the Department; or any program or activity
administered by any entity established under Title I of the Act. Part
of OCR's 2016 final rule (81 FR 27778) included the requirement that
all covered entities include taglines with all ``significant
communications''. The sample tagline provided by the Department
consisted of a sentence stating ``ATTENTION: If you speak [insert
language], language assistance services, free of charge, are available
to you. Call 1-xxx-xxx-xxxx (TTY: 1-xxx-xxx-xxxx).'' in the top 15
languages spoken in a state or states. Because of the inherent
duplication with the MLI, CMS issued an HPMS email on August 25, 2016
removing the MLI. On June 14, 2019, OCR published a proposed rule that,
among other actions, proposed to repeal the requirement that notices
and taglines be provided with all significant communications (84 FR
27846). Finally, on June 19, 2020, OCR published a final rule that
finalized the repeal of the notice and tagline requirements while
requiring that a covered entity take reasonable steps to ensure
meaningful access to its programs or activities by LEP individuals (85
FR 37160, 37210, 37245).
In a proposed rule titled ``Medicare and Medicaid Programs;
Contract Year 2021 and 2022 Policy and Technical Changes to the
Medicare Advantage Program, Medicare Prescription Drug Benefit Program,
Medicaid Program, Medicare Cost Plan Program, and Programs of All-
Inclusive Care for the Elderly,'' which appeared in the Federal
Register on February 18, 2020 (85 FR 9002) (hereinafter referred to as
the February 2020 proposed rule), CMS proposed an availability of non-
English translations disclaimer. The disclaimer consisted of the
statement ``ATTENTION: If you speak [insert language], language
assistance services, free of charge, are available to you. Call 1-XXX-
XXX-XXXX (TTY: 1-XXX-XXX-XXXX).'' We proposed that the disclaimer be
required in all non-English languages that met the five percent
threshold for language
[[Page 27821]]
translation under Sec. Sec. 422.2267(a)(2) and 423.2267(a)(2). In
addition, when applicable, we proposed the disclaimer be added to all
required materials under Sec. Sec. 422.2267(e) and 423.2267(e).
However, we did not finalize the proposed disclaimer in January 2021
final rule (86 FR 5995). In doing so, we stated that CMS believed
future rulemaking regarding non-English disclaimers, if appropriate,
was best addressed by OCR, as those requirements would be HHS-wide
instead of limited to CMS. We also stated that CMS believed deferring
to OCR's oversight and management of any requirements related to non-
English disclaimers was in the best interest of the Medicare program.
It is important to note that none of CMS's actions impacting the
various notifications of interpreter services changed the requirement
that plans must provide these services under applicable law. Plans have
long been required to provide interpreters when necessary to ensure
meaningful access to limited English proficient individuals, consistent
with existing civil rights laws. In fact, in the January 2021 final
rule, CMS codified call center requirements under Sec. Sec.
422.111(h)(1)(iii) and 423.128(d)(1)(iii) that require interpreter
services be provided to non-English speaking and limited English
proficient (LEP) individuals at no cost.
In the months following the publication of the January 2021 final
rule, we have gained additional insight regarding the void created by
the lack of any notification requirement associated with the
availability of interpreter services for Medicare beneficiaries. The
U.S. Census Bureau's 2019 American Community Survey (ACS) 1-year
estimates show that 12.2 percent of individuals sixty-five and older
speak a language other than English in the home (https://data.census.gov/cedsci/table?q=language&tid=ACSST1Y2019.S1603). CMS
considers the materials required under Sec. Sec. 422.2267(e) and
423.2267(e) to be vital to the beneficiary decision making process.
Providing a notification for beneficiaries with limited English
proficiency that translator services are available provides a clear
path for this portion of the population to properly understand and
access their benefits. We have also reviewed complaints in the
Complaint Tracking Module (CTM) under the term ``language'' and found
several reporting beneficiary confusion based on a language barrier. In
retrospect, we believe that solely relying on the requirements
delineated in OCR's 2020 final rule for covered entities to convey the
availability of interpreter services is insufficient for the MA, cost
plan, and Part D programs, and is not in the best interest of Medicare
beneficiaries who are evaluating whether to receive Medicare benefits
through these plans, as well as those already enrolled. Ultimately, we
believe it is counterproductive to have regulatory requirements for
interpreter services without an accompanying requirement to inform
beneficiaries that the service is available.
In the January 2022 proposed rule, we therefore proposed the
requirement to use the MLI under Sec. Sec. 422.2267(e)(31) and
423.2267(e)(33). Similar to the previously required version, the MLI
must state ``We have free interpreter services to answer any questions
you may have about our health or drug plan. To get an interpreter, just
call us at [1-xxx-xxx-xxxx]. Someone who speaks [language] can help
you. This is a free service.'' in the 15 most common non-English
languages in the United States. In addition, we proposed the
requirement that plans also include the required statement in any
language that meets the five percent threshold for a plan's service
area, as currently required under Sec. Sec. 422.2267(a)(2) and
423.2267(a)(2) for translation of required materials, when not
currently on the standardized MLI. We also proposed the requirement
that the MLI be included with all required materials listed in
Sec. Sec. 422.2267(e) and 423.2267(e). Finally, in the January 2022
proposed rule, we explained that if OCR were in the future to finalize
broader or more robust requirements associated with interpreter
services than what CMS requires and plans adopted those broader or more
robust OCR requirements, CMS would consider plans compliant with these
MLI requirements.
Comment: Most commenters supported this proposal. Many of these
commenters pointed out that individuals who do not speak English are
often unaware of their rights. The commenters asserted that having the
MLI included with required documents was the best way to reach these
individuals.
Response: We acknowledge and appreciate the support. As stated
above, we have reviewed CTM cases and found reported beneficiary
confusion stemming from not fully understanding materials based on a
language barrier. While MA organizations, Part D sponsors, and cost
plans are required to provide translator services, the requirement
cannot be effective if those organizations do not also inform
beneficiaries that those services are available. As we consider certain
required documents to be vital to a beneficiary's understanding of the
MA, Part D, and cost plan programs, we agree that the requirement to
include the MLI with those required documents is the best way to reach
the target audience.
Comment: Many commenters suggested different ways to implement this
provision including requiring the MLI to be sent with only specific
required documents (such as the Summary of Benefits, the Evidence of
Coverage, and the Annual Notice of Change), requiring the MLI as a
disclaimer on certain required documents, limiting delivery of the MLI
to once annually, placing the MLI on the plan's website, and sending
the MLI as a small flyer with required documents.
Response: We appreciate the suggested alternate methods. However,
we believe that requiring the MLI as a separate full-page document that
is included or provided with all required documents is the best way for
the MLI to reach the target audience. CMS required plans to provide the
MLI under similar circumstances for several years before replacing it
with the language assistance notice and tagline requirements adopted in
OCR's 2016 final rule. OCR implemented the same dissemination method in
its section 1557 final rule from July 18, 2016. Between the MLI and
OCR's analogous language assistance notice and tagline requirements,
CMS has used this method for over 10 years with positive feedback and
few complaints. To reiterate, we are again requiring plan delivery of
the MLI to address the lack of any notification requirement associated
with the availability of interpreter services for Medicare
beneficiaries that exists since OCR repealed the notice and tagline
requirements in its June 19, 2020 final rule.
Comment: We received a comment on the MLI indicating a fear that
beneficiaries will not read it as they receive a prohibitive volume of
paper materials.
Response: For enrollees whose primary language is not English, we
are confident, based on historical consumer testing, that they will
notice a one-page document, prominently displayed with required
documents, directing them how to access support in their chosen
language.
After careful consideration of all the comments received, and for
the reasons set forth in the January 2022 proposed rule and in our
responses to the comments, we are finalizing this provision under
Sec. Sec. 422.2267(e)(31) and 423.2267(e)(33) as proposed.
[[Page 27822]]
4. Third-Party Marketing Organizations
In the proposed rule, we discussed our concerns regarding third-
party marketing organizations (TPMOs) as well as the reasons for those
concerns. We also explained that, while we acknowledge that TPMOs can
serve a role in helping a beneficiary find a plan that best meets the
beneficiary's needs, additional regulatory oversight is required to
protect Medicare beneficiaries from confusing and potentially
misleading activities in this space and to ensure that Medicare health
and drug plans are appropriately overseeing and maintaining
responsibility for the entities that conduct marketing and,
potentially, enrollment activities on the plans' behalf. To this end,
CMS proposed several updates to various sections of parts 422 and 423,
subpart V.
First, we proposed to define TPMOs in Sec. Sec. 422.2260 and
423.2260 as being organizations that are compensated to perform lead
generation, marketing, sales, and enrollment related functions as a
part of the chain of enrollment, that is the steps taken by a
beneficiary from becoming aware of a Medicare plan or plans to making
an enrollment decision. In addition, the proposed definition of TPMOs
specifies that TPMOs may be first tier, downstream or related entity
(FDRs), as defined under Sec. Sec. 422.504(i) and 423.505(i), but
TPMOs may also be other businesses which provide services to customers
including an MA or Part D plan or an MA or Part D plan's FDRs. CMS
specifically solicited comments from stakeholders regarding the
proposed TPMO definition and whether it is sufficiently broad to
capture the scope of the types of entities that may be in a position of
marketing Medicare health and drug plans. Comments revealed that many
of the commenters thought the definition was too broad. Those
commenters indicated that they felt the definition would apply to
entities to whom it shouldn't apply or would be a burden to compliant
organizations instead of applying compliance actions to deter bad
actors. There was comment that the definition was too narrow, and that
there would be bad actors who were not captured by the definition. We
decided, for the reasons discussed in our below response to these
comments, that the definition, with clarifying edits described in this
final rule, is sufficient for now but may choose to revisit it in
future rule-making if the evolving industry landscape indicates that
reevaluation is necessary.
Second, we proposed to codify, in Sec. Sec. 422.2267(e)(41) and
423.2267(e)(41), the requirement that TPMOs use a standardized
disclaimer that states ``We do not offer every plan available in your
area. Any information we provide is limited to those plans we do offer
in your area. Please contact Medicare.gov or 1-800-MEDICARE to get
information on all of your options.'' As part of this proposal, MA
organizations and Part D sponsors would need to ensure that any TPMO
with which they do business, either directly or indirectly, utilizes
this disclaimer where appropriate. MA organizations and Part D sponsors
would also need to ensure TPMO's adherence with these requirements
through contractual arrangements, review of materials or other
appropriate oversight methods available to the MA organization or Part
D sponsor such as complaint reviews or audits. CMS would not require
the disclaimer for those TPMOs who truly offer every option in a given
service area. TPMOs would be required to prominently display the
disclaimer on their website and marketing materials, including all
print materials and television advertising that meet the definition of
marketing. We also would require that the disclaimer be provided
verbally, electronically, or in writing, depending on how the TPMO is
interacting with the beneficiary. In cases where the TPMO is providing
information through telephonic means, the TPMO would be required to
provide this disclaimer within the first minute of the call. We believe
the proposed disclaimer would help to reduce the type of beneficiary
confusion CMS observed when we listened to TPMO-based sales calls.
Third, we proposed to codify new TPMO oversight responsibilities in
Sec. Sec. 422.2274 and 423.2274, covering agent, broker, and other
third-party requirements. These requirements would fall under
Sec. Sec. 422.2274(g) and 423.2274(g), with the heading ``TPMO
oversight,'' and would work (when applicable) in conjunction with the
previously existing FDR requirements in Sec. Sec. 422.504(i) and
423.505(i). As a part of their oversight responsibilities, plans that
do business with a TPMO, either directly or indirectly through an FDR,
would be responsible for ensuring that the TPMO adheres to any
requirements that apply to the plan. An MA or Part D plan cannot
purchase the services of a TPMO, and thereby evade responsibilities for
compliance with Medicare marketing and communication requirements. This
proposed new requirement that those instances where the TPMO does not
contract either directly with the MA organization or the Part D sponsor
or indirectly with a plan's FDR, but where the plan or its FDR
purchases leads or otherwise receives leads directly or indirectly from
a TPMO. It is the responsibility of the MA organization or Part D
sponsor to have knowledge of how and from where it (or its FDR) obtains
leads or enrollments. We also proposed to require plans (and their
FDRs), in their contracts, written arrangements, or agreements with
TPMOs, to require TPMOs to disclose to the plan any subcontracted
relationships used for marketing, lead generation, and enrollment;
require sales calls with beneficiaries to be recorded in their
entirety; and have TPMOs report to plans any staff disciplinary actions
associated with Medicare beneficiary interaction on a monthly basis. As
discussed in the proposed rule, MA organizations and Part D sponsors
may not utilize TPMOs as means of evading their own compliance
responsibilities, and thus these oversight requirements are intended to
require plans to ensure that TPMOs adhere to any requirements that
apply to the plans themselves. Based on this, we are finalizing changes
to the proposed oversight requirements at Sec. Sec.
422.2274(g)(2)(iii) and 423.2274(g)(2)(iii) to require that violations
by TPMOs of requirements that apply to the MA organization or Part D
sponsor be reported to MA organizations and Part D sponsors, in
addition to disciplinary actions. These reporting requirements would
ensure that plans are made aware of all TPMO-associated activities that
are part of or related to the chain of enrollment.
Fourth, we proposed to codify a requirement to provide
beneficiaries with certain notifications associated with TPMO lead
generating activities. In the proposed rule, we discussed how
beneficiaries are receiving outreach from sales agents and brokers
based on previous contact and how this outreach in response to the
previous contact was not prohibited as unsolicited. We explained the
potential for bad actors to abuse this situation, and how beneficiaries
were concerned about how the sales agent or broker had obtained the
beneficiary's contact information. As part of the proposed rule, plans
would be required to ensure that TPMOs conducting lead generating
activities inform the beneficiary that his or her information will be
provided to a licensed agent for future contact, or that the
beneficiary is being transferred to a licensed agent who can enroll him
or her into a new plan. This requirement would help to eliminate
beneficiary confusion by making the role of lead generating TPMOs more
transparent.
Overall, we believe the proposed requirements associated with TPMOs
[[Page 27823]]
will result in greater plan oversight of TPMOs, and in turn, will
result in a more positive beneficiary experience as it relates to
learning about plan choices to best meet their health care needs. We
also believe the new requirements will complement and strengthen
existing requirements. The finalized disclaimers and notifications will
ensure that beneficiaries are more informed. Moreover, the more robust
reporting requirements and oversight we now require will create a
better mechanism for plans to be made aware when beneficiary-related
issues arise.
Comment: We received many comments supporting these proposals. Most
of the supporting comments indicated the ``severe'' impact of bad
actors in the TPMO industry on the Medicare beneficiary population and
the MA and Part D markets. These comments also commended CMS for being
accountable and taking action to curtail ``predatory'' activities of
these entities.
Response: We acknowledge and appreciate the support of these
proposals.
Comment: We received a few comments indicating that these proposed
changes are not sufficient as a whole to protect Medicare beneficiaries
from the actions of TPMOs. These commenters often suggested that CMS
develop mechanisms, best practices, or rules to further curtail the
activities of TPMOs. Other commenters suggested CMS create a reporting
mechanism specifically for instances where beneficiaries have had
detrimental experiences with TPMOs.
Response: We appreciate that the impact of TPMOs on Medicare
beneficiaries bears further observation and analysis. As proposed, we
believe that these requirements should reduce the incidence of
confusing and misleading marketing activities leading to, for example,
improper enrollments, by making beneficiaries more well-informed. CMS
has a mechanism, through 1-800 Medicare, for reporting detrimental
experiences with TPMOs. We review those complaints in our Complaint
Tracking Module (CTM). CMS also engages in robust surveillance of
agents associated with TPMOs, monitoring their sales and enrollment of
beneficiaries. Overall, we have laid the groundwork from which we can
develop additional rules addressing potentially confusing and
misleading activities in this space, while acknowledging the
conscientious performers who act within scope to educate and inform
beneficiaries of their healthcare options. While we recognize that our
authority to enforce compliance on TPMOs is limited to MA
organizations, cost plans, and Part D sponsors, there is room to
develop additional parameters around TPMOs as we gain a greater
awareness of their impact on the Medicare insurance landscape. We will
consider the suggestions made by these commenters as we contemplate
future rulemaking.
Comment: We received a comment on this provision indicating that a
supporting provision further delineating the difference between
educational and marketing events is necessary.
Response: We appreciate this comment. It is, however, outside the
scope of this rule. We will consider this suggestion for future
policymaking in Sec. Sec. 422.2264(c) and 423.2264(c) as those
sections provide an explanation of the difference between educational
events and marketing events.
Comment: We received comments on this provision providing
suggestions as to language of the disclaimer the rule requires. Some
commenters suggested TPMOs be allowed to modify the disclaimer language
to suit individual situations where the operational systems of the TPMO
make use of the disclaimer problematic. Some commenters suggested that
TPMOs be allowed to modify the disclaimer language when reaching out to
individuals with whom they have a business relationship. Some
commenters suggested that CMS modify the disclaimer language so that
entities cannot incorrectly say that beneficiaries will receive their
full Medicare benefits upon enrollment in an MA plan. Some commenters
suggested that the language in the disclaimer be more direct, that the
disclaimer should make it clear that not all plans and benefits are
available in all service areas. Some commenters stated that CMS should
require stronger disclaimer language including consideration of
provider network and availability of current prescription drugs. Other
commenters suggested that the disclaimer contain language referring
beneficiaries to other educational tools including Medicare.gov, State
Health Insurance Programs (SHIPs), and other educational resources.
Response: We respectfully disagree. CMS carefully considered the
content and length of this disclaimer, and believes all of it contains
vital beneficiary information. The potential burden imposed by reading
or listening to this disclaimer is necessary to ensure that plans, and
TPMOs engaged in marketing activities on their behalf, are not
providing information that could mislead beneficiaries into joining
plans contrary to their intention for reaching out, or do not best meet
their needs. For example, the TPMO disclaimer makes it clear that the
TPMO does not offer all available plans, and that beneficiaries must
call 1-800 Medicare or visit Medicare.gov for that information. CMS
believes it provides the most pertinent information without including
more content than a beneficiary can reasonably absorb and understand,
especially during the limited duration of a television or radio
advertisement. Requiring disclaimer language such as provider networks
availability of current prescription drugs, or language referring
beneficiaries to other educational resources, while good information,
could cause the beneficiary to miss the most pertinent information
directly related to the sales and enrollment activities of TPMOs.
Furthermore, requiring a standardized notice ensures that all
beneficiaries receive the same message, and assists CMS by allowing
easier and more robust oversight of that message. The commenters had
suggested modifications that either narrowed the scope of the
disclaimer beyond what we had intended, or altered the disclaimer such
that it no longer matched our intentions. While we received no specific
examples of what operational limitations make compliance challenging,
we will review specific requests and will consider allowing
modifications accordingly. We do not believe that having an existing
relationship with a beneficiary reduces the need for him or her to
receive the exact information in this disclaimer. Regarding commenters
who are concerned about the disclaimer not conveying that enrollees
will not receive full benefits upon enrollment, please note that the
requirements to not provide inaccurate or misleading information that
currently apply to MAOs and Part D sponsors (Sec. Sec.
422.2262(a)(1)(i), 423.2262(a)(1)(i)) also apply to TPMOs under the
proposed TPMO oversight requirements. What we proposed and are
finalizing does match what we intended in both definition and scope.
Comment: We received several comments on the definition of TPMOs,
including comments requesting additional clarity about what types of
entities would be included within this definition. Some commenters
indicated that the definition of TPMOs was too broad such that the
provisions would apply unfairly to different actors in the Medicare
Advantage and Part D plan sales landscape including call center
employees and advocates Additionally, some commenters believed the
proposed definition of TPMOs was too
[[Page 27824]]
narrow. Specifically, some commenters suggested that agents and brokers
should be included in the definition of TPMOs. Other commenters
suggested that agents and brokers should not be included in the
definition of TPMOs. Some commenters suggested we limit the definition
of TPMO to those entities with whom plans have a direct relationship.
Some commenters suggested we limit the definition of TPMO to those
entities who are able to offer all plans in a service area. Some
commenters suggested we limit the definition of TPMO to those entities
who are able to offer only a specific plan within a service area. Some
commenters suggested that the definition of TPMO be limited to only
those entities who are contractually obligated to provide services to a
plan.
Response: We believe that the definition is clear that TPMOs
include all third-party marketers who work on behalf or provide
services to plans. The definition is intentionally broad to ensure MA
and Part D plans properly oversee and are accountable for any entity
who profits in any manner from the enrollment of a beneficiary into an
MA or Part D plan. As defined in Sec. Sec. 422.2260 and 423.2260, this
rule would apply to organizations, as well as agents and brokers, that
are compensated to perform lead generation, marketing, sales, and
enrollment related functions as a part of the chain of enrollment.
TPMOs may be a first tier, downstream or related entity (FDRs), as
defined under Sec. Sec. 422.2 and 423.4, but may also be entities that
are not FDRs but provide services to customers including an MA
organization or Part D sponsor or an MA organization's or Part D
sponsor's FDR. We have carefully considered the wording of this
provision as to the type of entities it encompasses. As described in
the proposed rule, our intent is to cover entities that are conducting
marketing and/or enrollment activities that result in a beneficiary's
enrollment in a Medicare plan, and the definition of TPMO is
deliberately broad to accomplish that. With respect to the comments
regarding the inclusion of individual agents and brokers in the
definition of TPMO, we note that the proposed definition of TPMO
included FDRs, which CMS has historically interpreted to mean
individual agents and brokers, as well as organizational entities (72
FR 68704). However, because our intention to include individuals
including independent agents and brokers was not sufficiently clear, we
are finalizing the definition of TPMO at Sec. Sec. 422.2260 and
423.2260 with an update to clarify that the definition includes such
individuals as well as organizations. In addition, we note that
definition of TPMOs in the proposed rule included incorrect citations
when referencing the regulatory definitions of first tier, downstream,
or related entities. These incorrect citations at Sec. Sec. 422.504(i)
and 423.505(i) have been corrected in this final rule to correctly
refer to Sec. Sec. 422.2 and 423.4. We will explore the definition in
future rulemaking if we feel that the landscape of the industry evolves
such that the definition we are finalizing requires reevaluation.
After careful consideration of all the comments received, and for
the reasons set forth in the January 2022 proposed rule and in our
responses to the comments, we are finalizing the proposed changes to
amend part 422 subpart V and part 423 subpart V with the following
modifications. We are updating the TPMO oversight requirements at
Sec. Sec. 422.2274(g)(2)(iii) and 423.2274(g)(2)(iii) to make clear
that violations by TPMOs of requirements that apply to the MA
organization or Part D sponsor must be reported to MA organizations and
Part D sponsors, in addition to disciplinary actions. We are updating
the definition of TPMOs at Sec. Sec. 422.2260 and 423.2260 to include
individuals such as independent agents and brokers. We are making a
technical correction to the definition of TPMO at Sec. Sec. 422.2260
and 423.2260 to include correct citations to the definitions of FDRs at
Sec. Sec. 422.2 and 423.4. Finally, we are adding a technical
correction that clarifies that ID cards as required documents are
exempt from the requirement to have all text in 12-point font. We are
finalizing all the other provisions in this section as proposed.
To reiterate and summarize, the new and revised regulatory sections
and their content are as follows:
Sections 422.2260 and 423.2260 are revised to add a
definition for Third-Party Marketing Organization (TPMO).
Sections 422.2265(b)(13), 423.2265(b)(14),
422.2265(b)(14), and 423.2265(b)(15) are revised to add instructions on
how to appoint a representative and to add enrollment instructions and
forms.
Sections 422.2267(e)(30) and 423.2267(e)(32) are revised
to add the Member ID card and requirements for the card as a model
document.
Sections 422.2267(e)(31) and 423.2267(e)(33) are revised
to add the Multi-Language Insert.
Sections 422.2267(e)(41) and 423.2267(e)(41) are revised
to add the Third-Party Marketing disclaimer.
Section 423.2267(e)(40) is revised to add the Limited
Access to Preferred Cost-Sharing disclaimer.
Sections 422.2274 and 423.2274 are revised to apply MA and
Part D oversight to TPMOs.
G. Regulatory Changes to Medicare Medical Loss Ratio Reporting
Requirements and Release of Part C Medical Loss Ratio Data (Sec. Sec.
422.2460, 422.2490, and 423.2460)
1. Background
Section 1103 of Title I, Subpart B of the Health Care and Education
Reconciliation Act (Pub. L. 111-152) amended section 1857(e) of the Act
to add a medical loss ratio (MLR) requirement to Medicare Part C (MA
program). An MLR is expressed as a percentage, generally representing
the percentage of revenue used for patient care rather than for such
other items as administrative expenses or profit. Because section
1860D-12(b)(3)(D) of the Act adopts by reference the requirements of
section 1857(e) of the Act, these MLR requirements also apply to the
Medicare Part D program. In the May 23, 2013 Federal Register, we
published a final rule titled ``Medicare Program; Medical Loss Ratio
Requirements for the Medicare Advantage and the Medicare Prescription
Drug Benefit Programs'' (78 FR 31284) (hereinafter referred to as the
May 2013 Medicare MLR final rule), we codified the MLR requirements for
MA organizations and Part D prescription drug plan sponsors (Part D
sponsors) (including organizations offering cost plans that offer the
Part D benefit) in the regulations at 42 CFR part 422, subpart X, and
part 423, subpart X.
Generally, the MLR for an MA or Part D contract reflects the ratio
of costs (numerator) to revenues (denominator) for all enrollees under
the contract. For an MA contract, the MLR reflects the percentage of
revenue received under the contract spent on incurred claims for all
enrollees, prescription drug costs for enrollees in MA plans under the
contract offering the Part D benefit, quality initiatives that meet the
requirements at Sec. 422.2430, and amounts used to reduce Part B
premiums. The MLR for a Part D contract reflects the percentage of
revenue received under the contract spent on incurred claims for all
enrollees for Part D prescription drugs, and on quality initiatives
that meet the requirements at Sec. 423.2430. The percentage of revenue
that is used for other items such as administration, marketing, and
profit is excluded from the numerator of the MLR (see
[[Page 27825]]
Sec. Sec. 422.2401 and 423.2401; 422.2420(b)(4) and 423.2420(b)(4);
422.2430(b) and 423.2430(b)).
For contracts for 2014 and later, MA organizations and Part D
sponsors are required to report their MLRs and are subject to financial
and other sanctions for failure to meet the statutory requirement that
they have an MLR of at least 85 percent (see Sec. Sec. 422.2410 and
423.2410). The statute imposes several levels of sanctions for failure
to meet the 85 percent minimum MLR requirement, including remittance of
funds, a prohibition on enrolling new members, and ultimately, contract
termination. The minimum MLR requirement creates incentives for MA
organizations and Part D sponsors to reduce administrative costs, such
as marketing costs, profits, and other uses of the revenue received by
plan sponsors, and helps to ensure that taxpayers and enrolled
beneficiaries receive value from Medicare health and drug plans.
Section 1001(5) of the Patient Protection and Affordable Care Act
(Pub. L. 111-148), as amended by section 10101(f) of the Health Care
and Education Reconciliation Act (Pub. L. 111-152), also established a
new MLR requirement under section 2718 of the Public Health Service Act
that applies to issuers of employer group and individual market private
insurance. We will refer to the MLR requirements that apply to issuers
of private insurance as the ``commercial MLR rules.'' Regulations
implementing the commercial MLR rules are published at 45 CFR part 158.
We proposed modifications to the MLR reporting requirements in the
Medicare Part C and Part D programs and to the regulation that governs
the release of Part C MLR data.
2. Reinstate Detailed MLR Reporting Requirements (Sec. Sec. 422.2460
and 423.2460)
Each year, MA organizations and Part D sponsors submit to CMS data
necessary for the Secretary to determine whether each MA or Part D
contract has satisfied the minimum MLR requirement under sections
1857(e)(4) and 1860D-12(b)(3)(D) of the Act. In the May 2013 Medicare
MLR final rule (78 FR 31284) that established the Medicare MLR
regulations, CMS codified at Sec. Sec. 422.2460 and 423.2460 that, for
each contract year, each MA organization and Part D sponsor must submit
an MLR Report to CMS that included the data needed by the MA
organization or Part D sponsor to calculate and verify the MLR and
remittance amount, if any, for each contract such as the amount of
incurred claims, expenditures on quality improving activities, non-
claims costs, taxes, licensing and regulatory fees, total revenue, and
any remittance owed to CMS under Sec. 422.2410 or Sec. 423.2410.
To facilitate the submission of MLR data, CMS developed a
standardized MLR Report template that MA organizations and Part D
sponsors were required to populate with their data and upload to the
Health Plan Management System (HPMS), starting with contract year (CY)
2014 MLR reporting, which occurred in December 2015. Based on the data
entered by the MA organization or Part D sponsor for each component of
the MLR numerator and denominator, the MLR reporting software would
calculate an unadjusted MLR for each contract. The MLR reporting
software would also calculate and apply the credibility adjustment
provided for in Sec. Sec. 422.2440 and 423.2440, based on the number
of member months entered into the MLR Report, in order to calculate the
contract's adjusted MLR and remittance amount (if any). In addition to
the numerical fields used to calculate the MLR and remittance amount,
the MLR Report template included narrative fields in which MA
organizations and Part D sponsors provided detailed descriptions of the
methods used to allocate expenses, including how each specific expense
met the criteria for the expense category to which it was assigned.
The proposed rule discussed how CMS originally modeled the Medicare
MLR reporting format on the tools used to report commercial MLR data,
in keeping with our general policy of attempting to align the Medicare
MLR requirements with the commercial MLR requirements to limit the
burden on organizations that participate in both markets, and to make
commercial and Medicare MLRs as comparable as possible for comparison
and evaluation purposes. The proposed rule also explained how, as part
of an initiative to reduce the regulatory burden on private industry,
we later amended the reporting requirements by scaling back the amount
of MLR data that MA organizations and Part D sponsors submit to CMS on
an annual basis, starting with CY 2018. Under current Sec. Sec.
422.2460 and 423.2460, for CY 2018 and subsequent contract years, MA
organizations and Part D sponsors are only required to report each
contract's MLR and the amount of any remittance owed to CMS; they are
no longer required to submit the underlying data needed to calculate
and verify reported MLR and remittance amount, if any. In the final
rule titled ``Medicare Program; Contract Year 2019 Policy and Technical
Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-
for-Service, the Medicare Prescription Drug Benefit Programs, and the
PACE Program'' (83 FR 16440, 16675), which appeared in the April 16,
2018 Federal Register (hereinafter referred to as the April 2018 final
rule) and finalized the current MLR reporting requirements, we
expressed our belief that we would still be able to effectively oversee
MA organizations' and Part D sponsors' compliance with the MLR
requirements by relying solely on audits, as authorized under
Sec. Sec. 422.2480 and 423.2480.
As discussed in greater detail in the proposed rule at 87 FR 1903
through 1904, in light of subsequent experience overseeing the
administration of the Medicare MLR program while the simplified MLR
reporting requirements have been in effect, and after further
consideration of the potential impacts on beneficiaries and costs to
the government and taxpayers when CMS has limited access to detailed
MLR data, we have reconsidered the changes to the MLR reporting
requirements that were finalized in the April 2018 final rule. We have
come to recognize the limitations of our current approach to MLR
compliance oversight, in which we do not collect the information needed
to verify that a contract's MLR has been calculated accurately, except
in the small number of cases that we can feasibly audit each year. As
noted in the proposed rule at 87 FR 1905, we believe we would need to
greatly expand the number of audits we conduct if we were to rely on
them as our sole means of validating the accuracy of MLR reporting, and
we anticipate that the increased cost to the government and the
aggregate burden across all of the additional MA organizations and Part
D sponsors selected for audits would negate the savings that the April
2018 final rule estimated would result from the changes to the MLR
reporting requirements.\87\ For these reasons, we proposed to reinstate
the detailed MLR reporting requirements that were in effect for CYs
2014 through 2017. In addition, we proposed to collect additional data
on certain categories of expenditures, and to make conforming changes
to our data collection tools, which is discussed in section II.G.3.
later in this final rule.
---------------------------------------------------------------------------
\87\ The April 2018 final rule (83 FR 16715) estimated that the
change in the MLR reporting requirements that CMS finalized for CYs
2018 and subsequent contract years would result in annual savings of
$1,446,417 per year ($490,000 to the government and $904,884 to MA
organizations and Part D sponsors).
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[[Page 27826]]
Comment: Many commenters agreed with our proposed reinstatement of
the MLR reporting requirements and believe reinstating these
requirements will provide transparency to beneficiaries and the public.
Response: We appreciate the support.
Comment: Some commenters expressed opposition to the proposed
reinstatement of the Medical Loss Ratio reporting requirement that was
previously in effect for contract years 2014-2017. These commenters
state that this proposal will add administrative burden. Several
commenters expressed concern that more detailed MLR reporting for
supplemental benefits will add burden and administrative costs for MA
organizations and Part D sponsors. Commenters suggested that CMS
require a single consolidated report for supplemental benefits costs
rather than a separate report for each benefit. A majority of these
commenters suggested that CMS maintain the current simplified MLR
reporting requirements that have been in effect since 2018.
Response: We appreciate the feedback. We proposed to reinstate the
collection of detailed MLR reporting requirements that were in effect
for CYs 2014 through 2017 to improve transparency and oversight
concerning the use of Medicare Trust Fund dollars. This requires
reporting of the underlying data used to calculate and verify the MLR
and any remittance amount, such as incurred claims, total revenue,
expenditures on quality improving activities, non-claims costs, taxes,
and regulatory fees. We address the collection of more detailed data
about categories of supplemental benefits in section II.G.3. of this
final rule.
In light of subsequent experience overseeing the administration of
the Medicare MLR program while the simplified MLR reporting
requirements have been in effect, and after further consideration of
the potential impacts on beneficiaries and costs the government and
taxpayers when CMS has limited access to detailed MLR data, we have
reconsidered the changes to the MLR reporting requirements that were
finalized in the April 2018 final rule. We have come to recognize the
limitations of our current approach to MLR compliance oversight, in
which we do not collect the information needed to verify that a
contract's MLR has been calculated accurately, except in the small
number of cases that we can feasibly audit each year.
In developing the MLR reporting format, CMS modeled the data
collection on tools used to report commercial MLR data. This was in
keeping with a general policy of modeling the data collection on tools
used to report commercial MLR data, with modifications for Medicare-
specific needs in order to limit the burden on organizations that
participate in both markets, and to make commercial and Medicare MLRs
as comparable as possible for comparison and evaluation purposes.
Additionally, given the minimal data we currently receive from MA
organizations and Part D sponsors, we believe that we would need to
greatly expand the number of audits we conduct if we were to rely on
them as our sole means of validating the accuracy of MLR reporting. We
would need to conduct comparatively resource heavy audits in order to
identify potentially costly errors in the calculation of the MLR and
remittance amount, including errors that would have been flagged
systematically during the desk review process. We believe that the
increased cost to the government and the aggregate burden across all of
the additional MA organizations and Part D sponsors selected for audits
($13.8 million per year) would negate the savings that the April 2018
final rule estimated would result from the changes to the MLR reporting
requirements ($1.5 million per year). Additional information on the
projected cost and burden estimates of auditing MLR reports can be
found in the Regulatory Impact Analysis (RIA) pages.
Given that MA organizations and Part D sponsors are already
tracking expenses by line of business and contract in order to comply
with our current regulations and account for supplemental benefit
expenditures for both internal accounting and bid development purposes,
we estimate that the additional start-up and ongoing costs and time
burden for submitting detailed data will be moderate. We estimate that
MA organizations and Part D sponsors will incur minimal one-time start-
up costs associated with developing processes for capturing the
necessary data and will incur ongoing annual costs relating to data
collection, populating the MLR reporting form, conducting an internal
review, submitting the MLR reports to the Secretary, and conducting
internal audits. Please see additional discussion of these costs in the
Collection of Information Requirements section of this rule.
We are finalizing this provision without modification.
3. Changes to Medicare MLR Reporting Regulations, Data Collection
Instrument, and Regulations Authorizing Release of Part C MLR Data
(Sec. Sec. 422.2460, 422.2490, and 423.2460)
As noted throughout this section of this final rule, we proposed to
amend our regulations to reinstate the MLR reporting requirements that
were in effect for CYs 2014 through 2017, with some modifications.
Under our proposed amendments, paragraph (a) of Sec. 422.2460 would
state that, except as provided in paragraph (b), for each contract
year, each MA organization must submit to CMS, in a timeframe and
manner that we specify, a report that includes the data needed to
calculate and verify the MLR and remittance amount, if any, for each
contract, including the amount of incurred claims for Medicare-covered
benefits, supplemental benefits, and prescription drugs; expenditures
on quality improving activities; non-claims costs; taxes; licensing and
regulatory fees; total revenue; and any remittance owed to CMS under
Sec. 422.2410.
We proposed similar amendments to paragraph (a) of Sec. 423.2460,
except Sec. 423.2460(a) as proposed would refer to ``incurred claims
for covered drugs,'' would omit any mention of ``covered services (both
Medicare-covered benefits and supplemental benefits),'' and would refer
to the remittance owed to CMS under Sec. 423.2410. In addition, we
proposed to revise paragraph (b) of both Sec. Sec. 422.2460 and
423.2460 to specify that the limited MLR data collection requirements
under that paragraph only apply to MLR reporting for CYs 2018 through
2022.
The proposed rule noted that, in connection with our proposal to
reinstate the detailed MLR reporting requirements, starting with MLR
reporting for CY 2023, we intend to require MA organizations and Part D
sponsors to submit their MLR data to CMS using the MLR Reporting Tool
that was used to report MLR data for CYs 2014 through 2017, with
certain changes. The proposed rule, at 87 FR 1907, discussed the three
types of changes that we intend to make to the MLR Reporting Tool:
First, we will revise the MLR Reporting Tool's formulas to
incorporate changes to the MLR calculation that have been finalized
since CMS stopped developing the MLR Reporting Tool after CY 2017 MLR
Reports were submitted. For example, we will add categories for fraud
reduction expenses and medication therapy management programs in the
section for Activities that Improve Healthcare Quality,
[[Page 27827]]
consistent with changes in the April 2018 final rule that redefined
these categories of expenditures as quality improvement activities (83
FR 16670 through 16673). Similarly, we will design the MLR Reporting
Tool to automatically calculate and insert the medical savings account
(MSA) deductible factor, added to Sec. 422.2440 in a June 2020 final
rule (85 FR 33908).
Second, we will separate out certain items that are
currently consolidated into or otherwise accounted for in existing
lines of the MLR Reporting Tool. For example, we will separate out low-
income cost-sharing subsidy amounts, which were previously subtracted
from the MLR numerator and excluded from the denominator, into an
information-only line in the MLR Reporting Tool's numerator section.
Third, we will separate out the single line in the MLR
Report for claims incurred during the contract year covered by the MLR
Report into separate lines for benefits covered by Medicare Parts A and
B, certain additional supplemental benefits (that is, benefits not
covered by Part A, B, or D and meeting the criteria in Sec.
422.100(c)(2), but excluding supplemental benefits that extend or
reduce the cost-sharing for items and services covered under Parts A
and B), and Part D prescription drug benefits.
The proposed rule noted our intention to require MA organizations
to report all expenditures for Medicare-covered benefits, including
extended A/B coverage (by which we mean, for example, coverage of
additional days during an inpatient stay) and cost-sharing reductions
(by which we mean the value of the difference between the cost-sharing
under Medicare FFS and the plan's cost-sharing), on the same line of
the MLR Reporting Tool, based on our assumption that it would be
exceedingly difficult for MA organizations to separately identify and
track spending on extended coverage of original Medicare benefits and
cost-sharing reductions. We solicited comment on whether this is a
reasonable assumption and whether the MLR Reporting Tool should instead
mirror how MA bids are submitted under Sec. 422.254(b).
The proposed rule discussed our intention to have MA organizations
report expenditures for additional supplemental benefits (supplemental
benefits meeting the criteria in Sec. 422.100(c)(2) but excluding
supplemental benefits that extend or reduce the cost-sharing for items
and services covered under Parts A and B) on multiple lines of the MLR
Reporting Tool, which will represent different types or categories of
supplemental benefits. We explained that requiring MA organizations to
account for their supplemental benefit expenditures by benefit type or
benefit category will provide more transparency into how the MLR is
being calculated, and it will assist CMS in verifying the accuracy of
the MLR calculation, particularly with respect to expenditures related
to categories of supplemental benefits that MA organizations must
already separately report to CMS for purposes of bid development. The
proposed rule also stated that the public release of information on
supplemental benefit spending by benefit type or category may be
helpful to beneficiaries who wish to make their enrollment decisions
based on a comparison of the relative value of the supplemental
benefits actually provided by different MA organizations. We did not
propose to require separate reporting of Part D supplemental benefit
expenditures (that is, they would continue to be reported combined with
other Part D expenditures).
The proposed rule explained that we intend to expand the MLR
reporting requirements beyond what was required under the detailed MLR
reporting requirements that were in effect for CYs 2014 through 2017,
to include expenditures related to supplemental benefits. As part of
reinstating more detailed MLR reporting, the proposed rule described
collecting data on claims incurred for certain supplemental benefits
(that is, benefits not covered by Part A, B, or D and meeting the
criteria in Sec. 422.100(c)(2), but excluding supplemental benefits
that extend or reduce the cost-sharing for items and services covered
under Parts A and B). Based on these considerations, we intend to
expand the MLR reporting requirements beyond what was required under
the detailed MLR reporting requirements that were in effect for CYs
2014 through 2017, to include expenditures related to the following
categories of supplemental benefits:
Dental
Vision
Hearing
Transportation
Fitness Benefit
Worldwide Coverage/Visitor Travel
Over the Counter (OTC) Items
Remote Access Technologies
Meals
Routine Foot Care
Out-of-network Services
Acupuncture Treatments
Chiropractic Care
Personal Emergency Response System (PRS)
Health Education
Smoking and Tobacco Cessation Counseling
All Other Primarily Health Related Supplemental Benefits
Non-Primarily Health Related Items and Services that are
Special Supplemental Benefits for the Chronically Ill (SSBCI) (as
defined in Sec. 422.102(f))
In the proposed rule at 87 FR 1907 through 1908, we discussed the
factors that we took into consideration in compiling the list of
supplemental benefit types and categories in the proposed rule. We
solicited comment on whether the list of supplemental benefit types and
categories would be appropriate breakouts for separating out
supplemental benefit expenditures in the MLR Reporting Tool. We noted
that we were interested in feedback that addressed whether we should
increase or decrease the number of types or categories of supplemental
benefits, as well as suggestions for alternative categories or for
consolidating the previously listed benefit types or categories into
larger categories.
We received some comments requesting that requesting that CMS
either collapse or expand the proposed supplemental benefit categories.
As discussed in our response to these comments, we believe it is more
appropriate for CMS to retain flexibility to modify the scope of data
fields and the specific list of supplemental benefit categories
required to be reported on the MLR Reporting Template. Maintaining this
flexibility will allow CMS to collect data that is sufficiently
detailed to enable us to understand benefit expenditures and verify and
increase accountability for the accuracy of MLR calculation. We are
finalizing the amendments to Sec. Sec. 422.2460(a) and 423.2460(a) to
provide us with the flexibility to modify the scope of data fields and
categories required for supplemental benefit expenditures. The intent
of this rule is not to create a more detailed but static MLR report;
rather this rule is intended to enable reporting requirements that
support the program needs, such as supporting MLR calculation,
verifying data reporting accuracy, gaining insight into supplemental
benefit policies, and providing transparency into program expenditure
allocation.
In considering the scope of data fields and list of supplemental
benefit categories for reporting we will take into account the
following four factors, which were previously included in the proposed
rule in setting forth our rationale for the list of supplemental
[[Page 27828]]
benefit categories. First, data elements and categories should enable a
thorough reporting of data elements in categories that support MLR
calculation, reduce errors in reporting, and increase our ability to
verify data reporting accuracy. Second, data elements and categories
for supplemental benefits should be selected to provide transparency
into how MA program payments are allocated and may focus on specific
benefits, such as the non-primarily health related supplemental
benefits offered to the SSBCI population, for the purposes of providing
CMS with information on the impact of a specific benefit change. Third,
we will take into consideration the percentage of MA plans that offer
each type of supplemental benefit in the most recent year for which
data on plan benefit packages is available (that is, looking at CY 2022
for developing the CY 2023 Reporting Tool), so that the lines we add to
the MLR Reporting Tool are more likely to allow for comparison of MA
organizations' expenditures on types of supplemental benefits that are
widely offered. In addition, in deciding whether to require separate
reporting of the expenditures for a particular supplemental benefit
type, we considered the percentage of contracts that currently offer
that supplemental benefit under just one plan, as we believe
expenditures associated with benefits offered under only one plan under
a contract would constitute plan-level data, which CMS proposed to
exclude from public release of MLR data consistent with the exclusions
for MLR data reported at the plan level and information submitted for
contracts consisting of a single plan (see Sec. 422.2490(b)(2)).
Fourth in establishing the scope of data fields and categories for
supplemental benefits, we acknowledge the trade-offs between the
additional information gained from changing requirements and the
additional burden placed on MA organizations and Part D sponsors
brought about by changing requirements. We will take the balance
between the increased value of additional information and the increased
reporting burden into account in developing requirements on the scope
of data fields and specific list of supplemental benefit categories.
Modifications to the MLR data requirements for supplemental
benefits expenditures will be set forth in a revision to the MLR
Paperwork Reduction Act package (CMS-10476, OMB 0938-1232) and made
available to the public for review and comment under the standard PRA
process which includes the publication of 60- and 30-day Federal
Register notices and the posting of the collection of information
documents on our PRA website.
The list of supplemental benefits included in the proposed rule
should be viewed as an example of categories of supplemental benefits
CMS is interested in collecting and is based on the standards described
above. We will set forth data reporting requirements in a revised
package as required by the PRA. This package will be published in the
Federal Register and be available for public comment.
In addition, the proposed rule discussed how we intend to use our
authority under Sec. Sec. 422.2490 and 423.2490 to release to the
public the Part C and Part D MLR data we proposed to collect, including
the additional data we proposed to collect on supplemental benefit
expenditures, to the same extent that we released the information we
formerly collected under the MLR reporting requirements in effect for
CYs 2014 through 2017. The proposed rule noted that, consistent with
Sec. Sec. 422.2490(c) and 423.2490(c), the release of the MLR data we
proposed to collect for a contract year would occur no sooner than 18
months after the end of the applicable contract year, and would be
subject to the exclusions in Sec. Sec. 422.2490(b) and 423.2490(b). We
proposed to amend Sec. 422.2490(b)(2) by adding new paragraph
(b)(2)(ii), which will exclude from release data on amounts that are
reported as expenditures for a specific type of supplemental benefit,
where the entire amount that is reported represents costs incurred by
the only plan under the contract that offers that benefit. For example,
if only one plan under a contract offers Dental X-rays as a
supplemental benefit, and expenditures for that benefit are the only
amounts reported on that line of the MLR Reporting Tool, we will
exclude the entire amount reported on that line from our public data
release. However, if only one plan under a contract covers Dental X-
rays, and another plan under that same contract is the only plan under
the contract that covers Extractions, expenditures for both benefits
will be reported in the Dental line in the MLR Reporting Tool, and that
combined amount (assuming both plans had expenditures in the Dental
category) will not be excluded from our public data release. As stated
in the proposed rule, we believe data regarding supplemental benefit
expenditures is only sensitive to the extent that the data reveals
plan-level expenditures for a specific benefit offered under a single
plan, and that these concerns do not exist when expenditures for
multiple types of supplemental benefits or from multiple plans are
included in the same line of the MLR Reporting Tool.
We solicited comment on this proposed exclusion, including any
suggestions for how we would implement this exclusion (for example, by
adding check boxes next to the applicable lines in the MLR Reporting
Tool, where users would add a check mark if their expenditures for the
supplemental benefit type or category in the line by the checkbox
represented expenditures for a single plan and single benefit type),
and whether additional exclusions should be added to our MLR data
release regulations. We also solicited comment on whether there is
additional sensitivity around expenditures for supplemental benefits
generally or for any types of supplemental benefits in particular, such
that public release of data concerning those expenditures would be
harmful.
Comment: A number of commenters supported CMS' efforts to provide
additional transparency as part of the proposal to reinstate the
detailed MLR reporting previously in effect for contract years 2014-
2017. They believed more detailed reporting will demonstrate the value
of services being offered to beneficiaries, as included in plan bids,
and provide transparency around how rebate dollars are being put to use
by plans.
Response: We appreciate the support.
Comment: Some commenters were opposed to the public release of MLR
data related to amounts paid for incurred expenditures for supplemental
benefits. These commenters do not believe information on expenditures
on supplemental services will help beneficiaries effectively
distinguish the value offered by different plans.
Response: In the final rule titled ``Medicare Program; Revisions to
Payment Policies Under the Physician Fee Schedule and Other Revisions
to Part B for CY 2017; Medicare Advantage Bid Pricing Data Release;
Medicare Advantage and Part D Medical Loss Ratio Data Release; Medicare
Advantage Provider Network Requirements; Expansion of Medicare Diabetes
Prevention Program Model; Medicare Shared Savings Program
Requirements,'' which appeared in the Federal Register on November 15,
2016 (81 FR 80170) (hereinafter referred to as the CY 2017 PFS final
rule), we adopted Sec. Sec. 422.2490 and 423.2490 to authorize the
release of MLR reports along with a regulation authorizing release of
MA bid data. In that rule, we explained the rationale for releasing MA
and Part D MLR reports,
[[Page 27829]]
which included increasing transparency and access to Federal data sets,
alignment with the public release of MLR data of commercial issuer,
facilitating the public evaluation of the evaluation of the MA and Part
D programs by providing insight into the efficiency of health insurers'
operations, providing beneficiaries with information that can be used
to assess the relative value of Medicare health and drug plans, and
enhancing the competitive nature of the MA and Part D programs. We
further stated that the release of this data would promote
accountability in the MA and Part D programs, by making MLR information
publicly available for use by beneficiaries who are making enrollment
choices and by allowing the public to see whether and how privately-
operated MA and Part D plans administer Medicare--and supplemental--
benefits in an effective and efficient manner. The January 2022
proposed rule acknowledged that this existing regulation for disclosure
of MLR reports would include disclosure of the more detailed reports we
intended to require beginning with CY 2023. We discussed in that prior
rulemaking how we believe that protecting against disclosures of
individual beneficiary information and information at the plan level
would be sufficient to protect against disclosure of proprietary or
confidential commercial information. Disclosure of the additional
details about MA supplemental benefits is consistent with the rationale
and purpose of Sec. Sec. 422.2490 and 423.2490. Public access to
information on supplemental benefit spending by benefit type or
category may be a valuable tool for consumers (to make their enrollment
decisions based on a comparison of the relative value of the
supplemental benefits actually provided by different MA organization),
researchers (to potentially use this data to provide insight on trends
in supplemental benefit coverage in the MA programs or to better
understand how managed care in Medicare differs from managed care for
non-Medicare populations), and the public (to have information at an
aggregate level about expenditures and benefits in the Medicare
program).
In the proposed rule titled ``Medicare Program; Revisions to
Payment Policies Under the Physician Fee Schedule and Other Revisions
to Part B for CY 2017; Medicare Advantage Pricing Data Release;
Medicare Advantage and Part D Medical Loss Ratio Data Release; Medicare
Advantage Provider Network Requirements; Expansion of Medicare Diabetes
Prevention Program Model'' (81 FR 46162), which appeared in the Federal
Register on July 15, 2016 (hereinafter referred to as the CY 2017 PFS
proposed rule) we enumerated the benefits CMS associated with the
release of Part C and Part D MLR data to the public. In that proposed
rule, we stated that the release of Part C and Part D MLR data could
lead to research into how managed care in the Medicare population
differs from and is similar to managed care in other populations (such
as the individual and group markets) where MLR data is also released
publicly, and could inform future administration of these programs (81
FR 46396). We further stated that the release of this data would
promote accountability in the MA and Part D programs, by making MLR
information publicly available for use by beneficiaries who are making
enrollment choices and by allowing the public to see whether and how
privately-operated MA and Part D plans administer Medicare--and
supplemental--benefits in an effective and efficient manner (81 FR
46397). Notably, in the CY 2017 PFS final rule, in response to comments
that requested that CMS release only the MLR percentage for a contract,
CMS expressly rejected that approach because releasing only the minimum
amount of MLR data for MA and Part D contracts would not align with
CMS' release of the detailed MLR data submitted by commercial plans
(see 81 FR 80439). However, when we amended Sec. Sec. 422.2460 and
423.2460 to scale back the MLR reporting requirements starting with CY
2018 MLR reporting, we did not indicate that we had subsequently
concluded that MLR data would not provide this value to the public, nor
did we acknowledge that a direct consequence of CMS ending the detailed
MLR reporting requirements, was that our release of Medicare MLR data
would no longer align with the release of commercial MLR data, as we
would only be releasing the MLR percentage and remittance amount (if
any) for MA and Part D contracts, starting with MLR data submitted for
CY 2018.
We believe it is appropriate that we reaffirm our position that the
public release of Part C and Part D MLR data provides value to the
public both by increasing market transparency and improving beneficiary
choice. We believe that the value in CMS releasing to the public
detailed MLR data in accordance with Sec. Sec. 422.2490 and 423.2490,
and of alignment with the disclosure of commercial MLR data, provides
further support for our proposal to require MA organizations and Part D
sponsors to submit such detailed data to us on an annual basis,
starting with MLR reporting for CY 2023. Further, while not every
beneficiary will use the MLR data as part of making enrollment
decisions, we believe providing access to more detailed information
about expenditures on supplemental benefits, as reported in the MLR
Reporting Tool, will provide a means for beneficiaries to determine the
value provided by MA plans.
Overall, we believe that the release of incurred expenditures for
supplemental benefits is consistent with the rationale explained in the
release of MLR reporting in the 2016 final rule. We do not believe it
is necessary or appropriate to create exceptions from this existing
regulation to exclude disclosure of the data that will be released for
incurred expenditures for supplemental benefits, especially when that
data will be provided at an aggregate level without risk of disclosing
specific plan-level costs that might be used to put a particular MA
plan at a competitive disadvantage.
Comment: A commenter cited that reverting to the requirement to
submit more detailed expenditure data on the MLR and the newly added
requirement to submit expenditure data on supplemental benefits, in
particular, is duplicative of data in the bid pricing tool (BPT).
Response: In our view, the data collected during the bid process
and the detailed data collected through the MLR report are not fully
comparable. The data collected on the BPT is at the plan benefit
package (PBP) level while MLR data is reported at the contract level.
MA organizations and Part D sponsors submit bids at the plan level and
typically use historical spending and utilization as the basis to for
their bid projections for the applicable year. For example, MAOs this
June will use 2021 spending and utilization as the basis for trending
forwarding their bids to the 2023 plan year. If a plan is new or the MA
organization or Part D sponsor expects a significant change in the
plan's 2023 enrollment or risk profile, the MA organization or Part D
sponsor can use historical 2021 experience from another plan or group
of plans that the MA organization or Part D sponsor expects to have had
a similar enrollment/risk profile. For this reason, there is not always
a one-to-one relationship between the historical plan experience used
for bidding for a specific plan and the plan's expenditures in the
payment year. For MLR reporting, MAOs submit historical information for
a specific contract and
[[Page 27830]]
specific contract year, not at the PBP level, so the detailed MLR data
is not duplicative of the bid data. In addition, we intend to structure
the MLR reporting so that data on supplemental benefits in the detailed
MLR report are more granular than the broad supplemental benefit
categories used in the BPT. The more detailed categories of reporting
for supplemental benefits will provide increased transparency regarding
the expenditures on supplemental benefits and enable us to assess the
impact of specific policies, such as the provision of non-primarily
health related supplemental services to the SSBCI population. Moreover,
because the time lag between submission and release of public use files
for the MLR data is significantly shorter than the time lag between
submission and release of public use files of bid data, users have
access to more recent data with the MLR.
The MLR data is typically released for more recent contract years
than the BPT data. Under Sec. [thinsp]422.272(b), MA bid pricing data
is released for a contract year that is at least 5 years prior to the
upcoming calendar year. In comparison, according to Sec. 422.2490, MLR
data cannot be released earlier than 18 months after the end of the
applicable contract year. CMS anticipates that for future years, MLR
data will be released for more recent years than MA bid pricing data
due to these timing requirements.
Comment: Commenters stated that the release of expenditure
information on supplemental benefits could risk revealing proprietary
cost information and may threaten current MA market competition since
supplemental benefits vary between plans, which helps drive
competition. Commenters note that given the flexibility around the
types of supplemental benefits MAOs may offer and the variety of
benefit and payment structures used to offer these benefits, the cost
information provided is not ``apples to apples'' across contracts and
is not useful for comparison by beneficiaries. As an example, a
commenter noted that if only two or three plans in a given area offered
a particular benefit category and that information were made publicly
available, each plan could readily assess the other's costs and could
result in core business strategy and other highly proprietary cost
information being revealed.
Response: Currently, Sec. Sec. 422.2490(b)(2) and 423.2490(b)(2)
prohibit release of information that is reported in the MLR reports at
the plan level. Our proposal, which we are finalizing, amends that
provision to also protect amounts that are reported as expenditures for
a specific type of supplemental benefit where the entire reported
amount represents costs incurred by the only plan under the contract
that offers that benefit. The data will be aggregated at the contract
level, rather than at the PBP level, which we believe will prevent
releases of proprietary cost information. Additionally, line items in
the detailed MLR reporting will include aggregation at the provider
type or service level (for example, different types of dental benefits
would be reported together as a single line item) in the general
supplemental benefit categories. Many MA and Part D contracts cover
large or multiple geographic regions or areas and are made up by
several plans, avoiding the risk of releasing plan-specific data. As
commenters note, the flexibility commenters describe around the types
of supplemental benefits MAOs may offer and the variety of benefit and
payment structures used to offer supplemental benefits limits the
comparability of the data across contracts and therefore, mitigates the
risk of revealing proprietary cost information through the release of
the supplemental benefit expenditures data. Moreover, as noted in the
proposed rule, in deciding whether to require separate reporting of the
expenditures for a particular supplemental benefit type, we considered
the percentage of contracts that currently offer that supplemental
benefit under just one plan, as we believe expenditures associated with
benefits offered under only one plan under a contract would constitute
plan-level data. In creating a list of potential categories of
supplemental benefits for the more detailed MLR reporting, we did not
include supplemental benefit types or categories offered by less than
10 percent of all MA plans in 2021, with the exception of SSBCI that
are not primarily health related, in order to protect individual plan
information. Because of the potential variation in coverage of
different items and services, such as the non-primarily health related
services provided to the SSBCI population, which can range from indoor
air quality equipment to transportation to services supporting self-
direction depending on the needs of an individual enrollee whose
overall function or health is reasonably expected to be improved by the
item or service, we do not believe that the aggregate data available in
the MLR reports about expenditures in this category could reveal
confidential business strategies or cost information of an MA
organization. We will also review the expenditure information on
supplemental benefits to gain a better understanding of the data and
analyze the number of contracts that include a given supplemental
service and take this into consideration in creating files for public
use.
Additionally, according to Sec. Sec. 422.2490(b)(1) and
423.2490(b)(1), narrative descriptions that MA organizations submit to
support the information reported to CMS pursuant to the reporting
requirements at Sec. 422.2460, such as descriptions of expense
allocation methods, are excluded from MLR data released to the public.
Finally, consistent with Sec. Sec. [thinsp]422.2490(c) and
423.2490(c), the release of the MLR data we propose to collect for a
contract year will occur no sooner than 18 months after the end of the
applicable contract year, and will be subject to the exclusions in
Sec. Sec. [thinsp]422.2490(b) and 423.2490(b). For example, CMS does
not release the narrative for the specifics around spending for any
aspect of the MLR, including supplemental benefits per Sec. Sec.
422.2490(b)(1) and 423.2490(b)(1). Finally, we believe the time lag
between submission of data for a given contract year and public release
of the data mitigates the potential threat to MA market competition on
the basis of supplemental benefits.
Comment: Several commenters cited the challenges of reporting more
detailed information on supplemental benefits, and requested CMS delay
implementation.
Response: We do not believe that there are sufficient challenges
for MA organizations with regard to reporting the more detailed MLR
information to delay implementation beyond the MLR report due for CY
2023. Requiring MA organizations to account for their supplemental
benefit expenditures by benefit type or benefit category will provide
more transparency into how the MLR is being calculated, and it will
assist CMS in verifying the accuracy of the MLR calculation,
particularly with respect to expenditures related to categories of
supplemental benefits that MA organizations must already separately
report to CMS for purposes of bid development. In order to ensure
accurate MLR reporting, for bid development purposes, and for internal
accounting and planning purposes, MA plans presumably already collect
detailed information on supplemental benefit expenditures. Given that
plans will submit the detailed MLR reports at end of 2024 for contract
year 2023, we believe plans will have adequate time to prepare for
reporting additional
[[Page 27831]]
requirements in the MLR; therefore, a delay in implementation is not
warranted.
Comment: A few commenters raised concerns regarding quality
improving activities (QIA) and requested that CMS ensure that QIA
expenses represent actual value provided for consumers' premium dollars
and that plans do not abuse the removal of the ``fraud reduction
expenses'' cap.
Response: We appreciate the commenters concerns and remind
commenters that the regulations at Sec. Sec. 422.2430(a)(3) and
423.2430(a)(3) require QIA to be grounded in evidence-based practice
that can be objectively measured. Under the current MLR reporting
requirements, CMS is unable to determine the extent to which QIA
expenses are actually spent on quality improving activities. The more
detailed reporting reinstates requirements that plans submit narratives
that explain their QIA methodology (for example, there is a line on
reporting dedicated to spending on fraud reduction specifically). We
believe these reinstated measures will prevent plans from misusing the
removal of the fraud reduction cap.
Comment: A few commenters supporting CMS' efforts to reinstate the
detailed MLR reporting urged CMS to clarify how health plans should
capture and report such information and believed that the claims-based
reporting framework may not be appropriate for all supplemental
benefits. Commenters stated that using a per member per month (PMPM)
reporting system would better illustrate what financial support a plan
is providing for such benefits.
Response: We appreciate the feedback. A per member per month (PMPM)
reporting of expenditures is not consistent with the general
calculation of the medical loss ratio or the method of reporting
expenditure information. For the purposes of the MLR, MA organizations
and Part D sponsors submit data on incurred claims for each contract,
regardless of the type of payment arrangement with providers. The
medical loss ratio is calculated by dividing total expenditures (as
defined by the MLR instructions and reported to CMS) by total revenues
(as defined by the MLR instructions and reported to CMS) for a given
contract for a given contract year. A per member per month (PMPM)
reporting for selected service categories, such as supplemental
services, as suggested by the commenter, would not be suitable for the
purpose of the MLR report. We are finalizing the detailed MLR
reporting, including flexibility for CMS to change the specific line
items and supplemental benefit categories that are reported by MA
organizations.
Comment: A few commenters recommended expanding reporting for the
``Non-Primarily Health Related Items that are Special Supplemental
Benefits for the Chronically Ill (SSBCI)'' category, and suggested
adding sub-categories such as food, transportation, and housing, which
align with the broader areas of focus for CMS and health plans.
Another commenter recommended that CMS consolidate the ``Wellness''
and ``Fitness Benefit'' categories, thus establishing a ``Fitness and
Wellness Benefit'' category, which would incorporate the programs that
use a more holistic approach to the health and wellbeing.
A commenter requested CMS provide clarification on how the
``Fitness Benefit'' should be classified in the MLR reporting, given
that currently ``memory fitness'' supplemental benefits are filed as a
specific category under the ``Fitness Benefit'' category, as are
physical fitness supplemental benefits and wearable device supplemental
benefits. They proposed CMS require plans to break out their MLR data
across the three categories of fitness benefit, to provide data that
evaluate how these very distinct types of fitness benefit are being
implemented.
Response: We appreciate the feedback related to expanding and
collapsing supplemental benefit categories and line items. As noted
above, maintaining flexibility to modify the scope of data fields and
categories for MA supplemental benefits will allow CMS to collect data
that is sufficiently detailed to enable us to understand benefit
expenditures, verify and increase accountability for the accuracy of
MLR calculation and accommodate evolving policy and program needs. We
describe four standards we will use to determine supplemental benefit
data reporting requirements above. One of those standards is the
percentage of MA plans that offer each type of supplemental benefit.
With regard to the requests for more detailed reporting for the
``Fitness'' and ``Non-Primarily Health Related Items that are Special
Supplemental Benefits for the Chronically Ill (SSBCI)'' categories, as
noted in the proposed rule, we proposed to limit separate reporting of
expenditures for supplemental benefit types or categories if these
services were offered by less than 10 percent of all MA plans in 2021.
The exception was the category of services for the SSBCI population
that are not primarily health related; we included this category in the
proposed rule because we believe this information will help us assess
the impact of our 2021 rule change that allows all amounts paid for
covered services to be included in the MLR numerator as incurred claims
(prior to this rule change, only amounts paid ``to providers''--which
is defined in Sec. 422.2 in terms of the provision of healthcare items
and services--for covered services could be included in incurred
claims, which would have excluded, for example, pest control). We will
continue to take the concentration of each type of supplemental benefit
category offered into consideration in proposing the list of
supplemental benefit categories in the PRA package.
Similarly, with regard to request to combine the ``Wellness'' and
``Fitness'' benefit categories, we will also consider the standard
previously described related to the percentage of MA plans offering
these specific categories of supplemental benefits.
Generally, as noted previously in this section II.G.3. of the final
rule, we will consider the other standards related to administrative
burden, data transparency, and data accuracy in developing the proposed
reporting requirements in the PRA package.
CMS will propose the MLR data requirements in a PRA package that
will be published in the Federal Register for public comment. The
comment period is 60 days, during which plans and the public may
comment on the MLR data reporting requirements. CMS will take these
comments into consideration in developing final MLR data reporting
requirements, which will be published in final PRA package.
After consideration of the comments and for the reasons outlined in
the proposed and final rules and our responses to comments, we are
finalizing the proposed amendments to Sec. Sec. 422.2460(a) and (b)
and 423.2460(a) and (b) without modification. We do note for readers
that the MLR report will be subject to PRA processes and encourage the
submission of comments related to reporting requirements and the
structure of MLR reporting once the PRA package is posted for public
comment.
In addition, we are finalizing the requirement for MA organizations
to separately report expenditures for supplemental benefits
(supplemental benefits meeting the criteria in Sec. 422.100(c)(2) but
excluding supplemental benefits that extend or reduce the cost-sharing
for items and services covered under Parts A and B) on multiple lines
of the MLR Reporting Tool, which will represent different types or
categories of supplemental
[[Page 27832]]
benefits. Requiring MA organizations to account for their supplemental
benefit expenditures by benefit type or benefit category will serve
program purposes, such as providing more transparency into how the MLR
is being calculated, and assisting CMS in verifying the accuracy of the
MLR calculation, particularly with respect to expenditures related to
categories of supplemental benefits that MA organizations must already
separately report to CMS for purposes of bid development. We did not
propose a separate reporting of Part D supplemental benefits
expenditures and continue to believe that a separate reporting of Part
D supplemental benefits expenditures is not needed at this time. We
will set forth detailed reporting requirements through the PRA process
as noted previously.
4. Technical Change to MLR Reporting Regulations (Sec. Sec. 422.2460
and 423.2460)
In addition to our proposal to reinstate the detailed MLR reporting
requirements that were in effect for CYs 2014 through 2017, with some
modifications, and to add new data fields to our MLR Reporting Tool as
described in the previous section of this preamble, we proposed to make
a clarifying amendment to our MLR reporting regulations.
Currently, Sec. Sec. 422.2460(d) and 423.2460(d) state that the
MLR is reported once, and is not reopened as a result of any payment
reconciliation process. We proposed to amend this paragraph to note
that it is subject to an exception in new paragraph (e), which as
proposed will provide that, with respect to an MA organization (in the
case of proposed Sec. 422.2460(e)) or Part D sponsor (in the case of
proposed Sec. 423.2460(e)) that has already submitted to CMS the MLR
report or MLR data submission for a contract for a contract year,
paragraph (d) does not prohibit resubmission of the MLR report or MLR
data for the purpose of correcting the prior MLR report or data
submission. Proposed paragraph (e) will also provide that such
resubmission must be authorized or directed by CMS, and upon receipt
and acceptance by CMS, will be regarded as the contract's MLR report or
data submission for the contract year for purposes of part 422, subpart
X, and part 423, subpart X.
As explained in more detail in the proposed rule at 87 FR 1908
through 1909, we characterized this as a clarifying amendment because
we believe it is clear from the discussion in the May 2013 Medicare MLR
final rule that the provision stating that the MLR will be reported
once, and will not be reopened as a result of any payment
reconciliation process, was intended to codify the policy decision that
the MLR for a contract year is based on the contract year revenue
figure available at the time of reporting, and is not subject to change
if the contract year revenues increase or decrease through adjustments
that take place in a future year. The proposed rule at 87 FR 1909
discussed this requirement at Sec. Sec. 422.2460(d) and 423.2460(d) in
the context of other provisions in our MLR regulations. We believe this
discussion provides additional support for our position that we did not
intend to prohibit ourselves from collecting or considering additional
or corrected MLR data submitted to address deficiencies or inaccuracies
in the original annual MLR submission required under Sec. Sec.
422.2460 and 423.2460. Specifically, if, based on the data available at
the time of the original MLR submission, or on the data that should
have been available at the time of the original MLR submission, the MAO
or Part D sponsor submits an MLR report or data submission that
contains errors or omissions, the MA organization or Part D sponsor
must notify CMS of the incorrect report submission. CMS will review and
may require a resubmission.
The proposed rule also noted at 87 FR 1909 that a prohibition on
any and all corrections or resubmissions would be contrary to our
longstanding practice, which dates back to when CMS first began
collecting Part C and Part D MLR data (for CY 2014) in December 2015,
of allowing MA organizations and Part D sponsors to resubmit their MLR
Data Forms for a contract year in order to correct errors and omissions
in the original MLR filing without treating that resubmission as a
reporting of the MLR for purposes of Sec. Sec. 422.2460(d) and
423.2460(d).
Comment: A commenter requested additional clarification on CMS'
technical changes and proposal for submitting corrections on MLR data.
The commenter requested CMS clarify what changes and payment
reconciliations would result in requiring an organization to resubmit
MLR information and the types of MLR changes that CMS expects plans to
report. Further, the commenter requested clarification on any proposed
timeline or timing limitations for making changes and how that may
correspond with potential audits. The commenter requested further
clarification on the materiality thresholds that would trigger the need
for a refiling, and examples of what criteria would necessitate a
refiling to improve plan compliance. Another commenter expressed
concern that requiring MLR corrections as a result of ongoing
adjustments, such as direct and indirect remuneration (DIR) adjustments
that can be made for years after the initial DIR submission, could
require refiling of MLR information for several years. This commenter
also asked about the process by which an MA organization or Part D
sponsor would resubmit an MLR report.
Response: The general concept underlying the resubmission of an MLR
report remains unchanged from our original intent in the May 2013
Medicare MLR final rule. In the proposed rule, we stated that with
respect to an MA organization (in the case of proposed Sec.
422.2460(e)) or Part D sponsor (in the case of proposed Sec.
423.2460(e)) that has already submitted to CMS the MLR report or MLR
data submission for a contract for a contract year, paragraph (d) does
not prohibit resubmission of the MLR report or MLR data for the purpose
of correcting the prior MLR report or data submission. We also stated
in the proposed rule that our remarks in the 2013 Medicare MLR proposed
and final rules made it clear that we never intended to prohibit
ourselves from collecting, or taking into account, additional or
corrected MLR data that is submitted to address deficiencies or
inaccuracies in the annual MLR submission required under Sec. Sec.
422.2460 and 423.2460. We believe that the remittances owed based on a
failure to meet the MLR standard should be based on the revenue and
expenditure figures at the time of the report, and should not be
subject to change if this revenue or expenditure figure is decreased or
increased in a future year. If the revenue or expenditure figures
increase or decrease as the result of an omission or other error
committed by the MA organization or Part D sponsor, then the entity
must notify CMS and may be required to resubmit the MLR report. We
understand the commenter's concerns regarding ongoing regularly
occurring processes that affect payments, such as the reopenings of
Part D payment reconciliation; however, this requirement for notifying
CMS of errors in the MLR report does not extend to such adjustments
that occur after the MLR report is submitted and finalized.
Furthermore, payment reconciliations applicable for a contract year
that occur after the contract year MLR report is submitted and
finalized would not trigger the resubmission of that MLR report. Based
on our prior experience, we do not anticipate that the identification
and reporting to CMS
[[Page 27833]]
of issues in an MLR report will be commonplace. If we see that
organizations are re-stating or correcting MLR submissions that are
related to MLR reports that were submitted a number of years ago, then
we will revisit this issue. We decline to set a materiality threshold
at this time and as we state previously, CMS will review on a case-by-
case basis instances in which an MLR report may need to be resubmitted.
If CMS decides that an MLR report should be resubmitted, we will
provide entities with instructions on how to resubmit at that time.
We assume the commenter who asked about audits is referring to our
standard desk review of the MLR reports described at Sec. 422.2460.
The resubmission of MLR reports described herein is separate from
reporting issues detected through the standard desk reviews of MLR
reports. If an error is detected during a desk review, the MLR report
is not considered final until it has been corrected and resubmitted and
passes the desk review.
Comment: A commenter requested that CMS confirm whether
resubmission of an MLR report and/or data may be initiated by CMS only
or if resubmission may be initiated by a MA organization or Part D
sponsor.
Response: CMS confirms that MLR resubmissions may be initiated by a
MA organization, Part D sponsor, or CMS. The regulations we are
finalizing at Sec. Sec. 422.2460(e) and 423.2460(e) specify that CMS
can either require or allow an MLR resubmission. We note that upon
notification by an MA organization or Part D sponsor of an error in
reporting, CMS will work with the reporting entity to gather additional
information as necessary and determine whether a resubmission of the
MLR report is required.
Comment: A commenter stated that if a plan were at or around the 85
percent threshold when it filed its report, it would be disincentivized
from identifying and collecting any erroneous payments after the data
submission deadline for fear of subsequently revising its claims
estimates, falling below 85 percent, having to refile, and potentially
receiving an enrollment penalty.
Response: It is incumbent upon the MA organization or Part D
sponsor to submit data that is complete, accurate, and truthful.
MA organizations and Part D sponsors that inaccurately report
revenues or expenditures in an MLR filing, taking into account payment
policy that was in effect during the contract year and payment amounts
that the plan received for that contract year prior to the submission
of the MLR report, may be required, as determined by CMS, to resubmit
the MLR data for the given contract year. For example, if MA
organizations and Part D sponsors identify errors (such as double
counting, math errors, or misclassification of a type of revenue or
expenditure that is discovered after submission of an MLR report), the
organization should contact CMS and may be required to refile as
determined by CMS. Additionally, if an MA organization or Part D
sponsor develops estimates of revenues or expenditures in preparing the
MLR report that are inconsistent with payment policy or MLR guidance in
place at the time of submission of the report, the MA organization or
Part D sponsor must notify CMS.
After consideration of the comments and for the reasons outlined in
the proposed rule and our responses to comments, we are finalizing
amendments at Sec. Sec. 422.2460(d) and (e) and 423.2460(d) and (e),
as proposed.
H. Pharmacy Price Concessions in the Negotiated Price (Sec. 423.100)
1. Introduction
Under Medicare Part D, Medicare makes partially capitated payments
to private insurers, also known as Part D sponsors, for covering
prescription drug benefits for Medicare beneficiaries. Often, the Part
D sponsor or its pharmacy benefit manager (PBM) receives compensation
after the point of sale that serves to lower the final amount paid by
the sponsor to the pharmacy for the drug. Under Medicare Part D, this
post-point-of-sale compensation is called Direct and Indirect
Remuneration (DIR) and is factored into CMS's calculation of final
Medicare payments to Part D plans. DIR includes rebates from
manufacturers, administrative fees above fair market value, price
concessions for administrative services, legal settlements affecting
Part D drug costs, pharmacy price concessions, drug costs related to
risk-sharing settlements, or other price concessions or similar
benefits offered to some or all purchasers from any source (including
manufacturers, pharmacies, enrollees, or any other person) that would
serve to decrease the costs incurred under the Part D plan (see Sec.
423.308).
Total DIR reported by Part D sponsors has been growing
significantly in recent years. The data Part D sponsors submit to CMS
as part of the annual reporting of DIR \88\ show that pharmacy price
concessions (generally referring to all forms of discounts, direct or
indirect subsidies, or rebates that a pharmacy pays to a Part D sponsor
to reduce the costs incurred by Part D sponsors), net of all pharmacy
incentive payments, have grown faster than any other category of DIR
\89\ received by sponsors and their contracted PBMs. This means that
pharmacy price concessions now account for a larger share than ever
before of reported DIR and a larger share of total gross drug costs in
the Part D program. In 2020, pharmacy price concessions accounted for
about 4.8 percent of total Part D gross drug costs ($9.5 billion), up
from 0.01 percent ($8.9 million) in 2010. As shown in Table 2, the
growth in pharmacy price concessions from 2010 to 2020 has been a
continuous upward trend with the exception of 2011.
---------------------------------------------------------------------------
\88\ CMS collects DIR data under collection approved under OMB
control number 0938-0964 (CMS-10174) (``Collection of Prescription
Drug Event Data from Contracted Part D Providers for Payment''). CMS
does not release publicly the DIR data that we collect. The one
exception was a highly summarized release of certain 2014 DIR data
related to manufacturer rebates: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Information-on-Prescription-Drugs/PartD_Rebates.
\89\ Sponsors report all DIR to CMS annually by category at the
plan level. DIR categories include: Manufacturer rebates,
administrative fees above fair market value, price concessions for
administrative services, legal settlements affecting Part D drug
costs, pharmacy price concessions, drug costs related risk-sharing
settlements, etc.
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[[Page 27834]]
[GRAPHIC] [TIFF OMITTED] TR09MY22.006
The data show that pharmacy price concessions, net of all pharmacy
incentive payments, grew more than 107,400 percent between 2010 and
2020. The data also show that much of this growth occurred after 2012,
when the use by Part D sponsors of performance-based payment
arrangements with pharmacies became increasingly prevalent. Part D
sponsors and their contracted PBMs have been increasingly successful in
recent years in negotiating price concessions from network pharmacies.
Such price concessions are negotiated between pharmacies and sponsors
or their PBMs, independent of CMS, and are often tied to the pharmacy's
performance on various measures defined by the sponsor or its PBM.
Performance-based pharmacy price concessions, net of all pharmacy
incentive payments, increased, on average, nearly 170 percent per year
between 2012 and 2020 and now comprise the second largest category of
DIR received by sponsors and PBMs, behind only manufacturer rebates.
The negotiated price is the primary basis by which the Part D
benefit is adjudicated, as it is used to determine plan, beneficiary,
manufacturer (in the coverage gap), and government cost obligations
during the course of the payment year, subject to final reconciliation
following the end of the coverage year. Under the current definition of
``negotiated prices'' at Sec. 423.100, negotiated prices must include
all price concessions from network pharmacies except those that cannot
reasonably be determined at the point of sale. However, because
performance adjustments typically occur after the point of sale, they
are not included in the price of a drug at the point of sale.
As discussed in the proposed rule, based on stakeholder feedback
and sponsor-reported DIR data, we understand that the share of
pharmacies' reimbursement that is contingent upon their performance
under such arrangements has grown steadily each year. When pharmacy
price concessions received by Part D sponsors are not reflected in
lower drug prices at the point of sale and are instead used to reduce
plan liability, beneficiaries generally see lower premiums, but they do
not benefit through a reduction in the amount they must pay in cost-
sharing. Thus, beneficiaries who utilize drugs end up paying a larger
share of the actual cost of a drug. Moreover, when the point-of-sale
price of a drug that a Part D sponsor reports on a prescription drug
event (PDE) record as the negotiated price does not include such
discounts, the negotiated price of each individual prescription is
rendered less transparent and less representative of the actual cost of
the drug for the sponsor.
President Biden's Executive Order (E.O.) 14036, ``Promoting
Competition in the American Economy'' (86 FR 36987), section 5
(``Further Agency Responsibilities''), called for agencies to consider
how regulations could be used to improve and promote competition
throughout the prescription drug industry. Because variation in the
treatment of pharmacy price concessions by Part D sponsors may have a
negative effect on the competitive balance under the Medicare Part D
program, and given the programmatic impacts laid out above and the
charge from the E.O., CMS proposed changes that would standardize how
Part D sponsors apply pharmacy price concessions to negotiated prices
at the point of sale.
As discussed in the proposed rule, at the time the Part D program
was established, we believed, as discussed in the January 2005 final
rule (70 FR 4244), that market competition would encourage Part D
sponsors to pass through to beneficiaries at the point of sale a high
percentage of the price concessions they received. However, in recent
years, less than 2 percent of sponsors have passed through any price
concessions to beneficiaries at the point of sale. We now understand
that sponsors may face market incentives not to apply price concessions
at the point of sale because of the advantages that accrue to sponsors
in terms of lower premiums (also an advantage for beneficiaries).
Pharmacy price concessions reduce plan costs, and having the
concessions not be applied at the point of sale reduces plan costs and
plan premiums at the expense of the beneficiary having lower cost-
sharing at the point of sale, thus shifting some of the net costs to
the beneficiary via higher cost-sharing. We believe that Part D
sponsors are incentivized to have lower premiums versus lower cost-
sharing because anecdotal evidence suggests beneficiaries focus more on
premiums instead of cost-sharing when choosing plans.
For this reason, as part of a November 2017 proposed rule titled
``Medicare Program; Contract Year 2019 Policy and Technical Changes to
the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service,
the Medicare Prescription Drug Benefit Programs, and the PACE Program''
(82 FR 56419 through 56428), which appeared in the Federal Register on
November 28, 2017, we published a ``Request for Information Regarding
the Application of Manufacturer Rebates and Pharmacy Price Concessions
to Drug Prices at the Point of Sale.'' In the Request for Information,
we solicited comment on whether CMS should require that the negotiated
price at the point of sale for a covered Part D drug must include all
price concessions that the Part D
[[Page 27835]]
sponsor could potentially collect from a network pharmacy for any
individual claim for that drug. Of the many comments received, the
majority were from pharmacies, pharmacy associations, and beneficiary
advocacy groups that supported the adoption of such a requirement
claiming that it would: (1) Lower beneficiary out-of-pocket drug costs
(especially critical for beneficiaries who utilize high cost drugs);
(2) stabilize the operating environment for pharmacies (by creating
greater transparency and allegedly making the minimum reimbursement on
a per-claim level more predictable); and (3) standardize the way in
which plan sponsors and their PBMs treat pharmacy price concessions.
Some commenters--mostly Part D sponsors and PBMs--were against such a
policy, claiming that it would limit their ability to incentivize
quality improvement from pharmacies. In the proposed rule titled
``Modernizing Part D and Medicare Advantage To Lower Drug Prices and
Reduce Out-of-Pocket Expenses'' (83 FR 62174 through 62180), which
appeared in the Federal Register on November 30, 2018 (hereinafter
referred to as the November 2018 proposed rule), we solicited comment
on a potential policy approach under which all pharmacy price
concessions received by a plan sponsor for a covered Part D drug,
including contingent price concessions paid after the point of sale,
would be included in the negotiated price (83 FR 62177). Specifically,
we considered adopting a new definition for the term ``negotiated
price'' at Sec. 423.100, which would mean the lowest amount a pharmacy
could receive as reimbursement for a covered Part D drug under its
contract with the Part D plan sponsor or the sponsor's intermediary. In
the final rule titled ``Modernizing Part D and Medicare Advantage to
Lower Drug Prices and Reduce Out-of-Pocket Expenses,'' which appeared
in the Federal Register on May 23, 2019 (84 FR 23867), we noted that we
received over 4,000 comments on this potential policy approach,
indicated that we would continue studying the issue, and left the
existing definition of ``negotiated prices'' in place.
To address concerns about the lack of transparency in the
performance measures used to evaluate pharmacy performance, in the
February 2020 proposed rule, we proposed to amend the regulatory
language at Sec. 423.514(a) to establish a requirement for Part D
sponsors to disclose to CMS the pharmacy performance measures they use
to evaluate pharmacy performance, as established in their network
pharmacy agreements. We explained in the proposed rule that, once
collected, we would publish the list of pharmacy performance measures
in order to increase public transparency. In the final rule titled
``Medicare and Medicaid Programs; Contract Year 2022 Policy and
Technical Changes to the Medicare Advantage Program, Medicare
Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan
Program, and Programs of All-Inclusive Care for the Elderly,'' which
appeared in the Federal Register on January 19, 2021 (86 FR 5684), we
finalized the proposed amendment to Sec. 423.514(a), such that,
starting January 1, 2022, Part D sponsors are required to disclose
their pharmacy performance measures to CMS.
After considering the comments received on the November 2018 and
January 2022 proposed rules, and in light of recent data indicating
that pharmacy price concessions have continued to grow at a faster rate
than any other category of DIR,\90\ applicable beginning with contract
year 2024, we are finalizing the policy proposed in the January 2022
proposed rule to amend Sec. 423.100 to define the term ``negotiated
price'' to ensure that the prices available to Part D enrollees at the
point of sale are inclusive of all possible pharmacy price concessions.
Effective January 1, 2024, we will delete the current definition of
``negotiated prices'' (in the plural) and we will add a definition of
``negotiated price'' (in the singular), applicable January 1, 2024, to
make clear that a negotiated price can be set for each covered Part D
drug. We believe this approach accommodates the different approaches to
applying price concessions under sponsor and PBM payment arrangements
with pharmacies, which may provide for price concessions to be applied
uniformly as a percentage adjustment to the price for all Part D drugs
dispensed by a pharmacy or have price concessions differ on a drug-by-
drug basis. In addition, defining ``negotiated price'' in the singular
is consistent with the regulations for the coverage gap discount
program, which define the term ``negotiated price'' at Sec. 423.2305,
and it is compatible with our existing regulations, which at times
refer to the ``negotiated price'' for a specific drug rather than
``negotiated prices'' for multiple drugs. Second, we will define
``negotiated price'' as the lowest possible reimbursement a network
pharmacy will receive, in total, for a particular drug, taking into
account pharmacy price concessions. For the reasons described below, we
are finalizing these proposals.
---------------------------------------------------------------------------
\90\ From 2018 to 2020, pharmacy price concessions increased by
50.4 percent while all other DIR increased by 23.5 percent.
---------------------------------------------------------------------------
2. Background
Section 1860D-2(d)(1) of the Act requires that a Part D sponsor
provide beneficiaries with access to negotiated prices for covered Part
D drugs. Under the definition of ``negotiated prices'' at Sec.
423.100, the negotiated price is the price paid to the network pharmacy
or other network dispensing provider for a covered Part D drug
dispensed to a plan enrollee that is reported to CMS at the point of
sale by the Part D sponsor. This point-of-sale price is used to
calculate beneficiary cost-sharing. More broadly, the negotiated price
is the primary basis by which the Part D benefit is adjudicated, as it
is used to determine plan, beneficiary, manufacturer (in the coverage
gap), and government liability during the course of the payment year,
subject to final reconciliation following the end of the coverage year.
Under current law, Part D sponsors can, for the most part, choose
whether to reflect in the negotiated price the various price
concessions they or their intermediaries receive from all sources, not
just pharmacies. Specifically, section 1860D-2(d)(1)(B) of the Act
requires that negotiated prices ``shall take into account negotiated
price concessions, such as discounts, direct or indirect subsidies,
rebates, and direct or indirect remunerations, for covered part D drugs
. . .'' Part D sponsors are allowed, but generally not required, to
apply rebates and other price concessions at the point of sale to lower
the price upon which beneficiary cost-sharing is calculated. Under the
existing definition of negotiated prices at Sec. 423.100, however,
negotiated prices must include all price concessions from network
pharmacies that can reasonably be determined at the point of sale.
To date, very few price concessions have been included in the
negotiated price at the point of sale. All pharmacy and other price
concessions that are not included in the negotiated price must be
reported to CMS as DIR at the end of the coverage year using the form
required by CMS for reporting Summary and Detailed DIR (OMB control
number 0938-0964). These data on price concessions are used in our
calculation of final plan payments, which, under section 1860D-
2(d)(1)(B) of the Act, are required to be based on costs actually
incurred by Part D sponsors, net of all applicable DIR. Reinsurance
payments under section 1860D-15(b) of the Act, and risk sharing
payments and adjustments under section 1860D-
[[Page 27836]]
15(e)(2) of the Act are also required to be based on costs actually
incurred by Part D sponsors. In addition, pursuant to section 1860D-
2(d)(2) of the Act, Part D sponsors are required to disclose the
aggregate negotiated price concessions made available to the sponsor by
a manufacturer which are passed through in the form of lower subsidies,
lower monthly beneficiary prescription drug premiums, and lower prices
through pharmacies and other dispensers.
When price concessions are applied to reduce the negotiated price
at the point of sale, some of the concession amount is apportioned to
reduce beneficiary cost-sharing. In contrast, when price concessions
are applied after the point of sale, as DIR, the majority of the
concession amount accrues to the plan, and the remainder accrues to the
government. For further discussion on this matter, please see the CMS
Fact Sheet from January 19, 2017 ``Medicare Part D Direct and Indirect
Remuneration,'' found on the CMS website at https://www.cms.gov/newsroom/fact-sheets/medicare-part-d-direct-and-indirect-remuneration-dir. The January 2022 proposed rule explained in detail how pharmacy
price concessions applied as DIR can: (1) Lower plan premiums and
increase plan revenues; (2) result in cost-shifting to certain
beneficiaries (in the form of higher cost-sharing) and the government
(through higher reinsurance and low-income cost-sharing subsidies); and
(3) obscure the true costs of prescription drugs for consumers and the
government.
3. Changes to the Definition of Negotiated Price (Sec. 423.100)
As discussed in the proposed rule, in the May 2014 final rule (79
FR 29844), we amended the definition of ``negotiated prices'' at Sec.
423.100 to require Part D sponsors to include in the negotiated price
at the point of sale all pharmacy price concessions and incentive
payments to pharmacies--with an exception, intended to be narrow, that
allowed the exclusion of contingent pharmacy payment adjustments that
cannot reasonably be determined at the point of sale (the reasonably
determined exception). At that time, we did not anticipate the growth
of performance--based pharmacy payment arrangements that we have
observed in subsequent years.
The proposed rule discussed how, based on feedback from
stakeholders as well as information submitted by plan sponsors in their
annual DIR reports, we have come to understand that the reasonably
determined exception has been applied more broadly than we had
initially envisioned, due to the shift by Part D sponsors and their
PBMs towards contingent pharmacy payment arrangements. In short,
because performance-based pharmacy payment adjustments are contingent
upon performance over a period of time that extends beyond the point of
sale, the stakeholders asserted that by definition, the amount of these
adjustments cannot ``reasonably be determined'' at the point of sale as
they cannot be known in full at the point of sale. As a result, the
reasonably determined exception prevents the current policy from having
the intended effect on price transparency, consistency (by reducing
differential reporting of pharmacy payment adjustments by sponsors),
and beneficiary costs.
Given the predominance of plan sponsors' use of performance-
contingent pharmacy payment arrangements, we do not believe that the
existing requirement that pharmacy price concessions be included in the
negotiated price can be implemented in a manner that achieves the goals
previously discussed: Meaningful price transparency, consistent
application of all pharmacy payment concessions by all Part D sponsors,
and preventing cost-shifting to beneficiaries and taxpayers. Therefore,
to establish a requirement that accomplishes these goals while better
reflecting current pharmacy payment arrangements, we proposed to delete
the existing definition of the term ``negotiated prices'' at Sec.
423.100 and add a definition of the term ``negotiated price'' at Sec.
423.100 to mean the lowest amount a pharmacy could receive as
reimbursement for a covered Part D drug under its contract with the
Part D sponsor or the sponsor's intermediary (that is, the amount the
pharmacy would receive net of the maximum possible reduction that could
result from any contingent pharmacy payment arrangement). Specifically,
as noted previously, we proposed to delete the current definition of
``negotiated prices'' (in the plural) and to add a new definition of
``negotiated price'' (in the singular) in order to make clear that a
negotiated price can be set for each covered Part D drug, and the
amount of pharmacy price concessions may differ on a drug-by-drug
basis. Our proposed definition of negotiated price would specify that
the negotiated price for a covered Part D drug must include all
pharmacy price concessions and any dispensing fees, and exclude
additional contingent amounts (such as incentive fees) if these amounts
increase prices. Under our proposal, we would not change Part D
sponsors' ability to pass through other, non-pharmacy price concessions
and other direct or indirect remuneration amounts (for example, legal
settlement amounts and risk-sharing adjustments) to enrollees at the
point of sale. These proposed provisions are discussed in the following
sections.
a. All Pharmacy Price Concessions
In the proposed rule, we proposed to adopt a new definition of
``negotiated price'' at Sec. 423.100 that would include all pharmacy
price concessions received by the plan sponsor for a covered Part D
drug. The proposed definition would omit the reasonably determined
exception, meaning that all price concessions from network pharmacies,
negotiated by Part D sponsors and their contracted PBMs, would have to
be reflected in the negotiated price that is made available at the
point of sale and reported to CMS on a PDE record, even when such price
concessions are contingent upon performance by the pharmacy.
Section 1860D-2(d)(1)(B) of the Act requires that negotiated prices
``shall take into account negotiated price concessions, such as
discounts, direct or indirect subsidies, rebates, and direct or
indirect remunerations, for covered part D drugs . . .'' We have
previously interpreted this language to mean that some, but not all,
price concessions must be applied to the negotiated price (see, for
example, 70 FR 4244 and 74 FR 1511). Although we continue to believe
that the prior interpretation of ``take into account'' was permissible,
we believe that our initial interpretation may have been overly
definitive with respect to the intended meaning of ``take into
account.'' We believe that a proper reading of the statute supports
requiring that all pharmacy price concessions be applied at the point
of sale. As proposed, requiring that all pharmacy price concessions be
applied at the point of sale would ensure that negotiated prices ``take
into account'' at least some price concessions and, therefore, would be
consistent with and permitted by the plain language of section 1860D-
2(d)(1)(B) of the Act.
The proposed rule noted that the regulatory change we proposed
would change the reporting requirements for Part D sponsors, but it
does not affect what sponsors may arrange in their contracts with
network pharmacies regarding payment adjustments after the point of
sale. Contracts between sponsors or their PBMs and pharmacies can
continue to provide for performance-based payment adjustments. The
requirement that pharmacy price concessions be passed through to the
point-of-sale price only
[[Page 27837]]
directly impacts the price that is used to determine beneficiary cost-
sharing and the information that is populated and reported on the PDE
record, but it does not dictate the amount that is ultimately paid to
the pharmacy or the timing of payments and adjustments.
Comment: Most of the comments we received supported the adoption of
a requirement that pharmacy price concessions be applied to the
negotiated price at the point of sale. Many of the commenters who
supported the proposal agreed that Part D sponsors or the sponsor's
intermediaries apply the ``reasonably determined'' exception in the
current definition of ``negotiated prices'' to nearly all performance-
based pharmacy payment adjustments and that the exclusion of these
adjustments from the negotiated price has resulted in cost-shifting to
beneficiaries and the government. A majority of the commenters agreed
with our assessment that the requirement to include all pharmacy price
concessions in the negotiated price at the point of sale would lead to
lower overall beneficiary spending for prescription drugs, even after
accounting for possible increases in beneficiary premiums.
Many commenters explained that they supported the proposal because
they believed it would increase price transparency for beneficiaries,
the government, and other stakeholders. Several commenters agreed with
our observation in the proposed rule that there is currently wide
variation in reporting of DIR to CMS, with some, albeit few, plan
sponsors including certain pharmacy price concessions in negotiated
price, while others continue to report them as DIR. Some commenters
suggested that this inconsistency in reporting makes it difficult for
beneficiaries to accurately compare plans with respect to the true
costs of their medications. These commenters suggested that requiring
all pharmacy price concessions to be accounted for in negotiated price
would enhance the quality of information available to beneficiaries and
provide them with a better understanding of how they will progress
through the phases of the Part D benefit based on their current
medications. Several commenters believed that increased price
transparency would also create a more level playing field among plans
by providing more consistency in how Part D sponsors report these price
concessions. Many commenters suggested that pharmacies would also
benefit from the increased price transparency because it would provide
information necessary for more accurate budgeting and improved ability
to evaluate proposed PBM contracts.
Response: We thank these commenters for their support and agree
that changing the definition of ``negotiated price'' will provide
greater transparency and lower out-of-pocket costs for beneficiaries.
Comment: Some commenters stated that the policy would harm
competition among pharmacies, leading to higher program costs. These
commenters explained that under a revised definition of ``negotiated
price,'' sponsors would no longer be able to apply pharmacy price
concessions as DIR to reduce plan premiums. Several commenters stated
that plan sponsors have demonstrated that the use of preferred networks
has put a downward pressure on net prices and noted that pharmacies
aggressively compete for preferred status in low premium plans. Knowing
that beneficiaries prefer these plans, pharmacies (and, in particular,
large retail-based pharmacies) are willing to offer substantial
concessions to ensure that they have access to a large and fast-growing
membership base. These commenters suggested that beneficiaries are not
as sensitive to--or aware of--point-of-sale negotiated prices in
comparison to premiums, and if sponsors are no longer able to reduce
premiums by applying pharmacy price concessions as DIR, the result will
be less effective competition between pharmacies for network placement.
These commenters concluded that the use of post-point-of-sale pharmacy
price concessions can give sponsors further leverage with pharmacies to
negotiate prices, which decreases costs for the entire program.
A few commenters were concerned that including pharmacy price
concessions in the negotiated price would give pharmacies the power to
impact future discount levels and pharmacies' increased negotiating
power would dramatically impact costs for patients, taxpayers, and
plans. A few commenters suggested that pharmacies would not agree to
economically equivalent discounts and would use the ``any willing
provider'' provisions to mandate that they must be allowed to
participate in the network even at less of a discount.
Response: The comments contending that sponsors' inability to apply
pharmacy price concessions as DIR to reduce premiums will lead to less
effective competition among pharmacies for network placement assume
that post-point-of-sale recoupments are a more effective incentive than
post-point-of-sale bonus payments. Commenters did not cite evidence to
support this assumption; therefore, we believe pharmacies would
continue to have incentives to compete for placement in networks. In
addition, the aggressive competition among pharmacies for placement in
low premium plan networks would be a continuing incentive for plan
sponsors to keep premiums as low as possible regardless of the change
in how the negotiated price is reported to CMS. To the extent that this
policy results in increased transparency and information symmetry it
would encourage market competition and improve competition among
pharmacies.
As noted above, several commenters stated that plan sponsors have
demonstrated that the use of preferred networks has put a downward
pressure on net prices, and we see no reason why this would change
under the new policy. In spite of the statutory requirement at section
1860D-4(b)(1)(A) of the Act that Part D sponsors permit the network
participation of any pharmacy willing to accept their standard terms
and conditions, Part D sponsors and pharmacies remain free to negotiate
terms of preferred network participation. The commenters provided no
evidence to support the assertion that post-point-of-sale incentive
payments (if used) would provide any less effective an incentive for
pharmacies to continue to compete for preferred network status. We
believe the policy would improve transparency and not necessarily
affect any party's leverage.
Comment: We received some comments that opposed the adoption of a
requirement that all pharmacy price concessions be included in the
negotiated price at the point of sale because it would lead to higher
premiums and increased government costs. Several commenters stated that
the financial and budgetary impact of revising the definition of
negotiated price to include all pharmacy price concessions does not
address the Administration's objectives to reduce overall drug prices.
A few commenters noted that the CMS impact analysis estimates that drug
manufacturers would have a financial gain due to less liability during
the coverage gap. These commenters stated that this is particularly
concerning as it financially rewards the very industry responsible for
high drug prices. A few commenters posited that any savings from the
policy would not be distributed evenly among beneficiaries. The
commenters noted that although a subset of beneficiaries would pay less
for discounted drugs, other beneficiaries would only experience higher
premiums. The
[[Page 27838]]
commenters also pointed out that some of the cost would be shifted to
the Federal Government and would ultimately be borne by taxpayers. A
few commenters were concerned this rule would disproportionately
increase the financial burden for vulnerable beneficiaries with limited
resources that are especially cost-conscious. They stated that premium
increases due to the rule may potentially hinder progress in health
equity for vulnerable populations and asked CMS to consider the
potential to detract from the Agency's overall goal of improving health
equity and access.
Response: While reducing overall prices is one of the
Administration's objectives, the new definition of ``negotiated price''
set forth in this rule was not intended to meet that objective. The new
definition will lead to savings for some beneficiaries by lowering the
prices they pay for prescription drugs at the point of sale. As
explained in the proposed rule, when pharmacy price concessions and
other price concessions are not reflected in the negotiated price (that
is, are applied instead as DIR at the end of the coverage year),
beneficiary cost-sharing increases. For many Part D beneficiaries who
utilize drugs and thus incur cost-sharing expenses, this means, on
average, higher overall out-of-pocket costs, even after accounting for
the premium savings tied to higher DIR. A principal purpose of any
health insurance is to help reduce the financial burden borne by
enrollees who need to utilize covered benefits.\91\ We believe it is
appropriate that savings from price concessions go toward defraying the
out-of-pocket costs of the beneficiaries who purchase prescription
drugs.
---------------------------------------------------------------------------
\91\ Keisler-Starkey, K.B., & Bunch, L.N. (2021). Health
Insurance Coverage in the United States: 2020. United States Census
Bureau.
---------------------------------------------------------------------------
We disagree that this rule would increase the financial burden for
vulnerable beneficiaries, hinder progress in health equity for
vulnerable populations, or detract from the Agency's overall goal of
improving health equity and access. In fact, the lower cost-sharing for
prescription drugs will help beneficiaries with serious health
conditions, who bear a disproportionate burden of health care costs.
These beneficiaries have reported difficulties paying for prescription
drugs as a common problem.\92\ As stated earlier in the preamble, the
application of all pharmacy price concessions to the negotiated price
will lower cost-sharing for beneficiaries with the most serious health
conditions. In addition, lower beneficiary cost-sharing can lead to
increased medication adherence, which could result in a potential
decrease in overall medical costs.\93\ Finally, this policy does not
change how much LIS-eligible beneficiaries pay in cost-sharing or
premiums, and therefore the low-income subsidy will continue to protect
the most vulnerable populations.
---------------------------------------------------------------------------
\92\ Kyle, M.A., Blendon, R.J., Benson, J.M., Abrams, M.K., &
Schneider, E.C. (2019). Financial hardships of Medicare
beneficiaries with serious illness. Health Affairs, 38(11), 1801-
1806.
\93\ Cong, M., Chaisson, J., Cantrell, D., Mohundro, B.L.,
Carby, M., Ford, M., . . . & Nigam, S.C. (2021). Association of co-
pay elimination with medication adherence and total cost. The
American Journal of Managed Care, 27(6), 249-254. https://doi.org/10.37765/ajmc.2021.88664.
---------------------------------------------------------------------------
Comment: A few commenters stated that, although including all
pharmacy price concessions in the price at the point of sale could lead
to lower cost-sharing for beneficiaries, it does not solve the
complexities of drug pricing. For example, these commenters noted that
the policy would not help beneficiaries who take expensive drugs with
no post-point-of-sale rebates or discounts.
Response: We appreciate the comment. Although we believe adopting
this new definition of ``negotiated price'' is an important first step
toward improving the affordability of drugs for the majority of
beneficiaries who do not receive the low-income subsidy (LIS), and
improving price transparency, we acknowledge that this change does not,
nor is it intended to, address the full range of complexities of drug
pricing, and may not directly reduce out-of-pocket costs for all
beneficiaries. However, as discussed in further detail in section IV of
this final rule, we project that the new definition of ``negotiated
price'' (modified to be applied across all phases of the Part D
benefit, including the coverage gap phase (see comments, response and
discussion below)) will save beneficiaries $26.5 billion between 2024
and 2032.
Comment: Some commenters opposed the policy on the ground that the
new definition of ``negotiated price'' would violate the statutory
definition of negotiated price at section 1860D-2(d)(1)(B) of the Act.
Some commenters suggested that CMS would be exceeding its delegated
authority if it finalized a requirement that all pharmacy price
concessions be included in the point-of-sale price. Commenters also
stated that Congress's intent was to provide Part D sponsors with the
flexibility in administering the Part D prescription drug benefit as a
private market model and that the pharmacy price concession rule breaks
with this fundamental trust in private markets instilled in the statute
by Congress. In addition, some commenters noted that CMS has on
multiple previous occasions recognized that the term ``negotiated
price,'' as defined by Congress, grants Part D plans discretion in how
they treat pharmacy price concessions and, as a result of this
flexibility, Part D plans have been drivers of innovation in benefit
design. Some commenters contended that CMS cannot now purport to
interpret the statute in a way that eliminates post-point-of-sale
pharmacy price concessions, given that the agency previously found that
the plain language of the statute permitted such price concessions.
Further, commenters stated that an agency may not reverse a
longstanding and reasoned policy without an adequate and thoughtful
explanation for such a decision. Because the rule is unaligned with the
intent of Congress, commenters argued, a reviewing court may find such
policy changes to be substantively invalid because they would not be
based on a permissible construction of the statute.
A few commenters writing in support of revising the definition
stated that the statutory definition of negotiated price gives CMS the
authority to require Part D plan sponsors to include all price
concessions in the negotiated price. These commenters explained that
section 1860D-2(d)(1)(B) of the Act specifies that the negotiated price
``shall'' take into account negotiated price concessions, such as
discounts, direct or indirect subsidies, rebates, and direct or
indirect remunerations, for covered part D drugs, and include any
dispensing fees for such drugs. These commenters stated that the
statute's use of the word ``shall'' means that the negotiated price is
required to reflect these price concessions. These commenters reasoned
that, because the statute does not specify what percentage of these
price concessions must be used to lower negotiated prices and thus
passed through to patients at the point of sale or otherwise provide
details about implementing the pass-through requirement, CMS has the
authority to fill in those details. These commenters noted that plan
sponsors and PBMs have exploited the ability to exclude price
concessions that ``cannot reasonably be determined at the point of
sale'' under the current definition of negotiated price. These
commenters stated that plan sponsors and PBMs have applied this
exception broadly and not passed the vast majority of pharmacy price
concessions through to the point of sale, and that by doing so, plan
sponsors and PBMs are violating CMS's intent in allowing this exception
(see 2014 final rule titled ``Contract Year 2015 Policy and Technical
Changes to
[[Page 27839]]
the Medicare Advantage and the Medicare Prescription Drug Benefit
Programs'' (79 FR 29878), which appeared in the Federal Register on May
23, 2014).
Response: As we stated in the proposed rule, section 1860D-
2(d)(1)(B) of the Act requires that negotiated prices ``shall take into
account negotiated price concessions, such as discounts, direct or
indirect subsidies, rebates, and direct or indirect remunerations, for
covered part D drugs . . . .'' The statutory language does not
prescribe the extent to which the negotiated prices shall take into
account negotiated price concessions, and therefore, provides CMS with
the authority to decide whether plan sponsors should be required to
include all price concessions in the negotiated price. We have
previously interpreted this language to mean that some, but not all,
price concessions must be applied to the negotiated price (see, for
example, 70 FR 4244 and 74 FR 1511). Although we continue to believe
that the prior interpretation of ``take into account'' was permissible,
we believe that our initial interpretation may have been overly
definitive with respect to the intended meaning of ``take into
account.'' Requiring that all pharmacy price concessions be applied at
the point-of-sale would ensure that negotiated prices ``take into
account'' at least some price concessions and, therefore, would be
consistent with and permitted by the plain language of section 1860D-
2(d)(1)(B) of the Act. In this way, the negotiated price is required to
``take into account'' these price concessions. This policy we are
finalizing is thus consistent with the statutory definition of
negotiated price. In addition, the policy we are adopting is consistent
with CMS's delegated authority to interpret the statute and administer
the Medicare program. Moreover, the statutory definition of negotiated
price should be viewed in the broader context of administration of the
Part D program and support better functioning of the Part D benefit
overall. The policy we are adopting does so by addressing market
incentives for plans to keep premiums low, by reducing point-of-sale
costs for beneficiaries and by bringing the balance of cost-sharing
among the government, plans, and beneficiaries into better alignment.
We disagree with commenters who contend that CMS cannot change its
interpretation of the statute. As noted above, the statutory language
at section 1860D-2(d)(1)(B) of the Act does not prescribe the extent to
which the negotiated prices shall take into account negotiated price
concessions, and therefore, provides CMS with the authority to decide
whether plan sponsors should be required to include all pharmacy price
concessions in the negotiated price. We believe that it is a
permissible interpretation of the statute to require that all pharmacy
price concessions be applied at the point of sale. The policy decision
to treat pharmacy price concessions in this way is supported by
evidence indicating that very few pharmacy price concessions are being
passed on to beneficiaries in the form of lower cost-sharing at the
point of sale and the significant growth in such concessions. As noted
by some commenters, CMS originally believed that Part D plans would
apply price concessions to the negotiated price due to pharmacy and
beneficiary market competition; however, this has not been occurring as
expected. As discussed in the proposed rule preamble, the sponsor
reported data and stakeholder comments (83 FR 62174 through 62180)
indicate that most price concessions are being applied after the point-
of-sale. We reconsidered our interpretation of section 1860D-2(d)(1)(B)
given that the initial interpretation does not accomplish the goals of
meaningful price transparency, consistent application of pharmacy
payment concessions, and preventing cost shifting to beneficiaries and
taxpayers. We also disagree with commenters who claim that CMS is
reversing its longstanding policy without an adequate explanation. CMS
has carefully and thoroughly considered this issue over several years.
Indeed, since 2014, CMS has addressed this topic multiple times,
including soliciting comment through a formal process three times and
holding numerous listening sessions.
We disagree with commenters who contend that the policy we are
adopting in this rule is inconsistent with trust in private markets or
would hinder innovation in benefit design. As noted in the proposed
rule, this policy changes the reporting requirements for Part D
sponsors; it does not govern payment arrangements or eliminate post-
point-of-sale price concessions, but rather only requires that all
pharmacy price concessions be included in the negotiated price.
Therefore, Part D sponsors remain free to negotiate innovative
arrangements with network pharmacies. In addition, to the extent our
policy increases transparency and information symmetry, as noted
previously, it would improve competition in private markets. Regarding
comments about Congressional intent for Part D sponsor flexibility, we
do not believe this policy fundamentally changes Part D sponsor
flexibility in administering the Part D benefit. Sponsors continue to
exercise extensive flexibility over plan design and payment.
CMS appreciates commenters support for the revision of the
regulatory definition and statutory interpretation. As discussed in the
preamble and mentioned by commenters that support revising the
definition, this policy requiring that all pharmacy price concessions
be applied to the negotiated price would ensure that negotiated prices
``take into account'' at least some price concessions and would be
passed on to beneficiaries in the form of lower cost-sharing at the
point of sale.
Comment: A few commenters stated that a requirement that the
negotiated price reflect the lowest possible reimbursement to the
pharmacy at the point of sale would violate the statutory prohibition
under section 1860D-11(i) of the Act on CMS ``institut[ing] a price
structure for the reimbursement of covered part D drugs.'' Commenters
stated that requiring pharmacy price concessions to be passed through
at the point of sale would effectively create a price structure for
pharmacy payment whereby sponsors would have to negotiate only on the
lowest possible price/rates with each and every pharmacy with which
they contract. Commenters argued that this ``single variable
negotiating system'' would result in standard rates across all pharmacy
lines of business.
Response: CMS did not propose, and is not adopting, a price
structure for the reimbursement of covered Part D drugs; rather, the
requirement that the negotiated price reflect the lowest possible
reimbursement the pharmacy will receive for a particular drug regulates
only the reporting of data on the PDE record. The examples provided in
this rule under section 3c. Lowest Possible Reimbursement Example
clearly illustrate how the requirement that the negotiated price
reflect the lowest possible reimbursement would be reflected on the
PDE, under different payment arrangements. The policy we are adopting
in this final rule has no bearing on how a pharmacy's payment is
calculated or what price structure sponsors use. Sponsors still have
the option of negotiating with pharmacies on factors related to the
payment rate ultimately received by the pharmacy, which may be higher
than the negotiated price. While sponsors must comply with the prompt
payment requirements at Sec. 423.530, they continue to have discretion
over the timeframes
[[Page 27840]]
for settling payment incentives and penalties.
Comment: Most commenters, including beneficiary advocates and
beneficiaries, applauded CMS' effort to provide cost-sharing relief to
beneficiaries.
Some commenters stated that, if finalized, the requirement that all
pharmacy price concessions be included in the negotiated price would
increase beneficiary confusion and frustration over health care costs.
These commenters suggested that beneficiaries do not have an awareness
of the impact of pharmacy price concessions on their overall pharmacy
drug and premium costs, and beneficiaries will not understand that
their increased premium costs will be due to Part D sponsors no longer
reporting pharmacy price concessions as DIR.
Response: We thank commenters for their support of the application
of all pharmacy price concessions to the negotiated price, which will
lower beneficiary cost-sharing. Moreover, establishing consistency in
how sponsors report pharmacy price concessions will allow for more
meaningful price comparisons (for both premium and cost-sharing) and
more well-informed choices by consumers. While beneficiaries may not
immediately understand the factors underlying premiums increases and
cost-sharing decreases, they will be better positioned to compare
plans, because the standardized reporting of negotiated price required
by this rule will create a more consistent basis for comparing plans
based on premiums and cost-sharing.
Comment: Several commenters who opposed adopting a new definition
of ``negotiated price'' stated that a requirement that all pharmacy
price concessions be passed through at the point of sale, as opposed to
being reported as DIR, would violate the statutory ``non-interference
clause,'' at section 1860D-11(i) of the Act, which specifies that ``the
Secretary . . . may not interfere with the negotiations between drug
manufacturers and pharmacies and PDP sponsors.'' A few commenters
charged that the new definition would be designed to directly affect
the contracting processes between plans and pharmacies by mandating
changes to point-of-sale prices. Several commenters indicated that the
policy would take away Part D sponsors' and PBMs' ability to negotiate
downside incentives with pharmacies tied to performance or quality
targets, and that it would impair their ability to negotiate rates with
pharmacies. A few commenters suggested that the new definition would
limit the tools available to Part D sponsors to establish varied and
innovative incentive arrangements with contracted pharmacies intended
to achieve important goals, such as increasing generic dispensing
rates, and to focus on priorities, such as reducing the use of high-
risk medications and improving medication adherence. Several commenters
asserted that pharmacy price concessions are used to develop a
preferred pharmacy network while also keeping Part D premiums low and
expressed concern that adopting the new definition of ``negotiated
price'' would limit the ability of plan sponsors to negotiate
effective, high-value contracts with pharmacies, resulting in an
increase in both beneficiary premiums and government spending, as well
as a decrease in preferred pharmacy networks.
A commenter noted that this policy would adversely affect the
reductions in cost-sharing for beneficiaries that have been realized
under the Part D Senior Savings Model. The commenter stated that Part D
plans that participate in this Center for Medicare & Medicaid
Innovation (CMMI) model are relying on their preferred pharmacy
networks to stock and dispense specific products. The commenter noted
that additional contract terms help plans achieve goals under models
and that pharmacy interactions can increase adherence to prescribed
medications and foster therapeutic substitution that can save
beneficiaries and plans money in the long run. The commenter stated
this policy will put the benefits achieved through this model at risk
by interfering with the relationships that have been formed between
PBMs and pharmacies.
Some commenters stated that the new definition of ``negotiated
price'' would not violate the ``non-interference clause.'' Several
commenters asserted that CMS would not be inserting itself into
negotiations between plan sponsors, PBMs, and pharmacies by defining
the negotiated price and altering the manner in which to account for
pharmacy price concessions. Rather, some commenters stated, CMS is
authorized to promulgate regulations in accordance with the Medicare
statute's any willing provider and prompt payment requirements, and
such regulations would not run afoul of Medicare's non-interference
clause. Commenters also noted that CMS retains authority to promulgate
such regulations in the interest of protecting market competition,
which is consistent with the plain meaning of the text of the non-
interference clause. Some commenters noted that plan sponsors and their
PBMs and pharmacies are still free to negotiate any reimbursement,
concessions, or pay structure they like.
Response: We agree with commenters that this rule does not violate
the non-interference clause. This rule does not implicate or impose
requirements on plan-pharmacy interactions, such as contracting,
negotiations, payments rates, incentive arrangements, quality goals or
targets, performance-based payments or performance-based contracting.
Sponsors and pharmacies remain free to negotiate any such arrangements
they wish--this rule requires only that the negotiated price reflect
the price that the parties have negotiated as the lowest possible
reimbursement that the pharmacy could receive for a particular drug,
inclusive of all pharmacy price concessions. As noted above, the
requirement that the negotiated price reflect the lowest possible
reimbursement that a pharmacy receives for a drug is directly related
to the reporting of data on the PDE record and determination of
beneficiary cost-sharing and to promoting price transparency to the
beneficiary. The connection that commenters make between this policy
and adverse effects on the Part D Senior Savings model and Part D
sponsors and pharmacy relationships is unclear. To the extent that our
policy has an effect on the calculation of cost-sharing under the
model, we would anticipate that the model could be adapted, to
accommodate new requirements and policies. As we have stated
previously, this policy does not impose requirements on contracts
between sponsors or their PBMs and pharmacies; therefore, we do not see
how this policy affects performance-based payment adjustments that
exist in the Senior Savings Model. We agree that pharmacy interactions
can increase adherence to prescribed medications and foster therapeutic
substitution that can save beneficiaries and plans money in the long
run.
Comment: A commenter noted that beneficiary costs are based on a
combination of premiums and cost-sharing, both of which are already
fully disclosed to the beneficiary through plan materials and other
tools like Medicare Plan Finder (MPF). This commenter stated that
beneficiaries use tools like MPF to choose plans based on factors
including cost-sharing, premiums, formulary coverage, pharmacy network,
Star Ratings, and integration or non-integration with MA plans. This
commenter maintained that tools like MPF already allow for a real,
meaningful, and actionable comparison of plan prices and efficiencies
and
[[Page 27841]]
therefore, promoting transparency through this policy is unnecessary.
Commenters believed that the pharmacy price concession rule will
undo the effectiveness of MPF and create less transparency by causing
confusion with the introduction of the new definition of negotiated
price. Commenters were also concerned that if CMS allows plans the
flexibility to determine how much of the pharmacy price concessions to
pass through at the point of service (POS) for applicable drugs in the
coverage gap (while using the negotiated price determined using the
lowest possible reimbursement to the pharmacy in the non-coverage gap
phases), then MPF will need to be updated to account for the
differences, which could add to beneficiary confusion.
Commenters recommend that CMS use the MPF tool to examine which
factors most impact beneficiaries when making a plan choice before CMS
makes drastic changes to the program through the pharmacy price
concession rule. They suggested that CMS use underlying MPF data to
perform analysis to determine how important premiums are in the total
calculus of plan choice as compared to overall out-of-pocket (OOP)
costs.
Commenters also stated that the proposal would require development
of processes to ensure accurate information is posted on MPF and that
there would be considerable challenges with loading accurate pharmacy
network data into MPF in a timely fashion, as there is likely to be
increased network volatility as contracts are renegotiated.
Response: We agree with commenters that MPF is a valuable tool that
beneficiaries use to make informed decisions. We note that the cost-
sharing and premium data for Part D reflected in the MPF is and will
continue to give beneficiaries an accurate assessment of their expected
costs for a given plan. This policy does not affect the accuracy of the
data in MPF as the new definition of negotiated price does not change
how the out-of-pocket costs are displayed to the beneficiary. As
discussed elsewhere in this rule, CMS is finalizing a policy to require
that pharmacy price concessions be applied to the negotiated price
across all phases of the Part D benefit, including the coverage gap
phase. Therefore, MPF will not need to account for the difference in
how pharmacy price concessions are applied in the gap verses non-
coverage gap phases. Thus, we do not see how commenters' claims that
the new definition will cause confusion due the new definition of
negotiated price are substantiated.
In addition, CMS's MPF tool utilizes drug prices net of rebates and
other price concessions that are applied at the point of sale, so MPF's
current design already supports the collection and display of drug
prices as contemplated under this rule. Therefore, CMS does not
anticipate implementing changes to the MPF tool or the methodology
currently in place. Plans should refer back to the Part D drug pricing
submission guidance published annually by CMS. This guidance provides
technical instructions on how to submit drug prices that account for
rebates and other price concessions that are applied at the point of
sale. The applicability date of January 1, 2024, for the new definition
of negotiated price provides time for sponsors to prepare data for
submission to MPF.
We understand that beneficiaries consider many factors in selecting
a plan and that the relative importance of premium costs as opposed to
out-of-pocket costs can vary depending upon a beneficiary's particular
circumstances. Moreover, even for beneficiaries who prioritize premium
costs over other factors, this rule will result in premiums that better
reflect the relative efficiency of plan designs for prescription drug
coverage, and therefore, this policy will contribute to more informed
choices by beneficiaries.
Comment: A few commenters expressed concern that the impact of the
rule would likely be more profound on prescription drug plans (PDPs)
than Medicare Advantage prescription drug (MA-PDs) plans, as many PDPs
would be unable to avoid a significant increase in premiums, and could
potentially be priced out of the market. Commenters explained that PDPs
lack the additional financial cushion available to MA organizations
(MAOs) as a result of their offering an integrated benefit. Also, PDPs
lack the financial incentives of Star Ratings bonus payments for which
MAOs are eligible. Commenters were concerned that as beneficiaries lose
access to PDPs, many would be forced to enroll in MA-PDs, and be driven
from original Medicare, which may be a source of comfort and stability
to many, especially older beneficiaries, into managed care plans.
Response: CMS appreciates the comments and concerns about potential
differential impacts on PDPs versus MA-PDs. One outcome of this rule is
that beneficiary cost-sharing may be reduced, regardless of the plan
type in which they are enrolled. The statement that beneficiaries may
be driven from original Medicare to Medicare Advantage assumes that
Part D benefits are the sole factor behind individuals' decisions in
choosing between original Medicare and Medicare Advantage. We note that
many factors, such as geographic location, Medicare Advantage plan
options, and preferences related to provider choices, are also
important considerations for many beneficiaries in choosing between
original Medicare and Medicare Advantage. We also note that
beneficiaries selecting original Medicare (for other reasons) will be
comparing PDP premiums against one another and not comparing PDP
premiums against MA-PD premiums. Medicare Advantage plans that use Part
C rebates to offset Part D premium increases may need to forgo offering
other benefits that would have been provided with those funds.
Comment: Some commenters stated that it would be extremely
challenging, if not impossible, to implement changes to bid
assumptions, renegotiate pharmacy contracts, and make the necessary
revisions to pharmacy adjudication systems prior to January 1, 2023,
and recommended that the implementation of the rule be postponed until
2024 or later. Commenters noted that if the rule is applicable for
contract year 2023, there could be disruptions in member benefits
because of the contracting and systems changes that would have to
happen in time for the Fall 2022 Open Enrollment. As a result of the
compressed timeline, they are concerned that focus will be taken away
from member benefits.
A commenter noted that Part D plan sponsors would need to
renegotiate their contracts with PBMs. This commenter stated that not
only would it be necessary to renegotiate fee arrangements, but also,
given the rule, Part D plan sponsors may want to discuss new business
strategies and underwriting scenarios with their PBMs. The commenter
explained that this is a lengthy, resource-intensive process that
precedes pharmacy contracting because it is the plan that sets the
target for pharmacy contracts that the PBM negotiates. This commenter
stated that CMS' proposed timeline would cause the Part D sponsor/PBM
negotiations to occur at the same time as PBMs are trying to
renegotiate pharmacy contracts.
Commenters also explained that changes to pharmacy contracts would
not be mere technical changes, but would include how, when, and the
amount pharmacies would receive in reimbursement. Commenters stated
that most pharmacies are likely to see a significant reduction in
reimbursement, which could result in some pharmacies
[[Page 27842]]
refusing to participate in the Part D network at the new reimbursement
rate. Commenters explained that issues with participation could impact
preferred pharmacy arrangements and network access, which could result
in additional time needed for additional contracting to ensure that
pharmacy network access requirements are satisfied.
However, other commenters indicated that plans/PBMs customarily
impose new terms without any consultation or negotiation. Some
commenters stated that most fees charged to pharmacies are placed in
the provider manual, which is included by reference into the contract
terms. A commenter stated that all or substantially all PBMs have
contractual terms in place with pharmacies to enable payment term
modifications for any change in DIR, such as requiring immediate
renegotiation of rates or setting a fixed reimbursement rate in the
event of policy change. This commenter believed that any additional
delay in providing this rule would improperly place Part D plan sponsor
and PBM profits above beneficiary well-being and believe CMS' current
proposed timeline is appropriate.
Response: We find commenters' concerns regarding the ability to
effectuate contract negotiations and make potential systems changes in
time for 2023 implementation to be compelling. To give all parties
sufficient time to implement this policy, including making the systems
changes that will be needed to ensure that cost-sharing is correctly
adjudicated for beneficiaries at the point of sale, we are modifying
our proposal and finalizing an applicability date of January 1, 2024.
This will give the Part D sponsors over a year to contract and prepare
bids for the 2024 contract year. In addition, based upon our experience
implementing changes in the Part D program that require Part D sponsor
and PBM system changes, we believe that this additional time is
sufficient to operationalize the new definition of negotiated price. We
are making corresponding changes to the regulation at 42 CFR 423.100 to
retain the current regulatory definition of ``negotiated prices'' for
2023 and adopt the new regulatory definition of ``negotiated price''
for 2024 and thereafter.
Comment: A significant volume of letters were submitted as the
result of a letter writing campaign and encouraged CMS to move forward
as swiftly as possible in adopting the new definition of negotiated
price.
Response: We thank the commenters for their feedback. While we
appreciate the need to pass meaningful out of pocket cost savings to
and increase drug price transparency for beneficiaries as soon as
possible, concerns related to contracting and operational timelines
that could disrupt successful implementation are sufficiently
compelling to warrant making this policy applicable beginning on
January 1, 2024.
After consideration of comments received, CMS is finalizing the new
definition of negotiated price at Sec. 423.100 effective January 1,
2024. Under this definition, the negotiated price must be the lowest
possible reimbursement a network entity will receive, in total, for a
particular drug and include all pharmacy price concessions. To
implement this policy, we will also remove the existing definition of
negotiated prices at Sec. 423.100, effective January 1, 2024.
b. Lowest Possible Reimbursement
To effectively capture all pharmacy price concessions at the point-
of-sale consistently across sponsors, we proposed to require that the
negotiated price reflect the lowest possible reimbursement that a
network pharmacy could receive from a particular Part D sponsor for a
covered Part D drug. Under this approach, the price reported at the
point of sale would need to include all price concessions that could
potentially flow from network pharmacies, as well as any dispensing
fees, but exclude any additional contingent amounts that could flow to
network pharmacies and thus increase prices over the lowest possible
reimbursement level, such as incentive fees. That is, if a performance-
based payment arrangement exists between a sponsor and a network
pharmacy, the point-of-sale price of a drug reported to CMS would need
to equal the final reimbursement that the network pharmacy would
receive for that drug under the arrangement if the pharmacy's
performance score were the lowest possible. If a pharmacy is ultimately
paid an amount above the lowest possible reimbursement (such as in
situations where a pharmacy's performance under a performance-based
arrangement triggers a bonus payment or a smaller penalty than that
assessed for the lowest level of performance), the difference between
the negotiated price reported to CMS on the PDE record and the final
payment to the pharmacy would need to be reported as negative DIR as
part of the annual report on DIR following the end of the year. For an
illustration of how negotiated prices would be reported under such an
approach, see the lowest cost reimbursement example provided later in
this rule.
By requiring that sponsors assume the lowest possible pharmacy
performance when reporting the negotiated price, we would be
prescribing a standardized way for Part D sponsors to treat the unknown
(final pharmacy performance) at the point of sale under a performance-
based payment arrangement, which many Part D sponsors and PBMs have
identified as the most substantial operational barrier to including
such concessions at the point of sale. The proposed rule discussed our
bases for believing that requiring that the negotiated price reflect
the lowest possible reimbursement a network pharmacy could receive for
a Part D drug is the best approach to achieve our goals, as noted
previously, of (1) consistency (standardized reporting of negotiated
prices and DIR); (2) preventing cost-shifting to beneficiaries; and (3)
price transparency for beneficiaries, the government, and other
stakeholders.
Consistent with this approach, we proposed that all contingent
incentive payments (that is, an amount that is paid to the pharmacy
instead of a price concession from the pharmacy) be excluded from the
negotiated price. As explained in the proposed rule, including the
amount of any contingent incentive payments to pharmacies in the
negotiated price would make drug prices appear higher at a ``high
performing'' pharmacy, which receives an incentive payment, than at a
``poor performing'' pharmacy, which is assessed a penalty, and would
also reduce price transparency. This pricing differential could create
a perverse incentive for beneficiaries to choose a ``lower performing''
pharmacy for the advantage of a lower price. Additionally, Part D
sponsors and their intermediaries previously asserted in public
comments on the 2017 and 2018 rules that network pharmacies lose
motivation to improve performance when all performance-based
adjustments are required to be reported up-front. Revising the
negotiated price definition as proposed would mitigate this concern by
allowing sponsors and their intermediaries to continue to motivate
network pharmacies to improve their performance with the promise of
future incentive payments that would increase pharmacy reimbursement
from the level of the lowest possible reimbursement per claim. Further,
we emphasized that the proposed changes would not require pharmacies to
be paid in a certain way; rather we would be requiring standardized
reporting to CMS of drug prices at the point of sale.
[[Page 27843]]
c. Lowest Possible Reimbursement Example
To illustrate how Part D sponsors and their intermediaries would
report costs under our proposal, we provided the following example.
Suppose that under a performance-based payment arrangement between a
Part D sponsor and its network pharmacy, the sponsor will implement one
of three scenarios: (1) Recoup 5 percent of its total Part D-related
payments to the pharmacy at the end of the contract year for the
pharmacy's failure to meet performance standards; (2) recoup no
payments for average performance; or (3) provide a bonus equal to 1
percent of total payments to the pharmacy for high performance. For a
drug that the sponsor has agreed to pay the pharmacy $100 at the point-
of-sale, the pharmacy's final reimbursement under this arrangement
would be: (1) $95 for poor performance; (2) $100 for average
performance; or (3) $101 for high performance. Under the current
definition of negotiated prices, the reported negotiated price is
likely to be $100, given the reasonably determined exception for
contingent pharmacy payment adjustments. However, under the proposed
definition, for all three performance scenarios, the negotiated price
reported to CMS on the PDE record at the point of sale for this drug
would be $95, or the lowest reimbursement possible under the
arrangement. Thus, if a plan enrollee were required to pay 25 percent
coinsurance for this drug, then the enrollee's costs under all
scenarios would be 25 percent of $95, or $23.75, which is less than the
$25 the enrollee would pay today (when the negotiated price is likely
to be reported as $100). Finally, any difference between the reported
negotiated price and the pharmacy's final reimbursement for this drug
would be reported as DIR at the end of the coverage year. Under this
requirement, the sponsor would report $0 as DIR under the poor
performance scenario ($95 minus $95), -$5 as DIR under the average
performance scenario ($95 minus $100), and -$6 as DIR under the high-
performance scenario ($95 minus $101), for every covered claim for this
drug purchased at this pharmacy.
Comment: Many commenters encouraged CMS to address the proposed
rule's potential impact on pharmacy cash flow during the first quarter
of 2023 assuming the rule is implemented in January 2023. Many
commenters expressed concern that a pharmacy's payments for CY 2022 DIR
fees to Part D sponsors and/or their PBMs will be due concurrently with
the time pharmacies expect to receive lower reimbursements at the point
of sale. Many of these commenters urged CMS to implement this proposal
on January 1, 2023; however, due to the potential impact of the
retroactive fees and implementation of the rule, these commenters urged
CMS to require sponsors and/or their PBMs to establish payment plans
with pharmacies that need them during the transition period. Commenters
noted that when Medicare Part D was established, hundreds of pharmacies
closed because of cash flow issues, necessitating Congressional action
to establish prompt pay rules. These commenters urged that CMS
emphasize that prompt payment requirements will continue to be
enforced.
Response: CMS understands these concerns but does not have the
authority to mandate payment plans between plans sponsors and
pharmacies. We acknowledge the possibility that changes in cash flow
may cause some already struggling pharmacies to decrease services or
medication availability, and/or be unable to remain in business, which
may impact pharmacy networks. Note that CMS will be particularly
attuned to plan compliance with pharmacy access standards under Sec.
423.120 to ensure that all Medicare Part D beneficiaries have
convenient access to pharmacies and medications. Therefore, we
encourage Part D sponsors to consider options, such as payment plans or
alternate payment arrangements, to minimize impacts to vulnerable
pharmacies and the patients they serve. We also note that the prompt
payment requirements for Part D, as described in Sec. 423.520, will
continue to apply and that Part D sponsors must pay clean claims in
accordance with the prompt pay regulation. As noted elsewhere, we are
finalizing an applicability date of January 1, 2024, instead of January
1, 2023. Nonetheless, we would expect these same concerns that
commenters raised for January 1, 2023 to be similarly applicable to
January 1, 2024. With this extra implementation time, we believe Part D
sponsors and pharmacies will now have adequate time to implement
payment plans or make other arrangements to address these cash flow
concerns at the beginning of 2024.
Comment: Many commenters wrote in support of a requirement that the
negotiated price reflect the lowest possible reimbursement to the
pharmacy because they believed this approach would make it possible for
pharmacies to better predict the minimum reimbursement they could
receive on a per-claim level.
Response: We thank these commenters for their support of this
policy. We agree that defining negotiated price to mean the lowest
possible reimbursement received by the pharmacy will provide greater
transparency and may improve predictability of per-claim revenue.
Comment: Several commenters opposed the policy, suggesting that a
requirement that the price paid to a pharmacy for a covered Part D drug
be net of all possible downward adjustments would effectively eliminate
the ability of Part D plans to employ performance-based negative
pharmacy payment adjustments. A few commenters suggested that the
elimination or restriction of performance-based pharmacy payment
arrangements is out of line with current CMS initiatives to expand and
incentivize value-based arrangements, such as the recently announced
agenda to expand value-based care in Medicare by CY 2023. Commenters
stated that restricting or eliminating payment arrangements that
incentivize pharmacy performance is counterintuitive to these ongoing
efforts to bring increased value to the Part D program as well as the
rest of Medicare. A few commenters stated that this rule will make it
harder to achieve the bold quality agenda set forth by CMS (cited in
Health Affairs written by CMS officials). These commenters stated that
pharmacy DIR is generated by two-sided, value-based contracts--similar
to contracts entered into by health plans and other providers as the
optimal path to transform health care delivery and payment. These
commenters also noted that these pharmacy DIR contracts often focus on
driving Stars performance and increasing generic dispensing to the
benefit of the Medicare program and its beneficiaries. Some commenters
stated that applying all pharmacy price concessions at the point of
sale would negatively impact Star Ratings and performance-based models
such as MIPS and APMs. Commenters argued that if sponsors adopt a
``bonus only model'' when paying pharmacies for performance, there will
not be an adequate financial incentive for pharmacies to help plans
improve pharmacy measures. A few commenters noted that performance on
adherence measures has been trending up as has the generic dispensing
rate and MTM completion. These commenters stated that this proposal
would interfere with the DIR contracting that has yielded these
impressive results.
[[Page 27844]]
A commenter noted that recent research has shown that pharmacy
performance measures that address social determinants of health (SDOH)
help promote equitable and high-quality care. The commenter stated that
Medicare beneficiaries are best served when their providers are focused
on addressing community-level SDOH barriers, and in pharmacy care, a
number of programs are funded and incentivized through Part D plan
price concessions that CMS would effectively eliminate.
Response: We did not propose to eliminate or restrict the use of
any performance-based pharmacy payment arrangements, and we do not
agree that a policy of requiring the negotiated price to reflect the
lowest possible reimbursement to the pharmacy for a Part D drug
eliminates or restricts Part D sponsors' ability to institute
performance-based pharmacy payment arrangements. The new definition of
negotiated price that we are adopting in this final rule does not
mandate how sponsors contract with, incentivize, or pay pharmacies in
their network. The new definition of negotiated price applies only to
how the PDE data is populated and reported and thus the price of the
drug on which beneficiary cost-sharing is determined. We also disagree
with the implication that performance-based contingent incentive
payments provide pharmacies with insufficient motivation to engage in
activities that impact sponsors' Star Ratings and other performance-
based models. Rather, sponsors remain free to motivate pharmacies by
offering performance-based payment arrangements to pharmacies. Applying
all pharmacy price concessions to the negotiated price will provide
pharmacies with more information on the reimbursement they will receive
if they fail to meet performance metrics. While we are not specifying
payment arrangements between plan sponsors and pharmacies, we encourage
fair and equitable value-based arrangements, including those focused on
social determinants of health (SDOH), that improve beneficiaries'
quality of care and reduce health care costs.
Comment: Many commenters urged CMS to collect pharmacy performance
measure information from Part D sponsors as finalized in the January
2021 final rule (86 FR 5864) to assess concerns raised by pharmacies
about performance measures. Several commenters noted that PBMs often
apply one-size-fits-all metrics that are not relevant to a pharmacy's
population or specialty. Commenters explained that they are penalized
for not having a large enough population for a credible sample that
PBMs use to assess performance. A few commenters noted they were
penalized for not meeting generic dispensing rates because the
pharmacies are specialty pharmacies serving a population whose medical
conditions do not have available generic drugs for treatment. A
commenter recommended that plan sponsors not be able to apply the
pharmacy price concessions to all pharmacies within a particular chain
of pharmacies, such as local chains or supermarket pharmacies, based on
the performance of the lowest performing pharmacy in the chain. This
commenter stated that the ability of pharmacies to meet performance
standards set forth by PBMs and plan sponsors is hindered by the fact
that no consideration is given to inherent handicaps, such as socio-
economic disparities between pharmacy geographic locations or as noted
above differences in dispensing practices between retail and specialty
drugs. Many commenters noted that penalties from one measure and one
medication are applied to all medications, setting thresholds
pharmacies cannot meet.
Response: We appreciate the comments regarding the nature of and
differing application of pharmacy performance metrics to assess
pharmacy performance; however, we did not propose to address pharmacy
performance metrics in the proposed rule. We addressed reporting of
pharmacy performance measures to CMS in the January 2021 final rule (86
FR 5864). In the January 2021 final rule, we finalized a proposal to
give CMS the authority to establish a Part D reporting requirement for
Part D sponsors to disclose to CMS the pharmacy performance measures
they use to evaluate pharmacy performance, as established in their
network pharmacy agreements. This authority to establish a reporting
requirement is effective January 2022; however, the actual data
elements must be proposed through the Office of Management and Budget
(OMB) Paperwork Reduction Act (PRA) process in a future package. We
encourage the industry to continue to work together on developing a set
of pharmacy performance measures through a consensus process and Part D
sponsors to adopt such measures to ensure standardization, transparency
and fairness. We are aware that the Pharmacy Quality Alliance (PQA), a
measure developer, is working to build consensus on pharmacy-level
measures across pharmacies, plans, PBMs, and other stakeholders.
Comment: Some commenters stated that CMS did not articulate any
rational basis for giving ``preferable'' treatment for pharmacy
incentive payments over pharmacy price concessions. A few commenters
asserted that giving special treatment to higher payments to pharmacies
underscores the arbitrary and capricious nature of CMS's effort to
redefine negotiated price. A few commenters supported a requirement
that all contingent incentive payments be excluded from the negotiated
price. The commenters noted that this approach supports PBMs' ability
to measure and monitor pharmacy performance on Stars Ratings-related
measures and incentivize pharmacies for their performance without
negatively impacting the beneficiaries' cost-sharing.
Response: We disagree that the proposal gives preferential
treatment or higher payments to pharmacies. The proposed rule does not
impose requirements on the actual payments made to pharmacies. This
rule sets forth requirements that standardize how and when pharmacy
price concessions are reported to CMS. In the proposed rule, we
described the information gathered through the Request for Information
in the November 2017 proposed rule regarding pharmacy price concessions
(payments from network pharmacies to sponsors or their intermediaries
for ``poor performance'') and incentive payments (payments made to
pharmacies by plan sponsors or their intermediaries for ``high
performance''). The primary concern with including incentive payments
in the negotiated price is that including these types of payments in
the negotiated price would make drug prices appear higher at a ``high
performing'' pharmacy, which receives an incentive payment, than at a
``poor performing'' pharmacy, which is assessed a penalty. This pricing
differential could create a perverse incentive for beneficiaries to
choose a ``lower performing'' pharmacy for the advantage of a lower
price. Additionally, Part D sponsors and their intermediaries
previously asserted in public comments on the 2017 and 2018 rules that
network pharmacies lose motivation to improve performance when all
performance-based adjustments are required to be reported up-front.
Revising the negotiated price definition to include pharmacy price
concessions and not incentive payments would mitigate this concern by
allowing sponsors and their intermediaries to motivate network
pharmacies to improve their performance with the promise of future
incentive payments that would increase pharmacy reimbursement from the
level of the lowest possible reimbursement per
[[Page 27845]]
claim. We thank the commenters for the support on excluding incentive
payments from the negotiated price and agree that not including
contingent incentive payments in the negotiated price best aligns
beneficiary, plan, and pharmacy incentives.
Comment: Many commenters requested that CMS establish safeguards to
guarantee that pharmacies participating in Medicare Part D receive a
reasonable rate of reimbursement. These commenters urged the
administration to ensure that the negotiated price at a minimum cover
the pharmacy's costs of purchasing and dispensing covered items and
providing covered services. A few commenters requested that CMS
establish a flat dispensing fee or an alternative model such as a
pharmacy reimbursement model based on a public drug pricing benchmark
such as national average drug acquisition costs (NADAC) plus a fair
dispensing fee in line with those in state Medicaid fee-for-service
program.
Response: Thank you for these suggestions. CMS will consider these
suggestions for future rulemaking.
Comment: Some commenters suggested that, as an alternative to
requiring that all pharmacy price concessions be included in the
negotiated price, CMS could achieve the policy goals of controlling and
reducing drug prices and improving transparency by making changes to
the treatment of pharmacy DIR in Part D sponsors' bids. Some commenters
recommended that plan sponsors be required to reflect some or all of
the expected pharmacy DIR in cost-sharing amounts when they submit
their Part D bids. A few commenters encouraged CMS to consider imposing
a penalty for systematically underestimating DIR within plan bids.
Some commenters offered alternatives to the implementation of the
new definition of negotiated price. One suggestion was to offer Part D
sponsors the flexibility to launch an additional new plan beyond what
is currently allowable, for example, three PDP products per contract.
This new plan could be structured to test CMS' negotiated price
proposal, while the other existing Part D plans remain using the
current approach. A similar suggestion was for CMS to perform a case-
control study to test the implementation of the new definition of
negotiated price. A third suggestion was for CMS to require additional
options for treatment of pharmacy price concessions. These options
could for example, include no pharmacy price concession arrangements or
explicitly limit the amount of pharmacy price concession payment
arrangements relative to point-of-sale payments. Under this approach,
pharmacies could choose one of the options and not be excluded from
network participation. Commenters noted that these approaches would
allow CMS to gather data before finalizing the requirements set forth
in this rule.
A few commenters recommended that CMS focus on creating pricing
transparency through the widespread use of provider and beneficiary-
level real-time benefit tools (RTBT). One of these commenters explained
that prescriber RTBT allows for real-time decision-making to guide
beneficiaries, advise them of their options with a focus on clinically
needed drugs and the prices of those drugs. According to the commenter,
although many plans use RTBT, the tools are proprietary and can lead to
highly variant experiences. Congress has mandated broader adoption of
RTBT by 2023 and mandated provider use of these tools. The commenter
noted that National Council for Prescription Drug Programs (NCPDP) has
developed a standard for a real-time prescription benefit request and
response for use by providers and asked that CMS name the specific
telecommunications standard for use by Part D program participants.
This commenter believes that RTBT, rather than changing point-of-sale
pricing, creates a way to get pricing information into the hands of
beneficiaries, without the need for computers or smart phones, which
promotes efficient and socially sensitive SDOH-focused care delivery.
Response: We thank commenters for their suggestions regarding
alternative approaches to implementing the new definition of negotiated
price, but we decline to adopt these approaches. We do not believe that
a policy that requires sponsors to include all pharmacy price
concessions in the negotiated price and some of the alternatives
suggested by commenters are mutually exclusive or that the availability
of alternatives should prevent us from adopting the revised definition
of ``negotiated price.''
With regard to use of the RTBT to promote price transparency, CMS
is committed to the use of tools that promote efficient and socially
sensitive social determinants of health focused care delivery.
Regulations at Sec. 423.160(b)(7) require Part D plans to implement
one or more electronic RTBT capable of integrating with at least one
prescriber's e-Prescribing (eRx) system or electronic health record
(EHR). CMS will continue to evaluate available electronic standards for
RTBT to determine if they are appropriate for the Part D program and
propose updated standards, if appropriate. In the meantime, this rule
will promote lower beneficiary cost-sharing, which also will help
beneficiaries to overcome financial barriers to the medications they
need.
Comment: A few commenters recommended that if CMS instructs plans
to bid with existing law and regulations in effect currently for the
2023 bid deadline and then finalizes this policy as proposed, then CMS
consider conducting the proposed 2019 voluntary two-year demonstration
that would consist of a modification to the Part D risk corridors in
order to better manage a transition to new requirements.
Response: Thank you for the suggestions. However, we decline to
adopt them at this time, as we have changed the applicability of this
rule to January 1, 2024, which, as noted previously, provides
sufficient transition time.
After considering the comments received, we are adopting a
requirement as proposed that the negotiated price reflect the lowest
possible reimbursement that the network entity will receive, in total,
for a particular covered Part D drug, including all price concessions
and any dispensing fees, but excluding additional contingent amounts
that increase prices.
d. Additional Considerations
In order to implement the proposed change, we indicated we would
leverage existing reporting mechanisms to confirm that sponsors are
appropriately applying pharmacy price concessions at the point of sale.
Specifically, we indicated we would likely use the estimated rebates at
point-of-sale field on the PDE record to also collect the amount of
point-of-sale pharmacy price concessions. We also indicated that we
would likely use fields on the Summary and Detailed DIR Reports to
collect final pharmacy price concession data at the plan and national
drug code (NDC) levels. Differences between the amounts applied at the
point of sale and amounts actually received, therefore, would become
apparent when comparing the data collected through those means at the
end of the coverage year.
Comment: Several commenters questioned how data ensuring the lowest
possible reimbursement will be transmitted to the pharmacy via the
required HIPAA-standard transactions and how data will map to the PDE
and to the pharmacy remittance. Both plan/PBMs and pharmacies raised
these questions, as all stakeholders are currently required to use the
National Program for Prescription Drug Plans (NCPDP) Telecommunications
standard
[[Page 27846]]
version D.0 (D.0) for claims adjudication, and the Health Care Claim
Payment/Advice Transaction Set (X12 835) to support the claims payment
process. A few commenters stated that D.0 would need to be replaced by
an updated standard, as the current standard cannot support another
cost field to convey post-point-of-sale remuneration to downstream
entities. A commenter posited that such capability would not be
available until 2027 or beyond.
Response: We disagree with commenters that there is no mechanism
under the current NCPDP data format for Part D sponsors to provide
information on a drug's negotiated price to pharmacies. PCMS does not
dictate or provide guidance regarding plans' billing arrangements, and
has identified the two following approaches that could accomplish the
goal of transmitting a drug's negotiated price data between plan
sponsors and pharmacies using the data format available today.
The following example reflects a payment arrangement where the
pharmacy point-of-sale payment reflects the negotiated price.
Example 1: Pharmacy is paid Negotiated Price of $90 at the Point of
Sale.
Pharmacy Point-of-Sale Transactions:
Ingredient Cost Paid + Dispense Fee Paid = $90 (this is the
total amount that will be paid to the pharmacy by all parties)
Patient Pay (beneficiary cost share in deductible is 100%) =
$90
Total Amount Paid (Plan paid) = $0
Because the Negotiated Price of $90 is the lowest possible
reimbursement there is no need for an informational field to indicate
future deductions from the pharmacy.
The second example reflects a payment arrangement in which a plan/
PBM pays the pharmacy more than the negotiated price at the point of
sale. The Total Gross Payment (negotiated price plus post-POS pharmacy
price concession) could be populated in the Total Amount Paid Field on
the claim response, and the post-POS pharmacy could be included in an
informational structured text field. Under this scenario the pharmacy
could compute the negotiated price by reducing the Total Gross Payment
by the amount noted in the informational field on the pharmacy claim
response. The PBM would calculate the beneficiary cost share at the
point of sale using the negotiated price and not the total gross
payment.
The following example reflects this payment arrangement where the
price paid to the pharmacy at the point of sale does not reflect the
negotiated price and so the amount that needs to be adjusted has to be
separately conveyed in the informational field within D.0. The PBM
computes beneficiary and plan cost-sharing based on the negotiated
price; however, the pharmacy will have to subtract the amount reported
by the PBM in the informational field to determine the negotiated
price.
Example 2: Pharmacy is paid $100 at the Point of Sale, Negotiated
Price is $90.
Pharmacy Point-of-Sale Transactions:
Ingredient Cost Paid + Dispense Fee Paid = $100 (this is the
total amount that will be paid to the pharmacy by all parties)
Patient Pay (Beneficiary cost share in deductible is 100% of
negotiated price) = $90
Total Amount Paid (plan paid) = $10 (this plan paid amount is
necessary to have pricing fields balance on a claim)
Additional Message Information-(informational structured claim
response indicates the amount that could be taken back post point of
sale) = Negative $10
Both of these arrangements can be reflected within the current
standard, and indeed historically this is how coordination of benefits
occurred prior to availability of specific pricing fields.
Additionally, any amount paid by the pharmacy to the plan post-point-
of-sale could be reported at the claim level (CLP) on the 835 and will
be reported in the Estimated Rebate at the Point of Sale field 40 on
the PDE as some plans are doing today. This would allow the information
to be transparent from the point-of-sale transaction to the PDE.
We agree with commenters who pointed out that the pharmacy price
concessions cannot be conveyed to downstream supplemental payers unless
price concession values are conveyed in a dedicated cost field, which
is not available under D.0. Because these price concession amounts
could only be conveyed in an informational field, the current NCPDP
standard does not support providing this information to a supplemental
payer on a COB claim. So, if the PBM uses the method illustrated in
Example 2, the pharmacy would be unable to provide transparency around
any amounts that will be taken back post point of sale on the COB claim
that will be sent to a supplemental payer. However, we are including
Example 2 for PBMs to use when implementing the new rule because it
will still benefit those supplemental payers who provide coverage based
on beneficiary cost- sharing, and will retain the status quo for
supplemental payers who pay based on plan-paid amounts.
Comment: A few commenters explained that Part D bidding and payment
policies in the Advance Notice would be impacted by these provisions
that are not mentioned in the AN. For example, the risk adjustment
model for CY 2023 is proposed to be calibrated on 2018 claims and
encounter data, plus expenditure data from 2019 PDE records that do not
reflect pharmacy DIR being applied at POS. Commenters noted that the
risk adjustment is not the only issue impacted by pharmacy DIR at POS
but also the underlying trends used to make the annual adjustments to
Medicare Part D benefit parameters would also be impacted.
Response: Given that we are finalizing an applicability date of
January 1, 2024, the policy we are adopting will not affect Part D
payment in 2023. We will consider commenters' feedback as we prepare
the Part D payment policies for the 2024 Advance Notice.
Comment: A few commenters urged CMS' Office of the Actuary to
provide plan sponsors with bid guidance as soon as possible to ensure
accuracy of the bids. Commenters noted that the pharmacy DIR impacts if
the rule were final, were not referenced in the draft Bid Pricing Tool
(BPT) or the Advance Notice. Commenters noted that Part D sponsors will
have to choose whether to prepare their bids under current regulations
where they assume that (a) the definition of negotiated price remains
the same, or (b) the new definition of negotiated price is finalized. A
few commenters indicated that if the industry is not aligned on
assumptions, there will be significant disruption for beneficiaries due
to the erratic bidding in the market. Also, commenters noted that the
uncertainty of the proposed rule adds additional actuarial risk, which
may result in plans adopting more conservative (that is, higher) plan
pricing, in order to mitigate the impacts of the uncertainty during the
bidding period.
Response: As noted above, we are finalizing this rule with an
applicability date of January 1, 2024. CMS will communicate bid
guidance to support the bid development process with sufficient lead
time for the 2024 bid cycle.
Comment: A commenter noted that the Out-of-Pocket Cost (OOPC)
Models are under development and targeted for release in April 2022,
possibly prior to the publication of the final rule. The commenter was
concerned as the values produced from these models are used in CMS's
bid review and while the
[[Page 27847]]
baselines were released on January 21, 2022, the average price for each
RxCUI in the model could be influenced by adoption of the proposal to
require the negotiated price to include pharmacy price concessions. The
commenter stated that CMS would have to decide whether adjustments for
potential changes in the average price for each RxCUI in the model
would be appropriate. The same commenter noted that in relation to
pricing changes, the Health Plan Management System (HPMS) Formulary
Submission and Part D Pricing File Submission (PDPFS) Modules are
expected to be released on May 16, 2022, and that the formulary
submission module may be directly impacted by this proposal, while plan
sponsor and PBM formulary strategy most certainly will. The commenter
noted that the Part D pricing file module would likely either have to
be delayed or re-released to appropriately reflect this final rule.
Response: Given the applicability date of January 1, 2024, changes
to the OOPC model tool for 2023 are not needed. We will consider
whether updates will be appropriate for the OOPC model for 2024.
Comment: A commenter requested that CMS ensure that Part D sponsors
and their PBMs load revised drug pricing tables reflecting the lowest
possible reimbursement into their claims processing systems that
interface with contracted pharmacies. The commenter noted that this
information goes hand-in-hand with a real-time prescription benefit
model in providing at the point of prescribing and even at the point of
dispensing an accurate accounting of the beneficiary's out-of-pocket
cost for their prescription.
Response: We appreciate the suggestion. We will monitor the
situation to determine whether it is necessary that we take any
additional steps to ensure that Part D sponsors and their PBMs have
made the appropriate changes to their claims processing systems.
After consideration of the comments, we will finalize our proposal
to use existing reporting mechanisms to confirm that sponsors are
appropriately applying pharmacy price concessions to the negotiated
price.
e. Negotiated Prices of Applicable Drugs in the Coverage Gap
The negotiated price of an applicable drug is also the basis by
which manufacturer liability for discounts in the coverage gap is
determined. Section 1860D-14A(g)(6) of the Act provides that, for
purposes of the coverage gap discount program, the term ``negotiated
price'' has the meaning it was given in Sec. 423.100 as in effect as
of the enactment of section 3301 of the Patient Protection and
Affordable Care Act (Pub. L. 111-148) (PPACA), as amended by section
1101 of the Health Care and Education Reconciliation Act of 2010 (Pub.
L. 111-152), except that it excludes any dispensing fee for the
applicable drug. Under that definition, which is codified in the
coverage gap discount program regulations at Sec. 423.2305, the
negotiated price is the amount the Part D sponsor (or its intermediary)
and the network dispensing pharmacy (or other network dispensing
provider) have negotiated as the amount such a network entity will
receive, in total, for a covered Part D drug, reduced by those
discounts, direct or indirect subsidies, rebates, other price
concessions, and direct or indirect remuneration that the Part D
sponsor has elected to pass through to Part D enrollees at the point of
sale, and net of any dispensing fee or vaccine administration fee for
the applicable drug.
In the November 2018 proposed rule (83 FR 62179), we solicited
comment on whether to require sponsors to include pharmacy price
concessions in the negotiated price in the coverage gap. Under such an
approach, the negotiated price of the applicable drug for purposes of
determining manufacturer coverage gap discounts, would include all
pharmacy price concessions as in all other phases of the Part D benefit
under the proposed revision to the definition of negotiated price at
Sec. 423.100. Because the statutory definition of negotiated price for
purposes of the coverage gap discount program references price
concessions that the Part D sponsor has elected to pass through at the
point-of-sale, we explained that we did not believe it would be
appropriate to require sponsors to include all price concessions in the
negotiated price for purposes of the coverage gap discount program.
However, we indicated our belief that there would be authority under
the statute to require sponsors to include all pharmacy price
concessions in the negotiated price for purposes of the coverage gap
discount program because such concessions necessarily affect the amount
that the pharmacy receives in total for a particular applicable drug.
We also noted that pharmacy price concessions account for only a share
of all price concessions a sponsor might receive. Thus, even if a plan
sponsor were required to include all pharmacy price concessions in the
negotiated price of an applicable drug at the point of sale, the plan
sponsor must still make an election as to how much of the overall price
concessions (including non-pharmacy price concessions) it receives will
be passed through at the point of sale.
In the November 2018 proposed rule, we also sought comment on an
alternative approach under which Part D sponsors would determine how
much of pharmacy price concessions to pass through at the point-of-sale
for applicable drugs in the coverage gap, and beneficiary, plan, and
manufacturer liability would be calculated using this alternate
definition of negotiated price.
The majority of the comments on the November 2018 proposed rule
that addressed the possible inclusion of pharmacy price concessions in
the negotiated price of applicable drugs in the coverage gap expressed
support for applying the same definition of negotiated price in all
phases of the Part D benefit, as they believed maintaining the same
definition for all phases of the benefit would provide more
transparency and consistency at the point of sale, minimize beneficiary
confusion, and avoid the operational challenges of having two different
rules for applying pharmacy price concessions to applicable drugs in
the coverage gap versus other phases of the Part D benefit. Some
commenters disagreed with our assessment that CMS has the legal
authority to require that all pharmacy price concessions be included in
the negotiated price of applicable drugs in the coverage gap, as they
felt this was at odds with the reference to ``price concessions that
the Part D sponsor had elected to pass-through to Part D enrollees at
the point-of-sale'' in the regulatory definition of ``negotiated
price'' at Sec. 423.100 as in effect when the PPACA was enacted.
Commenters noted that if CMS were to adopt the alternative approach
under which sponsors would be required to include pharmacy price
concessions in the negotiated price for applicable drugs in all phases
of the Part D benefit other than the coverage gap, it would be
necessary for CMS to issue very specific guidance explaining how to
operationalize different definitions of ``negotiated price'' for the
coverage gap versus the non-coverage gap phases of the Part D benefit.
In the proposed rule, we noted that we continue to believe that
section 1860D-14A(g)(6) of the Act would not preclude us from revising
the definition of negotiated price at Sec. 423.2305 to require Part D
sponsors to apply all pharmacy price concessions for applicable drugs
at the point of sale. However, we did not propose to adopt such a
mandate and noted that allowing plans flexibility with respect to the
[[Page 27848]]
treatment of pharmacy price concessions for applicable drugs in the
coverage gap would moderate increases to beneficiary premiums and
government costs.
In summary, under our proposed approach, for non-applicable drugs
in the coverage gap, and during the non-coverage gap phases of the Part
D benefit for applicable drugs, claims would be adjudicated using the
negotiated price determined using the lowest possible reimbursement to
the pharmacy. In contrast, for applicable drugs during the coverage
gap, plans would have the flexibility to determine how much of the
pharmacy price concessions to pass through at the point of sale, and
beneficiary, plan, and manufacturer liability in the coverage gap would
be calculated using this alternate negotiated price.
Based on comments we received on the November 2018 proposed rule,
we anticipate that if we were to adopt the proposed approach, we would
need to provide technical or operational guidance to Part D sponsors
regarding the calculation of the gap discount, PDE reporting, and
straddle claim processing. We solicited comment on whether there are
other topics CMS would need to address in new guidance if we finalized
the proposed approach. We also requested that commenters with concerns
about the feasibility of sponsors having two different rules for
applying pharmacy price concessions to applicable drugs in the coverage
gap versus other phases of the Part D benefit provide detailed
explanations of their concerns, with specificity and examples.
In addition, we solicited comment on whether, as an alternative to
our proposed approach, we should require that Part D sponsors apply
pharmacy price concessions to the negotiated price of applicable drugs
in the coverage gap. As noted above, we believe that such a requirement
would also be consistent with section 1860D-14A(g)(6) of the Act.
Comment: The majority of commenters indicated that pharmacy price
concessions should be included in the negotiated price for applicable
drugs in the coverage gap. Commenters stated that applying pharmacy
price concessions at the point of sale, regardless of the benefit
phase, is the least confusing option for beneficiaries and provides
consistency and transparency at the point of sale. Some noted that
predictability in out-of-pocket costs is critically important for
seniors and people with disabilities. Some commenters believed that
applying the same rules regarding the reporting of pharmacy price
concessions in the coverage gap would reduce beneficiary out-of-pocket
costs and improve patient access and affordability. Several commenters
stated that having two different sets of rules would be hard to explain
to beneficiaries and create beneficiary confusion. A few commenters
raised concerns about how two definitions could be effectively
communicated in Medicare Plan Finder files, with greater potential for
errors in the information and confusion among enrollees.
Many commenters stated that it would be operationally challenging
to have different rules for applying pharmacy price concessions in the
coverage gap versus other phases of the Part D benefit. Commenters
noted that it was unclear how Part D plans, PBMs, and pharmacies could
operationalize two different rules for negotiated prices. Others noted
that having two different approaches would increase administrative
costs for pharmacies, plan sponsors, PBMs, and other stakeholders, and
that claims systems would need to be reprogrammed. Commenters stated
that if there were two different approaches, Part D sponsors would need
specific guidance regarding the calculation of the gap discount, PDE
reporting, and straddle claim processing. In addition, commenters were
concerned that having different rules for the negotiated price would
result in significant complexity during the bid process and CMS
oversight. Some commenters noted the potential for confusion and errors
and administrative costs associated with implementation.
Response: We appreciate the thoughtful feedback on maintaining two
separate rules for determining the negotiated price and the concerns
about the potential for beneficiary confusion, added administrative
burden and cost, and implementation challenges that would result from
applying one approach to the negotiated price for applicable drugs in
the coverage gap phase and another for non-applicable drugs in the gap,
as well as for drugs in all other phases of the Part D benefit.
As noted in the preamble of the proposed rule, in the November 2018
proposed rule (83 FR 62179), we solicited comment on whether to require
sponsors to include pharmacy price concessions in the negotiated price
of applicable drugs in the coverage gap. Because the statutory
definition of negotiated price for purposes of the coverage gap
discount program references price concessions that the Part D sponsor
has elected to pass through at the point-of-sale, we explained that we
did not believe it would be appropriate to require sponsors to include
all price concessions in the negotiated price for purposes of the
coverage gap discount program. However, we indicated our belief that
there would be authority under the statute to require sponsors to
include all pharmacy price concessions in the negotiated price for
purposes of the coverage gap discount program because such concessions
necessarily affect the amount that the pharmacy receives in total for a
particular applicable drug. We also noted that pharmacy price
concessions account for only a share of all price concessions a sponsor
might receive. Thus, even if a plan sponsor were required to include
all pharmacy price concessions in the negotiated price of an applicable
drug, the plan sponsor must still make an election as to how much of
the overall price concessions (including non-pharmacy price
concessions) it receives will be passed through to beneficiaries at the
point-of-sale.
Given our authority under the statute to require plans to include
all pharmacy price concessions to the negotiated price for all phases
of the Part D benefit and the beneficiary confusion, additional
administrative burden and costs, and implementation challenges posed by
maintaining two approaches for purposes of the two definitions of
negotiated price, we are finalizing our proposal with modification to
use the negotiated price determined using the lowest possible
reimbursement to the pharmacy across all phases of the Part D benefit,
including for applicable drugs in the coverage gap phase. Accordingly,
we are revising the definition of negotiated price at Sec. 423.2305 to
clarify that the negotiated price must be inclusive of all pharmacy
price concessions in the coverage gap phase of the Part D benefit but
that sponsors continue to have the flexibility to elect which non-
pharmacy price concessions are to be passed through at the point of
sale. After consideration of the comments, we are finalizing our
proposal with modification to use the negotiated price determined using
the lowest possible reimbursement to the pharmacy across all phases of
the Part D benefit, including the coverage gap phase.
4. Pharmacy Administrative Service Fees
As noted in the proposed rule, we are aware that some sponsors and
their intermediaries believe certain fees charged to network
pharmacies--such as ``network access fees,'' ``administrative fees,''
``technical fees,''
[[Page 27849]]
and ``service fees''--represent valid administrative costs and, thus,
do not believe such fees should be treated as price concessions.
However, pharmacies and pharmacy organizations report that they do not
receive anything of value for such administrative service fees other
than the ability to participate in the Part D plan's pharmacy network.
Thus, we restate the conclusion we provided in the May 2014 final
rule (79 FR 29877): When pharmacy administrative service fees take the
form of deductions from payments to pharmacies for Part D drugs
dispensed to Part D beneficiaries, they clearly represent charges that
offset the sponsor's or its intermediary's operating costs under Part
D. We believe that if the sponsor or its intermediary contracting
organization wishes to be compensated for these services and have those
costs treated as administrative costs, such costs should be accounted
for in the administrative costs of the Part D bid. If instead these
costs are deducted from payments made to pharmacies for purchases of
Part D drugs, such costs are price concessions and must be treated as
such in Part D cost reporting. This is the case regardless of whether
the deductions are calculated on a per-claim basis.
The regulations governing the Part D program require that price
concessions be fully disclosed. If not reported at all, these amounts
would result in another form of so-called PBM spread in which inflated
prices contain a portion of costs that should be treated as
administrative costs. That is, even if these amounts did represent
costs for services rendered by an intermediary organization for the
sponsor, then these costs would be administrative service costs, not
drug costs, and should be treated as such. Failure to report these
costs as administrative costs in the bid would allow a sponsor to
misrepresent the actual costs necessary to provide the benefit and thus
to submit a lower bid than necessary to reflect its revenue
requirements (as required at section 1860D-11(e)(2)(C) of the Act and
at Sec. 423.272(b)(1) of the regulations) relative to another sponsor
that accurately reports administrative costs consistent with CMS
instructions.
Comment: Some commenters expressed support for the requirement that
legitimate administrative service fees be recorded as administrative
costs in the bid and not as a pharmacy price concession. The commenters
explained these fees typically provide no additional value to the
pharmacy or the beneficiary beyond the ability to participate in the
Medicare Part D plan's pharmacy network and instead mainly offset the
sponsor's or its intermediary's costs of operating the Part D plan,
which the commenters contended should not be the responsibility of a
network pharmacy. A few commenters requested that CMS provide further
clarification on the definition of pharmacy administrative service fees
and what should be considered under such definition.
Response: CMS appreciates the commenters' support. As discussed in
the May 2014 final rule (79 FR 29877), pharmacy price concessions
characterized as ``network access fees,'' ``administrative fees,''
``technical fees,'' or ``service fees'' and are taken as deductions
from payments to pharmacies for drugs dispensed, represent charges that
offset sponsor or PBM operating costs. If a sponsor or its intermediary
contracting organization wishes to be compensated for these services
then such administrative costs should be accounted for as such in the
Part D bid. However, when such fees take the form of deductions from
payments to pharmacies for dispensed Part D drugs, such costs are price
concessions and must be reflected in the negotiated price. This is the
case regardless of whether the deductions are calculated on a per-claim
basis. CMS declines at this time to further define what should be
considered pharmacy administrative service fees, but we may consider
providing further clarification in future rulemaking.
Comment: A commenter requested that CMS clarify how it intends to
ensure that administrative service fees are being properly recognized
and reported. This commenter recommended that CMS utilize Medicare Part
D Reporting Requirements to ensure fees charged to pharmacies are
properly reported as either administrative costs or price concessions.
Another commenter requested that CMS require a Part D sponsor (and its
PBM) attest that any administrative service fees charged by the Part D
sponsor (or its PBM) are utilized for administrative services and that
such services are relevant and applicable to the pharmacy against which
the fees are applied.
Response: We appreciate the concerns raised by commenters and will
consider what steps might be necessary in the future to ensure that
administrative service fees are properly reported to CMS.
Comment: A number of commenters expressed concerns that the Part D
sponsors could use the classifications of price concessions and
pharmacy administrative service fees to manipulate the Part D bidding
and MLR processes in order to retain additional profit. A commenter was
concerned that Part D sponsors had incentives to bid in ways that
allowed the sponsors to retain pharmacy price concessions and not apply
them to the negotiated price, diminishing the value available to
enrollees at the point of sale. This commenter stated that plans
overbid by underestimating DIR in order to retain additional profit
during the plan's reconciliation process. The commenter is concerned
that the terms of the MLR requirements may permit Part D sponsors to
inflate their actual expenditures, or ``incurred claims,'' by
classifying their arbitrary charges to pharmacies as ``administrative
fees'' or ``administrative service fees.'' By doing so, a Part D
sponsor inflates their reported incurred claims so that they can retain
such fees while simultaneously reducing the sponsor's probability of
paying remittances under the MLR. This commenter noted that if such
fees were instead reported as post-point-of-sale price concessions,
then they would increase the plan's probability of paying a remittance
under the MLR. This commenter stated that the MLR requirement was
created to encourage plans to: (1) Provide value to beneficiaries, (2)
be transparent and accountable for expenditures, and (3) reduce health
care costs.
A commenter rejected the notion that Part D plans have an incentive
to deliberately underestimate DIR in Part D bids in order to increase
plan profits. This commenter stated that there are multiple mechanisms
in place to prevent abuse of the system. The commenter cited the bid
review process, Part D risk corridors, and the MLR requirement as
examples of programmatic features that limit Part D plan sponsors'
gaming of bids and profits. The commenter asserts that the Office of
the Actuary would refuse to approve bids if a sponsor were
``consistently off'' in projections. They contended that the current
plan payment structure applies appropriate incentives and allows for
appropriate oversight to ensure that private market innovation delivers
competitive and meaningful choices to beneficiaries and financial
savings to taxpayers.
Response: While the bid review process, Part D risk corridors and
the MLR requirement limit Part D plan sponsors' ability to game bids
and profits to an extent, we do not agree with the commenters'
implication that these are CMS. The commenters do not address the
analysis of Part D plan payment and cost data we discussed in the
proposed rule, which show that in recent years, DIR amounts that Part D
[[Page 27850]]
sponsors and their PBMs actually received have consistently exceeded
bid-projected amounts, by an average of 0.6 percent and as much as 3
percent as a share of gross drug costs from 2010 to 2020. The commenter
merely asserts that the Office of the Actuary would have refused to
approve bids if a sponsor were ``consistently off'' in projections.
They fail to elaborate under which conditions the Office of the Actuary
would reject a bid from a Part D sponsor because the Part D sponsor has
been historically off in their bids, but could provide an argument that
their current bid is actuarially sound. We do not believe the MLR
requirement nor the Part D risk corridors function to solve or
disincentivize the trend of underbidding DIR. The MLR requirement
mandates that sponsors remit funds if less than 85 percent of all
revenues are spent on prescription drugs or quality improvement
activities. When Part D sponsors share extra profits through the Part D
risk corridor with the Federal Government due to the sponsor
underestimating DIR, sponsors typically keep a significant majority of
the extra profits. For example, when a Part D sponsor's target amount
or revenue exceeds their allowable risk corridor costs by 10%, the
sponsor would retain 75% of the extra profits while the Federal
Government would recoup 25%. Also, a Part D sponsor could underestimate
DIR relative to its bid and receive additional profits up to the
maximum amount permitted by the Part D risk corridors without
necessarily failing to meet the 85 percent MLR requirement.
CMS appreciates the commenter's concerns that Part D sponsors could
manipulate the treatment of payments from pharmacies in different Part
D processes in order retain additional profits. However, we believe the
requirements for both MLR and under this final rule are clear that a
Part D sponsor could not treat a fee as an administrative cost for one
purpose, but a drug cost for the other. While Part D sponsors have had
an incentive to bid using an assumption that pharmacy price concessions
would not be applied at the point of sale to achieve advantageous
premiums, Part D sponsors must submit Part D bids that comply with the
Part D statute, regulations, and rules applicable for the contract year
as the basis for their actuarial assumptions, and in relation to the
issuance of this final rule Part D sponsors will be required to reflect
the new definition of negotiated price in all phases of the Part D
benefit in their Part D bids. The definition of ``price concession''
and the requirements of the MLR would not allow Part D sponsors to
inflate the ``incurred claims'' in their MLR by reclassifying amounts
that are deducted from payments made to pharmacies for purchases of
Part D drugs as administrative fees. ``Incurred claims'' in the MLR
numerator include direct drug costs that are actually paid (Sec.
423.2420(b)(2)(i)) and excludes administrative fees (Sec.
423.2420(b)(4)). The definition of ``price concession'' mirrors
``actually paid'' as defined in Sec. 423.308. A ``price concession''
is defined as any form of discount, direct or indirect subsidy, or
rebate received by the Part D sponsor or its intermediary contracting
organization from any source that serves to decrease the costs incurred
under the Part D plan by the Part D sponsor. Similarly, ``actually
paid'' are costs that must be actually incurred by the Part D sponsor
and must be net of DIR from a source that serves to decrease the costs
incurred under the Part D plan by the Part D sponsor. Therefore, any
amount that would be considered a price concession in the application
of this rule would also be netted from the incurred claims amount in
the MLR numerator, which is why we believe the requirements for both
MLR and this final rule are clear that a Part D sponsor could not treat
a fee as an administrative cost for one purpose, but a drug cost for
the other.
5. Defining Price Concession (Sec. 423.100)
Section 1860D-2(d)(1)(B) of the Act stipulates that the negotiated
price shall take into account negotiated price concessions, such as
discounts, direct or indirect subsidies, rebates, and direct or
indirect remunerations, for covered Part D drugs. Section 1860D-2(d)(2)
of the Act further requires that Part D sponsors disclose to CMS the
aggregate negotiated price concessions by manufacturers that are passed
through in the form of lower subsidies, lower monthly beneficiary
premiums, and lower prices through pharmacies and other dispensers.
While ``price concession'' is a term important to the adjudication of
the Part D program, it has not yet been defined in the Part D statute
or in Part D regulations and sub-regulatory guidance. Therefore, to
avoid confusion among Part D sponsors and other stakeholders of the
Part D program resulting from inconsistent terminology, we proposed to
add a regulatory definition for the term ``price concession'' at Sec.
423.100 that is consistent with how that term is used in subsections
(d)(1)(B) and (d)(2) of section 1860D-2 of the Act.
We proposed to define price concession to include any form of
discount, direct or indirect subsidy, or rebate received by the Part D
sponsor or its intermediary contracting organization from any source
that serves to decrease the costs incurred under the Part D plan by the
Part D sponsor. The proposed definition would note that price
concessions include but are not limited to discounts, chargebacks,
rebates, cash discounts, free goods contingent on a purchase agreement,
coupons, free or reduced-price services, and goods in kind.
The proposed rule noted that adopting the proposed definition of
price concession would not affect the way in which price concessions
must be accounted for by Part D sponsors in calculating costs under a
Part D plan, and it would not require the renegotiation of any
contractual arrangements between a sponsor and its contracted entities.
Therefore, the proposed definition of price concession has no impact
under the Federal requirements for Regulatory Impact Analyses.
Comment: Many commenters expressed concern that PBMs will
restructure pharmacy fees to sources other than claim-level fees to
circumvent CMS's intent in the proposal and provided recommendations on
what CMS should include or consider. Some commenters wanted CMS to
clarify that pharmacies would not be held accountable for ``non-
pharmacy'' price concessions (for example, manufacturer rebates).
Many commenters asked CMS to confirm that any fee related to or
assessed because of a Part D prescription drug claim is considered a
price concession. Commenters expressed that this should be true whether
the fee represents an administrative fee, a transaction fee, or the
value of a contingent amount, such as a performance-based penalty. Many
commenters explained that the fees and price concessions that PBMs
utilize in contracts and pharmacy manuals have different names, but
were primarily deductions from their reimbursements. Commenters felt
these deductions must be treated as a price concession and fully
disclosed to them on individual adjudicated claim responses and
remittance advices within the prompt pay rules of 14 calendar days.
Response: We believe that the definition of ``price concession''
that we discussed in the proposed rule is broad enough to include all
forms of discounts, direct or indirect subsidies, or rebates that serve
to reduce the costs incurred under Part D plans by Part D sponsors, so
that Part D sponsors and their intermediaries are limited in
[[Page 27851]]
circumventing CMS' intent without fundamentally changing. When pharmacy
administrative service fees take the form of deductions from payments
to pharmacies, they represent charges that offset the sponsor's or its
intermediary's operating costs under Part D. If the sponsor or its
intermediary contracting organization wishes to be compensated for
these services and have those costs treated as administrative costs,
such costs should have been accounted for in the administrative costs
of the Part D bid. However, if the sponsor or its intermediary deducts
these same costs from payments to pharmacies, such costs are price
concessions and must be reflected in the negotiated price. For pharmacy
price concessions that are not at the claim level, Part D sponsors
would have to determine a methodology to attribute such concessions to
the claim level to remain in compliance with the definition of
negotiated price.
We are confirming that under the definition of negotiated price we
are adopting in this final rule, the negotiated price must include
pharmacy price concessions, and does not require inclusion of non-
pharmacy price concessions, such as manufacturer rebates. To the extent
a non-pharmacy price concession is applied to the negotiated price, it
would reduce the negotiated price, but not reduce the amount that is
the lowest possible reimbursement the pharmacy could receive as
reimbursement for a covered Part D drug under the contract between the
pharmacy and the Part D sponsor or the sponsor's intermediary.
Comment: Some commenters recommended changes to our proposed
definition of ``price concession.'' These commenters recommended that
the definition consider administrative service fees. A commenter
recommended that in our proposed definition after the phrase ``received
by the Part D sponsor or its intermediary contracting organization''
that we add ``for a particular claim at any time during the contract
year.'' This commenter also recommended that after the phrase ``from
any source'' that we add ``including a network dispensing pharmacy.''
Finally, in the list of examples of price concessions, the commenter
recommended that we include ``fees or other charges to network
dispensing pharmacy.'' Another commenter recommended that we modify the
definition of ``price concession'' by adding, after the phrase ``that
serves to decrease the costs incurred under the Part D plan by the Part
D sponsor,'' ``or its intermediary contracting organization under the
Part D plan.'' This commenter also recommends that the examples be
expanded to include ``any type of fee or other amount that a Part D
sponsor or its intermediary contracting organization retains from
payments made to such pharmacies or providers for their provision of
Part D drugs or requires such pharmacies or providers to pay in
connection with its provision of Part D drugs under a Part D network,
including but not limited to transaction fees, network participation
fees and administrative fees.'' Commenters also requested that CMS
define ``administrative service fees.''
Response: For the reasons stated previously, we believe the
definition we are adopting in this final rule is sufficient to identify
price concessions. CMS will take commenters' suggestions for changes to
the definition of price concession, as well as for a new definition of
``administrative service fees,'' into consideration for future
rulemaking.
We are finalizing our proposal without modification to define
``Price concession'' to include any form of discount, direct or
indirect subsidy, or rebate received by the Part D sponsor or its
intermediary contracting organization from any source that serves to
decrease the costs incurred under the Part D plan by the Part D sponsor
at Sec. 423.100.
III. Requests for Information
A. Request for Information: Prior Authorization for Hospital Transfers
to Post-Acute Care Settings During a Public Health Emergency
We are committed to ensuring that hospitals, post-acute care
facilities (including long-term care hospitals (LTCHs), inpatient
rehabilitation facilities (IRFs), and skilled nursing facilities
(SNFs)), physicians, and MA organizations have the tools necessary to
provide access to appropriate care to patients without unnecessary
delay during a public health emergency (PHE). Throughout 2020 during
the Coronavirus Disease 2019 Public Health Emergency (COVID-19 PHE), we
consistently issued guidance to address permissible flexibilities for
MA organizations as part of an ongoing effort to help MA enrollees, and
the health care systems that serve them, avoid delays and disruptions
in care. We recognize that any delays or disruptions in care that might
transpire within the MA program could have a ripple effect and also
negatively impact the timely provision of appropriate care to patients
covered under payer systems external to MA (for example, employer-
sponsored insurance). Additionally, we recognize the positive impact
that payers in general can have through the adoption of flexibilities
that support hospitals' ability to effectively manage resources when a
hospital experiences a substantial uptick in hospitalizations.
As a result of the guidance and clarification that we issued
throughout 2020, a large proportion of MA organizations opted to relax
or completely waive their prior authorization requirements with respect
to patient transfers between hospitals and post-acute care facilities
during plan year 2020, consistent with our guidance encouraging
flexibility to ensure access to care. However, as the PHE continued
into 2021, many MA organizations reinstated prior authorization
requirements, which some stakeholders reported contributed to capacity
issues and delays in care within hospital acute care settings. For
example, one stakeholder reported that only 5 percent of intensive care
unit (ICU) beds were open in their state during the month of August
2021, and stated that the scarcity of available beds could be mitigated
if more MA organizations reinstated waivers on prior authorization
requirements for patient transfers. Another stakeholder reported that
it was not uncommon for a hospital to wait up to 3 business days to
receive a decision from an MA organization for a request for a patient
transfer--a delay which prevented the hospital from moving patients to
the next appropriate care setting in a timely manner and forced the
unnecessary use of acute-care beds. The same stakeholder reported that
a high rate of initial denials from MA organizations also contributed
to delays in patient transfer. We acknowledge our responsibility to
ensure that our programs' policies do not hinder access to care,
especially during a public health emergency. Therefore, in response to
these reports and the uptick in COVID-19 hospitalizations across the
country, we sought information from stakeholders in order to assess the
impact of MA organizations' use of prior authorization or other
utilization management criteria during certain PHEs. Through this
request for information (RFI), CMS sought additional information from
all affected stakeholders, especially MA organizations, hospitals,
post-acute care facilities, professional associations, states, and
patient advocacy groups regarding the effects of both the relaxation of
and reinstatement of prior authorizations on patient transfers during a
PHE.
[[Page 27852]]
We noted that we remain mindful of the impact the MA program's
policies have on the health care system as a whole, and strongly
encouraged MA organizations to continuously re-assess the need for
flexibilities in their utilization management practices. We noted that
with regard to prior authorization and other utilization management
practices, we permit MA organizations the choice to uniformly waive or
relax plan prior authorization requirements at any time in order to
facilitate access to care, even in the absence of a disaster,
declaration of a state of emergency, or PHE. Generally, MA
organizations are required to ensure that enrollees are notified of
changes in plan rules of this type in accordance with Sec. 422.111(d);
however, when the provisions under Sec. 422.100(m)(1) go into effect
during a disaster or emergency, as they did during the COVID-19 PHE, MA
organizations are permitted to immediately implement plan changes that
benefit enrollees, including a waiver of prior authorization
requirements, without the 30-day notification requirement at Sec.
422.111(d)(3).
We invited the public to submit comments for consideration as CMS
assesses the impact of MA organizations' prior authorization
requirements for patient transfer on a hospital's ability to
effectively manage resources and provide appropriate and timely care
during a PHE. We indicated that the primary objective of this RFI was
for us to glean information from stakeholders about the effects of MA
organizations' prior authorization requirements for patient transfers
on a hospital's ability to furnish the appropriate care to patients in
a timely manner in the context of a PHE. This was a general RFI related
to prior authorizations on patient transfers during any PHE. While many
commenters may have chosen to provide information in the context of the
COVID-19 PHE, we welcomed and encouraged commenters to provide
information in the context of any PHE.
B. Request for Information: Building Behavioral Health Specialties
Within MA Networks
CMS is dedicated to ensuring that MA beneficiaries have access to
provider networks sufficient to provide covered services in accordance
with the standards described in section 1852(d)(1) of the Act and in
Sec. Sec. 422.112(a) and 422.114(a)(1). Accordingly, CMS strengthened
network adequacy rules for MA plans by codifying our network adequacy
standards at Sec. 422.116 in the June 2020 final rule.
Currently, we require MA organizations to submit data for
behavioral health providers, specifically psychiatry (provider-
specialty type) and inpatient psychiatric facility services (facility-
specialty type), using the Health Service Delivery (HSD) tables. The
HSD tables are submitted to CMS during an MA organization's formal
network review and are utilized to demonstrate compliance with network
adequacy standards. The HSD tables must list every provider and
facility with a fully executed contract in the MA organization's
network, and are uploaded to the Health Plan Management System (HPMS)
for an automated review. MA plans must have sufficient providers within
a certain time and distance of 85 or 90 percent of beneficiaries
residing the plan's service area, depending on the type of counties in
the service area, under Sec. 422.116. We also encouraged plans to
provide more choices for enrollees to access care using telehealth for
certain specialties, including psychiatry, through our policy under
Sec. 422.116(d)(5), while maintaining enrollees' right to access in
person care for these specialty types. To encourage and account for
telehealth providers in contracted networks, Sec. 422.116(d)(5)
provides MA plans a 10-percentage point credit towards the percentage
of beneficiaries that reside within published time and distance
standards when the plan's network includes telehealth providers for
certain specialties and the plan covers additional telehealth benefits,
as defined in Sec. 422.135. However, as noted in the proposed rule,
even with the availability of the additional 10-percentage point credit
for the use of telehealth providers, it is our understanding that MA
organizations may experience difficulties meeting network adequacy
standards with respect to behavioral health providers.
In order to increase our understanding of issues related to MA
enrollees' access to behavioral health specialties, CMS sought input
from industry stakeholders on the challenges MA organizations face when
building an adequate network of behavioral health providers for MA
plans. More specifically, we issued an RFI that solicited comment on
issues including, but not limited to, the following:
Challenges related to a lack of behavioral health provider
supply in certain geographic regions for beneficiaries, health plans,
and other stakeholders;
Challenges related to accessing behavioral health
providers for enrollees in MA plans, including wait times for
appointments;
The extent to which a behavioral health network affects a
beneficiary's decision to enroll in an MA plan;
Challenges for behavioral health providers to establish
contracts with MA plans;
Providers' inability or unwillingness to contract with MA
plans, including issues related to provider reimbursement;
Opportunities to expand services for the treatment of
opioid addiction and substance use disorders;
The overall impact of potential CMS policy changes as it
relates to network adequacy and behavioral health in MA plans,
including in rural areas that may have provider shortages; and
Suggestions from industry stakeholders on how to address
issues with building adequate behavioral health networks within MA
plans.
We acknowledge and appreciate all comments submitted in response to
this RFI. While we will not be responding to those comments in this
final rule, we will take the commenters' suggestions, concerns, and
other feedback into account as we consider future changes to our in
policy in this area.
C. Request for Comment on Data Notification Requirements for
Coordination-Only D-SNPs (Sec. 422.107(d))
In the April 2019 final rule, we established an additional
contracting requirement at Sec. 422.107(d) for any D-SNP that is not a
FIDE SNP or HIDE SNP. Under this new requirement for the contract that
is required between the D-SNP and the State Medicaid agency effective
January 1, 2021, the D-SNP is required to notify the State Medicaid
agency, or individuals or entities designated by the State Medicaid
agency, of hospital and skilled nursing facility (SNF) admissions for
at least one group of high-risk full-benefit dual eligible individuals,
as determined by the State Medicaid agency.
These data notification requirements have only been in effect for a
short time, all of which coincided with the COVID-19 public health
emergency. Through the proposed rule we invited MA organizations,
States, and other stakeholders to submit comments on their experience
implementing the data notification requirements thus far and any
suggested improvements for CMS consideration in future rulemaking.
While we are not responding to specific comments submitted in
response to this Hospital Transfers to Post-Acute Care Settings during
a Public Health Emergency, Building Behavioral
[[Page 27853]]
Health Specialties within MA Networks, Data Notification Requirements
for Coordination-Only D-SNPs request for information (RFI) in this
final rule, we appreciate all of the comments and interest on these
topics. We will continue to take all concerns, comments, and
suggestions into account as we continue work to address and develop
policies on these topics and may reach out to commenters for further
discussion.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.) we are required to provide 60-day notice in the Federal Register
and solicit public comment before a ``collection of information''
requirement is submitted to the Office of Management and Budget (OMB)
for review and approval. For the purposes of the PRA and this section
of the preamble, collection of information is defined under 5 CFR
1320.3(c) of the PRA's implementing regulations.
To fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA requires that we
solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In our January 12, 2022 (87 FR 1842) proposed rule, we solicited
public comment on each of these issues for the following provisions
that contain information collection requirements. As indicated below,
we received public comments on the collection of information
requirements related to the creation of a one-page multi-language
insert; the comments and our responses are summarized below under the
applicable Collection of Information subsection. Separately, on
February 25, 2022 (87 FR 10761), we published a correction that
clarified we will submit information on the number of respondents and
the time estimates to the public and OMB for the collection of
information requirements related to limiting certain Medicare Advantage
contracts to D-SNPs prior to the 2025 plan year application.
A. Wage Data
To derive average costs, we are using data from the U.S. Bureau of
Labor Statistics' (BLS's) National Occupational Employment and Wage
Estimates for all salary estimates (https://www.bls.gov/oes/current/oes_nat.htm), which, at the time of finalizing of this rule, provides
May 2021 wages. In this regard, Table 3 presents BLS's mean hourly wage
along with our estimated cost of fringe benefits and overhead
(calculated at 100 percent of salary), and our adjusted hourly wage.
[GRAPHIC] [TIFF OMITTED] TR09MY22.007
As indicated, we are adjusting our employee hourly wage estimates
by a factor of 100 percent to account for fringe benefits and overhead
costs that vary from employer to employer and because methods of
estimating these costs vary widely from study to study. We believe that
doubling the hourly wage to estimate total cost is a reasonably
accurate estimation method.
Revised Wage and Cost Estimates: While our proposed rule's costs
were based on BLS's May 2020 wages, this final rule uses BLS's May 2021
wages which are the most current as of the publication date of this
rule. The wage changes are presented below in Table 4. Overall, the
revised BLS wages increased our cost estimates by $74,274 for first
year (from $5,225,170 to $5,299,444) and a corresponding decrease of
$43,579 for subsequent years (from $3,647,583 to $3,604,004). Note
these numbers also reflect an adjustment to the numbers published in
the January 2022 proposed rule (87 FR 1934) since two provisions
described in section IV.B.2 and section IV.B.3. had changes in their
estimated number of respondents, and in response to comments one
additional provision (section IV.B.7.) was added. Therefore, we
recalculated the estimates from the proposed rule with these three
changes resulting in $5,225,170 for first year and $3,647,583 for
subsequent years representing the updated estimates with 2020 wage
estimates. We then recalculated again using the 2021 wage estimates
resulting in the $5,299,444 for first year and the $3,604,004 for
subsequent years numbers so that the difference would compare similar
items.
Please note that besides the wage changes there were (i) two
changes in occupation codes, 13-1198 is now 13-1199 and 15-1250 is now
15-1252 and (ii) there was one change in occupational title, ``Software
and Web Developers'' is now ``Software developers.''
[[Page 27854]]
[GRAPHIC] [TIFF OMITTED] TR09MY22.008
B. Information Collection Requirements (ICRs)
The following ICRs are listed in the order of appearance within
section II. of this final rule.
1. ICRs Regarding Enrollee Participation in Plan Governance (Sec.
422.107) (CMS-10799, 0938-1422)
The requirement and burden for D-SNPs to create one or more
enrollee advisory committees will be submitted to OMB for approval
under control number 0938-TBD (CMS-10799). The requirement and burden
for D-SNPs to update audit protocols to require documentation of the
enrollee advisory committees will be submitted to OMB for approval
under control number 0938-1395 (CMS-10717).
a. Creating One or More Enrollee Advisory Committees (CMS-10799, OMB
0938-1422)
At Sec. 422.107(f), we are requiring that any MA organization
offering a D-SNP must establish one or more enrollee advisory
committees at the State level or other service area level in the State
to solicit direct input on enrollee experiences. We also require at
Sec. 422.107(f) that the committee include at least a reasonably
representative sample of the population enrolled in the dual eligible
special needs plan, or plans, or other individuals representing those
enrollees, and solicit input from these individuals or their
representatives on, among other topics, ways to improve access to
covered services, coordination of services, and health equity for
underserved populations.
The burden of establishing and maintaining an enrollee advisory
committee is variable due to the flexibilities MA organizations would
have to implement the requirements. We believe that D-SNPs should work
with enrollees and their representatives to establish the most
effective and efficient process for enrollee engagement; therefore, we
chose not to establish the: (1) Frequency; (2) location; (3) format;
(4) participant recruiting and training methods; (5) use and adoption
of telecommunications technology; or (6) other parameters for operation
of the required committee. In addition, the final rule requires one
committee (for example, one committee at the State level to serve all
of the MA organization's D-SNPs in that State) but MA organizations may
establish more than one committee). This rule also permits MA
organizations to use existing committees which would meet the
requirements of both Sec. Sec. 422.107(f) and 438.110 (we expect this
approach to be used by FIDE and HIDE SNPs).
The only requirements in this rule for an MA organization offering
one or more D-SNPs in a State is to establish and maintain one or more
enrollee advisory committees that serve the D-SNPs offered by the MA
organization and for that committee to solicit input on, among other
topics, ways to improve access to covered services, coordination of
services, and health equity for underserved populations. The enrollee
advisory committee(s) must include at least a reasonably representative
sample of the population enrolled in the D-SNP(s), or other individuals
representing those enrollees. The enrollee advisory committee(s) may
also advise managed care plans under title XIX of the Act offered by
the same parent organization as the MA organization offering a D-SNP.
To determine the burden for MA organizations to establish the
enrollee advisory committees, we reviewed two estimates from similar
committees. First, the May 2016 final rule (81 FR 27778) estimated it
will take 6 hours annually for a business operations specialist to
establish and maintain the LTSS member advisory committee required by
Sec. 438.110 for Medicaid managed care plans that cover Medicaid LTSS.
Second, in 2021 we conducted an informal survey of the three South
Carolina MMPs under the capitated FAI demonstration that are required
to conduct meetings quarterly and highly value their advisory
committees. The MMPs surveyed estimated an annual average of 240 hours
(or 60 hours per meeting) to recruit members and establish and maintain
the committee. We expect these efforts to include outreach and
communication to members, developing meeting agendas, scheduling
participation of presenters, preparing meeting materials, identifying
meeting location and technology, D-SNP staff attendance at the meeting,
and disseminating enrollee feedback to D-SNP and MA organization staff.
Due to the variety of flexibilities in creating the enrollee
advisory committee, detailed previously in this section, we expect the
average time and annual cost for an MA organization to establish and
hold an enrollee advisory committee meeting(s) to be somewhere between
6 hours estimated for the requirement at Sec. 438.110 and 240 hours as
reported by MMPs. We believe this large difference in the time spent
comes from two sources: (1) The committees created by MMPs must meet
quarterly rather than annually and (2) MMPs find value in their
committees and have invested more staff and resources to recruit
enrollees, and prepare for and hold meetings; for example, MMPs often
provide transportation to meetings, refreshments, and nominal
incentives for participation, none of which is required by the
capitated FAI demonstration or this rule. With this understanding that
a wide variety of approaches would be used, we estimate that on average
a business compliance officer will spend 40 hours at $76.20/hr to
establish and hold enrollee advisory committee meetings.
In the proposed rule, we noted that each MA organization offering
one or more D-SNPs in a State will decide how to establish an enrollee
advisory
[[Page 27855]]
committee based on the MA organization's approach to obtaining maximal
input from enrollees leading to the highest quality enrollee
experience. Because of the wide variability, we solicited stakeholder
comments on our assumptions and burden estimates. We received no
comments on this issue and therefore we are finalizing our estimates
that an MA organization will spend 40 hours at a cost of $3,048 (40 hr
x $76.20/hr for a business operation specialist) to establish an
enrollee advisory committee.
We believe all FIDE SNPs and HIDE SNPs that provide LTSS currently
have an enrollee advisory committee since they have a Medicaid managed
care plan that must comply with Sec. 438.110. We are updating these
estimates from the estimates used in the proposed rule based on the
increase in D-SNP PBPs for contract year 2022. There were 596 D-SNP
PBPs in 2021 and 703 D-SNP PBPs in 2022. For 2022, we estimate 578 D-
SNPs do not have a corresponding Medicaid managed care plan that
provides LTSS, with 125 D-SNP PBPs in MA contracts that provide LTSS.
Additionally, 268 D-SNP PBPs are in the same State and under the same
contract, which means only one enrollee advisory committee is necessary
to meet the requirement. Therefore, we estimate MA organizations
operating D-SNPs will need to establish 310 (703 D-SNP PBPs minus 125
PBPs in D-SNP contracts that provide LTSS minus 268 PBPs under the same
contract in the same State) new enrollee advisory committees.
Thus, the aggregate minimum annual burden for MA organizations
operating D-SNPs to meet the requirements of Sec. 422.107(f) is 12,400
hours (310 new committees x 40 hr per committee) at a cost of $944,880
(12,400 hr x $76.20/hr). As stated above, the requirement and burden
will be submitted to OMB for approval under control number 0938-1422
(CMS-10799).
b. Updates to Audit Protocols (CMS-10717, OMB 0938-1395)
As noted in section II.A.3. of this rule, we anticipate updating
the CMS SNP Care Coordination audit protocols \94\ for MA organizations
offering one or more D-SNPs to require documentation, such as a
committee member list and meeting minutes, of the enrollee advisory
committee meetings. In our currently approved collection of information
request, we estimated that the audit protocol and data request will
take 701 hours per MA organization at an average hourly cost of $87.00/
hr, totaling $60,987 per MA organization (701 hr x $87.00/hr). With
regard to this final rule, we believe MA organizations offering D-SNPs
will prepare and retain a committee member list and meeting minutes a
of customary business practices that is exempt from the requirements of
the PRA under 5 CFR 1320.3(b)(2). Therefore, we do not believe
reporting this documentation on the enrollee advisory committee will
impact our currently approved 701-hour audit protocol time estimate.
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\94\ See https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/ProgramAudits.
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While we do not anticipate any changes to our active time
estimates, we will revise the SNP Care Coordination audit protocol
prior to the effective date of the rule to provide stakeholders with an
opportunity to comment on the contents of our revised audit protocol.
The CMS-10717 collection of information request will be made available
to the public for review and comment under the standard PRA process,
which includes the publication of 60- and 30-day Federal Register
notices and the posting of the collection of information documents on
our PRA website.
c. Conclusion
We did not receive any public comments on our proposed collection
of information requirements, however, as noted and explained previously
in this section, we have updated to our estimates based on: (1) The
increase of D-SNP PBPs for contract year 2022; and (2) updated hourly
wage estimates.
2. ICRs Regarding Standardizing Housing, Food Insecurity, and
Transportation Questions on Health Risk Assessments (Sec. 422.101)
(CMS-10799, OMB 0938-1422) and (CMS-10717, OMB 0938-1395)
The following HRA requirements will be submitted to OMB for
approval prior to the CY 2024 applicability date. The changes to our
SNP audit protocols will be submitted to OMB for approval under control
number 0938-1395 (CMS-10717).
a. Added HRA Questions
As described in section II.A.4. of this final rule, we are
requiring that SNPs include questions on housing stability, food
security, and access to transportation as part of their HRAs, although,
based on insight from public comments, we are not finalizing our
proposal to require standardized questions as proposed in our January
2022 proposed rule. Instead, we will require SNPs to include one or
more questions from a list of screening instruments specified by CMS in
sub-regulatory guidance on housing stability, food security, and access
to transportation in their HRAs. SNPs will also have the option to use
any State-required Medicaid screening instruments that include
questions on these domains. We have updated our burden estimates
accordingly, as described later in this section. As noted in section
II.A.4. of this final rule, we will ensure compliance with the PRA as
we strive to post the sub-regulatory guidance by the end of 2022.
This provision will result in SNPs having a more complete picture
of the risk factors that may inhibit enrollees from accessing care and
achieving optimal health outcomes and independence. We do not believe
that collecting this information will require any additional efforts
from SNPs outside of customary updates to the HRA tools. Due to the
current requirement at Sec. 422.101(f) that the HRA include an
assessment of the individual's physical, psychosocial, and functional
needs, we believe, and public comments confirmed, that many SNPs are
already including questions in their HRA tools related to housing
stability, food security, and access to transportation, and many such
questions are drawn from the types of validated and widely-used
screening instruments that we will specify in sub-regulatory guidance.
Therefore, many SNPs will not need to revise their HRA tools. If a SNP
is not already asking these questions, we do not predict the addition
of questions on these three topics would lengthen the time to
administer a typical HRA.
CMS does not currently collect specific data elements from HRAs for
all SNP enrollees. CMS will not be collecting data elements from the
HRA as part of this collection of information.
We estimate a one-time burden for the parent organizations offering
SNPs to update their HRA tools in their care management systems and
adopt questions on housing stability, food security, and access to
transportation, in cases where the SNPs are not already asking
questions on the required topics.
In our proposed estimate, we assumed that each parent organization
offering one or more SNP would be impacted. Because we are not
finalizing standardized questions but rather requiring SNPs to choose
questions from a list of existing screening instruments that comments
indicate are widely in use or a State-required Medicaid screening
instruments, we assume that many SNPs are already asking questions that
we will include on the list; therefore, we estimate about 35 percent of
parent organizations with one or
[[Page 27856]]
more SNPs would update the care management system where an enrollee's
HRA responses are recorded. We estimate that it will take a software
programmer 3 hours at $116.34/hr to update the care management system
resulting in a cost of $349 (3 hr x $116.34/hr) per parent
organization. We are updating the number of parent organizations making
these updates based on the 2022 contract year numbers from 123 parent
organizations with a SNP PBP in 2021 to 133 parent organizations with a
SNP PBP in 2022. We therefore estimate 47 parent organizations (35
percent of organizations that update multiplied by 133 parent
organizations) will be making these updates. In aggregate, we estimate
a one-time burden for updating the HRA tool of 141 hr (47 parent
organizations x 3 hr) at a cost of $16,404 (141 hr x $116.34/hr).
b. Updates to Audit Protocols (CMS-10717, OMB 0938-1395)
The change to the HRAs would also require an update to the CMS SNP
Care Coordination audit protocols \95\ that ensure the completed HRAs
include the assessment of housing stability, food security, and access
to transportation based on the list of screening instruments specified
by CMS in sub-regulatory guidance. Currently, audit protocol and data
request burden are estimated at 701 hours per MA organization at an
average hourly cost of $87.00/hr, totaling $60,987 per MA organization.
We do not believe the changes to SNP audit protocols would add more
time to the 701-hour audit protocol estimate, as we are adding a
confirmation that the SNP's HRA includes the changes as part of the SNP
Care Coordination audit protocols.
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\95\ See https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/ProgramAudits.
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While we do not anticipate any changes to our active time
estimates, we will revise the audit protocol documents to provide
stakeholders an opportunity to review and comment on the contents of
the protocol documents. The revised collection of information request
is not available at this time, but it will be made available to the
public for review and comment under the standard PRA process, which
includes the publication of 60- and 30-day Federal Register notices and
the posting of the collection of information documents on our PRA
website.
c. Conclusion
We did not receive any public comments on our proposed collection
of information requirements regarding housing, food insecurity, and
transportation questions on health risk assessment. As indicated above,
(i) we have updated our burden estimates from 123 affected parent
organizations to 47 parent organizations and (ii) updated our cost
estimates by using BLS' 2021 wages; however, the estimated time per
respondent remains the same.
3. ICRs Related To Refining Definitions for Fully Integrated and Highly
Integrated D-SNPs (Sec. 422.2)
The following changes will be submitted to OMB for approval under
control number 0938-1410 (CMS-10796).
As described in section II.A.5. of this final rule, we are making
several changes to the definitions of FIDE SNPs and HIDE SNPs at Sec.
422.2 that we believe will ultimately help to differentiate various
types of D-SNPs and clarify options for beneficiaries and stakeholders.
Our changes to the FIDE SNP definition require these plans to: Have
exclusively aligned enrollment; cover Medicare cost-sharing; and cover
the Medicaid benefits of home health (as defined in Sec. 440.70),
medical supplies, equipment, and appliances (as described in Sec.
440.70(b)(3)), and Medicaid behavioral health services through a
capitated contract with the State Medicaid agency. We also require that
each FIDE SNP's and HIDE SNP's capitated contract with the State
Medicaid agency apply to the entire service area for the D-SNP for plan
year 2025 and subsequent years. We are also codifying existing policy
outlined in sub-regulatory guidance to permit, subject to CMS approval,
specific limited benefit carve-outs for FIDE SNPs and HIDE SNPs through
the State Medicaid agency contract submission process.
Due to the changes to the definition of FIDE SNP and HIDE SNP, a D-
SNP may need to update its contract with the State Medicaid agency. The
currently approved annual burden estimate for updating the State
Medicaid agency contract is 30 hours per D-SNP as described in OMB
control number 0938-0753 (CMS-R-267). While the changes may result in a
one-time change to the contract, we believe the changes to the contract
language would be relatively minor (even though the changes are
substantive in nature) and part of routine updates to contracts such as
changes of dates. We also believe that the contract changes would be
subsumed in the 30-hour burden estimate for updating the contract
annually. Therefore, we do not estimate our changes to these
definitions at Sec. 422.2 would impact our currently approved annual
30 hour contracting burden estimate for D-SNPs.
The changes to the FIDE SNP and HIDE SNP definitions may change how
D-SNPs attest when submitting their State Medicaid agency contract to
CMS. The burden is currently estimated under OMB control number 0938-
0935 (CMS-10237). We do not estimate D-SNPs would experience an
increase in their per response time or effort to submit the State
Medicaid agency contract to CMS.
However, we will update the content of the collection of
information to reflect the changes to Sec. 422.2 by revising the 5.11
D-SNP State Medicaid Agency Contract Matrix and 5.12 D-SNP State
Medicaid Agency Contract Matrix documents connected to control number
0938-0935 (CMS-10237) and move these documents to control number 0938-
1410 (CMS-10796). We believe including these forms in a separate OMB
control number 0938-1410 (CMS-10796) exclusively for the D-SNP State
Medicaid agency contracts is more operationally consistent with the
collection of information required from MA organizations. The matrix
documents will be removed from 0938-0935 after they are approved by OMB
under 0938-1410.
a. Service Area Overlap Between HIDE SNPs and Companion Medicaid Plans
(CMS-R-262, OMB 0938-0763)
In addition to the updates described in this section, changes to
the FIDE SNP or HIDE SNP definition described in section II.A.5.f. of
this final rule will require the service area of a FIDE SNP or HIDE SNP
to overlap with companion Medicaid plans; therefore, the 15 HIDE SNPs
that have service area gaps with their affiliated Medicaid MCOs would
make a business decision regarding how to comply with the requirement
in addition to updating the State Medicaid agency contract with the D-
SNP. We believe that only one-third of the 15 impacted D-SNPs, or 5 D-
SNPs, would choose to remain a HIDE SNP. The remaining 10 D-SNPs would
contract with the State as a non-HIDE D-SNP and not incur additional
burden.
A D-SNP that wishes to remain a HIDE SNP would submit a new D-SNP
PBP for the service area that does not overlap with the D-SNP's
companion Medicaid plan during the annual bid submission process (OMB
control number 0938-0763 (CMS-R-262)). Also, under the annual bid
submission process, the existing HIDE SNP would reduce their MA service
area to that which overlaps with the companion Medicaid plan.
[[Page 27857]]
The currently approved annual burden estimate for D-SNPs to update
PBPs is 35.75 hours per MA contract as described in OMB control number
0938-0763 (CMS-R-262). We do not estimate D-SNPs would experience an
increase in their response time or effort to submit the bid to CMS.
Alternatively, to remain a HIDE SNP, the MA organization can work
with the State Medicaid agency to expand the service area of the
companion Medicaid plan to align with the D-SNP service area. However,
State Medicaid procurement time frames and contracting strategies may
not provide the 15 D-SNPs an opportunity to expand the service area of
the companion Medicaid plan in CY 2025.
b. Conclusion
We did not receive any public comments on our proposed collection
of information requirements and are therefore finalizing them without
modification.
4. ICRs Related to Additional Opportunities for Integration Through
State Medicaid Agency Contracts (Sec. 422.107)
As described in section II.A.6. of this final rule, we are adding
new paragraph (e) at Sec. 422.107 to describe conditions through which
States may require certain contract terms for D-SNPs and how CMS would
facilitate compliance with those contract terms. Paragraph (e)(1) would
allow States, through the State Medicaid agency contract with D-SNPs,
to require that certain D-SNPs with exclusively aligned enrollment (a)
establish MA contracts that only include one or more D-SNPs within a
State, and (b) integrate materials and notices for enrollees. A more
detailed discussion of these requirements and associated burden
follows:
a. State Medicaid Agency Contract Requirements
The following changes will be submitted to OMB for review under
control number 0938-1410 (CMS-10796).
For States that opt to require the contract requirements at Sec.
422.107(e), States and plans will need to modify the existing State
Medicaid agency contract. These modifications will document the D-SNP's
responsibility to only enroll dually eligible individuals who receive
coverage of Medicaid benefits from the D-SNP, integrate member
materials, and request that CMS establish an MA contract limited to D-
SNPs within the State.
(1) State Burden (CMS-10796, OMB 0938-1410)
Section 1903(a)(7) of the Act requires the Federal Government to
pay a match rate for administrative expenses. Since cost is split
between the State Medicaid agency and the Federal Government, we split
in half the total costs associated with administering the Medicaid
program, half of which the States incur and half of which the Federal
Government incurs. The Federal Government's cost is presented in the
RIA section of this rule (see section V.D.3.).
For each State Medicaid agency, it will take a total of 24 hours at
$142.34/hr for State staff to update the State Medicaid agency's
contract with the D-SNPs in its market to address the changes in this
final rule. This estimate includes the burden to negotiate with the D-
SNPs on contract changes and engage with CMS to ensure contract changes
meet the requirements that we are finalizing at Sec. 422.107(e).
Based on our experience, we expect that each State Medicaid agency
will establish uniform contracting requirements for all D-SNPs
operating in their market. We are uncertain of the exact number of
States that would opt to require these proposed contract changes over
the course of the first 3 years (contract years 2025 to 2027). Based on
our previous work with States as part of the capitated FAI
demonstration and implementing the D-SNP integrations requirements
established by the BBA of 2018, we estimate as few as five and as many
as 20 States may opt to make these changes in their contracts with D-
SNPs and their administration of their programs. Based on the number of
States currently collaborating with CMS on Medicare and Medicaid
integration and the States likely to transition from MMP-based to D-
SNP-based integrated care approaches, we believe there will be 12
States that implement this rule. In our proposal, we projected that
States would implement this one-time change during the first year
(contract year 2025). In section II.A.14. of this final rule, we
discuss our intent to explore extension of the FAI model test in
certain circumstances and consistent with our authority under section
1115A of the Act to convert MMPs to integrated D-SNPs. The discussion
in section II.A.14. of this final rule makes us less certain of when
States will incur the burden described in this collection of
information; however, we do not expect the number of States impacted to
change. Therefore, we are not updating our estimates based on the
discussion in section II.A.14. of this final rule.
Section 1903(a)(7) of the Act requires the Federal Government to
pay half of the States' administrative costs. In aggregate we estimate
a one-time burden of 288 hours (12 States x 24 hr/State) at a cost of
$20,497 (288 hr x $142.34/hr x 0.5). After this first-year one-time
requirement is satisfied, and given the uncertainty involved in
estimating State behavior, we are estimating zero burden in subsequent
years.
(2) MA Organization Burden (CMS-10796, OMB 0938-1410)
For the initial year, we expect each affected D-SNP will take 8
hours at $142.34/hr for a lawyer to update the contract with the State
Medicaid agency to reflect the revised and new provisions in this rule
at Sec. 422.107(e). Based on our assumptions of States likely to opt
to require the contract changes, we estimate between 40 to 80 MA
organizations would be impacted. Since we are uncertain of which
extreme to use, we use the average, 60 MA organizations. We further
expect the updates to be completed in the first year (contract year
2025). In aggregate we estimate a one-time burden of 480 hours (60 MA
organizations x 8 hr) at a cost of $68,323 (480 hr x $142.34/hr).
b. Limiting Certain Medicare Advantage Contracts to D-SNPs (CMS-10237,
OMB 0938-0935 and CMS-10137, OMB 0938-0936)
The following changes regarding additional Part C application
respondents will be submitted to OMB for approval under control number
0938-0935 (CMS-10237). The following changes regarding additional Part
D application respondents will be submitted for OMB approval under
control number 0938-0936 (CMS-10137).
At Sec. 422.107(e) we are codifying a pathway by which States can
require and CMS would permit MA organizations--through the existing MA
application process--to establish MA contracts that only include one or
more D-SNPs with exclusively aligned enrollment within a State. This
action will allow dually eligible individuals to ascertain the full
quality performance of a D-SNP and better equip States to work with
their D-SNPs to improve health equity.
We note that creating a new D-SNP-only contract will have several
downstream collection of information impacts for an MA organization
that are captured under the two aforementioned control numbers, the
most immediate of which is the MA organization would
[[Page 27858]]
need to complete a new application for Parts C and D.
We estimate that 60 D-SNPs will be impacted by our changes to Sec.
422.107(e). Currently, 32 percent of D-SNPs are in D-SNP-only
contracts; \96\ therefore, we estimate that 19 of the 60 D-SNPs (60 D-
SNPs x 0.32) impacted would already have a D-SNP-only contract and not
need to submit a new Part C and D application. The remaining 41 D-SNPs
(60-19 D-SNPs) would need to submit both a new Part C and a new Part D
application.
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\96\ HPMS, Contract Management Reports 2020, SNP Type and
Subtype Report, August 7, 2020.
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The burden per MA organization for an initial Part C application
for a SNP is currently approved by OMB under control number 0938-0935
(CMS-10237) at 10 hours at $72.90/hr for a compliance officer to review
instructions and complete the application (including submission) at a
cost of $729 (10 hr x $72.90/hr). Under this final rule, we estimate 41
D-SNPs will need to submit a new Part C application; therefore, the
currently approved total burden for one-time Part C applications will
increase by 410 hours (10 hr x 41 D-SNPs) at a cost of $29,889 (410 hr
x $72.90/hr).
The burden per MA organization for an initial Part D application
for an MA-PD plan is currently approved by OMB under control number
0938-0936 (CMS-10137) at 6.41 hours for a compliance officer to review
instructions and complete the application (including submission) at a
cost of $467 (6.41 hr x $72.90/hr). Under this final rule, we estimate
41 D-SNPs will need to submit a new Part D application; therefore, the
currently approved total burden for one-time Part C applications will
increase by 263 hours (6.41 hr x 41 affected D-SNPs) at a cost of
$19,173 (263 hr x 72.70/hr).
While we anticipate changes to the number of respondents and our
active time estimates for the Part C and Part D applications, we will
revise control numbers 0938-0935 (CMS-10237) and 0938-0936 (CMS-10137)
for the 2025 plan year application. Because States will likely consult
with CMS, MA organizations, and other stakeholders on whether and how
to pursue this step toward integration and because of the timing of MA
applications, bids, and contract execution, we believe the 2025 plan
year application is the earliest date that the new policy in Sec.
422.107(e) can be implemented by a State and MA organization. The CMS-
10237 and CMS-10137 collection of information materials will be made
available to the public for review/comment under the standard PRA
process which includes the publication of 60- and 30-day Federal
Register notices and the posting of the collection of information
documents on our PRA website.
We acknowledged in our proposal that there may be additional
downstream collection of information impacts for new contracts related
to Part C and D reporting and CMS monitoring at the contract level. For
example, MA organizations would experience additional reporting to CMS,
calculation of HEDIS measures, and administration of HOS and CAHPS
surveys. We are uncertain of the extent of the additional burden
incurred for reporting as a separate contract. We requested comments on
these impacts for a new contract under an already existing MA
organization and if they should be included in our estimates. We
received no comments and are finalizing our estimates without including
any additional collection of information impacts.
c. Integrated Member Materials
As described in section II.A.6.b. of this final rule, to provide a
more coordinated beneficiary experience, at Sec. 422.107(e) we are
codifying a pathway by which States and CMS will collaborate to
establish model materials when a State chooses to require through its
State Medicaid agency contract that certain D-SNPs use an integrated
SB, Formulary, and combined Provider and Pharmacy Directory. Section
422.107(e)(1) establishes factual circumstances that would commit CMS
to certain actions under paragraphs (e)(2) and (3).
We do not estimate any additional burden for States or plans to
implement integrated member materials at Sec. 422.107(e) due to
existing State efforts to work with Medicaid managed care plans to
comply with information requirements at Sec. 438.10 and to work with
D-SNPs to populate Medicaid benefits for Medicare member materials.
Since requirements imposed on the Federal Government are not subject to
the PRA, we describe costs to the Federal Government's burden to
develop integrated member materials in section V.D.3.c. of this final
rule.
d. Conclusion
We did not receive any public comments on our proposed collection
of information requirements and are finalizing these estimates as is
with updated mean hourly wages.
5. ICRs Related to Definition of Applicable Integrated Plan Subject to
Unified Appeals and Grievances Procedures (Sec. 422.561) (CMS-10796,
OMB 0938-1410)
The following changes will be submitted to OMB for approval under
control number 0938-1410 (CMS-10796).
In Sec. 422.561, we are expanding the universe of D-SNPs with
unified grievance and appeals processes by revising the definition of
the term ``applicable integrated plan,'' which establishes the scope of
plans that are subject to the requirement to use those unified
processes. Unified grievance and appeals processes were originally
limited to FIDE SNPs and HIDE SNPs; however, after our implementation
experience, we believe that there are models of integrated D-SNPs other
than FIDE SNPs and HIDE SNPs that should be required to use, and are
capable of using, the unified grievance and appeals processes.
We anticipate that additional D-SNPs will be implementing the
unified grievance and appeals procedures under Sec. Sec. 422.629
through 422.634 and that the D-SNPs impacted by this rule are D-SNPs in
California with exclusively aligned enrollment, including those plans
receiving Cal MediConnect members at the end of the California
capitated FAI demonstration.
We estimate a one-time burden for each new applicable integrated
plan to update its policies and procedures to reflect the new
integrated organization determination and grievance procedures under
Sec. 422.629. We anticipate this task will take a business operation
specialist 8 hours at $76.20/hr. In aggregate, we estimate a one-time
burden of 104 hours (8 hr x 13 D-SNPs) at a cost of $7,925 (104 hr x
$76.20/hr).
While new D-SNPs will use the CMS-10716 denial notice under OMB
control number 0938-1386 rather than the CMS-10003 MA denial notice
under OMB control number 0938-0829, neither of the notices nor burden
estimates would be revised as a result of this rule. As indicated
previously, the rule's changes will be submitted to OMB under control
number 0938-1410 (CMS-10796).
The CMS-10716 denial notice required under Sec. 422.631(d)(1)
includes information about the determination, as well as information
about the enrollee's appeal rights for both Medicare and Medicaid
covered benefits. Though integrating information on Medicare and
Medicaid appeal rights will be a new requirement for the impacted D-
SNPs, we note that the timeframe for sending
[[Page 27859]]
a notice and the content of the notice are largely the same as the
current requirements in Medicaid (Sec. 438.404(b)) and MA (Sec.
422.572(e)); therefore, impacted D-SNPs are not incurring additional
burden to send the notification. Setting out such burden would be
duplicative.
We did not receive any public comments on our proposed collection
of information requirements and are therefore finalizing our estimates
as is but with updated mean hourly wages.
6. ICRs Related to Attainment of the Maximum Out-of-Pocket (MOOP) Limit
(Sec. Sec. 422.100 and 422.101)
As described in section II.A.12. of this final rule, we are making
a revision to which costs accumulate toward the MOOP limit, with the
most significant impact being for dually eligible enrollees with cost-
sharing protections under Sec. 422.101 for MA regional plans and Sec.
422.100(f)(4) and (5) for all other MA plans. As established in this
final rule, all costs for Medicare Parts A and B services accrued under
the plan benefit package, including cost-sharing paid by any applicable
secondary or supplemental insurance (such as through Medicaid,
employer(s), and commercial insurance) and any cost-sharing that
remains unpaid (such as because of limits on Medicaid liability for
Medicare cost-sharing under lesser-of policy and the cost-sharing
protections afforded certain dually eligible individuals), will count
towards the MOOP limit. This will ensure that once an enrollee,
including a dually eligible individual with cost-sharing protections,
has accrued cost-sharing (deductibles, coinsurance, or copays) that
reaches the MOOP limit, the MA plan will pay 100 percent of the cost of
covered Medicare Part A and Part B services. MA plans are currently
tracking all costs accrued as part of preparing to submit an accurate
plan benefit package bid (OMB control number 0938-0763 (CMS-R-262));
therefore, this provision does not add additional requirements or
burden.
This final rule will update current guidance governing MA
organization bid requirements, which are captured under our active OMB
control number 0938-0763 (CMS-R-262). We do not foresee any new or
revised burden that would arise from the changes. The non-PRA related
burden can be found in section V.D.4. of this final rule.
We did not receive any public comments on regarding the collection
of information requirements for this provision and are finalizing them
without change.
7. ICRs Related to Network Adequacy (Sec. 422.116(a)(i)(ii) and
(d)(7))
The following changes will be submitted to OMB for approval under
control number 0938-1346 (CMS-10636).
In this rule we will require compliance with CMS's network adequacy
standards for initial and service area expansion (SAE) applicants as
part of the MA application process. Therefore, we will require that
initial and SAE provider networks be submitted and reviewed in February
instead of June (with plans being reviewed for the triennial review).
Consequently, the number of reviews and the amount of work is the
same; rather, it is being re-distributed.
Comment: We did not receive any public comments specific to our
proposed collection of information requirements. However, based on
comments we received on our proposal to review applicants' provider
networks during the time of application in mid-February of each year,
we will modify the final regulation to include a change in our
collection of information.
We received a number of comments that were not supportive of our
proposal to require compliance with CMS's network adequacy standards
for initial and SAE applicants as part of the MA application process.
Commenters expressed concerns over the proposed timing for submission
and review of provider networks, which they said would not allow
sufficient time for MA organizations to build high-quality networks.
Further, commenters said that our proposal would negatively impact
negotiations with provider groups, give providers leverage to negotiate
higher rates that would increase healthcare costs and reduce benefits.
Commenters also suggested that our proposal would disproportionately
impact smaller organizations working to expand to certain regional,
rural, and medically underserved areas, thereby inhibiting competition
among plans and ultimately limiting choice for beneficiaries; some of
these commenters also expressed the view that the proposal would
provide an unfair advantage to large health plans with a presence in
these areas. Several commenters posited that our proposal would place a
substantial administrative burden on MA organizations and on providers,
and that establishing contracts with organizations takes a significant
amount of time. Finally, a number of commenters asked CMS to consider
allowing applicants to use Letters of Intent (LOIs) to contract with
providers as a means to meet network adequacy standards, which would
provide flexibility as they work to come into compliance for the
coverage year.
Response: We appreciate the commenters' feedback regarding our
proposal. As we noted in the proposed rule, we understand that
requiring an applicant to establish a full provider network almost a
year in advance of the contract becoming operational will be difficult.
We also indicated that we previously separated the network adequacy
reviews from the application process due to the potential challenge of
applicants securing a full provider network almost a year in advance of
the contract becoming operational.
Therefore, based on the comments received, we will modify the
regulation to allow applicants to use LOIs in lieu of signed provider
contracts, at the time of application and for the duration of the
application review. The LOI must be signed by both the MA organization
and the provider with which the MA organization intends to negotiate.
Further, as part of the network adequacy review process, applicants
must notify CMS of their use of LOIs to meet network standards in lieu
of a signed contract and submit copies upon request and in the form and
manner directed by CMS. At the beginning of the contract year, the MA
organization must be in full compliance with the section, including
having signed provider and facility contracts in place of the LOIs.
We are not estimating the burden of updating systems to receive
LOIs since this is done by CMS and its contractors and not subject to
PRA requirements. We are not estimating the negotiations between plans
and providers since these already occur, as would negotiations of LOIs.
While there might be some increase in these negotiations, we do not
have access to data on plan negotiations and believe that the
assumption that the negotiations remain the same is valid.
There is an increase in burden because we will require applicants
to submit the providers with whom LOIs have been entered into when
submitting their MA application using CMS systems; previously, the LOIs
were internal documents to the plan. We must be prepared that all
applicants who may be requesting an exception to the network adequacy
standards may submit LOIs. While there might be additional or less we
have no way of ascertaining this and believe this a reasonable
assumption.
As noted, applicants will use existing processes to submit the
LOIs. Currently we have 468 MA applicants of which we expect about 45
percent to submit exceptions through CMS systems (CMS-10636, OMB 0938-
1346). Thus, we assume 211 applicants (45 percent x 468
[[Page 27860]]
applicants) would submit an exception request. MA applicants are
already collecting LOIs, and already submitting zipped files through
our application and network adequacy review process. The extra burden
to the applicants from this provision would be in gathering documents
for the zip file and indicating whether there are LOIs. We are
estimating that the extra burden of gathering forms and indicating a
check on an application will take 5 minutes (0.083 hr). Therefore, the
total burden of this provision is 18 hours (211 applicants x 0.083 hr)
at a cost of $1,312 (18 hr x $72.90/hr for a compliance officer.)
8. ICRs Related to the Disclaimer for Preferred Pharmacy (Sec.
423.2267(e)(40))
The following disclaimer changes carry no burden. Section
423.2267(e)(40) would require Part D sponsors to insert CMS standard
disclaimer on materials that mention preferred pharmacies. The burden
associated with this requirement is the time and effort to copy the
disclaimer on plan documents during document creation. While these
requirements are subject to the PRA, we believe the associated burden
is exempt from the PRA in accordance with 5 CFR 1320.3(c)(2). We
believe that the time, effort, and financial resources to comply with
the information collection requirements will be incurred by persons in
the normal course of their activities and therefore considered to be
usual and customary business practice.
This disclaimer is currently described in CMS's sub-regulatory
guidance, the MCMG, and will be codified in this final rule. The
disclaimer provides an important safeguard to Medicare beneficiaries
enrolled in a Part D plan that only provide access to preferred cost-
sharing through a limited number of pharmacies by alerting them that
the preferred costs may not be available at the pharmacy they use, as
well as providing information on how to access the list of pharmacies
offering prescription drugs as a preferred cost in the beneficiary's
area. We did not receive any public comments on our proposed collection
of information requirements and are finalizing them without change.
9. ICRs Related to Member Identification Cards (Sec. Sec.
422.2267(e)(30) and 423.2267(e)(32))
Member Identification Cards burden is exempt from the requirements
of the PRA since the issuance of Medicare Identification Cards is a
normal and customary practice throughout the insurance industry. Health
plans, whether commercial, through Medicare or Medicaid, or Original
Fee-For-Service issue cards that inform providers of the enrollee's
insurance.
This final rule is a codification of previously issued sub-
regulatory guidance in the MCMG defining standards for member
identification cards issued by MA plans and Part D plan sponsors.
CMS created this sub-regulatory guidance to reduce Medicare
beneficiary confusion through bringing consistency to member ID card
requirements by applying standards so that ID cards from plan to plan
contained the same information in the same locations.
The member identification card standard provided in the previously
issued sub-regulatory guidance was created using an industry standard
for ID cards; these industry standards reflected best practices and
consequently plans found the previously issued sub-regulatory guidance
implementable with minimal burden. Because of the minimal burden, plans
will have no incentive to avoid using them. Additionally, we have
received no enrollee complaints on member cards since issuing the sub-
regulatory guidance.
Because of the reasons listed previously, we believe plans are
following the standards described in this sub-regulatory guidance and
therefore no further burden is imposed by codifying these standards in
regulation.
We did not receive any public comments on our proposed collection
of information requirements and are finalizing them without change.
10. ICRs Related to the Creation of a One-Page Multilanguage Insert
(Sec. Sec. 422.2267(e)(31) and 423.2267(e)(33)) (CMS-10802, OMB 0938-
1421)
The following changes will be submitted to OMB for approval under
control number 0938-1421 (CMS-10802).
The requirements finalized under Sec. Sec. 422.2267(e)(31) and
423.2267(e)(33) will require that plans add in their postings or
mailings of CMS required materials a one-page document written in the
top 15 non-English languages in the U.S. informing enrollees that
interpreter services are available at no cost.
We previously required plans to provide this document to enrollees.
However, based on section 1557 of the Affordable Care Act, the Office
for Civil Rights (OCR) created their own version. Because of the
inherent duplication between CMS's MLI requirement and OCR's
requirement, CMS issued an HPMS email on August 25, 2016, that removed
the MLI requirement. OCR later vacated their requirement, leaving a
gap. Consequently, we proposed to require that MA plans and Part D plan
sponsors provide the one-page document.
Because the MLI will be standardized, plans will not be permitted
to create their own version and will need to use the standardized
template provided by CMS. In estimating the burden of this 1-page
standardized document, we assume plans have retained their templates
consistent with the record retention requirements at Sec.
422.504(e)(4). Consequently, there is no burden to create the template,
as plans will either use their existing templates or the standardized
template that CMS will provide to new plans based on the previously-
created MLI without change.
The cost of placing an extra page on the plan's web page is
incurred by plans as part of their normal course of fluctuating
business activities and hence excluded from the PRA (5 CFR
1320.3(b)(2)).
For beneficiaries who request a paper copy, this final rule
requires that plans mail it to those beneficiaries along with other CMS
required materials (Sec. Sec. 422.2267(e) and 423.2267(e)). We believe
it is reasonable to assume that adding one page (at 0.1696 ounces) to a
bulk mailing cost is de minimis and therefore does not create
additional postage costs.
Similar estimates have been made in previous final rules where we
identified the major burden as paper and toner. We have checked the
following assumptions of cost and beneficiary interest in receiving
paper copies found in the April 2018 final rule (83 FR 16695), and
found them to still be reliable for the purpose of this rule.
A 10-ream box (of 5,000 sheets) of paper costs approximately $50.
Hence the cost per sheet is $50/5,000 sheets = $0.01 per page.
Standard toner cartridges which last for about 10,000 pages also
cost $50. Hence the cost per sheet is $50/10,000 = $0.005 per page.
Thus, the total paper and toner cost is $0.015 per page.
As of September 2021, there are 52 million beneficiaries enrolled
in MA PD or stand-alone PDP plans.\97\
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Of these 52 million beneficiaries we estimate that 40 percent or
20,800,000 beneficiaries (52 million beneficiaries x 0.40) will request
paper copies.
[[Page 27861]]
It follows that the aggregate cost of providing one extra sheet of
paper is $312,000 (20,800,000 enrollees x $0.015/page).
There is no labor cost for providing one extra sheet of paper.
We solicited stakeholder input on all assumptions including the
estimate that 40 percent of enrollees request paper copies and that the
major costs are paper and toner.
Comment: We received comments indicating generally that our
estimate of the burden to plans was incorrect. A commenter indicated
our estimate of the burden was incorrect without providing any
specifics on the nature of the alleged error or its impact on the
burden calculation. Another commenter indicated that our estimate of
the burden was too low, but they did not indicate to what degree or in
what way they felt we had miscalculated.
Response: As the comments did not provide specific parameters as to
how our burden estimate is inaccurate, we decline modification of
estimates based on the comment. On review, we believe our assessment of
the burden on plans is accurate. Regardless, we also believe the burden
on plans is acceptable considering the vital nature of the MLI.
Additionally, we expect that plans consider the burden acceptable as
the MLI improves awareness of health issues; and as plans are committed
to the health of their members, they support the MLI as is a bridge to
education and awareness of health and health insurance issues.
We did not receive any other comments on our proposed collection of
information requirements and are finalizing them without change.
11. ICRs Related to Third-Party Marketing Organizations (TPMOs) Agent
(Sec. Sec. 422.2260, 422.2267(e)(41), 422.2274(g), 423.2260,
423.2267(e)(41), and 423.2274(g))
Sections 422.2260, 422.2267(e)(41), 422.2274(g), 423.2260,
423.2267(e)(41), and 423.2275(g) will require MA organizations and Part
D sponsors to insert a CMS standard disclaimer on materials created by
Third Party Marketing Organizations.
The burden associated with this requirement will be the time and
effort to copy the disclaimer on marketing materials during document
creation. The disclaimer is a standardized, required material. In this
regard we believe that the disclaimer is not subject to the
requirements of the PRA because it does not constitute a ``collection
of information.'' Instead, the disclaimer is a ``public disclosure'' of
information originally supplied by the Federal Government to the
recipient (5 CFR 1320.3(c)(2)).
CMS did not receive any other comments on our proposed collection
of information requirements and are finalizing them without change.
CMS received no comments on the estimates for this proposal and
therefore are finalizing this provision estimate without modification.
12. ICRs Related to the Medicare Medical Loss Ratio (MLR) Reporting
Requirements (Sec. Sec. 422.2460 and 423.2460) (CMS-10476, OMB 0938-
1232)
The following changes to the Medicare MLR reporting requirements
will be submitted to OMB for approval under control number 0938-1232
(CMS-10476).
In section II.G.2. of this final rule, we note that under current
Sec. Sec. 422.2460 and 423.2460, for each contract year, MA
organizations and Part D sponsors must report to CMS only the MLR and
the amount of any remittance owed to us for each contract with credible
or partially credible experience. For each non-credible contract, MA
organizations and Part D sponsors are required to report only that the
contract is non-credible. In this rule, our amendments to Sec. Sec.
422.2460 and 423.2460 would increase the MLR reporting burden by
requiring that MA organizations and Part D sponsors report, for each
contract year, the data needed to calculate and verify the MLR and
remittance amount, if any, for each contract, such as the amount of
incurred claims for Medicare-covered benefits, supplemental benefits,
and prescription drugs; expenditures on quality improving activities;
non-claims costs; taxes; licensing and regulatory fees; total revenue;
and any remittance owed to CMS under Sec. 422.2410 or Sec. 423.2410.
In estimating impact, we initially focus on hourly burden. Once the
hourly burden of this final rule is established, we calculate the per
contract and aggregate hourly and dollar burden. The reason for this
approach is that the estimates of hourly burden have undergone several
changes; focusing on them first provides a clearer exposition.
The following four regulatory sources, final rules and PRA
packages, are used as a source for items estimated. These are presented
here with brief outlines of their contributions which will be detailed
below. (i) The information collection that was previously approved by
OMB under 0938-1232 (CMS-10476) in connection with the requirements
finalized in the May 2013 Medicare MLR final rule, CMS estimated that,
on average, MA organizations and Part D sponsors will spend 47 hours
per contract on Medicare MLR reporting, including: Collecting data,
populating the MLR reporting forms, conducting internal review,
submitting the reports to the Secretary, and conducting internal
audits. (ii) This 47-hour figure was also used in the April 2018 final
rule (83 FR 16701) to estimate the reduction in burden resulting from
that rule's revisions to the MLR reporting requirements that apply with
respect to MLR reporting for contract year 2018 and subsequent contract
years. (iii) The June 2020 final rule (84 FR 33796 to 33850), added a
deductible-based adjustment to the MLR calculation for MA medical
savings account (MSA) contracts. (iv) The current final rule, which
introduces three changes: Automation of the MLR reporting for MA
organizations including the MSA reporting requirement, reinstatement of
detailed MLR reporting requirement used in 2014-2017, and addition of
data fields related to expenditures on supplemental services.
Five items must be estimated to perform the impact analysis. They
are presented in Table 5. Table 5 indicates if these items have
undergone change for this final rule.
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We next present more detailed discussion of some of these
assumptions.
Number of contracts: Our analysis of the estimated administrative
burden related to the MLR reporting
[[Page 27863]]
requirements is based on the average number of MA and Part D contracts
subject to the reporting requirements for each contract year. For
contract years (CYs) 2014 to 2020, the average number of such contracts
is 601. The total number of MA and Part D contracts is relatively
stable year over year varying from 533 to 691 during CYs 2014-2020,
such that we are applying the 601 average in this rule's burden
estimates.
Total hourly burden related to MLR: It is necessary to estimate the
total effort (time) related to the Medicare MLR requirements that
applied with respect to MLR reporting for contract years 2014 through
2017. In the information collection request that was previously
approved by OMB under 0938-1232 (CMS-10476), CMS estimated the total
time spent on MLR reporting to be 47 hours. The April 2018 final rule
subsequently divided this 47 hour estimate into two components: Time to
complete the MLR form and time spent on other administrative tasks
related to MLR reporting.
Time to complete the MLR form: In the April 2018 final rule (83 FR
16701), we estimated that it would take an MA organization or Part D
sponsor 11.5 hours to complete the MLR reporting form that was used to
collect MLR data for CYs 2014 through 2017. We explained that we
developed this estimate by considering the amount of time it would take
an MA organization or Part D sponsor to complete each of the following
tasks:
Review the MLR report filing instructions and external
materials referenced therein and to input all figures and plan-level
data in accordance with the instructions.
Draft narrative descriptions of methodologies used to
allocate expenses.
Perform an internal review of the MLR report form prior to
submission.
Upload and submit the MLR report and attestation.
Correct or provide explanations for any suspected errors
or omissions discovered by CMS or our contractor during initial review
of the submitted MLR report.
In 2018, we finalized a less detailed form which we estimated takes
0.5 hours to complete.
The calculations for hourly burden per contract that were included
in the April 2018 final rule are summarized in Table 6. These
calculations do not reflect the corrections to the April 2018 rule that
were taken into account in our burden estimate for the proposed rule.
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The following explanations apply to the rows in Table 6:
Row (1): The 47-hour figure, as explained in the opening paragraphs
of this ICR, is CMS's estimate for the total amount of time MA
organizations and Part D sponsors will spend per contract on Medicare
MLR reporting when the MLR was reported using the MLR form for CYs 2014
through 2017, including: Collecting data, populating the MLR reporting
form, conducting internal review, submitting the report to the
Secretary, and conducting internal audits.
Row (2): The 11.5-hour burden is the portion of the burden in Row
(1) that the April 2018 final rule assumed was associated with
completing the MLR form used for CYs 2014 through 2017. This burden is
discussed in the paragraph immediately preceding Table 6.
Row (3): 35.5 hours, the administrative burden associated with the
MLR requirements, excluding the April 2018 final rule's estimate of the
burden for completing and submitting the MLR form used for CYs 2014
through 2017. This number represents the difference between total per
contract burden, 47 hours, and the form burden per contract, 11.5
hours.
Row (4): Estimated burden to complete the current MLR data form,
which is vastly simplified and is estimated to take only a half-hour to
complete.
Row (5): The total burden per contract, as written in the April
2018 final rule, and as adjusted for the current number of contracts is
36.00 (35.5 hours non-form burden + 0.5 hours current form burden).
However, we cannot use Table 6 as a basis for comparing the burden
of this final rule with the current burden. The reason we cannot use
Table 6 is because the 11.5 hours (Row (2)) in Table 6 was corrected in
the proposed rule. As indicated in Tables 5 and 6, the other
Administrative burden is a calculated number equal to the difference
between the total burden of 47 hours and the
[[Page 27864]]
burden of filling out the form (Row (3)). Consequently, if Row (2)
changes, then Row (3) must change also. We next discuss the revisions
of the April 2018 estimates just summarized in Table 6.
In the proposed rule, we explained that after further
consideration, we believe that the April 2018 final rule overstated the
burden of completing the detailed MLR reporting form because it did not
take into account the number of MA organizations and Part D sponsors
that were actually required to provide explanations for suspected
errors or omissions discovered by CMS or our contractor during initial
review of the submitted MLR report. Unlike the first four tasks
previously listed (the first four of the bullets immediately listed
prior to Table 6), the need to correct or provide explanations for
errors and omissions discovered by CMS or our contractor during desk
reviews and estimated at 11.5 hours (Row (2)) was not applicable to all
plans when our detailed MLR data reporting requirements were in effect.
Based on the percentage of contracts per contract year (for years
2014 through 2017) for which the annual MLR filing was flagged for
potential errors during desk reviews, the number of MA organizations
and Part D sponsors that were required to correct or explain suspected
errors during desk reviews, and a review of the correspondence between
such organizations or sponsors and CMS or our contractor, we estimated
the last task previously listed (to correct or provide explanations for
suspected errors or omissions flagged in desk reviews) would take an MA
organization or Part D sponsor an average of 3 hours per affected
contract, depending on the number and complexity of issues that
required additional explanation, whether the MA organization or Part D
sponsor had to recalculate any of the figures included in its original
MLR submission, and whether the MA organization or Part D sponsor had
to submit a corrected MLR Report to address any of the errors or
omissions in its original submission.
Table 7 presents a revision of Table 6 with the primary change
being replacing 11.5 (Row (2) in Table 6) with 10.75 (Row (7) in Table
7), with the other rows following by computation. Table 7 also differs
from Table 6 is the addition of the per contract burden of calculation
of the MSA deductible factor. This is explained in the narrative to
Table 7.
This refinement to our prior 11.5-hour time estimate does not
affect our estimate that MA organizations and Part D sponsors spent 47
hours per contract under the MLR reporting requirements in effect for
CYs 2014 through 2017 (Row (1) in Table 6) which as we have noted was
an aggregate number estimated by CMS in the information collection that
was previously approved by OMB under control number 0938-1232 (CMS-
10476). Instead, it causes the estimated time to complete the detailed
MLR reporting form to decrease from 11.5 hours to 10.75 hours (Row (2)
in Table 6 and Row (7) in Table 7), with the remaining administrative
tasks, a derived calculation, now estimated as taking the other 36.25
hours (47 hours-10.75 hours) (Row (8) in Table 7).
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We next explain row (10), calculation of the deductible factor. In
the June 2020 final rule, CMS estimated that it would take 5 minutes
(\1/12\ hour) to calculate and verify the deductible factor for an MSA
contract. At the time of the 2020 rule, there were 8 MSA contracts. As
of 2021, there are only 4 MSA contracts. However, the calculations
presented in Table 7 are per contract, not aggregate. Thus, the hourly
burden for calculation of the MSA
[[Page 27865]]
deductible factor adjusted for the number of current contracts is
0.00055 hours (\1/12\ hour per contract x 4 MSA contracts divided by
601 total contracts). We round to 5 decimal places because if we had
rounded to two decimal places the burden would be 0 (zero).
This final rule finalizes three items affecting per contract hourly
burden that were introduced in the proposed rule. These changes are
summarized in Table 9 which will be referred to throughout the
following discussion of the three changes. First, as noted in section
II.G.3. of this final rule, in connection with the changes to the
reporting requirements CMS is adopting in this final rule, we expect to
resume development of the MLR reporting software, and to update the
data collection fields and built-in formulas so that the MLR reporting
software calculates the MLR consistent with all amendments to the MLR
regulations that CMS has finalized since contract year 2017. In making
these updates, CMS is revising the programming of the MLR reporting
software so that it automatically calculates and applies the
appropriate deductible factor for MA MSA contracts, as determined under
Sec. 422.2440. Because MA organizations would no longer be responsible
for calculating the deductible factor, the burden associated with
performing that calculation will be eliminated. Thus Row (19) in Table
9 is 0 contrasting with Row (10) in Table 7 which had a positive
amount.
Second, as discussed in section II.G.2. of this final rule, CMS is
finalizing our proposal to reinstate the detailed MLR reporting
requirements in effect for CYs 2014 through 2017. This changes the 0.5
hour estimate in Rows (4) and (9) to 10.75 hours (Row (18)).
Third, we are finalizing our proposal to require a detailed MLR
report that provides details on several categories of data and costs
(for example, the amount of incurred claims for original Medicare
covered benefits, supplemental benefits, and prescription drugs; total
revenue; expenditures on quality improving activities; non-claims
costs; taxes; licensing and regulatory fees; and any remittance owed to
CMS) and also permits CMS to break down the general categories and
require additional details or line items to be included in the report.
As discussed in section II.G.3. of this final rule, to collect this
information, we are adding additional fields to the MLR Report template
in which MA organizations will enter their total expenditures for
different types or categories of supplemental benefits. We are also
adding narrative fields in which users will describe the methodologies
used to allocate supplemental benefit expenditures.
In total, we estimate that the addition of these fields, as well as
an information-only field in which MA organizations and Part D sponsors
will enter the low-income cost-sharing subsidy amount that they
deducted when calculating the amount of prescription drug costs to
include in the MLR report, will increase the number of fields that will
require user input and validation by approximately one-third, or 33.3
percent. We believe this increase would cause a proportional increase
in the amount of time needed both to complete and submit the MLR Report
to CMS, and to perform the data collection activities that make up the
remaining portion of the 47 hours per contract that we previously
estimated MA organizations and Part D sponsors would spend on tasks
related to the MLR reporting requirements.
However, because the new supplemental benefits fields do not affect
the MLR reporting burden for sponsors of standalone Part D contracts,
we calculate the MLR reporting burden separately for MA contracts and
standalone Part D contracts. Thus, we estimate the burden to stand-
alone Part D contracts would only increase 5 percent in contrast to the
33.3 percent increase for MA contracts and Part D sponsors estimated in
the previous paragraph. This is summarized in Row (12) of Table 8. To
aggregate this increase on a per-contract level, we take a weighted
average of the 33 percent increase and the 5 percent increase. The
weights correspond to the percentage of contracts that represent MA
contracts (about 89 percent) and standalone Part D contracts (about 11
percent). This aggregate net increase per contract is 29.92 percent
(89% x 33% + 11% x 5%). The computations are presented in Table 8. It
is simpler to use one aggregate figure (29.92 percent) for all
contracts rather than estimate each contract type separately and then
adding them together. This weighted average on Row (14) in Table 8 is
used to estimate the increased burden finalized in this rule of filling
out MLR forms as calculated in Row (21) in Table 9.
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Table 9 incorporates these three changes--removing the deductible
factor calculation burden, reinstating the form used for MLR reporting
for CYs 2014 through 2017, and increasing the fields in the form--to
arrive at a final increased hourly burden per contract, and then
calculates dollar burden per contract as well as aggregate burden for
all contracts. The following presents further information about the
rows in Table 9 as compared to Table 7.
Rows (15)-(17) are identical to Rows (6)-(8). This
provides the per-contract administrative hours on non-form items
connected with the MLR provisions before adding the form-related
burdens.
Row (18): The 0.5 hours in Row (9) is replaced by the
10.75 hours in Row (16) since this final rule requires returning to the
detailed form used for MLR reporting for CYs 2014 through 2017 whose
cost is estimated in Row (7).
Row (19): Row (10), the time for calculation of the MSA
deductible factor, is replaced with 0 hours, since the changes CMS is
finalizing would entail having CMS-developed software automatically
calculate and apply the deductible factor.
Row (20): The total hourly burden per contract, 47 hours,
reflecting returning to the detailed form used for contract year 2014
through 2017 MLR reporting and removal of calculation of the MSA
deductible factor (but not yet reflecting additional fields) is
obtained by adding 10.75 (form burden) + 36.25 (non-form burden), (Rows
(17) and (18)).
Row (21): The total hourly burden per contract, 61.1 hours
under the
[[Page 27867]]
requirements we are adopting in this final rule, is obtained by
increasing the 47 hours (Row (20)) by 29.92 percent, which is the
weighted effect of adding new fields (Row (14)) (61.1 = 47 + 29.92
percent x 47).
Row (22): The current contract burden of 36.75055 hours is
obtained from Row (11). The five decimal places assure that the effect
of the provision on MSAs is not removed.
Row (23): The average increase in time under the
requirements we are finalizing of 24.34945 is obtained by subtracting
from the total burden under the regulation requirements we are
finalizing of 61.1 hours on Row (21) the current-form burden of
36.75055 hours on Row (22).
Row (25): The increased contract cost ($) $3,815 on Row
(25) is obtained by multiplying the average increase in time (hours) of
24.34945 on Row (23) by the wages ($156.66/hr) on Row (24).
Row (26): The total number of contracts is presented in
Table 5
Row (27): The average increase in time (hours) across all
contracts of 14,634 is obtained by multiplying the 601 contracts (Row
(26)) by the per contract increase in time (hours) of 24.34945 on Row
(23).
Row (28): The aggregate increase in cost ($) across all
contracts, $2,292,562 is obtained by multiplying the increase in time
(hours) of 14,634 on Row (27) by the wages per hour on Row (24).
We estimate that MA organizations and Part D sponsors will incur
minimal one-time start-up costs associated with developing processes
for capturing the necessary data, as they should already have been
allocating their expenses by line of business and contract in order to
comply with our current regulations regarding the calculation of the
MLR, and they should already have been tracking their supplemental
benefit expenditures for purposes of bid development. We estimate that
MA organizations and Part D sponsors will incur ongoing annual costs
relating to data collection, populating the MLR reporting form,
conducting an internal review, submitting the MLR reports to the
Secretary, and conducting internal audits.
Table 10 summarizes the relevant calculations as one combined line
item.
[GRAPHIC] [TIFF OMITTED] TR09MY22.014
The average burden per contract as given on Row (25) of Table 8 is
$3,815. We note that this is a weighted average. Stakeholders may be
interested in a more careful analysis based on contract type. We do
this for 3 types of contracts.
MA MSA contracts have reduced burden since the new software
automatically calculates the deductible factor and uses that to adjust
the applicable credibility factor, relieving them of the need to
perform this calculation and adjustment on their own.
For each MA contract (including MA-PD and MA MSA contracts), we
estimate, on average, 25.92 hours of additional burden at an additional
cost of $4,061. Row (11) (which excludes the burden on Row (10)
associated with calculating the MSA deductible factor) shows the
current hour burden to be 36.75 hours. (The removal of the 0.00055
hours has negligible effect and is appropriate for the majority of
contracts which are non-MSAs). Row (20) shows that the new burden
without considering the additional fields is 47 hours. Row (13) shows
that this would result in 62.67 hours total burden (47 hours x 1.33 due
to increased fields). Comparing the 62.67 total burden under the MLR
reporting requirement we are adopting in this final rule with the 36.75
hours under the reporting requirements that have been in effect since
contract year 2018 shows an increase time of 25.92 hours (62.67-36.75)
at a cost of $4,061 (25.92 hours x $156,66/hr).
For Part D contracts, we estimate 12.6 additional hours of burden
at an additional cost of $1,974. As in the preceding analysis for MA
contracts, Row (11) (which excludes burden on Row (10) associated with
calculating the MSA deductible factor) shows the current hour burden to
be 36.75 hours. Row (20) shows that the new burden without taking into
effect the new fields is 47 hours. Row (12) shows a 5 percent increase
for new fields for Part D contracts, such that this would result in a
total burden of 49.35 hours (47 hours + 47 hours x 5 percent). Thus,
there is an additional hour burden of 12.6 hours (49.35 hours-36.75
hours) at an additional cost of $1,974 (12.6 hours x $156.66/hr) per
contract.
As indicated above, the total increased impact of finalizing the
MLR provision is presented in Table 10.
We did not receive any comments on our proposed collection of
information requirements and are finalizing them without change.
13. ICRs Related to Pharmacy Price Concessions in the Part D Negotiated
Price (Sec. Sec. 423.100 and 423.2305) (CMS-10174, OMB 0938-0982)
The requirement and burden for Part D Sponsors to implement the
proposals related to pharmacy price concessions that we are now
finalizing, as discussed in section II.H. of this final rule will be
submitted to OMB for approval under control number 0938-0982 (CMS-
10174), as needed. Below we discuss in greater detail the burden
associated with the requirements we are finalizing.
Revisions to Sec. Sec. 423.100 and 423.2305 will require that Part
D sponsors apply all pharmacy price concessions to the point of sale
price in all phases of the Part D benefit. Under this rule,
beneficiaries will see lower prices at the pharmacy point-of-sale and
on Plan Finder beginning immediately in the year the policy will apply,
2024. We anticipate that the change will require that Part D sponsors
make certain system changes related to the calculation of the amounts
they report in one or two fields in the PDE data collection form.
In the NPRM we only estimated the impact of annual costs for PDE
Data transmission. Although we received no
[[Page 27868]]
external comments on our burden estimates, we made two changes from the
NPRM. First, we anticipate that this provision will cause sponsors to
incur both one-time costs for updating software, and annual costs for
PDE Data transmission. Second, our estimates of PDE data transmission
used an estimate of a $35.50/hr cost for electronic submission. This is
incorrect and should be $17.75/hr.
Update of Software: The systems for submitting PDE transmission are
already in place as required by the regulations. A software update is
required to deal with transmitting data at the time of sale. We believe
it reasonable that this software update will be done at the parent
organization level rather than the contract level. Based on internal
CMS data, currently there are 298 parent organizations. The burden of
update requires that 2 software developers will each spend 20 hours (2
and one half days) performing the necessary designs. Therefore, the
aggregate burden across all parent organization is 11,920 hours (2
software developers x 20 hr a programmer x 298 parent organizations) at
a total cost of $1,386,773 (11,920 hr x 116.34/hr). The burden per
parent organization would be 40 hours (20 hr x 2 software developers)
at a cost of $4,654 (40 hr x $116.34/hr).
PDE Data Submission: The calculations discussed in the narrative
are presented in Table 11. The number of prescription drug events (PDE)
for 2020 is 1.5 billion (Row C). The average number of Part D contracts
for the past 3 years (2019-2021) is 856 (Row B). To compute the average
number of responses per respondent, that is, the number of PDEs per
contract, we divide the average number of PDEs per year (Row C) by the
average number of contracts (Row B). This computation leads to an
average of 1,752,336.449 PDEs/contract (Row D (1.5 billion divided by
856)). The extra decimal places listed in Row D and other rows are to
assure consistency in two methods at arriving at the final burden. A
similar computation shows that the average number of PDEs per Part D
enrollee is 30.5047 (1.5 billion PDE (Row C) divided by 49,229,626
enrollees (as of November 2021) (Row A).
Since our regulations require Part D sponsors to submit PDE data to
CMS that can be linked at the individual level to Medicare Part A and
Part B data in a form and manner similar to the process provided under
Sec. 422.310, the data transaction timeframes will be based on risk
adjustment and prescription drug industry experiences. Moreover, our
PDE data submission format only supports electronic formats.
The drug industry's estimated average processing time for
electronic data submission is 1 hour for 500,000 records (Row F). The
drug industry further estimates that on average it costs $17.75/hr (for
2020) to process PDEs (Row E).
Using these numbers, we can compute individual contract and
aggregate burden.
It would take 3.5047 hours (Row G) on average for each respondent
(contract) to process its 1,752,336.449 PDEs at a rate of 500,000 per
hour (1,752,336.449 PDEs per contract (Row D) divided by 500,000/hr
(Row F). The aggregate hours to process all 1.5 billion claims is
therefore 3,000 hours (Row H) (3.5047 hours/contract (Row G) x 856
contracts (Row B)).
The average cost per contract (Row I) is $62.2084 hours (3.5047
hours (Row G) x $17.75/hr (Row E)). The ongoing cost for all contracts
(Row J) is therefore $53,250, which can be obtained either by
multiplying total hours (3,000 (Row H)) by cost per hours(17.75/hr (Row
E)) or by multiplying the cost per contract ($62.2084 (Row I)) by the
number of contracts (856 (Row B)).
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The aggregate burden for the provision is $1,440,023 in the first
year ($1,386,773 for software updates plus $53,250 for transmission
costs) and $53,250 in subsequent years.
C. Summary of Finalized Information Collection Requirements and
Associated Burden Estimates
[[Page 27870]]
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[[Page 27871]]
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V. Regulatory Impact Analysis
A. Statement of Need
This final rule will revise the MA and Part D program regulations
to improve transparency in, and oversight of, these programs and to
revise regulations to improve the integration of Medicare and Medicaid
programs for individuals enrolled in dual eligible special needs plans
(D-SNPs). This final rule will also revise regulations related to MA
and Part D plans, D-SNPs, other special needs plans, and cost contract
plans. Additional revisions will implement changes related to
requirements during disasters or public emergencies, past performance,
MLR reporting, pharmacy price concessions, marketing and
communications, Star Ratings, and network adequacy.
Through provisions that apply to D-SNPs, we intend to improve
beneficiary experiences by amplifying the voices of dually eligible
individuals in health plan governance and operations by requiring an
enrollee advisory committee and requiring assessment of certain social
risk factors. Additionally, our final rule will improve partnership
with States through better Federal-State collaboration on oversight and
performance improvement activities and establishing new pathways for
CMS and States to collaborate to integrate care for dually eligible
individuals.
The past performance proposals hold plans more accountable for
their performance under MA and Part D and protect the best interest of
the Medicare program by preventing those with poor past performance
from entering new MA or Part D applications or service area expansions.
The Star Ratings provisions allow CMS to calculate 2023 Star Ratings
for three Healthcare Effectiveness Data and Information Set measures
that are based on the Health Outcomes Survey; due to the COVID-19 PHE
in place nationwide during 2020, applying the 60 percent rule in the
current regulations would result in removal of all contracts from
threshold calculations and CMS would be unable to calculate ratings for
these three measures. In sections II.D.3. and II.D.4. of this final
rule, we are also responding to comments about and finalizing Star
Ratings provisions from the March 31st COVID-19 IFC and the September
2nd COVID-19 IFC without modification: Sec. Sec. 417.472(i) and (j),
422.152(b)(6), 422.166(a)(2)(i), (f)(1)(i), (g)(3), (i)(11), and
(j)(1)(i) through (iv), 422.252, 423.182(c)(3), and 423.186(a)(2)(i),
(f)(1)(i), (g)(3), (i)(9), and (j)(1)(i) through (iii). We are not
finalizing the following provisions in the March 31st COVID-19 IFC:
Sec. Sec. 422.164(i), 422.166(j)(1)(v) and (j)(2), 423.184(i), and
423.186(j)(1)(iv) and (j)(2).
Due to a rule change that took effect with CY 2018 MLR reporting,
MA organizations and Part D sponsors only submit to CMS the MLR
percentage and amount of any remittance that must be repaid to CMS for
failure to meet the 85 percent minimum MLR requirement. CMS is
finalizing our proposal to change our regulations to reinstate the
former requirement for MA organizations and Part D sponsors to submit
the underlying information needed to calculate, and verify the accuracy
of, the MLR and remittance amount. We believe reinstating this detailed
data submission requirement and the desk review process will allow us
to detect errors in the MLR calculation which can result in significant
losses to the Government.
We are deleting the existing definition of ``negotiated prices'' at
Sec. 423.100 and adopting a new definition for the term ``negotiated
price'' at Sec. 423.100, which we define as the lowest amount a
pharmacy could receive as reimbursement for a covered Part D drug under
its contract with the Part D plan sponsor or the sponsor's intermediary
(that is, the amount the pharmacy would receive net of the maximum
negative adjustment that could result from any contingent pharmacy
payment arrangement and before any additional contingent payment
amounts, such as incentive fees). This provision will reduce out-of-
pocket prescription drug costs, improve price transparency and market
competition under the Part D program. As discussed in the proposed
rule, based on stakeholder feedback and sponsor-reported DIR data, we
understand that the share of pharmacies' reimbursement that is
contingent upon their performance under such arrangements has grown
steadily each year. When pharmacy price concessions received by Part D
sponsors are not reflected in lower drug prices at the point of sale
and are instead used to reduce plan liability, beneficiaries generally
see lower premiums, but they do not benefit through a reduction in the
amount they must pay in cost-sharing. Thus, beneficiaries who utilize
drugs end up paying a larger share of the actual cost of a drug.
Moreover, when the point-of-sale price of a drug that a Part D sponsor
reports on a prescription drug event (PDE) record as the negotiated
price does not include such discounts, the negotiated price of each
individual prescription is rendered less transparent and less
representative of the actual cost of the drug for the sponsor.
President Biden's Executive Order (E.O.) 14036, ``Promoting
Competition in the American Economy'' (86 FR 36987), section 5
(``Further Agency Responsibilities''), called for agencies to consider
how regulations could be used to improve and promote competition
throughout the prescription drug industry. Because variation in the
treatment of pharmacy price concessions by Part D sponsors may have a
negative effect on the competitive balance under the Medicare Part D
program, and given the programmatic impacts laid out above and the
charge from the E.O., CMS proposed changes that would standardize how
Part D sponsors apply pharmacy price concessions to negotiated prices
at the point of sale.
We are clarifying our regulations regarding the special
requirements for disasters and emergencies at Sec. 422.100(m) to
address stakeholder concerns about the end of a disaster or emergencies
and to codify previous guidance. We also are finalizing the proposed
updates to them to allow smoother transitions for enrollees who during
a disaster or emergency may have been obtaining services from out-of-
network providers.
B. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999), and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
[[Page 27872]]
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive order.
A regulatory impact analysis (RIA) must be prepared for major rules
with significant regulatory action/s and/or with economically
significant effects ($100 million or more in any 1 year). While the
total annualized costs for this rule are estimated at $3.1 million a
year, as indicated in Table 20, the net transfers from the Trust Fund
to enrollees and manufacturers exceed $100 million annually. Therefore,
based on our estimates, OMB's Office of Information and Regulatory
Affairs has determined this rulemaking is ``economically significant''
as measured by the $100 million threshold, and hence also a major rule
under Subtitle E of the Small Business Regulatory Enforcement Fairness
Act of 1996 (also known as the Congressional Review Act). Accordingly,
we have prepared a Regulatory Impact Analysis that to the best of our
ability presents the costs and benefits of the rulemaking.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2022, that
threshold is approximately $165 million. This rule will not mandate on
an unfunded basis any requirements for State, local, or tribal
governments nor would it result in expenditures by the private sector
meeting that threshold in any 1 year.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has federalism
implications.
Under Executive Order 13132, this final rule will not significantly
affect the States. It follows the intent and letter of the law and does
not usurp State authority beyond what the Act requires. This rule
describes the processes that must be undertaken by CMS, the States, and
D-SNPs in order to implement and administer the requirements of the MA
program. In accordance with the provisions of Executive Order 12866,
this final rule was reviewed by OMB.
If regulations impose administrative costs on reviewers, such as
the time needed to read and interpret this final rule, then we should
estimate the cost associated with regulatory review. As of November
2021, there are 962 contracting organizations with CMS (which includes
MA, MA-PD, and PDP contracts). Additionally, there are 55 State
Medicaid agencies and 300 Medicaid MCOs. We also expect a variety of
other organizations to review (for example, consumer advocacy groups,
major PBMs). A reasonable maximal number is 1,500 total entities who
will review this rule We note that other assumptions are possible. We
assume each organization will designate two people to read the rule.
Using the BLS wage information for medical and health service
managers (code 11-9111), we estimate that the cost of reviewing this
final rule is $114.24 per hour, which includes 100 percent increase for
fringe benefits and overhead costs (https://www.bls.gov/oes/current/oes_nat.htm). Assuming an average reading speed, we estimate that it
will take approximately 8 hours for each person to review this entire
final rule. For each person that reviews this final rule, the estimated
cost is therefore $900 (8 hours x $114.24). Therefore, we estimate that
the maximum total cost of reviewing this entire final rule is $.7
million ($900 x 1,500 entities x 2 reviewers/entity).
We note that this analysis assumed two readers per contract. Some
alternatives include assuming one reader per parent organization. Using
parent organizations instead of contracts will reduce the number of
reviewers. However, we expect it is more reasonable to estimate review
time based on the number of contracting organizations because a parent
organization might have local reviewers assessing potential region-
specific effects from this final rule.
C. Regulatory Flexibility Act (RFA)
Executive Order 13272 requires that HHS thoroughly review rules to
assess and take appropriate account of their potential impact on small
business, small governmental jurisdictions, and small organizations (as
mandated by the RFA). If a final rule may have a significant economic
impact on a substantial number of small entities, then the final rule
must discuss steps taken, including alternatives, to minimize burden on
small entities. The RFA does not define the terms ``significant
economic impact'' or ``substantial number.'' The Small Business
Administration (SBA) advises that this absence of statutory specificity
allows what is ``significant'' or ``substantial'' to vary, depending on
the problem that is to be addressed in the rulemaking, the rule's
requirements, and the preliminary assessment of the rule's impact.
Nevertheless, HHS typically considers a ``significant'' impact to be 3
to 5 percent or more of the affected entities' costs or revenues.
For purposes of the RFA, we estimate that many affected payers are
small entities as that term is used in the RFA, either by being
nonprofit organizations or by meeting the SBA definition of a small
business. For purposes of the RFA, small entities include small
businesses, nonprofit organizations, and small governmental
jurisdictions. The North American Industry Classification System
(NAICS) is used to classify businesses by industry and is used by the
United States, Canada, and Mexico. While there is no distinction
between small and large businesses among the NAICS categories, the SBA
develops size standards for each NAICS category.\98\ Note that the most
recent update to the NAICS classifications went into effect for the
2017 reference year. The latest size standards are for 2019.
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\98\ North American Industry Classification System (2017).
Retrieved from: https://www.census.gov/eos/www/naics/2017NAICS/2017_NAICS_Manual.pdf. https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019.pdf.
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As can be seen from the Summary of Annual Information Collection
Requirements and Burden table (Table 12) in section IV.C. of this final
rule, as well as Table 21 of this section, on average, the net cost to
each plan to implement all provisions is significantly below $10,000
(the annualized cost over 10 years of $3.6 million divided by the
number of contracts, about 1,000, is significantly below $10,000).
Additionally, not all provisions apply to all plans. We do not believe
this to be excessive burden even to small entities. Nevertheless, a
more complete analysis is provided immediately below supporting the
position that burden is not excessive.
Although States are also affected by these provisions, States are
not classified as small entities and in any event the burden as just
indicated is small.
The relevant NAICS category is Direct Health and Medical Insurance
Carriers, NAICS 524114, with a $41.5 million threshold for ``small
size,'' with 75 percent of insurers having under 500
[[Page 27873]]
employees meeting the definition of small business.
MA organizations and Medicaid managed care plans have their costs
funded by the Federal Government or State and therefore there is no
significant burden. We discuss the details of this in this section.
This discussion will establish that there is no significant burden to a
significant number of entities from this final rule for these
provisions.
1. Medicare Advantage
Each year, MA plans submit a bid for furnishing Part A and B
benefits and the entire bid amount is paid by the government to the
plan if the plan's bid is below an administratively set benchmark. If
the plan's bid exceeds that benchmark, the beneficiary pays the
difference in the form of a basic premium (note that a small percentage
of plans bid above the benchmark, whereby enrollees pay a basic
premium, thus this percentage of plans is not ``significant'' as
defined by the RFA and as justified below). Payments to MA plans of the
bid (or benchmark) amounts are risk adjusted and are higher for
enrollees with risk scores above 1.0 and lower for enrollees with risk
scores below 1.0.
MA and MA-PD plans can also offer supplemental benefits, that is,
benefits not covered under Original Medicare or under Part D. These
supplemental benefits are paid for through enrollee premiums, extra
Government payments, or a combination. Under the statutory payment
formula, if the bid submitted by a Medicare Advantage plan for
furnishing Part A and B benefits is lower than the administratively set
benchmark, the government pays a portion of the difference to the plan
in the form of a ``beneficiary rebate.'' The rebate must be used to
provide supplemental benefits (that is, benefits not covered under
Original Medicare or Part D) and/or lower beneficiary Part B or Part D
premiums. Some examples of these supplemental benefits include vision,
dental, hearing, fitness and worldwide coverage of emergency and
urgently needed services.
To the extent that the Government's risk adjusted payments to plans
for the bid plus the rebate exceeds costs in Original Medicare, those
additional payments put upward pressure on the Part B premium which is
paid by all Medicare beneficiaries, including those in Original
Medicare who do not have the supplemental coverage available in many MA
plans.
Part D plans, including MA-PD plans, submit bids and those amounts
are paid to plans through a combination of Medicare funds and
beneficiary premiums. In addition, for enrolled low-income
beneficiaries Part D plans receive government funds to cover most of
premium and cost-sharing amounts those beneficiaries would otherwise
pay.
Thus, the cost of providing services by these insurers is funded by
a variety of government funding and in some cases by enrollee premiums.
As a result, MA and Part D plans are not expected to incur burden or
losses since the private companies' costs are being supported by the
Government and enrolled beneficiaries. This lack of expected burden
applies to both large and small health plans.
Small entities that must comply with MA regulations, such as those
in this final rule, are expected to include the costs of compliance in
their bids, thus avoiding additional burden, since the cost of
complying with any final rule is funded by payments from the government
and, if applicable, enrollee premiums.
For Direct Health and Medical Insurance Carriers, NAICS 524114, MA
plans estimate their costs for the upcoming year and submit bids and
proposed plan benefit packages. Upon approval, the plan commits to
providing the proposed benefits, and CMS commits to making risk
adjusted payments to the plan of either--(1) the full amount of the
bid, if the bid is below the benchmark, which is a ceiling on bid
payments annually calculated from Original Medicare data; or (2) the
benchmark, if the bid amount is greater than the benchmark.
If an MA plan bids above the benchmark, section 1854 of the Act
requires the MA plan to charge enrollees a premium for that amount.
Historically, only two percent of plans bid above the benchmark, and
they contain roughly one percent of all plan enrollees. The CMS
threshold for what constitutes a substantial number of small entities
for purposes of the RFA is 3 to 5 percent. Since the number of plans
bidding above the benchmark is two percent, this is not considered
substantial for purposes of the RFA.
The preceding analysis shows that meeting the direct cost of this
final rule does not have a significant economic impact on a substantial
number of small entities, as required by the RFA.
There are certain indirect consequences of these provisions which
also create impact. We have already explained that 98 percent of the
plans bid below the benchmark. Thus, their estimated costs for the
coming year are fully paid by the Federal Government. However, the
government additionally pays the plan a ``beneficiary rebate'' amount
that is an amount equal to a percentage (between 50 and 70 percent
depending on a plan's quality rating) multiplied by the amount by which
the benchmark exceeds the bid. The rebate is used to provide additional
benefits to enrollees in the form of reduced cost-sharing or other
supplemental benefits, or to lower the Part B or Part D premiums for
enrollees. (Supplemental benefits may also partially be paid by
enrollee premiums.) It would follow that if the provisions of this
final rule cause the MA bid to increase and if the benchmark remains
unchanged or increases by less than the bid does, the result would be a
reduced rebate and, possibly fewer supplemental benefits, or higher
premiums for the health plans' enrollees. However as noted above, the
number of plans bidding above the benchmark to whom this burden applies
do not meet the RFA criteria of a significant number of plans.
It is possible that if the provisions of this rule would otherwise
cause bids to increase, plans will reduce their profit margins, rather
than substantially change their benefit packages. This may be in part
due to market forces; a plan lowering supplemental benefits even for 1
year may lose its enrollees to competing plans that offer more generous
supplemental benefits. Thus, it can be advantageous to the plan to
temporarily reduce profit margins, rather than reduce supplemental
benefits.
2. Medicaid
We include Medicaid in this section since it is relevant to the
proposed change to the applicable integrated plan definition at Sec.
422.561. At Sec. 422.561, we are expanding the universe of D-SNPs that
are required to have unified grievance and appeals processes by
revising the definition of an applicable integrated plan. Section
50311(b) of the BBA of 2018 amended section 1859(f)(8)(B) of the Act to
direct establishment of procedures, to the extent feasible, unifying
Medicare and Medicaid grievances and appeals. The April 2019 final rule
introduced the concept of applicable integrated plans, which we defined
as FIDE SNPs and HIDE SNPs whose Medicare and Medicaid enrollment is
exclusively aligned (meaning State policy limits a D-SNP's enrollment
to those whose Medicare and Medicaid enrollment is aligned as defined
in Sec. 422.2) and the companion Medicaid MCOs for those D-SNPs,
thereby making it feasible for these plans to implement unified
grievance and appeals processes. We believe that unified grievance and
[[Page 27874]]
appeals procedures are feasible for the additional D-SNPs and MCOs
included in the revisions to the definition. While we are not imposing
new Medicaid requirements, the applicable integrated plan definition
change would expand the universe of Medicaid managed plans subject to
the unified appeals and grievances provisions codified in the April
2019 final rule. However, the burden imposed by this final rule on
Medicaid managed care plans is the one-time requirement to update their
grievance and appeals procedures, which as estimated in Table 12, is a
one-time cost of $7,582. Consequently, we have determined that this
final rule will not have a significant impact on Medicaid managed care
plans.
Therefore, the Secretary has certified that this final rule will
not have a significant economic impact on a substantial number of small
entities. Based on the above, we conclude that the requirements of the
RFA have been met by this final rule.
Comment: We received support, thanks, and encouragement from a
large number of small business stakeholders including several
organizations representing large numbers of small businesses. This
support frequently echoed comments already made in the analysis: (i)
The enormous expenses and rise of DIR, (ii) the lack of transparency
resulting from pharmacy price concessions being collected a year or so
after a small pharmacy had gained a profit and resulted in a net loss,
(iii) the increased cost-sharing to enrollees, which can result in
increased levels of medication non-compliance and lead to poorer health
incomes. Commenters' criticism consisted of: (1) Requests for CMS to
regulate the PBMs; (2) requests for extending the pharmacy price
concessions provisions to the coverage gap; (3) requests for a delay of
the effective date pointing to the burden of updating software and
preparing for the 2023 bid; and (4) requests for further protections
for small businesses and specialty pharmacies, which the commenters
stated were very vulnerable and at risk for going out of business. Some
commenters also noted that although this final rule is a step in the
right direction, it does so on average and may not meet the needs of
very small pharmacies not belonging to chains or pharmacies
specializing in certain types of drugs.
Response: We thank the stakeholders for their support. With respect
to the criticisms received: (1) We did not propose to impose any
requirements directly on PBMs in the proposed rule. (2) After
consideration of the comments, however, we modified our proposal to
require pharmacy price concessions be applied to the negotiated price
in the coverage gap. (3) We agree with the comment that pharmacies,
including small pharmacies, need time to prepare software updates and
that Part D sponsors will need time to prepare their 2023 bids. In
response to comments here and as addressed previously, we are
finalizing the proposal with a 2024 applicability date. We are also
sympathetic to specialty pharmacies. CMS does not collect data on
pharmacy price concessions at the pharmacy level, and this information
is not publicly available. In order to estimate, for example, the
effects on specialty pharmacies in particular, we would need to
speculate on the relative difference between price concessions to those
pharmacies versus retail pharmacies. As we do not have any basis for
developing this difference, it is not possible to meaningfully analyze
impacts by type of pharmacy.
We are therefore finalizing our analysis as presented above.
3. Rural Hospitals
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis if a rule may have a significant impact on the
operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. This rule however is
directed to plans and enrollees. Providers including hospitals receive
the contracted rate or at least the original Medicare rate depending on
whether the providers are contracted or not. Consequently, the
Secretary has certified that this final rule will not have a
significant economic impact on a substantial number of small entities.
D. Anticipated Effects
1. Enrollee Participation in Plan Governance (Sec. 422.107)
As described in section II.A.3. of this final rule, at Sec.
422.107(f), we are finalizing our proposal that any MA organization
offering a D-SNP must establish one or more enrollee advisory
committees at the State level or other service area level in the State
to solicit direct input on enrollee experiences. We are also finalizing
at Sec. 422.107(f) that the committee include a reasonably
representative sample of individuals enrolled in the D-SNP(s) and
solicit input on, among other topics, ways to improve access to covered
services, coordination of services, and health equity for underserved
populations. This final rule intends to ensure enrollees are engaged in
defining, designing, participating in, and assessing their care
systems. Section IV.B.1. of this final rule presents the collection of
information burden for this provision.
To support D-SNPs in establishing enrollee advisory committees that
meet the objective of this final rule in achieving high-quality,
comprehensive, and coordinated care for dually eligible individuals,
CMS would provide technical assistance to D-SNPs to share engagement
strategies and other best practices. CMS can leverage the body of
technical assistance developed for MMPs. For example, the CMS
contractor Resources for Integrated Care partnered with Community
Catalyst, a non-profit advocacy organization, to offer a series of
webinars and other written technical assistance to help enhance MMPs'
operationalization of these committees.\99\ CMS will be able to realize
efficiencies by repurposing and building on these resources. Based on
the existing technical assistance contracts held by CMS, we estimate an
annual cost to the Federal Government of $15,000.
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\99\ Resources for Integrated Care and Community Catalyst,
``Member Engagement in Plan Governance Webinar Series'', 2019.
Retrieved from: https://www.resourcesforintegratedcare.com/article/member-engagement/.
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We received no comments on this proposal and therefore are
finalizing this analysis without modification.
2. Refining Definitions for Fully Integrated and Highly Integrated D-
SNPs (Sec. 422.2)
We have presented a discussion of collection of information burden
associated with this provision in section IV.B.3. of this final rule.
In this section, we describe the impacts of our definition changes of:
(1) Requiring exclusively aligned enrollment for FIDE SNPs; (2)
capitation of Medicare cost-sharing; (3) clarifying the scope of
services covered by a FIDE or HIDE; (4) Medicaid carve-outs; and (5)
requiring service area overlap with the corresponding Medicaid plan. We
anticipate all changes to the definition of FIDE SNP and HIDE SNP will
result in additional time for CMS staff to review D-SNPs' contracts
with State Medicaid agencies. We estimate that a GS level 13, step 5
(GS-13-5), employee will take an additional 20 minutes per State to
confirm the contract meets the updated definitions. For CY 2022, 21
States have FIDE SNPs, HIDE SNPs, or both. Therefore, we estimate that
the
[[Page 27875]]
final rule would result in 7 hours (20 minutes x 21 State contracts) of
additional work for a GS-13-5 Federal employee. The 2021 hourly wage
for a GS-13-5 Federal employee for the Baltimore Washington Area, which
is close to the average hourly wage over all localities, is
$56.31.\100\ We allow 100 percent for fringe benefits and overtime,
increasing the hourly wage to $112.62. Thus, the expected additional
annual cost for reviewing the contract is $788.
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\100\ See the locality pay tables for 2021 at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2021/general-schedule/.
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a. Exclusively Aligned Enrollment for FIDE SNPs
As described in section II.A.5.a. of this final rule, we are
requiring exclusively aligned enrollment for FIDE SNPs beginning in
2025. We noted that 12 D-SNPs may lose FIDE SNP status and no longer
qualify for the frailty adjustment described in section 1853(a) of the
Act and the regulation at Sec. 422.308(c)(4). Of these 12 FIDE SNPs,
six are currently receiving the frailty adjustment. We believe that
these six FIDE SNPs are likely to have exclusively aligned enrollment
by CY 2025 as only a small fraction of their current enrollment is
currently unaligned and there are multiple options through which MA
organizations can meet the requirement. Therefore, we do not believe
the final rule will result in a significant reduction of Medicare
payments from FIDE SNPs losing the frailty adjustment.
b. Capitation for Medicare Cost-Sharing and Behavioral Health Services
for FIDE SNPs
We do not anticipate any cost transfers from the State to FIDE SNPs
resulting from the final rule amendment of the definition of FIDE SNP
(at Sec. 422.2) to require that the capitated contract with the State
Medicaid agency for a FIDE SNP must include coverage of Medicare cost-
sharing (that is, payment by Medicaid of Medicare cost-sharing for the
dually eligible individual), where applicable, and Medicaid behavioral
health services. We initially estimated that all FIDE SNPs include
coverage of Medicare cost-sharing in their capitated contracts with the
State Medicaid agency; however, we learned that Tennessee does not
capitate FIDE SNPs for cost-sharing. In this final rule, we are making
the requirement related to cost-sharing applicable starting in 2025. We
expect policy changes in Tennessee before 2025 will allow all current
FIDE SNPs to meet the new definition. As noted in section II.A.5.b. of
this final rule, most FIDE SNPs already include Medicaid behavioral
health benefits in their capitated contracts with the State Medicaid
agency. The remaining FIDE SNPs in California and Pennsylvania that do
not currently cover Medicaid behavioral health benefits would likely
become HIDE SNPs, which is also defined at Sec. 422.2 (with revisions
adopted in this final rule). These impacted D-SNPs would not experience
a direct impact on costs when becoming a HIDE SNP as benefits covered
by the impacted D-SNP would not change. Nor would impacted D-SNPs
experience a change to Medicare revenue, as none of the impacted D-SNPs
receive the frailty adjustment.
We received no comments on our analysis and are finalizing it
without modification.
3. Additional Opportunities for Integration Through State Medicaid
Agency Contracts (Sec. 422.107)
As described in section II.A.6. of this final rule, we are
finalizing new paragraph (e) at Sec. 422.107 to describe conditions
through which States may require certain contract terms for D-SNPs with
exclusively aligned enrollment and how CMS would facilitate compliance
with those contract terms. This final rule allows States to further
promote integration using the State Medicaid agency contract with D-
SNPs, with the goal of improving beneficiary experiences and health
plan oversight. Section 422.107(e) applies only for State Medicaid
agency contracts through which the State requires exclusively alignment
enrollment, as defined in Sec. 422.2, and establishes that States may
choose to require and CMS would permit MA organizations--through the
existing MA application process--to establish MA contracts that only
include one or more State-specific D-SNPs and require that all such D-
SNPs use integrated member materials.
a. State Medicaid Agency Contract Requirements
Section IV.B.4. of this final rule describes the total cost for the
State to update the State Medicaid agency's contract with the D-SNPs in
its market to address the changes in this final rule and consult with
CMS to ensure contract changes meet the requirements at Sec.
422.107(e). Half of the cost ($20,618) could be claimed by the State as
Federal financial participation for administrative costs of the
Medicaid program, born by the Federal Government. In addition to
updating the State Medicaid agency contract, a State choosing to
further integration through Sec. 422.107(e) would need to determine
readiness and make changes to State policy. The State's time and cost
for adopting this final rule would depend on the State's current level
of integration. For example, 11 States currently have a policy
requiring some or all of the D-SNPs in the State to have exclusively
aligned enrollment, and Massachusetts, New Jersey, and New York have
worked with CMS to integrate some member materials. These States that
have taken steps toward integration may use less time and resources to
take advantage of the new processes at Sec. 422.107(e) than States
just beginning to integrate Medicare and Medicaid using D-SNPs. Given
the uncertainty involved in estimating State behavior and levels of
existing integration, we are not estimating any additional burden
outside of updating the State Medicaid agency contract with D-SNPs. We
did not receive any comments on what State resources would be needed to
use the pathway for requiring or achieving higher integration and
collaboration with CMS as described in Sec. 422.107(e) in a State with
limited D-SNP integration (for example, a State with no FIDE SNPs or
HIDE SNPs).
b. Limiting Certain MA Contracts to D-SNPs
At Sec. 422.107(e), we are codifying a pathway that would result,
in certain circumstances, in contracts that only include one or more D-
SNPs with exclusively aligned enrollment within a State. Because Star
Ratings are reported at the contract level, having a contract with only
the D-SNPs in a particular State would allow dually eligible
individuals in that State to ascertain the full quality performance of
a D-SNP and better equip States to work with their D-SNPs to improve
health equity.
We describe the collection of information burden for MA
organizations resulting from establishing a D-SNP-only contract in
section IV.B.4.b. of this final rule. However, the additional Part C
and D applications necessary to create separate contracts covering only
D-SNPs in a particular state also result in additional Federal costs.
While the collection of information packages lay out the Federal burden
to process Part C and D applications, they do not list out the cost per
contract application. We estimate the additional contract submissions
for D-SNP only contracts would at most cost an additional $50,000 in
labor burden for the Federal Government annually.
[[Page 27876]]
We note impacted D-SNP contracts may have changes to their quality
bonus payments (QBP), as the new contract's payment will initially be
calculated from the parent organization's enrollment-weighted average
quality rating and eventually only on the performance under the new
contract. We are unable to predict if QBPs will increase or decrease
for these MA organizations due to separating D-SNPs from the original
contracts into separate contracts.
c. Integrated Member Materials
As described in section II.A.6.b. of this final rule, to provide a
more coordinated beneficiary experience we are finalizing at Sec.
422.107(e) a pathway by which States and CMS would collaborate to
establish model materials when a State chooses to require through its
State Medicaid agency contract that certain D-SNPs use an integrated
SB, Formulary, and combined Provider and Pharmacy Directory. Section
422.107(e)(1) establishes factual circumstances that commit CMS to
certain actions under paragraphs (e)(2) and (3).
In section IV.B.4.c. of this final rule, we note that we do not
intend to significantly change timelines for D-SNPs to prepare
materials, nor do we intend to mandate that States require D-SNPs to
use integrated materials. We do not estimate any additional costs for
States or plans to implement integrated member materials at Sec.
422.107(e) due to existing State efforts to work with Medicaid managed
care plans to comply with information requirements at Sec. 438.10 and
to work with D-SNPs to populate Medicaid benefits for Medicare member
materials. This final rule assures interested States that, under the
conditions outlined in Sec. 422.107(e), CMS would do its part to make
it possible for D-SNPs to comply with State Medicaid agency contract
terms for D-SNP-only contracts and integrated enrollee materials.
Therefore, we do not estimate any additional burden for States or plans
to implement integrated member materials at Sec. 422.107(e).
We anticipate costs to CMS will be similar to past work done to
collaborate with States to improve the integration and effectiveness of
materials for dually eligible beneficiaries. To test materials, we
conducted individual interviews with dually eligible individuals and
desk reviews by contractors, CMS subject matter experts, and advocacy
organizations. Since 2015, we have tested an integrated EOC, ANOC, SB,
Formulary, and combined Provider and Pharmacy Directory.
We estimate that each of the model documents under Sec.
422.107(e)--the SB, Formulary, and combined Provider and Pharmacy
Directory--will require 40 hours of work from CMS staff (a GS-13-5
Federal employee) working at $112.62/hr. The projected cost to the
Federal Government for 120 hours (40 hours x 3 documents) of a GS-13-5
employee is $13,500.
In our experience, a desk review from a contractor is approximately
$10,000 per document and a study of the documents consisting of dually
eligible individuals' interviews costs $25,000 per document. Therefore,
we anticipate the contractor costs for integrated member materials to
be $105,000 ($10,000 x 3 documents + $25,000 x 3 documents). Therefore,
the total cost to the Federal Government of our final rule on
integrating member materials is $118,500.
d. Joint State/CMS Oversight
In section II.A.6.c. of this final rule, we discuss our changes at
Sec. 422.107(e)(3) to better coordinate State and CMS monitoring and
oversight of D-SNPs that operate under the conditions described at
paragraph (e)(1). These coordination mechanisms include sharing
relevant plan information, coordinating program audits, and consulting
on network exception requests. We cannot estimate the cost of
uncoordinated State and Federal oversight, but we believe this
provision would result in a reduction in administrative burden for D-
SNPs. States will have the ability to determine what level of resources
is needed for their related work, and we believe States likely to elect
to use the pathway described in Sec. 422.107(e) would already have
resources invested in coordinating care between MCOs and D-SNPs and
would otherwise make choices that avoid significant increases in State
burden.
At paragraph (e)(3)(i), we are finalizing that CMS would grant
State access to HPMS, or any successor system, to facilitate monitoring
and oversight for a D-SNP with exclusively aligned enrollment in an MA
contract that only includes one or more D-SNPs operating within the
State. Our final rule will require the State officials and employees
accessing HPMS to comply with applicable laws and CMS policies and
standards for access to that system, including keeping information
confidential and maintaining system security. This access will allow
State users the ability to directly view D-SNP information without
requiring or asking the D-SNP to send the information to the States and
would facilitate State-CMS communication on D-SNP performance since
more people are able to review the data and information. MA
organizations may benefit when it reduces the need for States to
separately obtain the same information that is already available in
HPMS.
Providing this HPMS access to State users would require HPMS
contractors to update several modules, including user access and coding
changes needed to implement the necessary access. HPMS contractors
estimated that there would be a one-time update costing approximately
$750,000.
We received no comments on our analysis and are finalizing it
without modification.
4. Attainment of the Maximum Out-of-Pocket (MOOP) Limit (Sec. Sec.
422.100 and 422.101)
As described in section II.A.12. of this final rule, we are
finalizing a revision to which costs are tracked and accumulate toward
the MOOP limit for dually eligible enrollees in MA plans under Sec.
422.101(d) for MA regional plans and Sec. 422.100(f)(4) and (5) for
all other MA plans. Our rule will result in MA organizations that,
under current policy, rarely or never pay cost-sharing above the MOOP
limit for dually eligible enrollees being held responsible for payment
of cost-sharing amounts above the MOOP limit. As a result, our final
rule may lead to an increase in the plan bids relative to the benchmark
for dually eligible individuals who would receive the same cost-sharing
protection provided by the MOOP that is now afforded to non-dually
eligible individuals. However, in the short term, as we note above, MA
organizations may prefer to reduce their profit margins, rather than
raise their bids and thereby reduce the rebate dollars available for
supplemental benefits.
Specifically, we are finalizing that all cost-sharing for Medicare
Parts A and B services accrued under the plan benefit package,
including cost-sharing paid by any applicable secondary or supplemental
insurance (such as through Medicaid, employer(s), and commercial
insurance) and any cost-sharing that remains unpaid (such as because of
limits on Medicaid liability for Medicare cost-sharing under the
lesser-of policy and the cost-sharing protections afforded certain
dually eligible individuals), is counted towards the MOOP limit. This
will ensure that once an enrollee, including a dually eligible
individual with cost-sharing protections, has accrued cost-sharing
(deductibles, coinsurance, or copays) that reaches the MOOP limit, the
MA plan must pay 100 percent of the cost
[[Page 27877]]
of covered Medicare Part A and Part B services. As a result, the State
Medicaid agency will no longer be responsible for any Medicare cost-
sharing for the remainder of the year. In addition, providers serving
dually eligible MA enrollees with Medicare cost-sharing above the MOOP
limit will be fully reimbursed for this cost-sharing for the remainder
of the year. Now, some of that cost-sharing is unpaid because of limits
on State payment of Medicare cost-sharing and prohibitions on
collection of Medicare cost-sharing from certain dually eligible
beneficiaries. We believe this change to the cost-sharing that MA
organizations must use to determine when the MOOP limit has been
reached will mitigate existing provider payment disincentives related
to serving dually eligible MA enrollees. This change will also
eliminate the perceived need for providers to bill dually eligible for
non-paid coinsurance, which although prohibited, is not uncommon. As a
result, this final rule may improve access to providers, including
specialists, who currently limit the number of dually eligible MA
enrollees they serve or decline to contract with D-SNPs. However, we
are unable to quantify the extent to which any improved access would
affect utilization of services by dually eligible MA enrollees and
thereby affect Medicare spending.
Our final rule will increase the amount of MA organization payments
to providers serving dually eligible individuals enrolled in MA plans
after the MOOP limit is reached. As a result, our final rule may lead
to an increase in the plan bids relative to the benchmark for dually
eligible individuals who would receive the same cost-sharing protection
provided by the MOOP that is now afforded non-dually eligible
individuals.
To estimate the costs of the final rule, we started with CY 2022
bid data to estimate the Medicare cost-sharing accrued by dually
eligible beneficiaries with cost-sharing protections (full-benefit
dually eligible individuals and QMB enrollees) above the mandatory MOOP
level ($7,550 in 2022). We estimated the cost of Medicare cost-sharing
above this MOOP level to be on average $22.99 per person per month.
Then we multiplied this amount by 41 percent to reflect the portion of
dually eligible enrollees in MA organizations that already accrue cost-
sharing towards the MOOP level to arrive at $9.43 as the additional per
person per month bid cost. Based on projected MA enrollment of dually
eligible beneficiaries and other factors described in this section,
this final rule would result in additional payments from MA
organizations to health care providers serving high cost dually
eligible MA enrollees, represented in the annual MA bid costs shown in
column 2 of Table 13.
Only a portion of the projected higher MA organization bids for
MOOP benefits represent higher costs to Medicare. MA rebates are
calculated as an average of 68 percent of the difference between the
bids and benchmarks. The additional cost to the Medicare Trust Funds is
estimated to be the remaining 32 percent increase in bids. After
reflecting the change in rebates, the per member per month cost to
Medicare of the final rule is 32 percent of $9.43, or $3.
To project annual costs, we used projected enrollment by dually
eligible beneficiaries in MA plans, as well as Trustee's Report U.S.
Per Capita Costs (USPCC) cost and utilization trends. We also projected
annual increases in the mandatory MOOP amounts under current
regulations. The cost to Medicare based on our final rule will be
partly offset by the savings to Medicaid for payment of Medicare cost-
sharing over the MOOP limit for dually eligible individuals. While some
State Medicaid agencies may save as much as the projected increase in
bid costs per dually eligible MA enrollee in their State, the savings
from this final rule will likely be less for most States. The majority
of States have a ``lesser-of'' policy, under which the State caps its
payment of Medicare cost-sharing so that the sum of Medicare payment
and cost-sharing does not exceed the Medicaid rate for a particular
service. We estimate that, based on average differences in State
Medicaid and Medicare provider contracted rates, 39 percent of the
costs of MOOP coverage under our final rule represents Medicaid
savings. Of those savings, 57 percent accrue to the Federal Government
based on the average FMAP rate of 57 percent. Those annual savings are
shown in column 4 of Table 13.
Finally, 25 percent of the additional Medicare costs that represent
Part B costs (Part B accounts for 60 percent of the costs of Parts A
and B benefits provided by Medicare Advantage organizations) are offset
by beneficiary premiums for Part B, as shown in column 6 of Table 13.
The total Federal costs of the final rule, net of Federal Medicaid
savings and the Part B premium offset are shown in column 7 of Table
13.
We note that there is uncertainty inherent in this analysis. In
using the bid data, we made some assumptions about the extent to which
MA organizations are already counting all cost-sharing in the plan
benefit, including amounts paid by Medicaid programs, towards the MOOP
limit. In addition, MA organizations may prefer to reduce their gain/
loss margins, rather than substantially change their benefit package,
when rebates are reduced in the short term. However, our estimate of
the added bid benefit costs does not assume that MA organizations will
absorb any portion of these costs by reducing their gain/loss margins.
[[Page 27878]]
[GRAPHIC] [TIFF OMITTED] TR09MY22.017
No additional goods or services are being created. Rather, the
money that States would pay or that would remain unpaid for Parts A and
B services is now being paid by the plans and hence by the Trust Fund.
Hence these amounts are considered transfers from the Trust Fund to the
States.
We received no comments on our analysis and are finalizing this
analysis without modification.
5. Special Requirements During a Disaster or Emergency for Medicare
Advantage Plans (Sec. 422.100(m))
We are not scoring the finalized revisions to Sec. 422.100(m)
(Special Requirements during a Disaster or Emergency). As stated in the
February 12, 2015 final rule (80 FR 7953), we recognize that disasters
can create unavoidable disruptions and increased costs for MA
organizations. Our primary goal during a disaster is the provision of
continued and uninterrupted access to medically necessary plan-covered
services for all enrollees. Our intention is to facilitate achievement
of this goal by ensuring that plans facilitate increased access to
providers from whom enrollees in the disaster area may seek high
quality services at in-network cost-sharing. We do not believe that
these temporary and unusual episodes of increased access will
incentivize enrollees in a negative way or result in significant cost
increases for affected MA organizations. We believe this is still
relevant as most of our final revisions clarify our current policy.
More detailed arguments for not scoring are presented after a
discussion of the finalized revisions.
Our final amendments to Sec. 422.100(m) include codifying our
current practice of imposing the special requirements at Sec.
422.100(m)(1) on MA organizations only when there is a disruption of
access to health care as stated in the preamble to the February 12,
2015, final rule (80 FR 7953) and in our responses to comments and
questions from MA organizations and others in administration of the
existing requirement during the pandemic. We receive many questions and
inquiries during a disaster or emergency so we believe this has been
fully complied with; because we are clarifying through notice and
comment rulemaking, these clarifications may result in enhanced
compliance with this requirement and may contribute to reduced costs.
Consequently, we do not believe the proposal to clarify what amounts to
a disruption of access to health care and how the special requirements
only apply when there is a disruption in connection with a declared
emergency or disaster has an impact because it is consistent with
current application of the regulation and MA organizations are already
complying.
We are also finalizing adding a transition period of 30 days
between a disaster or emergency ending and the end of the special
requirements to Sec. 422.100(m)(3). We do not believe these provisions
would create impact. Some MA organizations may already allow
flexibilities to enrollees following a disaster or emergency, such as a
transition period to allow additional time for enrollees to return to
in-network providers. Additionally, many MA plans have experience with
disasters or other changes in cost that arise annually. The nature of
the business cycle shows that MA plans may experience losses due to
short-term disasters or emergencies in certain years, which may be
offset with profits in the following years. Although the cost burden
for a longer disaster or emergency is different than that for a shorter
disaster, our recent experience with the COVID-19 PHE shows that CMS is
aware of this cost burden and as each specific situation develops, is
responding with certain flexibilities.
For these reasons, we are not further scoring the special
requirements during a disaster or emergency provision.
6. Provisions Relating to Past Performance (Sec. Sec. 422.504 and
423.505)
We are finalizing an update the past performance measures at 42 CFR
422.504 and 423.505 in order to better ensure CMS' capacity to limit
new
[[Page 27879]]
applications and applications for service area expansions by low
performers when these new plans and/or service area expansions would
not be in the best interest of the Medicare program. Although there are
no tangible costs to organizations, there may be future costs that may
or may not occur. Organizations that fail to meet CMS' requirements
will have applications denied, resulting in their inability to gain
enrollment, thus losing potential future dollars. On the other hand,
some organizations may actually improve performance, because of the
ramifications of being a poor performer. In these cases, these
organizations will actually be in a better position, potentially having
higher Star Ratings, resulting in additional funds if the organization
receives performance pay for their Star Ratings. The CMS costs are as
follows:
To perform the calculations, we estimate--
++ 2 staff at the GS 13-5 level working at $112.62/hr would have to
perform a total of 24 hours of work (12 hours for each staff); and
++ 2 staff at the GS 14-9 level working at $148.74/hr would have to
perform 10 hours of work.
To notify plans, we estimate that 1 staff at the GS-13-5
level working at $112.62/hr will have to perform 3 hours of work.
The aggregate annual cost to the government is therefore $4,528.
7. Marketing and Communications Requirements on MA and Part D Plans To
Assist Their Enrollees (Sec. Sec. 422.2260, 423.2260, 422.2267, and
423.2267)
We have presented a discussion of collection of information burden
associated with this provision in section IV.B.11. of this final rule.
In this section, we summarize comments on the impacts of these
provisions.
Comment: Comments suggested that the MLI as proposed would impose a
greater burden on plans than we anticipated in the proposed rule.
However, the comments suggesting this did not indicate why this was the
case or what aspect of the burden we failed to address.
Response: On review, we believe our assessment of the burden on
plans as discussed in the Regulatory Impact Assessment of this rule is
accurate. We also believe the burden on plans is acceptable considering
the vital nature of the MLI. As indicated earlier in the preamble and
the response to a previous comment, certain required documents (under
Sec. Sec. 422.2267(e) and 423.2267(e)) are vital to a beneficiary's
understanding of the MA, Part D, and cost plan programs. While those
organizations must provide translation services, the requirement is
less effective if beneficiaries are not aware of the availability of
and right to the translation services. As such, the requirement to
provide the MLI with required documents alerts the beneficiary to
services that may help to prevent misunderstanding of the program and
thus avoid beneficiary harm. Additionally, the MLI replaces OCR's
analogous language assistance tagline requirement that was, based on
scope and size, more burdensome than the MLI. Furthermore, CMS required
plans to deliver the MLI until 2016, when it was replaced by OCR's
analogous requirement. Finally, the MLI improves communication
affecting a variety of health issues, acting as a bridge to education
and awareness. This should ultimately improve beneficiary health and
reduce the cost of beneficiary care.
8. Revisions to the Medical Loss Ratio Reporting Requirements
(Sec. Sec. 422.2460 and 423.2460)
As discussed in section II.G. of this final rule, we are finalizing
our proposal to reinstate the detailed MLR reporting requirements in
effect for CYs 2014 through 2017, and to require separate reporting of
amounts spent on supplemental benefits.
The paperwork burden associated with these provisions, $2.3
million, is estimated in section IV.B.12. of this final rule and
included in the summary table below. There is also additional
anticipated impact to the Federal Government. Most of the impact will
arise from projections of future increases or decreases in MLR
remittances, which are amounts that were originally paid from CMS to MA
organizations or Part D sponsors, which they have to return to CMS
(although the remittances go to the Treasury General Fund and not the
Medicare Trust Funds from which they originated).
In the proposed rule, we explained that if we reinstate and add to
the detailed MLR reporting requirements, as we proposed and are now
finalizing, we will continue to pay a contractor to perform desk
reviews and analyses of the reported data in order to identify
omissions or suspected inaccuracies and to communicate its findings to
MA organizations and Part D sponsors in order to resolve potential
compliance issues, at a level comparable to the amount we paid for
similar services for the contract years for which MA organizations and
Part D sponsors were previously required to submitted detailed MLR data
(that is, contract years 2014 through 2017). As a starting point for
our analysis of the estimated cost increase associated with the
additional desk review and analysis services that we anticipate a
contractor will perform for us starting with contract year 2023 MLR
reporting, we noted that, in the Regulatory Impact Analysis for the
April 2018 final rule which had previously eliminated the detailed MLR
reporting requirements, we assumed that by significantly reducing the
amount of MLR data that MA organizations and Part D sponsors would be
required to report to CMS annually starting with CY 2018, we had also
eliminated the need for CMS to continue paying a contractor
approximately $390,000 each year in connection with desk reviews of the
detailed MLR reports. However, the April 2018 final rule indicated that
the entire amount we paid to our desk review contractor would no longer
be necessary once we stopped collecting detailed MLR data on an annual
basis. As noted in the proposed rule, this has not been our experience,
and in the years since we scaled back the reporting requirements, we
have continued to find value in having our contractor perform MLR-
related administrative tasks. Prior to CY 2018, the funding for these
administrative tasks was included in the $390,000 figure that the April
2018 final rule identified as representing payment for desk reviews
only. These administrative tasks include sending reminders to MA
organizations and Part D Sponsors to submit their MLR data and
attestations by the applicable deadlines, following up with MA
organizations and Part D sponsors about their questions regarding their
MLR submissions, and triaging communications to CMS so that matters
requiring additional input from us are brought to our attention timely.
CMS currently pays the contractor approximately $230,000 per year to
perform these services.
The proposed rule estimated that, if we finalized the detailed MLR
reporting requirements as we had, and if we resume conducting desk
reviews of the detailed MLR data, we will increase the amount that we
pay our contractor for desk reviews and MLR-related administrative
services so that the total payment amount will approximately equal to
the total amount we paid to our contractor for those services prior to
the elimination of the detailed MLR reporting requirements (that is,
$390,000). In other words, we expect that we will need to pay our
contractor an additional $160,000 per year to
[[Page 27880]]
perform MLR desk reviews of the detailed MLR data that CMS will be
requiring MA organizations and Part D sponsors to submit to us on an
annual basis, starting with CY 2023, under the requirements we are now
finalizing.
In addition, CMS currently pays a contractor $300,000 each year for
software development, data management, and technical support related to
MLR reporting. The Regulatory Impact Analysis for the April 2018 final
rule estimated that we would be able to reduce this amount by $100,000
because we would no longer need to maintain and update the MLR
reporting software with validation features, to receive certain data
extract files, or to provide support for desk review functionality.
However, contrary to our expectations, since CY 2018, CMS has continued
to require technical support related to submission of the MLR Data
Forms, such that, even without requiring significant updates to the MLR
reporting software, we have continued to pay a contractor $300,000 for
data management and technical support services. The proposed rule noted
that we anticipate that we will continue to pay this amount for
software development, data management, and technical support related to
MLR reporting if the proposed changes to the MLR reporting requirements
are finalized.
Table 14 presents expected additional payments (transfers) from MA
organizations and Part D sponsors to the Treasury arising because they
are projected to pay more in MLR remittances to the Treasury. These
additional payments are transfers since no goods or services are being
created. The impact to the Medicare Trust Funds is $0.
Based on internal CMS data, the raw average of total remittances
for CYs 2014-2019 is $153 million. As discussed in section II.G.2. of
this final rule, when CMS collected detailed MLR data pursuant to the
reporting requirements that were in effect for CYs 2014-2017, the desk
review contractor frequently detected potential errors or omissions in
the reported data, which were brought to the attention of the MA
organization or Part D sponsor that submitted the data, with a request
to explain or correct the data. This process often resulted in the MA
organization or Part D sponsor finding it necessary to resubmit the
contract's MLR Report after revising the figures in the Report or
attaching supplementary materials to explain details of its expense
allocation methodology. A summary of the MLR remittances for the
initial MLR submission versus the final MLR submission for CYs 2014-
2017 can be found in Table 14. These 4 years represent the time period
when detailed MLR data was submitted to CMS and subjected to desk
reviews.
[GRAPHIC] [TIFF OMITTED] TR09MY22.018
The percent change in MLR remittances increased on average 6.7
percent between the initial and final MLR submissions during the MLR
desk review periods for CYs 2014-2017. We anticipate that, if
finalized, the amendments to Sec. Sec. 422.2460 and 423.2460 would
increase future remittance amounts by an average of 6.7 percent due to
CMS receiving detailed MLR data and conducting desk reviews of the
detailed MLR data.
To estimate the amount of additional remittances under the
regulations we are adopting in this final rule, we evaluated the MLR
for those contracts that failed to meet the 85 percent minimum MLR
requirement for CYs 2016-2019. The MLR remittances for CYs 2014 and
2015 were much lower than those for the more recent years and so these
older years were excluded from the base period that is used to project
future remittances. For CYs 2016 and 2017, we examined the MLR prior to
desk reviews, or in the Initial MLR Submission. For CYs 2018 and 2019,
when there were not desk reviews of detailed MLR data, we examined the
finalized total MLR remittances. The average remittances for these
years (CYs 2016 and 2017 prior to desk reviews and CYs 2018 and 2019)
equaled $204.0 million. In order to project the increase in remittances
for CYs 2023-2032, the $204.0 million was inflated using estimated
enrollment and per capita increases based on Tables IV.C1. and IV.C3.
of the 2021 Medicare Trustees Report, with ordinary inflation (Table
II.D1. of the 2021 Medicare Trustees Report) carved out of the
estimates. We continued to assume that remittance amounts would
increase by 6.7 percent for the entire projection period due to the
restatement of desk reviews of detailed MLR data, after the application
of enrollment and per capita increases.
Table 15 is based on data from the Office of the Actuary, some of
which may be found in the annual Trustees Report. The calculations
started with a $13.7 million additional cost to MA organizations and
Part D sponsors in CY
[[Page 27881]]
2019 (This amount is not shown in the table which is a 10 year table
starting from CY 2023). The cost in each successive contract year is
obtained by adding the MA enrollment increases expressed as a
percentage in column (2), then adding the average annual per capita
increase in expenditures, expressed as a percentage in column (3), and
then dividing by ordinary inflation expressed as a percentage column
(4). The calculations can be illustrated starting with the CY 2023 net
cost ($20.3 million) and deriving the $21.5 million CY 2024 cost. We
have $20.3 million * (1+3.8%) * (1+4.8%) / (1+2.5%) = $21.5 million.
[GRAPHIC] [TIFF OMITTED] TR09MY22.019
We are finalizing our impact analysis without change.
9. Pharmacy Price Concessions in the Part D Negotiated Price
(Sec. Sec. 423.100 and 423.2305)
As discussed in section II.H.3. of this final rule, at Sec. Sec.
423.100 and 423.2305, we are finalizing our proposal to adopt a new
definition of ``negotiated price'' to include all pharmacy price
concessions received by the plan sponsor for a covered Part D drug, and
to reflect the lowest possible reimbursement a network pharmacy will
receive, in total, for a particular drug through all phases of the Part
D benefit In response to comments, we will retain the current
regulatory definition of ``negotiated prices'' for 2023 and delete the
current definition of ``negotiated prices'' (in the plural) and add a
definition of ``negotiated price'' (in the singular) to make clear that
a negotiated price can be set for each covered Part D drug, and the
amount of the pharmacy price concessions may differ on a drug by drug
basis for 2024 and thereafter. We are finalizing the definition of
``negotiated price'' that was proposed and that is intended to ensure
that the prices available to Part D enrollees at the point of sale are
inclusive of all pharmacy price concessions beginning with plan year
2024 onward. The requirement to apply pharmacy price concessions the
negotiated price will apply in all phases of the Part D benefit.
The provision would have several impacts on prescription drug costs
for government, beneficiaries, Part D sponsors, and manufacturers.
Tables 16, 17, and 18 summarize these impacts, which are discussed in
more detail in the narrative that follows. We note that this provision
would also have one-time administrative costs for Part D sponsors. This
cost is discussed in the Collection of Information section of this
final rule.
a. Impact on Prescription Drug Costs for Government, Beneficiaries,
Part D Sponsors, and Manufacturers
Tables 16, 17, and 18 summarize the 10-year impacts we have modeled
for requiring that sponsors apply all pharmacy price concessions to the
negotiated price in all phases of the Part D benefit. These tables
estimate a modest potential indirect effect on pharmacy payment as a
result of pharmacies' independent business decisions. Specifically, the
estimates assume that pharmacies will seek to retain 2 percent of the
existing pharmacy price concessions they negotiate with plan sponsors
and other third parties to compensate for pricing risk and differences
in cash flow and we assume that these business decisions will result in
a slight increase in pharmacy payments of 0.2 percent of Part D gross
drug cost.
Tables 16, 17, and 18 reflect the impact of these provisions to
enrollees, manufacturer gap discounts, and the Federal Government
respectively. Overall beneficiaries are expected to save $26.5 billion,
manufacturers pay $16.8 billion less in gap discounts, and the
government cost is expected to increase $46.8 billion dollars over
2024-2032.
Under this provision, we anticipate that beneficiaries would see
lower prices at the pharmacy point-of-sale and on Plan Finder for most
drugs, beginning immediately in the year the proposed change would take
effect (2024). (This is summarized in Table 16 in the row ``Beneficiary
Costs'' which reflects a sum of the rows ``Cost-sharing'' and
``Premiums.'') Lower point-of-sale prices would result directly in
lower cost-sharing costs for non-low-income beneficiaries, and on
average we expect these cost-sharing decreases would exceed the premium
increases. While the amounts will vary
[[Page 27882]]
depending on an individual beneficiary's prescriptions, plan sponsor
benefits, and contractual arrangements, we expect more than half of the
non-low-income, non-employer group beneficiaries to see lower total
costs, inclusive of cost-sharing decreases and premium increases. For
example, a beneficiary who takes no medications will probably see a
premium increase and no cost-sharing decreases, whereas a beneficiary
who takes several medications each month is likely to see cost-sharing
decreases that are greater than the premium increase. For low-income
beneficiaries, whose out-of-pocket costs are funded through Medicare's
low-income cost-sharing payments, cost-sharing savings resulting from
lower point-of-sale prices would accrue to the Government. Plan
premiums would likely increase as a result of the change to the
definition of negotiated price--if pharmacy price concessions are
required to be passed through to beneficiaries at the point of sale,
fewer such concessions could be apportioned to reduce plan liability in
the bid, which would have the effect of increasing the cost of coverage
under the plan. At the same time, the reduction in cost-sharing
obligations would be large enough to lower beneficiaries' overall out-
of-pocket costs on average.
The increasing cost of coverage under Part D plans as a result of
pharmacy price concessions being applied at the point of sale as
proposed would likely have a more significant impact on Government
costs, which would increase overall due to the significant growth in
Medicare's direct funding of plan premiums and low-income premium
payments. However, partially offsetting the increase in direct funding
and low-income premium payment costs for the government would be
decreases in Medicare's reinsurance and low-income cost-sharing
payments. Decreases in Medicare's reinsurance payments result when
lower negotiated prices slow down the progression of beneficiaries
through the Part D benefit and into the catastrophic phase, and when
the Government's 80 percent reinsurance payments for allowable drug
costs incurred in the catastrophic phase are based on lower negotiated
prices. Similarly, low-income cost-sharing payments would decrease if
beneficiary cost-sharing obligations decline due to the reduction in
prices at the point of sale. Finally, the slower progression of
beneficiaries through the Part D benefit would also have the effect of
reducing aggregate manufacturer gap discount payments as fewer
beneficiaries would enter the coverage gap phase or progress entirely
through it. These effects are presented in Table 18.
These impacts assume that the definition of ``negotiated price''
would apply for Part D drugs in all phases of the Part D benefit
(applicable drugs in the coverage gap phase of the benefit). While we
initially proposed excluding the coverage gap phase from this policy,
we are finalizing the alternative proposal which applies this policy to
the entire benefit. This policy increases beneficiary savings and
government costs relative to the initial proposal, but simplifies
administration and provides greater transparency to beneficiaries.
Table 16 shows the increased total savings to enrollees which is
projected to be $26.5 billion for the period from 2024-2032. As
explained in the previous narratives, the total savings to enrollees'
accounts for both cost-sharing savings and expected premium increases.
[[Page 27883]]
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[[Page 27885]]
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We received comments on our impact analysis.
Comment: A commenter stated that while this final rule is a step in
the right direction CMS must conduct a complete regulatory impact
analysis of how this
[[Page 27886]]
rule affects all types of specialty pharmacies. There was concern that
because of the more expensive drugs sold by specialty pharmacies that
this final rule would not meet their needs even though in aggregate it
improved the program.
Response: CMS does not collect data on pharmacy price concessions
at the pharmacy level, and this information is not publicly available.
In order to estimate, for example, the effects on specialty pharmacies
in particular, we would need to speculate on the relative difference
between price concessions to those pharmacies versus retail pharmacies.
As we do not have any basis for developing this difference, it is not
possible to meaningfully analyze impacts by type of pharmacy.
Comment: A commenter offered that in addition to the financial
impacts described in the rule, there may be additional improvements in
health outcomes and medical costs resulting from improved medication
adherence as a result of lower negotiated prices.
Response: We agree that it is possible that there will be effects
on health outcomes. We do not have adequate information to quantify
these impacts at this time because the actual cost-sharing effects will
vary considerably with how plan sponsors reflect this in their benefit
design. For example, it is possible that the plans will concentrate
these effects on certain categories of drugs, and many health effects
may take several years to realize.
Comment: We received several comments requesting that the financial
impacts include analysis by type of retail pharmacy.
Response: We do not have sufficient data to determine impacts by
type of pharmacy, as the pharmacy price concessions are not reported in
connection to a particular pharmacy or type of pharmacy.
Comment: A commenter stated that CMS did not disclose their
assumptions in developing the tables. These would include future Part D
membership, trends in drug utilization, drug cost, network contracting,
manufacturer rebates, drug mix, benefit designs, and general inflation.
The commenter noted that CMS did disclose that they assumed pharmacies
would seek to retain 2 percent of the existing pharmacy concessions for
risk and cashflow. Most importantly, CMS did not disclose how lowest
reimbursement was applied in the model.
Response: We modeled the lowest reimbursement as the negotiated
price, rather than having bonus payments to pharmacies that would lower
DIR and therefore lead to higher premiums. Aggregate forecasts for the
Part D program payments, including cost and DIR trends similar to those
used in our analysis, may be found in the Medicare Trustees Report for
2021, a publicly available resource (https://www.cms.gov/files/document/2021-medicare-trustees-report.pdf). More detailed assumptions
are based on CMS internal data that is not public, and if made public
could adversely affect Part D bid submissions, such as drug mix or
beneficiary progression through the benefit. For example, sharing the
assumptions on the projected mix of price concessions by drug could
allow sponsors to infer whether their current mix presents
opportunities for greater price concessions on certain drugs.
Comment: Several commenters commissioned an independent actuarial
analysis to gain additional insight into the proposed rule's potential
impacts. The actuary performing the independent analysis believed that
the CMS assumption of pharmacies negotiating 2 percent of the
concessions would produce a different value than what was shown in the
proposed rule.
Response: We assumed that 2 percent of only the existing pharmacy
price concessions impacted by this policy are reflected as an offset to
pharmacies for the change in cashflow and risk. As the proposed rule
specified that the new definition for the term ``negotiated price''
would not apply in the coverage gap, we did not apply the 2 percent
assumption to price concessions in the coverage gap in the proposed
rule. This difference between applying the 2 percent assumption to the
entire benefit or excluding the coverage gap explains the discrepancy.
As the proposed rule specified that the new definition for the term
``negotiated price'' would not apply in the coverage gap, we did not
apply the 2 percent assumption to price concessions in the coverage gap
in the proposed rule.
Comment: Several commenters commissioned an independent actuarial
analysis to gain additional insight into the proposed rule's potential
impacts. The actuary performing the independent analysis noted that
premium is an important factor--perhaps the most important factor--in
the purchase decisions of members.
Response: We agree that Part D sponsors are highly motivated to
keep premiums low. CMS agrees that premiums are a key factor
influencing insurance purchasing decisions and we have taken premium
levels into account in our analysis.
Comment: A commenter questioned the difference between the
calculations provided in the Alternative Analysis section of the
proposed rule (section V.E.2.) and the calculations provided in the
narrative in section V.D.8. of the proposed rule, the difference
between them being inclusion of the coverage gap. The commenter
questioned the validity of assuming a 6% drop in manufacturer cost
between the two tables.
Response: We thank the commenter for their feedback. The
manufacturer cost is impacted not only directly by the change in
negotiated price used for calculating the coverage gap discount on a
particular drug, but also by changing the amount of spending in the gap
phase of the benefit. As negotiated prices decrease from this policy,
there is less spending in the coverage gap phase of the benefit.
Comment: A commenter provided an alternative analysis that
considered the effects of an incentive payment of 4.3 percent of drug
cost to the pharmacies after the point of sale, rather than the net
payment to the pharmacy paid at the point of sale assumed in the RIA.
They noted that this is another possible payment arrangement under the
proposed rule.
Response: While an interesting example, we believe this approach is
unlikely. A bonus payment to pharmacies would further increase premiums
because it would decrease the DIR paid to the plan sponsor. Recent data
indicate an increase in DIR of 512 percent between 2009 and 2018, which
suggests plan sponsors are very focused on increasing DIR.
Comment: A few commenters commissioned an independent actuarial
analysis to gain additional insight into the proposed rule's potential
impacts. These analyses assumed pharmacy DIR was applied at the POS in
all phases including the coverage gap. The results were generally
consistent with the direction and magnitude of CMS's overall findings
by stakeholder. The independent analyses assumed no behavior changes
among stakeholders, which, if considered, could have a material impact
on the estimates. The independent analyses indicated that at best 29
percent of beneficiaries may see cost-sharing savings that exceed their
increases in premiums. By contrast, at least 38 percent of
beneficiaries may realize higher net costs, as their premium increases
typically outweigh their cost-sharing savings, and 33 percent (low
income enrollees) may see little or no change in OOP costs.
Response: We appreciate the feedback and additional analysis shared
in this comment. As noted by the commenter, the overall magnitude and
direction of
[[Page 27887]]
cost impacts is broadly similar to the results in the regulatory impact
analysis. We agree that low income beneficiaries will not see
significant impacts from the rule. We do not wholly agree with the
percentages of beneficiaries described in the analysis. For non-low
income beneficiaries, we disagree with the characterization in the
comment that no beneficiaries ending in the deductible phase will
benefit. On the contrary, those beneficiaries who are nearly at the end
of the deductible could see substantial cost decreases as they are
paying the full negotiated price of any drug in that phase. This is
also implicitly acknowledged in the independent analysis with the
caveat that beneficiaries in this phase would ``typically'' not see a
cost decrease.
We are finalizing our impact analysis without change. We
appreciated the additional analysis provided by commenters. For the
more complete analysis providing a range of potential future impacts,
we note that our estimates of government cost are within the range they
estimated. We believe the independent analysis largely confirms our
results and the majority of differences are due to more granular data
in the CMS analysis.
E. Alternatives Considered Analysis
The major drivers of cost and transfers in this rule include the
MLR and Part D pharmacy price concessions provisions. The aggregate
impact of each of these over 10 years exceeds $100 million. Alternative
analysis is provided below for these provisions.
1. Alternatives Related to the Medical Loss Ratio Reporting
Requirements (42 CFR 422.2460, 423.2460)
As an alternative to our proposal to reinstate and add to the
detailed MLR reporting requirements in effect for CYs 2014-2017, we
considered continuing to collect minimal MLR data, as required under
current Sec. Sec. 422.2460 and 423.2460, and to use our authority
under Sec. Sec. 422.2480 and 423.2480 to require that entities
selected for MLR audits provide us with more detailed MLR data, and
with any underlying records that can be used to substantiate amounts
included in the calculation of each contract's MLR and the amount of
any remittance owed to CMS. In addition to their primary function as a
mechanism for obtaining information that can be used to validate
audited MA organizations' and Part D sponsors' compliance with the
applicable requirements for calculating and reporting MLR information
to CMS, we believe that audits are in general well-suited for examining
matters such as where and how calculation errors occur, and identifying
areas where we might be able to reduce the incidence of errors through
revisions to our regulations and guidance. By contrast, desk reviews of
detailed MLR data are more useful for quickly reviewing large amounts
of data in order to identify possible errors or omissions that might
affect the MLR calculation, and for identifying market-wide trends in
how MA organizations and Part D sponsors might be adjusting their
expenditures in response to rule or policy changes that affect how MLRs
are calculated. Given CMS' interest in better understanding how MA
organizations and Part D sponsors' are calculating their MLRs in
general, and in flagging areas where calculation errors might be
impacting the MLR calculation so that they can be addressed promptly,
we decided that our goals would be better served if we were to require
MA organizations and Part D sponsors to report detailed MLR data to us
directly, and to subject that data to desk reviews, rather than to
attempt to collect the same or similar MLR data using our audit
authority.
An additional reason we chose at this time not to rely solely on
MLR audits to identify errors in MA organizations' and Part D sponsors'
MLR submissions is that we believe this approach would result in a
greater burden for the Federal Government and cumulatively across all
MA organizations and Part D sponsors than would the proposed
reinstatement of the detailed MLR reporting requirements. We note that,
in the April 2018 final rule, CMS indicated that we did not believe
that eliminating the detailed MLR reporting requirements would weaken
MLR compliance oversight, and in connection with this we noted that had
not changed our authority under Sec. 422.2480 or Sec. 423.2480 to
conduct selected audit reviews of the data reported under Sec. Sec.
422.2460 and 423.2460 for purposes of determining that remittance
amounts under Sec. Sec. 422.2410(b) and 423.2410(b) and sanctions
under Sec. Sec. 422.2410(c) and (d) and 423.2410(c) and (d) were
accurately calculated, reported, and applied (73 FR 16675). However, in
that rule, we did not account for the increased cost to CMS, or the
additional cumulative burden across all MA organization and Part D
sponsors, if we were to scale up our MLR audit operations to a
sufficient degree to perform effective compliance oversight in the
absence of detailed MLR reporting requirements.
Based on CMS' historical costs in auditing MLRs, we estimate that
individual audits would cost the government approximately $71,000 per
audit. We anticipate that, in order to effectively monitor MLR
compliance using audits, we would need to audit one-third of MA and
Part D contracts, or an average of 194 contracts per year, at a cost of
approximately $13.8 million per year. By contrast, we estimate that the
proposed reinstatement of the detailed MLR reporting requirements would
result in a relatively small increase in burden for MA organizations
and Part D sponsors, as we expect that they would already need to be
tracking most of the information included in the detailed MLR Report
template in order to calculate their MLRs in accordance with current
requirements.
2. Alternatives Related to Pharmacy Price Concessions in the Part D
Negotiated Price (Sec. 423.100)
As discussed in section II.H.3. of this final rule, we proposed to
adopt a new definition of ``negotiated price'' to include all pharmacy
price concessions received by the plan sponsor for a covered Part D
drug, and to reflect the lowest possible reimbursement a network
pharmacy will receive, in total, for a particular drug.
In the analysis provided in section IV.D.8. of this final rule, we
estimate the impact of our proposal to require application of pharmacy
price concessions to the negotiated price at the point-of-sale in all
phases of the Part D benefit. In this alternative analysis, we consider
the added impact of only requiring application of pharmacy price
concessions to the negotiated price of applicable drugs outside of the
coverage gap phase.
This alternative proposal would be more complex, but produces a
smaller premium impact. Given that Part D sponsors are highly focused
on premium targets for their competitive position, we would expect the
pharmacy price concessions to be held back from the point of sale
transaction and reimbursed at a later date.
Table 19 shows decreased savings to pharmaceutical manufacturers if
pharmacy price concessions are applied to applicable drugs in the
coverage gap.
[[Page 27888]]
[GRAPHIC] [TIFF OMITTED] TR09MY22.023
Table 20 shows the impact to the Government. As explained in the
narrative of section IV.D.8. of this final rule, the total Government
cost reflects four separate components including direct payments,
reinsurance, low
[[Page 27889]]
income cost-sharing payments, and low-income premium payments. We note,
that this cost is a transfer. More specifically, the identical Rx that
was formerly paid for by enrollees is now being paid for by the
Government.
[GRAPHIC] [TIFF OMITTED] TR09MY22.024
F. Accounting Statement and Table
In accordance with OMB Circular A-4, Table 21 depicts an accounting
statement summarizing the assessment of the benefits, costs, and
transfers associated with this regulatory action.
[GRAPHIC] [TIFF OMITTED] TR09MY22.025
Table 21 is based on the summary of costs presented in Tables 22
and 23. Tables 22 and 23 reflect all costs in both the COI and RIA
sections. This summary table allocates impact by year and by whether it
is a cost or transfer (no provisions of this rule have a savings
impact). In all tables, costs are expressed as positive amounts.
However, in the transfer row negative numbers correspond to
payments by the government (which in the provisions of this rule may
come from the Treasury or Medicare Trust Fund) while positive
[[Page 27890]]
numbers indicate savings. There are 3 transfers in this rule: The MOOP
provision is a cost to the Medicare Trust Fund (TF) (the corresponding
gain to States and providers of duals in equal amounts is not shown in
Tables 22 and 23). The MLR provision is a savings to the Treasury (the
corresponding loss in equal amount to the plans is not shown in the
Tables 22 and 23). The pharmacy price concessions provision incurs a
cost to the Medicare Trust Fund, and savings to enrollees and
manufacturers. However, there is a small difference between what the
Trust Fund pays and what beneficiaries and manufacturers gain. The
difference is due to the assumption that pharmacies will seek to retain
a small portion of the current DIR to compensate for differences in
cash flow and pricing risk. Therefore, Tables 22 and 23 list separately
the impacts on the Trust Fund, the enrollees, and the manufacturers.
However, the row ``Total transfers from the Trust Fund'' only reflects
the sum of the Trust Fund payments for the pharmacy price concessions
provision and the MOOP provision (it does not offset this amount by the
savings to enrollees and manufacturers). Similarly, Table 21 reflects
separately, annualized transfers to the Treasury and annualized
transfers from the Trust Fund for the MOOP and pharmacy price
concessions provision. Thus, complete detailed amounts on all
provisions may be found in Tables 22 and 23.
BILLING CODE 4120-01-P
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[[Page 27892]]
[GRAPHIC] [TIFF OMITTED] TR09MY22.027
[[Page 27893]]
BILLING CODE 4120-01-C
F. Conclusion
The previous analysis, together with the preceding preamble,
provides an RIA. This rule at an annualized average cost of 3.1
million, during the first 10 years after implementation, provides
efficiencies and improves marketing and communications, past
performance measures, Star Ratings, network adequacy, medical loss
ratio reporting, requirements during disasters or public emergencies,
D-SNP program, MOOP, as well as cost efficiencies to enrollees for
prescription drugs. Additionally, there are a variety of transfers to
and from the Federal Government (the Medicare Trust Fund and the United
States Treasury) which in aggregate will increase dollar spending by
$4.3 to $4.5 billion annually. We estimate that this rule generates
$2.0 million in annualized costs, discounted at 7 percent relative to
year 2016, over an infinite time horizon.
In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on April 22, 2022.
List of Subjects
42 CFR Part 417
Administrative practice and procedure, Grant programs--health,
Health care, Health insurance, Health maintenance organizations (HMO),
Loan programs--health, Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 422
Administrative practice and procedure, Health facilities, Health
maintenance organizations (HMO), Medicare, Penalties, Privacy,
Reporting and recordkeeping requirements.
42 CFR Part 423
Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations (HMO), Medicare,
Penalties, Privacy, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the interim rule
amendments to 42 CFR 417.472, 422.152, 422.166, 422.252, 423.182, and
423.186, which published at 85 FR 19230 (April 6, 2020) and 85 FR 54820
(September 2, 2020), are adopted as final and the Centers for Medicare
& Medicaid Services further amends 42 CFR chapter IV as set forth
below:
PART 422--MEDICARE ADVANTAGE PROGRAM
0
1. The authority citation for part 422 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
2. Section 422.2 is amended by--
0
a. In the definition of ``Fully integrated dual eligible special needs
plan'':
0
i. Revising paragraphs (2) and (3);
0
ii. Removing the period at the end of paragraph (4) and adding a
semicolon in its place; and
0
iii. Adding paragraphs (5) and (6); and
0
b. Revising the definition of ``Highly integrated dual eligible special
needs plan''.
The revisions and additions read as follows:
Sec. 422.2 Definitions.
* * * * *
Fully integrated dual eligible special needs plan * * *
(2) Whose capitated contract with the State Medicaid agency
requires coverage of the following benefits, to the extent Medicaid
coverage of such benefits is available to individuals eligible to
enroll in a fully integrated dual eligible special needs plan (FIDE
SNP) in the State, except as approved by CMS under Sec. 422.107(g) and
(h):
(i) Primary care and acute care, and for plan year 2025 and
subsequent years including Medicare cost-sharing as defined in section
1905(p)(3)(B), (C), and (D) of the Act, without regard to the
limitation of that definition to qualified Medicare beneficiaries;
(ii) Long-term services and supports, including coverage of nursing
facility services for a period of at least 180 days during the plan
year;
(iii) For plan year 2025 and subsequent years, behavioral health
services;
(iv) For plan year 2025 and subsequent years, home health services
as defined in Sec. 440.70 of this chapter; and
(v) For plan year 2025 and subsequent years, medical supplies,
equipment, and appliances, as described in Sec. 440.70(b)(3) of this
chapter;
(3) That coordinates the delivery of covered Medicare and Medicaid
services using aligned care management and specialty care network
methods for high-risk beneficiaries;
* * * * *
(5) For plan year 2025 and subsequent years, that has exclusively
aligned enrollment; and
(6) For plan year 2025 and subsequent years, whose capitated
contract with the State Medicaid agency covers the entire service area
for the dual eligible special needs plan.
* * * * *
Highly integrated dual eligible special needs plan means a dual
eligible special needs plan offered by an MA organization that provides
coverage of Medicaid benefits under a capitated contract that meets the
following requirements--
(1) The capitated contract is between the State Medicaid agency
and--
(i) The MA organization; or
(ii) The MA organization's parent organization, or another entity
that is owned and controlled by its parent organization;
(2) The capitated contract requires coverage of the following
benefits, to the extent Medicaid coverage of such benefits is available
to individuals eligible to enroll in a highly integrated dual eligible
special needs plan (HIDE SNP) in the State, except as approved by CMS
under Sec. 422.107(g) or (h):
(i) Long-term services and supports, including community-based
long-term services and supports and some days of coverage of nursing
facility services during the plan year; or
(ii) Behavioral health services; and
(3) For plan year 2025 and subsequent years, the capitated contract
covers the entire service area for the dual eligible special needs
plan.
* * * * *
0
3. Section 422.100 is amended by--
0
a. In paragraph (f)(4), removing the word ``incurred'' and adding in
its place the word ``accrued''.
0
b. In paragraph (f)(5)(iii), removing the word ``incurred'' and adding
in its place the word ``accrued''.
0
c. Revising paragraphs (m)(1) introductory text and (m)(2) introductory
text;
0
d. Removing paragraph (m)(2)(ii)(B);
0
e. Redesignating paragraph (m)(2)(ii)(A) as paragraph (m)(2)(ii);
0
f. Revising paragraphs (m)(3) and (4) and (m)(5)(i); and
0
g. Adding paragraph (m)(6).
The revisions and addition read as follows:
Sec. 422.100 General requirements.
* * * * *
(m) * * *
(1) Access to covered benefits during disasters or emergencies.
When a disaster or emergency is declared as described in paragraph
(m)(2) of this section and there is disruption of access to health care
as described in paragraph (m)(6) of this section, an MA organization
offering an MA plan must, until the end date specified in paragraph
(m)(3) of this section occurs,
[[Page 27894]]
ensure access to covered benefits in the following manner:
* * * * *
(2) Declarations of disasters or emergencies. A declaration of a
disaster or emergency will identify the geographic area affected by the
event and may be made as one of the following:
* * * * *
(3) End of the special requirements for the disaster or emergency.
An MA organization must continue furnishing access to benefits as
specified in paragraphs (m)(1)(i) through (iv) of this section for 30
days after the conditions described in paragraph (m)(3)(i) or (ii) of
this section occur with respect to all applicable emergencies or after
the condition described in paragraph (m)(3)(iii) of this section
occurs, whichever is earlier:
(i) All sources that declared a disaster or emergency that include
the service area declare an end.
(ii) No end date was identified as described in paragraph (m)(3)(i)
of this section, and all applicable emergencies or disasters declared
for the area have ended, including through expiration of the
declaration or any renewal of such declaration.
(iii) There is no longer a disruption of access to health care as
defined in paragraph (m)(6) of this section.
(4) MA plans unable to operate. An MA plan that cannot resume
normal operations by the end of the disaster or emergency as described
in paragraph (m)(3)(i) or (ii) of this section must notify CMS.
(5) * * *
(i) Indicate the terms and conditions of payment during the
disaster or emergency for non-contracted providers furnishing benefits
to plan enrollees residing in the affected service area(s).
* * * * *
(6) Disruption of access to health care. A disruption of access to
health care for the purpose of paragraph (m) of this section is an
interruption or interference in the service area (as defined at Sec.
422.2) such that enrollees do not have the ability to access contracted
providers or contracted providers do not have the ability to provide
needed services to enrollees, resulting in MA plans failing to meet the
normal prevailing patterns of community health care delivery in the
service area under Sec. 422.112(a).
0
4. Section 422.101 is amended by--
0
a. In paragraph (d)(4), removing ``(d)(3)'' and ``incurred'' and adding
in their places ``(3)'' and ``accrued'', respectively.
0
b. Revising paragraph (f)(1)(i).
The revision reads as follows:
Sec. 422.101 Requirements relating to basic benefits.
* * * * *
(f) * * *
(1) * * *
(i) Conduct a comprehensive initial health risk assessment of the
individual's physical, psychosocial, and functional needs as well as
annual health risk reassessment, using a comprehensive risk assessment
tool that CMS may review during oversight activities, and ensure that
the results from the initial assessment and annual reassessment
conducted for each individual enrolled in the plan are addressed in the
individuals' individualized care plan as required under paragraph
(f)(1)(ii) of this section. Beginning in 2024, the comprehensive risk
assessment tool must include one or more questions from a list of
screening instruments specified by CMS in sub-regulatory guidance on
each of the following domains:
(A) Housing stability;
(B) Food security; and
(C) Access to transportation.
* * * * *
0
5. Section 422.107 is amended by--
0
a. Revising the section heading and paragraphs (c)(6) and (d);
0
b. Redesignating paragraph (e) as paragraph (i); and
0
c. Adding new paragraph (e) and paragraphs (f) through (h).
The revisions and additions read as follows:
Sec. 422.107 Requirements for dual eligible special needs plans.
* * * * *
(c) * * *
(6) The verification of an enrollee's Medicaid eligibility.
* * * * *
(d) Additional minimum contract requirement. (1) For any dual
eligible special needs plan that is not a fully integrated or highly
integrated dual eligible special needs plan, except as specified in
paragraph (d)(2) of this section, the contract must also stipulate
that, for the purpose of coordinating Medicare and Medicaid-covered
services between settings of care, the SNP notifies, or arranges for
another entity or entities to notify, the State Medicaid agency,
individuals or entities designated by the State Medicaid agency, or
both, of hospital and skilled nursing facility admissions for at least
one group of high-risk full-benefit dual eligible individuals,
identified by the State Medicaid agency. The State Medicaid agency must
establish the timeframe(s) and method(s) by which notice is provided.
In the event that a SNP authorizes another entity or entities to
perform this notification, the SNP must retain responsibility for
complying with the requirement in this paragraph (d)(1).
(2) For a dual eligible special needs plan that, under the terms of
its contract with the State Medicaid agency, only enrolls beneficiaries
who are not entitled to full medical assistance under a State plan
under title XIX of the Act, paragraph (d)(1) of this section does not
apply if the SNP operates under the same parent organization and in the
same service area as a dual eligible special needs plan limited to
beneficiaries with full medical assistance under a State plan under
title XIX of the Act that meets the requirements at paragraph (d)(1) of
this section.
(e) Additional opportunities in certain integrated care programs.
(1) CMS facilitates operationalization as described in paragraphs
(e)(2) and (3) of this section if a State Medicaid agency requires MA
organizations offering dual eligible special needs plans with
exclusively aligned enrollment to do both of the following:
(i) Apply for, and seek CMS approval to establish and maintain, one
or more MA contracts that only include one or more dual eligible
special needs plans with a service area limited to that State.
(ii) Use required materials that integrate Medicare and Medicaid
content, including at a minimum the Summary of Benefits, Formulary, and
combined Provider and Pharmacy Directory that meets Medicare and
Medicaid managed care requirements consistent with applicable
regulations in parts 422, 423, and 438 of this chapter.
(2) The requirements, processes, and procedures applicable to dual
eligible special needs plans and the MA program, including for
applications, bids, and contracting procedures under Sec. Sec. 422.250
through 422.530, remain applicable. Because implementation of the
contract provisions described in paragraph (e)(1) of this section may
require administrative steps that cannot be completed between reviewing
the contract and the start of the plan year, CMS begins good faith work
following receipt of a letter from the State Medicaid agency indicating
intent to include the provisions described in paragraph (e)(1) of this
section in a future contract year and collaborate with CMS on
implementation.
(3) When the conditions of paragraph (e)(1) of this section are
met--
(i) Following a State request, CMS grants access for State Medicaid
agency officials to the Health Plan Management
[[Page 27895]]
System (HPMS) (or its successor) for purposes of oversight and
information-sharing related to the MA contract(s) described in
paragraph (e)(1)(i) of this section, as long as State Medicaid agency
officials agree to protect the proprietary nature of information to
which the State Medicaid agency may not otherwise have direct access.
State access to the Health Plan Management System (or its successor) is
subject to compliance with HHS and CMS policies and standards and with
applicable laws in the use of HPMS data and the system's functionality.
CMS may terminate a State official's access to the Health Plan
Management System (or its successor) if any policy is violated or if
information is not adequately protected; and
(ii) CMS coordinates with States on program audits, including
information-sharing on major audit findings and coordination of audits
schedules for the D-SNPs subject to paragraph (e)(1) of this section.
(f) Enrollee advisory committee. Any MA organization offering one
or more D-SNPs in a State must establish and maintain one or more
enrollee advisory committees that serve the D-SNPs offered by the MA
organization in that State.
(1) The enrollee advisory committee must include at least a
reasonably representative sample of the population enrolled in the dual
eligible special needs plan or plans, or other individuals representing
those enrollees, and solicit input on, among other topics, ways to
improve access to covered services, coordination of services, and
health equity for underserved populations.
(2) The enrollee advisory committee may also advise managed care
plans that serve D-SNP enrollees under title XIX of the Act offered by
the same parent organization as the MA organization offering the D-SNP.
(g) Permissible carve-outs of long-term services and supports for
FIDE SNPs and HIDE SNPs. A plan meets the FIDE SNP or HIDE SNP
definition at Sec. 422.2, even if its contract with the State Medicaid
agency for the provision of services under title XIX of the Act has
carve-outs of long-term services and supports, as approved by CMS,
that--
(1) Apply primarily to a minority of the beneficiaries eligible to
enroll in the dual eligible special needs plan who use long-term
services and supports; or
(2) Constitute a small part of the total scope of long-term
services and supports provided to the majority of beneficiaries
eligible to enroll in the dual eligible special needs plan.
(h) Permissible carve-outs of behavioral health services for FIDE
SNPs and HIDE SNPs. A plan meets the FIDE SNP or HIDE SNP definition at
Sec. 422.2, even if its contract with the State Medicaid agency for
the provision of services under title XIX of the Act has carve-outs of
behavioral health services, as approved by CMS, that--
(1) Apply primarily to a minority of the beneficiaries eligible to
enroll in the dual eligible special needs plan who use behavioral
health services; or
(2) Constitute a small part of the total scope of behavioral health
services provided to the majority of beneficiaries eligible to enroll
in the dual eligible special needs plan.
* * * * *
0
6. Section 422.116 is amended by revising paragraph (a)(1)(ii) and
adding paragraph (d)(7) to read as follows:
Sec. 422.116 Network adequacy.
(a) * * *
(1) * * *
(ii) Beginning with contract year 2024, an applicant for a new or
expanding service area must demonstrate compliance with this section as
part of its application for a new or expanding service area and CMS may
deny an application on the basis of an evaluation of the applicant's
network for the new or expanding service area.
* * * * *
(d) * * *
(7) New or expanding service area applicants. Beginning with
contract year 2024, an applicant for a new or expanding service area
receives a 10-percentage point credit towards the percentage of
beneficiaries residing within published time and distance standards for
the contracted network in the pending service area, at the time of
application and for the duration of the application review. In
addition, applicants may use a Letter of Intent (LOI), signed by both
the MA organization (MAO) and the provider or facility with which the
MAO has started or intends to negotiate, in lieu of a signed contract
at the time of application and for the duration of the application
review, to meet network standards. As part of the network adequacy
review process, applicants must notify CMS of their use of LOIs to meet
network standards in lieu of a signed contract and submit copies upon
request and in the form and manner directed by CMS. At the beginning of
the applicable contract year, the credit and the use of LOIs no longer
apply and if the application is approved, the MA organization must be
in full compliance with this section, including having signed contracts
with the provider or facility.
* * * * *
Sec. 422.164 [Amended]
0
7. Section 422.164 is amended by removing and reserving paragraph (i).
0
8. Section 422.166 is amended by--
0
a. Revising paragraph (a)(2)(i);
0
b. Adding paragraph (i)(12); and
0
c. Removing and reserving paragraphs (j)(1)(v) and (j)(2).
The revision and addition read as follows:
Sec. 422.166 Calculation of Star Ratings.
(a) * * *
(2) * * *
(i) The method maximizes differences across the star categories and
minimizes the differences within star categories using mean resampling
with the hierarchal clustering of the current year's data. Effective
for the Star Ratings issued in October 2022 and subsequent years, CMS
will add a guardrail so that the measure-threshold-specific cut points
for non-CAHPS measures do not increase or decrease more than the value
of the cap from one year to the next. The cap is equal to 5 percentage
points for measures having a 0 to 100 scale (absolute percentage cap)
or 5 percent of the restricted range for measures not having a 0 to 100
scale (restricted range cap). New measures that have been in the Part C
and Part D Star Rating program for 3 years or less use the hierarchal
clustering methodology with mean resampling with no guardrail for the
first 3 years in the program.
* * * * *
(i) * * *
(12) Special rules for the 2023 Star Ratings only. For the 2023
Star Ratings only, for measures derived from the Health Outcomes Survey
only, CMS does not apply the provisions in paragraph (i)(9) or (10) of
this section and CMS does not exclude the numeric values for affected
contracts with 60 percent or more of their enrollees in the FEMA-
designated Individual Assistance area at the time of the extreme and
uncontrollable circumstance from the clustering algorithms or from the
determination of the performance summary and variance thresholds for
the Reward Factor.
* * * * *
0
9. Section 422.252 is amended by revising the definition of ``New MA
plan'' to read as follows:
Sec. 422.252 Terminology.
* * * * *
New MA plan means a MA contract offered by a parent organization
that has
[[Page 27896]]
not had another MA contract in the previous 3 years. For purposes of
2022 quality bonus payments based on 2021 Star Ratings only, new MA
plan means an MA contract offered by a parent organization that has not
had another MA contract in the previous 4 years.
* * * * *
0
10. Section 422.502 is amended by revising paragraphs (b)(1)
introductory text and (b)(1)(i) to read as follows:
Sec. 422.502 Evaluation and determination procedures.
* * * * *
(b) * * *
(1) Except as provided in paragraphs (b)(2) through (4) of this
section, if an MA organization fails during the 12 months preceding the
deadline established by CMS for the submission of contract
qualification applications to comply with the requirements of the Part
C program under any current or prior contract with CMS under title
XVIII of the Act, CMS may deny an application based on the applicant's
failure to comply with the requirements of the Part C program under any
current or prior contract with CMS even if the applicant currently
meets all of the requirements of this part.
(i) An applicant may be considered to have failed to comply with a
contract for purposes of an application denial under paragraph (b)(1)
of this section if during the applicable review period the applicant
does any of the following:
(A) Was subject to the imposition of an intermediate sanction under
subpart O of this part or a determination by CMS to prohibit the
enrollment of new enrollees in accordance with Sec. 422.2410(c), with
the exception of a sanction imposed under Sec. 422.752(d).
(B) Failed to maintain a fiscally sound operation consistent with
the requirements of Sec. 422.504(b)(14).
(C) Filed for or is currently in State bankruptcy proceedings.
(D) Received any combination of Part C or D summary ratings of 2.5
or less in both of the two most recent Star Rating periods, as
identified in Sec. 422.166.
(E) Met or exceeded 13 points for compliance actions for any one
contract.
(1) CMS determines the number of points each MA organization
accumulated during the performance period for compliance actions based
on the following point values:
(i) Each corrective action plan issued during the performance
period under Sec. 422.504(m) counts for 6 points.
(ii) Each warning letter issued during the performance period under
Sec. 422.504(m) counts for 3 points.
(iii) Each notice of noncompliance issued during the performance
period under Sec. 422.504(m) counts for 1 point.
(2) CMS adds all the point values for each MA organization to
determine if any organization meets CMS' identified threshold.
* * * * *
0
11. Section 422.503 is amended by revising paragraphs (b)(5)(i) and
(ii) to read as follows:
Sec. 422.503 General provisions.
* * * * *
(b) * * *
(5) * * *
(i) Not accept, or share a corporate parent organization owning a
controlling interest in an entity that accepts, new enrollees under a
section 1876 reasonable cost contract in any area in which it seeks to
offer an MA plan that is not a dual eligible special needs plan.
(ii) Not accept, or be either the parent organization owning a
controlling interest of or subsidiary of an entity that accepts, new
enrollees under a section 1876 reasonable cost contract in any area in
which it seeks to offer an MA plan that is not a dual eligible special
needs plan.
* * * * *
0
12. Section 422.504 is amended by revising paragraph (m) to read as
follows:
Sec. 422.504 Contract provisions.
* * * * *
(m) Issuance of compliance actions for failure to comply with the
terms of the contract. The MA organization acknowledges that CMS may
take compliance actions as described in this section or intermediate
sanctions as defined in subpart O of this part.
(1) CMS may take compliance actions as described in paragraph
(m)(3) of this section if it determines that the MA organization has
not complied with the terms of a current or prior Part C contract with
CMS.
(i) CMS may determine that an MA organization is out of compliance
with a Part C requirement when the organization fails to meet
performance standards articulated in the Part C statutes, regulations
in this chapter, or guidance.
(ii) If CMS has not already articulated a measure for determining
noncompliance, CMS may determine that an MA organization is out of
compliance when its performance in fulfilling Part C requirements
represents an outlier relative to the performance of other MA
organizations.
(2) CMS bases its decision on whether to issue a compliance action
and what level of compliance action to take on an assessment of the
circumstances surrounding the noncompliance, including all of the
following:
(i) The nature of the conduct.
(ii) The degree of culpability of the MA organization.
(iii) The adverse effect to beneficiaries which resulted or could
have resulted from the conduct of the MA organization.
(iv) The history of prior offenses by the MA organization or its
related entities.
(v) Whether the noncompliance was self-reported.
(vi) Other factors which relate to the impact of the underlying
noncompliance or the lack of the MA organization's oversight of its
operations that contributed to the noncompliance.
(3) CMS may take one of three types of compliance actions based on
the nature of the noncompliance.
(i) Notice of noncompliance. A notice of noncompliance may be
issued for any failure to comply with the requirements of the MA
organization's current or prior Part C contract with CMS, as described
in paragraph (m)(1) of this section.
(ii) Warning letter. A warning letter may be issued for serious
and/or continued noncompliance with the requirements of the MA
organization's current or prior Part C contract with CMS, as described
in paragraph (m)(1) of this section and as assessed in accordance with
paragraph (m)(2) of this section.
(iii) Corrective action plan. (A) Corrective action plans are
requested for particularly serious or continued noncompliance with the
requirements of the MA organization's current or prior Part C contract
with CMS, as described in paragraph (m)(1) of this section and as
assessed in accordance with paragraph (m)(2) of this section.
(B) CMS issues a corrective action plan if CMS determines that the
MA organization has repeated or not corrected noncompliance identified
in prior compliance actions, has substantially impacted beneficiaries
or the program with its noncompliance, or must implement a detailed
plan to correct the underlying causes of the noncompliance.
* * * * *
0
13. Section 422.530 is amended by revising paragraph (c)(4) to read as
follows:
Sec. 422.530 Plan crosswalks.
* * * * *
(c) * * *
(4) When--
[[Page 27897]]
(i) A renewing D-SNP has another new or renewing D-SNP, and the two
D-SNPs are offered to different populations, enrollees who are no
longer eligible for their current D-SNP may be moved into the other new
or renewing D-SNP offered by the same MA organization if they meet the
eligibility criteria for the new or renewing D-SNP and CMS determines
it is in the best interest of the enrollees to move to the new or
renewing D-SNP in order to promote access to and continuity of care for
enrollees relative to the absence of a crosswalk exception. For the
crosswalk exception in this paragraph (c)(4)(i), CMS does not permit
enrollees to be moved between different contracts; or
(ii) An MA organization creates a new MA contract when required by
a State as described in Sec. 422.107(e), eligible enrollees may be
moved from the existing D-SNP that is non-renewing, reducing its
service area, or has its eligible population newly restricted by a
State, to a D-SNP offered under the D-SNP-only contract, which must be
of the same plan type operated by the same parent organization. For the
crosswalk exception in this paragraph (c)(4)(ii), CMS permits enrollees
to be moved between different contracts.
* * * * *
0
14. Section 422.561 is amended by revising the definition of
``Applicable integrated plan'' to read as follows:
Sec. 422.561 Definitions.
* * * * *
Applicable integrated plan means either of the following:
(1) Before January 1, 2023. (i) A fully integrated dual eligible
special needs plan with exclusively aligned enrollment or a highly
integrated dual eligible special needs plan with exclusively aligned
enrollment; and
(ii) The Medicaid managed care organization, as defined in section
1903(m) of the Act, through which such dual eligible special needs
plan, its parent organization, or another entity that is owned and
controlled by its parent organization covers Medicaid services for
dually eligible individuals enrolled in such dual eligible special
needs plan and such Medicaid managed care organization.
(2) On or after January 1, 2023. (i)(A) A fully integrated dual
eligible special needs plan or highly integrated dual eligible special
needs plan with exclusively aligned enrollment; and
(B) The Medicaid managed care organization, as defined in section
1903(m) of the Act, through which such dual eligible special needs
plan, its parent organization, or another entity that is owned and
controlled by its parent organization covers Medicaid services for
dually eligible individuals enrolled in such dual eligible special
needs plan and such Medicaid managed care organization; or
(ii) A dual eligible special needs plan and affiliated Medicaid
managed care plan where--
(A) The dual special needs plan, by State policy, has enrollment
limited to those beneficiaries enrolled in a Medicaid managed care
organization as described in paragraph (2)(ii)(B) of this definition;
(B) There is a capitated contract between the MA organization, the
MA organization's parent organization, or another entity that is owned
and controlled by its parent organization; and
(1) A Medicaid agency; or
(2) A Medicaid managed care organization as defined in section
1903(m) of the Act that contracts with the Medicaid agency; and
(C) Through the capitated contract described in paragraph
(2)(ii)(B) of this definition, Medicaid benefits including primary care
and acute care, including Medicare cost-sharing as defined in section
1905(p)(3)(B), (C), and (D) of the Act, without regard to the
limitation of that definition to qualified Medicare beneficiaries, and
at a minimum, one of the following: Home health services as defined in
Sec. 440.70 of this chapter, medical supplies, equipment, and
appliances as described in Sec. 440.70(b)(3) of this chapter, or
nursing facility services are covered for the enrollees.
* * * * *
0
15. Section 422.629 is amended by--
0
a. Revising paragraph (d);
0
b. In paragraph (k)(4)(ii), removing the phrase ``integrated
organization determination decision'' and adding in its place the
phrase ``integrated reconsideration determination'';
0
c. Revising paragraph (l)(1); and
0
d. Adding paragraph (l)(4).
The revisions and addition read as follows:
Sec. 422.629 General requirements for applicable integrated plans.
* * * * *
(d) Evidence. The applicable integrated plan must do the following:
(1) Provide the enrollee--
(i) A reasonable opportunity, in person and in writing, to present
evidence and testimony and make legal and factual arguments for
integrated grievances, and integrated reconsiderations; and
(ii) Information on how evidence and testimony should be presented
to the plan.
(2) Inform the enrollee of the limited time available for
presenting evidence sufficiently in advance of the resolution timeframe
for appeals as specified in this section if the case is being
considered under an expedited timeframe for the integrated grievance or
integrated reconsideration.
* * * * *
(l) * * *
(1) The following individuals or entities can request an integrated
grievance, integrated organization determination, and integrated
reconsideration, and are parties to the case:
(i) The enrollee.
(ii) The enrollee's representative, including any person authorized
under State law.
* * * * *
(4) The following individuals or entities may request an integrated
reconsideration and are parties to the case:
(i) An assignee of the enrollee (that is, a physician or other
provider who has furnished or intends to furnish a service to the
enrollee and formally agrees to waive any right to payment from the
enrollee for that service).
(ii) Any other provider or entity (other than the applicable
integrated plan) who has an appealable interest in the proceeding.
0
16. Section 422.631 is amended by adding paragraph (d)(3) to read as
follows:
Sec. 422.631 Integrated organization determinations.
* * * * *
(d) * * *
(3) Timeframe for requests for payment. The applicable integrated
plan must process requests for payment according to the ``prompt
payment'' provisions set forth in Sec. 422.520.
* * * * *
0
17. Section 422.633 is amended by revising the section heading and
paragraphs (e)(1) and (f)(3)(i) introductory text to read as follows:
Sec. 422.633 Integrated reconsiderations.
* * * * *
(e) * * *
(1) Applicable integrated plans must accept requests to expedite
integrated reconsiderations from either of the following:
(i) An enrollee.
(ii) A provider making the request on behalf of an enrollee, when
the request is not a request for expedited payment.
* * * * *
[[Page 27898]]
(f) * * *
(3) * * *
(i) The applicable integrated plan may extend the timeframe for
resolving any integrated reconsideration other than those concerning
Part B drugs by 14 calendar days if--
* * * * *
0
18. Section 422.634 is amended by revising paragraph (d) to read as
follows:
Sec. 422.634 Effect.
* * * * *
(d) Services not furnished while the appeal is pending. (1) If an
applicable integrated plan reverses its decision to deny, limit, or
delay services that were not furnished while the appeal was pending,
the applicable integrated plan must authorize or provide the disputed
services promptly and as expeditiously as the enrollee's health
condition requires but no later than the earlier of--
(i) 72 hours from the date it reverses its decision; or
(ii)(A) With the exception of a Part B drug, 30 calendar days after
the date the applicable integrated plan receives the request for the
integrated reconsideration (or no later than upon expiration of an
extension described in Sec. 422.633(f)); or
(B) For a Part B drug, 7 calendar days after the date the
applicable integrated plan receives the request for the integrated
reconsideration.
(2) For a Medicaid benefit, if a State fair hearing officer
reverses an applicable integrated plan's integrated reconsideration
decision to deny, limit, or delay services that were not furnished
while the appeal was pending, the applicable integrated plan must
authorize or provide the disputed services promptly and as
expeditiously as the enrollee's health condition requires but no later
than 72 hours from the date it receives notice reversing the
determination.
(3) Reversals by the Part C independent review entity, an
administrative law judge or attorney adjudicator at the Office of
Medicare Hearings and Appeals, or the Medicare Appeals Council must be
effectuated under same timelines applicable to other MA plans as
specified in Sec. Sec. 422.618 and 422.619.
* * * * *
0
19. Section 422.2260 is amended by adding the definition of ``Third-
party marketing organization (TPMO)'' in alphabetical order to read as
follows:
Sec. 422.2260 Definitions.
* * * * *
Third-party marketing organization (TPMO) means organizations and
individuals, including independent agents and brokers, who are
compensated to perform lead generation, marketing, sales, and
enrollment related functions as a part of the chain of enrollment (the
steps taken by a beneficiary from becoming aware of an MA plan or plans
to making an enrollment decision). TPMOs may be a first tier,
downstream or related entity (FDRs), as defined under Sec. 422.2, but
may also be entities that are not FDRs but provide services to an MA
plan or an MA plan's FDR.
0
20. Section 422.2265 is amended by adding paragraphs (b)(13) and (14)
to read as follows:
Sec. 422.2265 Websites.
* * * * *
(b) * * *
(13) Instructions on how to appoint a representative including a
link to the downloadable version of the CMS Appointment of
Representative Form (CMS Form-1696).
(14) Enrollment instructions and forms.
* * * * *
0
21. Section 422.2267 is amended by--
0
a. Redesignating paragraphs (e)(30) through (38) as paragraphs (e)(32)
through (40).
0
b. Adding new paragraphs (e)(30) and (31) and paragraph (e)(41).
The additions read as follows:
Sec. 422.2267 Required materials and content.
* * * * *
(e) * * *
(30) Member ID card. The member ID card is a model communications
material that plans must provide to enrollees as required under Sec.
422.111(i). The member ID card--
(i) Must be provided to new enrollees within ten calendars days
from receipt of CMS confirmation of enrollment or by the last day of
the month prior to the plan effective date, whichever is later;
(ii) Must include the plan's--
(A) Website address;
(B) Customer service number (the member ID card is excluded from
the hours of operations requirement under Sec. 422.2262(c)(1)(i)); and
(C) Contract/PBP number;
(iii) Must include, if issued for a PPO and PFFS plan, the phrase
``Medicare limiting charges apply.'';
(iv) May not use a member's Social Security number (SSN), in whole
or in part;
(v) Must be updated whenever information on a member's existing
card changes; in such cases an updated card must be provided to the
member;
(vi) Is excluded from the translation requirement under paragraph
(a)(2) of this section; and
(vii) Is excluded from the 12-point font size requirement under
paragraph (a)(1) of this section.
(31) Multi-language insert (MLI). This is a standardized
communications material which states, ``We have free interpreter
services to answer any questions you may have about our health or drug
plan. To get an interpreter, just call us at [1-xxx-xxx-xxxx]. Someone
who speaks [language] can help you. This is a free service.'' in the
following languages: Spanish, Chinese, Tagalog, French, Vietnamese,
German, Korean, Russian, Arabic, Italian, Portuguese, French Creole,
Polish, Hindi, and Japanese.
(i) Additional languages that meet the 5-percent service area
threshold, as required under paragraph (a)(2) of this section, must be
added to the MLI used in that service area. A plan may also opt to
include in the MLI any additional language that do not meet the 5-
percent service area threshold, where it determines that this inclusion
would be appropriate.
(ii) The MLI must be provided with all required materials under
paragraph (e) of this section.
(iii) The MLI may be included as a part of the required material or
as a standalone material in conjunction with the required material.
(iv) When used as a standalone material, the MLI may include
organization name and logo.
(v) When mailing multiple required materials together, only one MLI
is required.
(vi) The MLI may be provided electronically when a required
material is provided electronically as permitted under paragraph (d)(2)
of this section.
* * * * *
(41) Third-party marketing organization disclaimer. This is
standardized content. The disclaimer consists of the statement: ``We do
not offer every plan available in your area. Any information we provide
is limited to those plans we do offer in your area. Please contact
Medicare.gov or 1-800-MEDICARE to get information on all of your
options.'' The MA organization must ensure that the disclaimer is as
follows:
(i) Used by any TPMO, as defined under Sec. 422.2260, that sells
plans on behalf of more than one MA organization unless the TPMO sells
all commercially available MA plans in a given service area.
[[Page 27899]]
(ii) Verbally conveyed within the first minute of a sales call.
(iii) Electronically conveyed when communicating with a beneficiary
through email, online chat, or other electronic means of communication.
(iv) Prominently displayed on TPMO websites.
(v) Included in any marketing materials, including print materials
and television advertisements, developed, used or distributed by the
TPMO.
0
22. Section 422.2274 is amended by revising the section heading and
adding paragraph (g) to read as follows:
Sec. 422.2274 Agent, broker, and other third-party requirements.
* * * * *
(g) TPMO oversight. In addition to any applicable FDR requirements
under Sec. 422.504(i), when doing business with a TPMO, either
directly or indirectly through a downstream entity, MA plans must
implement the following as a part of their oversight of TPMOs:
(1) When a TPMO is not otherwise an FDR, the MA organization is
responsible for ensuring that the TPMO adheres to any requirements that
apply to the MA plan.
(2) Contracts, written arrangements, and agreements between the
TPMO and an MA plan, or between the TPMO and an MA plan's FDR, must
ensure the TPMO:
(i) Discloses to the MA organization any subcontracted
relationships used for marketing, lead generation, and enrollment.
(ii) Records all calls with beneficiaries in their entirety,
including the enrollment process.
(iii) Reports to plans monthly any staff disciplinary actions or
violations of any requirements that apply to the MA plan associated
with beneficiary interaction to the plan.
(iv) Uses the TPMO disclaimer as required under Sec.
422.2267(e)(41).
(3) Ensure that the TPMO, when conducting lead generating
activities, either directly or indirectly for an MA organization, must,
when applicable:
(i) Disclose to the beneficiary that his or her information will be
provided to a licensed agent for future contact. This disclosure must
be provided as follows:
(A) Verbally when communicating with a beneficiary through
telephone.
(B) In writing when communicating with a beneficiary through mail
or other paper.
(C) Electronically when communicating with a beneficiary through
email, online chat, or other electronic messaging platform.
(ii) Disclose to the beneficiary that he or she is being
transferred to a licensed agent who can enroll him or her into a new
plan.
0
23. Section 422.2460 is amended by revising paragraphs (a), (b)
introductory text, and (d) and adding paragraph (e) to read as follows:
Sec. 422.2460 Reporting requirements.
(a) Except as provided in paragraph (b) of this section, for each
contract year, each MA organization must submit to CMS, in a timeframe
and manner specified by CMS, a report that includes the data needed by
the MA organization to calculate and verify the medical loss ratio
(MLR) and remittance amount, if any, for each contract under this part,
including the amount of incurred claims for original Medicare covered
benefits, supplemental benefits, and prescription drugs; total revenue;
expenditures on quality improving activities; non-claims costs; taxes;
licensing and regulatory fees; and any remittance owed to CMS under
Sec. 422.2410.
(b) For contract years 2018 through 2022, each MA organization must
submit to CMS, in a timeframe and manner specified by CMS, the
following information:
* * * * *
(d) Subject to paragraph (e) of this section, the MLR is reported
once, and is not reopened as a result of any payment reconciliation
processes.
(e) With respect to an MA organization that has already submitted
to CMS the MLR report or MLR data required under paragraph (a) or (b)
of this section, respectively, for a contract for a contract year,
paragraph (d) of this section does not prohibit resubmission of the MLR
report or MLR data for the purpose of correcting the prior MLR report
or data submission. Such resubmission must be authorized or directed by
CMS, and upon receipt and acceptance by CMS, is regarded as the
contract's MLR report or data submission for the contract year for
purposes of this subpart.
0
24. Section 422.2490 is amended by redesignating paragraph (b)(2) as
paragraph (b)(2)(i) and adding paragraph (b)(2)(ii) to read as follows:
Sec. 422.2490 Release of Part C MLR data.
* * * * *
(b) * * *
(2) * * *
(ii) Amounts that are reported as expenditures for a specific type
of supplemental benefit, where the entire amount that is reported
represents costs incurred by the only plan under the contract that
offers that benefit.
* * * * *
PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT
0
25. The authority citation for part 423 continues to read as follows:
Authority: 42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152,
and 1395hh.
0
26. Section 423.100 is amended by adding in alphabetical order the
definition of ``Price concession'' to read as follows:
Sec. 423.100 Definitions.
* * * * *
Price concession means any form of discount, direct or indirect
subsidy, or rebate received by the Part D sponsor or its intermediary
contracting organization from any source that serves to decrease the
costs incurred under the Part D plan by the Part D sponsor. Examples of
price concessions include but are not limited to: Discounts,
chargebacks, rebates, cash discounts, free goods contingent on a
purchase agreement, coupons, free or reduced-price services, and goods
in kind.
* * * * *
0
27. Effective January 1, 2024, Sec. 423.100 is further amended by
removing the definition of ``Negotiated prices'' and adding in
alphabetical order the definition of ``Negotiated price'' to read as
follows:
Sec. 423.100 Definitions.
* * * * *
Negotiated price means the price for a covered Part D drug that--
(1) The Part D sponsor (or other intermediary contracting
organization) and the network dispensing pharmacy or other network
dispensing provider have negotiated as the lowest possible
reimbursement such network entity will receive, in total, for a
particular drug;
(2) Meets all of the following:
(i) Includes all price concessions (as defined in this section)
from network pharmacies or other network providers;
(ii) Includes any dispensing fees; and
(iii) Excludes additional contingent amounts, such as incentive
fees, if these amounts increase prices; and
(3) Is reduced by non-pharmacy price concessions and other direct
or indirect remuneration that the Part D sponsor passes through to Part
D enrollees at the point of sale.
* * * * *
Sec. 423.184 [Amended]
0
28. Section 423.184 is amended by removing and reserving paragraph (i).
0
29. Section 423.186 is amended by--
0
a. Revising paragraphs (a)(2)(i) and (i)(9); and
0
b. Removing and reserving paragraph (j)(1)(iv).
[[Page 27900]]
The revisions read as follows:
Sec. 423.186 Calculation of Star Ratings.
(a) * * *
(2) * * *
(i) The method maximizes differences across the star categories and
minimizes the differences within star categories using mean resampling
with the hierarchal clustering of the current year's data. Effective
for the Star Ratings issued in October 2022 and subsequent years, CMS
will add a guardrail so that the measure-threshold-specific cut points
for non-CAHPS measures do not increase or decrease more than the value
of the cap from one year to the next. The cap is equal to 5 percentage
points for measures having a 0 to 100 scale (absolute percentage cap)
or 5 percent of the restricted range for measures not having a 0 to 100
scale (restricted range cap). New measures that have been in the Part C
and D Star Rating program for 3 years or less use the hierarchal
clustering methodology with mean resampling with no guardrail for the
first 3 years of the program.
* * * * *
(i) * * *
(9) Special rules for the 2022 Star Ratings only. For the 2022 Star
Ratings only, CMS will not apply the provisions in paragraph (i)(7) or
(8) of this section and CMS will not exclude the numeric values for
affected contracts with 60 percent or more of their enrollees in the
FEMA-designated Individual Assistance area at the time of the extreme
and uncontrollable circumstance from the clustering algorithms or from
the determination of the performance summary and variance thresholds
for the Reward Factor.
* * * * *
0
30. Section 423.503 is amended by revising the section heading and
paragraphs (b)(1) introductory text and (b)(1)(i) to read as follows:
Sec. 423.503 Evaluation and determination procedures.
* * * * *
(b) * * *
(1) Except as provided in paragraphs (b)(2) through (4) of this
section, if a Part D plan sponsor fails during the 12 months preceding
the deadline established by CMS for the submission of contract
qualification applications to comply with the requirements of the Part
D program under any current or prior contract with CMS under title
XVIII of the Act CMS may deny an application based on the applicant's
failure to comply with the requirements of the Part D program under any
current or prior contract with CMS even if the applicant currently
meets all of the requirements of this part.
(i) An applicant may be considered to have failed to comply with a
contract for purposes of an application denial under paragraph (b)(1)
of this section if during the applicable review period the applicant:
(A) Was subject to the imposition of an intermediate sanction under
subpart O of this part, or a determination by CMS to prohibit the
enrollment of new enrollees under Sec. 423.2410(c).
(B) Failed to maintain a fiscally sound operation consistent with
the requirements of Sec. 423.505(b)(23).
(C) Filed for or is currently under state bankruptcy proceedings.
(D) Received any combination of Part C or Part D summary ratings of
2.5 or less in both of the two most recent Star Rating periods, as
identified in Sec. 423.186.
(E) Met or exceeded 13 points for compliance actions on any one
contract.
(1) CMS determines the number of points each Part D plan sponsor
accumulated during the performance period for compliance actions based
on the following point values:
(i) Each corrective action plan issued during the performance
period under Sec. 423.505(n) counts for 6 points.
(ii) Each warning letter issued during the performance period under
Sec. 423.505(n) counts for 3 points.
(iii) Each notice of noncompliance issued during the performance
period under Sec. 423.505(n) counts for 1 point.
(2) CMS adds all the point values for each Part D plan sponsor to
determine if any organization meets CMS' identified threshold.
* * * * *
0
31. Section 423.505 is amended by revising paragraph (n) to read as
follows:
Sec. 423.505 Contract provisions.
* * * * *
(n) Issuance of compliance actions for failure to comply with the
terms of the contract. The Part D plan sponsor acknowledges that CMS
may take compliance actions as described in this section or
intermediate sanctions as defined in subpart O of this part.
(1) CMS may take compliance actions as described in paragraph
(n)(3) of this section if it determines that the Part D plan sponsor
has not complied with the terms of a current or prior Part D contract
with CMS.
(i) CMS may determine that a Part D plans sponsor is out of
compliance with a Part D requirement when the organization fails to
meet performance standards articulated in the Part D statutes,
regulations in this chapter, or guidance.
(ii) If CMS has not already articulated a measure for determining
noncompliance, CMS may determine that a Part D plan sponsor is out of
compliance when its performance in fulfilling Part D requirements
represents an outlier relative to the performance of other Part D plan
sponsors.
(2) CMS bases its decision on whether to issue a compliance action
and what level of compliance action to take on an assessment of the
circumstances surrounding the noncompliance, including all of the
following:
(i) The nature of the conduct.
(ii) The degree of culpability of the Part D plan sponsor.
(iii) The adverse effect to beneficiaries which resulted or could
have resulted from the conduct of the Part D plan sponsor.
(iv) The history of prior offenses by the Part D plan sponsor or
its related entities.
(v) Whether the noncompliance was self-reported.
(vi) Other factors which relate to the impact of the underlying
noncompliance or the lack of the Part D plan sponsor's oversight of its
operations that contributed to the noncompliance.
(3) CMS may take one of three types of compliance actions based on
the nature of the noncompliance.
(i) Notice of noncompliance. A notice of noncompliance may be
issued for any failure to comply with the requirements of the Part D
plan sponsor's current or prior Part D contract with CMS, as described
in paragraph (n)(1) of this section.
(ii) Warning letter. A warning letter may be issued for serious
and/or continued noncompliance with the requirements of the Part D plan
sponsor's current or prior Part D contract with CMS, as described in
paragraph (n)(1) of this section and as assessed in accordance with
paragraph (n)(2) of this section.
(iii) Corrective action plan. (A) Corrective action plans are
issued for particularly serious and/or continued noncompliance with the
requirements of the Part D plan sponsors' current or prior Part D
contract with CMS, as described in paragraph (n)(1) of this section and
as assessed in accordance with paragraph (n)(2) of this section.
(B) CMS issues a corrective action plan if CMS determines that the
Part D plan sponsor has repeated or not corrected noncompliance
identified in prior compliance actions, has substantially impacted
beneficiaries or the program with its noncompliance,
[[Page 27901]]
and/or must implement a detailed plan to correct the underlying causes
of the noncompliance.
* * * * *
0
32. Section 423.2260 is amended by adding the definition of ``Third-
party marketing organization (TPMO)'' in alphabetical order to read as
follows:
Sec. 423.2260 Definitions.
* * * * *
Third-party marketing organization (TPMO) are organizations and
individuals, including independent agents and brokers, who are
compensated to perform lead generation, marketing, sales, and
enrollment related functions as a part of the chain of enrollment (the
steps taken by a beneficiary from becoming aware of a Part D plan or
plans to making an enrollment decision). TPMOs may be a first tier,
downstream or related entity (FDRs), as defined under Sec. 423.4, but
may also be entities that are not FDRs but provide services to a Part D
sponsor or a Part D sponsor's FDR.
0
33. Section 423.2265 is amended by adding paragraphs (b)(14) and (15)
to read as follows:
Sec. 423.2265 Websites.
* * * * *
(b) * * *
(14) Instructions on how to appoint a representative including a
link to the downloadable version of the CMS Appointment of
Representative Form (CMS Form-1696).
(15) Enrollment instructions and forms.
* * * * *
0
34. Section 423.2267 is amended by--
0
a. Redesignating paragraphs (e)(32) through (37) as paragraphs (e)(34)
through (39); and
0
b. Adding new paragraphs (e)(32) and (33) and paragraphs (e)(40) and
(41).
The additions read as follows:
Sec. 423.2267 Required materials and content.
* * * * *
(e) * * *
(32) Member ID card. The member ID card is a model communications
material that plans must provide to enrollees as required under Sec.
423.128(d)(2). The member ID card--
(i) Must be provided to new enrollees within 10 calendars days from
receipt of CMS confirmation of enrollment or by the last day of month
prior to the plan effective date, whichever is later;
(ii) Must include the Part D sponsor's--
(A) Website address;
(B) Customer service number (the member ID card is excluded from
the hours of operations requirement under Sec. 423.2262(c)(1)(i)); and
(C) Contract/PBP number;
(iii) Must include, if issued for a preferred provider organization
(PPO) and PFFS plan, the phrase ``Medicare limiting charges apply.'';
(iv) May not use a member's Social Security number (SSN), in whole
or in part;
(v) Must be updated whenever information on a member's existing
card changes; in such cases an updated card must be provided to the
member;
(vi) Is excluded from the translation requirement under paragraph
(a)(2) of this section; and
(vii) Is excluded from the 12-point font size requirement under
paragraph (a)(1) of this section.
(33) Multi-language insert (MLI). This is a standardized
communications material which states, ``We have free interpreter
services to answer any questions you may have about our health or drug
plan. To get an interpreter, just call us at [1-xxx-xxx-xxxx]. Someone
who speaks [language] can help you. This is a free service.'' in the
following languages: Spanish, Chinese, Tagalog, French, Vietnamese,
German, Korean, Russian, Arabic, Italian, Portuguese, French Creole,
Polish, Hindi, and Japanese.
(i) Additional languages that meet the 5-percent service area
threshold, as required under paragraph (a)(2) of this section, must be
added to the MLI used in that service area. A plan may also opt to
include in the MLI any additional language that do not meet the 5-
percent service area threshold, where it determines that this inclusion
would be appropriate.
(ii) The MLI must be provided with all required materials under
paragraph (e) of this section.
(iii) The MLI may be included as a part of the required material or
as a standalone material in conjunction with the required material.
(iv) When used as a standalone, the MLI may include organization
name and logo.
(v) When mailing multiple required materials together, only one MLI
is required.
(vi) The MLI may be provided electronically when a required
material is provided electronically as permitted under paragraph (d)(2)
of this section.
* * * * *
(40) Limited access to preferred cost-sharing pharmacies. This is
standardized content that must--
(i) Be used on all materials mentioning preferred pharmacies when
there is limited access to preferred pharmacies; and
(ii) Include the following language: ``'s pharmacy network includes limited lower-cost, preferred
pharmacies in . The lower costs advertised in our plan materials
for these pharmacies may not be available at the pharmacy you use. For
up-to-date information about our network pharmacies, including whether
there are any lower-cost preferred pharmacies in your area, please call
or consult the online
pharmacy directory at .''
(41) Third-party marketing organization disclaimer. This is
standardized content. The disclaimer consists of the statement: ``We do
not offer every plan available in your area. Any information we provide
is limited to those plans we do offer in your area. Please contact
Medicare.gov or 1-800-MEDICARE to get information on all of your
options.'' The Part D sponsor must ensure that the disclaimer is as
follows:
(i) Used by any TPMO, as defined under Sec. 423.2260, that sells
plans on behalf of more than one Part D sponsor unless the TPMO sells
all commercially available Part D plans in a given service area.
(ii) Verbally conveyed within the first minute of a sales call.
(iii) Electronically conveyed when communicating with a beneficiary
through email, online chat, or other electronic means of communication.
(iv) Prominently displayed on TPMO websites.
(v) Included in any TPMO marketing materials, including print
materials and television advertising.
0
35. Section 423.2274 is amended by revising the section heading and
adding paragraph (g) to read as follows:
Sec. 423.2274 Agent, broker, and other third-party requirements.
* * * * *
(g) TPMO oversight. In addition to any applicable FDR requirements
under Sec. 423.505(i), when doing business with a TPMO, either
directly or indirectly through a downstream entity, Part D sponsor must
implement the following as a part of their oversight of TPMOs:
(1) When TPMOs is not otherwise an FDR, the Part D sponsor is
responsible for ensuring that the TPMO adheres to any requirements that
apply to the Part D sponsor.
(2) Contracts, written arrangements, and agreements between the
TPMO and a Part D plan, or between a TPMO and a Part D plan's FDR, must
ensure the TPMO:
[[Page 27902]]
(i) Discloses to the plan any subcontracted relationships used for
marketing, lead generation, and enrollment.
(ii) Record all calls with beneficiaries in their entirety,
including the enrollment process.
(iii) Report to plans monthly any staff disciplinary actions or
violations of any requirements that apply to the Part D sponsor
associated with beneficiary interaction to the plan.
(iv) Use the TPMO disclaimer as required under Sec.
423.2267(e)(41).
(3) Ensure that the TPMO, when conducting lead generating
activities, either directly or indirectly for a Part D sponsor, must,
when applicable:
(i) Disclose to the beneficiary that his or her information will be
provided to a licensed agent for future contact. This disclosure must
be provided:
(A) Verbally when communicating with a beneficiary through
telephone;
(B) In writing when communicating with a beneficiary through mail
or other paper; and
(C) Electronically when communicating with a beneficiary through
email, online chat, or other electronic messaging platform.
(ii) When applicable, disclose to the beneficiary that he or she is
being transferred to a licensed agent who can enroll him or her into a
new plan.
0
36. Effective January 1, 2024, Sec. 423.2305 is amended by--
0
a. Revising paragraphs (1) and (2) of the definition of ``Negotiated
price''; and
0
b. Designating the undesignated paragraph following the definition of
``Negotiated price'' as paragraph (4).
The revisions read as follows:
Sec. 423.2305 Definitions.
* * * * *
Negotiated price * * *
(1) The Part D sponsor (or other intermediary contracting
organization) and the network dispensing pharmacy or other network
dispensing provider have negotiated as the lowest possible
reimbursement such network entity will receive, in total, for a
particular drug;
(i) Includes all price concessions (as defined in Sec. 423.100)
from network pharmacies or other network providers; and
(ii) Excludes additional contingent amounts, such as incentive
fees, if these amounts increase prices;
(2) Is reduced by those discounts, direct or indirect subsidies,
rebates, non-pharmacy price concessions, and direct or indirect
remuneration that the Part D sponsor has elected to pass through to
Part D enrollees at the point-of-sale; and
* * * * *
0
37. Section 423.2460 is amended by revising paragraphs (a), (b)
introductory text, and (d) and adding paragraph (e) to read as follows:
Sec. 423.2460 Reporting requirements.
(a) Except as provided in paragraph (b) of this section, for each
contract year, each Part D sponsor must submit to CMS, in a timeframe
and manner specified by CMS, a report that includes the data needed by
the Part D sponsor to calculate and verify the medical loss ratio (MLR)
and remittance amount, if any, for each contract under this part,
including the amount of incurred claims for prescription drugs,
supplemental benefits, total revenue, expenditures on quality improving
activities, non-claims costs, taxes, licensing and regulatory fees, and
any remittance owed to CMS under Sec. 423.2410.
(b) For contract years 2018 through 2022, each Part D sponsor must
submit to CMS, in a timeframe and manner specified by CMS, the
following information:
* * * * *
(d) Subject to paragraph (e) of this section, the MLR is reported
once, and is not reopened as a result of any payment reconciliation
processes.
(e) With respect to a Part D sponsor that has already submitted to
CMS the MLR report or MLR data required under paragraph (a) or (b) of
this section, respectively, for a contract for a contract year,
paragraph (d) of this section does not prohibit resubmission of the MLR
report or MLR data for the purpose of correcting the prior MLR report
or data submission. Such resubmission must be authorized or directed by
CMS, and upon receipt and acceptance by CMS, is regarded as the
contract's MLR report or data submission for the contract year for
purposes of this subpart.
Dated: April 27, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-09375 Filed 4-29-22; 4:15 pm]
BILLING CODE 4120-01-P