[Federal Register Volume 89, Number 79 (Tuesday, April 23, 2024)]
[Rules and Regulations]
[Pages 30448-30848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07105]
[[Page 30447]]
Vol. 89
Tuesday,
No. 79
April 23, 2024
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, 423, et al.
Medicare Program; Changes to the Medicare Advantage and the Medicare
Prescription Drug Benefit Program for Contract Year 2024--Remaining
Provisions and Contract Year 2025 Policy and Technical Changes to the
Medicare Advantage Program, Medicare Prescription Drug Benefit Program,
Medicare Cost Plan Program, and Programs of All-Inclusive Care for the
Elderly (PACE); Final Rule
Federal Register / Vol. 89 , No. 79 / Tuesday, April 23, 2024 / Rules
and Regulations
[[Page 30448]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 417, 422, 423, and 460
Office of the Secretary
[CMS-4201-F3 and CMS-4205-F]
RINs 0938-AV24 and 0938-AU96
Medicare Program; Changes to the Medicare Advantage and the
Medicare Prescription Drug Benefit Program for Contract Year 2024--
Remaining Provisions and Contract Year 2025 Policy and Technical
Changes to the Medicare Advantage Program, Medicare Prescription Drug
Benefit Program, Medicare Cost Plan Program, and Programs of All-
Inclusive Care for the Elderly (PACE)
AGENCY: Centers for Medicare & Medicaid Services (CMS), Office of the
National Coordinator for Health Information Technology (ONC),
Department of Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule will revise the Medicare Advantage (Part C),
Medicare Prescription Drug Benefit (Part D), Medicare cost plan, and
Programs of All-Inclusive Care for the Elderly (PACE) regulations to
implement changes related to Star Ratings, marketing and
communications, agent/broker compensation, health equity, dual eligible
special needs plans (D-SNPs), utilization management, network adequacy,
and other programmatic areas. This final rule also codifies existing
sub-regulatory guidance in the Part C and Part D programs.
DATES: Effective date: These regulations are effective June 3, 2024.
Applicability dates: The provisions in this rule are applicable to
coverage beginning January 1, 2025, except as otherwise noted. The
updates to marketing and communication provisions at Sec. Sec.
422.2267(e)(34), 422.2274, and 423.2274 are applicable for all contract
year 2025 marketing and communications beginning October 1, 2024. The
updated provisions at Sec. Sec. 422.2267(e)(31)(ii) and
423.2267(e)(33)(ii) are applicable for all contract year 2026 marketing
and communications beginning September 30, 2025, however, at plan
option for contract year 2025 marketing and communications beginning
September 30, 2024, the plan may use the model notice described in
Sec. Sec. 422.2267(e)(31)(ii) and 423.2267(e)(33)(ii) to satisfy the
MLI requirements set forth in Sec. Sec. 422.2267(e)(31)(i) and
423.2267(e)(33)(i).
Sections 422.111(l) and 423.530 are applicable beginning January 1,
2026. This final rule also includes revisions to existing regulations
in the Risk Adjustment Data Validation (RADV) audit appeals process,
the appeals process for quality bonus payment determination at Sec.
422.260, weighting of new Part C and D Star Ratings measures at
Sec. Sec. 422.166(e)(2) and 423.186(e)(2), and the rule for Part C and
D Star Ratings non-substantive measure updates at Sec. Sec. 422.164(d)
and 423.184(d) applicable 60 days after the date of publication. The
use and release of risk adjustment data provisions at Sec. Sec.
422.310(f)(1)(vi), 422.310(f)(1)(vii), and 422.310(f)(3)(v) are
applicable 60 days after the date of publication.
FOR FURTHER INFORMATION CONTACT:
Carly Medosch, (410) 786-8633--General Questions.
Naseem Tarmohamed, (410) 786-0814--Part C and Cost Plan Issues.
Lucia Patrone, (410) 786-8621--Part D Issues.
Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and Appeal
Issues.
Kelley Ordonio, (410) 786-3453--Parts C and D Payment Issues.
Hunter Coohill, (720) 853-2804--Enforcement Issues.
Lauren Brandow, (410) 786-9765--PACE Issues.
Sara Klotz, (410) 786-1984--D-SNP Issues.
Joe Strazzire, (410) 786-2775--RADV Audit Appeals Issues.
[email protected]--Parts C and D Star Ratings
Issues.
SUPPLEMENTARY INFORMATION:
I. Executive Summary and Background
A. Executive Summary
1. Purpose
The primary purpose of this final rule is to amend the regulations
for the Medicare Advantage (Part C) program, Medicare Prescription Drug
Benefit (Part D) program, Medicare cost plan program, and Programs of
All-Inclusive Care for the Elderly (PACE). This final rule includes a
number of new policies that will improve these programs beginning with
contract year 2025 and will codify existing Part C and Part D sub-
regulatory guidance.
Additionally, this final rule will implement certain sections of
the following Federal laws related to the Parts C and D programs:
The Bipartisan Budget Act (BBA) of 2018.
The Consolidated Appropriations Act (CAA), 2023.
2. Summary of the Major Provisions
a. Part D Medication Therapy Management (MTM) Program: Eligibility
Criteria
Section 1860D-4(c)(2) of the Act requires all Part D sponsors to
have an MTM program designed to assure, with respect to targeted
beneficiaries, that covered Part D drugs are appropriately used to
optimize therapeutic outcomes through improved medication use, and to
reduce the risk of adverse events, including adverse drug interactions.
Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to
target those Part D enrollees who have multiple chronic diseases, are
taking multiple Part D drugs, and are likely to meet a cost threshold
for covered Part D drugs established by the Secretary. CMS codified the
MTM targeting criteria at Sec. 423.153(d)(2).
Through this final rule, CMS establishes improved targeting
criteria for the Part D MTM program that will help ensure more
consistent, equitable, and expanded access to MTM services. After
consideration of the comments received, we are finalizing proposed
changes to the MTM eligibility criteria with modifications that are
effective for January 1, 2025, as follows:
We are finalizing the provision at Sec. 423.153(d)(2)(iii) that
Part D sponsors must include all core chronic diseases in their
targeting criteria for identifying beneficiaries who have multiple
chronic diseases, as provided under Sec. 423.153(d)(2)(i)(A). As part
of this provision at Sec. 423.153(d)(2)(iii), we are codifying the
nine core chronic diseases currently identified in guidance and adding
HIV/AIDS, for a total of 10 core chronic diseases. The 10 core chronic
diseases are: (1) Alzheimer's disease; (2) Bone disease-arthritis
(including osteoporosis, osteoarthritis, and rheumatoid arthritis); (3)
Chronic congestive heart failure (CHF); (4) Diabetes; (5) Dyslipidemia;
(6) End-stage renal disease (ESRD); (7) Human immunodeficiency virus/
acquired immunodeficiency syndrome (HIV/AIDS); (8) Hypertension; (9)
Mental health (including depression, schizophrenia, bipolar disorder,
and other chronic/disabling mental health conditions); and (10)
Respiratory disease (including asthma, chronic obstructive pulmonary
disease (COPD), and other chronic lung disorders). Sponsors retain the
flexibility to target
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additional chronic diseases beyond those codified as core chronic
diseases.
We are not finalizing the proposal at Sec. 423.153(d)(2)(i)(B) to
decrease the maximum number of Part D drugs a sponsor may require from
eight to five for Contract Year 2025. At this time, we are retaining
the maximum number of drugs a plan sponsor may require for targeting
beneficiaries taking multiple Part D drugs as eight at Sec.
423.153(d)(2)(i)(B). Part D sponsors will maintain the flexibility to
set a lower threshold (a number between two and eight Part D drugs) for
targeting beneficiaries taking multiple Part D drugs. We may consider
revisiting this or similar policies in future rulemaking.
We are finalizing the provision at Sec. 423.153(d)(2)(iv) to
require sponsors to include all Part D maintenance drugs in their
targeting criteria with minor modifications to the regulatory text to
clarify that sponsors must include all Part D maintenance drugs and to
provide flexibility for sponsors to include all Part D drugs in their
targeting criteria. However, sponsors will not be permitted to limit
the Part D maintenance drugs included in MTM targeting criteria to
specific Part D maintenance drugs or drug classes. We are also
finalizing the requirement at Sec. 423.153(d)(2)(iv) that, for the
purpose of identifying Part D maintenance drugs, plans must rely on
information in a widely accepted, commercially or publicly available
drug information database.
We are finalizing the provision at Sec. 423.153(d)(2)(i)(C) with
modification to set the MTM cost threshold at the average cost of eight
generic drugs, as defined at Sec. 423.4. CMS will calculate the dollar
amount of the MTM cost threshold based on the average daily cost of a
generic drug using the PDE data specified at Sec.
423.104(d)(2)(iv)(C).
We are also codifying longstanding guidance at Sec.
423.153(d)(1)(vii)(B)(2) to provide that a beneficiary must be unable
to accept the offer to participate in the CMR due to cognitive
impairment. We are also finalizing other technical changes at Sec.
423.153(d)(1)(vii)(B)(1)(i) to clarify that the CMR must include an
interactive consultation that is conducted in person or via synchronous
telehealth.
b. Improving Access to Behavioral Health Care Providers
We are finalizing regulatory changes that will improve access to
behavioral health care by adding a new behavioral health provider
specialty to our MA network adequacy standards. Specifically, we are
finalizing requirements to add a new facility-specialty type to the
existing list of facility-specialty types evaluated as part of network
adequacy requirements and reviews. The new facility-specialty type,
``Outpatient Behavioral Health,'' will be included in network adequacy
evaluations and can include providers of various types: Marriage and
Family Therapists (MFTs), Mental Health Counselors (MHCs), Opioid
Treatment Program (OTP) providers, Community Mental Health Centers or
other behavioral health and addiction medicine specialists and
facilities, including addiction medicine physicians, other providers.
Other providers may include nurse practitioners (NPs), physician
assistants (PAs) and Clinical Nurse Specialists (CNSs), who furnish
addiction medicine and behavioral health counseling or therapy services
and meet other specific criteria. Beginning January 1, 2024, MFTs and
MHCs were eligible to enroll in Medicare and start billing for services
due to the new statutory benefit category established by the
Consolidated Appropriations Act (CAA) 2023. We aim to strengthen
network adequacy requirements and improve beneficiary access to
behavioral health services and providers by expanding our network
adequacy evaluation requirements for MA organizations.
To address concerns that NPs, PAs, and CNSs might lack the
necessary skills, training, or expertise to effectively address the
behavioral health needs of enrollees and that the absence of criteria
for incorporating these provider types could result in the creation of
``ghost networks'' (where providers may be listed in a provider
directory without actively treating patients for behavioral health), we
are also adopting specific criteria that MA organizations must use to
determine when an NP, PA or CNS can be considered part of a network to
meet the Outpatient Behavioral Health network adequacy standard. MA
organizations must independently verify that the provider has furnished
or will furnish such services to 20 patients within a recent 12-month
period using reliable information about services furnished by the
provider such as the MA organization's claims data, prescription drug
claims data, electronic health records, or similar data.
c. Distribution of Personal Beneficiary Data by Third Party Marketing
Organizations (TPMOs)
Third-Party Marketing Organizations (TPMOs) are selling and
reselling beneficiary contact information to skirt existing CMS rules
that prohibit cold calling so they can aggressively market MA and Part
D Plans. Beneficiaries are unaware that by placing a call or clicking
on a generic-looking web-link they are unwittingly agreeing and
providing consent for their personal contact information to be
collected and sold to other entities for future marketing activities.
As a result, we are finalizing requirements to prohibit personal
beneficiary data collected by TPMOs for marketing or enrolling a
beneficiary into an MA or Part D plan to be shared with other TPMOs,
unless prior express written consent is given by the beneficiary.
Furthermore, we are finalizing a one-to-one consent structure where
TPMOs must obtain prior express written consent through a clear and
conspicuous disclosure for each TPMO that will be receiving the
beneficiary's data. This provision is designed to address complaints we
have received from beneficiaries and their advocates and caregivers
about receiving harassing and unwanted phone and email solicitations
from individuals attempting to enroll them in MA and Part D plans. This
final rule protects beneficiaries against unwanted calls, texts, email
solicitations, and other contacts, while still ensuring that
beneficiaries have control over their personal data and can connect
with the TPMOs they would like to speak with, creating a more
transparent and safer environment for beneficiaries to find the plan
that best fits their health needs.
d. Establish Guardrails for Agent and Broker Compensation
Section 1851(j) of the Act requires that CMS develop guidelines to
ensure that the use of agent and broker compensation creates incentives
to enroll individuals in the MA plan that is intended to best meet
their health care needs. To that end, for many years CMS has set upper
limits on the amount of compensation agents and brokers can receive for
enrolling Medicare beneficiaries into MA and PDP plans. We have
learned, however, that many MA and PDP plans, as well as third-party
entities with which they contract (such as Field Marketing
Organizations (FMOs)) have structured payments to agents and brokers
that allow for separate payments for these agents and brokers and have
the effect of circumventing compensation caps. We also note that that
these separate payments appear to be increasing. In this rule, we are
finalizing requirements that will generally prohibit contract terms
between MA organizations and agents, brokers or other TPMOs that may
interfere with the agent's or broker's ability to objectively assess
and
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recommend the plan that best fits a beneficiary's health care needs;
set a single, increased compensation rate for all plans to be updated
annually; revise the scope of items and services included within agent
and broker compensation; and eliminate the regulatory framework which
currently allows for separate payment to agents and brokers for
administrative services. We are also making conforming edits to the
Part D agent broker compensation rules at Sec. 423.2274. Collectively,
we believe the impact of these changes will better align with statutory
requirements to ensure that the use of compensation creates incentives
for agents and brokers to enroll individuals in the plan that best fits
a beneficiary's health care needs. Further, such changes align with the
Biden-Harris Administration's commitment to promoting fair, open, and
competitive markets and ensuring beneficiaries can make fully informed
choices among a robust set of health insurance options.
e. Special Supplemental Benefits for the Chronically Ill (SSBCI)
We are finalizing regulatory changes that will help ensure that
SSBCI items and services offered by MA plans are appropriate and meet
applicable statutory and regulatory standards, including that the SSBCI
items and services are reasonably expected to improve or maintain the
health or overall function of chronically ill enrollees. First, we are
finalizing requirements that, by the date on which it submits its bid
to CMS, an MA organization must establish a bibliography of relevant
acceptable evidence that an item or service offered as SSBCI has a
reasonable expectation of improving or maintaining the health or
overall function of a chronically ill enrollee. Second, we are
clarifying in the regulation that an MA plan must follow its written
policies based on objective criteria for determining an enrollee's
eligibility for an SSBCI when making such eligibility determinations.
Third, we are requiring that the MA plan document both denials and
approvals of SSBCI eligibility. Additionally, we are codifying CMS's
authority to review and deny approval of an MA organization's bid if
the MA organization has not demonstrated, through relevant acceptable
evidence, that its proposed SSBCI has a reasonable expectation of
improving or maintaining the health or overall function of the
chronically ill enrollee. Finally, we are codifying CMS's authority to
review SSBCI offerings annually for compliance, considering the
evidence available at the time. We believe these revisions to Sec.
422.102(f) will better ensure that the benefits offered as SSBCI are
reasonably expected to improve or maintain the health or overall
function of the chronically ill enrollee while also guarding against
the use of MA rebate dollars for SSBCI that are not supported by
acceptable evidence.
The new SSBCI requirements regarding creation of a bibliography and
documentation of SSBCI eligibility for enrollees will apply to plans
beginning with the CY2025 bid process. The codification of other SSBCI
requirements regarding plans' obligation to follow written SSBCI
eligibility policies, and our authority to decline to accept a bid if
the MA organization has not demonstrated that its proposed SSBCI has a
reasonable expectation of improving or maintaining the health or
overall function of the chronically ill enrollee do not represent a
change in policy and CMS will continue in practice during the CY2025
bid process and in subsequent years.
In addition, we are finalizing new policies to protect
beneficiaries and improve transparency regarding SSBCI so that
beneficiaries are aware that SSBCI are only available to enrollees who
meet specific eligibility criteria. We are modifying and strengthening
the current requirements for the SSBCI disclaimer that MA organizations
offering SSBCI must use whenever SSBCI are mentioned. Specifically, we
are requiring that the SSBCI disclaimer list the relevant chronic
condition(s) the enrollee must have to be eligible for the SSBCI
offered by the MA organization. The MA organization must convey in its
SSBCI disclaimer that even if the enrollee has a listed chronic
condition, the enrollee may not receive the benefit because other
eligibility and coverage criteria also apply. We are also finalizing
specific font and reading pace parameters for the SSBCI disclaimer in
print, television, online, social media, radio, other voice-based ads,
and outdoor advertising (including billboards). Finally, we are
requiring that MA organizations include the SSBCI disclaimer in all
marketing and communications materials that mention SSBCI. We believe
that imposing these new SSBCI disclaimer requirements will help to
ensure that the marketing of and communication about these benefits is
not misleading or potentially confusing to enrollees who rely on these
materials to make enrollment decisions.
f. Mid-Year Enrollee Notification of Available Supplemental Benefits
In addition, over the past several years, the number of MA plans
offering supplemental benefits has increased. The benefits offered are
broader in scope and variety and we are seeing an increasing amount of
MA rebate dollars directed towards these benefits. At the same time,
plans have reported that enrollee utilization of many of these benefits
is low. To help ensure MA enrollees are fully aware of all available
supplemental benefits and to promote equitable access to care, we will
now require MA plans to notify enrollees mid-year of the unused
supplemental benefits available to them. The notice will list any
supplemental benefits not utilized by the enrollee during the first 6
months of the year (January 1 to June 30). Currently, MA plans are not
required to send any communication specific to an enrollee's usage of
supplemental benefits and CMS believes such a notice could be an
important part of a plan's overall care coordination efforts. As
finalized, this policy will educate enrollees on their access to
supplemental benefits to encourage greater utilization of these
benefits and ensure MA plans are better stewards of the rebate dollars
directed towards these benefits.
g. Annual Health Equity Analysis of Utilization Management Policies and
Procedures
We are finalizing regulatory changes to the composition and
responsibilities of the Utilization Management (UM) committee. These
policies will require that at least one member of the UM committee have
expertise in health equity. These policies will also require that the
UM committee conduct an annual health equity analysis of the use of
prior authorization at the plan-level. The analysis will examine the
impact of prior authorization on enrollees with one or more of the
following social risk factors (SRFs): (i) receipt of the low-income
subsidy or being dually eligible for Medicare and Medicaid (LIS/DE); or
(ii) having a disability. To enable a more comprehensive understanding
of the impact of prior authorization practices on enrollees with the
specified SRFs at the plan level, the analysis must compare metrics
related to the use of prior authorization for enrollees with the
specified SRFs to enrollees without the specified SRFs. Finally, the
policies will require MA organizations to make the results of the
analysis publicly available on their plan's website in a manner that is
easily accessible and without barriers.
h. Amendments to Part C and Part D Reporting Requirements
In this final rule, we are affirming our authority to collect
detailed information from MA organizations and Part D plan
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sponsors under current regulations, in keeping with the Biden-Harris
administration's focus on improving transparency and data in MA and
Part D. We are revising Sec. Sec. 422.516(a)(2) and 423.514(a)(2) as
proposed (with a minor clarification in Sec. 422.516(a)) to be
consistent with the broad scope of the reporting requirements. This
will lay the groundwork for new program-wide data collections to be
established through the Paperwork Reduction Act (PRA) process, which
will provide advance notice to interested parties and be subject to
public comment. An example of increased data collection could be
service level data for all initial coverage decisions and plan level
appeals, such as decision rationales for items, services, or diagnosis
codes to have better line of sight on utilization management and prior
authorization practices, among many other issues.
i. Enhance Enrollees' Right To Appeal an MA Plan's Decision To
Terminate Coverage for Non-Hospital Provider Services
Beneficiaries enrolled in Traditional Medicare and MA plans have
the right to a fast-track appeal by an Independent Review Entity (IRE)
when their covered skilled nursing facility (SNF), home health, or
comprehensive outpatient rehabilitation facility (CORF) services are
being terminated. Currently, Quality Improvement Organizations (QIO)
act as the IRE and conduct these reviews. Under current regulations, MA
enrollees do not have the same access to QIO review of a fast-track
appeal as Traditional Medicare beneficiaries in connection with
terminations of these types of services. In this final rule, we are
finalizing proposals to: (1) require the QIO, instead of the MA plan,
to review untimely fast-track appeals of an MA plan's decision to
terminate services in an HHA, CORF, or SNF; and (2) fully eliminate the
current provision that requires the forfeiture of an enrollee's right
to appeal a termination of services to the QIO when the enrollee leaves
the CORF or SNF or ends HHA services. These will bring MA regulations
in line with the parallel reviews available to beneficiaries in
Traditional Medicare and expand the rights of MA beneficiaries to
access the fast-track appeals process in connection with terminations
of HHA, CORF, or SNF services.
j. Changes to an Approved Formulary--Including Substitutions of
Biosimilar Biological Products
Current regulations permit Part D sponsors to immediately remove
from their formularies a brand name drug and substitute its newly
released generic equivalent. Part D sponsors meeting the requirements
can provide notice of specific changes, including direct notice to
affected beneficiaries, after they take place; do not need to provide a
transition supply of the substituted drug; and can make these changes
at any time including in advance of the plan year. Consistent with
these requirements, we proposed in the proposed rule titled ``Medicare
Program; Contract Year 2024 Policy and Technical Changes to the
Medicare Advantage Program, Medicare Prescription Drug Benefit Program,
Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment
Provisions of the Affordable Care Act and Programs of All-Inclusive
Care for the Elderly; Health Information Technology Standards and
Implementation Specifications,'' which appeared in the December 27,
2022 Federal Register (hereinafter referred to as the December 2022
proposed rule), to permit Part D sponsors also to immediately
substitute: (i) a new interchangeable biological product for its
corresponding reference product; (ii) a new unbranded biological
product for its corresponding brand name biological product; and (iii)
a new authorized generic for its corresponding brand name equivalent.
Our proposed regulatory text in the December 2022 proposed rule did
not specify how Part D sponsors could treat substitution of biosimilar
biological products other than interchangeable biological products.
Under current policy, Part D sponsors have to obtain explicit approval
from CMS prior to making a midyear formulary change that removes a
reference product and replaces it with a biosimilar biological product
other than an interchangeable biological product. Further, if such a
change is approved, the Part D sponsor may apply the change only to
enrollees who begin therapy after the effective date of the change. In
other words, enrollees currently taking the reference product are able
to remain on the reference product until the end of the plan year
without having to obtain an exception. In response to comments received
on our initial proposal in the December 2022 proposed rule (discussed
in section III.P. of this final rule), and to increase access to
biosimilar biological products consistent with the Biden-Harris
Administration's commitment to competition as outlined in Executive
Order (E.O.) 14036: ``Promoting Competition in the American Economy,''
we proposed in the proposed rule titled ``Medicare Program; Contract
Year 2025 Policy and Technical Changes to the Medicare Advantage
Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan
Program, and Programs of All-Inclusive Care for the Elderly; Health
Information Technology Standards and Implementation Specifications,''
which appeared in the November 16, 2023 Federal Register (hereinafter
referred to as the November 2023 proposed rule) to add substitutions of
biosimilar biological products other than interchangeable biological
products to the type of formulary changes that apply to all enrollees
(including those already taking the reference product prior to the
effective date of the change) following a 30-day notice.
Having now considered comments (discussed in section III.P. of this
final rule) received on the proposals in both the December 2022 and
November 2023 proposed rules, we are finalizing regulations to permit
Part D sponsors that meet all requirements: (1) to immediately
substitute an interchangeable biological product for its reference
product, a new unbranded biological product for its corresponding brand
name biological product, and a new authorized generic for its brand
name equivalent; and (2) to substitute upon 30 days' notice any
biosimilar biological product for its reference product.
k. Increasing the Percentage of Dually Eligible Managed Care Enrollees
Who Receive Medicare and Medicaid Services From the Same Organization
We are finalizing, with some modifications, interconnected
proposals to: (a) replace the current quarterly special enrollment
period (SEP) with a one-time-per month SEP for dually eligible
individuals and others enrolled in the Part D low-income subsidy
program to elect a standalone PDP, (b) create a new integrated care SEP
to allow dually eligible individuals to elect an integrated D-SNP on a
monthly basis, (c) limit enrollment in certain D-SNPs to those
individuals who are also enrolled in an affiliated Medicaid managed
care organization (MCO), and (d) limit the number of D-SNP plan benefit
packages an MA organization can offer for full-benefit dually eligible
individuals in the same service area that it, its parent organization,
or any entity that shares a parent organization with the MA
organization offers an affiliated Medicaid MCO. This final rule will
increase the percentage of full-benefit dually eligible MA enrollees
who are in plans that--directly by the MA
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organization or indirectly through the parent organization or a related
entity--are also contracted to cover Medicaid benefits, thereby
expanding access to integrated materials, unified appeal processes
across Medicare and Medicaid, and continued Medicare services during an
appeal. It will also reduce the number of MA plans overall that can
enroll dually eligible individuals outside the annual coordinated
election period, thereby reducing the number of plans deploying
aggressive marketing tactics toward dually eligible individuals
throughout the year.
l. For D-SNP PPOs, Limit Out-of-Network Cost Sharing
We are finalizing a limitation on out-of-network cost sharing for
D-SNP preferred provider organizations (PPOs) for specific services.
The final rule will reduce cost shifting to Medicaid, increase payments
to safety net providers, expand dually eligible enrollees' access to
providers, and protect dually eligible enrollees from unaffordable
costs.
m. Contracting Standards for Dual Eligible Special Needs Plan Look-
Alikes
Under existing regulations, CMS does not contract with and will not
renew the contract of a D-SNP look-alike--that is, an MA plan that is
not a SNP but in which dually eligible enrollees account for 80 percent
or more of total enrollment. We are finalizing a reduction to the D-SNP
look-alike threshold from 80 percent to 70 percent for plan year 2025
and 60 percent for plan year 2026 and subsequent years. This provision
will help address the continued proliferation of MA plans that are
serving high percentages of dually eligible individuals without meeting
the requirements to be a D-SNP.
n. Standardize the Medicare Advantage (MA) Risk Adjustment Data
Validation Appeals Process
We are finalizing regulatory language to address gaps and
operational constraints included in existing RADV appeal regulations.
Currently, if MA organizations appeal both medical record review
determinations and payment error calculations resulting from RADV
audits, both issues must be appealed and move through the appeals
process concurrently, which we foresee could result in inconsistent
appeal adjudications at different levels of appeal that impact
recalculations of the payment error. This has the potential to cause
burden, confuse MA organizations, and negatively impact the operations
and efficiency of CMS's appeals processes. This final rule will
standardize and simplify the RADV appeals process for CMS and MA
organizations, as well as address operational concerns at all three
levels of appeal. We are finalizing requirements that MA organizations
must exhaust all three levels of appeal for medical record review
determinations before beginning the payment error calculation appeals
process. This will ensure adjudication of medical record review
determinations are final before a recalculation of the payment error is
completed and subject to appeal. We are also finalizing several other
revisions to our regulatory appeals process to conform these changes to
our procedures.
Finally, we are clarifying and emphasizing our intent that if any
provision of this final rule is held to be invalid or unenforceable by
its terms, or as applied to any person or circumstance, or stayed
pending further agency action, it shall be severable from this final
rule and not affect the remainder thereof or the application of the
provision to other persons not similarly situated or to other,
dissimilar circumstances. Through this rule, we adopt provisions that
are intended to and will operate independently of each other, even if
each serves the same general purpose or policy goal. Where a provision
is necessarily dependent on another, the context generally makes that
clear (such as by a cross-reference to apply the same standards or
requirements).
BILLING CODE P
3. Summary of Costs and Benefits
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[GRAPHIC] [TIFF OMITTED] TR23AP24.000
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[GRAPHIC] [TIFF OMITTED] TR23AP24.001
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[GRAPHIC] [TIFF OMITTED] TR23AP24.002
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BILLING CODE C
B. Background and Summary of the Final Rule
In this final rule, CMS addresses many of the remaining proposals
from the December 2022 proposed rule in addition to the proposals from
the November 2023 proposed rule. There are several proposals from the
December 2022 proposed rule that were not finalized. CMS may address
these proposals in a future final rule.
We received 3,463 timely pieces of correspondence containing one or
more comments on the November 2023 proposed rule. Some of the public
comments were outside of the scope of the proposed rule. These out-of-
scope public comments are not addressed in this final rule. Summaries
of the public comments that are within the scope of the proposed rule
and our responses to those public comments are set forth in the various
sections of this final rule under the appropriate heading.
C. General Comments on the December 2022 Proposed Rule and the November
2023 Proposed Rule Proposed Rule
We received some overarching comments related to the December 2022
and the November 2023 proposed rules, which we summarize in the
following paragraphs:
Comment: A commenter expressed concern that CMS had not provided
sufficient time for plan sponsors to understand the impact of recently
finalized regulations, and the changes they have implemented, before
proposing more policies that build on these areas. They recommended
that in future years CMS allows time to measure and observe the impact
of policy changes on plan sponsors and their members prior to layering
new proposals.
Response: We appreciate the commenter's concern regarding the plans
having enough time to understand the impact of finalized regulations.
We will take their recommendation into consideration for future
rulemaking.
Comment: A commenter requested that CMS extend the comment period
by 60 days, through March 5, 2024, so they could effectively use the
extended period in planning and preparing a response.
Response: Section 1871(b) of the Act requires that we provide for
notice of the proposed regulation in the Federal Register and a period
of not less than 60 days for public comment thereon. The proposed rule
was available for public inspection on federalregister.gov (the website
for the Office of Federal Register) on November 3, 2023. We did not
extend the comment period because we believe the required 60 days
provided the public with adequate time to prepare and submit responses.
Comment: In response to CMS-4201-P, a commenter suggested that CMS
had not allowed for a 60-day comment period for the proposed rule
because the beginning of the comment period was calculated from the
date the proposed rule was made available for public inspection on the
Federal Register website rather than the date that it appeared in an
issue of the Federal Register. The commenter recommended that CMS
provide an additional 60-day comment period on the proposed rule.
Response: Section 1871(b) of the Act requires that we provide for
notice of the proposed regulation in the Federal Register and a period
of not less than 60 days for public comment thereon. The proposed rule
was available for public inspection on federalregister.gov (the website
for the Office of Federal Register) on December 14, 2022. We believe
that beginning the comment period for the proposed rule on the date it
became available for public inspection at the Office of the Federal
Register fully complied with the statute and provided the required
notice to the public and a meaningful opportunity for interested
[[Page 30457]]
parties to provide input on the provisions of the proposed rule.
D. Status of the Overpayment Proposal in the December 27, 2022,
Proposed Rule
Under the governing statute, any Medicare Advantage Organization
(MA organization) that ``has received an overpayment,'' 42 U.S.C.
1320a-7k(d)(1), must ``report and return the overpayment,'' 42 U.S.C.
1320a-7k(d)(1)(A), no later than ``60 days after the date on which the
overpayment was identified'' 42 U.S.C. 1320a-7k(d)(2)(A). CMS
implemented this statutory overpayment provision through a May 23,
2014, final rule titled ``Medicare Program; Contract Year 2015 Policy
and Technical Changes to the Medicare Advantage and the Medicare
Prescription Drug Benefit Programs''. See 79 FR 29844. A group of MA
organizations challenged that rule's inclusion of instances where an MA
organization ``should have determined through the exercise of
reasonable diligence . . . that [it] has received an overpayment'' in
the regulation's definition of ``identified,'' 42 CFR 422.326(c). The
District Court for the District of Columbia held that this regulatory
provision was impermissible under the statute. See UnitedHealthcare
Ins. Co. v. Azar, 330 F. Supp. 3d 173, 191 (D.D.C. 2018), rev'd in part
on other grounds sub nom. UnitedHealthcare Ins. Co. v. Becerra, 16
F.4th 867 (D.C. Cir. 2021), cert. denied, 142 S. Ct. 2851 (U.S. June
21, 2022) (No. 21-1140). CMS views the District Court's ruling as
having invalidated the definition of ``identified'' set out in 42 CFR
422.326(c). However, MA organizations remain obligated to report and
return all overpayments that they have identified within the meaning of
the statute, 42 U.S.C. 1320a-7k(d)(2)(A). In the December 27, 2022
proposed rule titled ``Medicare Program; Contract Year 2024 Policy and
Technical Changes to the Medicare Advantage Program, Medicare
Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare
Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act
and Programs of All-Inclusive Care for the Elderly; Health Information
Technology Standards and Implementation Specifications'' (the December
2022 proposed rule), CMS proposed revisions to regulations primarily
governing Medicare Advantage (MA or Part C) and the Medicare
Prescription Drug Benefit (Part D) (87 FR 79452). CMS proposed in the
December 2022 proposed rule to remove the existing definition of
``identified'' in the Parts C and D overpayment regulations at 42 CFR
422.326 and 423.360 (as well as the corresponding Parts A and B
regulation) (see 87 FR 79559). Under the Parts C and D overpayment
proposal, an MA organization or Part D sponsor would have identified an
overpayment when it had actual knowledge of the existence of the
overpayment or acted in ``reckless disregard'' or ``deliberate
ignorance'' of the overpayment. CMS has received inquiries regarding
this proposal and want to be clear that it remains under consideration
and that CMS intends to issue a final rule to revise the definition of
``identified'' in the overpayment rules as soon as is reasonably
possible.
E. Information on Cyber Resiliency
In light of recent cybersecurity events impacting health care
operations nationally, we expect all payers to review and implement
HHS's voluntary HPH Cyber Performance Goals (CPGs). These CPGs are part
of HHS' broader cybersecurity strategy and designed to help health care
organizations strengthen cyber preparedness, improve cyber resiliency,
and ultimately protect patient health information and safety. We
welcome input on our approach via email at [email protected].
II. Strengthening Current Medicare Advantage and Medicare Prescription
Drug Benefit Program Policies
A. Definition of Network-Based Plan (Sec. Sec. 422.2 and 422.114)
Private-fee-for-service (PFFS) plans were established by the
Balanced Budget Act of 1997 (Pub. L. 105-33) and were originally not
required to have networks. The Medicare Improvements for Patients and
Providers Act of 2008 (Pub. L. 110-275) (MIPPA) revised the PFFS
requirements to require that, beginning with contract year 2011, PFFS
plans have a network when operating in the same service area as two or
more network-based plans. For purposes of this requirement, section
1852(d)(5)(C) of the Act and Sec. 422.114(a)(3)(ii) define network-
based plans as a coordinated care plan (as described in section
1851(a)(2)(A) of the Act and Sec. 422.4(a)(1)(iii)), a network-based
MSA plan, and a section 1876 reasonable cost plan. The statutory and
regulatory definitions both specifically exclude an MA regional plan
that meets access requirements substantially through means other than
written contracts, per Sec. 422.112(a)(1)(ii).
When codifying this requirement in the final rule that appeared in
the Federal Register September 18, 2008, titled ``Medicare Program;
Revisions to the Medicare Advantage and Prescription Drug Benefit
Programs,'' (73 FR 54226), we included the definition of network-based
plan in the section of the regulations for PFFS plans, as the
definition was integral to the new requirement for PFFS plans (73 FR
54249). A network-based plan, however, has meaning in contexts other
than PFFS. To ensure that the definition is readily and more broadly
accessible for those seeking requirements related to network-based
plans, we proposed in the December 2022 proposed rule (87 FR 79569) to
move the definition of a network-based plan from Sec.
422.114(a)(3)(ii) to the definitions section in Sec. 422.2. Further,
we proposed that the PFFS provision at Sec. 422.114(a)(3)(ii) will
continue to include language specifying the network requirement.
This proposed change has no policy implications for other
provisions in part 422 in which the definition or description of
network plans plays a role, for example, the network adequacy
provisions at Sec. 422.116 and the plan contract crosswalk provisions
at Sec. 422.530. However, in specifying the network adequacy
requirements for the various plan types, Sec. 422.116(a)(1)(i)
references the current definition of a network-based plan at Sec.
422.2 even though the definition for network-based plan currently
remains at Sec. 422.114(a)(3)(ii) because CMS inadvertently finalized
what was intended to be a conforming change to Sec. 422.116(a)(1)(i)
\1\ before we finalized our proposal to move the definition of network-
based plan to Sec. 422.2. In this final rule, we are moving the
definition to Sec. 422.2, making the current cross reference at Sec.
422.116(a)(1)(i) correct. With respect to the regulation at Sec.
422.530(a)(5), that provision specifically addresses the types of plans
to which it applies and when CMS considers a crosswalk to be to a plan
of a different type and refers to network-based PFFS plans without
citing a specific definition. Therefore, we do not believe any
amendment to Sec. 422.530 is necessary in connection with moving the
definition of network-based plan to Sec. 422.2.
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\1\ Medicare Program; Contract Year 2024 Policy and Technical
Changes to the Medicare Advantage Program, Medicare Prescription
Drug Benefit Program, Medicare Cost Plan Program, and Program of
All-Inclusive Care for the Elderly (88 FR 22120).
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We did not receive any public comments on our proposal to move the
definition and are finalizing the proposal for the reasons outlined in
the December 2022 proposed rule with slight modifications to reorganize
the regulation text for additional clarity.
[[Page 30458]]
B. Past Performance
We established at Sec. Sec. 422.502(b) and 423.503(b) that we may
deny an application submitted by MA organizations and Part D sponsors
that failed to comply with the requirements of a previous MA or Part D
contract, which we refer to as ``past performance.'' We proposed
several technical changes to the regulation text related to past
performance. These changes are intended to clarify the basis for
application denials due to past performance and to ensure that the
factors adequately account for financial difficulties that should
prevent an organization from receiving a new or expanded MA or Part D
contract.
One factor we consider regarding the past performance of MA
organizations and Part D sponsors is their record of imposition of
intermediate sanctions, because intermediate sanctions represent
significant non-compliance with MA or Part D contract requirements. To
clarify the basis for application denials due to intermediate
sanctions, at Sec. Sec. 422.502(b)(1)(i)(A) and 423.503(b)(1)(i)(A) we
proposed to change ``Was subject to the imposition of an intermediate
sanction'' to ``Was under an intermediate sanction.'' We proposed this
revision because MA organizations and Part D sponsors may have a
sanction imposed in one 12-month past performance review period and
effective for all or part of the subsequent 12-month review period. For
instance, CMS could impose a sanction in December 2022 that remains in
effect until September 2023. The sanction would be in effect for the
past performance review period that runs from March 2022 through
February 2023 (for Contract Year 2024 MA and Part D applications filed
in February 2023) and for the past performance review period that runs
from March 2023 through February 2024 (for Contract Year MA and Part D
applications filled in February 2024). Our proposal reflects our stated
intent to deny applications from MA organizations and Part D sponsors
when an active sanction existed during the relevant 12-month review
period when we previously codified that intermediate sanctions are a
basis for denial of an application from an MA organization or Part D
sponsor in ``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 5864)
hereinafter referred to as the ``January 2021 final rule.'' When we
codified this requirement, a commenter requested that sanctions lifted
during the 12 months prior to the application denial be excluded from
past performance. We responded that ``The applying organization will
receive credit for resolving the non-compliance that warranted the
sanction during the next past performance review period, when,
presumably, the organization will not have an active sanction in place
at any time during the applicable 12-month review period'' (86 FR 6000
through 6001). Since an intermediate sanction may be active during
multiple consecutive review periods, our proposed language clarifies
that an organization's application may be denied as long as the
organization is under sanction, not just during the 12-month review
period when the sanction was imposed.
An additional factor we consider regarding the past performance of
MA organizations and Part D sponsors is involvement in bankruptcy
proceedings. At Sec. Sec. 422.502(b)(1)(i)(C) and 423.503(b)(1)(i)(C)
we proposed to incorporate federal bankruptcy as a basis for
application denials due to past performance and to conform the two
paragraphs by changing the text to ``Filed for or is currently in
federal or state bankruptcy proceedings'' from ``Filed for or is
currently in State bankruptcy proceedings,'' at Sec.
422.502(b)(1)(i)(C) and ``Filed for or is currently under state
bankruptcy proceedings'' at Sec. 423.503(b)(1)(i)(C). We codified
state bankruptcy as a basis for an application denial for the past
performance of an MA or Part D sponsor in ``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,'' which appeared in the Federal Register on
May 9, 2022 (87 FR 27704). We codified that requirement because
bankruptcy may result in the closure of an organization's operations
and entering into a new or expanded contract with such an organization
is not in the best interest of the MA or Prescription Drug programs or
the beneficiaries they serve. This concern is equally applicable to
both federal and state bankruptcy, so we proposed to revise the
regulation so that applications from MA organizations or Part D
sponsors that have filed for or are in state or federal bankruptcy
proceedings may be denied on the basis of past performance. In
addition, we also proposed to correct two technical issues identified
since the final rule was published in May 2022. At Sec.
422.502(b)(1)(i)(B), we proposed to change the reference to the
requirement to maintain fiscally sound operations from Sec.
422.504(b)(14) to the correct reference at Sec. 422.504(a)(14). We
also proposed to remove the duplication of Sec. 422.502(b)(1)(i)(A)
and (B).
We invited public comment on this proposal and received several
comments in support of this proposal. We received no comments opposing
this proposal. Therefore, we are finalizing this proposal without
modification.
III. Enhancements to the Medicare Advantage and Medicare Prescription
Drug Benefit Programs
A. Effect of Change of Ownership Without Novation Agreement (Sec. Sec.
422.550 and 423.551)
In accordance with standards under sections 1857 and 1860 of the
Act, each Medicare Advantage (MA) organization and Part D sponsor is
required to have a contract with CMS to offer an MA or prescription
drug plan. Further, section 1857(e)(1) and 1860D-12(b)(3)(D) of the Act
authorizes additional contract terms consistent with the statute and
which the Secretary finds are necessary and appropriate. Pursuant to
this authority and at the outset of the Part C and Part D programs, we
implemented regulations at Sec. Sec. 422.550 and 423.551,
respectively. These regulations require the novation of an MA or Part D
contract in the event of a change of ownership involving an MA
organization or Part D sponsor (63 FR 35106 and 70 FR 4561).
Our current regulations at Sec. Sec. 422.550 and 423.551, as well
as our MA guidance under ``Chapter 12 of the Medicare Managed Care
Manual--Effect of Change of Ownership'' \2\ require that when a change
of ownership occurs, as defined in the regulation, advance notice must
be provided to CMS and the parties to the transaction must enter into a
written novation agreement that meets CMS's requirements. If a change
of ownership occurs and a novation agreement is not completed and the
entities fail to provide advance notification to CMS, the current
regulations at Sec. Sec. 422.550(d) and 423.551(e) indicate that the
existing contract is invalid. Furthermore, Sec. Sec. 422.550(d) and
423.551(e) provide that if the contract is not transferred to
[[Page 30459]]
the new owner through the novation agreement process, the new owner
must enter into a new contract with CMS after submission of an MA or
Part D application, if needed.
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\2\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf.
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The current regulations do not fully address what happens when the
contract becomes ``invalid'' due to a change of ownership without a
novation agreement and/or advance notice to CMS, or in other words,
what happens to the existing CMS contract that was held by the
purchased entity. In that circumstance, CMS would still recognize the
original entity as the owner, even if the contract is now held by a
different entity. Therefore, we proposed to revise Sec. Sec.
422.550(d) and 423.551(e) to make it clear that in such a circumstance,
CMS may unilaterally terminate the affected contract in accordance with
Sec. Sec. 422.510(a)(4)(ix) and 423.509(a)(4)(ix), which establish
that failure to comply with the regulatory requirements contained in
part 422 or part 423 (if applicable) is a basis for CMS to unilaterally
terminate an MA or Part D contract.
In addition, we are strengthening CMS's enforcement authority
regarding this process through the proposed amendments to Sec. Sec.
422.550(d) and 423.551(e). Pursuant to CMS's authority under sections
1857 and 1860 of the Act, we proposed to amend the regulations at
Sec. Sec. 422.550(d) and 423.551(e) to outline the enforcement process
CMS will follow, which includes imposing applicable sanctions before
terminating a contract that has a change in ownership without a
novation agreement in accordance with CMS requirements.
In the interest of protecting and effectively managing the MA and
Part D programs, CMS, through either the novation agreement or the
application process, must ensure that MA organizations and Part D
Sponsors--through their respective legal entities--are eligible to
contract with CMS. If CMS has no chance to assess the qualifications of
the new entity and a change in ownership from one legal entity to
another occurs without CMS approval of a novation agreement, CMS's
ability to ensure the integrity of the MA and Part D programs and
ability to monitor a contract's activity under the new legal entity
would be compromised, thereby putting enrollees at risk. Thus, any
change in ownership from one legal entity to another requires CMS to
determine whether the new entity meets the statutory and regulatory
requirements for operating a contract under the MA or Part D programs.
We proposed to impose enrollment and marketing sanctions, as
outlined in Sec. Sec. 422.750(a)(1) and (a)(3) and 423.750(a)(1) and
(a)(3) on the affected contract. Such sanctions will remain in place
until CMS approves the change of ownership, (including execution of an
approved novation agreement) or the contract is terminated. We also
proposed to provide an opportunity for organizations to demonstrate
that the legal entity assuming ownership by way of a change of
ownership without a novation agreement meets the requirements set forth
by our regulations. This may be completed in the following ways:
If the new owner does not participate in the same service
area as the affected contract, at the next available opportunity, it
must apply for and be conditionally approved for participation in the
MA or Part D program and, within 30 days of the conditional approval
(if not sooner), submit the documentation required under Sec. Sec.
422.550(c) or 423.551(d) for review and approval by CMS (note that
organizations may submit both the application and the documentation for
the change of ownership concurrently); or
If the new owner currently participates in the MA or Part
D program and operates in the same service area as the affected
contract, it must, within 30 days of imposition of intermediate
sanctions, submit the documentation required under Sec. Sec.
422.550(c) or 423.551(d) for review and approval by CMS.
If the new owner is not operating an MA or Part D contract
in the same service area and fails to apply for an MA or Part D
contract in the same service area at the next opportunity to apply, the
existing contract will be subject to termination in accordance with
Sec. Sec. 422.510(a)(4)(ix) or 423.509(a)(4)(x). Or, if the new owner
is operating in the same service area and fails to submit the required
documentation within 30 days of imposition of intermediate sanctions,
the existing contract will be subject to termination in accordance with
Sec. Sec. 422.510(a)(4)(ix) or 423.509(a)(4)(x).
Imposition of intermediate sanctions under Sec. Sec. 422.750(a)(1)
and (a)(3) and 423.750(a)(1) and (a)(3) triggers the past performance
rules applicable under Sec. Sec. 422.502(b)(1) or 423.503(b)(1).
Imposition of intermediate sanctions is a factor considered under CMS's
evaluation and determination of an organization's information from a
current or prior contract during the MA and Part D application process.
We solicited comments on these proposals. We appreciate
stakeholders' input on the proposed changes. We received the following
comments and have provided responses.
Comment: A commenter suggested that CMS not terminate a contract
when a change of ownership has occurred without notification to CMS,
but rather suggested CMS apply a substantial penalty or fine to the new
legal entity.
Response: In the interest of managing the MA and Part D programs
and protecting all enrollees, CMS must ensure, through the application
process, that MA organizations and Part D sponsors are eligible to
contract with CMS. This is existing policy that is also consistent with
statutory requirements under sections 1855 and 1857 and 1860D-12 of the
Act. The option to terminate the contract is a critical tool for CMS to
ensure that only qualified entities can contract with CMS to serve
enrollees. Imposing a substantial penalty or fine on the new owner
would not protect enrollees who are already in MA or Part D plans that
cannot adequately serve them. Moreover, under Sec. Sec. 422.550(d)(2)
and 423.551(e)(2), entities can cure any deficiencies within 30 days of
the imposition of intermediate sanctions. If an entity wishes to avoid
termination, it will have the opportunity to do so.
Comment: A commenter indicated that the proposed approach should
not apply to those changes of ownership that occur under the same
parent organization.
Response: In order to ensure the integrity of the MA and Part D
programs, CMS must review any change in ownership from one legal entity
to another, regardless of the relationship to the parent organization,
to confirm whether the new legal entity meets the regulatory
requirements for operating a contract in a given service area. As
previously indicated, our current regulations at Sec. Sec. 422.550 and
423.551, as well as our MA guidance under ``Chapter 12 of the Medicare
Managed Care Manual--Effect of Change of Ownership,'' \3\ require that
when a change of ownership occurs, as defined in the regulation,
advance notice must be provided to CMS and the parties to the
transaction must enter into a written novation agreement that meets
CMS's requirements.
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\3\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf.
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Comment: A commenter expressed concern that CMS's application
timelines would negatively impact potential changes of ownership and
suggested instead that CMS not impose the proposed sanctions or that
CMS implement the sanctions for a period of
[[Page 30460]]
time that is less time than the application cycle.
Response: As previously noted, CMS must determine whether the new
legal entity involved in the change in ownership meets all CMS
requirements for operating a MA contract. CMS must also have the
opportunity to review and evaluate the new entity. When a change in
ownership from one legal entity to another occurs without CMS approval,
it compromises CMS's ability to ensure the integrity of the MA and Part
D programs and hampers CMS's ability to monitor a contract's activity
under the new legal entity, thereby putting enrollees at risk. The
ability of CMS to ensure that MA and Part D plans are adequate to cover
enrollees' health care needs outweighs concerns about potential
timeline issues.
We believe that our process provides a sufficient opportunity for
organizations to demonstrate, and CMS to determine, that they meet all
CMS's requirements as set forth in our regulations.
Comment: A commenter asked CMS to clarify the types of sanctions
that would be applicable when a change of ownership without novation
agreement occurs.
Response: CMS would impose enrollment and marketing sanctions,
which are outlined in our regulations at Sec. 422.750(a)(1) and (a)(3)
and Sec. 423.750(a)(1) and (a)(3). These sanctions will remain in
place until CMS approves the change of ownership (including execution
of an approved novation agreement) or the contract is terminated.
After considering the comments received and for the reasons
discussed in the proposed rule and our responses to comments, we are
finalizing our proposal to amend the regulations at Sec. Sec.
422.550(d) and 423.551(e) with technical corrections to the cross-
references proposed in Sec. 423.551(e). The cross-references in
paragraphs (e)(1) and (e)(2) have been corrected to reflect the
appropriate Part D sections in the final regulatory text in this final
rule. In addition, we are finalizing minor grammatical and
organizational revisions to the regulations to improve the readability
and clarity of the text.
B. Part D Global and Targeted Reopenings (Sec. Sec. 423.308 and
423.346)
1. Executive Summary
2. Provisions of the Proposed Regulation (Preamble)
Pursuant to the authority under section 1860D-15(f)(1)(B) of the
Act, the Secretary has the right to inspect and audit any books and
records of a Part D sponsor or MA organization that pertain to the
information regarding costs provided to the Secretary. We stated in the
January 2005 Part D final rule (70 FR 4194, 4316) that this right to
inspect and audit would not be meaningful, if upon finding mistakes
pursuant to such audits, the Secretary was not able to reopen final
payment determinations. Therefore, we established that CMS may rectify
any final payment determination issues in a reopening provision at
Sec. 423.346. In the January 2005 Part D final rule, we established
that a reopening was at CMS' discretion and could occur within the
following timeframes after the final payment determination was issued:
(1) 12 months for any reason, (2) 4 years for good cause, or (3) at any
time when there is fraud or similar fault. We operationalized this
provision by conducting program-wide reopenings (that is, global
reopenings) and, when necessary, reopenings targeted to specific
sponsors' contracts (that is, targeted reopenings).
In our December 2022 proposed rule, we proposed to codify the
definitions of ``global reopening'' and ``targeted reopening.'' We also
proposed to modify the timeframe CMS may perform a reopening for good
cause from within 4 years to within 6 years to align with the 6-year
overpayment look-back period described at Sec. 423.360(f) and to help
ensure that payment issues, including overpayments, can be rectified.
In addition, we proposed to codify the circumstances under which CMS
will notify the sponsor(s) of our intention to perform a final payment
determination reopening and the requirement for CMS to announce when it
has completed a reopening. We are finalizing our proposed changes
without modifications.
a. Summary of the Current Process
Under the current process and under Sec. 423.346, CMS performs a
reopening of a Part D payment reconciliation (that is, the initial
payment determination) as a result of revisions of prescription drug
event (PDE) data and/or direct and indirect remuneration (DIR) data due
to plan corrections, CMS system error corrections, post reconciliation
claims activity, and audit and other post reconciliation oversight
activity. Based on our experience in the Part D program and the PDE and
DIR data changes, we understood that this process would require CMS to
perform an initial payment determination reopening every contract year.
By calendar year 2013, CMS had reopened the 2006, 2007, and 2008
Part D payment reconciliations and, approximately 4 years after those
reopenings were completed, began subsequent Part D payment
reconciliation reopenings (consistent with the timing described at
Sec. 423.346(a)(2)). These reopenings included all Part D contracts
that met the following criteria: (1) were in effect during the contract
year being reopened, and (2) were either in effect at the time CMS
completed the reopening or, if nonrenewed or terminated pursuant to
Sec. 423.507 through Sec. 423.510 (collectively referred to as
``terminated'' for the purposes of these reopening provisions), had not
completed the final settlement process by the time CMS completed the
reopening. CMS has referred to this type of program-wide reopening as a
``global reopening.'' See, for example, HPMS memorandum, ``Reopening of
the 2006, 2007, and 2008 Part D Payment Reconciliations,'' April 2,
2012 (available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/part%20dreopeningannoucement_199.pdf).
In addition to ``global reopenings,'' CMS has performed reopenings
as part of our process to correct certain issues. We would consider
performing a reopening to correct issues such as those associated with
CMS-identified problems with an internal CMS file that CMS used in a
Part D payment reconciliation, a coverage gap discount program
reconciliation, or a reopening; CMS corrections to a PDE edit that
impacted a specific plan type (for example, EGWPs); fraud or similar
fault of the Part D sponsor or any subcontractor of the Part D sponsor;
or a Part D sponsor's successful appeal of a reconciliation result.
See, for example, HPMS memorandum, ``Second reopening of the 2011 Final
Part D Payment Reconciliation,'' July 7, 2017 (available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/second%20reopening%20of%20the%202011%20part%20d%20reconciliation_final_403.pdf) and HPMS memorandum, ``Reopening of the 2014 Final Part D
Reconciliation for Employer Group Waiver Plans (EGWPs),'' January 11,
2017 (available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/cy14%20egwp%20reopening%20announcement_01-11-17_404.pdf). These reopenings are not program-wide, but rather are
targeted to the Part D contracts that are impacted by the particular
issue that needs to be addressed by CMS (that is, ``targeted
reopenings''). The targeted reopenings
[[Page 30461]]
are not performed on a predictable schedule, and instead are utilized
by CMS in the confines of the reopening timeframes described in the
current regulation at Sec. 423.346(a)(1) through (3).
Although CMS has in recent experience utilized targeted reopenings
as part of our process to correct certain issues, under the current
process, if a particular issue was program-wide, CMS would perform a
global reopening to address that issue. This global reopening could be
in addition to the scheduled global reopening that CMS has performed
approximately 4 years after the Part D payment reconciliation for that
year.
b. Aligning the Timing of Reopenings to the Overpayment Look-Back
Period
Pursuant to the current Sec. 423.346(a)(2), CMS may reopen and
revise an initial or reconsidered final payment determination within 4
years after the date of the notice of the initial or reconsidered
determination to the Part D sponsor, upon establishment of good cause
for reopening. As already discussed, this paragraph (a)(2) has set up
our current global reopening schedule. CMS performs the Part D payment
reconciliation (that is, the initial payment determination) for a
contract year, and then within 4 years of announcing the completion of
that reconciliation, CMS performs a global reopening on that contract
year.
This reopening process is used to recoup overpayments associated
with PDE and DIR related overpayments. Pursuant to the current
overpayment provision at Sec. 423.360(f), there is a ``look-back
period'' in which a Part D sponsor must report and return any
overpayment identified within the 6 most recent completed payment
years. As described at Sec. 423.360, an overpayment occurs after the
``applicable reconciliation.'' The applicable reconciliation refers to
the deadlines for submitting data for the Part D payment
reconciliation.
The following example illustrates the timing of the look-back
period. The deadlines for submitting data for the 2021 Part D payment
reconciliation were in June 2022. Prior to the deadlines for submitting
data for the 2021 Part D payment reconciliation, a PDE or DIR related
overpayment could not exist for 2021, and the latest year for which an
overpayment could occur was 2020. Therefore, prior to the deadlines for
submitting data for the 2021 Part D payment reconciliation, the look-
back period was 2015-2020.
This 6-year look-back period along with the 4-year reopening
timeframe described at Sec. 423.346(a)(2) results in overpayments
being reported for a contract year after CMS has performed the global
reopening for that contract year. Continuing the prior example, if a
Part D sponsor identified a PDE or DIR related overpayment associated
with contract year 2016 in May 2022 (that is, prior to the deadlines
for submitting data for the 2021 Part D payment reconciliation), that
overpayment falls within the 2015-2020 look-back period, and the
sponsor would have reported the overpayment to CMS mid-2022. However,
CMS completed the global reopening of the 2016 Part D payment
reconciliation in January 2022. This discrepancy between the 4-year
reopening timeframe and the 6-year overpayment look-back period results
in operational challenges for CMS, as discussed subsequently in this
section.
CMS had described a process for recouping PDE and DIR related
overpayments after the global reopening for the contract year at issue
had been completed. In the preamble to our final rule, ``Contract Year
2015 Policy and Technical Changes to the Medicare Advantage and the
Medicare Prescription Drug Benefit Programs,'' 79 FR 29843 (May 23,
2014) and in subsequent subregulatory guidance, we stated that
overpayments reported after the global reopening would be reported by
the sponsor with an auditable estimate and that CMS would recoup the
overpayment by either requesting a check or offsetting monthly
prospective payments for the amount provided in the auditable estimate.
See HPMS memorandum, ``Reopening Process and Updates to the PDE/DIR-
related Overpayment Reporting,'' April 6, 2018 (available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hpms%2520memo_reopen%2520and%2520overpay_04-06-2018_205.pdf). For PDE
and DIR related overpayments, that approach presents challenges
primarily because sponsors have also reported PDE and DIR related
underpayments after the global reopening, which we do not have a method
to process other than the reopening process.
We have contemplated doing targeted reopenings to reconcile the
changes in PDE and DIR data, but that also presents operational
challenges. Targeted reopenings are conducted using the same payment
reconciliation system that conducts the Part D payment reconciliation,
the coverage gap discount program reconciliation, and the scheduled
global reopening. Given the volume of reporting after the scheduled
global reopening, it would be challenging to find the time and
resources to run multiple targeted reopenings.
Therefore, we proposed to modify Sec. 423.346(a)(2) such that CMS
may reopen and revise an initial or reconsidered final payment
determination after the 12-month period (described at Sec.
423.346(a)(1)), but within 6 years after the date of the notice of the
initial or reconsidered determination to the Part D sponsor, upon an
establishment of good cause for reopening. This change will allow CMS
to process all changes to PDE data and DIR data after the overpayment
look-back period for a contract year. Once a contract year falls
outside of the look-back period, we would perform the global reopening
for that contract year within the new 6-year timeframe, to recoup the
PDE and DIR related overpayments reported by sponsors for that contract
year (and process underpayments).
Prior to the new reopening timeframe going into effect, CMS will
provide operational guidance, as has been done for past regularly
scheduled global reopenings. The following example describes the timing
for performing the scheduled global reopening. The data for the 2020
Part D payment reconciliation was due in June 2021. That reconciliation
was completed in November 2021. Assuming a 4-year schedule, the DIR
data for the contract year 2020 global reopening would be due to CMS by
the end of July 2025, PDE data would be due in September 2025, and the
2020 global reopening would be completed the end of 2025 or early 2026.
However, the 2020 contract year remains in the overpayment look-back
period through June 2027. Under the 6-year timeframe, data for the 2020
global reopening would be due middle to late 2027, and the global
reopening would be completed late 2027 or early 2028, after the 6-year
look-back period.
Comment: We received a comment that supported our proposal and our
efforts to align the look-back period with the reopening timeframe.
Response: We thank the commenter for the support.
Comment: A commenter stated that while they do not have a
conceptual problem with expanding the timeframe for overpayments
associated with PDE record data and DIR data, they were concerned that
looking back more than 4 years would result in administrative costs
that exceed the value of the overpayment recoupment and recommended
that CMS withdraw the proposal unless an analysis demonstrates that the
expanded timeframe would result in overpayment
[[Page 30462]]
recoupments that exceed increased administrative costs.
Response: We are not, as the commenter states, expanding the
timeframe for overpayments. Under the existing requirements, described
at Sec. 423.360(f), sponsors are required to report and return any
overpayment identified within the 6 most recently completed payment
years. To clarify, we proposed to modify the reopening timeframe,
described at Sec. 423.346(a)(2), which does not have any impact on the
existing timeframe for reporting and returning overpayments.
We decline the commenter's recommendation to withdraw the proposal
unless an analysis demonstrates that the expanded timeframe would
result in overpayment recoupments that exceed increased administrative
costs. We do not believe that expanding the reopening timeframe from
within 4 years to within 6 years will result in any additional burden.
Additionally, the intent of the proposed change is not strictly focused
on overpayment recoupment, but rather, is a remedy to operational
challenges associated with the misalignment of the overpayment look-
back period and the reopening timeframe.
Comment: A commenter expressed concerns that DIR fees collected
from pharmacies challenge patient access and pharmacies' viability. The
commenter was concerned that extending the timeframe at Sec.
423.346(a)(2) from within 4 years to within 6 years without any
guardrails or protections in place for community pharmacies could lead
to instances in which sponsors take advantage of the process to further
claw back payments from pharmacies. To address this concern, the
commenter requested that CMS consider establishing protections to
prevent sponsors from recouping pharmacy overpayments.
Response: The intent of the proposed change is to remedy
operational challenges associated with the misalignment of the
reopening timeframe, described at Sec. 423.346(a)(2), and 6-year
overpayment look-back period, described at Sec. 423.360(f). The change
in the reopening timeframe from within 4 years to within 6 years does
not, in any way, change a sponsor's responsibility to report and return
overpayments within the 6-year look-back period. The impact of DIR fees
collected from pharmacies, pharmacy claw backs, and the recoupment of
overpayments from pharmacies are outside of the scope of the proposed
change.
After consideration of comments, we are finalizing the proposed
requirements related to aligning the timing of reopenings to the
overpayment look-back period without modification.
c. Standards for Performing Global and Targeted Reopenings
Consistent with the existing regulation at Sec. 423.346(a) and
(d), reopenings are at CMS's discretion. Under the current process, CMS
has used its discretion to perform a scheduled global reopening on a
Part D payment reconciliation within the timeframe specified at Sec.
423.346(a)(2). Given the significant time and costs associated with
conducting a reopening, it is expected that CMS will use its discretion
to conduct a targeted reopening (or an additional global reopening for
a program-wide issue) only under limited circumstances. We would
contemplate using our discretion to perform a targeted reopening (or an
additional global reopening) to correct or rectify a CMS file or CMS-
created PDE edit-type issue, revise a payment determination that was
based on PDE and/or DIR data that was submitted due to fraudulent
activity of the sponsor or the sponsor's contractor, or pursuant to a
successful appeal under Sec. 423.350. CMS will not use its discretion
to conduct a reopening to reconcile data that will be, or should have
been, reconciled in the scheduled global reopening, which would include
data from plan corrections, claims activity, and audits completed after
the deadline to submit data for the scheduled global reopening. In
addition, we are unlikely to conduct a reopening solely pursuant to a
sponsor's request.
We proposed that in order to be included in a reopening, a contract
must have been in effect (that is, receiving monthly prospective
payments and submitting PDE data for service dates in that year) for
the contract year being reopened. Intuitively, if a contract was not in
the reconciliation for a particular contract year, it cannot be
included in the reopening of that contract year's reconciliation. We
also proposed that if CMS has sent a nonrenewed or terminated contract
the ``Notice of final settlement,'' as described at Sec. 423.521(a),
by the time CMS completes the reopening, described at proposed Sec.
423.346(f), CMS will exclude that contract from that reopening. We
established the proposed exclusion based on the timing of the issuance
of the ``Notice of final settlement'' and completion of the reopening,
as opposed to the announcement of the reopening, due to the potentially
lengthy reopening process and the likelihood that the ``Notice of final
settlement'' will be issued prior to CMS completing the reopening
process. For example, under the current timeframe for the scheduled
global reopening, CMS has typically announced in the Spring and
completed the reopening in December of that year or January of the
next. During that timeframe, nonrenewed or terminated contracts will
likely go through the final settlement process, and as a result, will
not be able to complete the reopening process. This is because,
pursuant to Sec. 423.521, after the final settlement amount is
calculated and the ``Notice of final settlement'' is issued to the Part
D sponsor, CMS will no longer apply retroactive payment adjustments,
and there will be no adjustments applied to amounts used in the
calculation of the final settlement amount. We proposed to codify these
inclusion criteria at Sec. 423.346(g).
We also proposed at Sec. 423.346(g)(2) that, specifically for
targeted reopenings, CMS will identify which contracts or contract
types are to be included in the reopening. This is because targeted
Part D contract reopenings are impacted by the particular issue that
CMS needs to address. Therefore, in order to be included in a targeted
reopening, the Part D contract must have been impacted by the issue
that causes CMS to perform a reopening. To date, most targeted
reopenings have been performed because of a CMS-identified issue that
most sponsors were not aware of prior to CMS completing the targeted
reopening. Accordingly, sponsors would not be aware of this specific
inclusion criteria unless CMS informed the sponsors of the CMS-
identified issue and the sponsors' contracts were impacted. Therefore,
we proposed that CMS notify sponsors of this specific inclusion
criteria via the proposed reopening notification and/or the proposed
reopening completion announcement.
We did not receive comments on this section of the proposal and are
finalizing the proposed requirements related to the standards for
performing global and targeted reopenings without modification.
c. Reopening Notification and Reopening Completion Announcement
We proposed to add new paragraphs (e) and (f) at Sec. 423.346 to
codify our existing policy regarding reopening notifications and
reopening completion announcements, respectively. We proposed to codify
at Sec. 423.346(e) that CMS will notify the sponsor(s) that will be
included in the global or targeted reopening of its intention to
perform a global or a targeted reopening--that is, the sponsor would
receive prior notice
[[Page 30463]]
of the reopening--only when it is necessary for the sponsor(s) to
submit PDE data and/or DIR data prior to the reopening. In contrast, if
it is not necessary for the sponsor(s) to submit data prior to a
reopening, we proposed to notify the sponsor(s) only after CMS
completes the reopening. For example, if CMS identifies an error in an
internal CMS file that CMS used in the reconciliation or reopening, CMS
may correct that file and reopen (holding all other data originally
used constant), without the need for the sponsor(s) to submit PDE data
or DIR data. See, for example, HPMS memorandum, ``Second reopening of
the 2011 Final Part D Payment Reconciliation,'' July 7, 2017 (available
at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/second%20reopening%20of%20the%202011%20part%20d%20reconciliation_final_403.pdf).
We proposed at Sec. 423.346(e)(1) that CMS will include in the
notification the deadline for submitting PDE data and/or DIR data to be
included in the reopening. We also proposed that the deadline to submit
this data will be at least 90 calendar days after the date of the
notice.
In addition, we proposed at Sec. 423.346(e)(2) that the reopening
notification will include inclusion criteria in the form of a
description of the contract(s) (either specifically by contract number
or generally by contract-type or contract status) that will be included
in the reopening. This will put a sponsor on notice of whether its
contracts are included in the reopening.
We proposed to codify at Sec. 423.346(f) that CMS will announce
when it has completed a reopening, including in cases where CMS issued
a notice under proposed paragraph (e). This announcement is consistent
with existing policy and past practice. At paragraph (f)(1), we
proposed to specify that CMS will provide a description of the data
used in the reopening. As in past reopenings, this data could include
PDE data described by the processed date on the Prescription Drug
Front-end System (PDFS) response report, DIR data described by the date
received in the Health Plan Management System (HPMS), as well as any
other relevant data used to perform the reopening.
At paragraph Sec. 423.346(f)(2), we proposed to include in the
announcement a statement of the contract(s) (either specifically by
contract number or generally by contract-type or contract status) that
were included in the reopening, consistent with proposed Sec.
423.346(e)(2). We proposed to specify which contracts or contract types
are included in the reopening in both the announcement of the
completion of the reopening and the reopening notification because CMS'
proposal would not require issuing a reopening notification when it is
not necessary for the sponsor(s) to submit PDE data and/or DIR data
prior to the reopening.
At paragraph Sec. 423.346(f)(3), we proposed to include in the
announcement of the completion of the reopening the date by which
reports describing the reopening results will be available to the
sponsor. In addition, at paragraph (f)(4), we proposed to include the
date by which a sponsor must submit an appeal, pursuant to Sec.
423.350, if the sponsor disagrees with the reopening results.
We did not receive comments on this section of the proposal and are
finalizing the proposed requirements related to the reopening
notification and the announcement of the completion of the reopening
without modification.
d. Definitions of ``Global Reopening'' and ``Targeted Reopening''
We proposed to establish definitions of global reopening and
targeted reopening at Sec. 423.308. We proposed to define a global
reopening as a reopening under Sec. 423.346 in which CMS includes all
Part D sponsor contracts that meet the inclusion criteria described at
proposed Sec. 423.346(g). We proposed to define a targeted reopening
as a reopening under Sec. 423.346 in which CMS includes one or more
(but not all) Part D sponsor contracts that the meet the inclusion
criteria described at proposed Sec. 423.346(g). Finally, consistent
with these proposed definitions, we proposed to include the terms
``global reopening'' and ``targeted reopening'' at the beginning of
existing Sec. 423.346(a) to clarify that the reopenings that CMS may
perform under Sec. 423.346(a) may be global or targeted, as defined in
proposed Sec. 423.308.
Comment: We received a comment supporting our proposal to codify
the definitions of ``global reopening'' and ``targeted reopening.''
Response: We thank the commenter for the support.
We are finalizing the proposed definitions of ``global reopening''
and ``targeted reopening'' without modification.
The proposals described in this section of the final rule are
consistent with our current guidance and requirements. None of the
proposed changes would place additional requirements on Part D
sponsors, nor do the proposed changes to Sec. Sec. 423.308 and 423.346
place any additional burden on the Part D sponsors or their pharmacy
benefit managers (PBMs). Our proposed rule does not change the extent
to which Part D sponsors comply with the reopening process. Part D
sponsors' compliance with this reopening process is evidenced by each
Part D sponsor's signed attestation certifying the cost data (pursuant
to Sec. 423.505(k)(3) and (5)) that CMS uses in each of the
reopenings. In addition, the burden associated with the submission of
cost data is already approved under the OMB control numbers 0938-0982
(CMS-10174) and 0938-0964 (CMS-10141). Therefore, as our changes do not
result in additional burden, we have not included a discussion a of
this provision in the COI section of this rule. In addition, we are not
scoring this provision in the Regulatory Impact Analysis section
because industry is already complying with this process.
Based on the comments received and for the reasons outlined in the
proposed rule and our responses to comments, we are finalizing the
proposed changes to the reopening provision at Sec. 423.346 and the
related changes to Sec. 423.308 without modification.
C. Medicare Final Settlement Process and Final Settlement Appeals
Process for Organizations and Sponsors That Are Consolidating,
Nonrenewing, or Otherwise Terminating a Contract (Sec. Sec.
422.500(b), 422.528, 422.529, 423.501, 423.521, and 423.522)
In our December 2022 proposed rule, we proposed to amend 42 CFR
part 422, subpart K, and part 423, subpart K, to codify in regulation
our final settlement process for Medicare Advantage (MA) organizations
and Part D sponsors whose contracts with CMS have been consolidated
with another contract, nonrenewed, or otherwise terminated. As
described subsequently in this section, we are finalizing our proposed
changes.
Sections 1857(a) and 1860D-12(b)(1) of the Act require contracts
between CMS and the legal entity that offers, respectively, one or more
MA plans or Part D plans to beneficiaries. Sections 1857(e)(1) and
1860D-12(b)(3)(D)(i) of the Act provide that these contracts shall
contain terms and conditions that the Secretary may find necessary and
appropriate in addition to the applicable requirements and standards
set forth in the statute and the terms of payment set by the statute.
At Part 422, subpart K, and Part 423, subpart K, we have codified
provisions relating to the contracts between CMS and MA
[[Page 30464]]
organizations and Part D sponsors, including a description of minimum
terms that must be included in the contract; the duration of contracts;
minimum enrollment, reporting, and prompt payment requirements; and
provisions regarding the consolidation, nonrenewal, or termination of a
contract. In addition, these contracts require compliance with the
regulations governing the program, which are adopted as standards
implementing and interpreting the statutory requirement and as new
terms and conditions that are not inconsistent with, and necessary and
appropriate for administration of, the MA and Part D programs. This
final rule will add to those requirements.
CMS makes monthly payments to MA organizations and Part D sponsors
for each beneficiary enrolled in a plan for that month. If there is an
update to the payment amount that was paid for a month, CMS will make
an adjustment to a month's payment for a beneficiary in a later month.
For example, if a beneficiary's Medicaid eligibility for a month is
changed, CMS will recalculate the payment for that month after receipt
of the updated Medicaid eligibility status for a beneficiary and make a
retroactive payment update to that month's payment in a later month. In
addition, CMS reconciles a number of different payment amounts after
specified periods of time to permit plan data submission for a payment
year as described subsequently in this section. These reconciliations
typically take place the year after a payment year and result in
retroactive payment adjustments for the prior payment year.
Generally, MA organizations and Part D sponsors continue to offer
plans to beneficiaries from one year to the next. From time to time, a
contract between CMS and an MA organization or Part D sponsor may
consolidate, nonrenew, or otherwise terminate as a result of a plan-
initiated termination, mutual termination, or CMS-initiated
termination. Once a contract has consolidated, nonrenewed, or otherwise
terminated, the retroactive payment adjustments for a year that would
have been made had the contract remained in effect are not paid to the
MA organization or Part D sponsor but are held until after the
reconciliations for the final payment year are calculated as described
subsequently in this section. After such time, all retroactive
adjustments to payment for the consolidated, nonrenewed, or otherwise
terminated contract are totaled and either a net payment amount is made
to the MA organization or Part D sponsor, or an amount is charged to
the MA organization or Part D sponsor.\4\
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\4\ In the case of a bankrupt or liquidated plan that owes CMS
money, CMS still completes the reconciliations, final settlement
process, and issues a notice of final settlement, but refers the
plan to the Department of Justice to collect the money owed.
---------------------------------------------------------------------------
The process used to determine the final net payments for an MA
organization or Part D sponsor, provide notice of these amounts to the
MA organization or Part D sponsor, adjudicate disputes, and receive or
remit payment constitutes the final settlement process and begins at
least 18 months following the end of the last contract year in which
the contract was in effect.
Before CMS determines the final settlement amount owed to or from
an MA organization or Part D sponsor whose contract has consolidated,
nonrenewed, or otherwise terminated, CMS first completes a series of
reconciliation activities and calculates the related payment
adjustments for both consolidated, nonrenewed, or otherwise terminated
contracts as well as ongoing contracts: (1) MA risk adjustment
reconciliation (described in Sec. 422.310(g)), (2) Part D annual
reconciliation (described in Sec. Sec. 423.336 and 423.343), (3)
Coverage Gap Discount Program annual reconciliation (described in Sec.
423.2320), and (4) medical loss ratio (MLR) report submission and
remittance calculation (described in Sec. Sec. 422.2460, 422.2470.
423.2460, and 423.2470). Each individual reconciliation process allows
the MA organization or Part D sponsor to raise concerns about the
calculation of that particular reconciliation amount. Once each
reconciliation is complete and no errors have been identified, the MA
organization or Part D sponsor is presumed to accept that
reconciliation amount and it is not reconsidered during the final
settlement process.
For a given consolidated, nonrenewed, or otherwise terminated
contract, the final settlement amount is then calculated by summing the
applicable reconciliation amounts from these 4 processes and any
retroactive payment adjustments that accumulated after a contract has
consolidated, nonrenewed, or otherwise terminated. Note that these
reconciliation amounts represent all of the reconciliation amounts that
could be included in the final settlement calculation. Whether each
reconciliation amount will factor into the final settlement amount for
a particular contract will depend on the specifics of that contract.
For example, MA risk adjustment reconciliation would not be performed
for a prescription drug plan contract.
The final settlement adjustment period is the period of time
between when the contract consolidates, nonrenews, or otherwise
terminates and the date the MA organization or Part D sponsor is issued
a notice of the final settlement amount (also referred to herein as the
notice of final settlement). The length of the final settlement period
is determined by the time it takes for these reconciliations and
related payment adjustments to be completed. During this time, CMS
continues to calculate payment adjustments that reflect changes in
beneficiary status.\5\ CMS tracks all payment adjustments for a
terminated contract for use in the final settlement for that contract.
---------------------------------------------------------------------------
\5\ A beneficiary profile status change reflects a change in a
beneficiary's economic or health status, such as low-income status
for Part D, Medicaid status, Hospice or ESRD status.
---------------------------------------------------------------------------
The final settlement adjustment period ends on the date on the
notice of final settlement that CMS issues to MA organizations and Part
D sponsors. At the end of the final settlement adjustment period, CMS
will no longer make adjustments to reconciliations for a contract that
has consolidated, nonrenewed, or otherwise terminated, that would
otherwise have been made for a continuing contract. Once the notice of
final settlement has been issued, contracts that have been
consolidated, nonrenewed, or otherwise terminated will also be excluded
from reopenings, including program-wide reopenings, or reconciliations
for prior payment years when the contract was in effect. For example,
under Sec. 423.346, CMS has the authority to reopen and revise an
initial or reconsidered Part D final payment determination, including
the Part D reconciliation amounts included in the final settlement
amount, for a prior payment year. However, this reopening would not
apply to consolidated, nonrenewed, or otherwise terminated contracts
that have already received a notice of final settlement. This allows
CMS to largely close out any outstanding financial responsibilities
associated with consolidated, nonrenewed, or otherwise terminated
contracts, either on the part of CMS or on the part of the MA
organization or Part D sponsor.\6\
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\6\ Once a contract has completed final settlement, the MA
organization or Part D sponsor may still have financial
responsibilities under any other applicable statute or regulation.
---------------------------------------------------------------------------
After determining the final settlement amount, CMS issues a notice
of final settlement to the MA organization or Part D sponsor for each
contract that has consolidated, nonrenewed, or otherwise
[[Page 30465]]
terminated, even if the final settlement amount is $0. The notice of
final settlement explains whether the MA organization or Part D sponsor
will receive or owe a final settlement amount and provides the
information needed to conduct the associated financial transaction. The
notice of final settlement includes the information CMS used to
calculate the final settlement amount, including the payment
adjustments that are reported on all monthly membership reports created
from the date the contract ended until the month the final settlement
amount was calculated. It also includes information on the process and
timeline for requesting a review concerning the accuracy of the final
settlement amount calculation.
In our proposed rule, we proposed to codify longstanding and
existing guidance pertaining to procedures for the final settlement
process described in the previous paragraphs. In addition, we proposed
to add a new appeals process for MA organizations or Part D sponsors
that disagree with the final settlement amount. MA organizations or
Part D sponsors may request an appeal of the final settlement amount
within 15 calendar days of the date of issuance of the notice of final
settlement. We believe that will provide organizations with sufficient
time to request an appeal, as MA organizations and Part D sponsors will
already be aware of the reconciliation amounts that factor into the
final settlement amount at the time the notice of final settlement is
issued, and requiring a request for appeal within this timeframe will
help ensure accurate and timely payment of final settlement amounts. If
an MA organization or Part D sponsor agrees with the final settlement
amount, no response will be necessary or required. Failure to request
appeal within 15 calendar days of the date of issuance of the notice of
final settlement will indicate acceptance of the final settlement
amount. We strongly encourage MA organizations and Part D sponsors to
communicate their acceptance to CMS to facilitate prompt payment.
Finally, in addition to codifying our longstanding and existing
review process under which MA organizations and Part D sponsors are
able to request a reconsideration of CMS's final settlement amount
calculation, we proposed to add two additional levels of appeal: (1) an
informal hearing conducted by the CMS Office of Hearings to review
CMS's initial determination, following a request for appeal of the
reconsideration of CMS's initial determination, and (2) a review by the
CMS Administrator of the hearing officer's determination if there is an
appeal of the hearing officer's determination. We believe that these
additional levels of appeal will afford MA organizations and Part D
sponsors sufficient opportunities to present objections to the
calculation of the final settlement amount. This additional process
will only be available to appeal CMS's final settlement amount
calculation and will not be used to review any prior payments or
reconciliation amounts. MA organizations and Part D sponsors seeking
review of prior payments or reconciliation amounts must do so during
the appropriate reconciliation process. CMS believes that these
additional levels of appeal will only be used in exceptional
circumstances given the narrow, mathematical nature of the final
settlement process. We anticipate that calculation errors will be rare,
and, if they do occur, that they will be quickly corrected to the
mutual satisfaction of both parties without a need for further review.
1. Process for MA Organizations and Part D Sponsors That Do Not Request
an Appeal
If an MA organization or Part D sponsor that owes a final
settlement amount to CMS does not request an appeal or provides an
optional response acknowledging and confirming the amount owed to CMS
within 15 calendar days of the date of the notice of final settlement,
the MA organization or Part D sponsor will be required to remit full
payment to CMS within 120 calendar days of receiving the notice of
final settlement. If an MA organization or Part D sponsor is owed money
and does not appeal the final settlement amount, CMS will remit payment
to the MA organization or Part D sponsor within 60 calendar days of the
date of issuance of the notice of final settlement. If an MA
organization or Part D sponsor does not owe or is not owed a final
settlement amount and does not request an appeal of the $0 final
settlement amount within 15 calendar days of the date of issuance of
the notice of final settlement, no further actions will occur. If an MA
organization or Part D sponsor does not appeal the final settlement
amount indicated in the notice of final settlement within 15 calendar
days of the issuance of the notice of final settlement, no subsequent
requests for appeal will be considered.
CMS did not receive comments on this section of the proposal.
2. Process for Appealing the Final Settlement Amount
In cases in which the MA organization or Part D sponsor submits a
request for an appeal of the final settlement amount within 15 calendar
days of the date of the notice of final settlement, the MA organization
or Part D sponsor will have to specify the calculation with which they
disagree and the reasons for their disagreement, as well as provide
evidence supporting the assertion that CMS's calculation of the final
settlement amount described in the notice of final settlement is
incorrect. MA organizations and Part D sponsors will not be able to
submit new reconciliation data or data that was submitted to CMS after
the final settlement notice was issued. CMS will not consider
information submitted for the purpose of retroactively adjusting a
prior reconciliation.
CMS will not accept requests for appeal that are submitted more
than 15 calendar days after the date of issuance of the notice of final
settlement. As noted previously, if an MA organization or Part D
sponsor does not reply within 15 calendar days, they will be deemed to
accept the final settlement amount indicated in the notice of final
settlement.
Once CMS has reconsidered the calculation of the final settlement
amount in light of the evidence provided by the MA organization or Part
D sponsor, CMS will provide written notice of the reconsideration
decision to the MA organization or Part D sponsor.
If the MA organization or Part D sponsor does not agree with CMS's
reconsideration decision, it will be able to request an informal
hearing from a CMS hearing officer. The MA organization or Part D
sponsor will have to submit a request for review within 15 calendar
days of the date of CMS's reconsideration decision. The MA organization
or Part D sponsor will be required to provide a copy of CMS's decision,
the findings or issues with which it disagrees, and the reasons why it
disagrees with CMS's decision. As the hearing officer's review will be
limited to a review of the existing record, the MA organization or Part
D sponsor will not be able to submit new evidence to support its
assertion that CMS's calculation of the final settlement amount
described in the notice of final settlement is incorrect in addition to
the evidence submitted during CMS's reconsideration.
The CMS hearing officer will provide written notice of the time and
place of the informal hearing at least 30 days before the scheduled
date and the CMS
[[Page 30466]]
reconsideration official will provide a copy of the record that was
before CMS when CMS made its reconsideration decision to the hearing
officer. The CMS hearing officer will not receive new testimony or
accept new evidence in addition to the evidence submitted by the MA
organization or Part D sponsor during CMS's reconsideration to support
its assertion that CMS's calculation of the final settlement amount is
incorrect.
Once the hearing officer has reviewed the record, the hearing
officer will send a written decision to the MA organization or Part D
sponsor explaining the basis of the hearing officer's decision. The
hearing officer's decision will be final and binding unless the
decision is reversed or modified by the CMS Administrator.
If the MA organization or Part D sponsor does not agree with the
hearing officer's decision, they will be able to request an additional,
final review from the CMS Administrator. The MA organization or Part D
sponsor will have to submit a request for review within 15 calendar
days of the date of the issuance of CMS hearing officer's decision. The
MA organization or Part D sponsor will be able to submit written
arguments to the Administrator for review but will not be able to
submit evidence in addition to the evidence submitted during CMS's
reconsideration.
The CMS Administrator will have the discretion to elect to review
the hearing officer's decision or decline to review the hearing
officer's decision within 30 calendar days of receiving the request for
review. If the Administrator declines to review the hearing officer's
decision, the hearing officer's decision will be final and binding. If
the Administrator elects to review the hearing officer's decision and
any written argument submitted by the MA organization or Part D
sponsor, the Administrator will review the information included in the
record of the hearing officer's decision and any written argument
submitted by the MA organization or Part D sponsor. Based on this
review, the Administrator may uphold, reverse, or modify the hearing
officer's decision. The Administrator's decision will be final and
binding and no other requests for review will be considered.
If an MA organization or Part D sponsor requests an appeal of the
final settlement amount, the financial transaction associated with the
issuance or payment of the final settlement amount will be stayed until
all appeals are exhausted. Once all levels of appeal are exhausted or
the MA organization or Part D sponsor fails to request further review
within the 15-day timeframe, CMS will communicate with the MA
organization or Part D sponsor to complete the financial transaction
associated with the issuance or payment of the final settlement amount,
as appropriate.
At all levels of review, the MA organization or Part D sponsor's
appeal will be limited to CMS's calculation of the final settlement
amount. CMS will not consider information submitted for the purposes of
retroactively adjusting a prior reconciliation. The MA organization or
Part D sponsor will bear the burden of proof by providing evidence
demonstrating that CMS's calculation of the final settlement amount is
incorrect.
CMS did not receive comments on this section of the proposal.
3. Proposed Amendments to Regulations (Sec. Sec. 422.500(b), 422.528,
422.529, 423.501, 423.521, and 423.522)
a. Definitions
We proposed to amend Sec. Sec. 422.500(b) and 423.501 to add
several definitions relevant for the codification of the final
settlement process.
First, we proposed to add a definition for the term final
settlement amount, which will be the final payment amount CMS
calculates and ultimately pays to the MA organization or Part D sponsor
or that an MA organization or Part D sponsor pays to CMS for a Medicare
Advantage or Part D contract that has terminated through consolidation,
nonrenewal, or other termination. The proposed definition provides that
CMS will calculate the final settlement amount by summing retroactive
payment adjustments for a contract that accumulate after that contract
consolidates nonrenews, or otherwise terminates, but before the
calculation of the final settlement amount, including the applicable
reconciliation amounts that have been completed as of the date the
notice of final settlement has been issued, without accounting for any
data submitted after the data submission deadlines for calculating the
reconciliation amounts. These reconciliation amounts used in this
process are: (1) MA risk adjustment reconciliation (described in Sec.
422.310), (2) Part D annual reconciliation (described in Sec. Sec.
423.336 and 423.343), (3) Coverage Gap Discount Program annual
reconciliation (described in Sec. 423.2320), and (4) MLR report
submission, including calculation of remittances (described in
Sec. Sec. 422.2470 and 423.2470).
We proposed to add a definition for the term final settlement
process as the process by which CMS will calculate the final settlement
amount for a Medicare Advantage or Part D contract that has been
consolidated, nonrenewed, or otherwise terminated, issue the final
settlement amount along with supporting documentation (described
previously in section XXX) in the notice of final settlement to the MA
organization or Part D sponsor, receive responses from MA organizations
and Part D sponsors requesting an appeal of the final settlement
amount, and take final actions to adjudicate an appeal (if requested)
and make payments to or receive final payments from MA organizations or
Part D sponsors. The proposed definition of final settlement process
will specify that the final settlement process begins after all
applicable reconciliations have been completed.
b. Final Settlement Process and Payment
We proposed to add Sec. Sec. 422.528 (for MA) and 423.521 (for
Part D) to our regulations to codify our process for notifying MA
organizations and Part D sponsors of the final settlement amount and
how payments to or from CMS will be made.
CMS will calculate and notify MA organizations and Part D sponsors
of the final settlement amount. At paragraph (a) of proposed Sec. Sec.
422.528 (for MA) and 423.521 (for Part D), we proposed to codify that
CMS will send a notice of final settlement to MA organizations and Part
D sponsors. Specifically, proposed paragraphs (a)(1), (a)(2), (a)(3),
and (a)(4) specify that the notice will contain at least the following
information: a final settlement amount; relevant banking and financial
mailing instructions for MA organizations and Part D sponsors that owe
CMS a final settlement amount; relevant CMS contact information; and a
description of the steps for the MA organizations or Part D sponsor to
request an appeal of the final settlement amount calculation.
At paragraph (b) of proposed Sec. Sec. 422.528 and 423.521, we
proposed to establish that MA organizations and Part D sponsors will
have 15 calendar days from the date of issuance of the notice to
request an appeal. We proposed at paragraphs (b)(1) and (b)(2) of these
new regulation sections that, if an MA organization or Part D sponsor
agrees with the final settlement amount, no response will be required,
and that, if an MA organization or Part D sponsor does not request an
appeal within 15 calendar days, CMS will not consider any subsequent
requests for appeal of the final settlement amount.
[[Page 30467]]
At paragraph (c) of proposed Sec. Sec. 422.528 and 423.521, we
proposed to codify the actions that will take place if an MA
organization or Part D sponsor does not appeal the final settlement
amount. Specifically, at paragraph (c)(1), we proposed to specify that,
if an MA organization or Part D sponsor owed a final settlement amount
from CMS does not appeal, CMS will remit payment within 60 calendar
days of the date of the issuance of the notice of final settlement. At
proposed paragraph (c)(2), we proposed that an MA organization or Part
D sponsor that owes money to CMS and does not appeal will have to remit
payment in full to CMS within 120 calendar days from issuance of the
notice of final settlement. We further specify that an MA organization
or Part D sponsor that does not appeal and does not remit payment
within 120 calendar days of issuance of the notice will be subject to
having any debts owed to CMS referred to the Department of the Treasury
for collection.\7\
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\7\ In the case of a bankrupt or liquidated plan that owes CMS
money, CMS still completes the reconciliations and the final
settlement process and issues a notice of final settlement, but
refers the plan to the Department of Justice to collect the money
owed.
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At paragraph (d) of proposed Sec. Sec. 422.529 (for MA) and
423.522 (for Part D), we proposed to establish the actions following
submission of a request for an appeal that will be taken.
At paragraph (e) of proposed Sec. Sec. 422.529 (for MA) and
423.522 (for Part D), we proposed that after the final settlement
amount is calculated and the notice of final settlement is issued to
the MA organization or Part D sponsor, CMS will no longer apply
retroactive payment adjustments for the terminated contract and there
will be no adjustments applied to the final settlement amount.
c. Requesting an Appeal of the Final Settlement Amount
We proposed to add Sec. Sec. 422.529 (for MA) and 423.522 (for
Part D) to our regulations to codify that an MA organization or Part D
sponsor will be able to request an appeal of the calculation of the
final settlement amount, and the process and requirements for making
such a request.
At paragraph (a) of proposed Sec. Sec. 422.529 and 423.522, we
proposed to establish requirements that will apply to MA organizations'
and Part D sponsors' requests for appeal of the final settlement amount
calculation.
Specifically, at proposed paragraph (a)(1), we proposed to
establish the process under which an MA organization or Part D sponsor
may request reconsideration of the final settlement amount. We proposed
to specify that the 15-calendar-day period for filing the request will
begin on the date the notice of final settlement from CMS is issued. We
also proposed that MA organizations and Part D sponsors will have to
include in their request: (1) the calculation with which they disagree
and (2) evidence supporting the assertion that the CMS calculation of
the final settlement amount is incorrect. We further specify that CMS
will not consider (for purposes of retroactively adjusting a prior
reconciliation), and MA organizations and Part D sponsors should not
submit, new reconciliation data or data that was submitted to CMS after
the final settlement notice was issued.
At proposed paragraph (a)(1)(iii), we proposed to establish that
the CMS reconsideration official will review the final settlement
calculation and evidence timely submitted by the MA organization or
Part D sponsor supporting the assertion that the CMS calculation of the
final settlement amount is incorrect. We further proposed to establish
that the CMS reconsideration official will inform the MA organization
or Part D sponsor of their decision on the reconsideration in writing
and that their decision will be final and binding unless the MA
organization or Part D sponsor requests a hearing officer review.
At proposed paragraph (a)(2), we proposed to establish that MA
organizations and Part D sponsors that disagree with CMS's
reconsideration decision under paragraph (a)(1) of this section will be
able to request an informal hearing by a CMS hearing officer.
Specifically, at paragraph (a)(2)(i), we establish that MA
organizations and Part D sponsors will have to submit their requests
for an informal hearing within 15 calendar days of the date of the
reconsideration decision. At paragraph (a)(2)(ii), we proposed that MA
organizations and Part D sponsors will have to include in their request
a copy of CMS's decision, the specific findings or issues with which
they disagree, and the reasons for which they disagree. At paragraph
(a)(2)(iii), we proposed to establish the informal hearing procedures.
Specifically, we proposed that the CMS hearing officer will provide
written notice of the time and place of the informal hearing at least
30 calendar days before the scheduled date and the CMS reconsideration
official will provide a copy of the record that was before CMS when CMS
made its reconsideration decision to the hearing officer. We further
proposed that the hearing will be conducted by a hearing officer who
will neither receive testimony nor accept new evidence. We finally
proposed that the hearing officer will be limited to the review of the
record that CMS had when making its decision. At paragraph (a)(2)(iv),
we proposed that the CMS hearing officer will send a written decision
to the MA organization or Part D sponsor explaining the basis for the
decision. At proposed paragraph (a)(2)(v), we proposed to establish
that the hearing officer's decision is final and binding, unless the
decision is reversed or modified by the CMS Administrator.
We further proposed to establish at paragraph (a)(3) that MA
organizations and Part D sponsors that disagree with the hearing
officer's decision will be able to request a review by the CMS
Administrator.
At paragraph (a)(3)(i), we establish that MA organizations and Part
D sponsors will have to submit their requests for a review by the
Administrator within 15 calendar days of the date of the decision and
may submit written arguments to the Administrator for review. At
paragraph (a)(3)(ii), we proposed that the CMS Administrator will have
the discretion to elect or decline to review the hearing officer's
decision within 30 calendar days of receiving the request for review.
We further proposed that if the Administrator declines to review the
hearing officer's decision, the hearing officer's decision will be
final and binding. We proposed at paragraph (a)(3)(iii) that, if the
Administrator elects to review the hearing officer's decision, the
Administrator will review the hearing officer's decision, as well as
any information included in the record of the hearing officer's
decision and any written arguments submitted by the MA organization or
Part D sponsor, and determine whether to uphold, reverse, or modify the
decision. At proposed paragraph (a)(3)(iv), we proposed that the
Administrator's determination will be final and binding.
At proposed paragraph (b), we proposed to establish the matters
subject to appeal and that an MA organization or Part D sponsor bears
the burden of proof. At proposed paragraph (b)(1), we proposed to
establish that the Part D sponsor's appeal will be limited to CMS's
calculation of the final settlement amount. We further proposed that
CMS will not consider information submitted for the purposes of
retroactively adjusting a prior reconciliation. At proposed paragraph
(b)(2), we proposed that the MA organization or Part D sponsor will
bear the burden of proof by providing evidence demonstrating that
[[Page 30468]]
CMS's calculation of the final settlement amount is incorrect.
At proposed paragraph (c), we proposed that if an MA organization
or Part D sponsor requests an appeal of the final settlement amount,
the financial transaction associated with the issuance or payment of
the final settlement amount will be stayed until all appeals are
exhausted. Once all levels of appeal are exhausted or the MA
organization or Part D sponsor fails to request further review within
the 15-calendar-day timeframe, CMS will communicate with the MA
organization or Part D sponsor to complete the financial transaction
associated with the issuance or payment of the final settlement amount,
as appropriate.
Proposed paragraph (d) clarifies that nothing in this section will
limit an MA organization or Part D sponsor's responsibility to comply
with any other applicable statute or regulation.
CMS did not receive comments on this section of the proposal.
Based on the lack of comments received, we are finalizing the
additions to Sec. Sec. 422.500(b), 422.528, 422.529, 423.501, 423.521,
and 423.522 to codify the final settlement process as proposed.
D. Civil Money Penalty Methodology (Sec. Sec. 422.760 and 423.760)
Sections 1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act provide CMS
with the ability to impose Civil Money Penalties (CMPs) of up to
$25,000 per determination (determinations are those which could
otherwise support contract termination, pursuant to Sec. 422.509 or
Sec. 423.510), as adjusted annually under 45 CFR part 102, when the
deficiency on which the determination is based adversely affects or has
the substantial likelihood of adversely affecting an individual covered
under the organization's contract. Additionally, as specified in
Sec. Sec. 422.760(b)(2) and 423.760(b)(2), CMS is permitted to impose
CMPs of up to $25,000, as adjusted annually under 45 CFR part 102, for
each enrollee directly adversely affected or with a substantial
likelihood of being adversely affected by a deficiency. CMS has the
authority to issue a CMP up to the maximum amount permitted under
regulation, as adjusted annually \8\ for each affected enrollee or per
determination, however CMS does not necessarily apply the maximum
penalty amount authorized by the regulation in all instances because
the penalty amounts under the current CMP calculation methodology are
generally sufficient to encourage compliance with CMS rules.
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\8\ Per the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015, which amended the Federal Civil Penalties
Inflation Adjustment Act of 1990, the maximum monetary penalty
amounts applicable to Sec. Sec. 422.760(b), 423.760(b), and
460.46(a)(4) will be published annually in 45 CFR part 102. Pursuant
to Sec. 417.500(c), the amounts of civil money penalties that can
be imposed for Medicare Cost Plans are governed by section
1876(i)(6)(B) and (C) of the Act, not by the provisions in part 422.
Section 1876 of the Act solely references per determination
calculations for Medicare Cost Plans. Therefore, the maximum
monetary penalty amount applicable is the same as Sec.
422.760(b)(1).
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On December 15, 2016, CMS released on its website, the first public
CMP calculation methodology for calculating CMPs for MA organizations
and Part D sponsors starting with referrals received in 2017. On March
15, 2019, CMS released for comment a proposed CMP calculation
methodology on its website that revised some portions of the
methodology released in December 2016. Subsequently, on June 21, 2019,
CMS finalized the revised CMP calculation methodology document, made it
available on its website, and applied it to CMPs issued starting with
referrals received in contract year 2019 and beyond.\9\
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\9\ CMS Civil Money Penalty Calculation Methodology, Revised.
June 21, 2019. https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/Downloads/2019CMPMethodology06212019.pdf.
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On January 19, 2021, CMS published a final rule in the Federal
Register 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. https://www.federalregister.gov/documents/2021/01/19/2021-00538/medicare-and-medicaid-programs-contract-year-2022-policy-and-technical-changes-to-the-medicare. Hereinafter referred to
as the January 2019 final rule). In January 2019 final rule, CMS
finalized a policy, effective beginning in CY 2022, to update the
minimum CMP penalty amounts no more often than every three years. Under
this policy, CMS updates the CMP penalty amounts by including the
increases that would have applied if CMS had multiplied the minimum
penalty amounts by the cost-of-living multiplier released by the Office
of Management and Budget (OMB) \10\ each year during the preceding
three-year period. CMS also tracks the yearly accrual of the penalty
amounts and announces them on an annual basis.
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\10\ Per OMB Memoranda M-19-04, Implementation of Penalty
Inflation Adjustments for 2019, Pursuant to the Federal Civil
Penalties Inflation Adjustment Act Improvements Act of 2015,
published December 14, 2018, the cost-of-living adjustment
multiplier for 2019 is 1.02522.
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The intent of the minimum penalty increase policy was to establish
the CMP calculation methodology document in regulation to ensure
consistency and transparency with CMP penalty amounts. Although parts
of the regulations at Sec. Sec. 422.760(b)(3) and 423.760(b)(3) have
set standards for CMP penalties, in hindsight, CMS believes that other
parts of the regulations unnecessarily complicated CMS's approach to
calculating CMPs, which has the effect of limiting CMS's ability to
protect beneficiaries when CMS determines that an organization's non-
compliance warrants a CMP amount that is higher than would normally be
applied under the CMP methodology. In addition, although CMS always has
had the authority to impose up to the maximum authorized under sections
1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act, parts of the minimum
penalty increase policy may have inadvertently given the impression
that CMS was limiting its ability to take up to the maximum amount
permitted in statute and regulation. This was not the intent of the
rule. For example, there may be instances where an organization's non-
compliance has so substantially adversely impacted one or more
enrollees that CMS determines it is necessary to impose the maximum CMP
amount permitted under statute, or an amount that is higher than the
amount set forth in the CMP methodology guidance, to adequately address
the non-compliance. In order to clarify its ability to adequately
protect beneficiaries and encourage compliance, CMS proposed to modify
its rules pertaining to minimum penalty amounts.
Specifically, we proposed to remove Sec. Sec. 422.760(b)(3)(i)(E)
and 423.760(b)(3)(i)(E), respectively, which is the cost-of-living
multiplier. We also proposed to remove Sec. Sec. 422.760(b)(3)(ii)(A)-
(C) and 423.760(b)(3)(ii)(A)-(C), which describes how CMS calculates
and applies the minimum penalty amount increase. Lastly, we proposed to
revise and add new provisions Sec. Sec. 422.760(b)(3) and
423.760(b)(3), which explain that CMS will set standard minimum penalty
amounts and aggravating factor amounts for per determination and per
enrollee penalties in accordance with paragraphs (b)(1) and (b)(2) of
paragraph (b) on an annual basis, and restates that CMS has the
discretion to issue penalties up to the maximum amount under paragraphs
(b)(1) and (2) when CMS determines that an organization's
[[Page 30469]]
non-compliance warrants a penalty that is higher than would be applied
under the minimum penalty amounts set by CMS.
Once finalized, CMS would continue to follow our existing CMP
methodology and would only impose up to the maximum CMP amount in
instances where we determine non-compliance warrants a higher penalty.
This update will also be incorporated in forthcoming revised CMP
calculation methodology guidance.
Comment: A commenter suggested that removing the minimum penalty
amount increase policy would lead to inconsistencies, and a lack of
parity, in the CMP amounts we impose.
Response: We disagree with this comment. First, as discussed above
and in the proposed rule, CMS has always had the statutory authority to
impose up to the maximum CMP amount authorized under sections
1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act. Second, CMS would
continue to follow our existing CMP methodology, which allows for
parity, fairness, and consistency in calculating CMP amounts. We would
only impose up to the maximum CMP amount in instances where we
determine non-compliance warrants a higher penalty to adequately
address the non-compliance.
After consideration of the comments received, we are finalizing our
changes to Sec. Sec. 422.760(b)(3) and 423.760(b)(3) as proposed.
E. Part D Medication Therapy Management (MTM) Program (Sec.
423.153(d))
1. MTM Eligibility Criteria (Sec. 423.153(d)(2))
a. Background
Section 1860D-4(c)(2) of the Act requires all Part D sponsors to
have an MTM program designed to assure, with respect to targeted
beneficiaries, that covered Part D drugs are appropriately used to
optimize therapeutic outcomes through improved medication use and to
reduce the risk of adverse events, including adverse drug interactions.
Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to
target those Part D enrollees who have multiple chronic diseases, are
taking multiple Part D drugs, and are likely to meet a cost threshold
for covered Part D drugs established by the Secretary. Since January 1,
2022, Part D sponsors are also required by section 1860D-
4(c)(2)(A)(ii)(II) of the Act to target all at-risk beneficiaries
(ARBs) \11\ in their Part D drug management program (DMP) for MTM. CMS
has codified the MTM targeting criteria at Sec. 423.153(d)(2).
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\11\ Defined at Sec. 423.100.
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As discussed in the December 2022 proposed rule (87 FR 79452), MTM
eligibility rates have steadily declined over time to 8 percent in
2020. In conjunction with the decreasing eligibility rates, CMS has
observed near-universal convergence among Part D sponsors to the most
restrictive targeting criteria currently permitted under Sec.
423.153(d)(2). When CMS finalized the current regulatory requirements
for targeting criteria over 13 years ago, CMS elected to continue to
give plan sponsors significant flexibility in establishing their MTM
eligibility criteria. However, sponsors have used this flexibility to
adopt increasingly restrictive criteria that we believe are limiting
access to MTM for vulnerable, clinically high-risk beneficiaries.
We performed an extensive analysis to identify potential
disparities in MTM program eligibility and access, as discussed in the
December 2022 proposed rule, and we identified the high cost threshold
and increasingly restrictive plan criteria (e.g., targeting select core
chronic diseases or specific drugs) as the main drivers of the
eligibility gaps. The targeting criteria used by most plans now require
three or more chronic diseases, require eight or more Part D drugs, and
target a narrow and variable list of chronic diseases. And because of
variation in plans' criteria for MTM enrollment, enrollees with
equivalent patient profiles (for example, same chronic diseases, same
number of chronic diseases, same number of Part D drugs, and similar
estimated drug costs) may or may not be eligible for MTM depending on
the criteria their plan requires. Under the current MTM cost threshold
methodology at Sec. 423.153(d)(2)(i)(C), the annual cost threshold for
2024 is $5,330, which also significantly limits the number of
beneficiaries who are eligible to be targeted for MTM enrollment. In
the December 2022 proposed rule, CMS proposed changes to the MTM
program eligibility criteria to address these concerns and help ensure
beneficiaries with more complex drug regimens who would benefit most
from MTM services are eligible.
The proposed changes included:
Requiring plan sponsors to target all core chronic
diseases identified by CMS, codifying the current nine core chronic
diseases in regulation,\12\ and adding HIV/AIDS for a total of 10 core
chronic diseases;
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\12\ The current core chronic diseases are: diabetes*,
hypertension*, dyslipidemia*, chronic congestive heart failure*,
Alzheimer's disease, end stage renal disease (ESRD), respiratory
disease (including asthma*, chronic obstructive pulmonary disease
(COPD), and other chronic lung disorders), bone disease-arthritis
(osteoporosis, osteoarthritis, and rheumatoid arthritis), and mental
health (including depression, schizophrenia, bipolar disorder, and
other chronic/disabling mental health conditions). Enumerated in
statute (*).
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Lowering the maximum number of covered Part D drugs a
sponsor may require from eight to five drugs and requiring sponsors to
include all Part D maintenance drugs in their targeting criteria; and
Revising the methodology for calculating the cost
threshold ($5,330 in 2024) to be commensurate with the average annual
cost of five generic drugs ($1,004 in 2020).
CMS received many comments on these proposed changes, including the
following general comments, and our responses follow.
Comment: Many commenters cited studies that demonstrated the value
of MTM services and supported changes to the targeting criteria to
optimize therapeutic outcomes, decrease adverse medication events, and
avoid unnecessary costs. Commenters also acknowledged that studies show
medication-related problems such as poor medication adherence and
polypharmacy are widespread among individuals taking multiple
prescription medications. These studies emphasized the value of MTM,
including maintaining the wellbeing of Part D enrollees, resolving
medication-related problems, improving health outcomes, empowering
patients, and coordinating care. Some commenters cited a study that
showed net cost savings (i.e., a reduction in total annual health
expenditures minus patient copayments, coinsurance, and deductible
amounts) divided by the incremental cost of providing MTM services
resulted in a return on investment of more than $12 in cost savings for
each $1 spent on MTM. Commenters added that when patients better
understand the goals of their medication therapy, medication adherence
may increase, and hospital readmissions can be reduced. One commenter
cited an analysis by a regional Medicare Advantage plan that found
enrollees who received a comprehensive medication review (CMR) had an
average savings of up to $4,000 in medical claims compared to members
who did not receive a CMR. The commenter stated that the analysis also
found that all enrollees who received a CMR had a 5 percent reduction
in total cost of care compared to those who were eligible for but did
not receive a CMR. Another commenter emphasized that access to
pharmacists'
[[Page 30470]]
clinical skills and increased opportunities for patient-centric care
through MTM could help offset shortages of physicians and nurses.
Lastly, commenters pointed out that MTM fosters collaboration between
clinicians, pharmacists, and patients who take multiple medications
and/or have multiple chronic diseases.
Several commenters agreed that the proposed changes to the MTM
eligibility criteria have the potential to significantly improve the
effectiveness of the MTM program and achieve equity for underserved
Medicare patients. One commenter noted studies highlighting that
individuals with multiple comorbid chronic conditions tend to have the
greatest disparities in accessing the care and treatments they need.
The commenter also cited studies that noted that the current MTM
eligibility criteria do not optimally target beneficiaries most at risk
of underuse or poor adherence and that eligibility is limited to
beneficiaries with high drug use and high spending, which
systematically excludes beneficiaries who could benefit from these
services. Another commenter suggested that rather than using MTM to
improve outcomes and reduce health care costs for Part D enrollees with
multiple chronic diseases, plan sponsors have instead used it as a cost
control tool by focusing on enrollees who take high-cost drugs.
Response: We thank the commenters for their support of the proposed
changes to the MTM eligibility criteria to better focus on
beneficiaries with more complex drug regimens who would benefit most
from MTM. We appreciate the citation of many studies reinforcing the
value of MTM and the need for more equitable access. Almost all of the
chronic diseases targeted for MTM identified at section 1860D-
4(c)(2)(A)(ii)(I)(aa) of the Act and in the current CMS MTM guidance
(See HPMS Memorandum Contract Year 2024 Part D Medication Therapy
Management Program Guidance and Submission Instructions dated April 21,
2023) are more prevalent among minorities and lower income populations.
As a result, we anticipate that these changes will increase eligibility
rates among those populations by promoting more equitable access to MTM
services and closing eligibility gaps.
Comment: Many commenters opposed the proposed eligibility criteria
changes partially or in whole, and several expressed significant
concerns about the costs and resource burden associated with
implementing such a large-scale expansion of the MTM program. Some of
these commenters opined that the proposed changes would increase Part D
premiums and cost sharing for all enrollees. One commenter estimated
that the proposed changes would more than double MTM administrative
costs. Some commenters stated that the proposed MTM expansion would be
cost-prohibitive without any documented benefit to enrollees. Another
commenter suggested finalizing the proposed changes would result in a
loss of rebate dollars that would otherwise be used to improve
affordability or provide supplemental benefits that support enrollee
well-being. Several commenters referenced competing priorities between
the proposed MTM expansion and implementation of the Inflation
Reduction Act of 2022 (IRA). A few commenters emphasized that many of
the same resources needed to support IRA implementation for 2024 and
beyond would also be needed to implement changes to the MTM program,
and finalizing the MTM changes as proposed would put successful
implementation of both the IRA and the MTM expansion at risk.
Response: We acknowledge the concerns raised regarding the cost and
burden of the proposed expansion of MTM. In light of these comments, we
are finalizing the proposed changes with modifications that will result
in a more moderate program size increase and less burden and lower
costs than initially estimated in our December 2022 proposed rule. We
provide more details about the specific modifications in the responses
to comments later in this section of the preamble.
Comment: Several commenters who were opposed to the proposed
changes raised concerns about a decline in MTM program quality that
could result from a significant increase in program size, which would
dilute plans' ability to target MTM interventions to those
beneficiaries who would most benefit from them. Other commenters were
concerned that MTM providers may ``water down'' their approach due to
the increased volume resulting in lower-value programs that satisfy the
MTM requirements but are much less likely to improve health outcomes
due to shorter consultations or fewer interventions. Another commenter
stated that the pool of MTM vendors has decreased while costs have
increased due to the loss of competition, hindering the ability of plan
sponsors to administer quality MTM programs.
Response: We understand the commenters' concerns about the impact
on the quality of the MTM programs and services delivered due to a
large increase in program size as proposed. CMS is finalizing the
proposed changes with modifications that will ensure a smaller increase
in program size and promote the administration of high-value MTM
programs. Currently, due to the increasing cost threshold and
variations in the targeting criteria adopted by sponsors, Part D
enrollees with more complex drug regimens who would benefit most from
MTM services are often not eligible. In addition, enrollees with
equivalent patient profiles (for example, with the same chronic
diseases and taking the same Part D drugs) may or may not be eligible
for MTM depending on the criteria their plan requires. The eligibility
criteria changes we are finalizing in this rule aim to address the key
drivers of the eligibility gaps, discussed in detail in the December
2022 proposed rule, while maintaining a reasonable program size and the
ability of plans to administer effective MTM services.
MTM is a patient-centric and comprehensive approach to improve
medication use, reduce the risk of adverse events, and improve
medication adherence. To continue to provide quality MTM services to an
expanded population and better manage resources, we remind sponsors
that the delivery of MTM may be tailored to meet each enrollee's needs.
For example, the length of the CMR consultation or number of follow-up
interventions needed following targeted medication reviews (TMRs) may
vary between MTM enrollees with more complex drug regimens and those
who are stable on their medication regimens as long as the minimum
level of MTM services is met as specified in Sec. 423.153(d)(1)(vii).
Sponsors may also leverage effective MTM programs to improve several
measures in the Medicare Part D Star Ratings and display page such as
medication adherence, polypharmacy, and gaps in therapy. Lastly, while
we acknowledge commenters' concerns regarding the availability of MTM
vendors, we note that Part D plan sponsors may use in-house resources,
one or more external vendors, or a combination of both, to administer
their MTM programs.
Comment: Some commenters stated that a large increase in the MTM
enrollee population would require significant resources and that there
would be limited time to hire and train additional staff, implement the
necessary processes, and upgrade clinical and administrative
infrastructures. Commenters estimated needing to double or triple their
staffing to accommodate MTM enrollment increases of up to 60 percent in
one year. A commenter stated that many plan sponsors that utilize local
[[Page 30471]]
community pharmacists to furnish MTM services would not be able to meet
the higher demand in time, or that there would be pressure to use call
centers, possibly employing customer service representatives without
clinical training, which may lead to lower quality of care or member
experience. Other commenters were concerned that rapid expansion of the
MTM program size would exacerbate the existing pharmacist workforce
shortage or would not be feasible given the expanded scope of pharmacy
practice. One commenter also suggested that MTM vendors would drop
smaller clients to service larger ones as a result of not being able to
hire enough pharmacists to accommodate the increase in MTM enrollees.
Response: We are optimistic that the increase in demand for MTM
services will incentivize plan sponsors to strengthen their hiring
efforts. It is not clear what methodology the commenters used to
estimate staffing needed to accommodate certain MTM program size
increases. However, CMS plans to finalize our proposed changes to the
MTM eligibility criteria with the modifications described later in this
section of the preamble. CMS believes that this scaled back MTM
expansion may alleviate a portion of the staffing concerns raised by
commenters.
Comment: A few commenters, particularly commenters representing
dual eligible special needs plans (D-SNPs), were concerned that due to
the higher prevalence of chronic diseases in their enrollees, they will
be disproportionately impacted by the changes in the MTM eligibility
criteria and estimated that the majority of their plan enrollment would
be eligible for the MTM program. They asserted that it would not be
feasible to perform outreach or offer the MTM services to all their
enrollees.
A few other commenters stated that when combined the proposed
changes would result in MTM enrollment increases that exceeded the
estimated program-wide size (23 percent of Part D enrollees) in the
proposed rule (for example, increasing enrollment to 60 percent of
their Medicare population, by five times, etc.), depending on the
population or type of plan. Commenters asserted that such an increase
in MTM enrollment would increase administrative costs, resulting in
increased premiums, and could limit the offering of Part D plans.
Response: We acknowledge that some Part D contracts may have actual
MTM enrollment rates above or below the average rate for the program as
a whole because they have higher or lower enrollments of beneficiaries
with the chronic diseases targeted for MTM under the changes to the MTM
requirements we are finalizing in this rule. This is also true under
the current MTM requirements, and there is no evidence that higher than
average MTM enrollment has increased administrative costs and thus
premiums to the point of limiting Part D plans' offerings, including
MA-PDs that are D-SNPs. However, based in part on considerations about
how the estimated program size under the proposals in the December 2022
proposed rule would impact MTM enrollment differently across contracts
and increase the MTM enrollment volume to greater levels than some
sponsors could feasibly handle, we are finalizing the proposed changes
to the MTM eligibility criteria with modifications that we expect to
decrease estimated program size relative to the proposed rule.
Comment: Some commenters expressed concerns that Part D MTM
programs overlap with other programs such as disease management or care
management (including post-discharge medication reconciliation;
hypertension, diabetes, and dyslipidemia case management; and annual
wellness visits) and may cause enrollee confusion, frustration, or
complaints due to multiple outreach attempts, beneficiaries not
answering calls from the plan sponsor, or beneficiaries requesting to
be placed on the plan's do-not-call list. A commenter discussed that
MTM-like interventions occur outside of the Part D MTM program and
achieve improvements to health outcomes, and many MTM services, such as
drug-drug interaction (DDI) analyses, could be automated (outside of
CMRs) without beneficiary participation.
Response: We believe that Part D MTM programs complement efforts
under other programs rather than overlap with them. MTM programs--which
use a comprehensive approach to improve medication use, reduce the risk
of adverse events, and improve medication adherence for beneficiaries
at increased risk of medication-related problems due to having multiple
chronic diseases and taking multiple Part D drugs--are distinct from
disease-specific disease management programs. We acknowledge that
recommendations arising from MTM services may result in referrals to
other specialized, disease-specific programs that may not be a part of
the Part D MTM program. To reduce the risk of beneficiary confusion and
frustration, plan sponsors should be mindful of the timing and
frequency of enrollee outreach for MTM relative to complementary
disease management programs.
In addition, we remind Part D sponsors that while a CMR must be an
interactive consultation with the beneficiary and the pharmacist or
other qualified provider, other aspects of MTM may be automated as
described in CMS MTM guidance (See HPMS Memorandum Correction to
Contract Year 2024 Part D Medication Therapy Management Program
Guidance and Submission Instructions dated April 21, 2023).\13\ As
described in this guidance, sponsors are required to perform TMRs for
all beneficiaries enrolled in their MTM program with follow-up
interventions when necessary. Part D sponsors must assess the findings
of these reviews to determine if a follow-up intervention is necessary
for the beneficiary and/or their prescriber. These assessments could be
person-to-person or system generated.
---------------------------------------------------------------------------
\13\ https://www.cms.gov/files/document/memo-contract-year-2022-medication-therapy-management-mtm-program-submission-v-083121.pdf.
---------------------------------------------------------------------------
Comment: Many commenters stated that the proposed eligibility
criteria changes would result in a substantive update to the Part D
Star Rating MTM Program CMR Completion Rate measure (MTM Star Rating
Measure) due to the program size expansion and impacts to resources.
Therefore, the commenters urged CMS to move the MTM Star Rating Measure
to a display measure for at least 2 years to adjust to the new levels.
A few commenters suggested specification changes to the MTM Star Rating
Measure. Other commenters suggested that expanding the program size in
such a short timeframe would incentivize plans to prioritize quantity
over quality of care.
Response: Per Sec. Sec. 422.164(d)(2) and 423.184(d)(2),
substantively updated Star Ratings measures are moved to the display
page for at least 2 years after the substantive update is adopted.\14\
Refer to sections VII.B.2 and VII.D of this final rule, where we
address the proposal to modify the Medication Therapy Management (MTM)
Program Completion Rate for Comprehensive Medication Review (CMR)
measure and discuss the weight of newly modified measures,
respectively. The MTM Program Completion Rate for CMR measure is being
updated in this rule to align with the revised targeting criteria
finalized at Sec. 423.153(d); the updated
[[Page 30472]]
measure will move to the display page entirely for the 2025 and 2026
measurement years and will return as a new measure to the Star Ratings
program no earlier than the 2027 measurement year for the 2029 Star
Ratings. We will share the additional suggestions for specification
changes with the Pharmacy Quality Alliance (PQA), the measure steward.
---------------------------------------------------------------------------
\14\ Information for measures on the display page are available
online at: https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data. Please download the zipped file ``2024 Display
Measures'' for display measure scores, data and explanatory
technical notes.
---------------------------------------------------------------------------
Comment: A few commenters suggested that MTM program expansion
could be limited to those beneficiaries who are newly eligible for the
Part D MTM program or have recently added, removed, or changed drugs.
One commenter also asserted that the newly eligible would see the
greatest benefit from MTM services, resulting in improved health
outcomes and reduced overall costs. This commenter also stated that the
value of the CMR declines for enrollees with no changes in health
status and that broadening the targeted disease states would increase
burden and administrative costs with diminishing benefits for both plan
sponsors and enrollees. Another commenter suggested that enrollees who
have had a CMR in the last 12 months should requalify for MTM only with
the addition of a new drug to their drug regimen and/or a new disease
state.
Response: Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D
sponsors to target those Part D enrollees who have multiple chronic
diseases, are taking multiple Part D drugs, and are likely to meet a
cost threshold for covered Part D drugs established by the Secretary.
Since January 1, 2022, Part D sponsors are also required by section
1860D-4(c)(2)(A)(ii)(II) of the Act to target all at-risk beneficiaries
(ARBs) in their Part D drug management program (DMP) for MTM.
Furthermore, for 2013 and subsequent plan years, the Affordable Care
Act (ACA) amended the Act by adding section 1860D-4(c)(2)(C)(i), which
requires all Part D sponsors to offer all enrollees targeted for MTM an
annual CMR. These requirements are codified in the regulations at Sec.
423.153(d)(1) and (2).
We acknowledge that the needs and goals of newly eligible MTM
enrollees may be different from those who have already received MTM
services and continue to be eligible for MTM. However, for both
populations of beneficiaries, annual CMRs may be an opportunity to
understand new information about the beneficiary, including but not
limited to if the beneficiary's goals have changed, if they have new or
unresolved medication therapy problems, or if they have any social risk
factors that may be affecting their medication use that can only be
assessed through an interactive consultation.
Comment: A few commenters suggested that CMS should engage the
industry to determine alternative options for better targeting or
increased CMR participation rather than finalize the proposed
modifications to the eligibility criteria. A commenter stated that many
MTM enrollees choose not to participate, and to be more consistent with
the Administration's health equity goals, CMS should engage those
already eligible, who have the greatest need. Another commenter
suggested changes to the Medicare Plan Finder (MPF) that would
highlight the value added by specific plans' MTM programs and provide
guidance to beneficiaries on why selecting plans based on MTM program
specifics may be beneficial. The commenter cited recent precedent in
2019 to 2020 when CMS engaged plans, PBMs, developers, and patient
groups on how to improve the MPF, resulting in major improvements
supported by a wide range of interested parties. A few commenters also
suggested that CMS could engage plans and PBMs to assess MTM and
alternative programs to determine whether MTM eligibility criteria
expansion is warranted, whether to include cancer as a core chronic
condition, the effect of including any additional core chronic diseases
on specialized MTM provider training and program size, and whether MTM
services are an effective mechanism for management of certain diseases
(for example, those with high use of Part B drugs or frequently
changing medication regimens).
Response: Through this rulemaking, we have engaged numerous
interested parties to solicit feedback on implementing MTM eligibility
criteria changes. We have also engaged in our own analysis. As
discussed in the December 2022 proposed rule, we conducted an extensive
data analysis that identified several issues with the current MTM
targeting criteria, and we proposed specific regulatory changes in an
effort to increase MTM eligibility rates, reduce variability of MTM
eligibility criteria across plans, and address disparities to ensure
that those who would benefit the most from MTM services have access.
Taken together, we believed that the proposed changes to the MTM
program targeting criteria would balance eligibility and program size
while allowing us to address specific problems identified in the Part D
MTM program, including marked variability and inequitable beneficiary
access to MTM services.
As discussed later in this preamble, we are finalizing the
proposals with modifications in response to public comments we
received. However, we are committed to addressing the main drivers of
the inequities in MTM program eligibility discussed in the December
2022 proposed rule. Accordingly, we will continue to request input from
interested parties on improving aspects of the MTM program in the
future, including enhanced targeting and better engagement with MTM
enrollees. We will also look for opportunities to improve the
information available for beneficiaries on CMS' websites about Part D
MTM programs.
Comment: A few commenters suggested that additional analyses are
needed to assess the effectiveness of MTM programs, optimize current
MTM programs, and review alternative medication management methods
already being used by plan sponsors and their contracted providers. One
commenter asserted that CMS would be unable to determine which part of
the eligibility criteria expansion worked or failed as they believed
the metrics for MTM success to be ill-defined. The commenter also asked
if CMS has conducted any evaluation of the requirement to target DMP
enrollees for MTM enrollment. Another commenter encouraged CMS to find
a new approach to measuring MTM success in the future through metrics
that assess the quality of MTM services provided and not just the
overall volume of services provided. Another commenter noted the
documented successes of MTM in a number of situations but recognized
room for improvement in the program. The commenter stated that in many
cases, MTM benefits patients directly and can decrease the burden of
healthcare costs, but that results are not consistent across the board,
suggesting a need to increase the overall quality of MTM evaluations.
The commenter concurred with researchers in recommending that future
studies should consider increasing study size and incorporating
multiple sites to bolster the reliability of the results and suggested
that CMS could use its authority to influence changes to MTM studies.
Another commenter suggested that further study can help improve the MTM
program due to limited evidence that MTM improves medication adherence
and patient outcomes. The commenter recommended that CMS initiate a
study including a large set of geographically diverse, Part D plans to
better understand the overall effectiveness of the MTM program and
[[Page 30473]]
potential areas for improvement. The commenter also suggested that it
would be particularly useful to understand the experience and impact of
pharmacists' involvement in MTM programs.
Response: We routinely analyze CMS and plan-reported data to
oversee the Part D MTM programs, including implementation of the new
requirement to target DMP ARBs for MTM enrollment. However, we agree
that additional analysis would be beneficial to assess MTM program
effectiveness, and we will continue to explore ways of conducting such
analysis. We appreciate the comments on potential research and analysis
topics and agree that the high degree of variability between MTM
program targeting criteria has made it difficult to evaluate MTM
programs. We are hopeful that standardizing the criteria as finalized
in this rule will allow more research to be done on MTM outcomes. We
will also engage with industry to develop additional consensus-based
measures to evaluate the quality of MTM programs which may be
considered for the Star Ratings program in the future, and we are
encouraged by recent efforts by the PQA to convene MTM leaders on
evidence-based priorities for measurement.\15\
---------------------------------------------------------------------------
\15\ https://www.pqaalliance.org/mtm-convenes.
---------------------------------------------------------------------------
Comment: Another commenter urged CMS to increase transparency
regarding the costs of the MTM program (that is, how much plans are
saving versus how much they are allocating to pay pharmacists for the
services) and whether Part D plans are incentivized to offer robust MTM
services.
Response: We remind commenters that per Sec. 423.153(d)(5)(ii),
even though a Part D sponsor must disclose to CMS the amount of the
management and dispensing fees and the portion paid for MTM services to
pharmacists and others, reports of these amounts are protected under
the provisions of section 1927(b)(3)(D) of the Act.
Comment: A commenter stated that CMS's proposals in the December
2022 proposed rule to add Part D measures to the Star Ratings, such as
the focus on polypharmacy measures, may present an opportunity to
improve MTM. The commenter felt that the proposed changes to the MTM
program eligibility criteria would expand eligibility but do not
address the issue of providing MTM to Medicare beneficiaries who could
truly benefit from it.
Response: We thank the commenter for the feedback. We agree that
MTM programs may present an opportunity to improve plan performance in
Star Ratings measures such as polypharmacy and help with overall
improvement of medication use among Part D beneficiaries. Refer to
Section VII.B.3 for discussion about the Part D Polypharmacy Use of
Multiple Central Nervous System Active Medications in Older Adults
(Poly-CNS), Polypharmacy Use of Multiple Anticholinergic Medications in
Older Adults (Poly-ACH), and Concurrent Use of Opioids and
Benzodiazepines (COB) Measures.
Comment: Some commenters encouraged CMS to continue to examine
policy options that expand access to MTM and improve patient outcomes
and, in particular, to release the findings from the fifth and final
year of the Part D Enhanced MTM model (Enhanced MTM model). Another
commenter suggested that the Enhanced MTM model can address alarming
trends of medication underuse and overuse. The commenters also
encouraged CMS to collaborate with interested parties to leverage the
findings from the Enhanced MTM model and identify best practices in MTM
to scale nationally, as well as to guide future reforms before taking
action to change MTM.
Response: CMS will continue to examine policy options within our
authority that expand access to MTM and improve patient outcomes. In
February 2023, CMS released the fifth and final evaluation report for
the Enhanced MTM model available at: https://www.cms.gov/priorities/innovation/innovation-models/enhancedmtm. We will continue to review
the results of the Enhanced MTM model and collaborate with interested
parties to identify best practices and lessons learned that may help
improve the traditional Part D MTM programs. We disagree that CMS
should leverage model findings or run additional analyses before making
changes to the Part D MTM programs, as our disparities analysis
discussed in the December 2022 proposed rule identified specific
eligibility gaps that need to be addressed. As such, we are moving
forward with finalizing modifications to the MTM targeting criteria in
this final rule.
Comment: A commenter urged CMS to require plan sponsors to report
MTM enrollee data and analyze the data using demographic information to
measure and address disparities among the enrollees.
Response: Plan sponsors are currently required to report MTM
program beneficiary-level data to CMS through the Part D Reporting
Requirements (OMB 0938-0992). We used these data and other program
data, including demographic information, to perform the MTM disparities
analysis. Furthermore, researchers may request access to a Part D MTM
data file through ResDAC \16\ which could be linked to encrypted
beneficiary and demographic variables in the CCW.
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\16\ Information on the Part D MTM Data File available through
ResDAC at: https://resdac.org/cms-data/files/part-d-mtm.
---------------------------------------------------------------------------
Comment: Many commenters suggested that if CMS finalizes the
combination of changes as proposed, the updated eligibility criteria
should be implemented on a delayed or phased-in basis. Commenters
stated that such an approach would provide plan sponsors with the
additional time necessary to build up staffing, processes, and
infrastructure over several years; to coordinate with other internal
programs to manage medications for the core chronic diseases; and to
ensure local networks can accommodate the increased volume. Commenters
who suggested delays were concerned about implications for costs and
the timing for bid submissions as well as the need for operational
enhancements. Commenters who advocated for a phased-in approach
suggested ways to finalize one or more of the proposed MTM criteria
changes over time on an annual basis. Another commenter suggested that
CMS take a stepwise approach by first finalizing the proposal to
require plan sponsors to target all 10 core chronic diseases to
evaluate how MTM engagement improves, and then allow some flexibility
in how plans target within broad therapeutic categories.
Response: We appreciate the suggestions to implement the proposed
changes using a delayed or phased-in approach. However, we do not agree
that such an approach is necessary because CMS is finalizing the
proposed changes with modification, and--as discussed later in this
preamble--the resulting program size will be about 35 percent smaller
than originally estimated in the December 2022 proposed rule. The
reduced program size mitigates the need for a phased-in approach to
accommodate the new MTM enrollees. Additionally, the changes will be
effective in 2025 rather than 2024 as initially proposed, which will
provide additional time for Part D plan sponsors to build up the
necessary infrastructure to support the anticipated increase in MTM
enrollment.
We now address comments on specific aspects of the proposed
eligibility criteria changes and describe our rationale for finalizing
the proposed changes with modifications.
[[Page 30474]]
b. Multiple Chronic Diseases
The regulation at Sec. 423.153(d)(2)(i)(A) specifies that to be
targeted for MTM, beneficiaries must have multiple chronic diseases,
with three chronic diseases being the maximum number a Part D sponsor
may require for targeted enrollment. In the current CMS MTM guidance
(See HPMS Memorandum Correction to Contract Year 2024 Part D Medication
Therapy Management Program Guidance and Submission Instructions dated
April 21, 2023), CMS identifies nine core chronic diseases.
In the December 2022 proposed rule, we proposed to amend the
regulations at Sec. 423.153(d)(2) by adding a new paragraph (iii) to
require all Part D sponsors to include all core chronic diseases when
identifying enrollees who have multiple chronic diseases, as provided
under Sec. 423.153(d)(2)(i)(A). As part of the proposed new provision
at Sec. 423.153(d)(2)(iii), we also proposed to codify the nine core
chronic diseases currently identified in guidance and to add HIV/AIDS,
for a total of 10 core chronic diseases. We explained that the current
flexibility afforded to plans to identify enrollees with multiple
chronic diseases had led to variability across plans and was a main
driver of eligibility gaps and inequitable beneficiary access to MTM
services. Under our proposal to codify the 10 core chronic diseases,
plan sponsors would maintain the flexibility to target beneficiaries
with additional chronic diseases that are not identified as core
chronic diseases, or to include all chronic diseases in their targeting
criteria.
In the December 2022 proposed rule, CMS also solicited comment on
whether we should consider including additional diseases in the core
chronic diseases proposed at Sec. 423.153(d)(2)(iii), including cancer
to support the goals of the Cancer Moonshot.\17\ We sought comments on
broadly including cancer as a core chronic condition or alternatively
including specific cancers that are likely to be treated with covered
Part D drugs such as oral chemotherapies where MTM could be leveraged
to improve medication adherence and support careful monitoring. We were
interested in comments on the impact of including any additional core
chronic diseases on specialized MTM provider training and on MTM
program size. We also solicited comments on whether MTM services
furnished under a Part D MTM program are an effective mechanism for
management of certain diseases (for example, those with high use of
Part B drugs or frequently changing medication regimens) given the
statutory goals of the MTM program--specifically, reducing the risk of
adverse events, including adverse drug interactions, and ensuring that
covered Part D drugs prescribed to targeted beneficiaries are
appropriately used to optimize therapeutic outcomes through improved
medication use.
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\17\ https://www.whitehouse.gov/cancermoonshot/ CE.
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The comments we received on our proposed policies with respect to
targeting of core chronic diseases are summarized below along with our
responses.
Comment: Many commenters supported the proposal to add HIV/AIDS to
the list of core chronic diseases. Several commenters applauded CMS for
recognizing and attempting to address disparities within the HIV/AIDS
community. Other commenters pointed out that antiretroviral medications
are not only high cost but part of complex regimens that require
frequent monitoring and re-evaluation. Supporters of this proposal also
emphasized the importance of MTM services for HIV/AIDS patients with
many comorbidities.
Response: CMS thanks the commenters for their support for the
proposal to add HIV/AIDS as a core chronic disease. We agree that Part
D enrollees with HIV/AIDS often have complex Part D drug regimens where
medication adherence is critical, very high Part D drug costs, and
multiple comorbidities. In addition, these individuals are more likely
to be members of populations affected by health disparities. For these
reasons and for the reasons discussed in the December 2022 proposed
rule, we are finalizing the proposal to include HIV/AIDS in the core
chronic diseases at Sec. 423.153(d)(2)(iii).
Comment: Many commenters were opposed to including HIV/AIDS as a
core chronic disease and expressed concerns regarding the potential of
MTM programs disrupting therapy that is already being closely monitored
by a specialized team. Other commenters were concerned that the
pharmacists reviewing the drug regimen for individuals with HIV/AIDS
may not have the specialized training needed. One commenter suggested
additional qualifications to identify high-risk medication use among
this population. Lastly, some commenters stated that the data needed
for a successful CMR for this population, including lab values, are not
always available.
Response: We acknowledge that Part D sponsors, especially PDPs, may
not always have complete and up to date information at the time of a
CMR, but the CMR may provide the opportunity to obtain additional
information regarding an individual's current therapy. As discussed in
CMS MTM guidance (See HPMS Memorandum Contract Year 2024 Part D
Medication Therapy Management Program Guidance and Submission
Instructions dated April 21, 2023), a CMR is a systematic process of
collecting patient-specific information, assessing medication therapies
to identify medication-related problems, developing a prioritized list
of medication-related problems, and creating a plan to resolve them
with the patient, caregiver, and/or prescriber. The CMR is designed to
improve patients' knowledge of their prescriptions, over-the-counter
(OTC) medications, herbal therapies and dietary supplements, identify
and address problems or concerns that patients may have, and empower
patients to self-manage their medications and their health conditions.
MTM services should be complementary, not disruptive, to services
furnished by the beneficiary's care team, and an MTM provider may make
referrals or recommendations to the beneficiary's prescribers to
resolve potential medication-related problems or optimize the
beneficiary's medication use.
The CMS analysis presented in the December 2022 proposed rule found
that, on average, Part D enrollees with HIV/AIDS have 4 core chronic
diseases (including HIV/AIDS), take 12 Part D covered drugs (including
eight maintenance drugs), and incur $40,490 in Part D annual drug
spend. Because beneficiaries with HIV/AIDS are likely to have complex
drug regimens and are at increased risk of medication-related problems,
they could benefit from MTM to improve medication use. Despite having
multiple chronic diseases, taking multiple Part D drugs, and incurring
high Part D drug costs, many of these individuals were not eligible for
MTM because their plan did not target HIV/AIDS or did not target enough
of their other chronic diseases. However, we also found that HIV/AIDS
was more likely to be targeted by plans (about 10 percent of plans in
2021) than any other non-core chronic disease, suggesting that these
plans have already recognized the value of offering MTM services to
this population.
Comment: Some commenters questioned whether data privacy policies
and state laws would allow Part D sponsors to engage in data sharing
with MTM vendors. Others voiced concern over the sensitive nature of an
[[Page 30475]]
HIV/AIDS diagnosis and that giving MTM providers access to enrollees'
health information would increase the risk of a data breach or cause
member concerns over privacy.
Response: CMS requires Part D sponsors to comply with all Federal
and State laws regarding confidentiality and disclosure of medical
records or other health and enrollment information per Sec. 423.136.
Those laws may require additional steps for Part D sponsors to share
information with MTM providers, such as obtaining beneficiary consent.
In establishing the requirement to include HIV/AIDS as a core chronic
disease, we do not intend to change or modify any legal obligations
that entities may have under the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) Privacy Rule or any other law.
Regarding the potential for data breaches, we expect plan sponsors and
their MTM providers to have appropriate safeguards in place to protect
personal health information for beneficiaries with HIV/AIDS just as
they do for enrollees with other diseases or medication regimens.
Comment: Many commenters supported the proposal to require Part D
sponsors to include all core chronic diseases when identifying
enrollees who have multiple chronic diseases. Some of these commenters
emphasized the importance of MTM services for beneficiaries with
diseases such as ESRD and mental health conditions. We received
suggestions to expand the inclusion of Alzheimer's disease on the list
of core chronic diseases to include neurodegenerative diseases
(including multiple sclerosis) and/or other dementias such as Lewy Body
disease or frontotemporal lobar degeneration and pain as core chronic
diseases.
Other commenters who supported the proposal suggested that
requiring the 10 core chronic diseases should provide more consistency
in MTM eligibility between plans and broaden beneficiaries' eligibility
for MTM in each plan.
Response: We thank the commenters for their supportive comments
regarding our proposal to require sponsors to include all core chronic
diseases when identifying enrollees who have multiple chronic diseases.
We are finalizing that proposal at Sec. 423.153(d)(2)(iii). Plan
sponsors will be required to target all 10 core chronic diseases
beginning January 1, 2025. This change will address the concerns we
discussed in the December 2022 proposed rule regarding increasingly
restrictive criteria implemented by plan sponsors (for example, by
targeting select core chronic diseases), which have been one of the
main drivers of reduced eligibility rates for MTM. By reducing the
variability in targeting criteria across plans, we will eliminate
situations where enrollees meet the requirement in Sec.
423.153(d)(2)(i)(A) of having three chronic diseases but are not
targeted for MTM enrollment because their plan does not target their
chronic diseases. This change will also ensure that plan sponsors are
targeting all of the chronic diseases specified in the statute at
section 1860D-4(c)(2)(A)(ii)(I)(aa) of the Act, along with certain
other chronic diseases that we have identified as prevalent in the Part
D population and commonly treated with Part D drugs. This reduced
variability should also allow CMS to more accurately estimate program
size when calculating burden and assessing impact.
We will continue to analyze chronic diseases that are highly
prevalent in the Part D population, align with common targeting
practices across sponsors, and are commonly treated with Part D drugs,
where MTM services could most impact therapeutic clinical outcomes,
including those suggested by the commenters, and may consider proposing
additional core chronic diseases such as neurodegenerative diseases
and/or other dementias in future rulemaking. Although we are not adding
pain as a core chronic disease in this final rule, we remind sponsors
that as of January 1, 2022, they are now required to target ARBs as
defined at Sec. 423.100 for MTM enrollment. We also note that plan
sponsors retain the flexibility to target additional chronic diseases
beyond those codified as core chronic diseases.
Comment: Many commenters opposed the proposal to require Part D
sponsors to include all core chronic diseases to identify beneficiaries
who meet the targeting criterion of having multiple chronic diseases.
Some commenters suggested that CMS limit core diseases to those that do
not require specialized training or requested extra time to hire
specialized staff. Another commenter urged CMS to continue to allow
plan sponsors to have flexibility to establish a targeted population
within the 10 core chronic diseases. Other commenters wanted to limit
the core chronic diseases to those that are easily identified using
Part D claims only or to those associated with the Star Ratings
medication adherence measures. A commenter noted that even though the
core chronic diseases are not entirely new, the requirement for
sponsors to include all of them will necessitate IT development for
file transfer of medical claims data, adding complexity, as most plans
utilize only prescription drug claims data to identify members. For
example, the commenter mentioned that to target beneficiaries with many
of the core chronic diseases, plans will need to submit diagnosis codes
from medical claims to MTM vendors in order to identify such members.
Another commenter was concerned that lab work or other relevant data
points may not be easily accessible by the plan's MTM pharmacist. One
commenter felt that MTM pharmacists are not in the best position to
positively impact (and may detract from) a beneficiary's care with a
CMR and routine TMR assessments for ESRD.
Response: Plan sponsors' flexibility to target select core chronic
diseases was a main driver of inequitable access to MTM in the Part D
program that we addressed in our proposed changes to the Part D MTM
requirements in the December 2022 proposed rule. CMS strongly believes
pharmacists or other qualified MTM providers with extensive knowledge
and training of prescribed medications are in an excellent position to
impact a beneficiary's medication use, regardless of the chronic
diseases they have or the Part D drugs they take. For instance,
beneficiaries with ESRD typically have multiple co-morbidities being
treated with multiple Part D drugs which may benefit from a CMR and
assessment for dose adjustments due to kidney function. If a
beneficiary requires more specialized services or coordinated care, MTM
may be a means to identify and refer the beneficiary to such services.
We also remind commenters that the eligibility criteria, including core
chronic diseases, help identify beneficiaries who may be at increased
risk of medication-related problems. However, MTM services should not
focus only on the core chronic diseases or drugs within classes used to
treat those diseases. For example, the CMR should include a review of
all of the MTM enrollee's prescription medications, OTC medications,
herbal therapies, and dietary supplements. As they do today, plan
sponsors should optimize their targeting algorithms and methods using
data available to them to identify enrollees who are eligible for MTM.
Some plan sponsors may need to update their IT systems or workflows to
expand the use of data sources available to them to better optimize
their targeting methods.
Comment: Some commenters requested clarification on whether all
diseases included under the 10 core chronic disease categories must be
targeted, or whether plans will have the flexibility to choose specific
diseases within the core chronic diseases. A few
[[Page 30476]]
commenters were concerned that requiring targeting for all core chronic
diseases removes sponsors' ability to customize their MTM program to
target members they deem well-suited for MTM services.
Response: Plan sponsors must target all 10 core chronic diseases,
including all conditions within each core chronic disease. As discussed
in the proposed rule, our analysis found that a significant proportion
of the Part D population that we identified as having three or more
core chronic diseases and using eight or more drugs were not eligible
to be targeted for MTM, and variation in plan-specific targeting
criteria (for example, plans targeting fewer than all of the core
chronic diseases) was a key driver of gaps in eligibility for MTM. By
reducing the variability in targeting criteria across plans, we can
significantly reduce situations where enrollees meet the requirement in
Sec. 423.153(d)(2)(i) of having three chronic diseases but are not
targeted for MTM enrollment because their plan does not target their
chronic diseases. The proposal to require plan sponsors to target all
10 core chronic diseases, which we are finalizing in this rule, aims to
close this gap in access and better ensure that the beneficiaries who
are most in need of MTM services are targeted for enrollment. Plan
sponsors will still have the flexibility of targeting additional
chronic diseases beyond the core diseases codified in this rule.
Comment: A commenter wanted CMS to provide greater specificity when
codifying core diseases. For example, they asked that CMS clarify how
``other chronic lung disorders'' are defined under respiratory disease
and how ``chronic/disabling mental health conditions'' are defined
under mental health.
Response: CMS does not have guidance for plan sponsors to define or
code core chronic diseases such as ``other chronic lung disorders'' or
``chronic/disabling mental health conditions.'' Sponsors should retain
documentation supporting their eligibility criteria determinations.
Comment: In response to our request for information and feedback on
including additional diseases, such as cancer, in the list of core
chronic diseases, a couple of commenters supported including cancer as
a core chronic disease. One commenter felt it would align well with
some pharmacies' specialty pharmacy offerings and clinical services. We
also received some comments opposed to adding cancer as a core chronic
disease for MTM program eligibility. Some commenters indicated that
complex cancer treatment needs timely, on-going monitoring by
specialists with expertise across Part B and Part D medications (for
which data sets may or may not be available) and may not be best
managed by Part D MTM programs through annual CMRs or by pharmacists
without specialized training. Other commenters noted that specialty
pharmacies, which dispense the majority of oral cancer medications
(including specialty pharmacies within oncology clinics), already
provide monitoring or counseling for their oncology patients. A
commenter was concerned that beneficiaries with cancer may find MTM
outreach to be intrusive and unwanted, and another was concerned with
patient sensitivity when in remission. Another commenter that opposed
including cancer as a core chronic disease noted that beneficiaries who
meet the current MTM eligibility criteria who are also taking oncology
drug(s) would still benefit from the MTM review for side effects,
safety, and potential drug-drug interactions.
Response: Equitable access to cancer screening and targeting the
right treatments for cancer patients is a top priority under the goals
of the Cancer Moonshot. However, while section 1860D-
4(c)(2)(A)(ii)(I)(aa) of the Act provides us the authority to specify
and include other chronic diseases, after consideration of the comments
received in response to the RFI, we do not believe it would be
appropriate to add cancer to the core chronic diseases specified in
Sec. 423.153(d)(2)(iii) in this final rule. We agree that including
cancer may be potentially disruptive to the medication management that
is already a part of standard clinical practice in oncology and
specialty centers. Moreover, it is unclear that cancer patients' needs
can be met through Part D MTM program annual CMRs centered on Part D
medication use delivered by MTM pharmacists who typically lack the
specialized training in oncology. Cancer treatment goals are often
different than the goals for treatment of the other chronic diseases
included in Part D MTM program (such as diabetes), where MTM may be
used to review and stabilize drug regimens that are likely to be long
term. In contrast, many cancers involve a high utilization of
physician-administered Part B drugs and frequently changing medication
regimens. Also, cancer is not currently commonly targeted by Part D
plans as a chronic disease for their MTM program eligibility.
While we are not adding cancer as a core chronic disease at this
time, we emphasize that some cancer patients may still be eligible for
MTM based on meeting the eligibility criteria. We encourage Part D
plans and MTM providers to seek opportunities to promote cancer
screening where possible for MTM enrollees and to coordinate with
specialty cancer programs to develop medication safety recommendations
for cancer patients. In support of the Cancer Moonshot, CMS has
initiated other activities, such as the Enhancing Oncology Model
(EOM),\18\ which is designed to test how best to place cancer patients
at the center of high-value, equitable, evidence-based care. CMS has
also adopted rules providing payment for principal illness navigation
services to help patients and their families navigate cancer treatment
and treatment for other serious illnesses.\19\
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\18\ https://www.cms.gov/newsroom/press-releases/biden-administration-announces-new-model-improve-cancer-care-medicare-patients.
\19\ https://www.cms.gov/newsroom/press-releases/cms-finalizes-physician-payment-rule-advances-health-equity?ref=upstract.com.
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c. Multiple Part D Drugs
Section 1860D-4(c)(2)(A)(ii) of the Act requires that targeted
beneficiaries be taking multiple covered Part D drugs. The current
regulation at Sec. 423.153(d)(2)(i)(B) specifies that eight is the
maximum number of Part D drugs a Part D plan sponsor may require for
targeted MTM enrollment. In accordance with the technical HPMS User
Guide for the MTM Program submission module, sponsors are permitted to
include all Part D drugs, all Part D maintenance drugs, or specific
drug classes.
We proposed to revise Sec. 423.153(d)(2)(i)(B) to decrease the
maximum number of Part D drugs a sponsor may require for targeted
enrollment from eight to five for plan years beginning on or after
January 1, 2024. As discussed in the preamble to the December 2022
proposed rule, while there is no consensus definition of polypharmacy
in terms of the use of a certain number of medications or medication
classes concurrently, the proposed change would ensure the MTM program
continues to focus on more individuals with complex drug regimens and
increased risk of medication therapy problems. In addition, although we
proposed changes to the targeting criteria with respect to the number
of Part D drugs, we noted that the CMR described in Sec.
423.153(d)(1)(vii)(B) should continue to include review of all
prescription medications, OTC medications, herbal therapies, and
dietary supplements.
We also proposed to add a new provision at Sec. 423.153(d)(2)(iv)
to
[[Page 30477]]
require all sponsors to include all Part D maintenance drugs in their
targeting criteria. Plans are currently able to include all maintenance
drugs in their targeting criteria as an option in the MTM Submission
Module in HPMS; however, CMS does not have guidance related to how
maintenance drugs are identified for this purpose. To ensure
consistency across the MTM program, we also proposed that, for the
purpose of identifying maintenance drugs, plans would be required to
rely on information contained within a widely accepted, commercially or
publicly available drug information database commonly used for this
purpose, such as Medi-Span or First Databank, but would have the
discretion to determine which one they use. Under this proposal,
sponsors would no longer be allowed to target only specific Part D drug
classes but would be required to target all Part D maintenance drugs.
However, plans would retain the option to expand their criteria by
targeting all Part D drugs. CMS solicited public comment on our
proposed parameters for defining maintenance drugs, including potential
additional sources for making such determinations.
Below, we address comments on the proposed revisions to the maximum
number of covered Part D drugs a plan sponsor may require and our
proposal to require sponsors to include all Part D maintenance drugs in
their targeting criteria. We also describe our rationale for finalizing
the proposed changes with modifications.
Comment: Many commenters supported the proposal to lower the
maximum number of covered Part D drugs a sponsor may require from eight
to five drugs. These commenters supported overall expansion of the MTM
program, which they believed would increase medication safety. A
commenter who supported the proposal suggested additional targeting
criteria, such as targeting individuals taking high-risk medications.
Response: We appreciate the support for this proposal. However, we
remind commenters that section 1860D-4(c)(2)(A)(ii) of the Act requires
plans to target beneficiaries taking multiple covered Part D drugs. We
note, however, that plans retain the flexibility to enroll
beneficiaries taking high-risk medications in their MTM programs
through expanded eligibility, even if they do not meet the statutory
criteria for targeted enrollment. In addition, high-risk medication use
may be addressed through MTM interventions.
Comment: Many commenters opposed the proposal to lower the maximum
number of covered Part D drugs a sponsor may require from eight to five
drugs. Commenters were concerned that MTM would not be as useful for
beneficiaries with less complex drug regimens and suggested that
beneficiaries should qualify for MTM enrollment based on higher pill
burdens and more complicated medication regimens. One commenter stated
that a typical enrollee with three or more chronic diseases takes
between seven and 10 medications and recommended retaining the current
maximum number of drugs at eight. Another commenter suggested initially
only decreasing this threshold from eight to five drugs for sponsors
that use specific classes of drugs in their criteria, and then fully
implementing the proposed change for all plan sponsors the following
year.
Response: After consideration of these comments, and the general
comments expressing concerns about increased burden and costs, current
pharmacy and vendor shortages, and other resource challenges due to the
combination of MA and Part D program policy changes plan sponsors must
implement over the next several years, we are not finalizing our
proposal to lower the maximum number of covered Part D drugs a sponsor
may require from eight to five drugs at this time. We are retaining the
maximum number of drugs a plan sponsor may require for targeting
beneficiaries taking multiple Part D drugs at eight (see Sec.
423.153(d)(2)(i)(B)). Plan sponsors will maintain the flexibility to
set a lower threshold (between two and eight Part D drugs) for
targeting. This will maintain the MTM program focus on beneficiaries
with the most complex drug regimens and will result in a more moderate
expansion of the MTM program size. Additionally, our decision not to
finalize this aspect of our proposed modifications to the MTM
eligibility criteria is supported by CMS' data analysis included in the
December 2022 proposed rule (87 FR 79542-79546). We found that the
beneficiaries identified as having 3 or more core chronic conditions
and using 8 or more drugs who were not eligible for MTM took on average
eight to nine Part D drugs, which suggests that the number of Part D
drugs criterion is not a main driver of MTM eligibility disparities
under our current policies. This change to our proposal allows us to
respond to commenters' concerns regarding the potential impact of
reducing the maximum number of Part D drugs from eight to five, while
still addressing the barriers to eligibility posed by the increasingly
restrictive plan criteria (for example, by targeting select core
chronic diseases or drugs) and the high cost threshold, which were
identified in our analysis as the main drivers of reduced eligibility
rates for MTM. CMS will continue to monitor the impact of the number of
Part D drugs criterion on MTM eligibility rates and consider whether to
propose any changes in future rulemaking.
Comment: No commenters specifically supported or opposed the
proposal to include all Part D maintenance drugs in the targeting
criteria. One commenter requested clarification on whether specific
Part D drug classes could still be targeted. A few commenters
recommended either Medispan or First DataBank as sources for
identifying maintenance drugs but wanted discretion to determine which
one they use.
Response: We appreciate the comments. As we stated in the December
2022 proposed rule, under the proposed modifications to the MTM
eligibility criteria, Part D sponsors would no longer be allowed to
target only specific Part D drug classes but would be required to
target all Part D maintenance drugs at a minimum. However, plans would
retain the option to expand their criteria by targeting additional Part
D drugs or all Part D drugs. While we proposed that plan sponsors would
be required to identify Part D maintenance drugs using information
contained within a widely accepted drug database, such as Medi-Span or
First Databank, we expressly stated that Part D plans would retain
discretion to determine which database to use.
We are finalizing the proposed provision at Sec. 423.153(d)(2)(iv)
with modification. Specifically, we are revising the regulation text to
clarify that sponsors must include all Part D maintenance drugs and to
expressly state that Part D sponsors retain the flexibility to include
all Part D drugs in their targeting criteria. Additionally, we are
finalizing the requirement that sponsors rely on information contained
within a widely accepted, commercially or publicly available drug
information database to identify Part D maintenance drugs. We are also
updating the text of this provision to reflect that these requirements
will apply beginning on January 1, 2025. We are not finalizing the
proposal to lower the maximum number of covered Part D drugs a sponsor
may require from eight to five drugs at this time.
d. Annual Cost Threshold
Section 1860D-4(c)(2)(A)(ii) of the Act specifies that
beneficiaries targeted for MTM must be likely to incur annual costs for
covered Part D drugs that
[[Page 30478]]
exceed a threshold determined by CMS. The regulation at Sec.
423.153(d)(2)(i)(C) codifies the current cost threshold methodology,
which was set at costs for covered Part D drugs greater than or equal
to $3,000 for 2011, increased by the annual percentage specified in
Sec. 423.104(d)(5)(iv) for each subsequent year beginning in 2012. The
annual cost threshold for 2024 is $5,330. The cost threshold has
increased substantially since it was established in regulation, while
the availability of lower cost generics and the generic utilization
rates have also increased significantly since the Part D program began.
Together, these factors have resulted in a cost threshold that is
grossly misaligned with CMS' intent and inappropriately reduces MTM
eligibility among Part D enrollees who have multiple chronic diseases
and are taking multiple Part D drugs. The cost threshold has been
identified as a significant barrier to MTM access, and, in the past,
interested parties have recommended that it be lowered.
In the December 2022 proposed rule, we proposed to amend the
regulation at Sec. 423.153(d)(2)(i)(C) to set the MTM cost threshold
at the average cost of five generic drugs, as defined at Sec. 423.4,
for plan years beginning on or after January 1, 2024. Under this
proposal, CMS would calculate the dollar amount of the MTM cost
threshold based on the average daily cost of a generic drug using the
PDE data specified at Sec. 423.104(d)(2)(iv)(C). As noted in the
December 2022 proposed rule, based on 2020 data, the average annual
cost of five generic drugs was $1,004. In the proposed rule, CMS
indicated that for 2024, the calculation would use PDE data from 2022
to identify the average daily cost of a generic fill, multiplied by 365
days for an annual amount. The average daily cost for a drug would be
based on the ingredient cost, dispensing fees, sales tax, and vaccine
administration fees, if applicable, and would include both plan paid
amounts and enrollee cost sharing. Based on 2022 PDE data analyzed
after publication of the December 2022 proposed rule, the average
annual cost of five generic drugs was $994. In the December 2022
proposed rule, we noted that in subsequent years, the MTM cost
threshold would be published in the annual Part D Bidding Instructions
memo.
Below, we address comments on the proposed revisions to the annual
cost threshold and describe our rationale for finalizing a modified MTM
cost threshold methodology at Sec. 423.153(d)(2)(i)(C) based on the
average annual cost of eight generic drugs, which will be applicable
beginning January 1, 2025.
Comment: Many commenters opposed the proposal to set the MTM cost
threshold at the average cost of five generic drugs. While many of
these commenters agreed that the current MTM cost threshold is too
high, they opposed our proposal to base the cost threshold on the
average cost of five generic drugs due to the estimated impact on MTM
program size. Instead, some commenters supported a less significant
cost threshold reduction. A few commenters suggested that the cost
threshold is irrelevant as the number of drugs, not their cost, is a
key metric. A health plan commented that over 40 percent of its
enrollees would have annual drug costs that meet the proposed MTM cost
threshold and suggested that the overarching aim should instead be to
continue targeting enrollees who are at risk for polypharmacy. This
commenter cited a study suggesting the range of rates of ambulatory
elderly patients who experience adverse drug reactions is 20 to 25
percent and that targeting a much larger percentage of Medicare
Advantage membership to enroll in an MTM program may divert the focus
from the population that would most benefit from program inclusion.
Other commenters did not recommend decreasing the cost threshold to
align with annual average generic drug costs because that would target
beneficiaries who would not benefit from a CMR consultation regarding
cost savings opportunities. Another commenter suggested that CMS
consider increasing the annual cost threshold, instead of decreasing
it, to better account for inflation in the prescription drug market and
allow plans to have greater capacity to target MTM services to high
need members.
Some commenters suggested alternative proposals for lowering the
MTM cost threshold. One commenter suggested CMS seek insight from the
industry, such as the PQA, on how best to adjust the cost threshold. A
few commenters recommended alternative approaches to establish the cost
threshold, such as commensurate with the average cost of eight generic
drugs, a specific dollar amount, the cost of a mix of brand and generic
drugs as many beneficiaries take at least one brand drug, or an
incremental approach to decreasing the cost threshold, starting with
the annual cost of six or seven drugs.
Response: After considering the comments and suggestions we
received, we are persuaded to finalize a modified MTM cost threshold
methodology at Sec. 423.153(d)(2)(i)(C) based on the average annual
cost of eight generic drugs beginning January 1, 2025. This revised
cost threshold methodology aligns with our decision not to finalize our
proposal to reduce the maximum number of covered Part D drugs a sponsor
may require from eight to five drugs. Lowering the cost threshold
removes a significant barrier to MTM enrollment, but setting the
threshold at the cost of eight (instead of five) generic drugs yields a
more moderate program size expansion, which will address commenters'
concerns about cost and burden. Encouraging the use of generic or lower
cost drugs when medically appropriate remains a pillar of the Part D
program. Under our final policy, beneficiaries meeting the criteria of
having multiple chronic diseases and taking multiple Part D drugs, but
who are taking lower cost generic alternatives, may now be targeted for
MTM enrollment. MTM enrollees, especially those with high drug costs,
may continue to benefit from cost saving opportunities from CMRs.
However, even if a CMR consultation does not result in cost savings,
there are other benefits of CMRs beyond cost savings.
Comment: Many commenters requested clarification regarding the MTM
cost threshold calculation, including which five generic drugs will be
used to determine this new cost threshold; what methodology CMS will
use to select the drugs; how authorized generics, biosimilars, or un-
branded biologics factor into the determination; whether the proposed
methodology would utilize the top five utilized generic drugs by
prescription volume or the top five generic drugs by plan paid amount;
whether the calculation includes or excludes generic specialty
medications; whether there is a process to detect outlier national drug
codes (NDCs) to ensure they are not included in the calculation; and
whether the cost of five generic drugs is per 30-day supply of
medication. A few commenters asked if the proposed cost threshold would
be expected to increase or decrease annually. Another commenter
suggested that CMS reevaluate cost data for generic drugs, as costs of
many generic drugs have increased since 2020 due to global supply chain
issues after the COVID-19 pandemic. One commenter asked if enrollees
would be required to receive the generic drugs only.
Response: The average daily cost of one generic drug was calculated
as total gross drug cost divided by total days supply for all Part D
covered generic drugs utilized by all Part D enrollees during the plan
year. The average daily
[[Page 30479]]
cost of one generic drug was then multiplied by eight drugs and 365
days to compute an average annual cost of eight generic drugs. The
total gross drug cost used in this calculation is the sum of the
ingredient cost, dispensing fees, sales tax, and vaccine administration
fees, if applicable, during the relevant plan year and includes both
plan paid amounts and enrollee cost sharing. This calculation does not
include the cost of biologic products or authorized generics. Compound
drug claims are also excluded.
Beginning January 1, 2025, CMS will calculate the dollar amount of
the MTM cost threshold based on the average daily cost of a generic
drug as determined using PDE data from the plan year that ended 12
months prior to the applicable plan year, which is the PDE data
currently used to determine the specialty-tier cost threshold as
specified in the provision at Sec. 423.104(d)(2)(iv)(C). CMS will
analyze the PDE data for all Part D covered generic drugs utilized by
all Part D enrollees during the plan year to calculate the average
daily cost of one generic fill and multiply the average daily cost of
one generic fill by 365 days to determine an annual amount. Therefore,
the cost threshold may change annually. Although average costs for all
Part D covered generic drug fills will be used to calculate the MTM
cost threshold, a beneficiary would not be required to only take
generic drugs to meet the eligibility criteria for MTM, and
beneficiary-specific drug costs may vary from the averages.
For example, based on 2022 PDE data, the average annual cost of
eight generic drugs was $1,591. If the MTM threshold were set at this
amount, plans would be required to target beneficiaries who are likely
to incur annual covered Part D drug costs greater than or equal to
$1,591 (across all Part D drugs they take, not just generic drugs) and
meet the other MTM targeting criteria for having multiple chronic
diseases and taking multiple Part D drugs for enrollment in their MTM
program.
Based on analysis of 2023 PDE data, the MTM cost threshold will be
$1,623 for 2025. The MTM cost threshold will be published in the annual
Part D Bidding Instructions memo for future years.
Following consideration of the comments received on the cost
threshold, as well as on the maximum number of Part D drugs plans may
target, we are finalizing a modified MTM cost threshold methodology at
Sec. 423.153(d)(2)(i)(C) based on the average annual cost of eight
generic drugs as defined at Sec. 423.4. This new cost threshold
methodology will be applicable beginning January 1, 2025.
e. Summary
After consideration of the comments received, we are finalizing
proposed changes to the Part D MTM program eligibility requirements
with the modifications discussed. The changes are effective January 1,
2025 and are summarized below.
We are finalizing the provision at Sec.
423.153(d)(2)(iii) that Part D sponsors must include all core chronic
diseases in their targeting criteria for identifying beneficiaries who
have multiple chronic diseases, as provided under Sec.
423.153(d)(2)(i)(A). As part of this provision at Sec.
423.153(d)(2)(iii), we are codifying the nine core chronic diseases
currently identified in guidance and adding HIV/AIDS, for a total of 10
core chronic diseases. The 10 core chronic diseases are: (A)
Alzheimer's disease; (B) Bone disease-arthritis (including
osteoporosis, osteoarthritis, and rheumatoid arthritis); (C) Chronic
congestive heart failure (CHF); (D) Diabetes; (E) Dyslipidemia; (F)
End-stage renal disease (ESRD); (G) Human immunodeficiency virus/
acquired immunodeficiency syndrome (HIV/AIDS); (H) Hypertension; (I)
Mental health (including depression, schizophrenia, bipolar disorder,
and other chronic/disabling mental health conditions); and (J)
Respiratory disease (including asthma, chronic obstructive pulmonary
disease (COPD), and other chronic lung disorders). Sponsors retain the
flexibility to target additional chronic diseases beyond those codified
as core chronic diseases.
We are not finalizing the proposal at Sec.
423.153(d)(2)(i)(B) to decrease the maximum number of Part D drugs a
sponsor may require from eight to five at this time. We are retaining
the maximum number of drugs a plan sponsor may require for targeting
beneficiaries taking multiple Part D drugs as eight at Sec.
423.153(d)(2)(i)(B). Part D sponsors will maintain the flexibility to
set a lower threshold (a number between two and eight Part D drugs) for
targeting beneficiaries taking multiple Part D drugs. We may revisit
the maximum number of Part D drugs (eight) a sponsor may require in
future rulemaking.
We are finalizing the provision at Sec. 423.153(d)(2)(iv)
to require sponsors to include all Part D maintenance drugs in their
targeting criteria with minor modifications to the regulatory text to
clarify that sponsors must include all Part D maintenance drugs and to
provide flexibility for sponsors to include all Part D drugs in their
targeting criteria. However, sponsors will not be permitted to limit
the Part D maintenance drugs included in MTM targeting criteria to
specific Part D maintenance drugs or drug classes. We are also
finalizing the requirement at Sec. 423.153(d)(2)(iv) that, for the
purpose of identifying Part D maintenance drugs, plans must rely on
information in a widely accepted, commercially or publicly available
drug information database.
We are finalizing the provision at Sec.
423.153(d)(2)(i)(C) with modification to set the MTM cost threshold at
the average cost of eight generic drugs, as defined at Sec. 423.4. CMS
will calculate the dollar amount of the MTM cost threshold based on the
average daily cost of a generic drug using the PDE data specified at
Sec. 423.104(d)(2)(iv)(C).
We believe these final policies will allow us to address specific
gaps identified in MTM program eligibility by reducing marked
variability across plans and ensuring more equitable access to MTM
services; better align with Congressional intent while focusing on
beneficiaries with complex drug regimens; and keep the program size
manageable. The changes also take into consideration the burden a
change in the MTM program size would have on sponsors, MTM vendors, and
the health care workforce as a whole. With these changes, we estimate
that the number and percent of Part D enrollees eligible for MTM will
increase from 3.6 million (7 percent of Part D enrollees based on
actual 2022 MTM enrollment data) to a total of 7.1 million (13 percent
of Part D enrollees estimated using 2022 data), which is smaller than
the estimated program size of 11 million beneficiaries in the December
2022 proposed rule. Burden estimates and impacts are discussed in
sections X. and XI. of this proposed rule, respectively.
2. Define ``Unable To Accept an Offer To Participate'' in a
Comprehensive Medication Review (CMR)
In guidance issued annually, CMS has consistently stated that we
consider a beneficiary to be unable to accept an offer to participate
in a CMR only when the beneficiary is cognitively impaired and cannot
make decisions regarding their medical needs. In the December 2022
proposed rule, we proposed to codify this definition by amending the
current regulation text at Sec. 423.153(d)(1)(vii)(B)(2) to specify
that in order for the CMR to be performed with an individual other than
the beneficiary, the beneficiary must be unable to accept the offer to
participate in the CMR due to cognitive impairment.
[[Page 30480]]
We received the following comments on this proposal, and our
responses follow:
Comment: A commenter voiced their support for our proposal.
Response: CMS appreciates the commenter's support.
Comment: A few commenters opposed or voiced concerns about the
proposal, stating that many beneficiaries who are not cognitively
impaired request that their caregiver or a trusted family member
participate in the CMR on their behalf. For example, one commenter
mentioned hearing impairment as a barrier for the beneficiary receiving
the CMR directly from the provider. Another commenter pointed out that
many beneficiaries receive MTM services in long-term care facilities
where nurses who manage their medications should be allowed to
participate in the reviews on the beneficiary's behalf. They argued
that caregivers should be allowed to participate in the CMR as long as
HIPAA Privacy Rule policies are not violated, and proper documentation
is maintained.
Response: Our proposal to codify the definition of ``unable to
participate'' does not preclude beneficiaries from inviting other
individuals to join them for the CMR. MTM enrollees may continue to
include caregiver or family member participation during the MTM
process, though we emphasize that MTM is a beneficiary-centric program.
Instead, this rule codifies the definition of ``unable to
participate,'' which is different from a beneficiary requesting a CMR
to be completed with another individual. Generally, we expect the
beneficiary being ``unable to participate'' due to cognitive impairment
to be an uncommon designation that should be reported through the Part
D Reporting Requirements (OMB 0938-0992). We will continue to monitor
the percentages of beneficiaries who are unable to accept a CMR offer
for outlier rates, and sponsors should retain documentation supporting
any instance in which a beneficiary is designated as ``unable to
participate'' in their reported data.
CMS would also like to remind plan sponsors that they are expected
to put in place safeguards against discrimination based on the nature
of their MTM interventions. Hearing impairment should not prevent a
beneficiary from receiving MTM services. Relevant federal regulations
for MTM programs may include Federal Communications Commission
requirements for accessibility, as defined in 47 CFR part 64 Subpart F;
Americans with Disabilities Act (ADA): Nondiscrimination on the Basis
of Disability by Public Accommodations and in Commercial Facilities, 28
CFR part 36; Nondiscrimination on the Basis of Race, Color, National
Origin, Sex, Age, or Disability in Health Programs or Activities
Receiving Federal Financial Assistance and Programs or Activities
Administered by the Department of Health and Human Services Under Title
I of the Patient Protection and Affordable Care Act or by Entities
Established Under Such Title, 45 CFR Part 92; Section 504 of the
Rehabilitation Act, Nondiscrimination on the Basis of Handicap in
Programs or Activities Receiving Federal Financial Assistance, 45 CFR
part 84; and 21st Century Communications and Video Accessibility Act
(CVAA). Part D sponsors should also refer to the standards for
communications and marketing found at 42 CFR 423.2267(a).
After consideration of the comments received, we are finalizing the
definition of a ``unable to accept an offer to participate'' in a CMR
as proposed at Sec. 423.153(d)(1)(vii)(B)(2) to provide that a
beneficiary must be unable to accept the offer to participate in the
CMR due to cognitive impairment.
3. Requirement for In Person or Synchronous Telehealth Consultation
As discussed in the December 2022 proposed rule, we proposed to
amend the existing regulation text at Sec. 423.153(d)(1)(vii)(B)(1)(i)
to require that the CMR be performed either in person or via
synchronous telehealth to clarify that the CMR must include an
interactive consultation that is conducted in real-time, regardless of
whether it is done in person or via telehealth. As discussed in the
December 2022 proposed rule, while the consultation must be conducted
in real-time, under this proposal, plans would continue to have the
discretion to determine whether the CMR can be performed in person or
using the telephone, video conferencing, or another real-time method.
We received the following comments on this proposal, and our
responses follow:
Comment: Several commenters supported clarifying the regulatory
language on the use of telehealth. A few commenters expressly stated
that their support for the proposal was conditioned on ``telehealth''
including a telephone option. Another commenter expressed concern
regarding lower levels of engagement due to fewer people wanting in-
person interactions in a pharmacy setting and fewer people answering
their phone, even when it is their local pharmacy calling.
Response: We thank these commenters for their feedback and confirm
that telephonic communication meets the definition of synchronous
telehealth. We believe updating the regulation to clarify that a CMR
must include an interactive consultation that is conducted in real-
time, regardless of whether it is done in person or via telehealth,
will ensure that beneficiaries receiving a CMR via telehealth have the
same opportunities to engage with their providers in real time as
beneficiaries who receive a CMR in-person. Sponsors are encouraged to
offer multiple methods of engagement since beneficiaries may prefer in-
person or telehealth interactions.
After consideration of the comments received, we are finalizing the
proposed revisions to Sec. 423.153(d)(1)(vii)(B)(1)(i) without
modification.
4. MTM Program Technical Changes
In the December 2022 proposed rule, we proposed several technical
changes to the regulation text related to the Part D MTM program. At
Sec. 423.4, we proposed to add a definition for ``MTM program'' to
clarify the meaning of this term as used in Part 423. In the heading
for Sec. 423.153(d), we proposed to remove the dash and replace it
with a period to be consistent with other paragraph headings in Subpart
D. We proposed to amend Sec. 423.153(d) by striking ``or'' from the
end of existing paragraph (d)(2)(i)(C)(2) to clarify that, consistent
with section 1860D-4(c)(2)(A)(ii) of the Act, plan sponsors must target
enrollees described in paragraph (d)(2)(i) and enrollees described in
paragraph (d)(2)(ii). Throughout Part 423, Subpart D, we proposed to
replace ``MTMP'' with ``MTM program'' to ensure that the terminology is
used consistently.
We did not receive any comments regarding these changes and are
finalizing these MTM program technical changes as proposed.
F. Part D Subcontractors May Terminate Only at the End of a Month
(Sec. 423.505)
At Sec. 423.505(i), we proposed to require Part D sponsors to
include a provision in certain contracts with first tier, downstream,
and related entities (FDRs) (as defined at Sec. 423.501) that the FDR
may terminate its contract only at the end of a calendar month after
providing at least 60 days' prior notice. Specifically, we proposed
that this prior notice be required in contracts with FDRs that perform
critical functions on the sponsor's behalf, as described in the
December 2022 proposed rule. We believe this change is necessary to
protect beneficiaries from disruptions in receiving Part D benefits and
to protect
[[Page 30481]]
the Part D program from incurring additional financial liability. We
are finalizing this provision as proposed.
As discussed in the December 2022 proposed rule preamble, Part D
sponsors contract with FDRs to perform many of the services critical to
the operation of the Part D program. For example, FDRs administer
formularies, process beneficiary enrollments into plans, contract with
pharmacies, process Part D claims at the point of sale, and administer
enrollee appeals and grievance processes. Many Part D sponsors do not
have the internal capability to take over administration of these
functions from their FDRs on short notice. If an FDR ceases operations
under a contract, enrollees in an affected plan may therefore be left
without access to their Part D benefits until the sponsor is able to
make alternative arrangements. For these reasons, CMS has a critical
interest in ensuring Part D sponsors' contracts with these FDRs protect
beneficiaries and the program.
Occasionally, Part D sponsors face financial difficulties so severe
that they may stop paying FDRs for services provided under their Part D
contracts. Such difficulties may also cause sponsors to be placed into
receivership or bankruptcy. In response to such developments, an FDR
may terminate its contract with the Part D sponsor or, in the case of
FDRs that administer claims at the point of sale, stop paying claims to
prevent or minimize operating losses. Such actions may be prompted by
overdue reimbursement from the sponsor or anticipated payment stoppages
and can occur in the middle of a month, depending on the termination
notice terms in the sponsor's contract with the FDR. Fortunately, such
mid-month terminations are rare. However, when they occur, they can
result in significant disruptions for enrollees, including a lack of
access to needed prescriptions through their Part D plan. For instance,
a PDP contract was terminated in the middle of March 2021 due, in part,
to the PDP's PBM terminating its contract mid-month for nonpayment.
This disrupted care for almost 40,000 beneficiaries and forced CMS to
incur additional expense to ensure that all beneficiaries had
continuous coverage for the month of March.
Mid-month terminations can also result in CMS incurring additional
costs. CMS makes prospective monthly capitation payments to Part D
sponsors, as provided in section 1860D-15(a)(1) of the Act and codified
in Sec. 423.315(b). When an FDR performing critical functions on a
sponsor's behalf terminates a contract mid-month, CMS has already paid
the sponsor for the services that the FDR was supposed to render for
the remainder of that month. To protect beneficiaries from suffering
further harm, CMS may find it necessary to terminate a sponsor's
contract pursuant to Sec. 423.509 or come to terms for a mutual
termination pursuant to Sec. 423.508. CMS reassigns affected
beneficiaries to other Part D plans in the same service area when such
terminations occur at any time other than the end of a contract year.
When these reassignments occur mid-month, CMS makes a full prospective
payment for that month to the plan into which enrollees are reassigned,
so that CMS pays twice for the same month. For example, if contract 1
terminates effective May 15 and CMS reassigns enrollees to contract 2,
CMS would pay contract 2 for the full month of May even though it
already paid contract 1 for the month of May. CMS has authority under
Sec. 423.509(b)(2)(ii) to recover the prorated share of the capitation
payments made to the Part D sponsors covering the period of the month
following the contract termination, but as a practical matter, a
contract terminated due to financial difficulties usually does not have
the funds available to repay CMS. Nor is CMS able to make a prorated
monthly payment to the contract into which enrollees are reassigned.
To protect beneficiaries and the Part D program from the
consequences of mid-month terminations of certain FDR contracts, we
proposed to establish at Sec. 423.505(i)(6) a requirement that all
Part D sponsors' contracts with FDRs that perform certain key Part D
functions require a minimum of 60-days' prior notice of termination
with an effective date that coincides with the end of a calendar month.
We are adopting this change pursuant to our authority at section
1857(e) of the Act, made applicable to Part D through section 1860D-
12(b)(3)(D), which authorizes the Secretary to adopt contract terms and
conditions as necessary and appropriate and not inconsistent with the
Part D statute. This policy is consistent with the existing requirement
that FDRs must comply with Part D requirements and support the
sponsor's performance of its Part D functions, including ensuring
access to covered Part D drugs under Sec. 423.120(a), as required at
Sec. 423.505(i)(3)(iii) and (iv). Because Part D sponsors are paid
prospectively and in units of no less than one calendar month, they and
their subcontractors should be able to negotiate arrangements for
access to covered Part D drugs in no less than 1-month increments by,
for example, requiring Part D sponsors to provide a surety bond to
compensate the FDR in the event of the sponsors' fiscal insolvency. We
do not believe that this will result in significant additional expense
for Part D sponsors because mid-month terminations have been very rare
to date.
The proposed provision at new paragraph (6) requires the contract
between a Part D sponsor and an FDR providing certain functions to
state that a contract termination could only occur after a 60-day
notice period and have an effective date that coincides with the end of
a calendar month. The functions for which this requirement would apply
would be--
Authorization, adjudication, and processing of
prescription drug claims at the point of sale;
Administration and tracking of enrollees' drug benefits in
real time;
Operation of an enrollee appeals and grievance process;
and
Contracting with or selection of prescription drug
providers (including pharmacies and non-pharmacy providers) for
inclusion in the Part D sponsor's network.
All of these functions are critical to beneficiaries maintaining
access to Part D drugs and ensuring that they pay appropriate out of
pocket costs. The disruption of any one of these functions could result
in beneficiaries failing to receive necessary drugs or incurring
unnecessary costs.
We received comments on this proposal, which are summarized below,
and respond to them as follows.
Comment: One commenter requested clarification on whether the
proposed rule was applicable to terminations initiated by Part D
sponsors or limited to terminations initiated by FDRs.
Response: The proposed rule would only apply to terminations
initiated by FDRs. Part D sponsors would remain free to terminate their
FDRs mid-month or on less than 60 days' notice if their contracts with
FDRs permit such terminations. CMS notes that any sponsor seeking to
terminate an FDR mid-month or on short notice would remain accountable
for ensuring that its enrollees continue to receive uninterrupted Part
D benefits in compliance with the statute, regulation, and its contract
with CMS.
Comment: A few commenters expressed support for the proposal but
requested that CMS include an exemption for terminations initiated by
Part D sponsors based on fraud or member harm.
[[Page 30482]]
Response: CMS appreciates commenters' support. We note that the
proposed rule would not limit Part D sponsors' ability to terminate
their FDRs for any reason. Therefore, sponsors' ability to terminate
FDR contracts based on fraud or member harm would be unaffected by the
proposed rule.
After considerations of the comments and for the reasons outlined
in the proposed rule and our response to comments, we are finalizing
the provision as proposed with one grammatical edit regarding
capitalization.
G. Application of 2-Year Ban on Reentering the Part D Program Following
Non-Renewal (Sec. Sec. 423.507 and 423.508)
In the December 2022 proposed rule, we proposed to amend Sec. Sec.
423.507(a)(3) and 423.508(e) to clarify that the prohibition on PDP
sponsors that non-renew or mutually terminate a contract entering into
a new PDP contract for 2 years applies at the PDP region level. That
is, if a sponsor non-renews or mutually terminates a PDP contract, the
two-year exclusion would only prohibit them from entering into a new or
expanded PDP contract in the PDP region(s) they exited and would not
prevent them from entering into a new or expanded contract in another
region(s). We also proposed to clarify that the 2-year exclusion
applies whenever a PDP sponsor terminates all of its plan benefit
packages (PBPs) in a PDP region, commonly known as a ``service area
reduction,'' even if they continue to serve other PDP regions under the
contract.
Under current regulations at Sec. Sec. 423.507(a)(3) and
423.508(e), Part D sponsors that non-renew or mutually terminate their
contracts with CMS are ineligible to enter into a new Part D contract
for two years following the non-renewal or mutual termination, absent
circumstances that warrant special consideration. CMS adopted the two-
year exclusion at the beginning of the Part D program in 2006 in order
to implement the requirements of section 1857(c)(4) of the Act, made
applicable to the Part D program by section 1860D-12(b)(3)(B) of the
Act. The 2-year exclusion following contract non-renewal or mutual
termination promotes stability in the Part D program, as the additional
period of contracting ineligibility causes organizations to consider
more than just the year-to-year fluctuations in the Part D market in
deciding whether to discontinue their participation in the program.
As described in the proposed rule, the 2-year exclusion at the PDP
region level would sufficiently promote the market-stabilizing purpose
of the exclusion by prohibiting PDP sponsors from non-renewing all
their plans in a region and returning to the same market after only one
year of absence from the program. We believe the 2-year exclusion as
applied at the regional level would prevent sponsors from undermining
the nondiscrimination requirements at section 1860D-11(e)(2)(D)(i) of
the Act by, for example, terminating PBPs in a region so they would no
longer receive LIS auto-enrollment. If the two-year exclusion were not
applied at the regional level, the effective penalty for the Part D
sponsors choosing to stop serving LIS beneficiaries would be only one
year's absence from offering plans in that region, rather than two.
However, these same concerns do not apply across regions. A sponsor
that non-renews a plan receiving LIS auto-enrollments in one region
that wishes to enter a different region the next year would not simply
be seeking to enroll more desirable beneficiaries who had declined to
enroll in their previous plan; instead, they would be competing in a
completely different market. Therefore, we see no reason to prohibit
sponsors that non-renew their plans in one region from offering plans
in a new region before the 2-year exclusion period elapses.
We proposed to modify Sec. Sec. 423.507(a) as follows:
Revising paragraph (3) to add regulatory text clarifying
that the requirements in this paragraph pertain to PDP sponsors'
ineligibility to enter into a contract for 2 years;
Redesignating paragraph (a)(3) regarding the current
regulatory requirement regarding a 2-year contracting ban following
non-renewal of a PDP contract as new paragraph (a)(3)(i);
Adding language to new paragraph (a)(3)(i) stating that
CMS cannot enter into a new contract in the PDP region or regions
served by the non-renewing contract;
Adding new paragraph (a)(3)(ii) to authorize CMS to make
organizations that non-renew all of their PBPs in a PDP region
ineligible to have plan bids approved again in that region for 2 years;
and
Adding new paragraph (a)(3)(iii) exempting new EGWP PBPs
from the 2-year ban.
Similarly, we proposed to apply our policy limiting the offering of
plans at the PDP region level for 2 years to mutual terminations under
Sec. 423.508. We proposed to add a sentence to the existing regulatory
text at paragraph (e) stating that a mutual termination of
participation in a PDP region makes a PDP sponsor ineligible to apply
for qualification to offer new plans in that region for 2 years. While
we already require sponsors seeking a mutual termination to agree not
to apply for a new contract for two years, we believe that the same
concerns that support applying the 2-year exclusion for non-renewals at
the regional level pertain to mutual terminations. Allowing a sponsor
that mutually terminates a contract in one PDP region to apply for a
new contract in another PDP region does not incentivize the market-
destabilizing practice of entering and exiting the PDP market in rapid
succession. Therefore, we believe our application of the 2-year
exclusion should be consistent between non-renewals and mutual
terminations.
We note that this proposed provision would not apply to a PDP
sponsor's non-renewal of its EGWP plans since those plans do not affect
the availability of plan choices to beneficiaries or the number of
plans that qualify for automatic LIS enrollments. We are also not
concerned that non-renewal of EGWP plans would be driven by a sponsor's
attempt to engage in adverse selection because EGWP plans are subject
to contract negotiation between employers and sponsors and are not open
to enrollment to all beneficiaries in the service area.
We received a comment on this proposed provision.
Comment: The commenter was generally supportive of the proposal and
of exempting EGWP plans from the 2-year ban following nonrenewal or
mutual termination. The commenter requested that we also exempt PDP
PBPs and contracts terminated as part of a consolidation of plans and
contracts after an acquisition.
Response: We appreciate the commenter's support for our proposal.
We understand the commenter's concern regarding the application of the
2-year ban following a PDP consolidation, but do not believe any
modification of the proposal is necessary because the termination of a
PDP contract as part of a consolidation would not trigger the 2-year
ban so long as the surviving contract continued to offer PDP PBPs in
the affected regions. A consolidation occurs when two or more PDP
contracts operated by the same sponsor or by sponsors that are
subsidiaries of the same parent organization combine into a single
contract. Consolidations often occur after the acquisition of a sponsor
by a parent organization that has subsidiaries that offer PDP PBPs in
the same region as the acquired sponsor. CMS limits the
[[Page 30483]]
number of PDP PBPs that a sponsor (or subsidiaries of the same sponsor)
can offer to three plans per region under Sec. 423.265(b)(3) and
consolidations are often required to comply with this requirement
following an acquisition. So long as the contract into which the plans
are consolidated continues to offer PDP PBPs in the affected region(s),
the sponsor (or the sponsor's parent organization) is not exiting the
region and therefore would not be subject to the 2-year ban on
reentering the region.
After consideration of the comments received and for the reasons
outlined in the proposed rule and our response to those comments, we
are finalizing the provision as proposed with minor grammatical and
formatting changes.
H. Crosswalk Requirements for Prescription Drug Plans (Sec. 423.530)
1. Overview and Summary
In the December 2022 proposed rule, we proposed to codify, with
modifications, the current process and conditions under which PDP
sponsors can transfer their enrollees into a different PDP's plan
benefit packages (PBPs) from year to year when such enrollees have made
no other election. This process is known as a ``plan crosswalk'' and
does not apply to enrollees in employer group health or waiver plans.
Our proposal defined plan crosswalks and crosswalk exceptions; codified
the circumstances under which enrollees can be transferred into
different PDP PBPs from year to year; established the circumstances
under which enrollees can be transferred into PDP PBPs offering
different types of prescription drug coverage (``basic'' or ``enhanced
alternative'' coverage); established the circumstances under which
enrollees can be transferred due to contract consolidations of PDPs
held by subsidiaries of the same parent organization; and provided
protections against excessive premium increases resulting from
crosswalks. We also proposed to limit the ability of PDP sponsors to
create new PDP PBPs to replace non-renewing PBPs under certain
circumstances.
We requested comment on whether and under what circumstances we
should permit crosswalks from PBPs offering basic prescription drug
coverage to PBPs offering enhanced alternative prescription drug
coverage, whether we should require sponsors that non-renew an enhanced
alternative PBP while continuing to offer individual market coverage in
the same PDP region to crosswalk affected beneficiaries into another
PBP, and limitations we should place on premium and cost increases for
enrollees who are crosswalked between different PBPs. We were
particularly interested in how best to balance avoiding gaps in
prescription drug coverage, preserving beneficiary choice and market
stability, and preventing substantial increases in costs to
beneficiaries resulting from crosswalks.
Finally, we proposed to codify the current procedures that a Part D
sponsor must follow when submitting a crosswalk or crosswalk exception
request.
2. Proposed General Rules for Plan Crosswalks (Sec. 423.530(a))
Section 1860D-1(b)(1)(B) of the Act requires the Secretary to use
rules similar to and coordinated with the rules for enrollment,
disenrollment, termination, and change of enrollment in MA-PD plans
under certain provisions of section 1851 of the Act. Therefore, in
codifying general rules for plan crosswalks, we seek both to maintain
current policy and, to the extent possible, be consistent with the
requirements for MA plan crosswalks codified at Sec. 422.530 in the
final rule published in the January 19, 2021 Federal Register (CMS-
4192-F2) (86 FR 5864).
At Sec. 423.530(a)(1), we proposed to define a plan crosswalk as
the movement of enrollees from one PDP PBP to another PDP PBP. We noted
that this definition is consistent with current policy and with the
definition of crosswalks for MA plans, codified at Sec. 422.530(a)(1).
We proposed at Sec. 423.530(a)(2)(i) through (iii) to adopt the
crosswalk prohibitions in current CMS subregulatory guidance, described
in the ``Guidance for Prescription Drug Plan (PDP) Renewals and
Nonrenewals'' (hereinafter referred to as the PDP Renewal and
Nonrenewal Guidance), issued in April 2018 and posted to the CMS
website at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionbDrugCovbContra/Downloads/Guidance-for-Prescription-Drug-Plan-PDP-Renewals-and-Non-Renewals-.pdf. First, we proposed to prohibit
crosswalks between PBPs in different PDP contracts unless the PDP
contracts are held by the same Part D sponsor or by sponsors that are
subsidiaries of the same parent organization. Second, we proposed to
prohibit crosswalks that split enrollment of one PBP into multiple
PBPs. Third, we proposed to prohibit crosswalks from PBPs offering
basic coverage to PBPs offering enhanced alternative coverage.
In the preamble to the December 2022 proposed rule, we noted that,
in the past, organizations have sought exceptions to the prohibition of
basic-to-enhanced alternative crosswalks on the grounds that one of the
available enhanced alternative PBPs is lower cost or otherwise a better
alternative for enrollees in a non-renewing basic PBP than the
available basic PBP. These requests come in the context of proposed
contract consolidations crosswalks and, because CMS prohibits PDP
contracts from offering more than one PBP offering basic coverage in a
region under Sec. 423.265(b)(2), there would only be one option for
the enrollees in non-renewing basic PBP to be transferred into. PBPs
offering basic prescription drug coverage can vary widely in premium
and estimated out-of-pocket costs. Enhanced alternative PBPs sometimes
offer lower premiums than basic PBPs under the same contract. However,
as discussed previously in section IV.AD.2. of the December 2022
proposed rule, a portion of the premium for an enhanced alternative PBP
is the ``supplemental'' premium and any LIS-eligible individuals
transferred from a basic to an enhanced alternative PBP might therefore
have to pay more than they would in the available basic PBP, even if
the enhanced alternative PBP has a lower overall premium. 87 FR 79602.
Therefore, we proposed to continue our current policy in order to
protect LIS-eligible beneficiaries from unanticipated premium
increases.
We solicited comments on whether and under what circumstances to
allow crosswalks from PBPs offering basic prescription drug coverage to
enhanced alternative coverage. CMS was particularly interested in how
such crosswalks could be administered in a way that protects LIS-
eligible beneficiaries from premium and other cost increases.
Plan crosswalks often occur in the context of contract renewals and
non-renewals. We proposed at Sec. 423.530(a)(3) to require sponsors
seeking crosswalks to comply with rules in Sec. Sec. 423.506 and
423.507 governing renewals and non-renewals, respectively. This
requirement is consistent with the requirement for MA plan crosswalks
codified at Sec. 422.530(a)(3). We also proposed at Sec.
423.530(a)(4) to make clear that only enrollees eligible for enrollment
under Sec. 423.30 can be crosswalked from one PBP to another. Finally,
we proposed at Sec. 423.530(a)(5) to continue to allow enrollees in
employer group health or waiver PBPs to be transferred between PBPs in
accordance with the usual
[[Page 30484]]
process for enrollment in employer group health or waiver plans, rather
than in accordance with the proposed provisions of Sec. 423.530. This
proposal would ensure that the process for enrollment in employer group
health or waiver plans is not disrupted by this proposed rule.
3. Mandatory Crosswalks (Sec. 423.530(b))
We proposed at Sec. 423.530(b)(1) and (2) to require enrollees in
PDP PBPs that are renewing to be transferred into the same PBP for the
following contract year. This is consistent with the current process
summarized for renewal plans in the PDP Renewal and Nonrenewal
Guidance. As discussed in the December 2022 proposed rule preamble,
this requirement would continue to apply to PBPs offering both enhanced
alternative and basic coverage and would continue to facilitate
evergreen enrollment as required by section 1851(c)(3)(B) of the Act.
We also noted that the proposal was consistent with the requirements
for MA renewal crosswalks codified at Sec. 422.530(b)(1)(i).
4. Plan Crosswalk Exceptions (Sec. 423.530(c))
We proposed at Sec. 423.530(c) to classify consolidated renewal
and contract consolidation crosswalks as ``crosswalk exceptions.'' We
proposed to define ``consolidated renewals'' and ``contract
consolidations'' consistent with the current policy described
previously in section IV.AD.2. of the December 2022 proposed rule. We
proposed to codify our current policy for the two types of plan
crosswalk exceptions with some modifications.
For consolidated renewals, we proposed to codify current policy at
Sec. 423.530(c)(1)(i) through (iv) with modifications that balance
concerns for beneficiaries in non-renewing plans losing coverage with
concerns about market stability and limiting unexpected premium
increases. Specifically, we proposed that:
The plan ID for the upcoming contract year PBP must be the
same plan ID as one of the PBPs for the current contract year;
The PBPs being consolidated must be under the same PDP
contract;
A PBP offering basic prescription drug coverage may not be
discontinued if the PDP contract continues to offer plans (other than
employer group waiver plans) in the service area of the PBP; and
Enrollment from a PBP offering enhanced alternative
coverage may be crosswalked either into a PBP offering either enhanced
alternative or basic prescription drug coverage.
We also proposed four major modifications to current policy with
respect to consolidated renewals:
At Sec. 423.530(c)(1) to allow, but not require, plan
crosswalks in consolidated renewal scenarios. PDP sponsors could
request a crosswalk of enrollment from a non-renewing PBP to another
PBP under the same contract, provided it meets the other requirements
of Sec. 423.530;
At Sec. 423.530(c)(1)(v), to require enrollees from non-
renewing PBPs offering enhanced alternative coverage to be crosswalked
into the PBP that will result in the lowest premium increase;
At Sec. 423.530(c)(1)(vi), to prohibit plan crosswalks if
the crosswalk would result in a premium increase greater than 100
percent, unless the dollar amount of the premium increase would be less
than the base beneficiary premium, as described in Sec. 423.286(c),
compared to the current year premium for the non-renewing PBP; and
At Sec. 423.530(c)(1)(vii), to prohibit sponsors that
fail to request and receive a plan crosswalk exception from offering a
new enhanced alternative PBP in the same service area for the contract
year after they non-renew an enhanced alternative PBP.
As discussed in the preamble to the December 2022 proposed rule, we
recognize that premiums are not the only aspect of a PBP's structure
that affect costs to beneficiaries or the beneficiary experience. The
PBP's formulary and cost-sharing structure are also important elements
affecting beneficiary costs. However, premiums for a PBP are the same
for every enrollee and are therefore the most straightforward factor to
use to protect enrollees from unexpected cost increases. We solicited
comments on whether we should use other factors, such as differences in
estimated out of pocket costs (OOPC) between the non-renewing and
surviving PBPs, rather than simply the difference in plan premiums, to
determine whether approving a plan crosswalk exception is the best
option for enrollees in a non-renewing PBP. We also requested comments
on whether to allow plan crosswalks to a higher premium plan if the
difference between the higher premium plan and the lower premium plan
is less than a certain dollar amount--for example, should CMS permit a
crosswalk to a higher premium surviving PBP despite the availability of
a lower premium surviving PBP if the difference between the premiums is
less than a fixed dollar amount. Finally, we sought comment on
alternatives to using the base beneficiary premium. Potential
alternatives included a fixed dollar amount, the low-income premium
subsidy amount, described in Sec. 423.780(b), for the non-renewing
PBP's region, or the national average monthly bid amount, described in
Sec. 423.279.
These four proposed changes represented a significant shift from
current policy. As such, we solicited comments on alternative
approaches. Possible alternatives included, but were not limited to:
(1) requiring plan crosswalks when a sponsor non-renews an enhanced
alternative PBP while continuing to offer individual market coverage
under the same PDP contract, but prohibiting sponsors from creating a
new PBP to replace the non-renewing PBP; (2) adopting the requirements
as proposed, but prohibiting sponsors from creating new PBPs to replace
non-renewing PBPs even if a plan crosswalk exception is requested and
received; (3) using an alternative measure, such as OOPC, instead of or
in addition to plan premiums to assess whether a plan crosswalk
exception should be granted; or (4) adopting the current subregulatory
policy without modification.
We also proposed requirements for contract consolidations that
would reflect our current subregulatory policy, but with two
significant differences that parallel the proposals with respect to
consolidated renewals. We proposed at Sec. 423.530(c)(2)(i)-(iv) to
adopt the following requirements of current subregulatory policy:
The non-renewing PDP contract and the surviving contract
must be held by the same legal entity or by legal entities with the
same parent organization;
The approved service area of the surviving contract must
include the service area of the non-renewing PBPs whose enrollment will
be crosswalked into the surviving contract;
Enrollment may be crosswalked between PBPs offering the
same type of prescription drug coverage (basic or enhanced
alternative); and
Enrollment from a PBP offering enhanced alternative
coverage may be crosswalked into a PBP offering basic prescription drug
coverage.
We proposed the following significant changes to current policy
with respect to contract consolidations:
At Sec. 423.530(c)(2)(v), require plan crosswalks from
non-renewing PBPs offering enhanced alternative coverage into the PBP
that would result in the lowest premium increase; and
At Sec. 423.530(c)(2)(vi), prohibit plan crosswalks that
would result in a premium
increase greater than 100 percent, unless the dollar amount of the
premium increase would be less than the base beneficiary premium, as
[[Page 30485]]
described in Sec. 423.286(c), compared to the current year premium for
the non-renewing PBP.
5. Procedures for Requesting Plan Crosswalks (Sec. 423.530(d))
We proposed to codify current procedures for submitting plan
crosswalks and/or making plan crosswalk exception requests at Sec.
423.530(d), as described in ``Bid Pricing Tool for Medicare Advantage
Plans and Prescription Drug Plans'' CMS-10142, posted for final comment
pursuant to the Paperwork Reduction Act of 1995 at 87 FR 2441 (February
14, 2022). We proposed that a Part D sponsor must submit all mandatory
plan crosswalks in writing through the bid submission process in HPMS
by the bid submission deadline. We further proposed that a Part D
sponsor must submit all plan crosswalk exceptions by the plan crosswalk
exception request deadline announced annually by CMS. Through the bid
submission process, the Part D sponsor may indicate if a plan crosswalk
exception is needed at that time; however, the Part D sponsor must also
ultimately request a crosswalk exception through the crosswalk
exception functionality in HPMS in accordance with the deadline
announced annually. CMS would verify the exception request and notify
the requesting Part D sponsor of the approval or denial of the request
after the plan crosswalk exception request deadline. CMS would approve
any plan crosswalk exception that met the requirements of the
regulation. Because plan crosswalks are requested when a PBP is non-
renewing, a denied crosswalk request would result in the PBP being non-
renewed without enrollment being crosswalked. Part D sponsors would be
required to submit these exception requests to ensure that PBP
enrollment is allocated properly.
6. Response to Comments
We are finalizing crosswalk requirements for PDPs at Sec. 423.530
without modification, as discussed in the responses to comments that
follow.
Comment: Several commenters asked that we consider plan
characteristics other than total premiums when determining which plan
or plans beneficiaries could be crosswalked into. They noted that
crosswalks can result in more changes than just a change in premium,
including changes to cost sharing and formulary drugs. They suggested
that CMS consider factors such as the beneficiary OOPC estimate in the
plan bid and the formulary composition and structure, in addition to
the plan premium, when assessing which PBP beneficiaries can be
crosswalked into in consolidated renewal and contract consolidation
scenarios.
Response: CMS acknowledges and shares the concerns that commenters
expressed regarding the impact that changing PBPs can have on
individual beneficiaries' costs and access to drugs. However, it is
very difficult to predict which formulary will be best for the greatest
number of beneficiaries. CMS reviews all formularies to ensure that
they contain the required number of Part D drugs from each therapeutic
category and class and an appropriate range of strengths and dosages of
those drugs, that utilization management requirements (including prior
authorization and step therapy requirements) are appropriate, and that
the formularies otherwise meet all Part D requirements. While this
ensures that all plans offer appropriate coverage of and access to Part
D drugs, individual beneficiaries may find that certain formularies
offer better coverage of, or pricing for, the drugs they utilize. CMS
does not currently have a methodology to determine whether a particular
approved formulary will be ``better'' for a group of beneficiaries than
another approved formulary, given the variety of ways that an
individual beneficiary may deem a certain formulary ``better'' and the
diversity of needs from one beneficiary to the next. For instance, one
beneficiary may find inclusion of utilization management to be off-
putting whereas another values a low tier placement. Despite these
hypotheticals, premiums have been shown to be a key factor in plan
choice for beneficiaries.
Each plan does have an estimated OOPC value, which estimates the
average monthly out-of-pocket costs for enrollees in a PBP. But while
that is a useful bid review and actuarial tool, the actual costs
incurred by beneficiaries are highly variable because they are based on
characteristics--including but not limited to LIS status, health
status, medications used, pharmacies chosen--that vary widely among
beneficiaries. Premiums, on the other hand, are uniform for all
beneficiaries. We believe that attempting to use other information,
including OOPC and formulary composition and structure, to determine
which plans beneficiaries may be crosswalked into is too complicated to
be practical at this time.
CMS will continue to encourage beneficiaries to investigate the
cost and benefits of available Part D plans during each Annual Election
Period (AEP). Beneficiaries can use Medicare Plan Finder and other
tools to assess which plans offer the combination of premiums, cost
sharing, pharmacy networks, and formulary coverage that best meets
their individual needs. Part D sponsors will continue to be required to
send Annual Notices of Change (ANOCs), Evidences of Coverage (EOCs) and
other materials as described in Sec. 423.2267(e) to all beneficiaries
enrolled in their plans before the AEP so that beneficiaries will have
information such as formulary coverage, cost sharing, and prior
authorization requirements to use when comparing plans.
Comment: A few commenters requested that CMS provide a special
election period (SEP) to beneficiaries subject to consolidated renewal
and contract consolidation crosswalks. These commenters believe that
beneficiaries do not always realize how their Part D benefits are
changing for the new year and that they may benefit from an SEP so they
may select new plans after the new plan year begins.
Response: CMS acknowledges commenters' concerns. However, plan
premiums, cost sharing, and formularies can significantly change year-
to-year even when beneficiaries are not being crosswalked into a new
PBP. CMS does not believe that beneficiaries subject to crosswalks,
particularly with the safeguards we are finalizing in this rule, are
any more vulnerable to not understanding the resulting changes to their
Part D benefits than beneficiaries who are continuing in the same PBP
without being crosswalked. Therefore, we do not believe an SEP is
appropriate for crosswalked beneficiaries. Crosswalked beneficiaries
will receive the same notice of changes--the ANOC--that all other
beneficiaries in continuing Part D coverage will receive before the
AEP. They will also receive all other required material, including the
EOC and Summary of Benefits, which provide details about premiums,
deductibles, and cost sharing for the new plan. CMS continues to
encourage all beneficiaries to compare available coverage offerings
during every AEP.
Comment: One commenter representing a Part D plan requested that
CMS delay the effective date of the crosswalk provisions until after
the premium stabilization protections in the Inflation Reduction Act of
2022 (``IRA'') go into effect.
Response: CMS notes that the premium stabilization provisions of
the IRA, which provide a mechanism to limit the growth in the base
beneficiary premium (used to calculate the plan-specific base premium)
to a 6 percent increase compared to the previous year, went into effect
for plan year 2024. There is therefore no need to further
[[Page 30486]]
delay implementation of the crosswalk provisions based on the concerns
expressed by this commenter.
Comment: Some commenters opposed limiting consolidated renewal and
contract consolidation crosswalks to those that would result in the
lowest premium increase and barring such crosswalks when they would
result in premium increases greater than 100 percent. These commenters
believed plans needed greater flexibility in determining the
appropriate plan into which to crosswalk members. Specifically, they
wanted CMS to take formulary structure, cost sharing, and network
composition into account. They also expressed concern over the effect
that the implementation of various provisions of the IRA would have on
plan premiums. They were concerned that the cost sharing limits for
insulin and certain adult vaccines (which went into effect in 2023),
ending beneficiary cost sharing for covered Part D drugs during the
catastrophic phase of the benefit (effective in 2024), and the new
beneficiary Part D out-of-pocket spending limit (effective in 2025),
among other provisions, will create unanticipated volatility in Part D
premiums. They requested that if CMS finalizes these requirements as
proposed, we delay implementation of the provisions of the proposed
crosswalk regulation that limit premium increases until at least 2026
to give the market time to adjust to the changes.
Response: As we noted in the preamble to the proposed rule,
crosswalks have rarely resulted in premium increases greater than 100
percent. We therefore do not think it is necessary to preserve
``flexibility'' for plans to implement such crosswalks in the future.
We also note that the proposed crosswalk requirements would grant plans
more flexibility in some respects by allowing them to choose to non-
renew an enhanced alternative plan without crosswalking enrollees into
another plan. Earlier in this preamble, we also pointed out in response
to a comment requesting that CMS consider factors other than premiums
in assessing the appropriateness of a proposed crosswalk that taking
formulary comparisons or anticipated out-of-pocket costs into account
would not be practical at this time.
CMS understands the commenters' concerns about the unanticipated
consequences of changes to the Part D program required by the IRA. As
discussed earlier in this preamble in response to another comment, the
IRA includes a mechanism to limit the growth in the base beneficiary
premium (used to calculate the plan-specific base premium) for Part D
plans starting on January 1, 2024. The 2024 Part D premiums reflect
both the IRA's premium stabilization provisions and its provisions
limiting cost sharing for covered insulin products and recommended
adult vaccines and ending beneficiary cost sharing for covered Part D
drugs during the catastrophic phase of the benefit. Rather than
increasing, the average total monthly premium for Medicare Part D
coverage was projected to decrease 1.8 percent from $56.49 in 2023 to
$55.50 in 2024 for 2024.\20\ We anticipate that premiums will continue
to remain stable as the IRA is fully implemented.
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\20\ CMS Press Release, ``Medicare Advantage and Medicare
Prescription Drug Programs to Remain Stable in 2024,'' September 26,
2023, available at https://www.cms.gov/newsroom/press-releases/medicare-advantage-and-medicare-prescription-drug-programs-remain-stable-2024.
---------------------------------------------------------------------------
While we do not believe it is necessary to suspend or delay these
elements of the proposed rule, we will delay implementation of this
proposal until January 1, 2026 to allow time for necessary system
updates to be made to the CMS systems for the 2026 bid cycle that
commences in June 2025. To the extent that commenters are concerned
about the burden of implementing the new crosswalk requirements while
adjusting to major changes under the IRA, this delay should allay their
concerns.
Comment: A commenter recommended allowing LIS beneficiaries to be
crosswalked from basic to enhanced alternative plans when the premium
for the enhanced alternative plan is lower than for the available basic
plan. The commenter believed that this would save the government money
by reducing LIS payments. The commenter alternatively recommended
allowing the creation of LIS-only plans to be offered by all sponsors
to address the unique needs of LIS beneficiaries.
Response: We thank the commenter for their input. While we
acknowledge that a lower premium enhanced alternative plan may indeed
lower the LIS subsidy the government would pay for an LIS beneficiary
enrolled in the plan, the commenter's recommendation does not address
the primary reason we prohibit such crosswalks. As we discussed in the
proposed rule, CMS can only provide the LIS for the portion of the
monthly beneficiary premium attributable to basic coverage, pursuant to
Sec. 423.780(b)(1)(i). This does not include the amount attributed to
supplemental coverage for enhanced alternative plans. Any LIS-eligible
individuals enrolled in a non-renewing PBP offering basic prescription
drug coverage that were transferred into a PBP offering enhanced
alternative coverage, and who did not change their election, might
therefore have to pay more than they would for a PBP offering basic
prescription drug coverage, even if the enhanced alternative PBP had a
lower overall premium. The commenter's recommendation for an LIS-only
offering is beyond the scope of our proposal.
Comment: One commenter requested clarification on how CMS would
compare a premium increase to the base beneficiary premium when
considering whether to allow a crosswalk that would result in a premium
increase of over 100 percent compared to the non-renewing plan's total
plan premium. The commenter interpreted the requirement proposed for
Sec. 423.530(c)(1)(vi) and (2)(vi) to compare the base beneficiary
premium to the premium increase amount, not to the total premium after
the increase. The commenter interpreted our proposal to allow a
consolidated renewal or contract consolidation crosswalk if the premium
increase were the same or lower than the base beneficiary premium and
asked for confirmation of that interpretation.
Response: The commenter's interpretation of the proposed language
is accurate. CMS will evaluate compliance with this requirement by
comparing the anticipated premium increase for crosswalked
beneficiaries to the base beneficiary premium.
Comment: One commenter expressed concern that ``forcing'' plans to
crosswalk members into certain plans would negatively impact current
members in those plans by increasing premiums based on the claims
history of the crosswalked members.
Response: This commenter appears to confuse our current crosswalk
policy, which does mandate crosswalks when sponsors non-renew an
enhanced alternative plan while continuing to offer PDP PBPs in a
service area, with the proposal, which would no longer require such
crosswalks. Under the proposed policy, sponsors could choose not to
perform a consolidated renewal crosswalk for members from a non-
renewing enhanced alternative PDP PBP into another PBP under the same
contract. CMS would bar the sponsor from creating a new enhanced
alternative plan to replace the non-renewing one if the sponsor opted
not to crosswalk membership from the non-renewed plan, but CMS would no
longer require plans to perform such crosswalks.
Comment: A commenter expressed general support for codifying the
[[Page 30487]]
crosswalk requirements as proposed because it would create clear
requirements for PDP crosswalks. They asked that CMS consider other
factors in the PDP market that create incentives for plan sponsors to
consolidate PDP offerings and that may result in unnecessary premium
increases. Specifically, the commenter asked that CMS make
modifications to the Prescription Drug Hierarchical Condition Category
(Rx-HCC) Risk Adjustment Model to enhance the predictive power of the
tool and ensure more appropriate reimbursement to plan sponsors. They
believe that the current model may no longer adequately mitigate
against plan sponsors' incentives to engage in risk selection. They
specifically asked that CMS take steps to reduce the lag time for
including updated claims data in the model to not more than three
years.
Response: CMS appreciates the commenter's support for this proposed
rule. CMS does not believe there are additional factors related to
premium increases that could be addressed through our proposed
crosswalk requirements. The comments regarding the Rx-HCC Risk
Adjustment Model are beyond the scope of this proposal.
After considerations of the comments and for the reasons outlined
in the proposed rule and our response to comments, we are finalizing
the plan crosswalk provisions as proposed but with minor grammatical
and formatting changes and a delayed effective date from January 1,
2025 to January 1, 2026.
I. Call Center Text Telephone (TTY) Services (Sec. Sec. 422.111 and
423.128)
We proposed to make a technical change by modifying Sec. Sec.
422.111(h)(1)(iv)(B) and 423.128(d)(1)(v)(B) to require a plan's call
center to establish contact with a customer service representative
within 7 minutes on no fewer than 80 percent of incoming calls
requiring TTY services, rather than establishing contact with a TTY
operator within 7 minutes on no fewer than 80 percent of incoming
calls. Our proposed change was intended to remove any ambiguity that
might result from our use of the term ``TTY operator,'' because our
intent was to ensure a beneficiary could establish contact with a
customer service representative within 7 minutes. When an MA
organization or Part D sponsor operates their own TTY device and
thereby creates a direct TTY to TTY communication, the plan customer
representative is also the TTY operator. However, when MA organizations
and Part D sponsors use telecommunications relay systems, a TTY
operator serves as an intermediary between the caller and the plan's
customer service representative and is not able to answer the caller's
questions about plan benefits.
We received several comments supporting and no comments opposing
this proposal. CMS thanks those in support of our proposal. For the
reasons outlined in the proposed rule, we are finalizing the revision
as proposed.
J. Clarify Language Related to Submission of a Valid Application
(Sec. Sec. 422.502 and 423.503)
1. Overview and Summary
In the December 2022 proposed rule, we summarized the history of
our treatment of substantially incomplete applications and proposed to
amend the language in Sec. Sec. 422.502 and 423.503 to codify CMS's
authority to decline to consider a substantially incomplete application
for a new or expanded Part C or D contract. We also proposed to codify
longstanding criteria for determining that an application is
substantially incomplete. We are finalizing these provisions as
proposed.
We proposed to modify Sec. Sec. 422.502 and 423.503 by adding new
paragraphs (a)(3) and (a)(4), respectively, regarding substantially
incomplete applications. At Sec. Sec. 422.502(a)(3)(i) and
423.503(a)(4)(i), we proposed to codify that we do not evaluate or
issue a notice of determination as described in Sec. Sec. 422.502(c)
and 423.503(c), respectively, when an entity submits a substantially
incomplete application. This proposed modification to the regulatory
text is consistent with our longstanding policy to treat substantially
incomplete applications as if they were not submitted by the
application deadline and therefore the submitting entity is not
entitled to review of its submitted material or an opportunity to cure
deficiencies.
We also proposed at Sec. Sec. 422.502(a)(3)(ii) and
423.503(a)(4)(ii) to codify our definition of a substantially
incomplete application as one that does not include responsive
materials to one or more sections of the MA or Part D application.
Pursuant to Sec. Sec. 422.501(c) and 423.502(c), entities seeking to
qualify as an MA organization (or to qualify to offer a specialized MA
plan for special needs individuals (a SNP)) and/or Part D sponsor to
must fully complete all parts of a certified application, in the form
and manner required by CMS. Applications for service area expansions
are subject to the same rules and review processes because we treat the
expansion of a plan service area as a new application for a new area.
We prescribe the form and manner in an application published annually.
This application is subject to the Paperwork Reduction Act review
process. The form and manner vary somewhat from year to year, but
generally include several sections that require an entity to
demonstrate compliance with specific categories of program
requirements. For instance, Part D applications for new Part D
contracts include: (1) a series of attestations whereby the applicant
agrees that it understands and complies with various program
requirements; (2) a contracting section that requires entities to
demonstrate compliance with Part D requirements by submitting certain
first tier, downstream, and related entity contracts and network
pharmacy templates; (3) a network section that requires entities to
submit lists of contracted pharmacies that meet geographic and other
access requirements; (4) a program integrity section that requires
entities to submit documentation that they have documented and
implemented an effective compliance program as required by Sec.
423.504(b)(vi); and (5) a licensure and solvency section that requires
entities to meet applicable licensure and fiscal solvency requirements.
MA applications require substantially similar information related to
the operation of an MA plan, and SNP applications include additional
sections related specifically to SNP requirements for the type of SNP
the applicant seeks to offer. Consistent with past practice, CMS
proposed to treat an application that does not include required content
or responsive materials for one or more of these sections as
substantially incomplete. In our assessment, applications that fail to
include significant amounts of responsive information and/or materials,
including failing to include required content or responsive material
for any section of the application, in their submission by the
application deadline are merely submitting placeholder applications
that do not merit additional opportunities to meet CMS requirements.
An example of a Part D application that would be incomplete and
therefore excluded from further consideration under the proposed rule
is one that failed to include (by uploading to the application system)
a retail pharmacy list that would allow CMS to determine whether it met
pharmacy access requirements. This would include failure to submit a
list at all, submitting a list containing fictitious pharmacies, or
submitting a list that contained so
[[Page 30488]]
few pharmacies that CMS could reasonably conclude that no good faith
effort had been made to create a complete network. CMS would also deem
as substantially incomplete any application that failed to submit any
executed contracts with first tier, downstream, or related entities
that the applicant had identified as providing Part D services on its
behalf.
An example of an MA application that would be incomplete and
therefore excluded from further consideration is one that failed to
upload either a state license or documentation that the state received
a licensure application from the applicant before the CMS application
due date. Another example of an incomplete MA application might be one
that failed to upload network adequacy materials, including failing to
submit network lists for designated provider types, submitting
fictitious providers, or submitting a list that contained so few
providers that CMS could only conclude that no good faith effort had
been made to create a complete network.
An example of a SNP application that would be incomplete and
therefore excluded from further consideration is one that failed to
upload a model of care (MOC) that would allow CMS to determine whether
or not it met MOC element requirements. This would include failure to
submit MOC documents at all or submitting incomplete documents that did
not contain all of the required MOC elements.
Finally, we proposed at Sec. Sec. 422.502(a)(3)(iii) and
423.503(a)(4)(iii) to explicitly state that determinations that an
application is substantially incomplete are not contract determinations
as defined at Sec. Sec. 422.641 and 423.641, respectively. Because
they are not contract determinations, determinations that an
application is substantially incomplete are not entitled to receipt of
specific notices or to file an appeal under Parts 422 and 423, subpart
N. CMS has consistently taken this position when determining an
application is substantially incomplete because a submission that is so
incomplete as to not be deemed a valid application did not meet the
application deadline and cannot be meaningfully reviewed. Nevertheless,
a few entities have used the contract determination hearing process to
appeal CMS's determination that they did not submit a substantially
complete application by the application deadline. In such cases, the
Hearing Officer has ruled that such determinations were not contract
determinations entitled to hearings under Sec. Sec. 422.660 and
423.650.
We do not believe that our proposed regulatory provisions at
Sec. Sec. 422.502(a)(3)(i) and 423.503(a)(4)(i) will have a
significant impact on the Part C or D programs. Only a handful of
entities have attempted to submit substantially incomplete applications
in recent years. We believe that codifying our treatment of
substantially incomplete applications will further discourage entities
from submitting placeholder applications and ensure that materials
submitted by the application deadline represent entities' good faith
efforts to meet application requirements.
We received comments on this proposal, which are summarized below:
Comment: A commenter expressed support for the proposal and
appreciated the clarifications regarding what constitutes a
substantially incomplete application.
Response: CMS appreciates the commenter's support.
Comment: Several commenters generally supported the proposal but
requested clarification on what documentation would be sufficient to
indicate that an application was not substantially incomplete. A few
commenters specifically requested further clarification on what
constitutes evidence that a state licensure application was filed. One
commenter wanted additional clarity on what evidence would indicate
that a plan made ``best efforts'' to complete an application.
Response: CMS appreciates the commenters' support. As summarized
from the proposed rule earlier in this section, an example of a
substantially incomplete application is one where the organization
failed to provide evidence of state licensure or documentation that the
state received a licensure application from the applicant before the
CMS application due date. When an entity submits, with the MA
application, documentation that the entity has filed a complete state
licensure application with the appropriate state before the CMS MA and
Part D application due date, CMS will not determine that the
application is substantially incomplete based on a failure to provide
responsive materials in the state licensure section of the MA
application. (However, all other portions of the MA application must
also be complete for CMS to review and evaluate the application.)
Documentation to demonstrate that the entity has applied for the
appropriate state licensure for its MA application could consist of a
copy of the application and a receipt or other documentation that the
application was sent to and received by the state before the CMS MA and
Part D application due date. MA organizations must be licensed in the
state(s) of the service area(s) covered by the application in order to
ultimately have their application approved by CMS.
CMS did not propose and does not currently use a ``best efforts''
standard for determining whether an application is substantially
incomplete. In the proposed rule (87 FR 79520), we described an example
of an MA applicant submitting a list of providers that was so few that
CMS could only conclude that that applicant had not even made a good
faith effort to create a complete network by the application deadline,
which is key to demonstrating the ability to provide adequate access to
covered services. For example, an application would be substantially
incomplete if it only included a single pharmacy in the retail pharmacy
network submission, regardless of how much effort the organization
submitting the application put into enrolling pharmacies in the
network. An organization that was acting in good faith would not have
filed an application wherein they certified they met application
requirements if they had not been able to enroll more than a single
pharmacy by the application deadline. While CMS recognizes that it can
be challenging for an organization to prepare to offer MA and Part D
plans, CMS expects any organization filing an application to have
already made sufficient progress in its preparations to provide
responsive materials to all parts of the application.
After consideration of the comments and for the reasons outlined in
the proposed rule and our response to comments, we are finalizing the
revisions to Sec. Sec. 422.502(a)(3) and 423.503(a)(4) as proposed
without substantive modification. The final regulation text includes
minor stylistic changes.
K. Expanding Network Adequacy Requirements for Behavioral Health
Section 1852(d)(1) of the Act allows an MA organization to select
the providers from which an enrollee may receive covered benefits,
provided that the MA organization, in addition to meeting other
requirements, makes such benefits available and accessible in the
service area with promptness and assures continuity in the provision of
benefits. Further, our regulation at Sec. 422.112(a), requires that a
coordinated care plan maintain a network of appropriate providers that
is sufficient
[[Page 30489]]
to provide adequate access to covered services to meet the needs of the
population served. To establish standards for these requirements, CMS
codified network adequacy criteria and access standards 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.'' In that final rule, we
codified, at Sec. 422.116(b), the list of 27 provider specialty types
and 13 facility specialty types subject to CMS network adequacy
standards. Further, as part of the ``Medicare Program; Contract Year
2023 Policy and Technical Changes to the Medicare Advantage and
Medicare Prescription Drug Benefit Programs'' published in the Federal
Register January 12, 2022 (87 FR 1842) proposed rule, hereinafter
referred to as the ``January 2022 proposed rule,'' we solicited
comments through a Request for Information (RFI), regarding challenges
in building MA behavioral health networks and opportunities for
improving access to services. In response to the RFI, stakeholders
commented on the importance of ensuring adequate access to behavioral
health services for enrollees and suggested expanding network adequacy
requirements to include additional behavioral health specialty types.
As a result, in the ``Medicare Program; Contract Year 2024 Policy and
Technical Changes to the Medicare Advantage Program, Medicare
Prescription Drug Benefit Program, Medicare Cost Plan Program, and
Programs of All-Inclusive Care for the Elderly'' final rule, which
appeared in the Federal Register on April 12, 2023, (88 FR 22120)
hereinafter referred to as the ``April 2023 final rule,'' CMS finalized
the addition of two new specialty types to the provider-specialty types
list at Sec. 422.116(b)(1), Clinical Psychology and Clinical Social
Work, to be subject to the specific time and distance and minimum
provider number requirements used in CMS's network adequacy evaluation.
While our regulation at Sec. 422.116(b)(3) authorizes the removal
of a specialty or facility type from the network evaluation criteria
for a specific year without rulemaking, CMS did not implement a process
in Sec. 422.116 to add new provider types without rulemaking. In a
continued effort to address access to behavioral health services within
MA networks, we proposed to add to the list of provider specialties at
Sec. 422.116(b) and add corresponding time and distance standards at
Sec. 422.116(d)(2).
In addition to meeting the network adequacy evaluation
requirements, MA organizations are required at Sec. 422.112(a) to
maintain and consistently monitor their provider networks to ensure
they are sufficient to provide adequate access to covered services that
meet the needs of enrollees. This also helps MA organizations maintain
a complete and accurate health plan provider directory as required
under Sec. Sec. 422.111(b)(3) and 422.120(b). The Health Plan
Management System (HPMS) provides MA organizations with access to the
``Evaluate my Network'' functionality, which allows MA organizations
the opportunity to test their provider networks against the evaluation
standards in Sec. 422.116 outside of a formal network review. The
``Evaluate my Network'' functionality provides MA organizations the
ability to test their networks using the standards in Sec.
422.116(a)(2) in different scenarios, including at the Plan Benefit
Package (PBP) level, to consistently monitor whether their provider
networks are meeting the current network adequacy standards. We
encourage MA organizations to utilize the HPMS ``Evaluate my Network''
tool to monitor their PBP-level active provider networks and keep
abreast of any network issues that could hinder access to care for
enrollees. We also remind MA organizations to report any compliance
issues or significant changes in their provider network to their CMS
Account Manager.
With the revisions applicable to coverage beginning January 1,
2024, MA organizations are required to demonstrate that they meet
network adequacy for four behavioral health specialty types:
psychiatry, clinical psychology, clinical social work, and inpatient
psychiatric facility services. The Consolidated Appropriations Act
(CAA), 2023 (Pub. L. 117-328) amended the Act to authorize payment
under Medicare Part B for services furnished by a Marriage and Family
Therapist (MFT) and by a Mental Health Counselor (MHC), effective
January 1, 2024. Specifically, section 4121 of the CAA amends section
1861(s)(2) of the Act by adding a new subparagraph (II) that
establishes a new benefit category under Part B for MFT services (as
defined in section 1861(lll) of the Act) and MHC services (as defined
in section 1861(lll) of the Act). MA organizations are required to
cover virtually all Part B covered services. As such, these new
services must be covered as defined and furnished, respectively, by
MFTs, as defined in section 1861(lll)(2) of the Act, and MHCs, as
defined in section 1861(lll)(4) of the Act. As a practical matter, MA
organizations need to ensure access to these new Medicare-covered
services that can only be provided by these types of individual
providers and therefore must contract with these types of providers in
order to furnish basic benefits as required by section 1852 of the Act
(when furnished by different providers, the services will be
supplemental benefits covered by the MA plan).
In addition, we discussed in the April 2023 final rule that the
responses CMS received to the January 2022 proposed rule RFI emphasized
the importance of expanding network adequacy standards to include other
outpatient behavioral health physicians and health professionals that
treat substance use disorders (SUDs) to better meet behavioral health
care needs of enrollees. Medicare fee-for-service claims data for 2020
shows that Opioid Treatment Program (OTP) providers had the largest
number of claims for SUD services during that timeframe. At the time of
publishing our April 2023 final rule, we indicated that while we were
not able to finalize adding a combined specialty type called
``Prescribers of Medication for Opioid Use Disorder,'' which included
OTPs and Medication for Opioid Use Disorder (MOUD) waivered providers
to the facility-specialty type list in Sec. 422.116(b)(2) as proposed,
we would consider the appropriateness of setting network adequacy
standards for OTPs in future rulemaking.
Considering the statutory changes to section 1861 of the Act as
mentioned, and our interest in establishing network adequacy standards
for SUD providers, CMS proposed to amend the MA network adequacy
requirements to address the new provider types and SUD provider types
through a combined behavioral health specialty type to include MFTs,
MHCs, OTPs, Community Mental Health Centers and other behavioral health
and addiction medicine specialty providers that will help us enhance
behavioral health access for enrollees. This is consistent with the
explanation in our April 2023 final rule that setting a meaningful
access standard for the OTP specialty type will be possible under a
combined behavioral health specialty type.
CMS is committed to improving access to behavioral health care
services for enrollees in the MA program. The
[[Page 30490]]
CMS Behavioral Health Strategy,\21\ aims to improve access and quality
of mental health care and services, including access to substance use
disorder prevention and treatment services. We proposed to extend
network adequacy requirements to additional behavioral health and
substance use disorder providers and facilities by adding time and
distance and minimum provider number requirements for a combined
provider category. Specifically, we proposed to add Outpatient
Behavioral Health as a new type of facility-specialty in Sec.
422.116(b)(2) and to add Outpatient Behavioral Health to the time and
distance requirements in Sec. 422.116(d)(2). For purposes of network
adequacy evaluations under Sec. 422.116, Outpatient Behavioral Health
can include, MFTs (as defined in section 1861(lll) of the Act), MHCs
(as defined in section 1861(lll) of the Act), OTPs (as defined in
section 1861(jjj) of the Act), Community Mental Health Centers (as
defined in section 1861(ff)(3)(B) of the Act), or those of the
following who regularly furnish or will regularly furnish behavioral
health counseling or therapy services, including, but not limited to,
psychotherapy or prescription of medication for substance use
disorders: physician assistants, nurse practitioners, and clinical
nurse specialists (as defined in section 1861(aa)(5) of the Act);
addiction medicine physicians; or outpatient mental health and
substance use treatment facilities. Per Sec. 422.2, the term
``provider'' means (1) any individual who is engaged in the delivery of
health care services in a State and is licensed or certified by the
State to engage in that activity in the State; and (2) any entity that
is engaged in the delivery of health care services in a State and is
licensed or certified to deliver those services if such licensing or
certification is required by State law or regulation. Although we are
not using the term ``provider'' specifically here in listing the type
of healthcare professionals that we expect to be available to furnish
services in order to count for purposes of the proposed new network
evaluation standard, all applicable laws about the practice of medicine
and delivery of health care services must be met and specific
healthcare professionals must be appropriately licensed or certified to
furnish the applicable services.
---------------------------------------------------------------------------
\21\ https://www.cms.gov/cms-behavioral-health-strategy.
---------------------------------------------------------------------------
We proposed to add this combined facility-specialty type instead of
adding individual provider-specialty types for a few reasons. First,
data from the U.S. Department of Labor, Bureau of Labor Statistics show
that currently MFTs and MHCs are generally providing services in
outpatient behavioral health settings, such as community mental health
centers, substance abuse treatment centers, hospitals, and some private
practices. 22 23 These types of clinical settings offer a
fuller range of services and usually provide access to additional
providers, such as advanced practice nurses and physician assistants
who provide counseling and other therapeutic services to individuals
with behavioral health conditions; our review of the Place of Service
codes recorded on professional claims for behavioral health services in
the Medicare FFS program illustrates this. In addition, currently,
there are a limited number of (if any) claims in the Medicare FFS
program from MFTs and MHCs; combining the MFT and MHC provider types
into the ``Outpatient Behavioral Health'' facility type provides time
for CMS to develop additional data as FFS claims are submitted by MFTs
and MHCs to show patterns of access to these provider types across the
country. CMS needs such claims and utilization data to support the
development of time and distance standards for these particular
provider-specialty types. Finally, categorizing these provider
specialties as a facility type is consistent with our practice under
Sec. 422.116, wherein physical therapy (PT), occupational therapy
(OT), and speech therapy (ST) providers have traditionally been
categorized as facility types, even though care is typically furnished
by individual health care providers. These provider types (that is, PT,
OT, ST) are reported for network adequacy purposes under facility
specialty types on Health Service Delivery (HSD) tables.
---------------------------------------------------------------------------
\22\ Bureau of Labor Statistics, U.S. Department of Labor,
Occupational Outlook Handbook, Marriage and Family Therapists, at
https://www.bls.gov/ooh/community-and-social-service/marriage-and-family-therapists.htm (visited July 03, 2023).
\23\ Bureau of Labor Statistics, U.S. Department of Labor,
Occupational Outlook Handbook, Substance Abuse, Behavioral Disorder,
and Mental Health Counselors, at https://www.bls.gov/ooh/community-and-social-service/substance-abuse-behavioral-disorder-and-mental-health-counselors.htm (visited July 06, 2023).
---------------------------------------------------------------------------
As mentioned previously, the statutory change under the CAA will
allow MFTs and MHCs to bill Medicare directly for services provided
beginning January 1, 2024. We acknowledge that these provider types may
not always be located in facilities and provide facility-based
services. As such, we will continue to monitor the appropriateness of
maintaining this proposed new behavioral health specialty type as a
facility-specialty type (that is, under Sec. 422.116(b)(2)) for
network adequacy review purposes. Similarly, as the list \24\ of OTPs
enrolled in Medicare continues to expand, we will continue to monitor
whether network adequacy for OTPs is best measured under a combined
facility type for the purpose of network adequacy reviews. Thus, we may
engage in future rulemaking to revise this requirement if the landscape
of providers changes such that access will be best evaluated separately
for MFTs, MHCs, or OTPs instead of under the one facility-specialty
type we proposed in this rule. Any related changes will be proposed in
future rulemaking. We proposed that MA organizations are allowed to
include on their facility HSD tables for the proposed new facility type
(Outpatient Behavioral Health) the following: contracted individual
practitioners, group practices, or facilities that are applicable under
this specialty type. We proposed that MA organizations may not submit a
single provider for purposes of meeting the Outpatient Behavioral
Health requirement if they have already submitted that provider under
another specialty. For example, MA organizations would not be permitted
to submit a single provider as a psychiatry, clinical social work, or
clinical psychologist provider specialty and as an Outpatient
Behavioral Health facility.
---------------------------------------------------------------------------
\24\ https://data.cms.gov/provider-characteristics/medicare-provider-supplier-enrollment/opioid-treatment-program-providers.
---------------------------------------------------------------------------
Our current regulations, at Sec. 422.116(a)(2), specify that an MA
plan must meet maximum time and distance standards and contract with a
specified minimum number of each provider and facility-specialty type.
Therefore, as part of the proposed changes to our list of facility
specialty types under Sec. 422.116(b)(2), we proposed base time and
distance standards in each county type for the new specialty type as
follows:
[[Page 30491]]
[GRAPHIC] [TIFF OMITTED] TR23AP24.004
In 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) (hereinafter referred to as the
``February 2020 proposed rule''), we explained how CMS developed the
base time and distance standards and the minimum provider requirements
used in Sec. 422.116 (85 FR 9094 through 9103). Further, we explained
in the February 2020 proposed rule how CMS determines the minimum
number requirement for all provider and facility specialty types, which
is now codified in Sec. 422.116(e). We codified at Sec.
422.116(e)(2)(iii) that all facilities, except for acute inpatient
hospitals facilities, have a minimum number requirement of one. Because
we had previously established paragraph (e)(2)(iii) to refer to all
facility types listed in paragraph (b)(2)(ii) through (xiv) and
proposed to add Outpatient Behavioral Health as a facility type at
paragraph (b)(2)(xiv), we did not propose any revisions to paragraph
(e)(2)(iii). We followed the analysis and methodology described in the
February 2020 proposed rule to develop the time and distance standards
that we proposed to apply to the new behavioral health facility-
specialty type described here. However, we utilized updated data,
including outpatient facility and professional Part B claims data from
August 1, 2021, through July 31, 2022, to inform our proposed standard.
Finally, as we indicated in the April 2023 final rule, Medicare FFS
claims data shows that telehealth was the second most common place of
service for claims with a primary behavioral health diagnosis in 2020
(88 FR 22170). Per Sec. 422.116(d)(5), MA plans may receive a 10-
percentage point credit towards the percentage of beneficiaries that
reside within published time and distance standards for certain
providers when the plan includes one or more telehealth providers of
that specialty type that provide additional telehealth benefits, as
defined in Sec. 422.135, in its contracted network. Currently, Sec.
422.116(d)(5) specifies 14 specialty types for which the 10-percentage
point credit is available. Because we understand from stakeholders who
commented on our April 2023 final rule that they were supportive of
usage of the 10-percentage point credit for behavioral health specialty
types, we also proposed to add the new Outpatient Behavioral Health
facility-specialty type to the list at Sec. 422.116(d)(5) of the
specialty types that will receive the credit if the MA organization's
contracted network of providers includes one or more telehealth
providers of that specialty type that provide additional telehealth
benefits, as defined in Sec. 422.135, for covered services.
We solicited comments on this proposal. Our responses to the
comments received are outlined below.
Comment: Numerous commenters supportive of our proposal to improve
behavioral health network adequacy standards in MA plans. Commenters
commended CMS for continuing to work towards increasing access to
behavioral health and improving health equity for MA enrollees through
these efforts. However, several commenters expressed concerns regarding
the proposal to consolidate several specialty and facility types into a
new single category for purposes of evaluating network adequacy in MA.
Specifically, commenters expressed concern that combining mental health
(MH) and substance use disorder (SUD) specialties into one category may
diminish the distinct access needs for these individual specialty types
and that the combined standard as proposed was too broad.
Recognizing the specialized nature of these services, commenters
advocated for differentiating MH and SUD network adequacy requirements.
Many commenters recommended establishing separate specialty categories
for ``Outpatient Mental Health'' and ``Outpatient Substance Use
Disorder,'' while other commenters suggested separate categories for
Opioid Treatment Programs (OTPs), and separate standards for MFTs and
MHCs. Commenters stated that the creation of separate standards for
these specialties would allow for more visibility for enrollees of the
availability of these services and better meet enrollees' behavioral
health and SUD needs.
Response: We thank commenters for their support and careful
consideration of our proposal. We agree with stakeholders that
establishing policies that improve network adequacy is critical to
improving access to behavioral health care, including access to
substance use disorder prevention and treatment services in MA.
We indicated in the November 2023 proposed rule that setting
meaningful network adequacy standards that include MFTs, MHCs, and OTPs
at this time is possible under a combined behavioral health specialty
type. We determined this through our review of U.S. Department of Labor
data and the Place of Service codes recorded on certain professional
claims data from 2017-2020 for behavioral health services in the
Traditional Medicare program, which indicate that MFTs and MHCs are
generally providing services in outpatient behavioral health
settings.25 26 As we have also stated in our April 2023
final rule, setting a meaningful access standard for the OTP specialty
type would be possible under a combined behavioral health specialty
type. We are taking this approach to provide additional time for CMS to
collect the specific claims and utilization data for MFTs and MHCs. We
may engage in future rulemaking to establish specific time and distance
[[Page 30492]]
standards for these specialties separately. More robust claims and
utilization data will help us to evaluate how enrollees are accessing
these benefits in Medicare Advantage and Traditional Medicare.
Additionally, we noted our intent to continue monitoring the
availability of OTPs across the country and determine whether network
adequacy for OTPs is best measured separately from the broader
Outpatient Behavioral Health facility-specialty type.
---------------------------------------------------------------------------
\25\ Bureau of Labor Statistics, U.S. Department of Labor,
Occupational Outlook Handbook, Marriage and Family Therapists, at
https://www.bls.gov/ooh/community-and-social-service/marriage-and-family-therapists.htm (visited July 03, 2023).
\26\ Bureau of Labor Statistics, U.S. Department of Labor,
Occupational Outlook Handbook, Substance Abuse, Behavioral Disorder,
and Mental Health Counselors, at https://www.bls.gov/ooh/community-and-social-service/substance-abuse-behavioral-disorder-and-mental-health-counselors.htm (visited July 06, 2023).
---------------------------------------------------------------------------
The Outpatient Behavioral Health facility-specialty type will
include individual practitioner and facility providers that furnish
psychotherapy and/or counseling services to individuals with mental
health or substance use disorders. Our review of certain Traditional
Medicare claims data from 2017-2020 (Place of Service codes, Type of
Bill codes, CCN codes, and Revenue Center codes) indicates that
facility types treat individuals with both mental health disorders and
substance use disorders. While the individual providers may specialize
in either mental health or substance use disorder treatment, many of
the facility providers will offer a variety of services and provider
types to meet the range of enrollees' behavioral health needs. In the
absence of more robust utilization and claims data, the Outpatient
Behavioral Health specialty type should be effective for use in our MA
plan network adequacy standards at this time.
Finally, Sec. 422.116(a) requires that each network-based MA plan
demonstrate that it has an adequate contracted provider network that is
sufficient to provide access to medically necessary covered services
consistent with standards in section 1851(d) of the Act, the
regulations at Sec. Sec. 422.112(a) and 422.114(a), and when required
by CMS, an MA organization must attest that it has an adequate network
for access and availability of a specific provider or facility type
that CMS does not independently evaluate in a given year (see section
II.A. of this final rule regarding the definition of ``network-based
plan''). In addition, Sec. 422.112 requires MA coordinated care plans
(which are network-based plans) to ensure covered services are
accessible and available to enrollees. Therefore, MA organizations must
always provide access to all covered services whether or not access to
a particular provider specialty is specifically evaluated by CMS
through our network adequacy standards.
Comment: Many commenters requested that CMS revise the proposed
Outpatient Behavioral Health time and distance standards to align with
those already established for Qualified Health Plans (QHPs). Commenters
emphasized that shortening the standards to reflect the benchmarks set
for QHPs would potentially benefit enrollees as behavioral health
services may be needed more frequently. Commenters emphasized that
aligning these standards would provide consistent and adequate access
across Federal programs and support operational needs of health plans.
Response: We are interested in aligning policies across Medicare,
Marketplace, and Medicaid wherever practicable. However, for MA plans,
CMS utilizes data on the unique health care utilization patterns and
geographic locations of Medicare beneficiaries and providers and
facilities to set the MA network adequacy time and distance as well as
the minimum provider and facility number requirements under 42 CFR
422.116. Therefore, at this time, we believe the requirements we
proposed, and are finalizing in this rule, are appropriate for
providing access and meeting the health care needs of the specific
beneficiary population served by this program.
Comment: Multiple commenters expressed concerns that MA provider
network adequacy standards could be met utilizing Nurse Practitioners
(NPs), Physician Assistants (PAs), and Clinical Nurse Specialists
(CNSs) within the new Outpatient Behavioral Health facility-specialty
type. Commenters suggested that the absence of clear and transparent
criteria for incorporating these provider types could result in the
creation of ``ghost networks,'' and one commenter referred to ghost
networks as networks where providers may be listed in a provider
directory without actively treating patients for behavioral health.
Further, commenters indicated that these provider types (NPs, PAs,
CNSs) might lack the necessary skills, training, or expertise to
effectively address the mental health and substance use disorder needs
of enrollees.
Response: We appreciate the feedback regarding the inclusion of
NPs, PAs, and CNSs within the new Outpatient Behavioral Health
facility-specialty type. We reiterate that the revisions to Sec.
422.116(b) and (d), as proposed and finalized, mandate that for
purposes of network adequacy evaluation, providers, including NPs, PAs,
and CNSs, must regularly furnish or will regularly furnish behavioral
health counseling or therapy services, including psychotherapy or the
prescription of medication for substance use disorders, in order for
those providers to be included in the new facility specialty Outpatient
Behavioral Health. Further, by defining the new facility specialty
Outpatient Behavioral Health so broadly, we expect that these
facilities will generally deliver a comprehensive array of services.
This includes services from MFTs, MHCs, OTPs, community mental health
centers, addiction medicine physicians, and outpatient mental health
and substance use treatment facilities.
Recognizing the diverse capabilities of NPs, PAs, and CNSs in
providing services to beneficiaries, CMS acknowledges the concerns
raised by stakeholders regarding the use of NPs, PAs, and CNSs to
satisfy the Outpatient Behavioral Health network adequacy standards
without verifying their qualifications to address and actual practice
of addressing behavioral health or SUD needs. To address this, we are
finalizing a clarification in Sec. 422.116(b)(2)(xiv) to limit when MA
organizations may list an NP, PA, or CNS, for purposes of network
evaluation under the Outpatient Behavioral Health facility-specialty
type. Specifically, the final rule establishes a standard to identify
when an NP, PA, or CNS regularly furnishes, or will furnish, behavioral
health counseling or therapy services, including psychotherapy or
medication prescription for SUDs.
For an NP, PA, or CNS to satisfy the Outpatient Behavioral Health
network adequacy standards, the NP, PA, and/or CNS must have furnished
certain psychotherapy or SUD prescribing services to at least 20
patients within the previous 12-months. The 20-patient threshold is
consistent with the minimum denominator requirement of several quality
measures, including many that are measured at the clinician-level in
the Merit-based incentive payment system (MIPS) in Traditional
Medicare. If the threshold is an important minimum for individual
practitioners being held accountable for the quality of care delivered
in Traditional Medicare, then having a similar threshold here for when
the practitioner ``regularly furnishes'' behavioral health care will
ensure that the NP, PA, or CNS is providing a meaningful amount of
behavioral health counseling or therapy services, including
psychotherapy or medication prescription for SUDs. In addition, we
believe the 12-month period timing will provide the best reflection of
current practice and is a sufficient time predicter of the next year's
practice by the provider.
Further, this standard supports the intent that a provider who is
an NP, PA or CNS, must ``regularly furnish or will regularly furnish''
behavioral health
[[Page 30493]]
services. This will help ensure that organizations only include
providers who have expertise in delivering services to be counted for
network adequacy purposes. The 12-month and 20 patient threshold
demonstrates that an NP, PA, or CNS has provided the applicable
services on an ongoing basis, and it will also provide a standard for
organizations that wish to utilize these provider types for network
adequacy evaluation.
As part of this minimum threshold for identifying that a specific
PA, NP and CNS regularly furnishes behavioral health services, we are
adopting specific requirements in new paragraphs (b)(2)(xiv)(A) and (B)
for how this threshold will be used. The list of psychotherapy or SUD
prescribing services to be used for this purpose will be identified by
CMS in the Health Service Delivery (HSD) Reference File (described in
Sec. 422.116(a)(4)(i)). CMS will identify the applicable services in
the HSD Reference File, using HCPCS code(s), narrative descriptions, or
something sufficiently similar to specify the necessary type of
services on an annual basis.
The MA organization must annually verify that this standard is met
by each individual NP, PA and/or CNS it intends to submit for purposes
of the Outpatient Behavioral Health facility type by analyzing reliable
information about services furnished by the provider such as the MA
organization's claims data, prescription drug claims data, electronic
health records, or similar data. This analysis must be performed at
least annually using a recent 12-month period and must be completed
before the MA organization includes the NP, PA and/or CNS to CMS for
purposes evaluation of the MA organization's network for the Outpatient
Behavioral Health facility type. If there is insufficient evidence of
these provider types having previous practice experience sufficient to
meet the threshold of 20 patients within a recent 12-month period, MA
organizations must have a reasonable and supportable basis for
concluding that the provider will meet the threshold in the next 12
months. If an NP, PA, or CNS is new to independent practice (and
therefore doesn't have the appropriate claims record in previous
years), has received psychiatry or addiction medicine specialized
training, and is listed as a psychiatry or addiction medicine NP, PA,
or CNS on public-facing websites, this would be a reasonable and
supportable basis for concluding that the practitioner would meet the
requirement in the next 12 months, and therefore able to be utilized
towards meeting network adequacy standards for Outpatient Behavioral
Health. We are establishing these requirements in Sec.
422.116(b)(2)(xiv)(B)(1) and (2).
This requirement is designed to prevent MA organizations from
including providers in their networks submitted to CMS for review that
are lacking a history of delivering or intent to deliver behavioral
health services, thereby improving the reliability of MA organization's
network's once operational. Further, this requirement will help MA
organizations identify the requisite services that NPs, PAs, and CNSs
must provide. MA organizations may be required to demonstrate, in the
specified form and manner requested by CMS, that the MA organization
has verified the service provision threshold. These criteria aim to
enhance transparency and accountability while preventing the formation
of ``ghost networks.'' This ensures that beneficiaries receive care
from providers with proven expertise in treating mental health and
substance use disorders.
Finally, we are also adopting a requirement, at Sec.
422.116(b)(2)(xiv)(B)(3) that an MA organization must submit evidence
and documentation to CMS, upon request and in the form and manner
specified by CMS, of the MA organization's determination that the PA,
NP, and/or CNS has furnished or is reasonably expected to furnish one
or more of the specified psychotherapy or medication prescription to at
least 20 patients within a 12 month period.
This provision will help to ensure compliance.
Comment: Some commenters stressed that network adequacy
requirements should accurately reflect the actual availability of
health care providers. These commenters emphasized that CMS should
tailor its approach to address the unique barriers that underserved
rural areas face in accessing behavioral health services. Some
commenters suggested that including NPs, PAs, and CNSs is particularly
important in rural areas where there is often a shortage of health care
providers. Commenters noted that NPs are increasingly providing
behavioral health services, with a significant percentage treating
conditions like depression in their practice. Commenters supported the
proposed changes to expand the definition of behavioral health
providers through the Outpatient Behavioral Health network adequacy
requirement since it will not only address the provider shortage, but
also align with the goal of ensuring that MA enrollees have access to
comprehensive and high-quality behavioral health care.
Response: We thank commenters for their support of our proposal to
include certain provider types such as NPs, PAs, and CNSs as part of
the Outpatient Behavioral Health network adequacy standard. Our network
adequacy standards take into account the unique access challenges in
rural areas. Network adequacy is assessed at the county level, and
counties are classified into five county type designations: Large
Metro, Metro, Micro, Rural, or CEAC (Counties with Extreme Access
Considerations), this allows us to set our criteria to represent the
geographic variations across the United States based on population size
and density of each county.
Comment: We received numerous comments supporting our proposal to
add Outpatient Behavioral Health specialty type to the list at Sec.
422.116(d)(5), which would provide a 10 percent credit towards the
percentage of beneficiaries residing within published time and distance
standards when the plan includes one or more telehealth providers that
offer additional telehealth benefits as defined in Sec. 422.135 in its
contracted network. Commenters agreed that network access through
telehealth benefits is critical, especially for enrollees in rural
areas where traditional services may be less accessible.
A few commenters suggested that CMS should increase the telehealth
credit from the proposed 10 percent up to 30 percent or that we
increase the credit and make it applicable to all behavioral health
network adequacy standards under Sec. 422.116(d)(5). Other commenters
expressed concerns regarding CMS's proposal to add Outpatient
Behavioral Health to the list at Sec. 422.116(d)(5). Commenters
cautioned against an over-reliance on telehealth that may not provide
the same level of care as in-person visits. These commenters emphasized
the need for telehealth services to adhere to the same capacity and
accessibility standards as in-person services, including the ability to
accept new patients and deliver specified services promptly.
Response: Our decision to extend the telehealth credit for the new
Outpatient Behavioral Health facility-specialty type is consistent with
our established practice for MA organizations receiving the credit as
part of a network adequacy evaluation. As we previously mentioned,
Medicare Fee-For-Service (FFS) claims data indicated that telehealth
was the second most common place of service for claims with a
[[Page 30494]]
primary behavioral health diagnosis in 2020.
The telehealth credit is designed to encourage the use of
telehealth services but is not a replacement for in-person care. Per
Sec. 422.116(d)(5), the telehealth credit is available when the MA
plan includes one or more telehealth providers that provide additional
telehealth benefits, as defined in Sec. 422.135, in the listed
specialties. Consistent with Sec. 422.135, MA plans that cover
additional telehealth benefits must offer enrollees the option to
choose their preferred mode of care delivery and to access the services
in person. This requirement underlines our commitment to encouraging
use of and access to telehealth without compromising the availability
of in-person care. Providers who receive the telehealth credit are
listed under Sec. 422.116(d)(5) and currently include all outpatient
behavioral health providers that are evaluated for network adequacy
purposes.
We understand and appreciate the concerns raised about the
potential over-reliance on telehealth services. We agree it is
necessary for these services to meet the same standards of capacity and
accessibility as in-person visits, including the acceptance of new
patients and the timely delivery of specified services. We recognize
the careful balance between expanding access through telehealth and
maintaining the quality and immediacy of care. As we move forward, CMS
will continue to monitor the effectiveness and impact of the telehealth
credit on network adequacy, especially in the context of Outpatient
Behavioral Health services. We remain open to considering adjustments
to the telehealth credit percentage in future rulemaking based on
evidence, stakeholder feedback, and the evolving landscape of
telehealth services. Our goal is to ensure that our policies support
the effective use of telehealth in enhancing access to care while
maintaining high standards of care delivery for MA enrollees.
Comment: Commenters requested clarification from CMS on whether
primary care practices that integrate behavioral health services,
including those staffed by MFTs, MHCs, and addiction medicine
physicians, fall under the ``Outpatient Behavioral Health'' category.
Commenters expressed that this clarification is critical to accurately
reflect network adequacy, especially since many MFTs work in medical
offices that provide behavioral health services.
Response: We confirm that primary care practices that integrate
behavioral health services are within the scope of the ``Outpatient
Behavioral Health'' category provided that the practice includes
providers of the type listed in Sec. 422.116(b)(2)(xiv), such as MFTs
and MHCs, and PAs, NPs, CNSs, and addiction medicine physicians who
regularly furnish or will regularly furnish behavioral health
counseling or therapy services. These services can be represented at
the level of individual providers or as a facility, depending on their
billing practices.
We are committed to conducting an in-depth evaluation of network
adequacy, acknowledging the changing landscape of healthcare delivery
where behavioral health services are becoming an integral part of
primary care. To that end, CMS annually publishes a Provider Supply
file (42 CFR 422.116(a)(4)(ii)) that lists available providers and
facilities and their corresponding office locations and specialty
types. MA organizations may use this as a resource to identify
providers and facilities. However, given the dynamic nature of the
market, MA organizations remain responsible for conducting validation
of data used for network adequacy review purposes.
Comment: Some commenters raised concerns regarding the possibility
of delays in the enrollment of MFTs and MHCs as Medicare providers, as
these providers will be registering for the first time. Commenters
suggested that CMS should closely monitor any potential backlogs of
providers or delay implementation of this rule if such issues arise.
Response: We are monitoring any potential issues or backlogs with
MFTs and MHCs enrolling as Medicare providers. We do not foresee any
such barriers to new provider enrollments at this time, and therefore
would not need to delay implementation of this rule.
Comment: Several commenters suggested that CMS should create a
complete list of qualifications for MFTs and MHCs so that MA plans can
properly determine and incorporate eligible providers.
Response: The qualifications for MFTs and MHCs are specified in
section 1861(lll) of the Act. Specifically, MFT services are defined in
section 1861(lll)(1) and the term MFT is defined in section
1861(lll)(2); MHC services are defined in section 1861(lll)(3) and the
term MHC is defined in section 1861(lll)(4) of the Act. These
definitions provide the necessary information for MA organizations to
understand and comply with the requirement to cover Part B covered
services, which now includes the services furnished by MFTs and MHCs as
newly defined eligible providers. MA organizations are required to
cover these services as defined in the Act and ensure that they are
furnished by providers who meet the qualifications specified in section
1861(lll)(2) of the Act for MFTs and in section 1861(lll)(4) of the Act
for MHCs. We also direct readers to the regulations at 42 CFR 410.53
and 410.54 for CMS regulations on Medicare-covered MFT and MHC
services.
Comment: Commenters suggested policy adjustments to allow for more
realistic and flexible standards for network adequacy in underserved
rural areas. For example, a few commenters recommended that CMS
introduce waivers or exceptions to address difficulties faced by plans
in contracting with a diverse range of providers due to workforce
shortages.
Response: We acknowledge the unique circumstances in rural areas.
CMS already addresses these circumstances when setting network time and
distance standards according to county type to account for the
different level of access in existing patterns of care for populations
in these areas. To further account for the specific landscape in a
particular area, CMS's time and distance standards measure the
relationship between the approximate locations of beneficiaries and the
locations of the network providers and facilities (42 CFR
422.116(d)(1)(i)). In addition, we have established guidelines under 42
CFR 422.116(f), which were finalized in our June 2020 final rule, that
outline the circumstances under which an MA plan may request an
exception to the network adequacy criteria. These provisions are
designed to provide flexibility while ensuring that beneficiaries have
access to necessary healthcare services.
Comment: Commenters expressed that many behavioral health providers
possess multiple professional credentials, enabling them to qualify for
more than one behavioral health specialty category. Commenters
recommended that CMS permit providers holding multiple credentials to
be included in the new behavioral health specialty category and be
counted within each applicable specialty.
Response: In our proposal, we indicated that MA organizations may
not submit a single provider as a psychiatry, clinical social work, or
clinical psychologist provider specialty to meet that network specialty
requirement and then submit that same provider as an ``Outpatient
Behavioral Health facility'' to meet this separate standard. 88 FR
78485. We explained that because Outpatient Behavioral Health is not a
specialty on its own,
[[Page 30495]]
such as other specialty types like Primary Care Physicians or
Cardiologists, but rather is an umbrella term for which several
specialties can be used to meet the requirement, it is important to
make this distinction. We acknowledge that there are other
circumstances when providers may hold multiple credentials that enable
them to be counted under more than one network adequacy standard. We
clarify here that MA organizations are still allowed to submit these
types of providers, for purposes of network adequacy evaluation, under
each applicable category that meets the specialty type requirements as
defined under statute and meet the requirements of the standard in
Sec. 422.116. Organizations are responsible for ensuring that the
contracted providers meet state and federal licensing requirements as
well as the organization's credentialing requirements for each
specialty type.
Comment: A few commenters requested that CMS consider postponing
the new Outpatient Behavioral Health network adequacy standard until
2026 in order to provide flexibility for provider certification and
contracting discussions with the relevant provider types.
Response: Behavioral health services, including the OTP benefit,
MFT and MHC services are covered under Traditional Medicare today, so
MA plans should have a network in place that assures adequate access to
those services when medically necessary for enrollees under section
1852(d) of the Act and Sec. 422.112. Therefore, we expect that MA
organizations are already conducting ongoing work related to provider
contracting and evaluating prevailing patterns of health care delivery
in their service areas. We anticipate issuing guidance on the specified
behavioral health services that need to be regularly furnished by PAs,
NPs, and CNSs, for them to be submitted under the Outpatient Behavioral
Health facility-specialty type after release of this final rule so that
MA organizations can determine how to include those providers in their
HSD tables for CMS to evaluate the provider network. The applicability
date of January 1, 2025, of this final rule, provides sufficient time
for organizations to prepare to include these provider types for the
formal network adequacy evaluations conducted by CMS under Sec.
422.116 beginning in 2025.
Based on our review and consideration of the comments received and
for the reasons outlined in the proposed rule and our responses to
comments, we are finalizing these provisions as proposed with
modifications to outline the criteria MA organizations must use to
determine when an NP, PA or CNS can be considered as part of a network
to meet the Outpatient Behavioral Health network adequacy standard. To
address concerns that NPs, PAs, and CNSs might lack the necessary
skills, training, or expertise to effectively address the behavioral
health needs of enrollees and that the absence of criteria for
incorporating these provider types could result in networks where these
providers may be listed in a provider directory without actively
treating patients, '' we are finalizing provisions in Sec.
422.116(b)(2)(xiv) to establish specific criteria that MA organizations
must use to determine when an NP, PA or CNS can be considered part of a
network to meet the Outpatient Behavioral Health network adequacy
standard. MA organizations must independently verify that the provider
has furnished or will furnish certain services to 20 patients within a
recent 12-month period, using reliable information about services
furnished by the provider such as the MA organization's claims data,
prescription drug claims data, electronic health records, or similar
data. For NPs, PAs, or CNSs new to independent practice, MA
organizations must have a reasonable and supportable basis for
concluding that the practitioner would meet the requirement in the next
12 months, including information related to psychiatry or addiction
medicine specialized training, and that the provider listed as a
psychiatry or addiction medicine NP, PA, or CNS on public-facing
websites.
L. Improvements to Drug Management Programs (Sec. Sec. 423.100 and
423.153)
Section 1860D-4(c)(5)(A) of the Act requires that Part D sponsors
have a drug management program (DMP) for beneficiaries at risk of abuse
or misuse of frequently abused drugs (FADs), currently defined by CMS
as opioids and benzodiazepines. CMS codified the framework for DMPs at
Sec. 423.153(f) in the April 16, 2018 final rule ``Medicare Program;
Contract Year 2019 Policy and Technical Changes to the Medicare
Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare
Prescription Drug Programs, and the PACE Program'' (83 FR 16440),
hereafter referred to as the April 2018 final rule.
Under current DMP policy, CMS identifies potential at-risk
beneficiaries (PARBs) who meet the clinical guidelines described at
Sec. 423.153(f)(16), which CMS refers to as the minimum
Overutilization Monitoring System (OMS) criteria. CMS, through the OMS,
reports such beneficiaries to their Part D plans for case management
under their DMP. There are also supplemental clinical guidelines, or
supplemental OMS criteria, which Part D sponsors can apply themselves
to identify additional PARBs. Under Sec. 423.153(f)(2), sponsors are
required to conduct case management for PARBs, which must include
informing the beneficiary's prescribers of their potential risk for
misuse or abuse of FADs and requesting information from the prescribers
relevant to evaluating the beneficiary's risk, including whether they
meet the regulatory definition of exempted beneficiary.
If the sponsor determines through case management that the enrollee
is an at-risk beneficiary (ARB), after notifying the beneficiary in
writing, the sponsor may limit their access to opioids and/or
benzodiazepines to a selected prescriber and/or network pharmacy(ies)
and/or through a beneficiary-specific point-of-sale claim edit, in
accordance with the requirements at Sec. 423.153(f)(3). CMS
regulations at Sec. 423.100 define exempted beneficiary, at-risk
beneficiary, potential at-risk beneficiary, and frequently abused drug.
1. Definition of Exempted Beneficiary Sec. 423.100
Section 1860D-4(c)(5)(C)(ii) of the Act defines an exempted
individual as one who receives hospice care, who is a resident of a
long-term care facility for which frequently abused drugs are dispensed
for residents through a contract with a single pharmacy, or who the
Secretary elects to treat as an exempted individual. At Sec. 423.100
CMS defines an exempted beneficiary as an enrollee being treated for
active cancer-related pain, or who has sickle-cell disease, resides in
a long-term care facility, has elected to receive hospice care, or is
receiving palliative or end-of-life care.
The OMS criteria finalized in the April 2018 final rule were
developed to align with available information and guidelines, such as
the Centers for Disease Control and Prevention (CDC) Guideline for
Prescribing Opioids for Chronic Pain (2016 CDC Guideline) issued in
March 2016.\27\ The current policy to exempt beneficiaries with cancer
from DMPs was developed through feedback from interested parties and
alignment with the 2016 CDC Guideline's active cancer treatment
exclusion. Patients within the scope of
[[Page 30496]]
the 2016 CDC Guideline included cancer survivors with chronic pain who
have completed cancer treatment, were in clinical remission, and were
under cancer surveillance only. The 2022 CDC Clinical Practice
Guideline for Prescribing Opioids for Pain (2022 CDC Guideline) \28\
expands and updates the 2016 CDC Guideline to provide evidence-based
recommendations for prescribing opioid pain medication for acute,
subacute, and chronic pain for outpatients aged >=18 years, excluding
pain management related to sickle cell disease, cancer-related pain
treatment, palliative care, and end-of-life care.
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\27\ https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm.
\28\ https://www.cdc.gov/mmwr/volumes/71/rr/rr7103a1.htm.
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In the interest of alignment with the 2022 CDC Guideline regarding
applicability in individuals with cancer, we proposed to amend the
regulatory definition of ``exempted beneficiary'' at Sec. 423.100 by
replacing the reference to ``active cancer-related pain'' with
``cancer-related pain.'' With this proposal, we would expand the
definition of exempted beneficiary to more broadly refer to enrollees
being treated for cancer-related pain to include beneficiaries
undergoing active cancer treatment, as well as cancer survivors with
chronic pain who have completed cancer treatment, are in clinical
remission, or are under cancer surveillance only.
We solicited comments on this proposal.
Comment: Most commenters supported the proposal to expand the
definition of exempted beneficiary to more broadly refer to enrollees
being treated for cancer-related pain to include beneficiaries
undergoing active cancer treatment, as well as cancer survivors with
chronic pain who have completed cancer treatment, are in clinical
remission, or are under cancer surveillance only. One commenter
suggested that expanding the definition to cancer-related pain beyond
beneficiaries undergoing active cancer treatment better encompasses the
range of patients with cancer related circumstances who are in need of
extended pain relief. Other commenters agreed that the proposed
definition was aligned with the 2022 CDC Guideline regarding
individuals with cancer or cancer-related pain treatment. Other
commenters agreed that enrollees being treated for cancer-related pain
require long-term pain management, commonly including opioid pain
medications, and thus, should be exempted from DMPs that are intended
to address potential opioid misuse. Another commenter wanted to ensure
that patients experiencing pain while not in the active cancer phase
can still reliably access treatment options. Another commenter agreed
that many patients in cancer survivorship experiencing pain-related
lasting effects of treatment or disease should be excluded from these
exemptions.
Response: We thank the commenters for their support.
Comment: A commenter appreciated CMS's efforts to improve the
definition of an ``exempted beneficiary'' but was concerned that the
proposal was too broad and would inadvertently include individuals who
are not experiencing cancer- or cancer treatment-related pain, but
instead are experiencing pain and have a prior, unrelated cancer
diagnosis. The commenter wanted to ensure clinicians involved in case
management will be able to exercise their professional judgement in
determining whether an opioid used for ``cancer-related pain'' is
reasonable, particularly when the cancer has been resolved for several
years and/or required minimal treatment. The commenter wanted to ensure
that CMS does not change the OMS criteria based on this change in
definition. The commenter also suggested that a member who meets the
criteria for identification in the OMS should not be omitted based
solely on a diagnosis code indicating a history of cancer or cancer-
related pain.
Response: CMS disagrees that the proposal is too broad. Our
analysis of beneficiary data estimates only a small increase in
exempted beneficiaries as a result of the proposed updated definition,
which we used to estimate burden in the proposed rule. Refer to section
X. Collection of Information Requirements, ICRs Regarding to
Improvements to Drug Management Programs in this final rule for
additional details. Beneficiaries who meet the regulatory definition
for exempted beneficiary must be exempted from the DMP despite meeting
all other OMS criteria. CMS attempts to remove exempted beneficiaries
from OMS reporting; however, we acknowledge that the data we have at
the time of quarterly OMS reporting may not be complete. Part D
sponsors must use data available to them or obtained through case
management to identify exempted beneficiaries, including those who are
reported by OMS or when the sponsor is reviewing cases and making its
own determinations based on OMS criteria. Therefore, a Part D sponsor's
DMP may identify a beneficiary who meets the OMS criteria and allow
clinicians to perform case management until it is determined that the
beneficiary is exempt and must be removed from the program. This
proposal changes the definition of ``exempted beneficiary'' at Sec.
423.100 and does not change the OMS criteria or clinical guidelines
described at Sec. 423.153(f)(16).
Comment: One commenter was concerned with identification of
patients whose opioid use is appropriately linked to cancer-related
pain but who are not otherwise receiving active treatment for some form
of cancer. The commenter pointed out that while plans have access to
clinical data on members, there is a need to conduct additional
administrative and clinical reviews of patient records to properly
exempt individuals meeting this new standard from participation in
DMPs. The commenter also anticipated a slight increase in the number of
individuals who will be exempted from DMPs due to cancer-related pain
under the proposed definition and a transition period in which existing
processes designed to identify ARBs evolve to match the broader
exemption for cancer-related pain.
Response: We acknowledge that there will be a transition period for
DMPs to adapt their processes for the proposed exemption. Part D
sponsors may identify exempted beneficiaries before or during case
management. We expect sponsors to diligently engage in case management,
but there is no deadline for sponsors to complete it. We also recognize
that every case is unique and that the time needed for case management
will vary depending on many factors, such as the complexity of the
case, and the promptness with which, and whether, prescribers respond
to sponsors' outreach. While the approach to case management may vary
based on the facts and circumstances of the case, the general goal of
case management is to understand why the beneficiary meets the OMS
criteria and whether a limitation on access to coverage for FADs is
warranted for the safety of the beneficiary. Thus, Part D sponsors are
expected to address all cases without unreasonable delay and to triage
their review of the most concerning cases to the extent possible.
Comment: A commenter agreed with the proposed updates but
recommended that CMS establish a clinical documentation code that
reflects the new definition, as is the case today with ``active cancer-
related pain.'' The commenter suggested that for accurate
identification of exempted beneficiaries, Part D plans would need
specific exclusion identifiers for the term ``cancer-related pain.''
The commenter also asked that CMS provide guidance allowing case
management
[[Page 30497]]
documentation to be sufficient for ``cancer-related pain'' in
situations when there is no code submitted by a provider. Another
commenter suggested that it would be extremely helpful if CMS could
indicate in the detailed OMS report the reason why a member was
identified for DMP review and, when this is based on a diagnosis, when
the diagnosis was made. The commenter also stated that stand-alone
Prescription Drug Plans (PDPs) have no access to medical encounter data
or to the member's medical history and even Medicare Advantage
Prescription Drug Plans (MA-PDs) lack visibility into events that pre-
date a member's enrollment with the MA-PD.
Response: We will share all exemption codes used in the OMS
reporting in the technical user guide, including any codes for cancer-
related pain. Should there be no code for cancer-related pain available
from a provider, plans should ensure that case management documentation
is sufficiently clear to justify OMS case responses to CMS.
We will also consider how best to update future OMS reporting,
including the level of detail reported for PARBs. As detailed in the
OMS technical user guide available on the CMS Part D Overutilization
website,\29\ the quarterly OMS report to Part D sponsors currently
provides a list of beneficiaries meeting the minimum OMS criteria
during the measurement period and information including the criteria
met (i.e., based on level of opioid use from multiple prescribers/
pharmacies (referred to as MIN1) or history of opioid-related overdose
(referred to as MIN2)).
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\29\ https://www.cms.gov/medicare/coverage/prescription-drug-coverage-contracting/improving-drug-utilization-review-controls-part-d.
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Comment: Another commenter agreed with the proposed updates to the
definition of exempted beneficiary but requested further guidance on
when and how to intervene earlier when it is unclear that a beneficiary
is using drugs aberrantly, which may increase DMP case volume without
achieving the program's goal. The commenter also requested that CMS
publish any criteria under consideration for use.
Response: While Part D sponsors may not vary the OMS criteria to
include more or fewer beneficiaries in their DMPs, they may apply the
criteria more frequently than CMS currently does, which is quarterly. A
sponsor must remove an exempted beneficiary from a DMP as soon as it
reliably learns that the beneficiary is exempt (including in their
internal claims systems), whether that be via the beneficiary, the
facility, a pharmacy, a prescriber, or an internal or external data
source. As part of ongoing case management, CMS expects plan sponsors
to have a process in place to regularly monitor such information for
enrollees in their DMP, and to take appropriate action expeditiously,
when they obtain new information. In the November 2023 proposed rule,
CMS provided information on data analysis and solicited feedback on
potentially using a machine-learning model to enhance the minimum or
supplemental OMS criteria in the future. This Request for Information
is addressed in section III.N. Improvements to Drug Management
Programs, OMS Criteria Request for Feedback of this final rule.
Comment: Another commenter agreed with the proposed update but
added that the CDC Guideline also refers to specialty guidelines as an
evidence-based resource for pain management in certain populations. A
commenter noted that the guidelines may be an additional useful
resource for plans as this policy is updated and implemented. The
commenter referred to the National Comprehensive Cancer Network (NCCN)
Clinical Practice Guidelines in Oncology: Adult Cancer Pain, NCCN
Clinical Practice Guidelines in Oncology: Survivorship, and Management
of Chronic Pain in Survivors of Adult Cancers: American Society of
Clinical Oncology Clinical Practice Guideline for recommendations on
pain management for patients with cancer and patients who have survived
cancer and American Society of Hematology 2020 Guidelines for Sickle
Cell Disease: Management of Acute and Chronic Pain.
Response: We thank the commenter for the feedback and agree that
CMS should refer Part D sponsors to the guidelines for both cancer-
related pain and sickle-cell disease. We remind Part D sponsors that
while both cancer-related pain and sickle-cell disease diagnoses exempt
Part D enrollees from DMPs and coverage limitations on FADs, Part D
sponsors must still comply with other utilization management
requirements in Sec. 423.153 to continue to monitor the safe use of
opioids.
After reviewing the comments received, we are finalizing the
proposal to amend the regulatory definition of ``exempted beneficiary''
at Sec. 423.100 by replacing the reference to ``active cancer-related
pain'' with ``cancer-related pain'' without modification.
2. Drug Management Program Notices: Timing and Exceptions Sec.
423.153(f)(8)
As discussed above under section III.N. Improvements to Drug
Management Programs of this final rule, sponsors must provide case
management for any PARB that meets the OMS criteria to determine
whether the individual is an ARB and whether to implement a limitation
on their access to FADs. Under section 1860D-4(c)(5)(B)(i)(I) of the
Act, a sponsor must send an initial and second notice to such
beneficiary prior to imposing such limitation. In the April 2018 final
rule (83 FR 16440), CMS adopted requirements for the initial and second
notices at Sec. Sec. 423.153(f)(5) and 423.153(f)(6). The initial
notice must inform the beneficiary that they have been identified as a
PARB and must include information outlined in Sec. 423.153(f)(5)(ii).
The second notice must inform the beneficiary that they have been
identified as an ARB and of the limitations on the beneficiary's
coverage of FADs, as specified in Sec. 423.153(f)(6)(ii). In the event
that, after sending an initial notice, a sponsor determines that a PARB
is not an ARB, a second notice is not sent; instead, an alternate
second notice is sent. Though not required by the Act, CMS codified a
requirement at Sec. 423.153(f)(7) to provide an alternate second
notice for the purpose of informing the beneficiary that they are not
an ARB and that no limitation on their coverage of FADs will be
implemented under the DMP.
Section 1860D-4(c)(5)(B)(iv) of the Act establishes that sponsors
must send a second notice on a date that is not less than 30 days after
the initial notice. The 30 days allow sufficient time for the
beneficiary to provide information relevant to the sponsor's
determination, including their preferred prescribers and pharmacies.
CMS codified at Sec. 423.153(f)(8) the timing for providing both the
second notice and alternate second notice. Currently, CMS requires
sponsors to send either the second or alternate second notice on a date
not less than 30 days from the date of the initial notice and not more
than the earlier of the date the sponsor makes the determination or 60
days after the date of the initial notice.
We proposed to change the timeframe within which a sponsor must
provide an alternate second notice to a beneficiary who is determined
to be exempt from the DMP subsequent to receiving an initial notice.
Specifically, we proposed to redesignate existing Sec.
423.153(f)(8)(ii) as Sec. 423.153(f)(8)(iii), and to revise the text
at Sec. 423.153(f)(8)(ii) to specify that, for such exempted
beneficiaries, the sponsor must provide the alternate second notice
within 3 days of determining the beneficiary is exempt, even if that
occurs less than 30 days from the date of the initial notice. In other
words, we proposed to remove the
[[Page 30498]]
requirement that sponsors wait at least 30 days from the date of the
initial notice to send the alternate second notice to exempted
beneficiaries.
Through program oversight, including audits of Part D sponsors, CMS
has observed that initial notices are sometimes sent to Part D
enrollees who meet the definition of an exempted beneficiary at Sec.
423.100, often because the sponsor does not have the necessary
information--for example, that the enrollee has a cancer diagnosis or
is receiving palliative care or end-of-life care--at the time the
sponsor sends the initial notice. However, this information may be
provided later by the enrollee or their prescriber in response to the
initial notice. In some cases, sponsors identify exemptions very
quickly after issuing the initial notice, prior to 30 days elapsing.
Under current CMS regulations, if a beneficiary meets the definition of
an exempted beneficiary, the beneficiary does not meet the definition
of a PARB. For this reason, exempted beneficiaries cannot be placed in
a Part D sponsor's DMP. Therefore, as stated in the preamble to the
April 2018 final rule (83 FR 16455), a sponsor must remove an exempted
beneficiary from a DMP as soon as it reliably learns that the
beneficiary is exempt (whether that be via the beneficiary, their
representative, the facility, a pharmacy, a prescriber, or an internal
or external data source, including an internal claims system). CMS
understands that sponsors may have already been sending alternate
second notices after determining that a beneficiary is exempt, without
waiting for 30 days to elapse. This proposed change would specify that
sponsors must send such notices to exempted beneficiaries sooner than
30 days after the provision of the initial notice.
CMS reminds Part D sponsors that, during their review and during
case management, they are expected to use all available information to
identify whether a PARB is exempt in advance of sending an initial
notice to protect these vulnerable beneficiaries from unnecessary
burden, anxiety, and disruptions in medically necessary drug therapy.
Thorough review of plan records and robust outreach efforts to
prescribers during case management help to minimize the risk that an
exempted beneficiary would receive an initial notice.
Sections 8.1 and 8.2.2 of the DMP guidance \30\ state that if a
sponsor learns that a beneficiary is exempt after sending an initial
notice, the sponsor should inform the beneficiary that the initial
notice is rescinded. If less than 30 days have passed since the initial
notice, a sponsor should send a Part D Drug Management Program
Retraction Notice for Exempted Beneficiaries. The model retraction
notice addresses the required 30-day timing issue in the current
regulation. As proposed, the Part D Drug Management Program Retraction
Notice for Exempted Beneficiaries would no longer be used because
sponsors would instead send the alternate second notice. We did not
estimate any reduction of burden for sponsors no longer using the
Retraction Notice. The Retraction Notice was implemented as a temporary
solution for Part D sponsors to use for exempted beneficiaries in place
of the alternate second notice, which had been accounted for in the
latest version of CMS-10141 (OMB control number 0938-0964).
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\30\ https://www.cms.gov/files/zip/cy-2023-part-d-dmp-guidance-april-20-2023.zip.
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We note that sponsors may determine that a PARB is not an ARB prior
to 30 days elapsing for reasons other than the beneficiary being
exempt. However, we believe the existing 30-day requirement before a
sponsor may send an alternate second notice in such situations is
important to maintain because it allows the beneficiary and other
prescribers enough time to provide the sponsor with information that
may influence the sponsor's determination.
We received the following comments on this proposal and our
responses follow.
Comment: We received several comments supporting our proposal to
eliminate the requirement that sponsors wait 30 days to send an
alternate second notice to a beneficiary determined to be exempt after
receiving an initial notice. Commenters described the proposal as
efficacious, reasonable, and aimed at protecting exempted beneficiaries
from unnecessary burden, including interrupted treatments. No
commenters opposed this proposal. One commenter expressed support for
discontinuing use of the Part D DMP Retraction Notice for Exempted
Beneficiaries, noting that the Retraction Notice would no longer be
needed under this proposal.
Response: We thank the commenters for their support and are
finalizing this provision as proposed.
We proposed an additional technical change related to the timeframe
for providing second notices and alternate second notices. The current
regulation at Sec. 423.153(f)(8)(i) requires that a sponsor provide a
second notice or alternate second notice not more than the earlier of
the date the sponsor makes the relevant determination or 60 days after
the date of the initial notice. It is critical that beneficiaries
receive timely written notice about changes to their access to Part D
drugs, as well as information about appeal rights, and the second
notice and alternate second notices are tied to the date of the plan's
determination. However, CMS understands that sponsors may not always be
able to issue printed notices on the exact day they make a
determination for a variety of reasons, such as they made the
determination on a day when there is no United States Postal Service
mail service, or later in the day after files have been sent to a print
vendor. Specifically, we proposed to add at Sec. 423.153(f)(8)(i)(A) a
window of up to 3 days to allow for printing and mailing the second
notice or alternate second notice. We noted in the proposed rule that
this change would provide sponsors sufficient time to print and mail
the notices while ensuring that beneficiaries receive timely
information about DMP limitations. Sponsors must continue to issue
these notices as soon as possible when a determination is made, and CMS
does not expect that sponsors will routinely take the maximum amount of
time.
We did not propose to change the requirement in Sec.
423.153(f)(8)(i)(B) that the second notice or alternate second notice
must be provided no later than 60 days from the date of the initial
notice. This is because sponsors have ample time to account in advance
for the days needed to print and mail these notices.
We received the following comments on this proposal and our
responses follow.
Comment: We received several comments on this proposal. Commenters
were supportive of adding a window of time between making a
determination and providing the second notice or alternate second
notice; no commenters were opposed. Most of these commenters noted the
importance of notifying beneficiaries as soon as practicable about DMP
determinations.
Response: CMS thanks the commenters for their support.
Comment: Several of the commenters that generally supported this
proposal opined that CMS should allow more than 3 days for sponsors to
provide the second notice or alternate second notice following a
determination, and offered specific recommendations, including allowing
up to 4 days, 5 business days, or 7 calendar days. One commenter stated
that weekends and holidays would make the proposed 3-day window almost
impossible to meet. Another commenter opined that sponsors should not
be held to the same timeframe that applies to written notice of a Part
D coverage determination
[[Page 30499]]
because of the impracticality of verbally conveying the information in
a DMP notice prior to mailing the written notice. The commenter instead
recommended that the timing align with the 7-day window that applies to
other current requirements, including certain DMP data disclosure
requirements. One commenter appeared to have misunderstood the existing
timeframes for providing the second notice and alternate second notice.
Response: We thank the commenters for their feedback but disagree
with their recommendations to allow more than 3 days between making the
determination and providing the notice. These notices contain important
information concerning a beneficiary's prescription drug access and
must not be unnecessarily delayed. As described above and in the
November 2023 proposed rule, there is precedent for establishing a 3-
day window for sponsors to provide a written notice for coverage
determinations under Sec. Sec. 423.568(d) and (f) and 423.572(b). CMS
recognizes that the DMP notices do not follow initial verbal
notification, but that makes timely written notification even more
important for these cases. Additionally, sponsors already have
established processes for providing written notices within a 3-day
timeframe, and these processes can be leveraged for sending DMP
notices.
Regarding the data disclosure provision at Sec.
423.153(f)(15)(ii)(D) that requires sponsors to update DMP information
in MARx as soon as possible but no later than 7 days from the date the
sponsor provides an initial notice or second notice to a PARB or ARB or
terminates a DMP limitation, it is important to note that this
requirement is unrelated to beneficiary notification and thus not as
urgent. The purpose of the data disclosure is not comparable to the
purpose of sending beneficiary notices regarding a restriction on their
access to Part D drugs; therefore, it is not an appropriate benchmark
to use to establish this timeframe. CMS does not expect plans to
routinely take the maximum amount of time possible and reminds sponsors
that the maximum 60-day timeframe from the date of the initial notice
is unchanged under our proposal. For example, if a determination is
made on day 60, the second notice or alternate second notice must be
provided on the same day.
Currently, under Sec. 423.153(f)(8)(i), Part D sponsors must
provide the second notice or the alternate second notice on the date of
the determination, with no additional window of time for providing
(i.e., printing and mailing) the written notice. As such, this change
extends from 0 days to up to 3 days the time sponsors have to provide a
notice after making a determination. After consideration of the
comments received and existing Part D beneficiary notice requirements,
CMS believes this change allows sponsors sufficient time to print and
mail the notices while ensuring that beneficiaries receive timely
information about their DMP limitations.
Comment: Some commenters requested clarification on how CMS will
calculate the 3-day window for providing the alternate second notice
and second notice and whether the provision refers to calendar or
business days. One commenter asked whether CMS intends for plans to
ensure the DMP notices are mailed within 3 days of the determination,
or whether CMS intends for the beneficiary to receive the notice within
3 days of the determination.
Response: CMS intends that a sponsor will have issued (i.e.,
printed and mailed, or sent electronically if the beneficiary has
indicated such a preference) the second notice or alternate second
notice within 3 days of making the relevant determination. We do not
require sponsors to send these notices in a manner that tracks receipt
by the beneficiary and consequently would be unable to enforce such a
timeframe. We further clarify that this proposal refers to calendar
days, consistent with the other DMP notice requirements specified at
Sec. 423.153(f)(8) and various beneficiary notice requirements
throughout Part 423, Subpart M. CMS will update the 2025 DMP guidance
to provide these clarifications as they relate broadly to the DMP
beneficiary notice requirements.
After consideration of the comments received, we are finalizing the
regulation text at Sec. Sec. 423.153(f)(8)(i)(A) and 423.153(f)(8)(ii)
as proposed.
3. OMS Criteria Request for Feedback
CMS regulations at Sec. 423.153(f)(16) specify that CMS and Part D
sponsors identify PARBs and ARBs using clinical guidelines that are
developed with stakeholder consultation, derived from expert opinion
backed by analysis of Medicare data, and include a program size
estimate. In addition, the clinical guidelines (also referred to as the
``OMS criteria'') are based on the acquisition of FADs from multiple
prescribers, multiple pharmacies, the level of FADs used, or any
combination of these factors, or a history of opioid-related overdose.
PARBs are the Part D beneficiaries who CMS believes are potentially
at the highest risk of opioid-related adverse events or overdose. The
current minimum OMS criteria \31\ identifies PARBs who (1) use opioids
with an average daily morphine milligram equivalents (MME) of greater
or equal to 90 mg for any duration during the most recent six months,
who have received opioids from 3 or more opioid prescribers and 3 or
more opioid dispensing pharmacies, or from 5 or more opioid prescribers
regardless of the number of dispensing pharmacies (also referred to as
``MIN1'' minimum OMS criteria), or (2) have a history of opioid-related
overdose, with a medical claim with a primary diagnosis of opioid-
related overdose within the most recent 12 months and a Part D opioid
prescription (not including Medication for Opioid Use Disorder \32\
(MOUD)) within the most recent 6 months (also referred to as ``MIN2''
minimum OMS criteria). Sponsors may use the current supplemental OMS
criteria to address plan members who are receiving opioids from a large
number of prescribers or pharmacies, but who do not meet a particular
MME threshold. These are (1) use of opioids (regardless of average
daily MME) during the most recent 6 months; AND (2) 7 or more opioid
prescribers OR 7 or more opioid dispensing pharmacies.
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\31\ April 20, 2023 HPMS memorandum, CORRECTION--Contact Year
2023 Drug Management Program Guidance available at: https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/rxutilization.
\32\ Referred to as medication-assisted treatment (MAT) in past
guidance.
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In 2019, CMS assigned the Health Federally Funded Research and
Development Center (FFRDC) to develop evidence-based recommendations
for improving the OMS criteria for the future. The Health FFRDC
conducted a literature review, facilitated a Technical Expert Panel
(TEP), and performed data analyses. All three activities served as
inputs into the evidence-based recommendations. The Health FFRDC
recommended that the results of the literature review and data analysis
support the continued inclusion of average MME, number of opioid
dispensing pharmacies, and number of opioids prescribers as indicators
for PARBs. In addition, they recommended that further data analysis
would be necessary to determine which additional criteria would be
appropriate to potentially adopt. CMS conducted subsequent literature
reviews and analysis.
In recent years, there has been a marked decrease in Part D
prescription opioid overutilization, but opioid-related overdose deaths
continue to be
[[Page 30500]]
a growing problem throughout the United States.\33\ While the CDC found
synthetic opioids (other than methadone) to be the main driver of
opioid overdose deaths, accounting for 82 percent of all opioid-
involved deaths in 2020,\34\ we must remain vigilant regarding the
risks of prescription opioids including misuse, opioid use disorder
(OUD), overdoses, and death. CMS tracks prevalence rates for Part D
beneficiaries with an OUD \35\ diagnosis and beneficiaries with an
opioid poisoning (overdose). While overall opioid-related overdose
prevalence rates among Part D enrollees have declined over the period
from contract year 2017 through 2021 at about 6.5 percent per annum,
overall opioid-related overdose prevalence rates increased by 1.0
percent between 2020 and 2021. Furthermore, about 1.6 percent of all
Part D enrollees had a provider diagnosed OUD in Contract Year 2021,
and the OUD prevalence rate has grown by 3.2 percent per annum since
contract year 2017.
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\33\ Spencer, Merianne R. et al. (2022). Drug Overdose Deaths in
the United States, 2001-2021. (457).
\34\ https://www.cdc.gov/drugoverdose/deaths/synthetic/index.html.
\35\ CMS used a modified version of the Chronic Condition
Warehouse (CCW) definition that excludes undiagnosed OUD
beneficiaries such as those with an opioid OD event and also limits
analysis to the particular measurement period instead of the prior
two years.
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A past overdose is the risk factor most predictive for another
overdose or suicide-related event.\36\ CMS finalized regulations to
implement section 2004 of the Substance Use-Disorder Prevention that
Promotes Opioid Recovery and Treatment for Patients and Communities
(SUPPORT) Act to include beneficiaries with a history of opioid-related
overdose as PARBs in DMPs. While the implementation of the SUPPORT ACT
enables identification of beneficiaries with a history of opioid-
related overdose and continues to identify PARBs who receive high
levels of opioids through multiple providers who may be more likely to
misuse prescription opioids,\37\ CMS is working on alternative methods
to identify beneficiaries potentially at risk before their risk level
is diagnosed as an OUD or the person experiences an opioid-related
overdose.
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\36\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR.
Substance use disorders and the risk of suicide mortality among men
and women in the U.S. Veterans Health Administration. Addiction.
2017 Jul;112(7):1193-1201. doi: 10.1111/add.13774.
\37\ Over 30,000 Part D enrollees met the minimum OMS criteria
and were reported to sponsors through OMS reports in 2022 (18
percent met the level of opioid use though multiple provider
criteria, and 82 percent met the history of history of opioid-
related overdose criteria).
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A recently published article that evaluated the use of machine
learning algorithms for predicting opioid overdose risk among Medicare
beneficiaries taking at least one opioid prescription concluded that
the machine learning algorithms appear to perform well for risk
prediction and stratification of opioid overdose especially in
identifying low-risk groups having minimal risk of overdose.\38\
Machine learning is a method of data analysis that automates analytical
model building, based on the idea that systems can learn from data,
identify patterns and make decisions with minimal human intervention.
---------------------------------------------------------------------------
\38\ Lo-Ciganic WH, Huang JL, Zhang HH, Weiss JC, Wu Y, Kwoh CK,
Donohue JM, Cochran G, Gordon AJ, Malone DC, Kuza CC, Gellad WF.
Evaluation of Machine-Learning Algorithms for Predicting Opioid
Overdose Risk Among Medicare Beneficiaries With Opioid
Prescriptions. JAMA Netw Open. 2019 Mar 1;2(3):e190968. doi:
10.1001/jamanetworkopen.2019.0968. Erratum in: JAMA Netw Open. 2019
Jul 3;2(7):e197610. PMID: 30901048; PMCID: PMC6583312.
---------------------------------------------------------------------------
While we did not propose changes to the clinical guidelines or OMS
criteria in the November 2023 proposed rule, we provided information on
our data analysis to date and welcome feedback for future changes.
Using predictor variables identified through the literature reviews,
CMS performed a data analysis to determine the top risk factors for
Part D enrollees at high-risk for one of two outcomes: (1) having a new
opioid poisoning (overdose) or (2) developing newly diagnosed OUD.
Since Part D enrollees with a known opioid-related overdose are already
identified in OMS, CMS focused on individuals at high risk for a new
opioid-related overdose or OUD. We anticipated no additional sponsor
burden since we did not propose regulatory changes and solicited
feedback.
In the analysis, we utilized Medicare data and traditional logistic
regression as well as machine learning models like Random Forest, Least
Absolute Shrinkage and Selection Operator (LASSO), and Extreme Gradient
Boosting (XGBoost) \39\ Cross Validation (CV) to examine and evaluate
performance in predicting risk of opioid overdose and OUD. The models
were compared based on the following criteria: Area Under the Curve
(AUC), sensitivity, specificity, positive predictive value (PPV),
negative predictive value (NPV), and number needed to examine (NNE). An
XGBoost model with CV performed best according to the specified
criteria and was selected as the model of choice for predicting a
beneficiary with a new opioid overdose or OUD diagnosis.
---------------------------------------------------------------------------
\39\ Extreme Gradient Boosting (XGBoost) model--data mining
technique that is similar to Random Forest that combines multiple
decision trees into a single strong prediction model, but it differs
in doing so in an iterative manner by building one tree at a time
and optimizing a differentiable loss function.
---------------------------------------------------------------------------
The model population included 6,756,152 Medicare beneficiaries
contemporaneously enrolled in Part D and Parts A, B, or C during the
period from January to June 2019, who were prescribed at least one non-
MOUD prescription opioid during the measurement period and did not have
a DMP exemption (that is, cancer, sickle cell disease, hospice, LTC
facility resident, palliative care, or end-of-life care). We excluded
beneficiaries with a prior opioid-related overdose or an OUD diagnosis
in the year prior to the prediction period. The training dataset used
to build the model consisted of a random 75 percent sample of the study
population (5,067,114). The remaining 25 percent of the population
(1,689,038) was used for validating the prediction performance of the
model. The measurement period to obtain information for the predictor
variables (for example, opioid use patterns, demographics,
comorbidities, etc.) was from January 1 to June 30, 2019, and the
prediction period we used to identify beneficiaries with a new opioid
overdose event or new OUD diagnosis was from July 1 to December 31,
2019.
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\40\ Multicollinearity tests were undertaken in order to ensure
that there was no collinearity among the explanatory variables used
in the model.
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The following risk factors \40\ were incorporated into the XGBoost
model:
BILLING CODE P
[[Page 30501]]
[GRAPHIC] [TIFF OMITTED] TR23AP24.005
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\41\ The Generic Product Identifier (GPI) designates any or all
of a drug's group, class, sub-class, name, dosage form, and
strength.
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[[Page 30502]]
[GRAPHIC] [TIFF OMITTED] TR23AP24.006
We evaluated the performance of the model using the confusion
matrix generated by applying the prediction model to the validation
dataset to calculate various metrics.
[[Page 30503]]
[GRAPHIC] [TIFF OMITTED] TR23AP24.007
[GRAPHIC] [TIFF OMITTED] TR23AP24.008
The top 15 risk factors that were highly associated with a new OUD
or opioid-related overdose diagnosis were:
[[Page 30504]]
[GRAPHIC] [TIFF OMITTED] TR23AP24.009
The number of short-acting prescription opioid fills and the
average daily MME were found to contribute most to XGBoost model
predictions of a new OUD or opioid-related overdose diagnosis. Risk was
present across a range of MME levels and increased with higher MME
levels. The risk of developing a new OUD or opioid-related overdose
diagnosis also increased with the number of diagnosed mental health or
substance use disorders. Utilization of opioids with other high-risk
medications like anticonvulsants, benzodiazepines, anti-psychotics, and
anti-anxiety medications were positively associated with higher risk.
Also, utilization of opioids like oxycodone and morphine were
positively associated with higher risk, while utilization of codeine,
tramadol, and opioids in the other category were positively associated
with lower risk.
Lastly, we applied our finalized model to data from October 1, 2021
through March 31, 2022 to predict future new opioid-related overdose
events and OUD diagnoses during the period from April 1, 2022 to
September 30, 2022 to understand program size estimates and NNE values.
[[Page 30505]]
[GRAPHIC] [TIFF OMITTED] TR23AP24.010
BILLING CODE C
Between 9 percent and 15 percent of the beneficiaries with a
predicted new opioid-related overdose/OUD actually experienced a new
overdose or OUD diagnosis during the evaluation period (April 1, 2022,
through September 30, 2022) depending on the Risk Probability
Threshold. The Top 1 percent threshold (n = 62,571) reported the lowest
precision score, while the Top 1,000 threshold showed the highest
precision. Among those who had a new opioid-related overdose/OUD in the
evaluation period, about 92 percent developed a new OUD; the proportion
with a new opioid overdose increased from 10 percent to 17 percent as
the risk probability threshold increased from the Top 1 percent to the
Top 1,000; and, as the risk probability threshold increased, about 2
percent to 8 percent had both a new opioid overdose and were identified
as having a newly diagnosed OUD. Among the different Risk Probability
Thresholds, between 93 to 98 percent of the correctly predicted new
overdoses/OUDs do not meet the current OMS criteria. The percentage
that meets the current OMS criteria decreases as the Risk Probability
Threshold becomes more restrictive. Thus, our analysis shows that there
is very little overlap between the population identified through this
model and beneficiaries already identified through the OMS.\42\
Furthermore, our analysis confirms that machine learning models can
analyze large datasets and identify complex patterns that are not
easily discernible by current non-statistical approaches. This makes
them a powerful tool for identifying new opioid-related overdose or OUD
risk and capturing an additional population of potential at-risk
beneficiaries who have not been identified through our current OMS
criteria.
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\42\ CMS also notes that historically, only about 1.6 percent of
the beneficiaries meeting the history of opioid-related overdose
(MIN2) OMS criteria also meet the (MIN1) minimum OMS criteria.
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In the November 2023 proposed rule, we discussed that CMS next
plans to assess risk in the model, validate the stability of the model
as new data become available, and develop guidelines on how to feasibly
implement the model into the existing DMP and OMS processes. We
solicited feedback on the following:
Potentially using such a model to enhance the minimum or
supplemental OMS criteria in the future (either in addition to the
current criteria or as a replacement).
How to avoid the stigma and/or misapplication of
identification of a PARB at high risk for a new opioid-related overdose
or OUD using the variables in the model.
Implementation considerations, such as effectively
conducting case management, as described in 423.153(f)(2), with
prescribers of PARBs identified by the model; opportunities to promote
MOUD, co-prescribing of naloxone, or care coordination; or potential
unintended consequences for access to needed medications.
Other factors to consider.
Comment: Commenters supported our machine learning model approach
or further testing. Several commenters encouraged CMS to provide a
demographic breakdown or the fairness analysis used to evaluate the
model. Several commenters suggested that CMS use clearly defined risk
factors that foster case management, ensure correctness of the risk
factors used, or focus on distinguishing factors to identify at-risk
beneficiaries and to minimize misapplication of the criteria for
beneficiaries with low risk of overdose or OUD. One commenter
recommended methods to better identify overdose risk such as removing
beneficiaries who do not show continuous use of opioids after an
overdose event and shortening look back windows.
Response: We thank the commenters for their support of our machine
learning model approach and thoughtful input. CMS will consider the
feedback, and we will proceed with further testing to improve the model
and risk factors.
[[Page 30506]]
The model focused on Part D beneficiaries at high-risk of one of two
outcomes: (1) having a new opioid poisoning (overdose) or (2)
developing newly diagnosed OUD. Since Part D beneficiaries with a known
opioid-related overdose are already identified in OMS, CMS focused on
individuals at high risk for a new opioid-related overdose or OUD. CMS
also excluded beneficiaries with a prior opioid-related overdose or an
OUD diagnosis in the year prior to the prediction period. Also, we did
include demographic factors in the initial model and a few of the
factors were highly associated with a new OUD or opioid-related
overdose diagnosis as described above and in the November 2023 proposed
rule. We will look for opportunities to provide additional details or
output from the analysis after we conduct more testing.
Comment: Some commenters recommended that CMS assess whether any
new criteria resulting from the use of such model could unintentionally
lead providers to be less likely to diagnose someone with OUD, as that,
in turn, would decrease access to MOUD.
Response: We will evaluate unintentional consequences of using
updated criteria that may affect the likelihood of diagnosing
beneficiaries with OUD. We encourage sponsors and prescribers to
promote co-prescribing of naloxone, MOUD, or other treatment referrals
through the DMP case management process.
Comment: Some commenters requested sufficient lead time and proper
communication language be in place before CMS implements any changes.
Response: We did not propose changes to the clinical guidelines or
OMS criteria in the November 2023 proposed rule. Changes would be
proposed through a future notice of proposed rulemaking with sufficient
lead time and guidance, if finalized.
M. Codification of Complaints Resolution Timelines and Other
Requirements Related to the Complaints Tracking Module (CTM) (42 CFR
417.472(l), 422.125, 423.129, and 460.119)
CMS maintains the CTM in the Health Plan Management System (HPMS)
as the central repository for complaints received by CMS from various
sources, including, but not limited to the Medicare Ombudsman, CMS
contractors, 1-800-MEDICARE, and CMS websites. The CTM was developed in
2006 and is the system used to comply with the requirement of section
3311 of the Affordable Care Act for the Secretary to develop and
maintain a system for tracking complaints about MA and Part D plans
received by CMS, CMS contractors, the Medicare Ombudsman, and others.
Complaints from beneficiaries, providers, and their representatives
regarding their Medicare Advantage (MA) organizations, Cost plans,
Programs of All-inclusive Care for the Elderly (PACE) organizations,
and Part D sponsors are recorded in the CTM and assigned to the
appropriate MA organization (MAO), Cost plan, PACE organization, and
Part D sponsor if CMS determines the plan, organization, or sponsor is
responsible for resolving the complaint. Unless otherwise noted,
``plans'' applies to MAOs, Part D sponsors, Cost plans, and PACE
organizations for purposes of this section.
We proposed to codify existing guidance for the timeliness of
complaint resolution by plans in the CTM. Currently, Sec. Sec.
422.504(a)(15) and 423.505(b)(22) require MAOs and Part D sponsors to
address and resolve complaints received by CMS against the MAO and Part
D sponsor through the CTM; we proposed to codify the expectation in
guidance that Cost plans and PACE organizations also address and
resolve complaints in the CTM. We proposed to codify the existing
priority levels for complaints based on how quickly a beneficiary needs
to access care or services and to codify a new requirement for plans to
make first contact with individuals filing non-immediate need
complaints within 3 calendar days. This timeframe will not apply to
immediate need complaints because those complaints need to be resolved
within two calendar days.
CMS codified the requirement for MAOs and Part D sponsors to
address and resolve complaints in the CTM at Sec. Sec. 422.504(a)(15)
and 423.505(b)(22) in the ``Medicare Program; Changes to the Medicare
Advantage and the Medicare Prescription Drug Benefit Programs for
Contract Year 2012 and Other Changes'' (76 FR 21431), which appeared in
the April 15, 2011 Federal Register (hereafter referred to as the
``April 2011 final rule''). As described in the April 2011 final rule,
the regulation requires that MAOs and Part D sponsors provide a summary
of the resolution in the CTM when a complaint is resolved. (76 FR
21470)
As Part D sponsors, Cost plans and PACE organizations that offer
Part D coverage have been required to comply with Sec. 423.505(b)(22).
We proposed to add language to Sec. Sec. 417.472(l) and 460.119 to
codify in the Cost plan regulations and PACE regulations, respectively,
the requirement that Cost plans and PACE organizations address and
resolve complaints in the CTM. This proposed new requirement will apply
to all complaints in the CTM for Cost plans and PACE organizations, not
just complaints about Part D.
In addition, CMS has issued guidance describing our expectations
for how complaints should be handled. In the Complaints Tracking Module
Plan Standard Operational Procedures (CTM SOP), the most recent version
of which was released on May 10, 2019, via HPMS memo,\43\ CMS provides
detailed procedures for plans to use when accessing and using the CTM
to resolve complaints. This includes describing the criteria CMS uses
in designating certain complaints as ``immediate need'' or ``urgent''
(all other complaints are categorized ``No Issue Level'' in the CTM),
setting forth our expectation that plans should review all complaints
at intake, and documentation requirements for entering complaint
resolutions in the CTM. The CTM SOP defines an ``immediate need
complaint'' for MAOs, Cost plans, and PACE organizations as ``a
complaint where a beneficiary has no access to care and an immediate
need exists.'' For Part D sponsors, ``an immediate need complaint is
defined as a complaint that is related to a beneficiary's need for
medication where the beneficiary has two or less days of medication
remaining.'' The CTM SOP defines an ``urgent complaint'' for MAOs, Cost
plans, and PACE organizations as a complaint that ``involves a
situation where the beneficiary has no access to care, but no immediate
need exists.'' For Part D sponsors, ``an urgent complaint is defined as
a complaint that is related to the beneficiary's need for medication
where the beneficiary has 3 to 14 days of medication left.''
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\43\ Available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/ctm%20plan%20sop%20eff053019.pdf.
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In Chapter 7, section 70.1 of the Prescription Drug Benefit Manual,
``Medication Therapy Management and Quality Improvement Program,'' \44\
CMS requires Part D sponsors to resolve any ``immediate need''
complaints within two (2) calendar days of receipt into the CTM and any
``urgent'' complaints within seven (7) calendar days of receipt into
the CTM. Chapter 7, section 70.1 also sets forth CMS's expectation that
Part D sponsors promptly review CTM complaints and notify the enrollee
of the plan's action as expeditiously as the case requires based on the
enrollee's health status.
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\44\ Available at https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/dwnlds/chapter7pdf.
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[[Page 30507]]
Requirements for resolution of complaints received in the CTM do
not override requirements related to the handling of appeals and
grievances set forth in 42 CFR part 422 subpart M (which apply to cost
plans as well as MAOs per Sec. 417.600), Part 423 subpart M, for Part
D sponsors, and Sec. Sec. 460.120-460.124 for PACE organizations.
Rather, CTM requirements supplement the appeals and grievance
requirements by specifying how organizations must handle complaints
received by CMS in the CTM and passed along to the plan. The
requirement for organizations to enter information on the resolution of
complaints in the CTM within specified time periods allows CMS to track
and ensure accountability for complaints CMS itself received, either
directly from beneficiaries or via entries in the CTM from the Medicare
ombudsman, CMS contractors, or others. A beneficiary who filed a
complaint directly with CMS may later contact CMS to find out the
status of the complaint and the plan's use of the system will allow CMS
to answer the beneficiaries inquires more expeditiously. In order to
comply with the applicable regulations, plans must handle any CTM
complaint that is also an appeal or grievance within the meaning of the
regulation in such a way that complies with the notice, timeliness,
procedural, and other requirements of the regulations governing appeals
and grievances.
We proposed to codify the timeliness requirements for MAOs and Part
D plans at new Sec. Sec. 422.125 and 423.129, both titled ``Resolution
of Complaints in Complaints Tracking Module.'' We proposed to codify
these requirements for Cost plans and PACE organizations at Sec. Sec.
417.472(l) and 460.119 by adopting Sec. Sec. 422.504(a)(15) and
422.125 by reference into the requirements for Cost plans and PACE
organizations, respectively.
Specifically, we proposed to codify at Sec. Sec. 422.125(a) and
423.129(a) the definitions of ``immediate need'' and ``urgent''
complaints in substantially the same way as they are currently defined
in guidance for MA and Part D-related complaints. However, we proposed
to specify that immediate need and urgent complaints for MA plans (as
well as Cost plans, and PACE) also include situations where a
beneficiary has access to enough of a drug or supply to last fewer than
2 days or from 3 to 14 days, respectively, as part of the definition
that these complaints are about situations that prevent the beneficiary
from accessing care or a service. This proposed change recognizes that
some complaints to an MAO (or Cost plan or PACE organization) may
overlap with Part D access, such as when a beneficiary reports a
problem with their enrollment in an MA-PD plan that is blocking access
to Part D coverage. The change also recognizes that non-Part D MA, Cost
plan, and PACE complaints relate not just to access to physician
services but to drugs and supplies that may be covered by the MA plan,
Cost plan, or PACE organization's non-Part D benefit (for example, Part
B drugs or diabetic test strips covered under the medical benefit of an
MA plan). Further, MA plans, Cost plans, and PACE also cover Part B
drugs.
We also proposed to codify at Sec. Sec. 422.125(b) and 423.129(b)
the current timeframes reflected in section 70.2 of Chapter 7 of the
Prescription Drug Benefit Manual for resolving immediate need and
urgent complaints. A two (2) calendar day deadline for resolving plan-
related immediate need complaints is both consistent with current
practice by plans and logically follows from the definition of an
``immediate need'' complaint. By its nature, an immediate need
complaint requires swift action. Because we define immediate need, in
part, as a situation where a beneficiary has access to two or fewer
days' worth of a drug or supply they need, a timeline greater than two
calendar days for resolving a complaint would represent an unacceptable
risk to beneficiaries.
Similarly, a 7 calendar day deadline for ``urgent'' complaints
reflects the importance of not delaying resolution of a situation that
is preventing access to care or services a beneficiary needs. Because
we define ``urgent'' in part as a situation where a beneficiary has 3
to 14 days' worth of a drug or supply they need, allowing more than a
week to elapse before resolving the complaint will put beneficiaries at
unacceptable risk of not receiving replacement drugs or supplies
timely.
For all other Part D and non-Part D complaints in the CTM, we
proposed requiring resolution within 30 days of receipt. This is
consistent with current practice and the guidance in section 70.2 of
Chapter 7 of the Prescription Drug Benefit Manual, and we believe will
prevent complaints from lingering for months without resolution in the
CTM. Further, a 30-day timeframe for resolving complaints in the CTM
aligns with the 30-day period provided in Sec. Sec. 422.564(e) and
423.564(e) for resolution of grievances. Although those regulations
permit an extension of up to 14 days for resolving the grievance if the
enrollee requests the extension or if the organization justifies a need
for additional information and documents how the delay is in the
interest of the enrollee, we do not believe that including the
authority to extend the deadline to resolve complaints in the CTM is
appropriate because complaints received into the CTM are often the
result of failed attempts to resolve issues directly with the plan.
Allowing plans to further extend the time to resolve the complaint only
allows further delays in addressing beneficiary concerns. Moreover,
recent evidence indicates that the vast majority of non-immediate need
or urgent complaints are resolved within 30 days--98 percent of such
complaints were resolved by plans within 30 days in 2022.
All timeframes for resolution will continue to be measured from the
date a complaint is assigned to a plan in the CTM, rather than the date
the plan retrieves the complaint from the CTM. This is consistent with
current guidance and practice. Measuring the timeframe in this manner
is the best way to protect beneficiaries from delayed resolution of
complaints and encourages organizations to continue retrieving CTM
complaints in a timely manner so that they have sufficient time to
resolve complaints.
We do not anticipate that plans will have difficulty meeting these
timeframes. The vast majority of complaints are currently resolved in
the timelines specified for the priority level of the complaint. For
example, in 2022, plans resolved 97 percent of complaints within the
required time frames for the level of complaint. Plans resolved 94
percent of immediate need complaints within two (2) calendar days, 97
percent of urgent complaints within seven (7) calendar days, and 98
percent of complaints with no issue level designated within thirty (30)
calendar days. Codifying the timeframes as proposed merely formalizes
CMS's current expectations and the level of responsiveness currently
practiced by plans.
We also proposed to create a new requirement for plans to contact
individuals filing non-immediate need complaints. At Sec. Sec.
422.125(c) and 423.129(c), we proposed to require plans to contact the
individual filing a complaint within three (3) calendar days of the
complaint being assigned to a plan. While current guidance generally
includes the expectation that organizations inform individuals of the
progress of their complaint, CMS has never specified a timeframe for
reaching out to a complainant. CMS has observed that, particularly for
complaints that are not assigned a priority level, plans sometimes wait
until the timeframe for resolution has almost elapsed to contact the
complainant. Because the timeframe
[[Page 30508]]
for resolving uncategorized complaints is 30 days, an individual who
files a complaint may wait weeks to hear back from the plan responsible
for resolving it. We believe that such delays cause unnecessary
frustration for beneficiaries and are inconsistent with the customer
service we expect from plans.
We acknowledge that our proposed timeframe for reaching out to the
complainant concerning a CTM complaint is more specific than our
requirement at Sec. Sec. 422.564(b) and 423.564(b) for plans to
``promptly inform the enrollee whether the complaint is subject to its
grievance procedures or its appeals procedures.'' We proposed a
specific timeframe for contacting the beneficiary regarding a CTM
complaint because, unlike with complaints received by the plans outside
the CTM, the complainant has not reached out directly to the plan and
may not know that their complaint has been passed on to the plan by CMS
via the CTM. Moreover, as previously noted, CMS monitors the handling
of complaints it receives through the CTM in real time. Part of
handling CTM complaints through the CTM, as required by Sec. Sec.
422.504(a)(15) and 423.505(b)(22), is entering information into the CTM
when the plan reaches out to the complainant. CMS will therefore be
able to monitor whether a plan has reached out to a beneficiary within
the required timeframe and follow up with the plan well before
timeframe for resolving the complaint has elapsed.
We proposed a three (3) calendar day timeframe for reaching out to
the individual filing the complaint because it will provide a timely
update to individuals filing both urgent and uncategorized complaints
without delaying resolution of immediate need complaints. We expect
that a plan will indicate in this communication that the plan has
received and is working on the complaint, and that they provide contact
information that the individual filing the complaint could use to
follow up with the plan regarding the complaint. We solicited comment
on whether this timeframe is appropriate and whether a longer or
shorter timeframe will better balance the needs of beneficiaries with
the capacity of plans to respond to complaints.
We also proposed conforming changes to Sec. Sec. 422.504(a)(15)
and 423.505(b)(22) to incorporate the proposed new requirements into
the existing contractual requirements for MAOs and Part D sponsors. The
proposed revisions to Sec. Sec. 417.472(l) and 460.119 incorporate
both the requirements in proposed Sec. 422.125 and the requirement for
a contract term for resolving complaints received by CMS through the
CTM for Cost plans and PACE organizations and their contracts with CMS.
We received comments on the proposal and our responses to the
comments are below.
Comment: Several commenters supported the proposed rule, with one
noting that they support any effort to improve the timeliness and
transparency associated with enrollee complaints to MA plans. One
organization was particularly appreciative of CMS's goal to ensure that
beneficiaries receive a timely response to complaints. Another
commenter likewise expressed the need to codify a timeline for letting
complainants know that the plan had received the complaint, stating
that beneficiaries and their representatives frequently have no idea if
a plan has received and is addressing the complaint.
Response: We appreciate the support for our proposal. We agree that
establishing clear timelines for MA plans, Cost plans, PACE
organizations and Part D plans to respond to CTM complaints is
important.
Comment: A few comments supported the proposal and suggested that
CMS adopt measures to promote greater transparency and accountability
for beneficiary and provider complaints. Specifically, they suggested
making CTM complaints publicly available on Medicare Plan Finder or
elsewhere, carefully monitoring trends in CTM complaints and use them
to focus CMS audits, creating an online portal for all stakeholders to
enter complaints about plans, and creating a provider hotline similar
to 1-800-MEDICARE specifically for providers to submit complaints.
Response: We appreciate the commenter's support. While the
commenter's suggestions are out of scope for the proposed rule, we will
consider them as we continue to explore ways to improve transparency
and accountability. We already closely monitor CTM complaints and that
complaint rates are used to calculate Star Ratings for MA and Part D
plans.
Comment: A commenter supported the proposal, but expressed concern
that many CTM complaints appear to be the result from MAO attempts to
shield denials of coverage from review by the Independent Review
Entities (IREs) that handle reconsiderations of adverse appeals and
coverage determination decisions by MAOs and Part D sponsors. The
commenter was particularly concerned that CMS does not appear to have
an effective mechanism to monitor what should have been sent to the IRE
for review but was not.
Response: This comment is out of scope for this proposal, but we
appreciate the commenter's concern. We agree it is critical for MAOs,
Part D sponsors and cost plan organizations (which must comply with the
MA appeal regulations per Sec. 417.600) to send all of the cases to
the IRE that should be sent to the IRE. See section VII.E of this rule
for a discussion of our revision to the process for identifying data
completeness issues at the IRE and calculating scaled reductions for
the Part C appeals measures to help ensure that all of the cases that
should be sent to the IRE are sent.
Comment: A commenter expressed concern with CMS's statements that
CTM complaints must be handled as appeals or grievances when
appropriate. The commenter stated that treating all CTM complaints as
appeals or grievances would result in conflicting timeframes for
resolution and duplicative communications to members. The commenter
requested clarification of whether CMS expects all complaints to be
treated as appeals or grievances and, if not, whether complaints that
are appeals or grievances would be held to the CTM timeframes in
addition to the appeals and grievance timeframes.
Response: We understand the commenter's concern. We wish to clarify
that CTM complaints should only be treated as appeals or grievances
when they otherwise meet the definition of appeals or grievances under
the applicable regulations. We note that MA and Part D appeals and
grievances must be resolved ``as expeditiously as the case requires''
and that this would require resolution of the appeal or grievance
within the proposed timeframe for immediate need and urgent complaints
if the appeal or grievance involved a service or drug for which the
beneficiary has a need that meets the definition of ``immediate need''
or ``urgent'' that we proposed and are finalizing in Sec. Sec. 422.125
and 423.129. See Sec. Sec. 422.564(e)(1), 422.630(e) and 423.564(e)(1)
regarding the timeline for responses to enrollee appeals and
grievances. Although the regulations at Sec. Sec. 422.564(e)(2),
422.630(e)(2), and 423.564(e)(2) permit the 30-day timeframe resolution
of grievances to be extended by up to 14 days if the enrollee requests
the extension or if the organization justifies a need for additional
information and documents how the delay is in the interest of the
enrollee, the stricter timing requirements for CTM complaints addressed
in Sec. Sec. 422.125 and 423.129
[[Page 30509]]
will control where a CTM complaint has been filed.
Similarly, PACE service determinations and appeals must be resolved
as ``expeditiously as the participant's condition requires'', but no
later than three days after the request is received for service
determinations, 30 days after the request is received for appeals, and
72 hours after the appeal request is received for expedited appeals.
See Sec. Sec. 460.121(i), 460.122(c)(6), and 460.122(f) regarding the
timelines for response to PACE participant service determination
requests and appeals and the definition of expedited appeals. Pursuant
to provisions of this rule, PACE grievances must also be resolved as
``expeditiously as the case requires,'' but no later than 30 calendar
days after the PACE organization receives the grievance. See section
XI.H of this rule, adopting changes to Sec. 460.120, including a
timeline for resolution of PACE grievances at Sec. 460.120(g).
Immediate need complaints that also qualify as PACE grievances, service
determination requests, appeals, or expedited appeals therefore need to
be resolved within two days under both PACE requirements and the
requirements of this rule. Although the regulations at Sec. Sec.
460.121(i)(1) and 460.122(f)(3) allow the timeline for resolution of
service determination requests and expedited appeals to be extended by
five days or 14 days, respectively, under certain circumstances, the
stricter timing requirements for CTM complaints addressed in Sec. Sec.
422.125 and 423.129 will control where a CTM complaint has been filed
in the same way they would for MA and Part D grievances.
Because existing CMS regulations explicitly permit extension for MA
and Part D appeals and grievances, we do not think it is appropriate to
penalize an organization for extending the resolution of a non-
immediate need and non-urgent CTM complaint that meets the definition
of an MA or Part D appeal or grievance. Therefore we are adding a new
paragraph (4) to Sec. Sec. 422.125(b) and 423.129(b) to allow
organizations to extend the timeline to respond to a CTM complaint if
the complaint is also a grievance within the scope of Sec. Sec.
422.564, 422.630 or 423.564 and if it meets the requirements for an
extension of time under Sec. Sec. 422.564[euro](2), 422.630(e)(2), or
423.564(e)(2) as applicable. (Depending on the type of organization--MA
plan, applicable integrated plan, Part D plan, or cost plan the
specific regulation that governs the time frame for responding to a
grievance will vary.) This extension will not be available for any
complaint that meets the definition of an immediate need complaint or
urgent complaint or that requires expedited treatment under Sec. Sec.
422.564(f), 422.630(d), or 423.564(f) because such a delay would
present an unacceptable risk of harm to the beneficiary. PACE
organizations are not permitted to extend the 30-day timeframe for
resolution grievances under the revisions to Sec. 460.120 finalized in
this rule or for non-expedited appeals under Sec. 460.122(c)(6) and
service determinations must be resolved within eight days even with the
permitted five-day extension under Sec. 460.121(i), so it is not
necessary to allow an extension of the 30-day timeline for non-
immediate need and non-urgent complaints that also qualify as PACE
grievances, service determination requests, or appeals.
We also acknowledge the potential conflict between the timelines
for resolving immediate need complaints or urgent complaints and the
requirement for organizations to respond within 24-hours to MA and Part
D grievances that meet the definition of ``expedited grievances'' under
Sec. Sec. 422.564(f), 422.630(d), and 423.564(f). Similarly, there is
a potential conflict between the timeline for resolving urgent
complaints and the three days and 72 hours permitted to respond to PACE
service determination requests and expedited appeals under Sec. Sec.
460.121(i) and 460.122(f)(2). We did not intend to allow organizations
to take longer to resolve an expedited MA or Part D grievance or PACE
service determination request or expedited appeal than is currently
required under the regulation merely because the grievance, service
determination request, or appeal was received as a CTM complaint.
Therefore, we are adding a new paragraph (5) to Sec. Sec. 422.125(b)
and 423.129(b) to make clear that organizations must comply with the
shortest applicable timeframe for resolving a CTM complaint when the
complaint also qualifies as a grievance, PACE service determination
request, or PACE appeal. By shortest applicable timeframe, we mean the
timeframe that (1) applies under this new CTM provision for the type of
complaint (that is, immediate need complaint, urgent complaint, or
other type of CTM complaint), the grievance regulation (that is
Sec. Sec. 422.56, 422.630, 423.564, or 460.120), or the PACE service
determination or appeals regulation (that is Sec. Sec. 460.121 or
460.122) and (2) is the shortest of those two applicable time frames.
So, if a CTM complaint qualifies as both an urgent complaint and an
expedited MA or Part D grievance, the organization responsible for
responding to the complaint would be required to do so within 24 hours,
as required by Sec. Sec. 422.564(f), 422.630(d), and 423.564(f), and
not within the seven days permitted under Sec. Sec. 422.125(b)(2) and
423.129(b)(2) for urgent complaints. Similarly, with respect to the
requirement for organizations to contact the individual making the
complaint in the CTM within a specific timeframe, we expect that
organizations will meet this timeframe for CTM complaints that also
meet the definition of MA, Part D, or PACE grievances. To the extent
that the requirement in Sec. Sec. 422.564(b) and 423.564(b) to
``promptly inform the enrollee whether the complaint is subject to its
grievance procedures or its appeals procedures'' would permit
organizations to take longer than seven days to notify enrollees,
Sec. Sec. 422.125(c) and 423.129(c) would nevertheless require
organizations to contact individuals who file a complaint that
qualifies as a grievance in the CTM within seven days.
Comment: A commenter recommended shorter timeframes for resolving
complaints submitted in the CTM. The commenter urged CMS to require
that immediate need complaints be resolved within 24 hours and that all
other cases be resolved within 72 hours. The commenter noted that this
would reflect timelines for the appeals processes for Part B drugs and
Part D benefits, which require that decisions be made ``as soon as the
beneficiary requires'' but not later than 72 hours for standard
requests (Sec. Sec. 422.568 and 423.568) and 24 hours for expedited
requests (Sec. Sec. 422.572 and 423.572). The commenter noted that a
seven-day resolution timeline for urgent complaints in which patients
have three to fourteen days of treatment left would potentially leave
patients without needed care for four days.
Response: We acknowledge that some complaints may require quicker
resolution than the timeframes currently required for CTM complaints.
As previously discussed, we expect organizations to treat complaints
that meet the definition of appeals or grievances in a manner
consistent with the requirements prescribed in the regulation for
handling appeals and grievances. When a CTM complaint is actually an
appeal, the organization must comply with the appeal regulations;
nothing in the new regulations we are finalizing to address handling of
CTM complaints changes or creates an exception to the appeal
regulations that apply to cost plans, MA plans (including applicable
integrated plans), Part D plans or PACE
[[Page 30510]]
organizations. We are finalizing a new paragraph (b)(4) as part of
Sec. Sec. 422.125 and 423.129 to make clear that organizations should
comply with the shortest timeline called for in the applicable
regulations when the timeliness requirements related to CTM complaints
and grievances both apply. Therefore, an organization would have to
respond to an immediate need complaint that also meets the definition
of an expedited grievance within the 24 hours required by Sec. Sec.
422.564(f), 422.630(d), or 423.564(f). Similarly, if an urgent
complaint meets the definition of a grievance under Sec. Sec. 422.561
and 423.560, or a PACE service determination request or appeal under
Sec. Sec. 460.121 and 460.122, and involves a beneficiary with only
four days of medication remaining, the organization would be required
to resolve the issue within four days because Sec. Sec. 422.564I(1),
422.630(e), 423.564(e)(1), 460.121(i), and 460.122(c)(6) require
organization notify an enrollee of its decision on a grievance (or PACE
service determination request or appeal) ``as expeditiously as the case
requires'' based on the enrollee's health status.
The resolution timeframes of two days for immediate need
complaints, seven days for urgent complaints, and 30 days for all other
CTM complaints have been in effect for many years and we do not have
evidence that beneficiaries entitled to quicker resolutions under the
regulations for grievances have had those resolutions delayed as a
result. We are finalizing the resolution timeframes for CTM complaints
as proposed in Sec. Sec. 422.125 and 423.129 with the modifications
described for Sec. Sec. 422.125(b)(4) & (5) and 423.129(b)(4) & (5),
but we will continue to monitor CTM complaint resolutions and appeals
and grievances procedures and records for evidence that the CTM
resolution timeframes are causing unnecessary delays in the resolution
of appeals and grievances.
Comment: A commenter supported the proposed requirement to contact
complainants within three days of filing a CTM complaint but
recommended that CMS require organizations to provide beneficiaries
with the CTM complaint ID number in addition to the plan contact
information. The commenter also recommended that CMS require plans to
document the contact within one to two business days of making the
contact.
Response: We appreciate the commenter's support. We agree that
organizations should provide the complainant with the CTM complaint ID
number when reaching out to them regarding the complaint. However, we
do not believe that it is necessary to codify this expectation at this
time. Individuals filing CTM complaints receive the complaint ID number
when they call 1-800-MEDICARE, and we do not think organizations
reaching out to complainants would ordinarily fail to provide this
information when contacting the individual to update them on the status
of the complaint. We also agree that organizations should update the
CTM promptly when contacting complainants and resolving complaints. We
currently monitor CTMs on an ongoing basis and our experience is that
organizations meet this expectation. Therefore, we do not believe that
it is necessary to codify this expectation at this time.
Comment: A commenter noted that their State guidance requires
health plans to acknowledge a complaint within ten days. They
questioned whether there was a way to align the CMS requirement with
the State requirement.
Response: We recognize that States may have different expectations
with respect to handling complaints. However, State insurance laws
other than licensure and solvency do not apply to MA plans under
section 1856(b)(3) of the Act, and we do not believe that it is
necessary or practical to allow organizations a longer time to contact
complainants or resolve complaints merely because a State may permit
longer timeframes for other types of health plans. We expect and will
continue to expect MA plans, cost plans, Part D plans, and PACE
organizations to meet the federal timeframes for beneficiary contact
and complaint resolution adopted here (or in other applicable laws).
Comment: A commenter was generally supportive of the proposal but
noted that complaints related to D-SNPs may require action from State
Medicaid agencies, which may require longer to resolve. The commenter
recommended that CMS modify the proposal to account for the need to
involve State Medicaid agencies in the resolution of D-SNP complaints.
Response: We appreciate the commenter's support and acknowledge
that some complaints for D-SNPs may require action by or input from
State agencies or others that are not bound by CMS requirements.
However, we do not believe a modification related to potential
involvement of a State Medicaid agency to the requirements we proposed
and are finalizing in this rule is necessary. Some CTM complaints have
always required action by or input from outside agencies. This has not
caused any significant delays in complaint resolution. Our experience
is that most States recognize the need to resolve urgent complaints and
immediate need complaints quickly and that States rarely take longer
than 30 days to respond to other complaints. Isolated complaints may
take longer to resolve as a result of inaction by outside agencies, but
we do not believe that it is necessary to extend the timeframe for
resolution to account for these outlier events. Rather, we will
continue to exercise its discretion to take into account such outliers
when determining whether compliance or enforcement actions are
necessary in a particular circumstance.
Comment: A few commenters expressed concern that CMS would expect
organizations to actually make contact with beneficiaries within the
required timeframes, rather than requiring them to attempt to make
contact. They requested that CMS clarify whether an attempt to make
contact within the specified timeframe would satisfy the requirement.
They also requested that CMS clarify the means by which the
organization make contact.
Response: We recognize that beneficiaries are not always available
to receive calls when plans reach out to them. We are therefore
finalizing the proposed regulations at Sec. Sec. 422.125(c) and
423.129(c) rule with a modification to clarify that organizations
attempt to make contact with individuals filing complaints in the CTM
within the specified timeframe. We believe that this ensures that plans
will reach out to complainants in a timely manner without creating an
unrealistic expectation that plans be able to reach complainants who
may not be available to receive calls or other communications within
the specified timeframes.
We also recognize that plans have many ways to contact
beneficiaries, including by phone or mail. We expect plans to attempt
to contact complainants regarding time sensitive matters by the most
expeditious means available. We also expect that plans would generally
use the same method to reach out to complainants as the complainants
used to file complaints. Generally, this would require that plans
attempt to contact complainants by phone, since this is the way the
vast majority of complaints are made and the quickest way to reach
individuals in real time. Our experience operating the CTM indicates
that organizations do attempt to contact complainants by phone. We
therefore do not believe that it is necessary to explicitly codify this
expectation at this time. However, we
[[Page 30511]]
will continue to monitor CTM complaints to ensure that organizations
continue to observe best practices for reaching out to complainants.
Comment: Several commenters requested greater flexibility in the
timeframes for resolving CTM complaints and reaching out to individuals
filing complaints. Some requested that CMS use a business day standard
rather than a calendar day standard, stating that it would allow PACE
organization to better manage communications outside of weekends and
holidays. One commenter suggested extending the time period for
contacting a complainant to five calendar days as an alternative to a
business day standard to balance the need for timely communication
against PACE organizations' need for flexibility. Another commenter was
concerned that contacting the complainant within three calendar days of
filing a complaint does not guarantee that the individual will get
meaningful feedback and may result in beneficiary confusion regarding
the status of their complaint. Some commenters believe that requiring
contact within three calendar days for a complaint that MAOs and Part D
sponsors have 30 days to resolve would negatively impact the resources
needed to investigate and resolve immediate need and urgent cases. They
noted that they already strive to reach out within four to seven days
for urgent and uncategorized complaints. One commenter also noted that
beneficiaries often express frustration with receiving calls at
inopportune times, such as on holidays, especially when the complaint
is not an immediate need complaint.
Response: We appreciate the commenters' desire for greater
flexibility and the difficulty plans may experience in meeting a 3-
calendar day timeframe for reaching out to beneficiaries. However, we
do not believe that switching from a calendar day to a business day
standard would be the best way to balance the needs of the beneficiary
for transparency with the plans' needs for flexibility. The need for
health care services can occur at any time, regardless of holidays or
business schedules. Moreover, different states and territories
celebrate different holidays, making it difficult for us to hold plans
accountable to a uniform standard that is based on business days. We
have long applied a calendar day standard to requirements related to
complaints, as well as to appeals and grievances. It would therefore be
inconsistent to switch to a business day standard when codifying CTM
resolution requirements.
We also do not share the commenter's concern that contacting
complainants before a complaint has been resolved would be premature or
confusing. As discussed previously, one of the major purposes of
requiring organizations to contact individuals filing complaints before
the complaint has been resolved is to ensure that the complainant knows
that the organization has received and is working to resolve the
complaint. We do not believe such communications would be confusing for
beneficiaries.
However, we do recognize that a three-calendar day requirement to
contact beneficiaries is a new requirement that may prove difficult for
organizations to adhere to and that it may not significantly improve
the beneficiary experience such that burden is sufficiently outweighed.
Based on these comments, we are finalizing a slightly longer deadline
by which organizations must attempt to contact individuals filing non-
immediate need complaints as finalized Sec. Sec. 422.125(c) and
423.129(c) require organizations to attempt to contact the complainant
within 7 calendar days of the organization being assigned the complaint
from the CTM. We believe that this strikes a balance between providing
individuals timely information regarding the handling of their
complaints with plans' valid concerns about being able to meet a
shorter timeframe. We also believe that this will address commenter's
concerns about the difficulty of contacting beneficiaries on non-
business days--it is unusual for an organization to have more than two
or three consecutive non-business days in a 7-day period, so
organizations should be able to meet the longer 7-day timeframe
regardless of whether a complaint was received immediately before a
weekend or holiday.
Final Decision: We thank commenters for their input. We note that
comments were generally supportive, with many commenters representing
plans requesting more flexibility and some commenters representing
beneficiaries and providers requesting more stringent requirements and
improved transparency. We received several comments requesting greater
public transparency for CTM complaints and increased scrutiny of plans'
handling of appeals and grievances that were out of scope for the
proposal, but which we will take into account as we continue to monitor
plan performance in these areas. Based on the comments received and for
the reasons outlined in the proposed rule and our responses to
comments, we are finalizing the proposed rule with four significant
modifications: (1) changing the requirement to make contact to a
requirement to attempt contact, (2) adding language that permits the
extension of time to resolve non-immediate need and non-urgent
complaints that also qualify as non-expedited grievances in a manner
consistent with the extension permitted for grievances under Sec. Sec.
422.564, 422.630, and 423.564, (3) adding language that requires
organizations to adhere to the shortest timeframe required by the
regulation for CTM complaints and grievances when a CTM complaint also
qualifies as a grievance; and (4) requiring that organizations contact
individuals filing complaints within 7 calendar days rather than 3
calendar days.
N. Changes to an Approved Formulary--Including Substitutions of
Biosimilar Biological Products (Sec. Sec. 423.4, 423.100, 423.104,
423.120, 423.128, and 423.578)
Section 1860D-11(e)(2) of the Act provides that the Secretary may
only approve Part D plans if certain requirements are met, including
the provision of qualified prescription drug coverage. Section 1860D-
11(e)(2)(D) of the Act specifically permits approval only if the
Secretary does not find that the design of the plan and its benefits,
including any formulary and tiered formulary structure, are likely to
substantially discourage enrollment by certain Part D eligible
individuals. Section 1860D-4(c)(1)(A) of the Act requires ``a cost-
effective drug utilization management program, including incentives to
reduce costs when medically appropriate.'' Lastly, section 1860D-
4(b)(3)(E) of the Act requires Part D sponsors to provide ``appropriate
notice'' to the Secretary, affected enrollees, physicians, pharmacies,
and pharmacists before removing a covered Part D drug from a formulary
or changing the preferred or tiered cost-sharing status of such a drug.
In section III.Q., Changes to an Approved Formulary, of the
December 2022 proposed rule, we proposed regulations related to (1)
Part D sponsors obtaining approval to make changes to a formulary
already approved by CMS, including extending the scope of immediate
formulary substitutions (also generally referred to as immediate
substitutions herein); \45\ and (2) Part D
[[Page 30512]]
sponsors providing notice of such changes.
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\45\ In the subsequent November 2023 proposed rule, we noted the
distinction between formulary substitutions made by a plan sponsor
and product substitutions made by a pharmacist at the point of
dispensing. As we described in section III.F.2.a.(2) of the November
2023 proposed rule, state laws govern the ability of pharmacists to
substitute biological products at the point-of-dispensing. By
contrast, the Secretary's statutory authority under section 1860D-
11(e)(2) of the Act governs approval of, and by extension any
changes to, Part D formularies. The provisions we describe herein
strictly apply to changes to Part D formularies made by plan
sponsors, and do not apply to substitutions made by pharmacists at
the point of dispensing.
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For reasons discussed therein, the December 2022 proposed rule
proposed regulatory changes on how to obtain approval to make changes
to a formulary already approved by CMS and to provide notice of such
changes. We proposed to codify, with some revisions, longstanding sub-
regulatory guidance and terminology specifying when and how Part D
sponsors can obtain approval to make negative formulary changes and the
enrollees to whom these changes would apply.
Approval of formulary changes: Specifically, we proposed to codify
our existing practice with respect to CMS review and approval of
negative formulary changes by proposing in Sec. 423.120(e) that Part D
sponsors may not make any negative formulary changes to the CMS-
approved formulary except as specified in the regulation. We proposed
to codify longstanding policy at proposed Sec. 423.120(e)(3)(i), to
permit each Part D sponsor that has submitted a maintenance change
request to assume that CMS has approved the request if it does not hear
back from CMS within 30 days of submission, and at Sec.
423.120(e)(3)(ii) to specify that Part D sponsors must not implement
any non-maintenance changes until they receive notice of approval from
CMS. We also proposed to codify our longstanding policy that affected
enrollees are exempt from approved non-maintenance changes for the
remainder of the contract year at Sec. 423.120(e)(3)(ii).
In support thereof, we proposed to define ``negative formulary
changes'' to Part D drugs in Sec. 423.100 to include drug removals,
moves to higher cost-sharing tiers, and adding or making more
restrictive prior authorization (PA), step therapy (ST), or quantity
limit (QL) requirements. We proposed to specify that negative formulary
changes can be classified in one of three categories, which we also
proposed to define in that same section as--
``Maintenance changes,'' which we proposed to define to
encompass seven types of changes including drug substitutions that do
not meet our requirements of immediate substitutions under Sec.
423.120(e)(2)(i); changes based on particular events such as certain
FDA actions, long-term shortages, and new clinical guidelines or
information, or to promote safe utilization; or adding PA to help
determine Part B versus Part D coverage;
``Non-maintenance changes,'' which we proposed to define
as negative formulary changes that are not maintenance changes or
immediate negative formulary changes; or
``Immediate negative formulary changes,'' a newly coined
term that we proposed to encompass all types of immediate substitutions
or market withdrawals under Sec. 423.120(e)(2)(i) or (ii)
respectively.
As an exception to the general rule requiring prior CMS approval of
formulary changes, our current regulations permit immediate generic
substitutions and the removal of drugs ``deemed unsafe'' by FDA or
``removed from the market by their manufacturer.'' We proposed in the
December 2022 proposed rule to move and incorporate that regulation
text as follows: In Sec. 423.120(e)(2)(i), we proposed to permit
``immediate substitutions,'' meaning Part D sponsors could make
immediate generic substitutions as well as substitute a new
``interchangeable biological product'' for its corresponding reference
product; a new ``unbranded biological product'' for its corresponding
brand name biological product; and a new ``authorized generic'' for its
corresponding brand name equivalent. We proposed to support this
proposal by defining the above quoted terms in Sec. 423.4; identifying
the corresponding relationships (including the previously permitted
generic substitutions) in our definition of a ``corresponding drug'' in
Sec. 423.100; and also defining ``biological product,'' ``brand name
biological product,'' and ``reference biological product'' in Sec.
423.4. In proposing in Sec. 423.120(e)(2)(ii) to continue to permit
plans to immediately remove from their formulary any Part D drugs
deemed unsafe by FDA or withdrawn from sale by their manufacturer, we
proposed to newly describe these changes as ``market withdrawals.''
Under Sec. 423.120(e)(2), as proposed in the December 2022 proposed
rule, Part D sponsors meeting our requirements for immediate
substitutions and market withdrawals would be able to make these
changes immediately without submitting negative change requests to CMS.
However, proposed Sec. 423.120(f)(2) and (3) would require Part D
sponsors to provide advance general notice of such changes and to
submit specific changes with their next required or scheduled CMS
formulary updates.
We proposed in respective Sec. Sec. 423.120(b)(3)(i)(B) and
423.120(e)(4) to conform our regulations such that the same transition
and timing rules would apply for all immediate negative formulary
changes: as proposed, all immediate negative formulary changes could
take place at any time (previously this exception only applied to
immediate generic substitutions and market withdrawals) and Part D
sponsors would not need to provide a transition supply (previously we
only specified in regulation that this exception applied to immediate
generic substitutions).
We also proposed to update and move to a new place the current
regulation at Sec. 423.120(b)(6), which prohibits Part D sponsors from
making certain changes from the start of the annual enrollment period
to 60 days after the beginning of the contract year. We proposed to
update such regulation at Sec. 423.120(e)(4) to specify that plans
cannot make negative formulary changes during the stated time period
except, as noted earlier, for immediate negative formulary changes
(that is, immediate substitutions or market withdrawals).
We also proposed miscellaneous changes in Sec. 423.100 in support
of the previously described changes, including updating the definition
of ``affected enrollee'' to encompass beneficiaries affected by all
negative formulary changes and moving our current regulatory
description of ``other specified entities'' from Sec. 423.120(b)(5)(1)
to be a standalone definition of the term in Sec. 423.100.
Permitted formulary changes and the IRA: We also proposed in the
December 2022 proposed rule a change related to the Inflation Reduction
Act of 2022 (IRA). Section 11001 of the IRA added section 1860D-
4(b)(3)(I)(i) of Act to require, starting in 2026, Part D sponsors to
include on their formularies each covered Part D drug that is a
selected drug under section 1192 of the Act for which a maximum fair
price is in effect with respect to the plan year. Section 1860D-
4(b)(3)(I)(ii) of the Act clarifies that nothing in clause (i) shall be
construed as prohibiting a Part D sponsor from removing such a selected
drug from a formulary if such removal would be permitted under Sec.
423.120(b)(5)(iv) or any successor regulation. We proposed to identify
Sec. 423.120(e)(2)(i) as the successor regulation to Sec.
423.120(b)(5)(iv) for purposes of section 1860D-4(b)(3)(I)(ii) of the
Act.
Notice of formulary changes: We proposed to move, with some
revisions and streamlining, current regulations on
[[Page 30513]]
notice of changes, and align them with our proposed approval
requirements. Specifically, in Sec. 423.120(f)(1) we proposed to
specify that maintenance and non-maintenance negative formulary changes
would require 30 days' advance notice to CMS, other specified entities,
and in written form to affected enrollees. We proposed to retain and
move to Sec. 423.120(f)(1) an alternative option for Part D sponsors
to provide a month's supply with notice at the point of sale as
specified. We also proposed to move and extend our existing
requirements for immediate generic substitutions to include immediate
substitutions of corresponding drugs and market withdrawals, by
requiring advance general notice of immediate negative formulary
changes at Sec. 423.120(f)(2), followed by written retrospective
notice required under Sec. 423.120(f)(3) to affected enrollees. We
proposed that this retrospective notice be provided to affected
enrollees as soon as possible after a specific change, but by no later
than the end of the month following any month in which a change takes
effect. We proposed at Sec. 423.120(f)(4) to reorganize and renumber
our current requirements for the contents of the direct written notice,
and to provide more flexibility by no longer restricting appropriate
alternative drugs to those in the same therapeutic category or class or
cost-sharing tier. Our proposed revision aimed to make clear that the
contents of the written notice would be largely the same regardless of
the timing: whether Part D sponsors were providing notice before making
a particular change (for maintenance and non-maintenance changes under
Sec. 423.120(f)(1)) or after (for negative immediate changes under
Sec. 423.120(f)(3) as proposed). Section 423.120(f)(5) proposed to
newly specify how to provide advance general notice and specific notice
of changes other than negative formulary changes.
We also proposed conforming amendments to update Sec.
423.128(d)(2)(iii) to require online notice of ``negative formulary
changes'' and to update cross citations in Sec. Sec.
423.104(d)(2)(iv)(A)(6) and 423.128(e)(6) to reflect the fact we
proposed to move the bulk of our requirements on formulary changes from
Sec. 423.120(b)(5) and (6) to Sec. 423.120(e) and (f). We proposed to
revise text at Sec. 423.120(b)(5) and (6) to indicate that Part D
sponsors must provide notice of formulary changes and can only make
changes to CMS-approved formularies as specified, respectively, in
Sec. 423.120(f) and (e).
After receiving comments on the December 2022 proposed rule, we
identified a limited number of changes that we wanted to make to that
proposed regulatory text, which we proposed in the November 2023
proposed rule. We noted that the November 2023 proposed rule reflected
our intent to consider the formulary change proposals in section III.Q.
of the December 2022 proposed rule, as updated by the limited changes
proposed in the November 2023 proposed rule, for inclusion in future
rulemaking.
In the November 2023 proposed rule, we noted that commenters on
section III.Q. of the December 2022 proposed rule did not agree on the
requirements that should apply to formulary substitutions of Food and
Drug Administration (FDA) approved and licensed biosimilar biological
products. Different commenters submitted divergent requests that
formulary substitutions of biosimilar biological products other than
interchangeable biological products be treated as immediate
substitutions, be treated as maintenance changes, or not be permitted
whatsoever. Our proposed regulatory text in the December 2022 proposed
rule only addressed substitution of interchangeable biological products
and unbranded biological products, and did not specify how Part D
sponsors could treat substitution of biosimilar biological products
other than interchangeable biological products. We stated that we
believed, in part because of the interest in the topic, it would be
appropriate to propose changes then to solicit comment directly on the
subject.
Accordingly, we proposed in the November 2023 proposed rule to
update the regulatory text we proposed in the December 2022 proposed
rule to the extent necessary to permit Part D sponsors to treat
substitutions of biosimilar biological products other than
interchangeable biological products as ``maintenance changes,'' as
defined in the December 2022 proposed rule. We also proposed to define
a new term, ``biosimilar biological product,'' distinct from our
previously proposed term ``interchangeable biological product.'' We
also proposed some technical changes to the term ``interchangeable
biological product.'' We believe these proposals from the November 2023
proposed rule add to the December 2022 proposed rule to increase access
to biosimilar biological products in the Part D program, consistent
with the Biden-Harris Administration's commitment to competition as
outlined in Executive Order (E.O.) 14306: ``Promoting Competition in
the American Economy.'' \46\
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\46\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.
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We specifically proposed to define biosimilar biological products
consistent with sections 351(i) and (k) of the Public Health Service
Act (PHSA) to include interchangeable biological products. As we noted
in section III.F.2.b.(1) of the November 2023 proposed rule, in section
III.Q of the December 2022 proposed rule, we originally proposed to
permit maintenance changes and immediate substitutions involving
interchangeable biological products. In the November 2023 proposed
rule, we also proposed to allow substitution of biosimilar biological
products other than interchangeable biological products for reference
products as a maintenance change. To ensure clarity, we proposed in the
November 2023 proposed rule to address the application of these
policies to interchangeable biological products and to biosimilar
biological products other than interchangeable biological products in
separate paragraphs of the proposed definition of maintenance change in
Sec. 423.100.
Further, in considering a comment on immediate formulary
substitutions we received on the December 2022 proposed rule, we also
determined it would be appropriate to propose in the November 2023
proposed rule to provide Part D sponsors with additional flexibility
with respect to the timing requirements for maintenance changes and
immediate substitutions than as originally proposed in the December
2022 proposed rule. Rather than requiring a Part D sponsor to add a
``corresponding drug'' and make a ``negative formulary change'' (as
both such terms are defined in the December 2022 proposed rule) to its
related drug ``at the same time'' for a maintenance change, we proposed
in the definition of maintenance change in Sec. 423.100(1) in the
November 2023 proposed rule to allow Part D sponsors to make a negative
formulary change to the related drug within 90 days of adding the
corresponding drug. We made similar changes in Sec. 423.100(2)
requiring negative formulary changes be made to a reference product
within 90 days of adding a biosimilar biological product other than an
interchangeable biological product. This means that the same
flexibility is available when Part D sponsors make any biosimilar
biological product substitutions that are maintenance changes. Lastly,
we also
[[Page 30514]]
proposed to make similar adjustments to the timing requirements for
immediate substitutions of corresponding drugs in Sec.
423.120(e)(2)(i). Specifically, as proposed in the November 2023
proposed rule, Part D sponsors would be able to make negative formulary
changes to a brand name drug, a reference product, or a brand name
biological product within 30 days of adding a corresponding drug (as
such terms are defined in the December 2022 proposed rule, as updated
by the November 2023 proposed rule).
Additionally, we also proposed in the November 2023 proposed rule a
technical change to our proposed definition of ``corresponding drug''
in Sec. 423.100 included in the December 2022 proposed rule to specify
that the reference to an ``unbranded biological product of a biological
product'' is intended to refer to ``an unbranded biological product
marketed under the same BLA [Biologics License Application] as a brand
name biological product.''
Lastly, we proposed in the November 2023 proposed rule to address a
technical change to the regulatory text proposed in the December 2022
proposed rule to specify in introductory language to the Sec. 423.100
proposed definition of ``maintenance change'' that maintenance changes
apply with respect to ``a covered Part D drug.''
As discussed earlier, we noted in the November 2023 proposed rule
that we intended to consider section III.Q. of the December 2022
proposed rule, as updated by the limited proposed changes discussed in
that November 2023 proposed rule, for inclusion in future rulemaking.
Even though we acknowledged in the November 2023 proposed rule at a
high level some comments regarding the December 2022 proposed rule that
informed the limited changes we proposed in the November 2023 proposed
rule, we stated that if we were to move forward in future rulemaking,
we would respond to comments received in response to section III.Q. of
the December 2022 proposed rule, as well as comments received in
response to the changes proposed in section III.F. of the November 2023
proposed rule. We summarize those comments, and our responses as
follows:
Comment: Many commenters voiced general and specific support for
the proposals both in the December 2022 and November 2023 proposed
rules. Somewhat fewer commenters offered criticism, in whole or in
part, including some commenters who generally supported the proposals
but had concerns with specific parts.
Response: We thank supporters for their support and all commenters
for providing us with their feedback. We address specific comments
about the proposals in more detail below.
Comment: Several commenters supported that our proposal in the
December 2022 proposed rule codified rules on formulary changes in one
place, with a few appreciating the clarity. A few supporters also
specifically supported certain proposed definitions such as ``negative
formulary change''; ``maintenance change'' and ``non-maintenance
change''; and ``affected enrollee.'' Conversely, a few commenters
suggested that we change certain definitions (as discussed in specific
comments and responses below). Another commenter stated that the policy
was too complex and required streamlining rather than a discussion in
two preambles, and suggested we use a chart and that we not only
explain the relationship of our proposals to Chapter 6 of the
Prescription Drug Benefit Manual \47\ but also update that manual
chapter. A few other commenters stated that the proposed regulation did
not conform to the guidance in Chapter 6.
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\47\ https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf.
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Response: We thank those commenters who supported our proposal and
specific definitions. One of our major goals with this proposal was to
codify in one place guidance that had long stood apart from related
regulations and conform the two in a reorganized regulation. We
acknowledge that the policy related to changes to an approved formulary
has been and remains intricate and that the December 2022 proposed rule
and November 2023 proposed rule addressed a wide range of issues
related to formulary changes, including with respect to conforming
current regulations and longstanding guidance, while proposing new
policies (for example, related to substitutions of biosimilar
biological products). We will take the chart suggestion under
consideration for any future updates to guidance and Chapter 6, but we
do not think that the final rule is the appropriate location for such a
chart. Where there is a conflict between the regulations and the manual
chapter, the regulations supersede and take precedence. We discuss
substantive issues related to interpretations of manual guidance later
in these responses.
Comment: A commenter stated that CMS should not distinguish between
authorized generic drugs and unbranded biological products in formulary
placement policy because they are approved or licensed (respectively)
under the same New Drug Application (NDA) or BLA as the brand name drug
and, other than the fact that they are not labeled with a brand name on
their label, they are the branded product. A product that is identical
in all respects because it is approved or licensed under the same NDA
or BLA should not be considered a ``negative'' formulary change,
immediate or otherwise.
Response: While the commenter is technically correct that we could
look at formulary replacement of a branded drug product with its
authorized generic or unbranded biological product, as applicable, as
not being a formulary change at all, we do not think this would be a
meaningful distinction for enrollees.
When an enrollee goes to the pharmacy, they would not know the
difference between an authorized generic drug or a generic drug as
those terms will be defined in Sec. 423.4. Similarly, if the name
changes from the branded biological product to an unbranded biological
product licensed under the same BLA, an enrollee might not know the
difference between the unbranded biological product and a biosimilar of
the branded biological product. Consequently, to avoid enrollee
confusion, we are finalizing a rule that treats all these replacements
as substitutions.
Comment: A commenter thanked CMS for the steps we proposed to take
to eliminate ``barriers'' for patients to access lower-cost treatment
options by permitting plans to add biosimilar biological products to
formularies as they become available, while another commenter suggested
that requiring 30 days' notice before the effective date of maintenance
changes was an unnecessary ``barrier'' to patients getting the exact
treatment they need.
Response: There have never been any barriers to Part D sponsors
adding at any time to their formularies any Part D drugs that they
think their enrollees need for treatment (such as new biosimilar
biological products) or from adding those drugs on lower cost-sharing
tiers or with fewer restrictions than those that apply to related drugs
already on the formulary (such as reference products). Our guidance in
section 30.3.3.1 of Chapter 6 of the Prescription Drug Benefit Manual
states that Part D sponsors may add any Part D drug to their
formularies at any time. We note, however, that we have and continue to
maintain approval and notice requirements that Part D sponsors must
follow when they seek to remove
[[Page 30515]]
a drug or make negative formulary changes to drugs already on the
formulary and that enrollees may currently be taking.
Comment: Several commenters stated we should not permit any midyear
changes to formularies because enrollees enroll in plans with the
expectation that they will have access to the same drugs for the
entirety of the plan year and to permit any changes is tantamount to a
bait and switch. A few commenters suggested that CMS should not permit
any midyear formulary changes because enrollees cannot leave plans
midyear, with one commenter requesting a special enrollment period
(SEP) for enrollees to join other plans midyear following formulary
changes.
Response: We do not agree that formularies should be static for the
plan year. As discussed more fully in section III.Q.2.a. of the
December 2022 proposed rule, section 1860D-4(b)(3)(E) of the Act itself
contemplates that Part D sponsors may make changes to formularies
during a plan year. For example, there is a need for certain changes to
an approved formulary to reflect the availability of new drug therapies
as well as for Part D sponsors to take advantage of opportunities to
improve safety and quality and lower costs.
We understand that enrollees sign up for plans with the expectation
of continued access to their drugs. Accordingly, we have established,
and are codifying in this final rule, approval and notice requirements
for different kinds of formulary changes. We are permitting the
following changes to drugs currently provided on a formulary: (i)
immediate substitutions of corresponding drugs, such as new generic
drugs for brand name drugs and interchangeable biological products for
reference products; (ii) immediate removal of drugs withdrawn from sale
by their manufacturer or that FDA determines to be withdrawn for safety
or effectiveness reasons; (iii) maintenance changes, which include
substitutions of generic drugs for brand name drugs that are not being
made on an immediate substitution basis; substitutions of
interchangeable biological products for their reference products; and
removals based on long term shortage and market availability; (iv) non-
maintenance changes, which can only be made if CMS provides explicit
approval and which do not apply to enrollees currently taking the
applicable drug; and (v) enhancements to the formulary (for instance,
Part D sponsors can add a drug to the formulary or lower its cost-
sharing), which can be made at any time.
We believe these requirements strike the appropriate balance
between protecting enrollees by ensuring they have adequate notice of
changes to their plan's formulary, while ensuring Part D sponsors have
the flexibility to ensure formularies reflect the latest market
developments and clinical guidelines. We monitor negative change
request submissions and changes to HPMS formularies as a matter of
standard operations, and we are not aware of widespread complaints from
beneficiaries stating they have been subject to formulary changes
without proper notice. Part D sponsors submit all maintenance and non-
maintenance changes to CMS for approval and, even if approved, non-
maintenance changes do not apply to enrollees currently taking a drug
for the remainder of the plan year. In addition, enrollees can avail
themselves of the formulary exception process if the enrollee or their
physician believes it is necessary that the enrollee remain on a drug
that is subject to a midyear change. The request for a SEP based on a
midyear formulary change is out of scope.
Comment: A few commenters specifically supported the time periods
within which we required specific notice. A few other commenters
pointed to the fact that section 30.3.4.1 of Chapter 6 of the
Prescription Drug Benefit Manual requires 60 days' advance direct
notice and asked that we conform any final regulation to that guidance.
Response: We appreciate commenters' support for the specific notice
time periods that we proposed. Our intent in the December 2022 proposed
rule was to codify much of our longstanding guidance. However, while
Chapter 6 of the Prescription Drug Benefit Manual specifies a
requirement for 60 days' advance direct notice, the current Sec.
423.120(b)(5)(i) has required Part D sponsors to provide 30 days'
notice rather than 60 days' notice for formulary changes since the
effective date of the ``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'' final rule, which appeared in the
April 16, 2018 Federal Register (hereinafter referred to as the April
2018 final rule). Where there is a conflict between the regulations and
the manual chapter, the regulations supersede and take precedence. The
same considerations for adopting a 30-day requirement that we discussed
in the 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,'' which appeared in the
November 28, 2017 Federal Register (82 FR 56413) (hereafter referred to
the November 2017 proposed rule), and which led us to finalize the
April 2018 final rule, strike us as applicable today. Additionally, we
have several years of operational experience with the requirements of
the April 2018 final rule, for which we have not received widespread
complaints.
As discussed in section II.A.14 of the November 2017 proposed rule,
we believe the 30 days' notice provides the necessary beneficiary
protections and affords enrollees sufficient time to either change to a
covered alternative drug or to obtain needed prior authorization or an
exception for the drug affected by the formulary change. CMS
regulations establish robust beneficiary protections in the coverage
determination and appeals processes. CMS requires at Sec. 423.568(b)
that standard coverage determinations are completed within 72 hours and
at Sec. 423.572(a) that expedited coverage determinations for exigent
circumstances are completed within 24 hours. If an initial coverage
determination is unfavorable, the enrollee or prescriber can request a
standard redetermination, which in accordance with Sec. 423.590(a)
must be completed within 7 days of receipt of the request, or an
expedited redetermination, which in accordance with Sec. 423.590(d)(1)
must be completed within 72 hours. (See a later response addressing
comments supporting and opposing the advance direct notice requirements
we would require for Part D sponsors seeking formulary to substitution
of biosimilar biological products for reference products as maintenance
changes.)
Comment: A commenter suggested that we no longer require any
notification of immediate substitutions because it would be confusing
to send a notice about a change that already took effect. In contrast,
another commenter suggested that permitting sponsors to provide notice
as late as almost two months after an immediate formulary substitution
takes effect is too long a time period and asked that we not finalize
the requirement to provide notice ``no later than the end of the month
following any month in which a change takes effect.'' They suggested
that such notice be provided on or before the effective date of the
change. A few other commenters recommended that there should be advance
direct notice for any changes made to a
[[Page 30516]]
formulary, including immediate substitutions.
Response: We disagree with the suggestion to do away entirely with
requiring direct notice to affected enrollees of immediate
substitutions. It is still important that affected enrollees learn
about formulary changes made to the drugs they take, even in the
context of immediate substitutions that may have already taken effect.
For immediate substitutions, under proposed Sec. 423.120(f)(2), and
under current Sec. 423.120(b)(5)(iv)(C), permitting immediate
substitutions of generic drugs for brand name drugs, Part D sponsors
must provide advance general notice in beneficiary communications
materials describing the types of changes that can be made without
giving advance direct notice of specific changes, including to
enrollees currently taking a drug subject to substitution. Part D
sponsors must specify in this advance general notice that affected
enrollees will receive direct notice of any specific changes made to
drugs they take, which may arrive after the change is effective, and
that will explain steps they may take to request coverage
determinations, including exceptions. Proposed Sec. 423.120(f)(3) and
current Sec. 423.120(b)(5)(iv)(E) require that Part D sponsors provide
retrospective direct notice to affected enrollees. Additionally, Sec.
423.128(d)(2)(ii) requires Part D sponsors to update their online
formulary monthly. However, we decline to require that notice be
provided in advance or at the same time as the effective date of an
immediate substitution. A central reason that we do not require advance
direct notice of specific changes in these cases is to support and
encourage Part D sponsors to add corresponding drugs to their
formularies as soon as possible. We are not aware of a notable volume
of enrollee complaints related to the notice requirements for immediate
substitutions of generic drugs under the current Sec.
423.120(b)(5)(iv), which we finalized in the April 2018 final rule to
permit Part D sponsors to send retrospective direct notice of immediate
generic substitutions to affected enrollees after such changes take
effect. We do not believe that extending similar rules to immediate
substitutions of authorized generics, interchangeable biological
products, and unbranded biological products will have different results
for enrollees and, therefore, we decline to change that regulation now
or to require different notice requirements for immediate substitutions
of products that qualify as corresponding drugs other than generics.
Comment: A commenter stated that there was a technical error in our
definition of maintenance change proposed in Sec. 423.100 because it
failed to indicate that corresponding drugs must be newly available to
align with sub-regulatory guidance at Chapter 6, section 30.3.3.1, of
the Prescription Drug Benefit Manual, which the commentor interprets as
requiring that maintenance changes involving brand-name drugs being
substituted with generic drugs to be limited to newly available generic
drugs only.
Response: The comment pointing to a technical error with respect to
maintenance changes misinterprets our guidance. While section 30.3.3.1
of Chapter 6 provides an example of a maintenance change involving a
new generic drug, our sub-regulatory guidance has not limited
maintenance changes to only newly approved generic drugs. Notably,
section 30.3.3.2 states that ``CMS will generally give positive
consideration to the following types of formulary changes'' including
``[r]emoval or placement in a less preferred tier of a brand name drug
upon the availability and addition of an A-rated generic or multi-
source brand name equivalent, at a tier with lower cost to the
beneficiary.'' It does not require that generic drugs added to the
formulary as part of maintenance changes be newly available. However,
to make an immediate substitution, the generic drug being added to the
formulary must be newly available.\48\ Although some sponsors might
choose to make maintenance changes only to substitute newly marketed
generics, we do not want to preclude sponsors from making maintenance
changes to add generics that are not newly available because there are
other appropriate factors that Part D sponsors could consider when
determining when to make such formulary substitutions. For example, a
Part D sponsor might not make a formulary substitution when a generic
first becomes available on the market because there may not be a
significant price difference between the first generic and brand name
drug. However, as more generics are introduced to the market, the price
of all generic drugs may decrease to the point a Part D sponsor could
later decide a formulary change would be advantageous.
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\48\ Section 423.120(b)(5)(iv) requires in part that, ``The Part
D sponsor previously could not have included such therapeutically
equivalent generic drug on its formulary when it submitted its
initial formulary for CMS approval consistent with paragraph (b)(2)
of this section because such generic drug was not yet available on
the market.'' In the proposed regulatory reorganization, this
requirement would appear at Sec. 423.120(e)(2)(i) and would apply
to immediate substitutions of corresponding drugs.
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Comment: A few commenters supported all or parts of our proposal,
as updated in the November 2023 proposed rule, to require Part D
sponsors to remove, or otherwise apply a negative formulary change to,
a brand name drug, reference product, or brand name biological product
within 30 days of adding a corresponding drug as part of an immediate
substitution (under proposed Sec. 423.120(e)(2)(i)) or within 90 days
of adding a corresponding drug or biosimilar biological product as part
of a maintenance change (under subparagraphs (1) and (2), respectively,
of the proposed Sec. 423.100 definition of maintenance change). A few
commenters did not support the change as proposed but had differing
views on what the policy should be. One commenter stated that we must
continue to require immediate substitutions to take place ``at the same
time'' because there was no evidence that the existing requirement
created a problem that needs to be fixed. A few other commenters asked
that we provide more time than a 30- or 90-day window within which to
apply a negative formulary change to a brand name drug or reference
product after adding a corresponding drug or biosimilar biological
product other than an interchangeable biological product to the
formulary. Another commenter said that we should apply the same 90-day
window to both types of changes because implementing different time
frames within which to complete immediate substitutions and maintenance
changes could be burdensome for Part D sponsors and confuse enrollees,
pharmacies, and providers. Another commenter stated that the 30- and
90-day windows did not provide enough time for Part D sponsors to
evaluate new products' attributes and availability in the marketplace,
update systems, and consider market condition for pricing changes (for
instance, whether a generic price will drop even more after additional
entries). Another commenter asked that we monitor this flexibility on
an annual basis to ensure providing more time to complete immediate
substitutions would not permit Part D sponsors to game the system by
delaying coverage for generic drugs.
Response: We appreciate comments on both sides of the issue. We
think 30- and 90-day limits to make negative formulary changes after
adding a drug as part of an immediate substitution or maintenance
change under
[[Page 30517]]
Sec. 423.120(e)(2)(i) or subparagraphs (1) and (2) of the definition
of a maintenance change in Sec. 423.100, respectively, are reasonable.
As for evidence to support our proposal, we proposed these
flexibilities in our November 2023 proposed rule in response to a
comment we received in response to our December 2022 proposed rule that
stated it was difficult to make substitutions ``at the same time''. The
commenter suggested that while they could quickly add a drug to the
formulary, before removing or making negative formulary changes to a
drug currently on the formulary they needed time to, for instance,
evaluate new product attributes such as formulation,
interchangeability, and pricing; determine sufficient availability in
the marketplace; communicate changes; and update systems. In response
to our November 2023 proposed rule, the original commenter repeated its
concerns and a couple of other commenters also asked for more time.
Additionally, a couple of commenters specified that they supported the
90-day window. We believe these comments, as well as our appreciation
of formulary management considerations and the practicalities of
programming internal systems, provide sufficient evidence to support
the proposed timeframes.
To respond to commenters to the November 2023 proposed rule that
asked for longer times frames within which to make negative changes to
the drug on the formulary, the purpose of immediate substitutions is to
support quick action, in which Part D sponsors put a newer
corresponding drug on the formulary right away and remove the drug it
replaces as soon as possible. To encourage this quick action, we permit
Part D sponsors implementing immediate substitutions to provide notice
to affected enrollees of the specific changes after they have taken
effect. For that reason, we continue to encourage that immediate
substitutions take place ``at the same time.'' Extending the time
within which to remove a brand name drug, brand name biological
product, or reference product past 30 days would negate the concept of
an ``immediate'' change.
While maintenance changes are not as urgent a matter, it would be
challenging for CMS to monitor negative formulary changes that take
place more than 90 days after adding a corresponding drug or biosimilar
biological product other than an interchangeable biological
product.\49\ Further, the more days that pass after a Part D sponsor
adds a replacement drug and before it removes or makes another other
negative formulary change to the drug on the formulary it will replace,
the more the two actions seem less like a substitution of one drug for
another so much as two unrelated formulary changes.
---------------------------------------------------------------------------
\49\ Please note that the definition of corresponding drug in
Sec. 423.120 includes interchangeable biological products.
---------------------------------------------------------------------------
In response to the concern that implementing different time frames
to make immediate substitutions versus maintenance changes creates a
burden for Part D sponsors, they are not required to take advantage of
the flexibility offered. The respective 30- and 90-day timeframes to
make a negative formulary change after adding a corresponding drug to
the formulary are limits, not requirements. Under the proposal, a Part
D sponsor could decide to ensure all immediate substitutions and
maintenance changes take place ``at the same time.''
We have carefully considered the commenter's concern that
implementing different windows could confuse enrollees, providers, and
pharmacies. It is possible that Part D sponsors are currently removing
brand name drugs after the date they add corresponding generic drugs.
As discussed in our November 2023 proposed rule, there has been a
longstanding operational limitation that Part D sponsors remove a brand
name drug from the formulary within 90 days of adding a generic drug.
We also do not believe that enrollees will be aware of the exact moment
that a Part D sponsor decides to add a drug. Rather, affected enrollees
will most likely learn that their plan will be making, or already has
made, a formulary substitution either when they receive direct notice
or request a refill on a brand name drug or reference product. We are
not aware that the current limitation has resulted in undue confusion
and do not expect that to be the case with this rule. We will also
continue to review beneficiary complaints in our Complaint Tracking
Module, should any complaints arise related to confusion about the
different timeframes.
Lastly, we do not believe that monitoring immediate substitutions
on an annual basis would provide a means to determine or address if
Part D sponsors are gaming the system by delaying coverage for generic
drugs because this provision has not and will not require Part D
sponsors to offer generic drugs.
Comment: A commenter asked that we clarify whether we mean business
or calendar days in all instances that apply a number of days to a
requirement.
Response: For regulations related to notice and approval of changes
to approved formularies, any requirements that refer to days are a
reference to calendar days. This includes Sec. 423.120(b)(5) and (6)
and proposed (e) and (f) and related definitions including
``maintenance changes'' as defined in Sec. 423.100. We believe the use
of calendar days for regulations related to notice and approval of
changes to approved formularies is appropriate because they are easier
for CMS, plan sponsors, enrollees, and others to track.
Comment: Several commenters stated that maintenance changes did not
require prior approval from CMS, with a commenter characterizing such
changes as ``near-immediate.''
Response: While it is technically true that Part D sponsors may not
receive explicit notice of approval of a negative change request for a
maintenance change, the proposed Sec. 423.120(e)(3)(i) would codify
longstanding sub-regulatory guidance from Chapter 6, section 30.3.3.2,
of the Prescription Drug Benefit Manual, under which Part D sponsors
may assume a maintenance change request has been approved if they do
not hear from CMS within 30 days of submission. This is in contrast to
our longstanding policy for non-maintenance changes, which we proposed
to codify at Sec. 423.120(e)(3)(ii), under which Part D sponsors must
not implement non-maintenance changes until they receive explicit
notice of approval of the negative change request from CMS. Regardless
of whether approval can be assumed after a period of time, contrary to
the commenters' assertions, both longstanding guidance and our proposal
require Part D sponsors to submit maintenance and non-maintenance
change requests to CMS for approval. Moreover, it is important to note
that approval of maintenance changes is not automatic. While we noted
in our preamble to the November 2023 proposed rule that most such
requests are routinely approved, CMS endeavors to review all requests
and we have denied maintenance change requests, albeit infrequently,
before the end of the 30-day approval period. Furthermore, we have
instituted edits within the HPMS Negative Change Request module which
can raise flags on issues that require our review or in some cases will
prevent Part D sponsors from submitting a negative change request that
would not meet CMS requirements. Lastly, should a Part D sponsor make a
change to their HPMS
[[Page 30518]]
formulary file that is inconsistent with an approved (or assumed
approved) negative change request, CMS may deny the formulary change
via the line-level review process.
Comment: A couple of commenters asked CMS to expand the proposed
definition of maintenance changes to include as additional categories
of maintenance changes (1) applying PA to exclude non-Part D drugs or
to reflect new indications or (2) placing PA or ST on protected class
drugs specified under section 1860D-4(b)(3)(G)(iv) of the Act to ensure
they are used for protected indications. Another commenter requested
that CMS allow prescribers to continue to prescribe the reference
product to an enrollee currently taking the affected product without a
lengthy prior authorization requirement.
Response: We did not propose to permit the midyear addition of PA
to prevent use of drugs for excluded uses, when a new indication is
approved, or to permit Part D sponsors to cover only protected
indications for protected class drugs. We appreciate commenters raising
these issues, and we may take some of these suggestions into
consideration for future rulemaking. Generally, we expect Part D
sponsors to submit such PA or ST requirements for review and approval
with their annual formulary submissions. Additionally, under current
policy, Part D sponsors can submit these types of requests midyear as
non-maintenance change requests for consideration by CMS. In the
absence of a PA requirement on a particular drug, Part D plans may
conduct retrospective review under Sec. 423.153(c)(3) to confirm that
a dispensed drug is being used for a medically accepted indication. We
note that non-protected indications for protected class drugs are not
excluded from Part D coverage as long as the use is for a medically
accepted indication, as defined in section 1860D-2(e)(4) of the Act.
Our intent is to allow Part D sponsors to promote utilization of
biosimilar biological products. We believe the current PA process
continues to be the appropriate mechanism for providers to provide the
necessary justification for continuing on a reference product.
Comment: A few commenters offered divergent views on our proposal
that the list of alternative drugs, which we require under the current
Sec. 423.120(b)(5)(ii)(D) to be provided as part of the written notice
of a formulary change, no longer be limited under our proposed Sec.
423.120(f)(4)(iv) to alternative drugs in the same therapeutic category
or class as the drug to which the negative formulary change applies. A
couple of commenters were concerned that Part D plans would use this
flexibility to switch patients under the immediate substitution rules
to drugs with different forms or modes of therapeutic action. In
contrast, a supporter noted that drugs may span multiple therapeutic
categories and appreciated the extra flexibility provided for Part D
sponsors to negotiate discounts and reduce overall prescription drug
spending. Another supporter asked that we permit clinical experts
outside of the P&T committee to identify appropriate formulary
alternatives because P&T committees only meet quarterly.
Response: We appreciate commenters' support. For commenters that
did not support our proposed policy, we clarify that the current
requirement that Part D sponsors list alternative drugs in Sec.
423.120(b)(5)(ii)(D) addresses a different topic than does the current
regulation Sec. 423.120(b)(5)(iv), which specifies drugs that can be
immediately substituted. Section 423.120(b)(5)(ii) addresses the
content that must be included in notices of change--including a list of
alternatives--but, contrary to the commenters' suggestions, does not
govern what types of drugs can be substituted or the conditions for
making such changes. Rather, Sec. 423.120(b)(5)(iv) governs what types
of drugs can be immediately substituted and the conditions for making
such changes.
While Sec. 423.120(b)(5)(ii) does not govern the types of drugs
that can be substituted, it requires Part D sponsors to list
alternatives. We believe provision of this list could affect treatment
in that it might provide alternatives that an enrollee and their
provider have not considered, or steer the enrollee to certain drugs on
that list given their coverage on their formulary. An enrollee and
their provider can consider the list of alternatives to the drug that
is being removed or otherwise subject to a negative formulary change as
they decide whether to try the new drug added to the formulary, try
another drug that appears on the list of alternatives, or to request an
exception for coverage of the removed drug. As we noted in our
proposal, there can be multiple drug options to treat the same
condition and we believe that the list of alternatives should not limit
possibilities of treatment by a strict adherence to class and category,
particularly since Part D sponsors are not required to use a particular
classification system for their Part D formularies. Therefore, we are
finalizing Sec. 423.120(f)(4)(iv) as proposed.
As to the question regarding who can determine what drug
alternatives exist, we do not believe it is appropriate for Part D
sponsors to outsource consideration of formulary alternatives to
clinical experts outside of the P&T committee. Section 423.120(b)(1)
specifies that a P&T committee must develop and revise the formulary.
Applying a negative formulary change to a drug is a formulary revision,
and we believe that consideration of the formulary in its entirety is
part and parcel of any formulary revision decision. We do not see how,
for example, a decision could be made to remove or apply utilization
management restrictions to a drug without examining which drugs are
being added to or are already on the formulary that could treat the
same conditions as the drug subject to the negative formulary change.
Comment: A couple of commenters supported our proposal in the
December 2022 proposed rule to identify Sec. 423.120(e)(2)(i) as the
successor regulation to Sec. 423.120(b)(5)(iv) under section 1860D-
4(b)(3)(I)(ii) of the Act, as added by the IRA. Another commenter asked
us to clarify expectations for when a Part D drug that is a selected
drug under section 11001 of the IRA is removed from the formulary and
give plans the flexibility to determine lowest price on a drug-by-drug
basis.
Response: We thank the commenters for their support. Section 1860D-
4(b)(3)(I)(i) of the Act requires Part D sponsors to include on their
formularies each covered Part D drug that is a selected drug under
section 1192 of the Act for which a maximum fair price is in effect
with respect to the plan year. Because maximum fair prices will not
take effect until 2026, the formulary inclusion requirement in section
1860D-4(b)(3)(I)(i) of the Act does not apply in 2025. As a result, we
are not finalizing the proposed language in Sec. 423.120(b)(5) to
identify a successor regulation for purposes of section 1860D-
4(b)(3)(I)(ii) of the Act at this time.
It is not within the scope of this provision on formulary changes
to address the request for flexibility to determine the lowest price of
the drug.
Comment: A commenter pointed out that our regulation assumes all
enrollees receive and comprehend notices of midyear formulary changes,
whereas in reality enrollees may experience low health literacy,
language barriers, or cognitive impairments that impede their
understanding of such notices. Furthermore, the commenter noted that
enrollees from socioeconomically disadvantaged communities and those
experiencing major health challenges
[[Page 30519]]
such as rare diseases may not be capable of navigating the exceptions
process. The commenter suggested that, by ignoring health disparities,
our proposed policy for formulary substitution of biosimilar biological
products as maintenance changes could cause disproportionate harm to
vulnerable patient communities.
Response: We certainly appreciate that the health care system,
along with all its complexities, presents significant challenges for
those experiencing health care and other disparities. CMS continues to
take action to address those disparities. However, we do not believe
that our biosimilar biological product policy on maintenance changes
widens health care disparities. In fact, our intent is quite the
opposite. For example, if this proposal improves access to more
biosimilar biological products in the Part D program, it could lead to
greater utilization of lower price biosimilar biological products that
have been determined by FDA to be just as safe and effective as their
reference products.
CMS has implemented various requirements to help protect enrollees,
address disparities, and mitigate confusion and burdens for enrollees,
especially those with low health literacy, language barriers, and
cognitive and other health care impairments. For example, under Sec.
423.2267(a), we require Part D sponsors to provide: translated
materials proactively in any non-English language that at least 5
percent of the beneficiaries in their service area speak, and materials
in alternative formats (such as recordings and braille) to
beneficiaries who are visually impaired. Furthermore, pursuant to Sec.
423.128(d), we require all plans to have call centers to respond to
current and prospective enrollee requests for assistance, and Sec.
423.128(d)(1)(iii) also requires Part D sponsors to provide
interpreters for non-English speaking and limited English proficient
(LEP) individuals at their call centers. States also have established
State Health Insurance Assistance Programs (SHIPs) that can assist
enrollees in navigating their options. Enrollees can also designate a
person to speak to plans on their behalf.
Comment: A commenter requested that we permit Part D sponsors to
immediately substitute a brand name drug for an authorized generic, and
an authorized generic drug for a generic drug, including within the
same plan year. Another commenter asked that we make clear there could
be only one maintenance change for a reference product within a single
plan year to avoid confusion and potential disruption of care. A few
other commenters asked us either to clarify or make sure that Sec.
423.120(e)(2)(i) only permitted substitution of an interchangeable
biological product for a reference product and not substitution of an
interchangeable biological product for another interchangeable
biological product that has the same reference product. Another
commenter asked that we clarify that maintenance changes would only be
allowed for biosimilar biological products for their reference products
and not among different biosimilar biological products that have the
same reference product. Without identifying them all, a commenter asked
for guidance specific to 36 different permutations of formulary change
types it counted among branded and unbranded versions of reference
products and biosimilar biological products. In contrast, another
commenter asked generally how Part D sponsors should treat enrollees
taking a biosimilar biological product that is not the biosimilar
biological product that is covered by the plan.
Response: We would not permit the immediate substitution of a brand
name drug for an authorized generic (that is, applying a negative
formulary change to an authorized generic already on the formulary and
adding a brand name drug to the formulary). Our proposed regulation is
not written to support that substitution. The proposed Sec.
423.120(e)(2)(i) allows Part D sponsors to apply immediate negative
formulary changes to a ``brand name drug. . . . within 30 days of
adding a corresponding drug.'' The proposed definition of
``corresponding drug'' in Sec. 423.100 refers in part to ``a generic
or authorized generic of a brand name drug.'' Therefore, an immediate
substitution would not allow a Part D sponsor to make a negative
formulary change to an authorized generic within 30 days of adding a
brand name drug. We do not support modifying our proposal in this way
because the intent of our generic substitution policy is to encourage
plans to make substitutions as soon as new generic drugs or authorized
generic drugs are marketed to provide beneficiaries with access to
lower cost therapeutically equivalent drugs. Moreover, it is unlikely
that a brand name drug would be marketed after an authorized generic
and, therefore, it would not fit within the structure of our proposed
regulation, which contemplates the substitution within the plan year of
a brand name drug to be removed or subject to a negative formulary
change with a drug that is marketed (after CMS approves an initial
formulary).
Likewise, our proposed regulation would not permit Part D sponsors
to immediately substitute a generic for an authorized generic or an
authorized generic for a generic as an immediate substitution under
Sec. 423.120(e)(2)(i). Nevertheless, an authorized generic and a
generic of the same brand name drug generally are represented by the
same RxCUI, as assigned by the National Library of Medicine's
RxNorm.\50\ In other words, one RxCUI can represent multiple NDCs. As
more NDCs become available and assigned to an RxCUI, to the extent
there is not a different RxCUI to submit on the formulary file, Part D
sponsors cannot submit NDC-specific formulary changes in the HPMS
system. Further, we note that it is not inconsistent with CMS policy
for Part D sponsors not to cover every NDC associated with an RxCUI for
a generic drug. Accordingly, a Part D sponsor can adjust which NDCs for
a generic drug and authorized generic of the same brand name reference
drug are covered on its formulary in a manner that would not be
considered a formulary change subject to the requirements of this final
rule.
---------------------------------------------------------------------------
\50\ https://www.nlm.nih.gov/research/umls/rxnorm/overview.html.
---------------------------------------------------------------------------
With respect to interchangeable biological products, the proposed
Sec. 423.120(e)(2)(i) likewise would not permit immediate
substitutions among interchangeable biological products--that is, we
would not permit Part D sponsors to immediately substitute an
interchangeable biological product for another interchangeable
biological product as an immediate substitution under Sec.
423.120(e)(2)(i). This is because Sec. 423.120(e)(2)(i) would be
limited to immediate substitutions of interchangeable biological
products for their reference products, not for other interchangeable
biological products that may be interchangeable with the same reference
product. However, in contrast to generic drugs and authorized generic
drugs of the same brand name drug sharing the same RxCUI, every
biosimilar biological product is assigned its own distinct RxCUI.
Therefore, a Part D sponsor cannot adjust which NDCs for
interchangeable biological products with the same reference product are
covered on its formulary in a manner that would not be considered a
formulary change subject to the requirements of this rule. We believe
this is in line with FDA's approach that approves biosimilar biological
products in relation to reference products. For instance, our
definition of a ``biosimilar
[[Page 30520]]
biological product'' at Sec. 423.4 cites section 351(i)(2) of the PHSA
(42 U.S.C. 262(i)(2)), which establishes similarity of a biological
product compared to the reference product and not with respect to other
biosimilar biological products. Similarly, our definition of an
``interchangeable biological product'' at Sec. 423.4 cites section
351(k)(4) of the PHSA (42 U.S.C. 262(k)(4)), which provides that
interchangeability is determined with respect to a reference product
and not with respect to other interchangeable biological products.
Our proposed definition of a maintenance change at Sec. 423.100
would not permit substitutions among biosimilar biological products
that share a reference product as maintenance changes, nor would our
proposed definition of immediate substitutions at Sec.
423.120(e)(2)(i) permit maintenance changes among interchangeable
biological products that share a reference product. For interchangeable
biological products, Sec. 423.100 would define a maintenance change at
subparagraph (1) as making any negative formulary change to a drug
within 90 days of adding a corresponding drug as specified. Section
423.100 would define a corresponding drug to include ``an
interchangeable biological product of a reference product''. For
biosimilar biological products other than interchangeable biological
products, Sec. 423.100 would define a maintenance change at
subparagraph (2) as ``making any negative formulary changes to a
reference product within 90 days of adding a biosimilar biological
product other than an interchangeable biological product of that
reference product.'' This definition does not include making negative
formulary changes to a biosimilar biological product after adding a
different biosimilar biological product for the same reference product.
With respect to the commenter's question about how to treat
enrollees taking a biosimilar biological product that is not the
biosimilar biological product on the formulary, this situation would be
treated the same as any other situation where an enrollee is taking a
non-formulary drug. If the plan only has biosimilar biological product
A on the formulary and then an enrollee who has been taking biosimilar
biological product B enrolls in the plan, the enrollee would need a new
prescription for the biosimilar biological product A.
We do not prohibit multiple maintenance changes with respect to the
same drug within the same plan year, and our review process considers
each such request on its own merit. We think multiple maintenance
changes within the same year would be rare given the type of changes we
allow but not impossible. For example, a plan may add a therapeutically
equivalent generic drug to the formulary and add a PA to the brand name
drug. If the brand name drug then becomes subject to a long-term
shortage, a maintenance change to remove the brand name drug from the
formulary altogether may be appropriate.
It is beyond the scope of this regulation to address every
hypothetical scenario provided by the commenter, but we will take them
into account when providing guidance in the future.
Finally, we note that, regardless of whether Part D sponsors are
permitted to replace an existing drug, they can always add the generic
or authorized generic, or biosimilar biological product or unbranded
biological product, to their formulary.
Comment: Several commenters, including a few concerned only about
the proposed expansion of immediate substitutions to include
interchangeable biological products for reference products, asked that
we require transition supplies for immediate substitutions, including
for some generic substitutions of brand name drugs. Additionally, a few
commenters, including commenters concerned that we would now permit as
maintenance changes substitution of biosimilar biological products
other than interchangeable biosimilar biological products for reference
products, asked that we require Part D sponsors to provide transition
supplies for midyear maintenance changes. A commenter asked that we
explain how our rules apply to hypothetical transition scenarios.
Response: We do not agree with the commenters asking us to apply
the transition process to immediate substitutions or maintenance
changes. The current Sec. 423.120(b)(3) provides that Part D sponsors
must provide a transition process for specified enrollees. In the April
2018 final rule, we finalized the current Sec. 423.120(b)(3)(i)(B) to
provide that Part D sponsors do not need to provide a transition supply
when a Part D sponsor immediately substitutes a generic drug for a
brand name drug under Sec. 423.120(b)(5)(iv). We are not aware of
widespread complaints regarding this policy and therefore do not see a
reason to undo a policy that has been in place for several years or to
apply different rules to other kinds of immediate substitutions or to
maintenance changes permitted under this proposal.
In the December 2022 proposed rule, we proposed to move the current
regulation on immediate generic substitutions, Sec. 423.120(b)(5)(iv),
to Sec. 423.120(e)(2)(i) and to expand it to include among other
products, interchangeable biosimilar biological products. We also
proposed in the December 2022 proposed rule to change the reference in
Sec. 423.120(b)(3)(i)(B) to now refer to Sec. 423.120(e)(2), which
would mean we would not require Part D sponsors to provide a transition
supply, for instance, when replacing a reference product with an
interchangeable biological product within the requirements of Sec.
423.120(e)(2)(i). Similar to our decision in the April 2018 final rule
not to provide transition supplies for immediate generic substitutions
under Sec. 423.120(b)(5)(iv), we are not convinced there is a need to
require transition supplies for immediate substitutions of
interchangeable biological products, authorized generics, or unbranded
biological products under the proposed Sec. 423.120(e)(2)(i).
Requiring transition supplies for one type of immediate substitution
but not others would introduce an unnecessary level of operational
complexity for Part D sponsors and inconsistent policies.
With respect to requiring transition supplies for maintenance
changes, we did not propose to change the existing transition policy.
Maintenance changes require 30 days advance notice to affected
enrollees under Sec. 423.120(f)(1). That 30 days' advance notice
serves the same function as the transition policy to provide affected
enrollees time to consider a formulary alternative or pursue a
formulary or tiering exception for the drug they are taking that will
be subject to the negative formulary change. As a reminder, the
transition regulation at Sec. 423.120(b)(3)(i)(B) requires 30 days'
notice and a month's supply. Similarly, affected enrollees getting 30
days advance notice of a maintenance change who have refills or obtain
a new prescription can go to the pharmacy and request a refill before
the maintenance change becomes effective.
It is beyond the scope of this regulation to address every
hypothetical transition scenario, but we will take them into account
when providing guidance in the future to reflect regulatory changes.
Comment: While many commenters generally supported greater use of
biosimilar biological products, they were generally divided into three
main groups regarding our specific proposals relating to biosimilar
biological product substitutions (which we mean to describe generally
as a formulary change in which a Part D sponsor would add a biosimilar
biological product and either
[[Page 30521]]
remove or apply a negative formulary change to its reference product).
The first group of commenters supported some or all of our specific
proposals regarding biosimilar biological product substitutions, under
which we would permit immediate substitutions of interchangeable
biological products for their reference products under proposed Sec.
423.120(e)(2)(i) and also permit Part D sponsors to treat as
maintenance changes all biosimilar biological product substitutions
under subparagraphs (1) and (2) of the definition of maintenance
changes proposed in Sec. 423.100. They stated, for instance, that the
proposed policies would result in more uptake of biosimilar biological
products by switching enrollees taking reference products to biosimilar
biological products, a move they felt could improve the overall
affordability of the Part D program to enrollees due to the lower cost
of biosimilar biological products as compared to reference products.
They stated, for instance, that because a distinction is made between
interchangeable biological products and biosimilar biological products
other than interchangeable biological products, with respect to
pharmacy-level substitutions, CMS had struck the right balance by
proposing to provide 30 days' advance notice to enrollees to get a new
prescription or to ask for an exception before a Part D sponsor
substitutes a biosimilar biological product other than an
interchangeable biological product for their reference product.
The second group of commenters did not support some or all of the
proposed flexibilities for biosimilar biological product substitutions
to occur as immediate substitutions or maintenance changes, including
interchangeable biological products. These commenters stated, for
instance, that switching from biosimilar biological products to
reference products was not the same as switching from generic drugs to
brand name drugs and that any biosimilar biological product
substitutions could disrupt patient treatment. They posited that
biosimilar biological products, being complex molecules made from
living organisms, are different than small molecule drugs that are
chemically synthesized and that even minor differences in manufacturing
processes could cause variations leading to clinical differences in a
given patient's experience or reaction. They pointed out that
biosimilar biological products are often used to treat patients with
complex chronic conditions, whom they believe would be less well
prepared to deal with adverse effects resulting from changes to the
drugs they take.
The final group of commenters did not feel CMS went far enough in
providing flexibilities to promote greater use of biosimilar biological
products and recommended that we permit immediate substitutions of all
biosimilar biological products regardless of whether they are licensed
as interchangeable biological products or not. They pointed to the fact
that FDA had found all biosimilar biological products to be highly
similar and to have no clinically meaningful differences from reference
products in safety and effectiveness and pointed out that FDA's
recently proposed labeling changes would reduce the visibility of a
product's interchangeability status. These commenters stated that
interchangeability is only meaningful in that it allows substitution at
the pharmacy counter. A commenter stated that treating biosimilar
biological products other than interchangeable biological products as
maintenance changes would not go far enough to make a major difference
in terms of savings because the regulation would still require 30 days'
advance notice, time in which the product could already have been
switched. A few of these commenters acknowledged that if we did not
move towards more flexibility, they supported what we had proposed.
Response: We appreciate the time all commenters took to explain
many different points of view regarding biosimilar biological products,
which are a relatively new category of products on the market. We
appreciate the first group of commenters who supported our proposals to
permit immediate substitutions of interchangeable biological products
and maintenance changes of all biosimilar biological products. As
explained in section III.F.2.b.(1) of the November 2023 proposed rule,
our proposal accounts for the current PHSA delineation between
interchangeable biological products, which may be substituted for the
reference product without the intervention of the health care provider
who prescribed the reference product (also called pharmacy-level
substitution), and biosimilar biological products which do not meet the
standards for interchangeability. However, substitution in terms of the
conditions and requirements that must be met for a pharmacist to
dispense a biosimilar biological product in place of its reference
product without a new prescription is subject to state pharmacy law.
Our review of state requirements with respect to pharmacy-level
substitutions involving biosimilar biological products indicates that
currently states overwhelmingly require that a biosimilar biological
product is an interchangeable biological product for a pharmacist to
make such a substitution for a reference product without the
intervention of the health care provider who prescribed the reference
product, among other conditions and requirements.51 52 53
Our goal is to promote greater use of biosimilar biological products,
and for that reason we expanded our original December 2022 proposal in
the November 2023 proposed rule to include as maintenance changes
substitutions of biosimilar biological products other than
interchangeable biological products for their reference products. Since
in most cases a pharmacist would not be permitted to make a pharmacy-
level substitution involving biosimilar biological products other than
interchangeable biological products without the intervention of the
prescriber, we maintain our decision that substitutions of biosimilar
biological products other than interchangeable biological products
should be maintenance changes with 30-days advance notice to provide
enrollees with time to obtain new prescriptions for the biosimilar
biological products other than interchangeable biological products or
obtain formulary exceptions for the reference products.
---------------------------------------------------------------------------
\51\ https://www.cardinalhealth.com/content/dam/corp/web/documents/publication/Cardinal-Health-Biosimilar-Interchangeability-Laws-by-State.pdf.
\52\ https://www.mintz.com/sites/default/files/media/documents/2019-02-08/State%20Legislation%20on%20Biosimilars.pdf n.
\53\ https://www.nacds.org/pdfs/government/2021/State-Substitution-Practices-for-Biological-Drugs-chart-July-2021.pdf.
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We do not agree with commenters in the second group that did not
support permitting any formulary changes for biosimilar biological
products. We believe that the emerging biosimilars market provides too
great an opportunity for potential savings and that prohibiting plan
sponsors from making such formulary changes would fail to acknowledge
FDA determinations that such products are as safe and effective as
their reference products and could discourage greater use of biosimilar
biological products.
As to the last group of commenters, we disagree that our proposals
did not go far enough in providing plan sponsors with flexibilities to
promote greater use of biosimilar biological products. With respect to
the comment that treating formulary substitutions for reference
products of biosimilar
[[Page 30522]]
biological products other than interchangeable biological products as
maintenance changes would not make much of a difference in savings, we
note that our proposed policy is still a significant change from our
current sub-regulatory policy. Current policy treats biosimilar
biological product substitutions as non-maintenance changes, and
exempts such biosimilar biological product substitutions from applying
to enrollees currently taking an affected drug for the remainder of the
plan year, which limits the potential cost savings of any such
formulary change.
Comment: A commenter specifically supported our definition of
``biosimilar biological product.'' A few commenters each respectively
asked that we: (i) revise the definition of ``unbranded biological
product'' in our proposed Sec. 423.4 to be modeled on the definition
of ``authorized generic drug'' found in section 505(t) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355(t)), which includes a
description of distribution; (ii) provide an explanation of the meaning
of the word ``potency'' as used in our proposed definition of a
``biosimilar biological product'' in Sec. 423.4; and (iii) revise our
definition in Sec. 423.4 to define ``interchangeable biological
product'' in order that it resemble the statutory definition in 42
U.S.C. 262(i)(3). Another commenter asked that we add biological
products to the existing definition of ``brand drug'' in Sec. 423.4
(more precisely, ``brand name drug'') to be more like our current
definition of ``covered Part D drug'' in Sec. 423.100 includes both
small molecule drugs and biological products.
Response: While we appreciate the comments, we disagree with the
suggestions to change our proposed definitions. Specifically, we are
not revising the proposed definition of ``unbranded biological
product'' to conform it to a statutory definition of ``authorized
generic drug.'' Our proposed definition is consistent with how the FDA
considers the unbranded biological product to be the same product as
the brand name biological product, but marketed without the brand name
on its label.\54\ Nor do we think it is necessary for the purpose of
CMS regulations to redefine what potency means for ``biosimilar
biological products.''
---------------------------------------------------------------------------
\54\ See FAQ #11: How are ``unbranded biologics'' displayed in
the Purple Book? https://purplebooksearch.fda.gov/faqs#11.
---------------------------------------------------------------------------
We are persuaded to revise our proposed definition of
``interchangeable biological product'' in Sec. 423.4 to include
language that links the standards described in 42 U.S.C. 262(k)(4) to
the definition of interchangeability at 42 U.S.C. 262(i)(3), since this
is more descriptive while maintaining the accuracy of the proposed
definition. We will therefore modify our proposed definition of
``interchangeable biological product'' in this final rule by adding the
following language to the end: ``which in accordance with section
351(i)(3) of the Public Health Service Act (42 U.S.C. 262(i)(3)), may
be substituted for the reference product without the intervention of
the health care provider who prescribed the reference product.''
We decline to revise our definition of brand name drug given that
we are finalizing a definition of ``brand name biological product'' in
Sec. 423.4, as proposed.
Comment: Several commenters who did not agree with our policy
proposals contended that CMS was undermining the work of the FDA. For
instance, a commenter stated that it is the role of FDA to decide what
biosimilar biological products are interchangeable. In their opinion,
if CMS were to permit Part D plans to substitute any biosimilar
regardless of a determination of interchangeability, this is tantamount
to disregarding the distinction between interchangeable biological
products and biosimilars other than interchangeable biological products
as set forth in the PHSA. On the other hand, several commenters that
supported our proposed policies believed our policies were consistent
with those of FDA. Several commenters on all sides of the issue looked
to FDA publications and studies to support their positions, with a few
citing the Biologics Price Competition and Innovation Act (BPCIA) or
the PHSA. A few commenters also asked CMS to work with FDA, and one
commenter specifically requested that the two agencies come to a
consensus on the definitions and data surrounding biosimilarity and
interchangeability, and the need for any more studies to support
interchangeability determinations.
Response: We disagree that our proposals interfere with FDA's
review of biosimilar biological products. CMS, among other things,
works in partnership with the entire health care community to improve
quality, equity, and outcomes in the health care system.\55\ This
includes regulation of Part D sponsors. FDA's mission, among other
things, is to protect the public health by assuring the safety,
efficacy, and security of human drugs and biological products.\56\ It
has long been the case that both agencies have had overlap on some
issues, and both agencies have undertaken complementary initiatives
under the Executive Order on Promoting Competition in the American
Economy (E.O. 14306). Examples of such initiatives include FDA's work
to continue to clarify and improve the approval framework for generic
drugs and biosimilar biological products to make generic drug and
biosimilar biological product approval more transparent, efficient, and
predictable, including improving and clarifying the standards for
interchangeability of biological products, as well as CMS's efforts to
prepare for Medicare and Medicaid coverage of interchangeable
biological products, and to develop payment models to support increased
utilization of generic drugs and biosimilar biological products. This
work includes issuing regulations codifying definitions specific to our
missions and authorities. The policies being finalized in this rule are
appropriate for the needs of the Part D program.
---------------------------------------------------------------------------
\55\ https://www.cms.gov/about-
cms#:~:text=CMS%20is%20the%20federal%20agency,in%20the%20health%20car
e%20system. ``CMS is the federal agency that provides health
coverage to more than 160 million through Medicare, Medicaid, the
Children's Health Insurance Program, and the Health Insurance
Marketplace. CMS works in partnership with the entire health care
community to improve quality, equity and outcomes in the health care
system.''
\56\ https://www.fda.gov/about-fda/what-we-do#mission ``The Food
and Drug Administration is responsible for protecting the public
health by ensuring the safety, efficacy, and security of human and
veterinary drugs, biological products, and medical devices; and by
ensuring the safety of our nation's food supply, cosmetics, and
products that emit radiation.''
---------------------------------------------------------------------------
Comment: A commenter questioned the underlying premise for our
proposed policies, noting that, as compared to brand name drugs and
generics, biosimilar biological products were not priced at a
significant savings from their reference products. Another commenter
stated that treating substitutions of reference products with
biosimilar biological products other than interchangeable biological
products as maintenance changes would not make a major difference in
terms of the uptake of biosimilar biological products because it would
not cause manufacturers of reference products to provide lower prices
or increase rebates. Another commenter posited that providing more
flexibilities for biosimilar biological products other than
interchangeable biological products could dampen manufacturer
innovation by reducing the incentive to devote additional time and
resources to interchangeable product development.
[[Page 30523]]
Lastly, another commenter did not support our policy on the basis that
allowing Part D sponsors to remove reference products from their
formularies removes incentives for the biosimilar biological product to
compete on price and could harm biologic competition, especially when
only one or a few biosimilar biological products are currently on the
market.
Response: These comments highlight a variety of factors that may
influence the biological product market, but we do not speculate on
every potential downstream effect of our proposal to permit
substitutions of biosimilar biological products other than
interchangeable biological products as maintenance changes. It is up to
Part D sponsors to negotiate with manufacturers, and section 1860D-
11(i) of the Act generally prohibits the Secretary from interfering
with those negotiations. We believe that it is in the interest of the
Part D program and Medicare beneficiaries to provide Part D sponsors
with flexibilities that can be leveraged in negotiations with
manufacturers to reduce costs to the government and Medicare
beneficiaries. While we cannot estimate savings for our proposals with
any certainty or predict whether fewer or more manufacturers will
produce interchangeable biological products in the future, we clarify
that the intent of this specific proposal has never been to affect
decisions by manufacturers. Rather our goal is to promote greater
access to and utilization of biosimilar biological products by
providing more flexibility for Part D sponsors to substitute them for
reference products than had previously been permitted. The introduction
of biosimilar biological products to the market is relatively recent
compared to generic small molecule drugs. We believe there is a
potential for savings to the Medicare Trust Fund in the long term as
acceptance of biosimilar biological products grows and increased
competition drives down costs.
Comment: A commenter pointed out that CMS stated in the December
2022 proposed rule at pages 79536-7 with respect to another proposal on
midyear benefit changes that such midyear changes violate uniformity
and integrity of bids. A few commenters pointed out that we had stated
in our December 2022 proposed rule that it was not appropriate to
immediately substitute biosimilar biological products other than
interchangeable biological products, and one commenter noted that we
indicated in the April 2018 final rule that it could cause confusion if
we were to define generic drugs to include biosimilar biological
products. Pointing out that nothing had changed since that time, these
commenters suggested we had no support to undertake what they reviewed
as a reversal in policy.
Response: The commenter failed to note that in the December 2022
proposed rule, we drew a distinction between changes in ``bid-level''
cost sharing (for example, the cost sharing associated with an entire
tier of drugs) and changes in the cost sharing for an individual drug
(for example, when such drug moves from one tier to another). That
discussion in the December 2022 proposed rule explained that section
1860D-4(b)(3)(E) of the Act contemplates that there will be midyear
changes in cost sharing of individual formulary drugs. Since the
beginning of the Part D program, we have allowed formulary changes that
result in changes to the cost sharing for individual drugs (for
example, moving a single drug to a different cost-sharing tier), but
have declined to permit Part D sponsors to change their benefit designs
or waive or reduce premiums, ``bid-level'' cost sharing (for example,
the cost sharing associated with an entire tier of drugs), or cost
sharing (for some or all enrollees) once plans are permitted to market
for the following contract year (on October 1, consistent with Sec.
423.2263(a)) on the grounds that such activities would be inconsistent
with the CMS-approved bid.
We do not believe our previously finalized policies are
inconsistent with our proposal to permit substitution of biosimilar
biological products other than interchangeable biological products as
maintenance changes. In the December 2022 proposed rule, we stated that
we were not permitting the immediate substitution of biosimilar
biological products other than interchangeable biological products as
immediate substitutions, and our proposals in the November 2023
proposed rule did not propose to permit such immediate substitutions.
(See the November 2023 proposed rule at III.F.2.(b)(1) for a detailed
discussion.) In our April 2018 final rule, we noted that, to avoid
confusion, we were not finalizing a proposed rule regarding the similar
treatment of biosimilar biological products and generic drugs for
purposes of LIS cost-sharing. We do not believe a concern about
avoiding confusion in 2018 with respect to the separate issue of LIS
cost-sharing is relevant to the policy proposals in our December 2022
and November 2023 proposed rules that involve the same type of products
but in a different context.
We do not believe that finalizing our proposals regarding formulary
substitution of biosimilar biological products precludes us from
revisiting these policies in the future. Of course, in such instances,
as is the case anytime that we feel it necessary to revisit regulatory
policy, we would carefully consider all factors and issue proposals
through rulemaking subject to public comment and response.
We also note we are finalizing our proposals to provide safeguards
to mitigate potential confusion, including a requirement that Part D
sponsors provide 30 days' advance notice requirement for substitutions
of biosimilar biological products other than interchangeable biological
products.
Comment: Several commenters requested that we exempt enrollees
currently taking a reference product if we finalize a policy that
permits Part D sponsors to treat as maintenance changes formulary
substitutions of biosimilar biological products other than
interchangeable biological products for reference products.
Response: We disagree with these commenters. As noted earlier, we
believe the right course of action is to treat such substitutions as
maintenance changes. These commenters appeared to support the feature
of our current sub-regulatory policy on non-maintenance changes that
exempts enrollees currently taking an affected product for the
remainder of the plan year from substitution of reference products by
biosimilar biological products other than interchangeable biological
products. However, the non-maintenance policy also requires Part D
sponsors to obtain explicit approval of such changes from CMS. We
believe that to continue to require every Part D sponsor that seeks to
substitute a biosimilar biological product other than an
interchangeable biological product for a reference product to wait to
obtain explicit permission before making any change and to continue to
exempt enrollees currently taking the reference product would be
counter to the goal of promoting the utilization of biosimilar
biological products. Additionally, as noted previously in this section,
the 30-day advance notice timeframe affords enrollees sufficient time
to change to a covered alternative drug which could include biological
products; to get a refill of the reference product to be replaced; or
to obtain needed prior authorization or an exception for the reference
product affected by the formulary change. Affected enrollees may still
be able to access the reference
[[Page 30524]]
product through the plan's coverage determination and exceptions
process.
Comment: Many commenters opposed ``non-medical switching''
formulary changes that are based on payer mandated reasons other than
strict medical necessity (such as cost and coverage reasons). They
stated that permitting biosimilar biological product substitutions for
enrollees who are stable on reference products would disrupt treatment
and undermine the doctor-patient relationship and central role of
prescribers in determining the best course of treatment, leading to
poor health outcomes and exacerbating health care disparities. Several
commenters opposed to the proposal noted that biosimilar biological
product substitutions could disrupt patient care or result in
unexpected cost sharing. One commenter suggested that rather than
finalizing this proposal, CMS should focus on policies that empower
physicians when partnering with their patients, such as expanded access
to real-time benefit tool (RTBT) use. A few commenters asked us to
require Part D sponsors to send notice of specific changes to the
prescribers of affected enrollees. Several commenters also noted the
importance of having a robust exceptions process.
Response: We take seriously concerns that enrollees, especially
those facing health challenges, may have when they are either switched
from a drug they have been stable on or told their plan will no longer
cover it, including for products such as biosimilar biological products
that are relatively new to the market. However, as we discussed in our
December 2022 proposed rule and the November 2017 proposed rule and as
contemplated under section 1860D-4(b)(3)(E) of the Act, Part D sponsors
may make changes to their formularies as specified during the year. As
detailed in the November 2023 proposed rule, all biosimilar biological
products have been determined by FDA to be safe and effective, and we
believe that, over time, biosimilar biological products will gain more
acceptance, as was the case with generic drugs as substitutes for brand
name drugs. For instance, the FDA has stated:
Both [biosimilar biological products and reference products] are
rigorously and thoroughly evaluated by the FDA before approval. For
[biosimilar biological products] to be approved by the FDA,
manufacturers must show that patients taking [biosimilar biological
products] do not have any new or worsening side effects as compared to
people taking the [reference products].
As it does with all medication approvals, the FDA carefully reviews
the data provided by manufacturers and takes several steps to ensure
that all [biosimilar biologic products] meet standards for patient use.
The FDA's thorough evaluation makes sure that all [biosimilar
biological products] are as safe and effective as their [reference
products] and meet the FDA's high standards for approval. This means
[consumers] can expect the same safety and effectiveness from the
[biosimilar biological product] over the course of treatment as [they]
would from the original product.\57\
---------------------------------------------------------------------------
\57\ See FDA website entitled ``Biosimilar and Interchangeable
Biologics: More Treatment Choices'' at: https://www.fda.gov/
consumers/consumer-updates/biosimilar-and-interchangeable-biologics-
more-treatment-
choices#:~:text=Biosimilars%20are%20a%20type%20of,macular%20degenerat
ion%2C%20and%20some%20cancers.
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We are not convinced that sending notices to prescriber offices,
which serve a great many patients covered by many types of insurance
and receive many communications, is an effective means to address
enrollee concerns. Prescribers are more likely to respond to direct
requests from their patients asking for a new prescription or help
supporting an exception request. We agree with the commenter who noted
the importance of RTBTs to provide prescribers with drug coverage and
cost-sharing information for their patients at the point of
prescribing. CMS does not require prescribers to use RTBTs, but
requires at Sec. 423.160(b)(7) that Part D sponsors implement at least
one RTBT capable of integrating with at least one prescriber's e-
prescribing system or electronic health record. See section III.L.5. of
this final rule for a discussion of our proposals to enable more
widespread access to RTBTs through the adoption of a standard.
Lastly, we agree with commenters about the importance of a robust
exceptions process being available to affected enrollees. Since the
start of the Part D program in 2006, CMS has had such a process in
place. Under the coverage determination and appeal processes described
in Part 423, subpart M, Part D enrollees and their prescribers have the
right to request an exception to a plan coverage rule, including an
exception to the plan's tiered cost-sharing structure or formulary
utilization management (UM) criteria. Part D plan sponsors are required
to make coverage decisions and notify the enrollee (and the prescriber,
as appropriate) in writing in accordance with strict regulatory
timeframes. Under Sec. 423.578, a Part D plan must grant a tiering or
formulary exception request (for example, provide coverage for a non-
formulary drug or an exception to the UM criteria) when it determines
that the requested drug is medically necessary, consistent with the
prescriber's supporting statement indicating that preferred
alternatives(s) would not be as effective and/or would have adverse
effects. Enrollees have a statutory right to an expedited determination
if the prescriber indicates that applying the standard timeframe may
jeopardize the enrollee's health, and plans must issue all coverage
decisions, except those seeking reimbursement only, as expeditiously as
the enrollee's health condition requires. Any initial coverage request
that the plan expects to deny based on a lack of medical necessity must
be reviewed by a physician. If the Part D sponsor makes an adverse
coverage determination, the required written notice must explain the
specific reason(s) for the denial and include a description of the
enrollee's right to a standard or expedited redetermination by the
plan, and the right to request independent review. We require plans to
conduct all redeterminations (first level appeals) using a physician or
other appropriate health care professional with sufficient medical and
other expertise, including knowledge of Medicare criteria, if the
initial denial was based on a lack of medical necessity. If a plan
fails to make a coverage decision and notify the enrollee within the
required timeframe, the request must be forwarded to the independent
review entity to be adjudicated.
Moreover, while we do not treat a claim transaction as a coverage
determination, we do require Part D sponsors to arrange with network
pharmacies to provide enrollees with a written copy of the Office of
Management and Budget (OMB)-approved standardized pharmacy notice
(``Notice of Denial of Medicare Prescription Drug Coverage,'' CMS-
10146) when the enrollee's prescription cannot be filled under the Part
D benefit and the issue cannot be resolved at the point of sale. The
notice instructs the enrollee on how to contact his or her plan and
explains the enrollee's right to request a coverage determination.
Thus, all beneficiaries immediately receive clear, concise instructions
on how to pursue their appeal rights whenever a prescription cannot be
filled. For additional information on the coverage determination,
appeals, and grievance process, including information about the
pharmacy notice, see 42 CFR part 423, subparts M and U, and the Parts C
& D Enrollee Grievances, Organization/Coverage Determinations, and
Appeals
[[Page 30525]]
Guidance.\58\ We believe these requirements are comprehensive enough to
address issues that might arise related to any transition from a
reference product to a biosimilar biological product.
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\58\ https://www.cms.gov/medicare/appeals-and-grievances/mmcag/downloads/parts-c-and-d-enrollee-grievances-organization-coverage-determinations-and-appeals-guidance.pdf.
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Comment: Several commenters specifically noted that requiring 30
days' notice for maintenance changes would be sufficient time for an
enrollee to communicate with their health care provider to get a new
prescription for a biosimilar biological product other than an
interchangeable biosimilar biological product. A commenter asked if
patients taking a reference product could waive their 30 days' advance
notice of maintenance changes and immediately switch to a substituted
biosimilar biological product. Several commenters asked CMS to extend
the advance direct notice period from 30 days to either 60 or 90 days.
These commenters posited that biosimilar biological products were
different than other drugs and that enrollees taking these drugs were
likely to be sicker or experiencing a chronic illness. They stated that
enrollees taking reference products would need to schedule appointments
with their providers to discuss changing treatment to a biosimilar
biological product and that average wait times may exceed a month.
Another commenter suggested that given the level of concern many
patients who have been on the same medication have regarding biosimilar
biological products with which they may not be familiar, providing a
longer time period would give enrollees and their prescribers more of
an opportunity to feel comfortable making the transition. A commenter
that opposed permitting Part D sponsors to treat the substitution of
biosimilar biological products for their reference products as
maintenance changes, noted that the 30-day notice period might not
provide sufficient time for an enrollee to obtain the biosimilar
biological product if it is subject to risk evaluation and mitigation
strategies (REMS). In such instances, FDA may require manufacturers to
restrict a drug's distribution or use only to patients with
prescriptions from authorized physicians or pharmacies under specified
conditions via one or more ``Elements to Assure Safe Use'' (ETASU).
Response: As noted earlier, the needs of enrollees are an important
priority for CMS. However, we have required advance direct notice of
maintenance changes since the beginning of the Part D program and are
not convinced that there is anything unique about biosimilar biological
products other than interchangeable biological products that justifies
a change to that longstanding policy. CMS has for some time permitted
maintenance changes; since our April 2018 final rule, Part D plans have
been required to provide 30 days' notice to these enrollees of changes.
We are not aware of widespread complaints regarding the 30 days'
advance direct notice, and do not believe it is necessary to create a
special rule for individuals taking reference products subject to
biosimilar biological product maintenance changes. We believe it would
add unnecessary complications and set a poor precedent to establish a
different time period of advance direct notice for biosimilar
biological products substituted as maintenance changes (be they
interchangeable or other than interchangeable) relative to other Part D
drugs. We find this level of complications unmerited because, as
discussed in section III.F of the November 2023 proposed rule, we trust
in FDA evaluations that have determined all biosimilar biological
products are safe and effective. See our discussion in the proposed
rule for more on this (88 FR 78518). Additionally, affected enrollees
may still be able to access the reference product through the plan's
coverage determination and exceptions process.
Section 1860D-4(b)(3)(E) of the Act requires ``appropriate notice''
of formulary changes; further, we view appropriate notice of change as
an integral beneficiary right. Therefore, we disagree that we need to
change the requirement for advance direct notice of maintenance changes
or create more complexity by requiring plans to create a means for
enrollees to waive formulary change notice on an individual basis. If a
prescriber were to recommend a switch to a new biosimilar biological
product to their patient, either they or the patient could call or
otherwise reach out to the plan to see if the drug was available on the
formulary ahead of receipt of any 30-day advance notice of drug change.
We appreciate that a REMS could cause complications relative to the
30-day notice period, for example, if the prescriber needs to enroll in
a different REMS for a biosimilar biological product than for the
reference product in order to be certified to prescribe the biosimilar
biological product; however, we do not think this scenario is unique to
biological products. The same scenario could occur under our current
policy for maintenance changes involving generic substitutions for
brand name drugs, because when a brand name drug has a REMS, the
generic drug must also have a REMS and manufacturers may not have a
shared system REMS.\59\ We are not aware of complaints indicating that
our current policy for substitutions of generic drugs for brand name
drugs has been complicated by REMS for drugs involved. Consequently, we
do not see a need to change the policies we have proposed for
substitution of biosimilar biological products.
---------------------------------------------------------------------------
\59\ https://www.fda.gov/drugs/risk-evaluation-and-mitigation-strategies-rems/frequently-asked-questions-faqs-about-rems.
---------------------------------------------------------------------------
Comment: A few commenters suggested that if we were to permit plans
to require patients stable on reference products to switch to
biosimilar biological products to reduce costs for payers, those
savings should be shared with enrollees. A few commenters requested
that we require biosimilar biological products to be placed on lower
cost-sharing tiers than the reference products they replaced.
Response: By encouraging Part D sponsors to introduce biosimilar
biological products to their formularies more quickly, we believe
enrollees may also be able to share in savings when negotiated prices
for those products are lower than for the reference products,
particularly in coinsurance-based benefit designs. CMS disagrees with
the commenters' proposal to require biosimilar biological products to
be placed on lower cost-sharing tiers than the reference products they
replaced because it has been longstanding policy to require
substitutions to apply to the same or lower tier. Moreover, most
biological products qualify for the specialty tier, as defined at Sec.
423.560. Unless the plan benefit structure includes two specialty tiers
as permitted under Sec. 423.104(d)(2)(iv)(D), requiring substituted
biosimilar biological products to be placed on a lower tier than the
reference product would in effect prohibit Part D sponsors from placing
biosimilar biological products on the specialty tier if the reference
product had been on the specialty tier.
Comment: While we received support for recognizing the role of
education to advance uptake and acceptance of biological products,
several commenters stressed that biosimilar biological products are a
relatively new concept that could cause confusion and concern for
enrollees who would prefer to continue taking drugs they are familiar
with. They asked that we develop educational resources on biological
products to better inform patients and
[[Page 30526]]
health care professionals and urge plan sponsors to engage in robust
education and utilize communications best practices. A commenter
encouraged us to update the Medicare Plan Finder tool to identify
coverage of and savings associated with biosimilar biological products.
Response: We plan to update our materials to reflect any regulatory
changes regarding the provision of biosimilar biological products, as
well as investigate options for identifying biosimilar biological
product alternatives on Medicare Plan Finder. Likewise, we encourage
Part D sponsors to educate their enrollees, including making sure that
call center customer service representatives are trained to discuss
biosimilar biological products. We note that the FDA also plays an
important role in educating consumers on emerging drug therapies. FDA
offers a variety of materials in multiple formats and languages to help
promote understanding of biosimilar biological products and
interchangeable biological products.\60\
---------------------------------------------------------------------------
\60\ See the following FDA website on Multimedia Education
Materials [verbar] Biosimilars: https://www.fda.gov/drugs/biosimilars/multimedia-education-materials-biosimilars.
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Comment: A commenter asked us to ensure enrollees receive
appropriate notifications of midyear changes, develop such notices with
stakeholder feedback, and hold Part D sponsors responsible if timelines
or other standards are not met. A commenter requested that if the rule
is finalized, that we monitor enrollee and prescriber experiences with
biosimilar biological products to determine whether notice is
necessary, particularly as state laws regarding substitution evolve.
Response: We will keep this feedback in mind as we consider
different monitoring options.
Comment: A few commenters were concerned that permitting immediate
substitutions of interchangeable biological products for reference
products and maintenance changes of all biosimilar biological products
for reference products would impose a greater administrative burden
upon pharmacists.
Response: While we certainly favor reducing unnecessary burdens on
pharmacists, it is not clear to us how permitting immediate
substitutions of interchangeable biological products under proposed
Sec. 423.120(e)(2)(i) will increase the administrative burden placed
on pharmacists. State laws determine the requirements for pharmacists
to make pharmacy-level substitutions of interchangeable biological
products for their reference products and these pharmacy-level
substitutions can take place even when a reference product remains on
the formulary (that is, in the absence of any immediate substitution by
the plan). We acknowledge that permitting Part D sponsors to substitute
biosimilar biological products for reference products as maintenance
changes means the claim will potentially be denied at the pharmacy (if
the negative formulary change adds restrictions or removes the
reference product from the formulary) or the enrollee will be faced
with higher than expected cost-sharing (if the negative formulary
change moves the reference product to a different cost-sharing tier).
The changes may cause enrollees to ask the pharmacist questions at the
point of sale. In some cases, a pharmacist might reach out to the
patient or their prescriber to obtain a new prescription if, for
example, a refill of a reference product that a patient has been taking
is denied by the plan. However, the advance direct notice provided to
affected enrollees is intended to prompt the enrollee to act before the
formulary change takes place and before the next fill of the reference
product at the pharmacy. We decline to make further changes to our
proposal based on these comments.
Comment: A commenter was concerned that expanding immediate
substitutions to include substitutions of authorized generics,
interchangeable biological products, and unbranded biological products,
as proposed in the December 2022 proposed rule, would allow plans to
choose different specified products for coverage, such that facilities
would have to stock every single product option or substitution,
whereas currently, only one substitution needs to be stocked.
Conversely, a few commenters were concerned that substituted drugs
would have a different delivery form. A commenter on the November 2023
proposed rule shared concerns that, given that all biosimilar
biological products are not necessarily available in all delivery
forms, our proposed rule could mean enrollees would lose access to
their current delivery form (for instance, be able to only obtain a
vial when they currently use a pen cartridge).
Response: We appreciate the concern the commenter raised about the
potential impact of our proposed policies on pharmacies that may need
to stock multiple biosimilar biological products and the challenges
that could create as more biosimilar biological products come to the
market. However, that issue is not specific to Part D and is beyond the
scope of our proposal to expand midyear substitutions. Regarding the
concerns about changes in available delivery forms, under proposed
Sec. 423.120(e)(2)(i), we would only allow immediate substitutions of
an interchangeable biological product that FDA has determined to be
interchangeable with its reference product. Our annual formulary review
process ensures that Part D plan formularies include adequate
representation of drugs consistent with best practices of formularies
currently in widespread use. Part D sponsors are not required to cover
every dosage or delivery form of a particular drug; however, Part D
sponsors are expected to cover widely available dosage and delivery
forms so as to not unduly limit enrollee access. If a Part D sponsor
has multiple dosage or delivery forms of a particular drug on their
formulary, Part D sponsors implementing immediate substitutions will be
expected to continue to offer a similar variety of dosage and delivery
forms to meet the needs of patients. CMS will review changes submitted
on the HPMS formulary file and take action as appropriate if it appears
that any immediate substitutions are inappropriate. As for maintenance
changes defined in Sec. 423.100, these determinations are subject to
our review on a case-by-case basis. CMS takes into consideration
differences in available delivery forms when making decisions to
approve or deny such negative change requests.
Comment: A few commenters opined that our policy conflates pharmacy
substitutions and formulary coverage, and that there is a distinction
between the ability of a pharmacist to substitute a product without
prescriber intervention and a plan's decisions regarding formulary
coverage of a product.
Response: We understand the decision by a Part D sponsor to provide
formulary coverage of any given product is very different from the
ability of a pharmacist to substitute a product for another drug.
However, coverage decisions do not take place in a vacuum, and CMS
cannot ignore practical realities despite these commenters' position
that formulary design should not be affected by pharmacy substitutions
policies. In contrast, CMS believes that to prevent enrollees from
standing in line at the pharmacy counter unable to get the biosimilar
biological product because they do not have a new prescription for it,
our proposal to require 30 days' advance direct notice in Sec.
423.120(f)(1) is appropriate.
Comment: A few commenters asked us to align our proposed
regulations
[[Page 30527]]
with policies in certain other countries. Specifically, both a
commenter that asked us to restrict immediate substitutions to
interchangeable biological products and a few commenters that asked us
to permit immediate substitutions of all biosimilar biological products
for reference products cited policies in Europe to support their
different views.
Response: We appreciate the comments but clarify that we are
proposing policies on approval and notice of formulary changes for Part
D plans in the United States independent of policies in other
countries. As explained in detail in both the December 2022 and the
November 2023 proposed rules, our policies are informed by another
federal agency, FDA, which implements the statutory and regulatory
framework for the review and approval of biosimilar biological
products.
After consideration of the comments received on both the December
2022 and November 2023 proposals, and for the reasons set forth in the
proposed rules and our responses to the comments in this final rule, we
are finalizing the proposed regulation text changes at Sec. Sec.
423.4, 423.100, 423.104, 423.120, and 423.128, with the minor
modifications discussed below, in addition to other non-substantive
organizational and editorial changes for clarity.
In Sec. 423.4, removing the word ``biological'' from the
term ``reference biological product.''
In Sec. 423.4, adding the following language to the end
of the definition of ``interchangeable biological product'': ``which in
accordance with section 351(i)(3) of the Public Health Service Act (42
U.S.C. 262(i)(3)), may be substituted for the reference product without
the intervention of the health care provider who prescribed the
reference product.''
In Sec. 423.100, in the definition of ``maintenance
change,'' revising and reordering language to provide more clarity by
stating that drugs subject to removal include those ``that FDA
determines to be withdrawn for safety or effectiveness reasons.''
In Sec. 423.120(b)(5), finalizing the requirement that
Part D sponsors must provide notice of changes as specified in Sec.
423.120(f), but removing a reference to selection of a successor
regulation to Sec. 423.120(b)(5)(iv) for purposes of section 1860D-
4(b)(3)(I)(ii) of the Act.
In Sec. 423.120(e)(2)(ii), revising and reordering
language on market withdrawals to provide more clarity by stating that
drugs subject to removal include those ``that the Food and Drug
Administration (FDA) determines to be withdrawn for safety or
effectiveness reasons.''
In Sec. 423.120(f)(4)(iv), revising language requiring
Part D sponsors to include in their written notice of change a list of
formulary alternatives to specify that the alternative drugs be ``on
the formulary'' to make clear these alternatives are on the formulary
and can meet the definition of a Part D drug.
In Sec. 423.120(f)(4)(v), revising language specifying
that Part D sponsors provide written notice of the coverage
determinations and exceptions to make clear that an exception is a type
of coverage determination and to correct the regulatory cross-
reference.
Additionally, in the course of developing the final rule, it came
to our attention that we had inadvertently omitted updating Sec.
423.578(d) when proposing updates to the regulations to reflect the
agency's proposals. Accordingly, we are making conforming changes in
this final rule to the existing regulation text in Sec. 423.578(d) to
correspond with the changes we are finalizing in this rule to require
Part D sponsors to provide notice regarding negative formulary changes
under Sec. 423.120(f).
O. Parallel Marketing and Enrollment Sanctions Following a Contract
Termination (Sec. Sec. 422.510(e) and 423.509(f))
Sections 1857(c)(2) and 1860D-12(b)(3)(B) of the Act provide CMS
with the ability to terminate MA (including MA-PD) and PDP contracts if
we determine that a contract(s) has met any of the following
thresholds:
Has failed substantially to carry out the contract
Is carrying out the contract in a manner that is
inconsistent with the efficient and effective administration of,
respectively, Part C or Part D of Title XVIII of the Act (that is, the
Medicare statute).
No longer substantially meets the applicable conditions of
the applicable part of the statute.
This termination authority is codified at 42 CFR 422.510(a)(1)
through (3) and 423.509(a)(1) through (3), respectively. In addition,
section 1857(g)(3) of the Act (incorporated for Part D sponsors under
section 1860D-12(b)(3)(F) of the Act) specifies that intermediate
sanctions and civil money penalties (CMPs) can be imposed on the same
grounds upon which a contract could be terminated (63 FR 34968 and 70
FR 4193). CMS codified this authority at Sec. Sec. 422.752(b) and
423.752(b) with respect to intermediate sanctions, and Sec. Sec.
422.752(c)(1)(i) and 423.752(c)(1)(i) with respect to CMPs.
If CMS terminates an MA organization or Part D sponsor contract(s)
during the plan year but the termination is not effective until January
1 of the following year, the MA organization or Part D sponsor could
potentially continue to market and enroll eligible beneficiaries (as
described in 422 Subpart B and 423 Subpart B) into plans under the
terminating contract(s) unless CMS imposes separate marketing and
enrollment sanctions on the terminating contract(s).\61\ A terminating
contract that continues to market to and enroll eligible beneficiaries
will cause confusion and disruption for beneficiaries who enroll in the
period of time between when the termination action is taken and the
January 1 effective date of the termination.
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\61\ Regulations in 42 CFR 422 Subpart B and 423 Subpart B
permit enrollees to enroll in a plan mid-year during their initial
election period or special election periods.
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For these reasons, we proposed to add paragraph (e) to Sec.
422.510 and paragraph (f) to Sec. 423.509 that, effective contract
year 2025, marketing and enrollment sanctions will automatically take
effect after a termination is imposed. At paragraph (e)(1) of Sec.
422.510 and paragraph (f)(1) of Sec. 423.509, we proposed to state
that the marketing and enrollment sanctions will go into effect 15 days
after CMS issues a contract termination notice. This timeframe is
consistent with the number of days CMS often designates as the
effective date for sanctions after CMS issues a sanction notice.
At paragraph (e)(2) of Sec. 422.510 and paragraph (f)(2) of Sec.
423.509, we proposed that MA organizations and Part D sponsors will
continue to be afforded the same appeals rights and procedures specific
to contract terminations under 42 CFR Subpart N of parts 422 and 423,
however, there will not be a separate appeal for the sanction (in other
words the appeal of the termination will include the associated
marketing and enrollment sanctions). In addition, at paragraph (e)(3)
of Sec. 422.510 and paragraph (f)(3) of Sec. 423.509 we proposed that
if an MA organization or Part D sponsor appeals the contract
termination, the marketing and enrollment sanctions will not be stayed
pending the appeal consistent with Sec. Sec. 422.756(b)(3) and
423.756(b)(3). Finally, at paragraph (e)(4) of Sec. 422.510 and
paragraph (f)(4) of Sec. 423.509 we proposed that the sanction will
remain in effect until the effective date of the termination, or if the
termination decision is overturned on appeal, until
[[Page 30528]]
the final decision to overturn the termination is made by the hearing
officer or Administrator.
CMS rarely terminates MA organization and Part D sponsor contracts
and, on average, contract terminations affect less than one MA
organization or Part D sponsor a year. Therefore, we anticipate that
this proposal will not result in additional costs or additional
administrative burden for affected MA organizations and Part D
sponsors. For example, an MA organization and Part D sponsor will not
be required to submit a corrective action plan, and if appealed there
will only be one appeal rather than multiple. MA organizations and Part
D sponsors will continue to be required to comply with existing
regulations that require public and beneficiary notice that their
contract is being terminated under this proposal.
Comment: Several commenters expressed support for this proposal.
Response: CMS appreciates commenters' support.
Final Decision: After consideration of the public comments received
and for the reasons discussed here and in the proposed rule, we are
finalizing this provision without modification.
P. Update to the Multi-Language Insert Regulation (Sec. Sec. 422.2267
and 423.2267)
Individuals with limited English proficiency (LEP) experience
obstacles to accessing health care in the United States. Language
barriers negatively affect the ability of patients with LEP to
comprehend their diagnoses and understand medical instructions when
they are delivered in English and impact their comfort with post-
discharge care regimens.\62\ We further described the language barriers
faced by individuals with LEP in the November 2023 proposed rule at 88
FR 78523. These barriers contribute to disparities in health outcomes
for individuals with LEP, which likely worsened during the COVID-19
pandemic.\63\
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\62\ Espinoza, J. and Derrington, S. ``How Should Clinicians
Respond to Language Barriers that Exacerbate Health Inequity?'', AMA
Journal of Ethics (February 2021) E109. Retrieved from https://journalofethics.ama-assn.org/sites/journalofethics.ama-assn.org/files/2021-02/cscm3-2102.pdf; Karliner, L., Perez-Stable, and E.,
Gregorich, S. ``Convenient Access to Professional Interpreters in
the Hospital Decreases Readmission Rates and Estimated Hospital
Expenditures for Patients with Limited English Proficiency'', Med
Care (March 2017) 199-206. Retrieved from https://pubmed.ncbi.nlm.nih.gov/27579909/.
\63\ Lala Tanmoy Das et al., Addressing Barriers to Care for
Patients with Limited English Proficiency During the COVID-19
Pandemic, Health Affairs Blog (July 29, 2020), https://www.healthaffairs.org/do/10.1377/hblog20200724.76821/full/.
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The multi-language insert (MLI) currently required at Sec. Sec.
422.2267(e)(31) and 423.2267(e)(33) is a standardized communications
material that informs enrollees and prospective enrollees that
interpreter services are available in Spanish, Chinese, Tagalog,
French, Vietnamese, German, Korean, Russian, Arabic, Italian,
Portuguese, French Creole, Polish, Hindi, and Japanese. These were the
15 most common non-English languages in the United States when we
reinstituted the MLI in the 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 (87 FR 27704) (hereafter referred to as the May 2022 final rule).
Additionally, Sec. Sec. 422.2267(e)(31)(i) and 423.2267(e)(33)(i)
require plans to provide the MLI in 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 but is not already included on
the MLI. These regulations also provide that a plan may opt to include
the MLI in any additional languages that do not meet the five percent
threshold, where it determines that including the language would be
appropriate. The current MLI 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.'' The
issuance of the MLI is independent of the Medicare written translation
requirements for any non-English language that meets the five percent
threshold, as currently required under Sec. Sec. 422.2267(a)(2) and
423.2267(a)(2), and the additional written translation requirements for
fully integrated D-SNPs (FIDE SNPs) and highly integrated D-SNPs (HIDE
SNPs) provided in Sec. Sec. 422.2267(a)(4) and 423.3367(a)(4).\64\
Additionally, we note that pursuant to CMS's authority in section
1876(c)(3)(C) to regulate marketing and the authority in section
1876(i)(3)(D) to specify new section 1876 contract terms, we have also
established in Sec. 417.428 that most of the marketing and
communication regulations in subpart V of part 422, including the MLI
requirement in Sec. 422.2267(e)(31), also apply to section 1876 cost
plans.
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\64\ This proposal pertains only to the MLI requirements in
Sec. Sec. 422.2267(e)(31) and 423.2267(e)(33), not Sec. Sec.
422.2267 and 423.2267 broadly.
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Section 1557 of the Patient Protection and Affordable Care Act
(ACA) \65\ provides that, except where otherwise provided in Title I of
the ACA, an individual shall not, 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), 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), be excluded from participation in, be
denied the benefits of, or be subjected to discrimination under, any
health program or activity, any part of which is receiving Federal
financial assistance (including credits, subsidies, or contracts of
insurance); any program or activity administered by the Department; or
any program or activity administered by any entity established under
Title I of the Act. On May 18, 2016, the Office for Civil Rights (OCR)
published a final rule (81 FR 31375; hereinafter referenced to as the
``2016 section 1557 final rule'') implementing the requirement that all
covered entities--any health program or activity that receives Federal
financial assistance--include taglines with all ``significant
communications.'' The sample tagline provided by the Department
consisted of a sentence stating, in the 15 most common non-English
languages in a State or States, ``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).'' On June 19, 2020,
the Department published a new section 1557 final rule, 85 FR 37160
(2020 section 1557 final rule), rescinding the 2016 section 1557 final
rule's tagline requirements, 84 FR 27860. That rule is currently in
effect, save for a few provisions enjoined or set aside by the courts
and pending OCR's new proposed rule for section 1557 of the ACA,
published on August 4, 2022 (87 FR 47824).
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\65\ 42 U.S.C 18116(c).
---------------------------------------------------------------------------
None of the rulemaking impacting the various notifications of
interpreter services changed the requirement that MA organizations,
Part D sponsors, or cost plans must provide these services under
applicable law. Plans have long been required to provide interpreters
when necessary to ensure meaningful access to individuals with LEP,
consistent with existing civil rights laws. In implementing and
carrying out the Part C and D programs under
[[Page 30529]]
sections 1851(h), 1852(c), 1860-1(b)(1)(B)(vi), 1860D-4(a), and 1860D-
4(l) of the Act, CMS considers the materials required under Sec. Sec.
422.2267(e) and 423.2267(e) to be vital to the beneficiary decision
making process; ensuring beneficiaries with LEP are aware of and are
able to access interpreter services provides a clear path for this
portion of the population to properly understand and access their
benefits.
In the May 2022 final rule, we noted that we gained additional
insight regarding the void created by the lack of any notification
requirement associated with the availability of interpreter services
for Medicare beneficiaries (87 FR 27821). We stated that we consider
the materials required under Sec. Sec. 422.2267(e) and 423.2267(e) to
be vital to the beneficiary's decision-making process. We also noted
that we reviewed complaint tracking module (CTM) cases in the Health
Plan Management System (HPMS) related to ``language'' and found a
pattern of beneficiary confusion stemming from not fully understanding
materials based on a language barrier. We noted that solely relying on
the requirements delineated in the 2020 section 1557 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 their Medicare benefits through these plans and who are
enrolled in these plans. We stated that we believed that informing
Medicare beneficiaries that interpreter services are available is
essential to realizing the value of our regulatory requirements for
interpreter services.
On August 4, 2022, OCR published a new proposed rule for section
1557 of the ACA (87 FR 47824) that proposed to require covered entities
to notify the public of the availability of language assistance
services and auxiliary aids and services for their health programs and
activities at no cost using a notice of availability of language
assistance services and auxiliary aids and services (Notice of
Availability). Proposed 45 CFR 92.11(b) would require the Notice of
Availability to be provided in English and at least in the 15 most
common languages spoken by individuals with LEP in the relevant State
or States, and in alternate formats for individuals with disabilities
who request auxiliary aids and services to ensure effective
communications. These proposed provisions would result in misalignment
with the MLI requirement under Sec. Sec. 422.2267(e)(31) and
423.2267(e)(33) which require that notice be provided in the 15 most
common non-English languages in the United States.
In addition, under Sec. 438.10(d)(2), States must require Medicaid
managed care organizations (MCOs), prepaid inpatient health plans
(PIHPs), prepaid ambulatory health plans (PAHPs), and primary care case
management programs to include taglines in written materials that are
critical to obtaining services for potential enrollees in the prevalent
non-English languages in the State explaining the availability of oral
interpretation to understand the information provided, information on
how to request auxiliary aids and services, and the toll-free telephone
number of the entity providing choice counseling services in the State.
Several States that use integrated Medicare and Medicaid materials for
D-SNPs and Medicare-Medicaid Plans have contacted CMS and requested
that we change the MLI to be based on the 15 most common languages in
the State rather than the 15 most common languages nationally because
the most common languages in the State are often not the same as the
most common 15 languages nationally.
As a result of the MLI requirements at Sec. Sec. 422.2267(e)(31)
and 423.2267(e)(33) and the Medicaid requirement at Sec. 438.10(d)(2),
any applicable integrated plans (AIPs), as defined at Sec. 422.561,
that provide integrated Medicare and Medicaid materials for enrollees
must currently include the MLI in the 15 most common languages
nationally as well as the Medicaid tagline in the prevalent non-English
languages in the State to comply with both Medicare and Medicaid
regulatory requirements. Specifically, these plans that provide
integrated materials must comply with the MLI requirements at
Sec. Sec. 422.2267(e)(31) and 423.2267(e)(33) and the Medicaid
requirement at Sec. 438.10(d)(2) to include taglines in written
materials that are critical to obtaining services for potential
enrollees in the prevalent non-English languages in the State. In the
enrollee materials, this can result in a very long multi-page list of
statements noting the availability of translations services in many
languages. As discussed in greater detail below, we proposed to update
Sec. Sec. 422.2267(e)(31) and 423.2267(e)(33) to instead require that
a Notice of Availability be provided in English and at least the 15
languages most commonly spoken by individuals with LEP of the relevant
State; we articulated our expectation that this proposed policy would
better align with the Medicaid translation requirements at Sec.
438.10(d)(2).\66\
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\66\ We expect the 15 most common languages for a given State to
include any language required by the Medicaid program at Sec.
438.10(d)(2). Therefore, our NPRM would reduce burden on fully
integrated dual eligible special needs plans and highly integrated
dual eligible special needs plans, as defined at Sec. 422.2, and
applicable integrated plans, as defined at Sec. 422.561, to comply
with regulations at Sec. Sec. 422.2267(a)(4) and 423.2267(a)(4).
---------------------------------------------------------------------------
We believe rulemaking regarding a notice of the availability of
language assistance services and auxiliary aids and services for
individuals with LEP is needed to more closely reflect the actual
languages spoken in the service area. We also believe it is in the best
interest of enrollees for the requirements to align with the Medicaid
translation requirements because it allows D-SNPs that are AIPs to
provide a more applicable, concise Notice of Availability to enrollees
that does not distract from the main purpose of the document. Further,
alignment of Medicare and OCR rules would help to prevent confusion
among MA organizations, Part D sponsors, and cost plans regarding which
requirements they must comply with.
We proposed to amend Sec. Sec. 422.2267(e)(31) and
423.2267(e)(33). First, we proposed to replace references to the MLI
with references to a Notice of Availability. We proposed that this
notice be a model communication material rather than a standardized
communication material and thus that CMS would no longer specify the
exact text that must be used in the required notice. Second, we
proposed to change paragraphs (e)(31) and (e)(33) to require MA
organizations and Part D sponsors to provide enrollees a Notice of
Availability that, at a minimum, states that MA organizations and Part
D sponsors provide language assistance services and appropriate
auxiliary aids and services free of charge. Third, we proposed, in new
paragraphs (e)(31)(i) and (e)(33)(i), that the Notice of Availability
must be provided in English and at least the 15 languages most commonly
spoken by individuals with limited English proficiency of the relevant
State and must be provided in alternate formats for individuals with
disabilities who require auxiliary aids and services to ensure
effective communication. We noted in the proposed rule that this State-
specific standard would ensure that a significant proportion of each
State's particular LEP population receives key information in the
appropriate languages. We cited the U.S. Census Bureau's ACS 2009-2013
multi-year data, which show that the top languages spoken in each State
can
[[Page 30530]]
vary significantly.\67\ We concluded that State-specific language
translations provide for flexibility to maximize access to care for
individuals with LEP. Fourth, we proposed that the updated notice must
also include a statement regarding the availability of appropriate
auxiliary aids and services to reduce barriers to access for
individuals with disabilities.
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\67\ https://www2.census.gov/library/data/tables/2008/demo/language-use/2009-2013-acs-lang-tables-nation.xls.
---------------------------------------------------------------------------
As discussed in the November 2023 proposed rule, we believe this
proposal would make it easier for individuals to understand the full
scope of available Medicare benefits (as well as Medicaid benefits
available through the D-SNPs, where applicable), increasing their
ability to make informed health care decisions, and promote a more
equitable health care system by increasing the likelihood that MA
enrollees have access to information and necessary health care.
Additional benefits include mitigating the risk that Sec. Sec.
422.2267(e)(31) and 423.2267(e)(33) could conflict with Sec.
438.10(d)(2) and the forthcoming 1557 final rule, requiring applicable
Medicare plans to comply with two, disparate sets of requirements.
Further, requiring MA organizations and Part D sponsors to provide
multiple sets of translated statements accompanying enrollee materials
could lead to enrollee confusion and detract from the enrollee material
message. Setting aside which specific policies are finalized in the
forthcoming 1557 final rule, we generally continue to believe our
proposed changes are appropriate given the benefits of a Notice of
Availability for individuals with LEP and auxiliary aid and service
needs more closely reflecting the actual languages spoken in the
service area and aligning with the Medicaid translation requirements.
Additionally, we proposed in Sec. Sec. 422.2267(e)(31)(ii) and
423.2267(e)(33)(ii) that if there are additional languages in a
particular service area that meet the 5 percent service area threshold,
described in paragraph Sec. Sec. 422.2267(a)(2) and 423.2267(a)(2),
beyond the languages described in Sec. Sec. 422.2267(e)(31)(i) and
423.2267(e)(33)(i), the Notice of Availability must also be translated
into those languages, similar to the current MLI requirements at
Sec. Sec. 422.2267(e)(31)(i) and 423.2267(e)(33)(i). While Sec. Sec.
422.2267(a)(2) and 423.2267(a)(2) apply to the Notice of Availability
since it is a required material under Sec. Sec. 422.2267(e) and
423.2267(e), we wanted to clarify this in the regulation text. MA
organizations and Part D sponsors may also opt to translate the Notice
of Availability in any additional languages that do not meet the 5
percent service area threshold at Sec. Sec. 422.2267(a)(2) and
423.2267(a)(2), where the MA organization or Part D sponsor determines
that such inclusion would be appropriate, which is also included in the
current MLI requirements at Sec. Sec. 422.2267(e)(31)(i) and
423.2267(e)(33)(i). It is possible that there may be a subpopulation in
the plan benefit package service area that uses a language that does
not fall within the top 15 non-English languages or meet the 5 percent
service area threshold that the plan determines can benefit by
receiving the notice. We noted that pursuant to CMS's authority in
section 1876(c)(3)(C) to regulate marketing and the authority in
section 1876(i)(3)(D) to specify new section 1876 contract terms, and
as established in Sec. 417.428, this proposal would also apply to
section 1876 cost plans.
To assist plans with fulfilling their requirements under Sec. Sec.
422.2267(a)(2) and 423.2267(a)(2) to translate required materials into
any non-English language that is the primary language of at least five
percent of the population of a plan service area, since 2009 CMS has
provided plans with a list of all languages that are spoken by 5
percent or more of the population for every county in the U.S. Each
fall, we release an HPMS memorandum announcing that MA organizations
and Part D sponsors can access this list in the HPMS marketing review
module.\68\ However, plans can also use U.S. Census Bureau ACS data to
determine the top languages spoken in a given State or service area.
The September 2023 Medicare Part C & D Language Data Technical Notes
\69\ outlines our methodology for calculating the percentage of the
population in a plan's service area speaking a language other than
English and provides plans with instructions to make these calculations
on their own.
---------------------------------------------------------------------------
\68\ We released the contract year 2024 version of this HPMS
memorandum titled, ``Corrected Contract Year 2024 Translated Model
Materials Requirements and Language Data Analysis'' on September 25,
2023. This memorandum can be retrieved at: https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-september-18-22.
\69\ Found in HPMS as described in the September 25, 2023 HPMS
memo, ``Corrected Contract Year 2024 Translated Model Materials
Requirements and Language Data Analysis.'' This memo can be
retrieved at https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-september-18-22.
---------------------------------------------------------------------------
We received the following comments on this proposal and respond to
them below:
Comment: Many commenters supported CMS's plan to require MA and
Part D plans to provide enrollees a Notice of Availability that, at a
minimum, states that MA organizations and Part D sponsors provide
language assistance services and appropriate auxiliary aids and
services free of charge in English and at least the 15 languages most
commonly spoken by individuals with LEP of the relevant State and
languages that meet the 5 percent service area threshold. The Medicaid
and CHIP Payment and Access Commission (MACPAC) noted that the change
aligns with work they have underway, more closely aligns Medicare
requirements with existing Medicaid standards, reduces administrative
burden on health plans, and may reduce health disparities for
beneficiaries whose primary language is not English. A commenter stated
that integrated Medicare and Medicaid plans have been experiencing this
conflict between Medicaid requirements and Medicare MLI requirements
for many years. Another commenter stated that using the same standard
as Medicaid will reduce administrative time and effort for State
Medicaid agencies overseeing D-SNPs by enabling State Medicaid staff to
enforce a standard consistent with their other Medicaid products.
Response: We appreciate the widespread support for our proposal. We
believe that requiring a Notice of Availability to be provided in
English and in at least the 15 most commonly spoken non-English
languages and languages that meet the 5 percent service area threshold
free of charge is more closely tailored to the needs of the population
where the notice will be sent and will make it easier for individuals
to understand the full scope of available Medicare benefits (as well as
Medicaid benefits available through a D-SNP, where applicable),
increasing their ability to make informed health care decisions. It
will also promote a more equitable health care system by increasing the
likelihood that MA enrollees have access to information and necessary
health care.
Comment: A few commenters opposed the proposal noting that it would
place an undue administrative burden on plans, including national
subcontractors that work with multiple plans across multiple States.
Some commenters raised concerns about providing a State-based notice
for plans with multi-State service areas. A commenter stated that
providing the Notice of Availability based on an
[[Page 30531]]
enrollee's location would require plans to implement enrollee-level
programming for every plan communication for all 50 States. A few
commenters reported having employer-group waiver plans that covered
more than one State.
Response: We thank the commenters for their thoughts. We believe
that requiring the Notice of Availability to be provided in at least
the 15 most common languages spoken by individuals with LEP where the
notice will be sent will make it easier for individuals to understand
the full scope of available Medicare benefits (as well as Medicaid
benefits available through the D-SNPs, where applicable), increasing
their ability to make informed health care decisions, and promote a
more equitable health care system by increasing the likelihood that MA
enrollees have access to information and necessary health care. Any
subcontractors will need to work with the applicable plan to ensure
that they are meeting this requirement.
However, we share the concerns raised by commenters about plans
that have a service area covering multiple States and the potential
burden associated with determining the State of residence for enrollees
within the plan. We also agree that requiring such plans to include the
Notice of Availability in at least the top 15 non-English languages in
each State in the plan's service area, potentially resulting in many
more than 15 languages, may cause enrollee confusion and undue
administrative and financial burden to the plan. As a result, we are
updating the regulation to require the Notice of Availability to be
provided in at least the top 15 languages most commonly spoken by
individuals with LEP within the State or States associated with the
plan benefit package service area, consistent with the section 1557
proposed rule. This approach would allow plans to aggregate the
populations with LEP across all States in the plan's service area to
determine the 15 languages in which it must provide the Notice of
Availability. For example, if a plan's service area is New York, the
Notice of Availability must include at least the top 15 languages
spoken by individuals with LEP in New York, based on guidance published
by the Secretary. If the plan's service area includes Connecticut, New
Jersey, and New York, the plan may aggregate the populations with LEP
across Connecticut, New Jersey, and New York to determine the 15
languages in which it must provide the Notice of Availability, based on
guidance published by the Secretary. If the service area does not
include an entire State, the plans should still use the top 15
languages for the entire State. If the service area is national, the
plan may use the top 15 languages nationally for the Notice of
Availability, based on guidance published by the Secretary.
Comment: Another commenter questioned whether, if CMS finalizes the
proposal as a model communication material, plans can use each State's
required tagline and language for the Notice of Availability.
Response: Since D-SNPs are State-specific at the plan level this
will still allow D-SNPs to comply with Sec. 438.10(d)(2) and use the
State-specific tagline to satisfy the Notice of Availability
requirements at Sec. Sec. 422.2267(e)(31) and 423.2267(e)(33) as long
as it states, at a minimum, in at least the 15 most common non-English
languages and any language that meets the 5 percent service area
threshold, that the MA organization provides language assistance
services and appropriate auxiliary aids and services free of charge,
since the Notice of Availability does not require standardized
language. The D-SNP will not need to include multiple notices to meet
these Medicaid and Medicare regulatory requirements.
Comment: A few commenters requested that we publish annually the 15
most common languages spoken by individuals with LEP in each State and
nationally. Other commenters requested that we expand the list beyond
15 languages such as to the top 20 languages most commonly spoken by
individuals with LEP in each State. They stated that including the top
20 languages on the list would help advocates identify languages that
may meet the plan coverage area threshold even if they are not on the
list of the top 15 for the State.
Response: We appreciate commenters' requests for CMS to publish
lists of the top languages in each State and note that HHS will provide
a list of the top 15 non-English languages most commonly spoken by
individuals with LEP in each State and nationally based on the U.S.
Census Bureau's American Community Survey (ACS) data. Additionally,
since 2009, CMS has provided plans with a list of all languages that
are spoken by five percent or more of the population for every county
in the U.S. Each fall, we release an HPMS memorandum announcing that MA
organizations and Part D sponsors can access this list in the HPMS
marketing review module.\70\ Further, the HPMS memorandum notes that
plans can also use U.S. Census Bureau ACS data to determine the top
languages spoken by individuals with LEP in a given State or service
area. The September 2023 Medicare Part C & D Language Data Technical
Notes \71\ outlines our methodology for calculating the percentage of
the population in a plan's service area speaking a language other than
English and provides plans with instructions to make these calculations
on their own.
---------------------------------------------------------------------------
\70\ We released the contract year 2024 version of this HPMS
memorandum titled, ``Corrected Contract Year 2024 Translated Model
Materials Requirements and Language Data Analysis'' on September 25,
2023. This memorandum can be retrieved at: https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-september-18-22.
\71\ Found in HPMS as described in the September 25, 2023 HPMS
memo, ``Corrected Contract Year 2024 Translated Model Materials
Requirements and Language Data Analysis.'' This memo can be
retrieved at https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-september-18-22.
---------------------------------------------------------------------------
We also appreciate commenters asking us to publish more than the 15
top languages spoken by individuals with LEP in each State. Plans will
be able to identify the top 15 languages most commonly spoken by
individuals with LEP in any State based on guidance published by the
Secretary. Plans may opt to include additional languages, for which the
U.S. Census Bureau's ACS data would be a helpful data source. We will
consider expanding the list of languages provided in HPMS for MA and
Part D plans in a future HPMS update.
Comment: A few commenters requested that we provide our methodology
for determining the top 15 languages spoken by individuals with LEP in
a State.
Response: We will provide guidance explaining our methodology for
determining the top 15 languages spoken by individuals with LEP in each
State and nationally based on ACS data.
Comment: A commenter encouraged CMS to clarify that the languages
available be based on the ``plan State'' and not the enrollee's State
of residence.
Response: We clarify that the requirement is based on the State or
States associated with the plan benefit package service area rather
than where an organization is located. To improve clarity, we are
updating the regulation text at Sec. Sec. 422.2267(e)(31) and
423.2267(e)(33) to, ``State or States associated with the plan's
service area.''
Comment: We received a few comments asking us to clarify which
communications a Notice of Availability must accompany and the
frequency with which the Notice of Availability is sent to enrollees. A
commenter suggested we develop a targeted list of
[[Page 30532]]
materials with which to include the Notice of Availability while
another commenter requested that we limit the types of documents that a
Notice of Availability must accompany to those documents sent less
frequently. Another commenter urged that we make the Notice of
Availability an annual mailing instead of requiring inclusion in all
materials and allow it to be suppressed if an enrollee has indicated a
language of preference.
Response: While we acknowledge the comments suggesting we reduce
the frequency with which we require the Notice of Availability, we
believe it is important to continually make enrollees aware of the
availability of language assistance services in all required materials
under Sec. Sec. 422.2267(e) and 423.2267(e). The requirement to
include notice of available interpreter services and auxiliary aids and
services with all required materials is an established policy that is
already provided for in CMS regulations. CMS did not propose any
amendments to this aspect of its policy as enrollee language and format
preferences and needs may change over time. We also note that
Sec. Sec. 422.2267(e)(31) and 423.2267(e)(33) include provisions, such
as allowing for a single copy of the requisite notice to be included in
a mailing of multiple required documents, that ease burden and offer
plans some flexibility, where practicable.
Comment: Several commenters requested that we work with OCR and
Medicaid to ensure consistency between our proposal, the OCR section
1557 final rule, and Medicaid regulations.
Response: We thank the commenters recommending we better align our
regulations with other relevant regulations. We strive to achieve this
goal by better aligning Medicare regulations at 42 CFR 422.2267(a)(2)
and 423.2267(a)(2) with OCR regulations at 45 CFR 92.11 and Medicaid
regulations at 42 CFR 438.10(d)(2). We note that we have continued to
work closely with OCR, the CMS Center for Consumer Information and
Insurance Oversight (CCIIO), and other offices throughout the drafting
of our rule to ensure alignment of regulations and mitigate burden on
plans.
Comment: Several commenters opposed the use of a model notice
instead of standardized language for the Notice of Availability.
However, another commenter specifically noted support for the model
communication approach and urged CMS to routinely review plans' Notices
of Availability for compliance. A commenter requested that we work with
States to publish a national Notice of Availability and any associated
disclaimers, which aligns with all State requirements and accommodates
all multi-plan materials by June of every year to reduce complexity and
prevent enrollee confusion. Another commenter asked that we use
specific notice language to ensure that all enrollees receive a full
explanation of their rights while another commenter expressed concern
that a model notice may result in more errors. Finally, another
commenter recommended we collaborate with relevant stakeholders to
develop a single, uniform Notice of Availability that can be used by
health plans and providers without customization in the top 31
languages spoken nationally to accommodate 99 percent of the LEP
population.
Response: We appreciate the commenters' concerns that a model
Notice of Availability rather than standardized language may result in
more errors and the concern with ensuring enrollees receive a full
explanation of their rights. We also appreciate the support in making
the Notice of Availability a model communication.
To mitigate errors in messaging, we specified that the content of
the Notice of Availability must include at minimum, a statement that
the MA organization provides language assistance services and
appropriate auxiliary aids and services free of charge. In addition,
for the purpose of compliance with section 1557 of the Affordable Care
Act, OCR will be providing model language translated into the 15
languages most commonly spoken by individuals with LEP in every State
and nationally that plans can use as a template to comply with the
proposed CMS notice requirements. Also, allowing the use of a model
Notice of Availability provides flexibility for D-SNPs in States that
may require the use of a specific tagline or Notice language so that
they do not have to include additional language in materials. We
believe that allowing this flexibility along with the OCR model
language outweighs the risk of errors in messaging.
We also thank the commenter for the recommendation to develop a
Notice of Availability list translated in the top 31 languages spoken
nationally. However, we believe that a list of 31 languages would be
too long. As we explained in the proposed rule (88 FR 78525), States
with AIP D-SNPs contacted CMS concerned that compliance with Medicaid
requirements at Sec. 438.10(d)(2) and Medicare requirements at
Sec. Sec. 422.2267(e)(31) and 423.2267(e)(33) would require D-SNPs to
include a Notice with a long list of languages in the required
materials. One State described how their current list of languages to
comply with Medicare and Medicaid requirements for D-SNPs was over four
pages. We noted this as a reason for updating this regulation in the
proposed rule. As the commenter points out, lengthy notices can dilute
the primary message, making it more difficult for enrollees to receive
critical information. Lengthy inserts can also increase costs for
plans.
Comment: A commenter encouraged us to promote flexibility for plans
to send materials digitally as nearly a quarter of the commenter's plan
enrollees selected to receive plan materials electronically. The
commenter suggested we require MA organizations to ask enrollees for
email address and cell phone information as part of the enrollment
application.
Response: We clarify that plans may send the Notice of Availability
digitally with required materials as described and permitted in
proposed Sec. Sec. 422.2267(e)(31)(vii) and 423.2267(e)(33)(vii) which
we have renumbered as Sec. Sec. 422.2267(e)(31)(ii)(G) and
423.2267(e)(33)(ii)(G) in this final rule that the notice may be
provided electronically when a required material is provided
electronically as permitted under Sec. Sec. 422.2267(d)(2) and
423.2267(d)(2). We also note that the model MA enrollment form includes
a section where enrollees can note materials they would like to receive
via email and the option to add their email address. Enrollees may also
include their cell phone number in the application.
Comment: A commenter questioned if the reference to ``auxiliary
aids'' in the CMS proposal equates to what CMS traditionally considered
alternate formats: audio, large print, and braille. Another commenter
requested that braille be exempt from the requirement because plans
know that an enrollee's preference is braille if the enrollee is
already receiving documents in braille.
Response: We thank the commenter for the question and clarify that,
in alignment with OCR, we define ``auxiliary aids'' as written in 45
CFR 92.102.\72\ As noted, plans must provide the Notice of Availability
in alternate formats, if requested. If an enrollee indicates a
preference for receiving materials in braille, the plan should also
provide that enrollee with the Notice of Availability text in English
braille, and then--not in braille--include the text in the 15 languages
most commonly
[[Page 30533]]
spoken by individuals with LEP in the State or States associated with
the plan benefit package service area, informing them of the
availability of verbal translation services as well as alternate
formats. If an enrollee requests materials in large print, then the
plan should provide them with the Notice of Availability text in
English in large print and in at least the 15 languages most commonly
spoken by individuals with LEP in the State or States associated with
the plan benefit package service area. Plans must also comply with
section 504 of the Rehabilitation Act and section 1557 of the
Affordable Care Act, which may include providing the Notice of
Availability in an alternate format or providing another auxiliary aid
or service such as braille. Thus, if an enrollee is in need of the
Notice of Availability in an alternate format or through another
auxiliary aid or service, the enrollee's plan would likely already be
required to provide the Notice of Availability in the requested medium,
to comply with section 504 and section 1557.
---------------------------------------------------------------------------
\72\ https://www.ecfr.gov/current/title-45/section-92.102.
---------------------------------------------------------------------------
Comment: Some commenters recommended that we delay the effective
date or enforcement of the requirement to CY 2026 or until OCR's final
rule is released to ensure consistency and prevent what they
characterize as undue burden to plans. A commenter stated a concern
with being able to include the associated costs in their 2024 MA bids
and the time required to make the administrative updates.
Response: We appreciate the commenters' concerns about the timing
of our proposal and OCR's section 1557 final rule. We have worked
closely with OCR to eliminate potential conflicts with the section 1557
final rule.
We also understand that MA organizations may need to make some
administrative adjustments to comply with this requirement. CMS will
provide a list of the top 15 languages most commonly spoken by
individuals with LEP in each State and nationally, and OCR will provide
translations of the model Notice of Availability in those languages. In
addition, in this final rule we have updated Sec. Sec. 422.2267(e)(31)
and 423.2267(e)(33) to allow plans to continue using the MLI until the
beginning of contract year 2026 marketing on September 30, 2025.
However, plans will also have the choice, starting at the beginning of
marketing for contract year 2025 on September 30, 2024, of using the
Notice of Availability described in subparagraphs 422.2267(e)(31)(ii)
and 423.2267(e)(33)(ii) to satisfy the MLI requirement, as provided in
Sec. Sec. 422.2267(e)(31)(i)(G) and 423.2267(e)(33)(i)(G). This
flexibility will allow D-SNPs in States requiring a State-specific
tagline to use the State tagline for contract year 2025 marketing and
communications without also having to include the MLI as well. It will
also allow those plans that want to provide a State-specific notice for
contract year 2025 marketing and communications to do so. Per
Sec. Sec. 422.2267(e)(31)(ii) and 423.2267(e)(33)(ii), all plans will
be required to use the Notice of Availability for CY 2026 marketing and
communications beginning September 30, 2025.
Comment: A commenter requested that all levels of government adopt
policies ensuring that individuals with LEP have adequate language
access to their health care provider. The commenter also recommended we
work to ensure that professional language service providers are
adequately trained, certified, and compensated, and that opportunities
are made available for Medicare beneficiaries, family caregivers, and
trained interpreters to provide input on the language used in the model
communication materials.
Response: We appreciate the commenter's perspective that
professional language service providers should be adequately trained,
certified, and compensated. We agree that these are important issues,
although matters of compensation are beyond the scope of this
rulemaking. We note that OCR will provide model language based on
beneficiary testing. In addition, we encourage MA organizations to
consult with Medicare beneficiaries, family caregivers, and trained
interpreters if they decide to include translations of the Notice of
Availability in languages other than those provided by OCR.
Comment: A few commenters recommended that we provide all standard
model materials in the top 15 languages that are on the current MLI.
Response: We appreciate the commenters' recommendation, but the
requests for CMS to provide translations of all standard model
materials are out of scope. Our proposal pertains to notifying
enrollees of the availability of verbal translation services, not the
translations of written model materials themselves. However, we note
that in contract year 2024, CMS did translate the Annual Notice of
Changes (ANOC), Evidence of Coverage (EOC), EOC errata, Explanation of
Benefits (EOB), Provider Directory, Pharmacy Directory, Formulary, Low-
Income Subsidy (LIS) Rider, and Part D transition letter in Chinese,
Korean, Spanish, and Vietnamese. We also remind commenters that OCR
will provide translations of the model Notice of Availability in the 15
languages most commonly spoken by individuals with LEP in each State
and nationally. Additionally, we note that Sec. Sec. 422.2267(a)(3)
and 423.2267(a)(3) obligate plans to provide required materials to
enrollees on a standing basis in any of the non-English languages
identified in Sec. Sec. 422.2267(a)(2) or (a)(4) and 423.2267(a)(2) or
(a)(4) or in an accessible format, when an enrollee makes a request to
receive these materials in a non-English language or accessible format.
Comment: A few commenters stated that the 5 percent service area
threshold is not inclusive enough and recommended that we set a
threshold of either 5 percent or 1,000 people, whichever is lower, in a
service area. Another commenter requested that there be an undefined
standard to ensure that smaller language communities receive the Notice
of Availability in their preferred language.
Response: We appreciate the commenters' perspectives on this issue,
but changes to the threshold for the translation requirement are beyond
the scope of this regulation. We believe policy making on this issue
would benefit from further study and engagement with interested
parties, including notice to the public and the opportunity to submit
comments on this topic.
Comment: A commenter strongly encouraged us to minimize future
modifications to the Notice of Availability as such fluctuations over
the years have created administrative burden and increased costs for
plans.
Response: We agree with the commenter that limiting future
modifications to regulations regarding notification of the availability
of language assistance services and auxiliary aids and services would
help reduce burden. We will work to limit future changes. Moreover, we
anticipate the policy we are finalizing, which better aligns Medicare
translation requirements with Medicaid and OCR requirements, will
mitigate the need for future updates.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing revisions to paragraphs at Sec. Sec. 422.2267(e)(31) and
423.2267(e)(33) as follows: We are allowing plans a choice in the
applicability date for the updates to Sec. Sec. 422.2267(e)(31) and
423.2267(e)(33). Plans may implement the changes for contract year 2026
marketing and communications beginning September
[[Page 30534]]
30, 2025, or contract year 2025 marketing and communications beginning
September 30, 2024. As a result, we are adding the heading Notice of
availability of language assistance services and auxiliary aids and
services (Notice of Availability) at Sec. Sec. 422.2267(e)(31) and
423.2267(e)(33) and modifying sections Sec. Sec. 422.2267(e)(31)(i)
and 423.2267(e)(33)(i) to read, ``Prior to contract year 2026 marketing
on September 30, 2025, the notice is referred to as the 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.'' We
are then inserting the former rule sections Sec. Sec.
422.2267(e)(31)(i)-(vi) and 423.2267(e)(33)(i)-(vi) and renumbering
them as Sec. Sec. 422.2267(e)(31)(i)(A)-(F) and 423.2267(e)(33)(i)(A)-
(F). We are also including a clarification in Sec. Sec.
422.2267(e)(31)(i)(B) and 423.2267(e)(33)(i)(B) to incorporate the
exception that we are finalizing in Sec. Sec. 422.2267(e)(31)(i)(G)
and 423.2267(e)(33)(i)(G), which will allow plans to utilize the new
model notice described in Sec. Sec. 422.2267(e)(31)(ii) and
423.2267(e)(33)(ii) to satisfy the existing MLI requirement during
contract year 2025. We are also adding Sec. 422.2267(e)(31)(i)(G)
stating, ``At plan option for CY 2025 marketing and communications
beginning September 30, 2024, the plan may use the model notice
described in subparagraph 422.2267(e)(31)(ii) to satisfy the MLI
requirements set forth in this subparagraph (i).'' We are adding an
identical provision at Sec. 423.2267(e)(33)(i)(G) except with a
reference to subparagraph 423.2267(e)(33)(ii).
We are modifying sections Sec. Sec. 422.2267(e)(31)(ii) and
423.2267(e)(33)(ii) to state, ``For CY 2026 marketing and
communications beginning September 30, 2025, the required notice is
referred to as the Notice of availability of language assistance
services and auxiliary aids and services (Notice of Availability). This
is a model communications material through which MA organizations must
provide a notice of availability of language assistance services and
auxiliary aids and services that, at a minimum, states that the MA
organization provides language assistance services and appropriate
auxiliary aids and services free of charge.'' We are then redesignating
sections Sec. Sec. 422.2267(e)(31)(i)-(vi) and 423.2267(e)(33)(i)-(vi)
as new paragraphs Sec. Sec. 422.2267(e)(31)(ii)(A)-(G) and
423.2267(e)(33)(ii)(A)-(G). For the redesignated paragraphs
(e)(31)(ii)(A) and (e)(33)(ii)(A) we are adding ``or States associated
with the plan's service area'' between the proposed language ``relevant
State'' and ``and must be provided . . .'' to reduce the burden on
organizations with plan benefit packages that operate in more than one
State and conform with the section 1557 proposed rule, and to clarify
that the requirement is based on the plan benefit package service area.
Paragraph (A) will specify that this notice of availability of language
assistance services and auxiliary aids and services must be provided in
English and at least the 15 languages most commonly spoken by
individuals with limited English proficiency of the relevant State or
States associated with the plan's service area and must be provided in
alternate formats for individuals with disabilities who require
auxiliary aids and services to ensure effective communication.
Q. Expanding Permissible Data Use and Data Disclosure for MA Encounter
Data (Sec. 422.310)
Section 1853(a) of the Act requires CMS to risk-adjust payments
made to Medicare Advantage (MA) organizations. In order to carry out
risk adjustment, section 1853(a)(3)(B) of the Act requires submission
of data by MA organizations regarding the services provided to
enrollees and other information the Secretary deems necessary. The
implementing regulation at Sec. 422.310(b) requires that MA
organizations submit to CMS ``the data necessary to characterize the
context and purposes of each item and service provided to a Medicare
enrollee by a provider, supplier, physician, or other practitioner.''
Currently, Sec. 422.310(d)(1) provides that MA organizations submit
risk adjustment data equivalent to Medicare fee-for-service (FFS) data
to CMS as specified by CMS. MA encounter data, which are comprehensive
data equivalent to Medicare FFS data, are risk adjustment data.\73\
---------------------------------------------------------------------------
\73\ See System of Records Notices for the CMS Encounter Data
System (EDS), System No. 09-70-0506, published June 17, 2014 (79 FR
34539), as amended at February 14, 2018 (83 FR 6591); and for the
CMS Risk Adjustment Suite of Systems (RASS), System No. 09-70-0508,
published August 17, 2015 (80 FR 49237), as amended at February 14,
2018 (83 FR 6591).
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Section 1106(a)(1) of the Act authorizes the Secretary to adopt
regulations governing release of information gathered in the course of
administering programs under the Act. In addition, section 1856(b) of
the Act authorizes CMS to adopt standards to carry out the MA statute,
and section 1857(e)(1) of the Act authorizes CMS to add contract terms
that are not inconsistent with the Part C statute and are necessary and
appropriate for the program. The regulation at Sec. 422.310(f)(1)
establishes permissible CMS uses of MA encounter data (referred to as
``risk adjustment data'' in the regulation), while Sec. 422.310(f)(2)
and (f)(3) establish rules for CMS release of data. Prior to 2008,
Sec. 422.310(f) provided for CMS to use MA risk adjustment data to
risk adjust MA payments and, except for any medical record data also
collected under Sec. 422.310, for other purposes. Over time, we
subsequently refined the regulatory language describing the scope of
permissible uses and releases of the MA risk adjustment data, including
MA encounter data, to (i) risk adjusting MA payments, (ii) updating
risk adjustment models, (iii) calculating Medicare disproportionate
share hospital percentages, (iv) conducting quality review and
improvement activities, (v) for Medicare coverage purposes, (vi)
conducting evaluations and other analysis to support the Medicare
program (including demonstrations) and to support public health
initiatives and other health care-related purposes, (vii) for
activities to support administration of the Medicare program, (viii)
for activities to support program integrity, and (ix) for purposes
authorized by other applicable laws (70 FR 4588; 73 FR 48650 through
48654; 79 FR 50325 through 50334).
Section 422.310(f)(2) permits the release of MA encounter data to
other HHS agencies, other Federal executive branch agencies, States,
and external entities, and Sec. 422.310(f)(3) of our current
regulation specifies circumstances under which we may release MA
encounter data for the purposes described in Sec. 422.310(f)(1).
Existing regulations allow release of the data after risk adjustment
reconciliation for the applicable payment year has been completed,
under certain emergency preparedness or extraordinary circumstances,
and when CMS determines that releasing aggregated data before
reconciliation is necessary and appropriate for activities to support
the administration of the
[[Page 30535]]
Medicare program (finalized in the CY 2024 Payment Policies Under the
Physician Fee Schedule and Other Changes to Part B Payment and Coverage
Policies; Medicare Shared Savings Program Requirements; Medicare
Advantage; Medicare and Medicaid Provider and Supplier Enrollment
Policies; and Basic Health Program final rule (88 FR 79400)). We noted
in the November 2023 proposed rule that further expanding MA encounter
data sharing to include support for the Medicaid program would be
consistent with the goals of the Federal Coordinated Health Care
Office, as established in statute (88 FR 78527).
MA enrollment has grown to approximately half of all Medicare
beneficiaries; a trend also seen in the enrollment of dually eligible
individuals. For example, 51 percent of all dually eligible individuals
were enrolled in an MA plan in 2021 (up from 12 percent in December
2006).74 75 Such individuals experience the health care
system and incur health outcomes as individuals regardless of which
health care program pays for the service, but currently, the States'
ability to obtain MA encounter data for program analysis and
evaluations or program administration for dually eligible individuals
enrolled in an MA plan is limited to support of a Medicare-Medicaid
demonstration. Our current regulation text does not specify that we may
make MA encounter data available to States for Medicaid program
administration or to conduct evaluations and other analyses for the
Medicaid program, with the exception of those evaluations and analyses
used to support demonstrations. Therefore, previous rulemaking limited
opportunities for States to effectively perform functions such as
coordination of care, quality measure design, and program evaluation
and analysis by allowing them access to MA encounter data for these
activities only for those dually eligible individuals enrolled in
Medicare-Medicaid demonstrations.
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\74\ 2023 Medicare Trustees Report https://www.cms.gov/oact/tr.
\75\ https://www.cms.gov/files/document/managedcareenrollmenttrendsdatabrief2012-2021.pdf.
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We proposed changes to Sec. 422.310(f) to improve States' access
to MA encounter data, including making a specific exception to the
timing of sharing MA encounter data. We noted that we did not intend
for our proposals to impact the terms and conditions governing CMS
release of MA risk adjustment data as described in Sec. 422.310(f)(2),
in accordance with applicable Federal laws and CMS data sharing
procedures. As discussed in the August 2014 final rule, CMS data
sharing procedures require each recipient of data from CMS to sign and
maintain a CMS data sharing agreement, ``which addresses privacy and
security for the data CMS discloses'' and ``contains provisions
regarding access to and storage of CMS data to ensure that beneficiary
identifiable information is stored in a secure system and handled
according to CMS's security policies,'' which encompasses the
limitations for additional disclosure of CMS data (79 FR 50333). We
noted that such provisions would similarly apply to States that receive
MA encounter data under our proposed amendments to Sec. 422.310(f).
As stated in the August 2014 final rule, the data described in
paragraphs (a) through (d) would include those elements that constitute
an encounter data record, including contract, plan, and provider
identifiers, with the exception of disaggregated payment data (79 FR
50325). In accordance with Sec. 422.310(f)(2)(iv), we aggregate
payment data to protect commercially sensitive information.
1. Expanding and Clarifying the Programs for Which MA Encounter Data
May Be Used for Certain Allowable Purposes
As we stated in the Medicare Program; Hospital Inpatient
Prospective Payment Systems for Acute Care Hospitals and the Long-Term
Care Hospital Prospective Payment System and Fiscal Year 2015 Rates;
Quality Reporting Requirements for Specific Providers; Reasonable
Compensation Equivalents for Physician Services in Excluded Teaching
Hospitals; Provider Administrative Appeals and Judicial Review;
Enforcement Provisions for Organ Transplant Centers; and Electronic
Health Record (EHR) Incentive Program proposed rule (hereafter referred
to as the May 2014 proposed rule; 79 FR 27978), using MA encounter data
enables us, our contractors, and external entities to support Medicare
program evaluations, demonstration designs, and effective and efficient
operational management of the Medicare program, encourages research
into better ways to provide health care, and increases transparency in
the administration of the Medicare program (79 FR 28281 through 28282).
However, because States lack access to MA encounter data, States'
ability to conduct activities for dually eligible individuals enrolled
in MA plans is limited. As Medicare is the primary payer for dually
eligible individuals, States generally lack comprehensive data on care
provided to dually eligible individuals enrolled in MA. Over the years,
various States have requested that CMS share MA encounter data for
dually eligible individuals to better coordinate care, conduct quality
improvement activities, support program design, conduct evaluations,
and improve efficiency in the administration of the Medicaid program.
Our current regulation text at Sec. 422.310(f)(1)(vi) (evaluations
and analysis to support the Medicare program) and (vii) (activities to
support administration of the program) specifies that, for these
purposes, the encounter data must be used for the Medicare program.
Therefore, though Sec. 422.310(f)(2) permits CMS to release MA
encounter data to States for the purposes listed in paragraph (f)(1),
Sec. 422.310(f)(1)(vi) and (vii) do not clearly permit CMS to release
MA encounter data to States to support Medicaid program evaluations and
analysis or to support administration of the Medicaid program.
We proposed to add ``and Medicaid program'' to the current MA
encounter data use purposes codified at Sec. 422.310(f)(1)(vi) and
(vii) and explained that these additions would enable CMS to use the
data and release it (in accordance with Sec. 422.310(f)(2) and (3))
for the purposes of evaluation and analysis and program administration
for Medicare, Medicaid, or Medicare and Medicaid combined purposes. We
stated our belief that our release of MA encounter data for data use
purposes that support the Medicare and Medicaid programs would
generally be to the States and would support our responsibility to
improve the quality of health care and long-term services for dually
eligible individuals; improve care continuity, ensuring safe and
effective care transitions for dually eligible individuals; improve the
quality of performance of providers of services and suppliers under the
Medicare and Medicaid programs for dually eligible individuals; and
support State efforts to coordinate and align acute care and long-term
care services for dually eligible individuals with other items and
services furnished under the Medicare program.
We noted in the November 2023 proposed rule that, as stated above,
CMS's usual data sharing procedures apply to the release of MA
encounter data in accordance with Sec. 422.310(f)(2) and address
access to and storage of CMS data to ensure that beneficiary
identifiable information is protected. We explained that we make other
data available to external entities, including
[[Page 30536]]
States, in accordance with CMS data sharing procedures and Federal
laws, including but not limited to the Privacy Act of 1974. We further
explained that we review data requests for appropriate use
justifications, including updated or amended use justifications for
existing data requests, and we employ data sharing agreements, such as
a Data Use Agreement and Information Exchange Agreement, that limit
external entities to CMS-approved data uses and disclosure of CMS data.
For example, States that request data from CMS for care coordination
and program integrity initiatives may disclose the data to State
contractors, vendors, or other business associates for those
activities. In accordance with CMS data sharing agreements, these State
contractors, vendors, or other business associates must also follow the
terms and conditions for use of the CMS data, including limiting use of
the CMS-provided data only for approved purposes. We explained that
this would mean that, under our proposal, a State receiving MA
encounter data for care coordination may disclose MA encounter data to
Medicaid managed care plans to coordinate services for enrolled dually
eligible individuals. We noted that comments submitted on the August
2014 final rule cited concerns that access to MA encounter data by
competitors of the various MA organizations that are required to submit
data could permit a competitor to gain an advantage by trending cost
and utilization patterns over a number of years. We explained that
Sec. 422.310(f)(2)(iv) provides for aggregation of dollar amounts
reported for the associated encounter to protect commercially sensitive
data and that any release of MA encounter data to States would comply
with applicable statutes, regulations, and processes including those
described above, and we expressed our belief that concern around
potential competitive advantage would be mitigated if the risk exists
at all. We noted that, as stated in the August 2014 final rule, we
believe that CMS data sharing procedures and review of use
justifications ``strikes an appropriate balance between the significant
benefits of furthering knowledge'' and the concerns regarding the
release of risk adjustment data, including about beneficiary privacy or
commercially sensitive nature of encounter information submitted by MA
plans (79 FR 50328). Consistent with what we stated in the August 2014
final rule, CMS data sharing agreements have enforcement mechanisms,
and data requestors acknowledge these mechanisms. For example,
penalties under section 1106(a) of the Social Security Act [42 U.S.C.
1306(a)], including possible fines or imprisonment, and criminal
penalties under the Privacy Act [5 U.S.C. 552a(i)(3)] may apply, as
well as criminal penalties that may be imposed under 18 U.S.C. 641 (79
FR 50333). Requestors of CMS data, such as States, are responsible for
abiding by the law, policies, and restrictions of the data sharing
agreements--which extends to any downstream disclosures of the data to
State contractors, vendors, or other business associates--as a
condition of receiving the data. We noted our intent to only approve
requests for MA encounter data that have clear written data use
justifications and identify any downstream disclosure--such as to State
contractors, vendors, or other business associates--for each requested
purpose. We have not identified any issues regarding competitive harm
or disadvantage in our current data sharing programs.
As stated in the November 2023 proposed rule, this proposal would
allow us to use MA encounter data and disclose it--subject to the other
limitations and protections specified in Sec. 422.310(f) and other
applicable laws and regulations--to States to perform evaluations and
analysis, which would include program planning for dually eligible
individuals. Currently, States generally only receive Medicare FFS data
from CMS under current authorities, which results in an incomplete
assessment of the dually eligible population. Under our proposal, we
noted that States could request MA encounter data for all of the dually
eligible enrollees they serve and include this growing portion of the
dually eligible population in their data analysis and efforts to
improve outcomes for low-income older adults and people with
disabilities who are enrolled in the Medicaid program.
In the August 2014 final rule, we stated that, in addition to use
of these data for review of bid validity and MLR, we expected there
would be additional potential uses for these data as part of the
program administration purpose, such as the development of quality
measures (79 FR 50326). Consistent with our expectation at that time,
we clarified in the November 2023 proposed rule that care coordination
would be an allowable use for these data as part of the purpose
currently codified at Sec. 422.310(f)(1)(vii)--for activities to
support the administration of the Medicare program--which includes
activities that are not within the scope of the other permitted uses
defined at Sec. 422.310(f)(1). Similar to quality measure development,
a use we explicitly named, care coordination is critical to ensuring
that individuals receive effective and efficient care, especially when
services may be covered under multiple health care programs, as is the
case for dually eligible individuals who are enrolled in Medicaid and
an MA plan. We also stated our belief that use and release of MA
encounter data to States to support administering the Medicaid program,
including to coordinate care and improve quality of care for Medicaid-
covered individuals, is appropriate. We provided the example that, in
administering the Medicaid program, a State may need MA encounter data
to coordinate care for dually eligible individuals, which may include
identification of individuals at high risk of institutional placement
or other undesirable outcomes based on past service utilization;
coordination of services from the MA plan's coverage of an inpatient
stay to Medicaid coverage of subsequent home and community-based
services; coordination of Medicaid-covered services in a skilled
nursing facility for a dually eligible individual after reaching the
limits of the individual's coverage through the MA plan; monitoring
nursing facility quality of care, including through tracking rates of
hospitalization and emergency room visits; and coordination of physical
health services with behavioral health services, where Medicaid
coverage differs from the MA plan's coverage.
2. Adding an Additional Condition Under Which MA Encounter Data May Be
Released Prior to Reconciliation
Section 422.310(f)(3) describes the circumstances under which we
may release MA encounter data. Specifically, the current regulation
provides that MA encounter data will not become available for release
unless the risk adjustment reconciliation for the applicable payment
year has been completed, we determine it is necessary for certain
emergency preparedness purposes, we determine that extraordinary
circumstances exist, or we determine that releasing aggregated data is
necessary and appropriate to support activities and authorized uses in
the administration of the Medicare program. Section 422.310(g)
specifies the deadlines that we use to determine which risk adjustment
data submissions we will use to calculate risk scores for a given
payment year. This section also establishes a reconciliation process to
adjust payments based on additional data from the data collection
period
[[Page 30537]]
(meaning the year the item or service was furnished to the MA enrollee)
so long as we receive the submissions before the established final risk
adjustment data submission deadline for the payment year, which is no
earlier than January 31 of the year following the payment year. This
submission window provides MA organizations an opportunity to update or
submit encounter data records and chart review records to be considered
for risk adjustment and payment in the applicable payment year. Section
422.310(b) requires MA organizations to submit data for all items and
services provided to an MA enrollee; therefore, MA organizations must
continue to submit encounter data records and data corrections after
the final risk adjustment data submission deadline when timely data
submissions are determined to be inaccurate, incomplete, or untruthful
(see Sec. 422.310(g)(2)(ii) for limitations on which submissions after
the final risk adjustment data submission deadline may be used for
additional payment). We explained that the timing limitation on release
of MA encounter data in our current regulation is tied to the
established final risk adjustment data submission deadline for a given
payment year, and it results in a data lag of at least 13 months after
the end of the MA risk adjustment data collection period (that is, the
year during which the item or service was furnished to the MA
enrollee), before CMS may release the MA risk adjustment data for the
purposes described in Sec. 422.310(f)(1). In the November 2023
proposed rule, we stated our belief that there will be increased
utility of MA encounter data for Medicaid programs if the data is
released before final risk adjustment reconciliation for coordination
of care under the allowable purpose in Sec. 422.310(f)(1)(vii) and
that the reasons and concerns we identified when adopting the delay in
release of MA encounter data can be sufficiently taken into account by
CMS as part of evaluating a request to use the data for specific
purposes and determining whether to release the data. Further, in many
cases, those reasons and concerns likely do not sufficiently apply in
the context of care coordination to require a delay in releasing the
data, the further discussion of which we recount below.
In order to improve utility of MA encounter data for certain
approved purposes, we proposed to add a new paragraph (f)(3)(v) to
Sec. 422.310 to authorize MA encounter data to be released to States
for the purpose of coordinating care for dually eligible individuals
when CMS determines that releasing the data to a State Medicaid agency
before the final risk adjustment reconciliation for a relevant year is
necessary and appropriate to support activities and uses authorized
under paragraph (f)(1)(vii). As discussed in the November 2023 proposed
rule, the proposed amendment to Sec. 422.310(f)(1)(vii) would expand
the scope of that provision to include using the data to support
administration of the Medicaid program, and in our discussion, we
clarified that coordination of care activities are within the scope of
activities that support administration of these health care programs.
We specified care coordination in our discussion of the proposal for
release of MA encounter data prior to final risk adjustment
reconciliation, because, as we explained in the November 2023 proposed
rule, we believe providing States access to this more timely data is
critical to effectively coordinating care which is directly tied to our
responsibility to support States' efforts to coordinate and align care
and services for dually eligible individuals and furthers our goal to
improve care continuity and ensure safe and effective care transitions
for dually eligible individuals (see 42 U.S.C. 1315B) while
accommodating the concerns that led us to adopt the time limits in
Sec. 422.310(f)(3). Together, the proposed changes to Sec.
422.310(f)(1)(vii) and (f)(3)(v) would improve the timeliness of the MA
encounter data we make available to States for coordination of care for
dually eligible individuals. For care coordination activities, States
rely more on timely data about service utilization than on complete
data. We stated our belief that improving access to timely MA encounter
data and ensuring Medicaid programs can coordinate care for dually
eligible individuals supports our goal of providing dually eligible
individuals full access to the benefits to which they are entitled (42
U.S.C. 1315B(d)).
As discussed above, States cannot effectively coordinate care for
individuals using data that is more than one or two years old. We
recognize that the MA encounter data may be subject to edits before
final risk adjustment reconciliation given the final risk adjustment
data submission deadline for submission of risk adjustment data under
Sec. 422.310(g)(2)(ii), which states that the final risk adjustment
data submission deadline is a date no earlier than January 31 of the
year following the payment year. Therefore, data from some MA
organizations or for some enrollees may not be available as quickly as
data from or for others. However, we explained that we believe that
earlier release of MA encounter data to States for the purpose of care
coordination for dually eligible individuals would be appropriate and,
as stated above, many of the reasons and concerns to require a delay
releasing MA encounter data likely do not sufficiently apply in the
context of care coordination. Care coordination activities require
States, or their contractors, to identify and contact individuals who
have received or are in need of services from their providers. We
explained that as States would use the MA encounter data to identify
opportunities for care improvement such as improving transitions of
care or promoting the use of underutilized services, we did not foresee
any risk to individuals from States using data that may be subject to
change in the future. States would be able to use the data to identify
more dually eligible individuals who are potentially in need of
Medicaid-covered services. States are not required to act on the data
and can address potential data concerns arising from using MA encounter
data before final risk adjustment reconciliation as States have
experience using Medicare data that may not be final for effective care
coordination. We noted that many States already obtain timely Medicare
FFS claims with a lag between 14 days to 3 months, depending on the
data file, for uses such as care coordination, quality improvement, and
program integrity. These Medicare FFS claims may also be subject to
change subsequent to the States' receipt of the data, yet we are not
aware of any problems in these use cases caused by CMS sharing data
that is still subject to change. Because the MA encounter data released
to States would be for care coordination purposes, we do not anticipate
any negative impacts from any potential subsequent changes to the
encounters. MA encounter data made available to States prior to final
risk adjustment reconciliation would not contain disaggregated payment
information, in accordance with Sec. 422.310(f)(2)(iv). Additionally,
States will not use the pre-reconciliation MA encounter data for plan
payment. Under our proposal, release of the MA encounter data for care
coordination purposes must be necessary and appropriate to support
administration of the Medicaid program; we stated our belief that it
would not be appropriate or necessary to use the MA data released on
this accelerated schedule for payment purposes (88 FR 78530).
[[Page 30538]]
As we explained in the November 2023 proposed rule, coordination of
care is a clear situation where more timely MA encounter data is needed
for effective intervention without invoking risks that we have cited in
the past about sharing MA risk adjustment data before final risk
adjustment reconciliation. The timing limits in Sec. 422.310(f)(3)
were adopted in the August 2014 final rule in response to comments
expressing concern about release of the MA risk adjustment data (79 FR
50331 through 50332). In that prior rulemaking, some commenters cited
concerns about release of MA encounter data submitted in the initial
years due to concerns regarding systems development and submission
challenges. We stated our belief that these concerns were mitigated by
the subsequent years since the implementation of the August 2014 final
rule that have resulted in accumulation of experience submitting,
reviewing, and using MA encounter data in accordance with Sec.
422.310(f). We noted that, in addition, CMS maintains several checks
and edits in the encounter data system to minimize duplicate,
incomplete, or inappropriate data stored in the encounter data system.
In the November 2023 proposed rule, we reiterated that our proposed
amendment to paragraph (f)(3) would only permit the release of MA
encounter data to State Medicaid agencies for care coordination for
dually eligible individuals.
We also explained that we had noted in prior rulemaking that our
approach to reviewing requests for MA encounter data from external
entities would incorporate the Medicare Part A/B and Part D minimum
necessary data policy, with additional restrictions to protect
beneficiary privacy and commercially sensitive information of MA
organizations and incorporated that limitation into paragraph (f)(2)
(79 FR 50327). Further, we noted that this limitation would also apply
when reviewing State requests for MA encounter data under the proposed
expansion of Sec. 422.310(f)(1)(vi) and (vii), and to any State
requests for MA encounter data before the reconciliation deadline to
support coordination of care. We explained that CMS data sharing
procedures include a review team that assesses data requests for
minimum data necessary and appropriate use justifications for care
coordination, and we would only approve release of MA encounter data
for any data requests where the requestor has sufficiently demonstrated
that the request satisfies all requirements of Sec. 422.310(f). We
noted that other commenters on the August 2014 final rule had expressed
concerns that MA organizations are able to delete, replace, or correct
MA encounter data before the reconciliation deadline, which could
potentially result in inaccurate or incomplete MA encounter data and
that incomplete or inaccurate data should not be used or released for
the purposes outlined in Sec. 422.310(f). Additionally, CMS makes
available technical assistance to States to help with State use and
understanding of Medicare data. In the November 2023 proposed rule, we
expressed our intent to extend this technical assistance to States
requesting MA encounter data to mitigate issues arising from non-final
data, and to evaluate the potential concerns arising from using MA
encounter data before final reconciliation when determining whether to
release MA encounter data to States for care coordination activities
for dually eligible individuals to support administration of the
Medicare and Medicaid programs.
Finally, we proposed that these amendments to Sec. 422.310(f)
would be applicable upon the effective date of the final rule. As
outlined in section I.A. of the November 2023 proposed rule, the
majority of our proposals were proposed to be applicable beginning
January 1, 2025. We stated that we do not believe delaying the
applicability of these proposed amendments beyond the effective date of
the final rule is necessary because these proposals address CMS's
authority to use and share MA encounter data but do not impose any
additional or new obligations on MA organizations.
We received the following comments on these two proposals and
respond to them below:
Comment: Numerous commenters, including the vast majority who
commented on these proposals, expressed support for CMS proposals to
expand the allowable MA encounter data uses by adding ``and Medicaid''
to existing uses at Sec. 422.310(f)(1)(vi) and (vii) and our proposal
to share MA encounter data with States in advance of reconciliation for
the purpose of care coordination for dually eligible individuals. These
commenters agreed that these changes would improve States' ability to
understand and improve service delivery for dually eligible
individuals. Many comments also included additional perceived benefits,
such as: identification of unaligned dually eligible individuals (that
is, individuals enrolled in one MA plan and a separate, unaligned
Medicaid managed care plan); D-SNP program planning; assessing
supplemental benefit use; facilitating development of a long term
services and supports dashboard to inform policy and quality
improvement efforts; ensuring proper payment for services and
determination of third party liability with minimal disruption to
providers; focusing outreach for service provision by Medicaid managed
care plans; analysis for required reporting on managed care network
adequacy and service access; eliminating potentially duplicative
evaluations; and providing continuity within both primary and specialty
care for dually eligible individuals.
Response: We appreciate the comments and support.
Comment: A commenter requested clarification on how the
facilitation of the data exchange may occur and if this requires data
exchange agreements, three-way contracts, business associate
agreements, or other contractual arrangements.
Response: To effectuate encounter data sharing with States, we
would utilize our existing pathways for new data requests, including
the existing data transfer mechanisms and data sharing agreements that
we currently hold with the States for the disclosure of Medicare data.
As stated in the proposed rule, we ``review data requests for
appropriate use justifications, including updated or amended use
justifications for existing data requests'' and ``employ data sharing
agreements, such as a Data Use Agreement and Information Exchange
Agreement, that limit external entities to CMS-approved data uses and
disclosure of CMS data'' (88 FR 78528).
Comment: Many commenters supported CMS's intent to provide
technical assistance and emphasized its importance. A few of those
commenters provided suggestions on technical assistance that we could
provide to States for encounter data, including sharing information on
best practices for utilizing the data; content and limitations of the
data set; data request processes and timelines; disclosure parameters
and suggested uses for the data; purposes not permitted; data linkage;
and building data infrastructure for use of MA encounter data.
Response: We thank these commenters for their suggestions. We agree
that technical assistance to States would be an important aspect of
sharing MA encounter data. As we noted in our proposal, we intend to
provide technical assistance to States, such as the CCW Medicare
Encounter Data User Guide (https://www2.ccwdata.org/web/guest/user-documentation), to help them make the most effective use of MA
[[Page 30539]]
encounter data, including ways to mitigate issues arising from non-
final data, potential concerns arising from using MA encounter data
before final reconciliation, and what disclaimers are appropriate to
provide to requestors, to help them understand the limitations of the
MA encounter data (88 FR 78531). We will take these suggestions into
consideration when developing our technical assistance approach.
Comment: A commenter provided additional suggestions for our
communication around sharing of MA encounter data with States. These
suggestions included notifying plans when MA encounter data is shared
with a State, guidance to States on how to communicate with plans and
address anomalies, particularly when the State is analyzing and
interpreting these data for performance evaluation and quality
reporting, and publishing a report following 2 years of implementation
that provides the industry with information on how the sharing of MA
encounter data has facilitated greater coordination, integration, and
quality measure alignment.
Response: We thank the commenter for these suggestions. We will
take them into consideration as we establish operational processes to
support sharing MA encounter data with States.
Comment: A commenter supported CMS proposals and suggested CMS
include other data collected from or submitted by MA organizations,
such as data obtained from chart reviews, lab results, EMR records, and
other clinical documents, in addition to MA encounter data in the data
that is shared with States under Sec. 422.310(f).
Response: We note that current regulation at Sec. 422.310(f)
specifies the purposes and procedures according to which we may use and
release the MA risk adjustment data, which is defined in Sec.
422.310(a) and includes encounter data and other data submitted by MA
organizations for risk adjustment purposes (such as chart review
records, which are reports of diagnoses, and may be sourced from chart
reviews, lab results, EMR record or other clinical documents). However,
aside from the chart review records, any clinical documentation that
CMS may have access to will not be released. The regulation at Sec.
422.310(f) excludes the use and release of the data described at Sec.
422.310(e) for validation of risk adjustment data; this means that the
medical records or other clinical documents that MA organizations
submit to validate their risk adjustment submissions are not released
under Sec. 422.310(f). CMS did not propose any changes to expand data
sharing to include medical records or other clinical documents;
therefore, CMS is not finalizing any regulatory changes related to
sharing such information.
Comment: Some commenters stressed the importance of establishing
strong measures to ensure data privacy and security when disclosing MA
encounter data, including limiting access to medical records to protect
the trust and security of the physician-patient relationship and the
safety of the patient.
Response: We appreciate these comments underscoring the importance
of protecting data privacy and security. In the proposed rule, we
stated that we disclose data in accordance with applicable Federal laws
and CMS data sharing procedures that include privacy and security
measures for data sharing to protect individuals' PHI and PII, (88 FR
78527). We also noted in our proposed rule the following additional CMS
data sharing processes to protect the safety of the individual: we
review data requests for appropriate use justifications, employ data
sharing agreements that limit data requestors to CMS-approved data uses
and disclosure of CMS data, and include enforcement mechanisms; and
data requestors acknowledge these mechanisms and that they will abide
by the law, policies, and restrictions of the data sharing agreements
as a condition of receiving the data (88 FR 78528). We will only
approve data requests that are within the allowable uses of MA risk
adjustment data (generally MA encounter data) as detailed in Sec.
422.310(f)(1). With regard to the comment about limiting access to
medical records, as discussed in a prior response to a public comment,
Sec. 422.310(f) does not authorize the release of medical records or
other records submitted by an MA organization under Sec. 422.310(e) to
validate its risk adjustment data submissions.
Comment: Some commenters underscored the importance of data quality
and provided recommendations to ensure data accuracy and completeness.
These recommendations included suggesting that CMS continue to seek
ways to improve the completeness of encounter data, including
considering MedPAC's 2019 recommendation on MA encounter data
completeness; considering ways to ensure that data is as accurate as
possible when shared to avoid incorrect care planning and potential
patient harm; and providing further clarity on how this data will be
communicated. Additionally, a commenter recommended CMS avoid any
changes that may impact data quality or how MA organizations currently
report to CMS and State Medicaid programs.
Response: We thank these commenters for the recommendations to
ensure data quality and accuracy. We reiterate our intent to provide
technical assistance and necessary resources for data requestors,
including appropriate disclaimers to help requestors understand the
limitations of the MA encounter data (88 FR 78531). We stated in the
proposed rule that we do not foresee any potential patient harm from
States using data that may be subject to change in the future since
States would use the MA encounter data to identify opportunities for
care improvement, such as improving transitions of care or to promote
the use of underutilized services, and that States are not required to
act on the data. We also explained that States have experience using
Medicare data that may not be final for effective care coordination (88
FR 78530). We appreciate MedPAC's 2019 recommendations and note that we
have been working with MA plans to ensure that the accuracy and
completeness of MA encounter data improve over time. We note that we
have released the Request for Information: Medicare Advantage Data to
solicit feedback ``on all aspects of data related to the MA program--
both data not currently collected as well as data currently
collected,'' including ``precise detail and definitions on the data
format, fields, and content that would facilitate comprehensive
analyses of any publicly released MA data, including comparisons with
existing data sets'' and ``recommendations related to operational
considerations as part of this effort'' (89 FR 5907 through 5908).
Additionally, we confirm that our proposal does not impact how MA
plans submit MA encounter data to CMS. As mentioned above, we will
utilize our existing pathways for new MA encounter data requests,
including the existing data transfer mechanisms.
Comment: A commenter raised the concern that in order for the
proposed policies to be meaningful, States would need necessary
resources and infrastructure in place to utilize MA encounter data
effectively. The commenter also explained that it is important to
coordinate with States to understand their current and planned capacity
for ingesting and utilizing the MA encounter data before proceeding.
The commenter further stressed that without sufficient IT supports and
specific plans for how to leverage MA encounter data, providing the
data as proposed would not achieve CMS's goals. Another commenter
suggested
[[Page 30540]]
that MA encounter data be available at the discretion of the State, as
with other Medicare data sharing, as not all State systems are
sophisticated enough to use this data.
Response: We appreciate the comments regarding States' capabilities
for intake and analysis of the MA encounter data. Many States have
extensive history with encounter data through their Medicaid managed
care programs. Many also have experience working with Medicare FFS and
MA encounter data. For example, since 2011, we have disclosed Medicare
data to States to support the dually eligible population, and over 30
States have requested and used, or are still using, these data. Another
example is that numerous States currently receive and use MA encounters
directly from MA plans in accordance with the terms of a demonstration
or as detailed by the contract held by a D-SNP with the State.
Additionally, our data sharing agreements require States attest to
certain requirements regarding appropriate administrative technical and
physical safeguards to protect the integrity, security, and
confidentiality of the data as well as system security requirements in
order to request data from us. Nonetheless, capacity and experience
vary across States, and we confirm our stated intention in the proposed
rule that MA risk adjustment data would be available, consistent with
Sec. 422.310(f) as amended, when the State requests such data; a
State's request for MA encounter data from CMS would be voluntary.
Comment: A few commenters raised questions regarding duplicative
data sharing practices and the requirements in some State Medicaid
agency contracts (SMACs) for D-SNPs to submit MA encounter data
directly to States. A commenter asked how the proposed change would
impact existing SMAC requirements, which may currently require such
data sharing between D-SNPs and the State, and whether our proposal
would create redundancies, inefficiencies, or simply obviate the need
for such data sharing. A commenter wished to avoid duplicating any data
sharing practices currently in place, and suggested we collaborate with
MA plans and States to determine if data sharing can be streamlined
through one process. Another commenter suggested removing the
requirement for D-SNPs to submit MA encounter data directly to States
and, instead, CMS would create a uniform set of MA encounter data
available from a central organization, eliminating 50 different systems
that collect data in different ways, formats, and times.
Response: We appreciate the interest in streamlining data sharing
processes and will consider these comments as we implement the final
rule. However, nothing in our final rule imposes any additional or new
obligations on MA organizations (88 FR 78531) or creates any additional
data sharing or data reporting burden for MA plans. These comments
relate to MA encounter data that D-SNPs submit to States in accordance
with SMACs established under Sec. 422.107(d)(1). Changes to SMAC
requirements about data sharing or data access are outside the scope of
our current proposals and are subject to negotiation between the MA
organization (or D-SNP) and the State; our current proposals do not
directly impact these SMAC requirements or data sharing processes.
Comment: A commenter suggested that CMS provide additional
resources for MA organizations on collecting encounter data, citing
burdens associated with collecting, processing, and submitting the
data. Another commenter suggested that CMS encourage MA plans to submit
more timely, higher quality, and uniform MA encounter data directly to
States to improve usability for time-sensitive care coordination.
Response: We believe that these suggestions for additional
resources for MA organizations to collect MA encounter data and
encouraging MA plans to submit more timely, higher quality data
directly to States are beyond the scope of this rule. However, as
mentioned above, we released the Request for Information: Medicare
Advantage Data to solicit additional feedback on all aspects of data
related to the MA program, including ways that we could improve our
current MA data collection and release methods (89 FR 5907).
Comment: A commenter recommended CMS create data sharing agreements
to exclude downstream disclosure of MA encounter data to commercial
entities. Another commenter expressed concern that changes made by
Congress or CMS could expand the type of information captured by MA
encounter data in the future to include competitively sensitive
information that should not be shared with States. This commenter said
that CMS should create an explicit exclusion of payment and pricing
data and other competitively sensitive information, indicating that
only MA encounter data necessary to support coordination of care,
quality measure design, and program evaluation and analysis be shared
with States.
Response: As stated in the proposed rule, we intend to only approve
requests for MA encounter data that have clear written data use
justifications and identify any downstream disclosure--such as to State
contractors, vendors, or other business associates--for each requested
purpose (88 FR 78528). Also, consistent with what we stated in the
August 2014 final rule, CMS data sharing agreements have enforcement
mechanisms, and data requestors acknowledge these mechanisms. For
example, penalties under section 1106(a) of the Social Security Act [42
U.S.C. 1306(a)], including possible fines or imprisonment, and criminal
penalties under the Privacy Act [5 U.S.C. 552a(i)(3)] may apply, as
well as criminal penalties may be imposed under 18 U.S.C. 641 (79 FR
50333). Requestors of CMS data, such as States, are responsible for
abiding by the law, policies, and restrictions of the data sharing
agreements--which extends to any downstream disclosures of the data to
State contractors, vendors, or other business associates--as condition
of receiving the data. Additionally, we note that current regulation at
Sec. 422.310(2)(iv) limits CMS release of MA encounter data
``(s)ubject to the aggregation of dollar amounts reported for the
associated encounter to protect commercially sensitive data.'' We
stated in the proposed rule that--given that Sec. 422.310(f)(2)(iv)
provides for aggregation of dollar amounts reported for the associated
encounter to protect commercially sensitive data and that any release
of MA encounter data to States would comply with applicable statutes,
regulations, and processes including those described above--we believe
that concern around potential competitive advantage is mitigated, if
the risk exists at all. We have not identified any issues regarding
competitive harm or disadvantage in our current data sharing programs,
including current disclosure of MA encounter data (88 FR 78528).
Finally, we note that in the Medicare and Medicaid Programs;
Patient Protection and Affordable Care Act; Advancing Interoperability
and Improving Prior Authorization Processes for Medicare Advantage
Organizations, Medicaid Managed Care Plans, State Medicaid Agencies,
Children's Health Insurance Program (CHIP) Agencies and CHIP Managed
Care Entities, Issuers of Qualified Health Plans on the Federally-
Facilitated Exchanges, Merit-based Incentive Payment System (MIPS)
Eligible Clinicians, and Eligible Hospitals and Critical Access
Hospitals in the
[[Page 30541]]
Medicare Promoting Interoperability Program final rule (hereinafter
referred to as the January 2024 final rule), we finalized a requirement
for impacted payers to employ a Payer-to-Payer API by January 1, 2027
to satisfy two requirements: first, for transfer of data from a
previous payer to a current payer for a new enrollee, and second, for
quarterly exchange of data between two concurrent payers. Impacted
payers include States, Medicaid managed care plans, and MA plans, and
therefore would apply to individuals dually enrolled in two or more of
these payers--such as between an MA organization and a Medicaid managed
care plan (89 FR 8759).
Comment: We received a comment on our discussion in section XI of
the November 2023 proposed rule (88 FR 78605), which provided examples
where the commenter felt we inadequately justified the need for
rulemaking. Specific to our MA encounter data use proposals in this
section, the commenter suggested that we include the number of States
that have requested such data and provide more specific information
about how the wording of the current rule has harmed coordination and
quality of care.
Response: As described in the proposed rule, 51 percent of all
dually eligible individuals were enrolled in an MA plan in 2021, but
previous rulemaking limited opportunities for States to effectively
perform functions such as coordination of care, quality measure design,
and program evaluation and analysis by allowing them access to MA
encounter data for these activities only for those dually eligible
individuals enrolled in Medicare-Medicaid demonstrations (88 FR 78527).
We also noted in the proposed rule that ``(a)s Medicare is the primary
payer for dually eligible individuals, States generally lack
comprehensive data on care provided to dually eligible individuals
enrolled in MA'' and that ``(o)ver the years, various States have
requested that CMS share MA encounter data for dually eligible
individuals to better coordinate care, conduct quality improvement
activities, support program design, conduct evaluations, and improve
efficiency in the administration of the Medicaid program'' (88 FR
78527). We further clarify here that while we do not have a definitive
list of all the States that would have requested MA encounter data if
it were made available, our contractor conducted an informal poll in
2017 of the States that requested Medicare FFS data and found that 14
out of 15 respondents were interested in requesting MA encounter data
if made available. Additionally, during 2022, four States directly
asked us for MA encounter data to support specific projects related to
dually eligible individuals. In 2023, 26 States (and the District of
Columbia) requested Medicare data for dually eligible individuals for
care coordination, quality improvement, program planning, and program
integrity data uses. The remaining 25 States that did not request
Medicare data for such uses had various levels of engagement and
interaction with our program. Over the previous decade, some of those
25 non-participating States with high managed care penetration cited
the lack of MA encounter data as the reason the State did not request
Medicare FFS data via our data sharing program.
In the proposed rule, we provided numerous examples of ways States
could use MA encounter data. These examples included identification of
individuals at high risk of institutional placement or other
undesirable outcomes based on past service utilization; coordination of
services from the MA plan's coverage of an inpatient stay to Medicaid
coverage of subsequent home and community-based services; coordination
of Medicaid-covered services in a skilled nursing facility for a dually
eligible individual after reaching the limits of the individual's
coverage through the MA plan; monitoring nursing facility quality of
care, including through tracking rates of hospitalization and emergency
room visits; and coordination of physical health services with
behavioral health services, where Medicaid coverage differs from the MA
plan's coverage (88 FR 78528). As the current regulation at Sec.
422.310(f) does not permit CMS to disclose MA encounter data to States
for these data uses, we believe there is harm incurred when States are
unable to conduct these activities for dually eligible individuals. We
note that we do not know the full extent of States that would have
requested MA encounter data if current regulation permitted, the exact
data uses for which the States would have used the data, or the number
of dually eligible individuals impacted by such data-driven
initiatives. However, based on our experience and observations, we
believe that it is appropriate to conclude that access to MA risk
adjustment data on an accelerated timeframe could support State efforts
to coordinate care for dually eligible individuals who are in MA plans.
Finally, as stated in the proposed rule, we believe disclosure for
the purpose of improving States' ability to understand and improve care
provided to dually eligible individuals is appropriate and consistent
with our intention in prior rulemaking regarding uses of MA risk
adjustment data and proposed changes to regulation to support our
intention (88 FR 78526).
Comment: A commenter recommended additional data sharing efforts
for CMS to undertake to improve care coordination for dually eligible
individuals. The commenter suggested CMS establish a database with
Medicare data for all dually eligible individuals--including Medicare
program and contract enrollment data, as well as their Medicare claims
data--and disclose to States and plans for coordination across payers.
The commenter also suggested requiring States to share standard
elements (for example, Medicare program enrollment, Medicare contract
number) to Medicaid managed care plans in standard benefit enrollment
and maintenance files to facilitate coordination for dually eligible
individuals.
Response: We appreciate the suggestions, but they are outside of
the scope of our proposal.
After considering the comments received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing without modification our proposed amendment to add ``and
Medicaid program'' to the current MA encounter data use purposes at
Sec. 422.310(f)(1)(vi) to conduct evaluations and other analysis to
support the Medicare program (including demonstrations) and to support
public health initiatives and other health care-related research, and
Sec. 422.310(f)(1)(vii) for activities to support the administration
of the Medicare program. We are also finalizing without modification
our proposed addition of new Sec. 422.310(f)(3)(v) to allow for MA
encounter data to be released to States for the purpose of coordinating
care for dually eligible individuals when CMS determines that releasing
the data to a State Medicaid agency before reconciliation is necessary
and appropriate to support activities and uses authorized under
paragraph (f)(1)(vii). These amendments to Sec. 422.310(f) will be
applicable upon the effective date of this final rule as outlined in
section I.A. of this final rule. As explained in the proposed rule,
delaying the applicability of these proposed amendments beyond the
effective date of the final rule is not necessary because these
proposals address CMS's authority to use and share MA risk adjustment
data but do
[[Page 30542]]
not impose any additional or new obligations on MA organizations.
3. Solicitation of Comments on Use of MA Encounter Data To Support
Required Medicaid Quality Reporting
We requested comments on making MA encounter data available to
States to support Child and Adult Core Set reporting as efficiently as
possible while complying with Sec. 422.310(f) and balancing
considerations related to the timeliness of quality reporting with
accuracy and completeness. While States are required to include all
Medicaid and CHIP beneficiaries in certain mandatory Child and Adult
Core Set reporting, including dually eligible individuals, States lack
access to the Medicare utilization data needed to report on dually
eligible individuals enrolled in MA plans. We discussed these mandatory
Core Set reporting requirements and the timing limitations posed by our
current regulations in the November 2023 proposed rule (88 FR 78531).
Several commenters supported CMS sharing MA encounter data to
States prior to reconciliation for quality review and improvement use.
A commenter suggesting alternative options to using MA encounter data
prior to reconciliation. We appreciate the support and suggestions for
our efforts to improve both the utility of MA encounter data and
support of State requirements for quality reporting. We will consider
comments and suggestions received as we move forward.
T. Standardize the Medicare Advantage (MA) Risk Adjustment Data
Validation (RADV) Appeals Process
In this final rule, we are revising certain timing issues in terms
of when RADV medical record review determination and payment error
calculation appeals can be requested and adjudicated. Specifically, we
proposed that Medicare Advantage (MA) organizations must exhaust all
levels of appeal for medical record review determinations before the
payment error calculation appeals process can begin. We believed that
this clarification was necessary because RADV payment error
calculations are directly based upon the outcomes of medical record
review determinations. We also proposed several other changes to our
regulatory appeals process to conform with these proposed revisions.
Section 1853(a)(1)(C) of the Act requires that CMS risk-adjust
payments made to MA organizations. Risk adjustment strengthens the MA
program by ensuring that accurate payments are made to MA organizations
based on the health status and demographic characteristics of their
enrolled beneficiaries, and that MA organizations are paid
appropriately for their plan enrollees (that is, less for healthier
enrollees who are expected to incur lower health care costs, and more
for less healthy enrollees who are expected to incur higher health care
costs). Making accurate payments to MA organizations also ensures we
are safeguarding Federal taxpayer dollars.
Contract-level RADV audits are CMS's main corrective action for
overpayments made to MA organizations when there is a lack of
documentation in the medical record to support the diagnoses reported
for risk adjustment. CMS conducts RADV audits of MA organization-
submitted diagnosis data from a selection of MA organizations for
specific payment years to ensure that the diagnoses they submitted are
supported by their enrollees' medical records. CMS can collect the
improper payments identified during CMS and Department of Health and
Human Services Office of Inspector General (HHS-OIG) audits, including
the extrapolated amounts calculated by the OIG. The RADV audit appeals
process, as outlined in 42 CFR 422.311, is applicable to both CMS and
HHS-OIG audits and is therefore referred to as the ``MA RADV audit
appeals process.'' Additional information regarding CMS's contract
level RADV audits was outlined in the RADV final rule, CMS-4185-F2,
published on February 1, 2023.\76\
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1. Current MA RADV Appeals Process
CMS previously established a process after notice and comment
rulemaking for MA organizations to appeal RADV audit findings as
outlined by provisions at 42 CFR 422.311(c)(6)-(c)(8). Once review of
the medical records submitted by MA organizations to support audited
HCCs is completed and overpayment amounts are calculated, HHS (CMS or
HHS-OIG) issues an audit report to each audited MA organization
contract. In accordance with Sec. 422.311(b)(1), this audit report
includes the following:
Detailed enrollee-level information relating to confirmed
enrollee HCC discrepancies.
The contract-level RADV-payment error estimate in dollars.
The contract-level payment adjustment amount to be made in
dollars.
An approximate timeframe for the payment adjustment.
A description of the MA organization's RADV audit appeal
rights.
The MA RADV audit appeals process begins once MA organizations are
notified of their audit findings via a RADV audit report. MA
organizations have 60 days from the date of issuance of a RADV audit
report to file a written request for appeal and must follow the
Secretary's RADV audit appeals procedures and requirements under Sec.
422.311. MA organizations may appeal RADV medical record review
determinations and/or the MA RADV payment error calculation and must
specify which findings the MA organization is appealing when requesting
an appeal of a RADV audit finding.
Under CMS's existing RADV audit appeals regulations under 42 CFR
422.311(c)(6)-(8), the MA RADV administrative audit appeals process
consists of three levels: reconsideration, hearing, and CMS
Administrator review. Below is a summary of the three levels of appeal
for background information only. This regulation is not revising the
basic structure of these three levels of appeal.
a. Reconsideration
Reconsideration is the first stage of the RADV audit appeals
process. When appealing a medical record review determination, the MA
organization's written request must specify the audited HCC(s) that it
wishes to appeal and provide a justification of why the audited HCC(s)
should not have been identified as an error. When appealing a payment
error calculation, the MA organization's written request must include
its own RADV payment error calculation that clearly indicates where
HHS' payment error calculation was erroneous, as well as additional
documentary evidence pertaining to the calculation of the error that
the MA organization wishes the reconsideration official to consider.
For payment error calculation appeals, a third-party who was not
involved in the initial RADV payment error calculation reviews the HHS
and MA organization's RADV payment error calculations and recalculates,
as appropriate, the payment error using the appropriate payment error
calculation method for the relevant audit.
The reconsideration official issues a written reconsideration
decision to the MA organization, and this decision is considered final
unless the MA organization disagrees with the reconsideration
official's decision and submits a valid request for CMS hearing officer
review. A new audit report is
[[Page 30543]]
subsequently issued for either a medical record review determination
reconsideration or a payment error calculation reconsideration only if
the reconsideration official's decision is considered final.
b. Hearing Officer Review
An MA organization that disagrees with the reconsideration decision
may request a hearing officer review in accordance with procedures and
timeframes established by CMS under 42 CFR 422.311(c)(7). If the MA
organization appeals the medical record review reconsideration
determination, the written request for RADV hearing must include a copy
of the written decision of the reconsideration official, specify the
audited HCC(s) that the reconsideration official confirmed as being in
error, and explain why the MA organization disputes the reconsideration
official's determination. If the MA organization appeals a RADV payment
error calculation, the written request for RADV hearing must include a
copy of the written decision of the reconsideration official and the MA
organization's RADV payment error calculation that clearly specifies
where the MA organization believes the Secretary's payment error
calculation was erroneous.
The hearing officer has the authority to decide whether to uphold
or overturn the reconsideration official's decision and, pursuant to
this decision, sends a written determination to CMS and the MA
organization explaining the basis for the decision. If necessary, a
third party who was not involved in the initial RADV payment error
calculation recalculates the RADV payment error and issues a new RADV
audit report to the MA organization. For MA organizations appealing the
RADV payment error calculation only, a third party not involved in the
initial RADV payment error calculation recalculates the MA
organization's RADV payment error and issues a new RADV audit report to
the appellant MA organization and CMS. The hearing officer's decision
is final unless the decision is reversed or modified by the CMS
Administrator.
c. CMS Administrator Review
Under the existing RADV audit appeals regulation at 42 CFR
422.311(c)(8), a request for CMS Administrator review must be made in
writing and filed with the CMS Administrator within 60 days of receipt
of the hearing officer's decision. After receiving a request for
review, the CMS Administrator has the discretion to elect to review the
hearing officer's decision or decline to review the hearing officer's
decision. If the CMS Administrator elects to review the hearing
decision, the CMS Administrator then will acknowledge the decision to
review the hearing officer's decision in writing and notify CMS and the
MA organization of their right to submit comments within 15 days of the
date of the notification. The CMS Administrator renders his or her
final decision in writing to the parties within 60 days of
acknowledging his or her decision to review the hearing officer's
decision. The decision of the hearing officer becomes final if the CMS
Administrator declines to review the hearing officer's decision or does
not render a decision within 60 days.
2. Proposed Policies
In this final rule, we are revising the timing of when a medical
record review determination and a payment error calculation appeal can
be requested and adjudicated. Specifically, we proposed that MA
organizations must exhaust all levels of appeal for medical record
review determinations before beginning the payment error calculation
appeals process. We believed that this change was necessary because
RADV payment error calculations are based upon the outcomes of medical
record review determinations and the current regulatory language is
somewhat ambiguous regarding this point. Adjudicating medical record
review determination appeals prior to payment error calculation appeals
alleviates operational concerns for CMS and burden on MA organizations
by preventing unnecessary appeals of payment error calculations that
will be moot if revisions must be made to payment error calculations
based on medical record review determination appeal decisions.
Section 422.311(c)(5)(iii) states that, ``for [MA organizations]
that appeal both medical record review determination appeal and RADV
payment error calculation appeal [,] (A) the Secretary adjudicates the
request for the RADV payment error calculation following conclusion of
reconsideration of the MA organization's request for medical record
review determination appeal.'' The regulations also state that, for
cases in which an MA organization requests both a medical record review
determination appeal and payment error calculation appeal, ``. . . (B)
an [MA organization's] request for appeal of its RADV payment error
calculation will not be adjudicated until appeals of RADV medical
record review determinations filed by the MA organization have been
completed and the decisions are final for that stage of appeal''
[emphasis added]. This language arguably addresses both those cases in
which the final adjudication is reached during the reconsideration
phase, as well as those that proceed to the second and third level of
appeal. We proposed to delete Sec. 422.311(c)(5)(ii)(C), which
requires MA organizations requesting both a medical record review
determination appeal and payment error calculation appeal to file their
written requests for both appeals within 60 days of the issuance of the
RADV audit report before the reconsideration level of administrative
appeal. Instead, we proposed that MA organizations may request only a
medical record review determination appeal or payment error calculation
appeal for purposes of reconsideration, and not both at the same time.
We proposed to amend Sec. 422.311(c)(5)(iii) by providing that MA
organizations who request a medical record review determination appeal
may only request a payment error calculation appeal after the
completion of the medical record review determination administrative
RADV appeal process.
An MA organization may also choose to only appeal the payment error
calculation, and therefore, no preceding medical record review
determination appeal will occur. MA organizations choosing to only file
a payment error calculation appeal will not be able to file a medical
record review determination appeal after the adjudication of payment
error calculation appeal. At Sec. 422.311(c)(5)(ii)(B), we proposed to
specify that MA organizations will forgo their medical record review
determination appeal if they choose to only file a payment error
calculation appeal, because medical record review appeals decisions
need to be final prior to adjudicating a payment error calculation
appeal.
At Sec. 422.311(c)(5)(iii)(A) and (B), we proposed to specify that
this process is complete when the medical record review determination
appeals process has been exhausted through the three levels of appeal,
or when the MA organization does not timely request a medical record
review determination appeal at the hearing officer or CMS Administrator
review stage. At proposed Sec. 422.311(c)(5)(iii)(B), we proposed that
an MA organization whose medical record review determination appeal has
been completed has 60 days from the issuance of a revised RADV audit
report to file a written request for payment error calculation appeal,
which specifies the issues with which the MA organization disagrees and
the reasons for the disagreements. If, as a result of the medical
record review determination appeals process, no
[[Page 30544]]
original determinations are reversed or changed, then the original
audit report will be reissued, and the MA organization will have 60
days from the date of issuance to submit a payment error calculation
appeal if it so chooses.
We also proposed to revise Sec. 422.311(c)(6)(i)(A) to clarify
that an MA organization's request for medical record review
determination reconsideration must specify any and all audited HCCs
from an audit report that the MA organization wishes to dispute. The
intent of this revision is to permit an MA organization to submit only
one medical record review determination reconsideration request per
audited contract, which includes all disputed audited HCCs, given that
the results of all audited HCCs for a given audited contract are
communicated as part of a single audit report.
We also proposed to revise Sec. 422.311(c)(6)(iv)(B) to clarify
that the reconsideration official's decision is final unless it is
reversed or modified by a final decision of the hearing officer as
defined at Sec. 422.311(c)(7)(x).
We also proposed to add Sec. 422.311(c)(6)(v) to clarify that the
reconsideration official's written decision will not lead to the
issuance of a revised audit report until the decision is considered
final in accordance with Sec. 422.311(c)(6)(iv)(B). If the
reconsideration official's decision is considered final in accordance
with Sec. 422.311(c)(6)(iv)(B), the Secretary will recalculate the MA
organization's RADV payment error and issue a revised RADV audit report
superseding all prior RADV audit reports to the appellant MA
organization.
We also proposed to revise Sec. 422.311(c)(7)(ix) to clarify that
if the hearing officer's decision is considered final in accordance
with Sec. 422.311(c)(7)(x), the Secretary will recalculate the MA
organization's RADV payment error and issue a revised RADV audit report
superseding all prior RADV audit reports for the specific MA contract
audit. Once the medical record review determination decision of the
adjudicator is final, we believe the same entity that issued the audit
report will be able to revise the audit report by applying any medical
record review determination findings that may have changed through the
medical record review determination appeal process and issue a revised
audit report in the most efficient and streamlined manner. Issuing a
revised audit report is a standard process and neutrally applies the
final adjudicator's medical record review determination findings. This
process is consistent with other long standing CMS appeals program,
such as the Provider Reimbursement Review Board (PRRB), where post-
adjudication revised determinations are issued by the same entity
(e.g., the Medicare Administrative Contractor for PRRB cases) that
issued the original determination.
We also proposed the following to provide clarity to the
Administrator's level of appeal: To revise Sec. 422.311(c)(8)(iii) to
add a requirement that if the CMS Administrator does not decline to
review or does not elect to review within 90 days of receipt of either
the MA organization or CMS's timely request for review (whichever is
later), the hearing officer's decision becomes final.
To revise Sec. 422.311(c)(8)(iv)(A) to clarify that CMS
and the MA organization may submit comments within 15 days of the date
of the issuance of the notification that the Administrator has elected
to review the hearing decision.
To revise Sec. 422.311(c)(8)(v) to clarify that the
requirement of the Administrator to render a final decision in writing
within 60 days of the issuance of the notice acknowledging the decision
to elect to review the hearing officer's decision and the 60-day time
period is determined by the date of the final decision being made by
the Administrator, not by the date it is delivered to the parties.
To revise Sec. 422.311(c)(8)(vi) to clarify the scenarios
in which the hearing officer's decision becomes final after a request
for Administrator review has been made.
To add new Sec. 422.311(c)(8)(vii) that states once the
Administrator's decision is considered final in accordance with Sec.
422.311(c)(8)(vi), the Secretary will recalculate the MA organization's
RADV payment error and issue a revised RADV audit report superseding
all prior RADV audit reports to the appellant MA organization.
We also proposed to add new Sec. 422.311(c)(9) to specify what
actions related to the RADV audit appeals process constitute final
agency action. Specifically, in cases when an MA organization appeals a
payment error calculation subsequent to an MRRD appeal that has
completed the administrative appeals process, the MRRD final decision
and the payment error calculation final decision will not be considered
a final agency action until the related payment error calculation
appeal has completed the administrative appeals process and a final
revised audit report has been issued.
We also proposed to revise Sec. 422.311(a) to remove the word
``annually'' for clarity, as the Secretary may conduct RADV audits on
differing cadences between the CMS and HHS-OIG RADV audits.
3. Summary of Public Comments
We invited public comment on these proposals and received several
comments. Specifically, we received numerous comments regarding our
proposals related to the timing of requesting and adjudication of MRRD
and PEC appeals. We did not receive any comments specifically
addressing our proposals related to the finality of decisions at each
level of appeal of appeal, nor the requirements for revised or reissued
audit reports. We did not receive any comments specifically addressing
our proposals related to the requirements affecting the elective
Administrator review process. We did not receive any comments
specifically related to our proposal concerning the definition of final
agency action. A discussion of these comments, along with our responses
follows.
Comment: Commenters generally expressed support for our proposed
policies regarding the timing of MRRD and PEC appeals. Commenters
stated that these proposals will provide needed clarity in the RADV
audit appeals process and that by disallowing MRRD appeals and PEC
appeals from being adjudicated concurrently, we will avoid potential
administrative complications. Commenters generally agreed that these
changes will create uniformity and consistency in the appeals process.
One commenter, in addition to supporting our proposed appeals policies,
encouraged CMS to consider larger scale reforms to reduce substantial
overpayments to MA organizations and recover improper payments.
Response: We thank these commenters for their support of our RADV
audit program and our appeals proposals. We agree that the proposals
will create uniformity and consistency, as well as avoid administrative
complications in the appeals process.
Comment: A commenter requested clarification regarding whether
completion of the MRRD appeals process is distinct if an MA
organization does not have a medical record to review.
Response: Any valid medical record that is reviewed as part of a
RADV audit and found to not substantiate the audited diagnosis may be
appealed if the MA organization disagrees with the audit finding. If an
MA organization does not wish to appeal any of the medical record
review determinations or does not request an appeal by the deadline,
the MA organization may
[[Page 30545]]
proceed with a PEC appeal. If the commenter is asking whether there are
MRRD appeal rights when an MA organization does not submit a medical
record to substantiate a diagnosis during an audit, pursuant to Sec.
422.311(c)(3)(iv) MA organizations may not appeal RADV errors that
result from failure to submit a valid medical record.
Comment: A commenter requested that we alter the proposal to
support uniformity between the RADV appeals process and the OIG audit
process.
Response: The RADV audit appeals provisions being finalized in this
rule are applicable to appeals of RADV audit findings resulting from
both CMS and OIG audits. As stated in Sec. 422.311(a), RADV audits are
conducted by the Secretary and the results of any such audit by CMS or
OIG are appealable pursuant to Sec. 422.311(c). Appeal rights to audit
findings based on either CMS or OIG RADV audits begin with the issuance
of an audit report that details audit findings.
4. Comments Out of Scope of the Proposed Policies
We received several comments that were beyond the scope of the
proposed rule. Commenters sought additional clarification and made
recommendations related to the underlying risk adjustment payment
model, aspects of the RADV audit methodology related to sampling and
extrapolation, and the need for monetary penalties to be applied to
providers or other actors that contributed to a negative RADV finding.
We thank commenters for making broad recommendations for changes to
the risk adjustment payment model and for the application of monetary
penalties; however, the scope of this rule is limited to the RADV audit
appeals process.
Regarding the use of extrapolation and other aspects of RADV audit
methodology, the RADV audit appeals process is limited to medical
record review determinations and payment error calculations
communicated to MA organizations in an audit report. Pursuant to Sec.
422.311(c)(3)(iii), the Secretary's medical record review determination
methodology and payment error calculation methodology are ineligible
for appeal under this process. While MA organizations may appeal
individual medical record review determinations and the resulting
payment error calculation, they may not appeal the underlying audit
methodology.
5. Final Policy
After consideration of the public comments received, we are
finalizing these policies as proposed. As noted above, we did not
receive comments on some proposals and are finalizing those policies as
proposed.
IV. Benefits for Medicare Advantage and Medicare Prescription Drug
Benefit Programs
A. Part C and Part D Midyear Benefit Changes (Sec. Sec. 422.254,
423.265)
1. Overview and Summary
In our proposed rule titled ``Medicare Program; Contract Year 2024
Policy and Technical Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program,
Medicare Parts A, B, C, and D Overpayment Provisions of the Affordable
Care Act and Programs of All-Inclusive Care for the Elderly; Health
Information Technology Standards and Implementation Specifications,''
(87 FR 79452) which appeared in the December 27, 2022 issue of the
Federal Register (hereinafter referred to as the ``December 2022
proposed rule''), we proposed two provisions that, if finalized, would
restrict changes to the benefits offered by plans (inclusive of MA, MA-
PD, and Part D) within the contract year.
We proposed these provisions to codify our longstanding policy
prohibiting midyear benefit changes (MYBCs), previously referred to as
midyear benefit enhancements (MYBEs), for MA and Part D plans.
Specifically, we proposed to prohibit changes to non-drug benefits,
premiums, and cost sharing by an MA organization after plans are
permitted to begin marketing prospective contract year offerings on
October 1 (consistent with Sec. 422.2263(a)) of each year for the
following contract year and until the end of the applicable contract
year. Similarly, we proposed to codify our longstanding policy
prohibiting Part D sponsors from making midyear changes to the benefit
design or waiving or reducing premiums, bid-level cost sharing (for
example, the cost sharing for an entire formulary tier of Part D
drugs), or cost sharing for some or all of a Part D plan's enrollees.
This prohibition applies after plans are permitted to begin marketing
prospective contract year offerings on October 1 (consistent with Sec.
423.2263(a)) of each year for the following contract year and until the
end of the applicable contract year.
2. Medicare Advantage Prohibition on Midyear Benefit Changes (Sec.
422.254)
In a 2008 final rule titled, ``Medicare Program; Prohibition of
Midyear Benefit Enhancements for Medicare Advantage Organizations'' (73
FR 43628), which appeared in the Federal Register on July 28, 2008, and
is hereinafter referred to as the ``July 2008 final rule,'' we
prohibited MA organizations from making any midyear changes in
benefits, premiums, or cost sharing, even under the circumstances in
which these types of changes had been permitted previously.\77\ We have
enforced this policy to the present day. It is necessary to prohibit
benefit changes after bids are submitted and after marketing is
permitted to begin in order to maintain the integrity of the bidding
process. MA organizations are still allowed to make changes during the
bidding process when permitted by CMS to remain in compliance with the
requirements set forth at Sec. 422.254 and when permitted by Sec.
422.256. Per Sec. 422.2263, following the start of marketing on
October 1 of each year, MA organizations may begin to market and
publicize their plan offerings for the following contract year, such
that organizations may compare their approved plans against competitors
in order to make advantageous changes. However, allowing MYBCs
undermines the integrity of the bidding process because it would allow
MA organizations to alter their benefit packages after the bidding
process is complete. Finally, MA organizations may use MYBCs to
misrepresent their actual costs and noncompetitively revise their
benefit packages later in the year (69 FR 46899, 70 FR 4301, 71 FR
52016).
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\77\ HHS Secretary Xavier Becerra Statement on End of the COVID-
19 Public Health Emergency, https://www.hhs.gov/about/news/2023/05/11/hhs-secretary-xavier-becerra-statement-on-end-of-the-covid-19-public-health-emergency.html.
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Altering an approved plan to include new benefits after marketing
has started may also give MA organizations an unfair advantage over
competitors when beneficiaries are selecting their plans during the
initial coverage elections period (ICEP). We articulated in the July
2008 final rule that we believe enrolling newly age-eligible enrollees
is attractive to MA organizations because of their relatively low
health care utilization, as these individuals tend to be healthier
compared to older beneficiaries (73 FR 43631). Therefore, to prevent MA
organizations from inappropriately changing bids to appeal to low-
utilization enrollees, an MA organization must provide the benefits
[[Page 30546]]
described in the MA organization's final plan benefit package (PBP) (as
defined in Sec. 422.162(a)) until the end of the applicable contract
year. The July 2008 final rule reiterated these points. Despite the
July 2008 final rule, we have continued to receive inquiries from MA
organizations requesting changes to PBPs after the contract year has
begun.
We also noted in the December 2022 proposed rule that CMS has
interpreted MYBCs after the start of the contract year to violate the
uniformity requirements set forth at Sec. 422.100(d)(ii), which
require that an MA organization must offer a plan to all beneficiaries
in a service area ``at a uniform premium, with uniform benefits and
level of cost sharing throughout the plan's service area, or segment of
service area as provided in Sec. 422.262(c)(2).'' Altering the non-
prescription drug benefits, premiums, or cost sharing midyear violates
this requirement, even if the new benefit, premium, or cost sharing is
offered to all of the plan's enrollees, because some enrollees would
have paid for such benefits, premiums, or cost sharing already, and
might not be eligible for reimbursement of these costs. In other words,
some plan enrollees would have paid higher or lower amounts for the
same benefits or services than other plan enrollees who paid depending
on when the MYBC was put in effect.
Furthermore, we noted in the December 2022 proposed rule that
Employer Group Waiver Plans (EGWPs) exclusively enroll the members of
the group health plan sponsored by the employer, labor organization
(that is, union) or trustees of funds established by one or more
employers or labor organizations to furnish benefits to the entity's
employees, former employees, or members or former members of the labor
organizations; these plans generally have ``800 series'' MA contracts
with CMS. We stated that these EGWPs are not currently subject to this
prohibition on MYBCs under existing CMS waivers for EGWPs and will not
be subject to the new regulation prohibiting MYBCs. However, we stated,
an MA organization is subject to the prohibition on MYBCs if the MA
organization offers an MA plan that enrolls both individual
beneficiaries and employer or union group health plan members (that is,
a plan open to general enrollment); for those types of plans, the
employer or union sponsor may make mid-year changes to offer or change
only non-MA benefits that are not part of the MA contract (that is, are
not basic benefits or MA supplemental benefits). (See 73 FR 43630 and
Chapter 9, section 20.3, of the Medicare Managed Care Manual, available
at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c09.pdf.)
We proposed to add new paragraph Sec. 422.254(a)(5) explicitly
prohibiting MYBCs and specifying when this prohibition applies.
Specifically, we proposed to clarify in regulatory text that any
changes to non-prescription drug benefits, cost sharing, and premiums
are prohibited starting after plans are permitted to begin marketing
prospective contract year offerings on October 1 of each year for the
following contract year (consistent with Sec. 422.2263(a)) and through
the end of the applicable contract year, except for modifications in
benefits required by law.
3. Part D Prohibition on Midyear Benefit Changes (Sec. 423.265)
In the December 2022 proposed rule (87 FR 79452), we proposed to
add new paragraph Sec. 423.265(b)(5), which states that once a Part D
sponsor is permitted to market prospective plan year offerings for the
following contract year (consistent with Sec. 423.2263(a)), it may not
change the benefits described in its CMS-approved plan benefit package
(PBP) (as defined at Sec. 423.182(a)) for the contract year, except
where a modification in benefits is required by law.
In part, section 1860D-11(e)(2)(C) of the Act, codified at Sec.
423.272(b)(1), requires that CMS may only approve a bid if it
determines that the portions of the bid attributable to basic and
supplemental prescription drug coverage are supported by the actuarial
bases provided and reasonably and equitably reflect the revenue
requirements (as used for purposes of section 1302(8)(C) of the Public
Health Service Act) for benefits provided under that plan. MYBCs
indicate that the plan bid was overstated and render the bid
meaningless, while waiving or reducing the premiums, cost sharing, or
both, that are reflected in the approved bid would indicate that the
amounts provided in the bid were not necessary for the provision of
coverage. In our final rule titled ``Medicare Program; Medicare
Prescription Drug Benefit'' (70 FR 4194), which appeared in the January
28, 2005 issue of the Federal Register (hereinafter referred to as the
``January 2005 Part D final rule''), we stated in the preamble that in
order to maintain the integrity of the bidding process, we believed it
was not appropriate to allow either MA organizations or Part D sponsors
to waive premiums or offer midyear benefit changes, as these would be
de facto adjustments to benefit packages for which bids were submitted
earlier in the year. We also stated that these adjustments would be de
facto acknowledgement that the revenue requirements submitted by the
plan were overstated, and further, that allowing premium waivers or
midyear benefit enhancements would render the bid meaningless (70 FR
4301). In other words, waiving or reducing the premiums and/or cost
sharing that are reflected in the approved bid would indicate that the
amounts provided in the bid do not reasonably and equitably reflect the
revenue requirements of the expected population for the plans' benefits
as required.
In the December 2022 proposed rule, we drew a distinction between
changes in ``bid-level'' cost sharing (for example, the cost sharing
associated with an entire tier of drugs) and changes in the cost
sharing for an individual drug (for example, when such drug moves from
one already approved tier of the benefit to another already approved
tier of the benefit). Section 1860D-4(b)(3)(E) of the Act, as codified
at Sec. 423.120(b)(5), requires that Part D sponsors provide
appropriate notice before any removal of a covered Part D drug from a
formulary and ``any change in the preferred or tiered cost-sharing
status'' of such a drug. Thus, the statute contemplates midyear changes
in cost sharing of individual formulary drugs. Consequently, since the
beginning of the Part D program, we have allowed formulary changes that
result in changes to the cost sharing for individual drugs (for
example, moving a single drug to a different cost-sharing tier).
However, CMS has declined to permit Part D sponsors to change their
benefit designs, or waive or reduce premiums, ``bid-level'' cost
sharing (for example, the cost sharing associated with an entire tier
of drugs), or cost sharing (for all or individual enrollees) once plans
are permitted to market for the following contract year (on October 1,
now reflected in Sec. 423.2263(a)) on the grounds that such activities
would be inconsistent with the CMS-approved bid.
As we noted in our proposed rule titled, ``Medicare Program; Policy
and Technical Changes to the Medicare Advantage and the Medicare
Prescription Drug Benefit Programs'' (74 FR 54633), which appeared in
the October 22, 2009 issue of the Federal Register (hereinafter
referred to as the ``October 2009 proposed rule''), a Part D sponsor's
waiver of cost sharing midyear violates the uniform benefit
requirements because such a waiver results in plans not providing the
same coverage to all eligible beneficiaries
[[Page 30547]]
within their service area (74 FR 54690). The CMS-approved benefit
cannot be varied for some or all of the plan's enrollees at midyear
because that would violate the uniform benefit provisions set forth in
Sec. 423.104(b). Even if the plan changed the benefit midyear for all
of the plan's enrollees, this would still violate the uniform benefit
provision because some of the plan's enrollees would still have paid
for benefits prior to the change. For example, because drug costs are
often not evenly distributed over the course of a year, a midyear
reduction in cost sharing could provide unequal benefit to enrollees
who had the same drug costs but in different phases of their Part D
benefit.
We received the following comments on the proposed Medicare
Advantage and Part D prohibitions on midyear changes to be added at
Sec. Sec. 422.254 and 423.265, and our responses follow:
Comment: Most of the comments received discussed midyear benefit
changes broadly, without specific reference to the MA or Part D
provisions. Most commenters took a positive or neutral stance on the
two proposals, but a few were opposed to them. A commenter asked that
CMS allow midyear benefit changes when plans attempt to improve their
benefit packages. Another commenter stated that CMS should make an
exception when new products are released to market, particularly
pointing to new drugs that receive FDA approval.
Response: As discussed in the proposed rule, changes in bid-level
cost sharing or benefits after bids have been submitted could undermine
the integrity of the bidding system, disincentivize plans from
submitting complete and accurate bids on time, provide competitive
advantages to plans that make such changes, undermine CMS's ability to
provide accurate comparative information to beneficiaries about plan
benefits and costs, and potentially violate the uniform benefit
requirements. Both the MA and Part D bid submissions rely on applying a
consistent set of criteria for evaluating the suitability and
reasonableness of an MA organization or Part D sponsor's estimated
costs for the contract year. Allowing plans to make benefit changes
after the bid submission deadline would compromise the integrity of
that process by introducing new variation between the costs estimated
at the bid submission deadline and the actual costs incurred. A
sophisticated MA organization or Part D sponsor may attempt to analyze
their population during the contract year and determine which benefit
changes could improve their overall costs, causing their bid
projections to be distorted relative to a different organization or
plan sponsor's bids and costs. Similarly, an organization or plan
sponsor that sees lower than expected membership could try to adjust
their benefits within the year to be more enticing. They may decide,
with the availability of the contract year emerging experience, to
change their competitive position by adjusting benefits. This would be
inconsistent with the standardized bidding process set forth in statute
and regulation, which requires plans to bid using only the information
available to them at that time. The bid process ensures that MA
organizations and Part D sponsors are assuming the risk for the
contract year on an equitable basis and receiving fair reimbursement
for that risk.
In addition, the potential distortion between the bid amounts and
the actual costs after a mid-year benefit change could reduce the
accuracy of information based on the bids that is released by CMS. For
example, if Part D sponsors are making changes during the contract year
that would have resulted in higher bids, that would mean that the
release of the national average monthly bid amount is artificially low.
This, in turn, would mean that all downstream payments relying on the
national average would be inaccurate as well.
The proposed regulatory provisions would restrict changes to the
fundamental aspects of plan benefit package design. Under our proposal,
MA plans would not be prohibited from making adjustments to their own
rules on such matters as prior authorization or referral policies, or
from making changes to their provider network, so long as these
adjustments or network changes remain within the bounds of existing
regulatory requirements and are consistent with the approved plan
benefit package. See, for example, Sec. 422.111(d) and (e). Likewise,
Part D plans would continue to be allowed to make midyear formulary
changes that result in cost sharing changes for individual drugs, but
they would not be allowed to change cost sharing for entire tiers of
drugs or adjust premiums.
In addition, we clarify that the prohibition on MYBCs, which has
been longstanding CMS policy, does not and will not prohibit Part D
plans (including MA-PD plans) from enhancing their formularies to add
coverage of new FDA-approved products. Section 1860D-4(b)(3)(C)(iii) of
the Act (echoed in regulation at Sec. 423.120(b)(4)) specifically
allows an exception to the rules prohibiting changes to the therapeutic
classes and categories of a formulary in order ``to take into account
new therapeutic uses and newly approved covered Part D drugs.'' Nothing
in our proposed policy overrides the statutory requirement or the
equivalent language in existing regulation. In addition, because MA
plans must cover all Part A and Part B benefits (subject to limited
exclusions as outlined at Sec. 422.100(c)), changes in items and
services covered under Parts A and B due to changes in the law, new or
changed NCDs, and advances in medical technology or new healthcare
services that are newly covered by Traditional Medicare under existing
benefit rules must be covered for MA enrollees as well. See Sec.
422.109 for more information on how NCD and legislative changes in
benefits are incorporated into the coverage for MA enrollees.
Comment: Some commenters indicated that they appreciated a number
of the waivers and flexibilities pertinent to midyear changes that CMS
implemented during the COVID-19 public health emergency. One commenter
highlighted several of the pharmacy access and cost-sharing
flexibilities as particularly helpful in the midst of the emergency.
The commenters who expressed appreciation for the COVID-19 waivers and
flexibilities also requested that CMS extend those flexibilities
through the end of 2023 to allow plans time to transition.
Response: We thank the commenters for providing their input. The
waivers and flexibilities for which these commenters requested
extensions ended with the conclusion of the Public Health Emergency on
May 11, 2023.\78\ We do not believe it is necessary or appropriate to
continue those flexibilities outside of the context of the PHE. As
discussed in the proposed rule (87 FR 79514 through 79517) and in the
prior response, there are important policy considerations and statutory
compliance issues served by the prohibition on MYBCs.
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\78\ HHS Secretary Xavier Becerra Statement on End of the COVID-
19 Public Health Emergency, https://www.hhs.gov/about/news/2023/05/11/hhs-secretary-xavier-becerra-statement-on-end-of-the-covid-19-public-health-emergency.html.
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After consideration of the comments and for the reasons set forth
in the proposed rule and our responses to the related comments, we are
finalizing the proposed new provisions at Sec. Sec. 422.254(a)(5) and
423.265(b)(5) without substantive modification. We have made minor
modifications to clarify the text.
[[Page 30548]]
AA. Failure To Collect and Incorrect Collections of Part D Premiums and
Cost Sharing Amounts (Sec. Sec. 423.293 and 423.294)
In the December 2022 proposed rule (87 FR 79452), we proposed
requirements for Part D sponsors to: (1) refund incorrect collections
of premiums and cost sharing, and (2) recover underpayments of premiums
and cost sharing. We also proposed to establish both a lookback period
and timeframe to complete overpayments and underpayment notices, as
well as a de minimis threshold for associated refunds and recoveries.
We solicited comments regarding the addition of similar requirements in
MA, specifically regarding establishing a lookback period and de
minimis threshold for refunding incorrect collections.
Part D sponsors' failure to attempt to collect cost sharing or
premiums is a violation of statutory and regulatory requirements. Part
D sponsors' incorrectly high or low collections of cost sharing and
premiums would have the effect of making the benefit non-uniform and
would violate the uniform premium and benefit requirements of section
1860D-2(a) of the Act and Sec. 423.104(b). Existing language at Sec.
423.104(b) mirrors the language at Sec. 422.100(d)(1) and (2)(i) with
regard to uniform premiums and cost sharing. Similarly, whether done in
a small number of instances or to all members enrolled of a plan, the
excess collection of premiums is the basis for intermediate sanctions,
as stated in section 1857(g)(1)(B) of the Act, covering Medicare
Advantage organizations, and 1860-12(b)(3)(E), for Part D sponsors.
However, although CMS adopted a regulation for the MA program at Sec.
422.270 to address incorrect collections of premiums and cost sharing
in the final rule titled ``Medicare Program; Establishment of the
Medicare Advantage Program'' (70 FR 4640), which appeared in the
Federal Register on January 28, 2005, the regulations in Part 423 have
not previously addressed Part D sponsor requirements regarding
incorrect collections of premiums and cost sharing. In the December
2022 proposed rule, we proposed to add a new regulation at Sec.
423.294 to establish new Part D requirements that generally align with
the existing MA requirements in Sec. 422.270 for incorrect collections
and to establish new Part D requirements regarding failure to collect
premiums and cost sharing amounts.
Specifically, in order to align Part D with the existing MA
requirements in Sec. 422.270 we proposed to add a new regulation at
Sec. 423.294, which at paragraph (c) would require a Part D sponsor to
make a reasonable effort to collect monthly beneficiary premiums under
the timing established in Sec. 422.262(e) (made applicable to Part D
premiums in Sec. 423.293(a)(2)) and ensure collection of cost sharing
at the time a drug is dispensed. If for some reason the Part D sponsor
fails to collect or ensure collection in a timely manner, the Part D
sponsor would be required to make a reasonable effort to bill for and
recover the premium or cost sharing amount after the fact. Any
adjustments to the premium or cost sharing amount that occur based on
subsequently obtained information would be made within the same
timeframe for coordination of benefits as established at Sec.
423.466(b), which is 3 years from the date on which the monthly premium
was due or on which the prescription for a covered Part D drug was
filled. We also proposed to add new Sec. 423.294(b)(2) to require a
Part D sponsor to make a reasonable effort to identify all amounts
incorrectly collected and to pay any other amounts due during the
timeframe for coordination of benefits as established at Sec.
423.466(b).
In addition, we proposed new Part D requirements for the management
of incorrect collections. First, we proposed to clarify that the 3-year
lookback period established in Sec. 423.466(b) for coordination of
benefits applies to retroactive claim or premium adjustments that
result in refunds and recoveries at Sec. 423.294(b)(2) and (4) and
Sec. 423.294(c)(2), respectively. Part D sponsors have been required
to process retroactive claims adjustments within 45 days of receiving
complete information, per Sec. 423.466(a), but there has been no
requirement for the timing of retroactive premium adjustments. Although
Sec. 423.466(b) allows 3 years for coordination of benefits, there was
no limit in the regulation for how far back a Part D sponsor must look
to determine whether retroactive premium adjustments or claims
adjustments unrelated to coordination of benefits must be made. For
example, if a Part D sponsor in 2022 identifies an error in their prior
years' drug pricing files that resulted in beneficiaries being charged
incorrect cost sharing from 2015 to 2020, the current regulation might
require them to refund and/or recover amounts for prescriptions
beneficiaries received as far back as seven years ago. This is not only
inconsistent with our coordination of benefits requirements, which only
require adjustments for the past 3 years, but is potentially confusing
to beneficiaries. By establishing a 3-year lookback period in Sec.
423.294(b)(2) and (4) and Sec. 423.294(c)(2), we would align the
timeframe established in Sec. 423.466(b) for coordination of benefits
with the timeframe for premium adjustments and claims adjustments
unrelated to coordination of benefits. This 3-year period coincides
with the timeframe established in Sec. 423.466(b) for coordination of
benefits with State Pharmaceutical Assistance Programs (SPAPs), other
entities providing prescription drug coverage, beneficiaries, and
others paying on the beneficiaries' behalf. A Part D sponsor would not
be required to make a premium or claims payment adjustment if more than
3 years have passed from the date of service, just as a Part D sponsor
is required to coordinate benefits for a period of 3 years.
Second, we proposed in Sec. Sec. 423.294(b)(2) and (4) and
423.294(c)(2), respectively, that the 45-day timeframe in Sec.
423.466(a) applies to the processing of refunds and recoveries for both
claims and premium adjustments. This would make the timeframes for the
refund or recovery of premium adjustments the same as the timeframes
for claims adjustments, refunds, and recoveries related to the low-
income subsidy program (which, under Sec. 423.800(e), are the same as
the requirements of Sec. 423.466(a)). In other words, whenever a Part
D sponsor receives, within the 3-year lookback period, information that
necessitates a refund of enrollee overpayment of premiums and/or cost
sharing, or recovery of underpayments of premiums and/or cost sharing,
the Part D sponsor would be required to issue refunds or recovery
notices within 45 days of the Part D sponsor's receipt of such
information. Nothing in this proposal would alter the requirements of
Sec. 423.293(a)(4) with respect to the options a Part D sponsor must
provide Part D enrollees for retroactive collection of premiums.
Finally, we proposed to apply a de minimis amount, calculated per
Prescription Drug Event (PDE) transaction for cost sharing or, for
premium adjustments, per month, for these refunds and recoveries.
Specifically, we proposed in Sec. 423.294(b) and (c)(1) that if a
refund or recovery amount falls below the de minimis amount set for
purposes of Sec. 423.34(c)(2) for the low-income subsidy (currently
set at $2), the Part D sponsor would not be required to issue a refund
or recovery notice. For example, if a plan sponsor in 2025 discovered
that it had charged incorrect premiums amounts to certain beneficiaries
for a 12-month period from
[[Page 30549]]
January through December of 2022 and the de minimis amount for 2025 is
$2, the sponsor would not have to issue recovery notices to any
beneficiary who owed $24 or less for the 12-month period.
The proposed rule preamble also noted that we are not making any
changes to the Medical Loss Ratio (MLR) requirements under Sec. Sec.
422.2420(c) and 423.2420(c), which provide that uncollected premiums
that could have been collected are treated as revenue and are included
in the MLR denominator.
In addition, the proposed rule noted that current MA regulations
set forth at Sec. 422.270 do not contain allowances for de minimis
amounts or limits to the lookback periods for MA organizations to
refund or recover incorrect collections of cost sharing or premiums. On
the contrary, Sec. 422.270(b) states that an MA organization must
agree to refund all amounts incorrectly collected from its Medicare
enrollees, or from others on behalf of the enrollees, and to pay any
other amounts due the enrollees or others on their behalf. With regard
to timing of recovering underpayments when an enrollee is not at fault,
Sec. 422.262(h) provides that an enrollee may make payments in equal
monthly installments spread out over at least the same period for which
the premiums were due, or through other arrangements mutually
acceptable to the enrollee and the Medicare Advantage organization. In
the proposed rule, we solicited comments on adding requirements
regarding a de minimis amount and lookback periods for recovering or
refunding incorrect collections in MA that would mirror the proposed
requirements in Part D.
We also proposed to implement a technical change to existing
regulation text related to the Part D retroactive collection of monthly
beneficiary premiums. Specifically, we proposed to amend Sec.
423.293(a)(4) by replacing ``Medicare Advantage organization'' with
``Part D sponsor'' to be consistent with the terminology used in the
rest of Sec. 423.293.
We received comments in response to the proposed new regulatory
text at Sec. Sec. 423.293 and 423.294. A summary of the comments
received and our responses follow.
Comment: A commenter stated that the collection of cost sharing is
materially different from premium collection and stated that CMS should
not proceed with the proposal to codify the collection of cost sharing
and premiums together under Sec. 423.294. They noted that premiums are
collected by the plans, but collection of cost sharing is managed by
pharmacies and should not be described as the plans' responsibility.
This commenter believed it was inappropriate for the proposal codifying
our interpretation of the uniform benefit requirement to include cost
sharing because plans are not the parties that fail to collect
beneficiary cost sharing. The commenter stated that plans would only
have control over cost sharing in the case of retroactive adjustments
and asked that the provision be revised to either explicitly state that
the requirement only applies to plans in the case of retroactive
adjustments, or to exclude language regarding cost sharing.
Response: We recognize that there is a fundamental difference
between the collection of Part D cost sharing and premiums under normal
circumstances. Pharmacies, not plans, collect cost sharing at the point
of sale, and therefore plan oversight of cost sharing is more resource
intensive in the case of retroactive adjustments. Pharmacies may also
have certain autonomy when it comes to the collection of cost sharing.
Pharmacies, as outlined at Sec. 1001.952(k)(3), may choose to waive
cost sharing under specific, but limited, circumstances (for example,
in the circumstances outlined at 42 CFR Sec. 1001.952(k)(3)). With
those limitations in mind, the preamble of the December 2022 proposed
rule (87 FR 79517) makes clear that we anticipate retroactive
adjustments to be the primary circumstance in which plans will handle
cost sharing directly.
However, the uniform benefit requirement at Sec. 423.104(b)(2)
requires Part D plan sponsors to offer ``a uniform premium, with
uniform benefits and level of cost sharing throughout the plan's
service area.'' As noted in the October 2009 proposed rule (74 FR
54690), CMS has consistently interpreted the uniform benefit
requirement to prohibit Part D sponsors from varying cost sharing and
premiums within its service area. While plan sponsors will primarily
manage cost sharing directly in the case of retroactive adjustments,
our existing regulations have placed significant responsibility for the
correct collection of cost sharing on plan sponsors. For example, plans
may exercise authority through their network participation agreements
to define pharmacies' responsibility to collect cost sharing, per
regulations at Sec. 423.104(g). The proposed regulation merely
codifies a portion of the obligations that plans have already been
required to uphold.
Comment: A commenter stated that the proposed 3-year lookback
period for incorrect collections does not align with the six-year
overpayment lookback period. They proposed that CMS should revise the
proposed provision to clarify that it would only require plan sponsors
to refund or collect cost sharing created through retroactive
adjustments. Alternatively, they asked CMS to clarify whether CMS would
adjust its payments to plans outside of the 3-year lookback period but
refuse to allow plans to initiate reimbursements or recoveries in that
same period.
Response: While the commenter is correct that the proposed lookback
period for incorrect collections would not align with the six-year
overpayment lookback period (defined in regulation at Sec.
423.360(f)), it was not our intention to align these lookback periods.
It was our stated goal to clarify that the lookback period for Part D
incorrect collections should be understood as covered by the lookback
period outlined in regulation for coordination of benefits (at Sec.
423.466(b)). While the overpayment lookback period in Sec. 423.360(f)
pertains to the reporting and returning of CMS overpayments by plans,
our proposed incorrect collections provision better aligns with other
aspects of coordination of benefits that are relevant to beneficiary or
third-party payments to plans and pharmacies. For example, CMS payments
to plans and the associated plan payment reconciliation processes are
not closely related to the repayment to, or recovery of funds from,
individuals. The incorrect collection of cost sharing and the
adjustments that can be made in the coordination of benefits process,
however, are inherently related. Furthermore, while the provision does
not require plans to provide adjustments beyond the 3-year lookback
window, there is nothing that would prohibit plans from voluntarily
issuing refunds for premium or cost sharing overpayments, so long as
they did so in a uniform manner.
Comment: A commenter stated that they were opposed to the 45-day
timeframe for processing refunds and recoveries for premium adjustments
proposed at Sec. 423.294(b)(2). Because the adjustment process can be
complicated, they indicated that a 90-day timeframe would be preferable
instead.
Response: First, we note that the 45-day timeframe is meant for the
beneficiary's benefit and is not related to record keeping.
Furthermore, as stated in the December 2022 proposed rule (87 FR
79517), we are aligning the adjustment of retroactive premium
adjustments with the timeline for processing retroactive claims
adjustments. Part D sponsors are already required to process
retroactive claims adjustments within 45 days of receiving
[[Page 30550]]
complete information, per Sec. 423.466(a), and the proposal would
simply impose a similar requirement for premium adjustments. While the
process for refunding or recovering premiums may be complicated, we do
not consider it to be substantially more complicated than final
processing of retroactive claims adjustments. Furthermore, as noted
earlier in this section, plan sponsors are already required to make
claims adjustments for refunds and recoveries related to the low-income
subsidy program within a 45-day window (per Sec. 423.800(e)). Finally,
we also believe it to be in the beneficiary's interest to resolve
refunds and recoveries in a timely manner. As explained, the 45-day
window has been used for adjustments in the past, and we consider it to
be still most appropriate in this circumstance.
Comment: Commenters were divided in their opinions of the proposed
de minimis amount for incorrect collections of Part D premiums and cost
sharing. While some commenters were supportive, others expressed
opposition to the proposal. A commenter suggested that the proposed de
minimis regulation could be interpreted to be optional, but they argued
that it should be made mandatory across all plans in order to prevent
enrollee confusion. Another commenter suggested that the proposal,
which they understood to be mandatory, would deprive plans of existing
flexibility to determine on their own the financial thresholds that are
appropriate for collection.
Response: We clarify that CMS has not previously provided Part D
sponsors with flexibility to pursue or return incorrect collections
only when they deem the funds sufficient to be worth the time and
effort. As noted in the October 2009 proposed rule (74 FR 54690), CMS
has interpreted a failure to attempt to collect premiums and cost-
sharing as a violation of the uniform benefit requirement. Plans are
already required to ensure correct payment of premiums and cost-
sharing, consistent with current regulations and guidance, which do not
define a minimum amount below which the obligation to provide a refund
to enrollees (or to collect from enrollees) does not apply. We proposed
and are finalizing at Sec. 423.294(b) and (c)(1) that it is not
mandatory for Part D sponsors to collect or refund amounts below the de
minimis threshold established in the regulation.
Furthermore, there will be little financial difference to enrollees
whether plans adopt the de minimis requirement or continue to refund or
recover all incorrectly collected amounts. For instance, the de minimis
amount for premium adjustments for 2024 will amount to $2 per month.
Thus, under the proposed rule, plans would only be permitted to forego
premium adjustments less than or equal to $24 for a calendar year. In
the case of one-time errors or errors that took place over a small
number of instances, the amounts involved may be less than the postage
required to send a refund or recovery notice to a beneficiary. In
combination with the 3-year lookback period, we believe that our
proposed de minimis amount provision would enable plans to minimize
their own burden while also limiting beneficiary confusion over minor
adjustments to previously paid premiums and cost-sharing.
Comment: A commenter requested clarification regarding whether
recoupment of underpayments will apply to dually eligible
beneficiaries, noting that the dually eligible population often faces
obstacles that limit their ability to make unexpected payments. The
commenter also stated their belief that CMS had not previously required
Part D sponsors to attempt to recover underpayments of premiums and
cost-sharing and refund overpayments.
Response: Under current regulations and guidance, plan sponsors are
already required to recover underpayments and refund overpayments,
regardless of the amount. Our proposal elaborated on existing
regulations applying to incorrect collections of premiums and cost
sharing. As explained in the October 2009 proposed rule (74 FR 54690)
and reiterated here, we have interpreted failure to attempt to collect
premiums and cost sharing as a violation of the existing uniform
benefit requirement at Sec. 423.104(b). In addition, there is at
present no clear limit to the lookback period for premium and cost-
sharing adjustments. While our proposed policy would apply to dually
eligible enrollees, the abbreviation of the lookback period and
inclusion of de minimis amount regulation may serve to decrease the
frequency with which plans attempt to recover incorrect collections
from dually eligible enrollees. Existing regulation and guidance
provide further protections for dually eligible enrollees. In the case
of retroactive premium collections in which the enrollee is without
fault, Sec. 423.293(a)(4) instructs sponsors to offer the enrollee the
opportunity to make payment by lump sum, by equal monthly installments
spread out over at least the same period over which the payments were
due, or through other arrangements mutually acceptable to the enrollee
and the sponsor Similar recommendations can be found in section 70.3.1
of Chapter 13 of the Prescription Drug Benefit Manual, which covers
refunds and recoupments for the premium and cost-sharing subsidies for
low-income individuals and would apply to all full dually eligible
enrollees and individuals eligible for a Medicare Savings Program as a
Qualified Medicare Beneficiary, Specified Low Income Medicare
Beneficiary, or a Qualifying Individual.
Comment: A commenter responded to CMS's request for feedback about
aligning elements of the process for MA incorrect collections with
those in the December 2022 proposed rule (87 FR 79517) for Part D. The
commenter believed that the process for collecting cost sharing is more
complex for MA plans than for Part D plans. The lag in payments and
collections involved in, for example, clinical and hospital visits
necessitates substantial differences between the incorrect collections
policies of the two programs.
Response: We appreciate the commenter's feedback. We decline to
revise Sec. 422.270 at this time to: (1) apply a threshold for a de
minimis amount below which refunds of excess MA cost sharing or excess
MA premiums are not required, or (2) adopt lookback periods to limit
the obligation for MA organizations to recover or refund incorrect
collections of such payments. We may revisit these policies for the MA
program at a later date.
After consideration of the comments received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the changes to Sec. Sec. 423.293 and 423.294 as proposed
with minor grammatical and formatting changes.
B. Definition of ``Basic Benefits'' (Sec. 422.2)
Section 1852(a)(1)(B)(i) of the Act defines the term ``benefits
under the original Medicare Fee-for-Service program option'' for
purposes of the requirement in subparagraph (a)(1)(A) that each MA
organization provide enrollees such benefits. Section 17006(c)(1) of
the 21st Century Cures Act (Pub. L. 114-255) (hereafter referred to as
``the Cures Act'') amended section 1852(a)(1)(B)(i) of the Act by
inserting ``or coverage for organ acquisitions for kidney transplants,
including as covered under section 1881(d)'' after ``hospice care.''
Per section 17006(c)(3) of the Cures Act, this amendment applies with
respect to plan years beginning on or after January 1, 2021. Thus,
effective January 1, 2021, MA plans no longer cover organ acquisitions
for kidney transplants, including the costs for
[[Page 30551]]
living donors covered by Medicare pursuant to section 1881(d) of the
Act.
In the April 2019 final rule \79\ and the January 2021 final rule,
we amended the definition of ``basic benefits'' at Sec. 422.100(c)(1)
to exclude coverage for organ acquisitions for kidney transplants,
effective beginning in 2021, in addition to the existing exclusion for
hospice care. In the June 2020 final rule, we also amended several
regulations to address coverage of organ acquisition for kidney
transplants for MA enrollees, with amendments to Sec. Sec. 422.258,
422.322, and 422.306. However, we inadvertently omitted making the same
type of revision to the ``basic benefits'' definition at Sec. 422.2.
We proposed to correct the definition of basic benefits at Sec. 422.2
to add the exclusion of coverage for organ acquisitions for kidney
transplants to Sec. 422.2.
---------------------------------------------------------------------------
\79\ ``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 15680).
---------------------------------------------------------------------------
Specifically, we proposed to revise the ``basic benefits''
definition at Sec. 422.2 to change the phrase ``all Medicare-covered
benefits'' to ``Part A and Part B benefits'' and correct the phrase
``(except hospice services)'' to include, beginning in 2021, organ
acquisitions for kidney transplants (which includes costs covered under
section 1881(d) of the Act).
This provision is a technical change to align the definition of
basic benefits with existing law; therefore, neither an economic impact
beyond current operating expenses nor an associated paperwork burden
are expected.
We invited public comment on this proposal and received a comment
in support of our proposal and an out-of-scope comment. We thank the
commenter for their support.
For the reasons outlined in the proposed rule and summarized in
this rule, we finalize the revisions to the definition of basic
benefits at Sec. 422.2 as proposed.
C. Standards for Determining Whether Special Supplemental Benefits for
the Chronically Ill (SSBCI) Have a Reasonable Expectation of Improving
the Health or Overall Function of an Enrollee
The Balanced Budget Act (BBA) of 2018 included new authorities
concerning supplemental benefits that may be offered to chronically ill
enrollees in Medicare Advantage (MA) plans. We addressed these new
supplemental benefits extensively 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 (hereafter referred to as ``June 2020 final rule'') (85 FR
33796, 33800-05), where we referred to them as Special Supplemental
Benefits for the Chronically Ill (SSBCI).
As we summarized in the June 2020 final rule, we interpreted the
intent of this new category of supplemental benefits as enabling MA
plans to better tailor benefit offerings, address gaps in care, and
improve health outcomes for chronically ill enrollees who meet the
definition established by the statute. Section 1852(a)(3)(D)(ii)(II) of
the Act authorizes the Secretary to waive the uniformity requirements
generally applicable to the benefits covered by MA plans with respect
to SSBCI. Therefore, CMS may allow MA plans to offer SSBCI that are not
uniform across the entire population of chronically ill enrollees in
the plans but that are tailored and covered for an individual
enrollee's specific medical condition and needs (83 FR 16481-82).
In addition to limiting the eligibility of enrollees who can
receive SSBCI to chronically ill enrollees, section
1852(a)(3)(D)(ii)(I) of the Act requires that an item or service
offered as an SSBCI have a reasonable expectation of improving or
maintaining the health or overall function of the chronically ill
enrollee. We codified this statutory requirement as part of the
definition of SSBCI at Sec. 422.102(f)(1)(ii).
As we provided in a Health Plan Management System (HPMS) memorandum
dated April 24, 2019 \80\ (``2019 HPMS memo'' hereafter), SSBCI can be
in the form of:
---------------------------------------------------------------------------
\80\ ``Implementing Supplemental Benefits for Chronically Ill
Enrollees'' https://www.cms.gov/medicare/health-plans/healthplansgeninfo/downloads/supplemental_benefits_chronically_ill_hpms_042419.pdf (April 24,
2019).
---------------------------------------------------------------------------
Reduced cost sharing for Medicare-covered benefits;
Reduced cost sharing for primarily health-related
supplemental benefits;
Additional primarily health-related supplemental benefits;
and/or
Non-primarily health-related supplemental benefits.
As we described in the November 2023 proposed rule, to offer an
item or service as an SSBCI to an enrollee, an MA plan must make at
least two separate determinations with respect to that enrollee in
order to satisfy the statutory and regulatory requirements for these
benefits. First, the MA plan must determine that an enrollee meets the
definition of ``chronically ill enrollee.'' Section 1852(a)(3)(D)(iii)
of the Act defines ``chronically ill enrollee'' as an individual
enrolled in the MA plan who meets all of the following: (I) has one or
more comorbid and medically complex chronic conditions that is life-
threatening or significantly limits the overall health or function of
the enrollee; (II) has a high risk of hospitalization or other adverse
health outcomes; and (III) requires intensive care coordination. Per
Sec. 422.102(f)(1)(i)(B), CMS may publish a non-exhaustive list of
conditions that are medically complex chronic conditions that are life-
threatening or significantly limit the overall health or function of an
individual. This list is currently the same as the list of chronic
conditions for which MA organizations may offer chronic condition
special needs plans, which can be found in section 20.1.2 of Chapter
16b of the Medicare Managed Care Manual. We require, currently at Sec.
422.102(f)(3)(i), the MA plan to have written policies for making this
determination and to document each determination that an enrollee is a
chronically ill enrollee. Documentation of this determination must be
available to CMS upon request according to Sec. 422.102(f)(3)(ii) (to
be redesignated to Sec. 422.102(f)(4)(ii)).
Second, the MA plan must determine that the SSBCI has a reasonable
expectation of improving or maintaining the health or overall function
of the enrollee. Currently Sec. 422.102(f)(3)(iii) provides that the
MA plan ``must have written policies based on objective criteria for
determining a chronically ill enrollee's eligibility to receive a
particular SSBCI and must document these criteria.'' We also require
the MA plan to document ``each determination that an enrollee is
eligible to receive an SSBCI and make this information available to CMS
upon request'' at Sec. 422.102(f)(3)(iv). (See later in this section
for how paragraph (f)(3) of Sec. 422.102 is redesignated and revised
in this final rule.)
We noted in the November 2023 proposed rule that we do not define
or definitively interpret the phrase ``has a reasonable expectation of
improving or maintaining the health or overall function of the
enrollee'' in regulation or policy guidance. Rather, in the 2019 HPMS
memo, we provided MA plans with ``broad discretion in determining what
may be considered `a reasonable expectation' when choosing to offer
specific items and services as SSBCI.'' We stated that we granted MA
plans this discretion so that they might effectively tailor their SSBCI
offerings and the eligibility standards for those offerings to the
specific chronically ill population upon which the plan is focusing.
[[Page 30552]]
We further indicated that ``CMS will provide supporting evidence or
data to an MA organization if CMS determines that an MA plan may not
offer a specific item or service as an SSBCI because it does not have a
reasonable expectation of improving or maintaining the health or
overall function of a chronically ill enrollee.'' In other words, we
placed the burden on CMS, and not the MA plan, to generate evidence
demonstrating whether the ``reasonable expectation'' standard--a
standard that we granted broad discretion for an MA plan to determine--
has been met (or not met) when offering items or services as SSBCI.
As we described in the November 2023 proposed rule, supplemental
benefits, including SSBCI, are generally funded using MA plan rebate
dollars.\81\ When submitting an annual bid to participate in the MA
program, an MA organization includes in its bid a Plan Benefit Package
(PBP) and Bid Pricing Tool for each of its plans, where the MA
organization provides information to CMS on the premiums, cost sharing,
and supplemental benefits (including SSBCI) it proposes to offer. Since
issuing the 2019 HPMS memo, the number of MA plans that offer SSBCI--
and the number and scope of SSBCI offered by an individual plan--has
significantly increased. We have observed these trends in reviewing
PBPs from MA plans submitted in the past few years.
---------------------------------------------------------------------------
\81\ MA plan rebates are a portion of the amount by which the
bidding benchmark or maximum MA capitation rate for a service area
exceeds the plan's bid; MA plans are obligated to use the MA rebates
for the purposes specified in 42 CFR 422.266: payment of
supplemental benefits (including reductions in cost sharing) or
reductions in Part B or Part D premiums.
---------------------------------------------------------------------------
In the November 2023 proposed rule, we noted that based on our
internal data, 101 MA plans offered a food and produce benefit in
contract year 2020, while 929 MA plans were offering this as an SSBCI
in contract year 2023.\82\ Similarly, 88 MA plans offered
transportation for non-medical needs as an SSBCI in contract year 2020.
In contract year 2023, 478 MA plans were offering this as an SSBCI.\83\
MA plans are also continuing to identify items or services as SSBCI
that were not included as examples in the 2019 HPMS memo. When an MA
plan is offering such a benefit, the plan indicates it in the PBP \84\
that is submitted with its bid. The MA plan categorizes the benefit
within our PBP submission system as an ``other'' SSBCI (a benefit
designation within the PBP submission system) and describes the
proposed new benefit in a ``free text'' field. While 51 MA plans
offered an ``other'' non-primarily health-related supplemental benefit
in contract year 2020, 440 plans are offering at least one ``other''
non-primarily health related SSBCI in contract year 2023--and 226 plans
are offering at least two.\85\
---------------------------------------------------------------------------
\82\ Taken from CMS internal data.
\83\ Taken from CMS internal data.
\84\ A PBP is a set of benefits for a defined MA (or
Prescription Drug Plan) service area. The PBP is submitted by MA
organizations and PDP sponsors to CMS for benefit analysis,
marketing, and beneficiary communication purposes.
\85\ Taken from internal data.
---------------------------------------------------------------------------
Through SSBCI, MA organizations can design and implement benefits,
including non-primarily health-related benefits, that may be able to
holistically address various needs of chronically ill enrollees. We
provided in the November 2023 proposed rule that, as these benefits
become a more significant part of the MA program, we believe it is
important to update our processes for reviewing and approving SSBCI to
manage the growth and development of new SSBCI offerings, as well as to
ensure compliance with the statutory requirements at section
1852(a)(3)(D). Additionally, section 1854(b)(1)(C) of the Act requires
that MA plans offer the value of MA rebates back to enrollees in the
form of payment for supplemental benefits, cost sharing reductions, or
payment of Part B or D premiums. As an increasing share of Medicare
dollars is going toward MA rebates that plans are using to offer SSBCI,
we believe that revising the regulation to adopt greater review and
scrutiny of these benefits is important for CMS to maintain good
stewardship of Medicare dollars, including the MA rebates used to pay
for these benefits, and for ensuring that the SSBCI offered are
consistent with applicable law and those most likely to improve or
maintain the health or overall function of chronically ill enrollees.
Therefore, we proposed to update our rules and processes to
simultaneously ensure effective program administration and oversight,
while enabling MA organizations to offer SSBCI and improve health
outcomes for chronically ill enrollees.
Currently, the burden is on CMS to review SSBCI included in an MA
organization's bid and determine whether sufficient evidence or data
exists to demonstrate that it has a reasonable expectation of improving
or maintaining the health or overall function of a chronically ill
enrollee. Given the growth in the quantity and type of SSBCI offerings
and given the associated burden increase on CMS in reviewing and
approving bids that include SSBCI, we believe that it would be more
efficient for the MA organization, rather than CMS, to demonstrate that
the reasonable expectation standard has been met.
When CMS provides MA organizations with broad latitude in offering
items or services as SSBCI and in establishing what a ``reasonable
expectation'' means for a given SSBCI, we believe that it is
appropriate for the MA organization, rather than CMS, to identify
supporting evidence or data to support an SSBCI and to establish
compliance with the applicable law.
We proposed that an MA organization that includes an item or
service as SSBCI in its bid must be able to demonstrate through
relevant acceptable evidence that the item or service has a reasonable
expectation of improving or maintaining the health or overall function
of a chronically ill enrollee. As part of shifting responsibility this
way, we proposed, as relevant to an MA organization that includes SSBCI
in its bid, to: (1) require the MA organization to establish, by the
date on which it submits its bid, a bibliography of ``relevant
acceptable evidence'' related to the item or service the MA
organization would offer as an SSBCI during the applicable coverage
year; (2) require that an MA plan follow its written policies (that
must be based on objective criteria) for determining eligibility for an
SSBCI when making such determinations; (3) require the MA plan to
document denials of SSBCI eligibility rather than approvals; and (4)
codify CMS's authority to decline to accept a bid due to the SSBCI the
MA organization includes in its bid and to review SSBCI offerings
annually for compliance, taking into account the evidence available at
the time. In addition, we proposed to make a technical edit to Sec.
422.102(f)(1)(i)(A)(2) to correct a typographical error. We describe
each proposal in greater detail below.
First, we proposed to redesignate what is currently Sec.
422.102(f)(3) to (f)(4), and to address, at new Sec. 422.102(f)(3),
new requirements for each MA plan that includes an item or service as
SSBCI in its bid. The MA organization must be able to demonstrate,
through relevant acceptable evidence, that the item or service to be
offered as SSBCI has a reasonable expectation of improving or
maintaining the health or overall function of a chronically ill
enrollee and must, by the date on which it submits its bid to CMS,
establish a bibliography of all ``relevant acceptable evidence''
concerning the impact that the item or service has on the health or
overall function of its recipient. The bibliography must be made
available to CMS upon request. As part of this
[[Page 30553]]
proposal, an MA organization would be required to include, for each
citation in its written bibliography, a working hyperlink to or a
document containing the entire source cited. This proposal would apply
only to SSBCI offered in the form of additional primarily health-
related supplemental benefits or SSBCI offered in the form of non-
primarily health-related supplemental benefits. It would not apply to
an SSBCI offered in the form of reduced cost sharing, regardless of the
benefit for which it is offered. We stated that we intended to exclude
from this policy supplemental benefits offered under the Value-Based
Insurance Design (VBID) Model administered by the Center for Medicare
and Medicaid Innovation (CMMI), unless CMMI incorporates this policy
within the VBID Model.
We also proposed, in new paragraph (f)(3)(iv), that the MA
organization must make its bibliography of relevant acceptable evidence
available to CMS upon request. CMS may request and use this
bibliography, without limitation, during bid review to assess whether
SSBCI offerings comply with regulatory requirements, or during the
contract year as part of CMS's oversight activities. We noted that CMS
does not intend at this time to require MA organizations to submit
these bibliographies as a matter of course in submitting bids.
We proposed that the term ``relevant acceptable evidence'' would
include large, randomized controlled trials or prospective cohort
studies with clear results, published in a peer-reviewed journal, and
specifically designed to investigate whether the item or service (that
is proposed to be covered as an SSBCI) impacts the health or overall
function of a population, or large systematic reviews or meta-analyses
summarizing the literature of the same. We further proposed that the MA
plan would need to include in its bibliography all relevant acceptable
evidence published within the 10 years preceding the month in which the
MA plan submits its bid. Ideally, relevant acceptable evidence should
include studies and other investigations specific to the chronic
conditions for which the MA organization intends to target the SSBCI,
but we are not proposing to make this a requirement at this time. We
are concerned that relevant acceptable evidence applicable to many
SSBCI will already be limited, and that requiring a bibliography be
limited to only studies concerning certain chronic conditions would
discourage the development of new SSBCI. Similarly, to the extent there
exists sufficient relevant acceptable evidence that the item or service
meets the reasonable expectation standard for a sample of a population,
an MA organization may still offer an SSBCI to enrollees with a
specific chronic condition even in the absence of any studies
addressing the connection between an item or service and its effect on
the health or overall function of individuals with that condition.
We proposed that, in the absence of publications that meet these
standards, ``relevant acceptable evidence'' for purposes of the MA
plan's bibliography could include case studies, federal policies or
reports, and internal analyses or any other investigation of the impact
that the item or service has on the health or overall function of its
recipient. By ``bibliography,'' we mean a list, and not a description,
of scholarly publications or other works, as we describe below.
In our April 2023 final rule, we discussed what constituted
sufficiently high-quality clinical literature in the context of an MA
organization establishing internal clinical criteria for certain
Medicare basic benefits (88 FR 22189, 22197). We believe that those
standards are also applicable for identifying ``relevant acceptable
evidence'' in the context of supporting whether an item or service
offered as SSBCI has a reasonable expectation of improving or
maintaining the health or overall function of a chronically ill
enrollee. Therefore, our proposal for Sec. 422.102(f)(3)(ii) largely
tracked the language in Sec. 422.101(b)(6) describing acceptable
clinical literature for purposes of establishing internal coverage
criteria, but with revisions to be specific to the context of SSBCI and
the reasonable expectation standard.
As we noted in the November 2023 proposed rule, literature that CMS
considers to be ``relevant acceptable evidence'' for supporting an
SSBCI offering include large, randomized controlled trials or cohort
studies or all-or-none studies with clear results, published in a peer-
reviewed journal, and specifically designed to answer a question
relevant to the requirements for offering and covering SSBCI and how
the MA plan will implement the coverage--such as the impact of
structural home modifications on health or overall function. Literature
might also include that which involves large systematic reviews or
meta-analyses summarizing the literature specifically related to the
subject of the SSBCI--such as meal delivery, availability of certain
food or produce, or access to pest control--published in a peer-
reviewed journal with clear and consistent results. Under this
proposal, an MA organization would be required to cite all such
available evidence in its bibliography, and not just studies that
present findings that are favorable to its SSBCI offering.
We also proposed that, in the absence of literature that conforms
to these standards for relevant acceptable evidence, an MA organization
would be required to include in its bibliography any other
investigations of the impact of the item or service which may include
evidence that is unpublished, is a case series or report, or derived
solely from internal analyses within the MA organization. In this way,
our proposed policy would deviate from the standard we established for
the type of evidence necessary to support an MA organization's internal
coverage criteria for Medicare basic benefits. We noted in our proposal
that we believe this deviation is appropriate as there is relatively
less research into the impact of the provision on items or services
commonly offered as SSBCI on health or overall function of chronically
ill individuals.
We did not propose that relevant acceptable evidence must directly
address whether there is a reasonable expectation of improving or
maintaining the health or overall function of a chronically ill
enrollee with a specific chronic illness or condition (conditions that
the MA plan would have identified in its PBP submission), but such
materials may be more persuasive than materials that only describe the
impact of certain items and services--particularly non-primarily
health-related items and services--on healthier individuals or
populations. Further, our proposal was limited to SSBCI offered as
additional primarily health-related supplemental benefits and non-
primarily health-related supplemental benefits. We did not propose to
require a bibliography for SSBCI that are exclusively cost sharing
reductions for Medicare-covered benefits or primarily health-related
supplemental benefits, so the regulation text was limited to SSBCI that
are items or services. Although we did not propose to apply this new
documentation requirement to cost sharing reductions offered as SSBCI,
that type of SSBCI must also meet the reasonable expectation standard
to be offered as SSBCI.
We believe that this proposal for new paragraph (f)(3) (which we
are finalizing without modification, as discussed in the responses to
public comments in the following pages) will serve our goal of ensuring
that SSBCI regulatory standards are met--specifically, that an item or
service covered as an SSBCI has a reasonable expectation of improving
or maintaining the health or overall
[[Page 30554]]
function of a chronically ill enrollee. As we explained in the November
2023 proposed rule, we expect that rigorous research like that we
describe above might be limited, and that some studies may not produce
results favorable to the offering of an SSBCI. However, when there are
also favorable studies, the existence of such unfavorable studies does
not necessarily mean that there could not be a ``reasonable
expectation'' that the SSBCI would improve or maintain the health or
overall function of a chronically ill enrollee. And it is not our goal
that mixed results in current literature--or the lack of rigorous
research at all--would reduce innovation in SSBCI offerings. We wish to
continue to see MA organizations identify new ways to deliver helpful
benefits to chronically ill enrollees that can address their social
needs while also improving or maintain the health or overall function
of these chronically ill enrollees. Our goal is to ensure that SSBCI
innovation occurs in a manner that is grounded to the extent possible
in research, and that MA organizations and CMS alike are tracking to
the most current research relevant to SSBCI offerings. We believe this
policy will continue to promote SSBCI innovation while helping to
ensure that when Medicare funds are used to offer SSBCI, such offerings
meet statutory requirements.
We solicited comments on our proposed requirement that an MA
organization that includes an item or service as SSBCI in its bid must,
by the date on which it submits its bid to CMS, establish in writing a
bibliography of all relevant acceptable evidence concerning the impact
that the item or service has on the health or overall function of its
recipient. We also solicited comments on our definition of ``relevant
acceptable evidence,'' including the specific parameters or features of
studies or other resources that would be most appropriate to include in
our definition. We also solicited comments on our proposal that, for
each citation in the written bibliography, the MA organization would be
required to include a working hyperlink to or a document containing the
entire source cited. Additionally, we solicited comments on whether we
should apply this requirement to all items or services offered as
SSBCI, or whether there are certain types or categories of SSBCI for
which this requirement should not apply. We address comments received
and our responses at the end of this section.
Second, for clarity, we proposed to explicitly require at
redesignated Sec. 422.102(f)(4)(iii) that an MA plan apply its written
policies, which must be based on objective criteria, that it
establishes for determining whether an enrollee is eligible to receive
an SSBCI. The regulation currently requires MA organizations to have
written policies based on objective criteria for determining a
chronically ill enrollee's eligibility to receive a particular SSBCI
and must document these criteria. While we anticipate that MA plans are
already applying their written policies that identify the eligibility
criteria when making these determinations, we proposed to make clear
that an MA plan must apply its written policies when making SSBCI
eligibility determinations.
We stated that we were considering whether to exclude the policies
required by current Sec. 422.102(f)(3) (that is, the requirements we
are proposing to redesignate to new paragraph (f)(4)) from the general
rule reflected in Sec. 422.111(d) that MA plans may change plan rules
during the year so long as notice is provided to enrollees. We
solicited comments on whether CMS should permit changes in SSBCI
eligibility policies during the coverage year, and, if so, the
limitations or flexibilities that CMS should implement that would still
allow CMS to provide effective oversight over SSBCI offerings. As we
explained in our proposal, the ability to change plan rules during the
year does not permit changes in benefit coverage but would include
policies like utilization management requirements, evidentiary
standards for a specific enrollee to be determined eligible for a
particular SSBCI, or the specific objective criteria used by a plan as
part of SSBCI eligibility determinations.
Third, we proposed to amend redesignated paragraph (f)(4)(iv) to
require that an MA plan document each instance wherein the plan
determines that an enrollee is ineligible to receive an SSBCI. Denials
of coverage when an enrollee requests an SSBCI are organization
determinations subject to the rules in Subpart M, including the
requirements related to the timing and content of denial notices in
Sec. 422.568. By fully documenting denials as required by this
proposal, MA organizations should be better placed to address any
appeals, including when an adverse reconsideration must be sent to the
independent review entity for review. Similarly, requiring robust
documentation of denials of SSBCI by MA organizations will make
oversight and monitoring by CMS easier and more productive, should CMS
request documentation.
We solicited comments on our proposal to require an MA plan to
document its findings that a chronically ill enrollee is ineligible,
rather than eligible, for an SSBCI.
Fourth, we proposed to add Sec. 422.102(f)(5) to codify CMS's
authority to decline to approve an MA organization's bid, if CMS
determines that the MA organization has not demonstrated, through
relevant acceptable evidence, that an SSBCI has a reasonable
expectation of improving or maintaining the health or overall function
of the chronically ill enrollees that the MA organization is targeting.
We clarified that while this proposal would establish a specific basis
on which CMS may decline to approve an MA organization's bid, our
authority to enforce compliance with other regulations and to negotiate
bids (see section 1854(a) of the Act and Subpart F) would not be
limited by this provision. As described in section 1854(a)(5)(C) of the
Act, CMS is not obligated to accept any or every bid submitted by an MA
organization, and CMS may reject bids that propose significant
increases in cost sharing or decreases in benefits offered under the
plan. Similarly, CMS's authority to review benefits to ensure non-
discrimination is not limited or affected under this proposal. Our
proposal was intended to clarify and establish that CMS's review of
bids that include SSBCI could include specific evaluation of SSBCI and
that CMS may decline to approve bids based on a lack of relevant
acceptable evidence in support of the SSBCI offering the MA
organization includes in its bid.
We also proposed to codify that, regardless of whether an SSBCI
offering was approved in the past, CMS may annually review the items or
services that an MA organization includes as SSBCI in its bid for
compliance with all applicable requirements, considering the relevant
acceptable evidence applicable to each item or service at the time the
bid is submitted. Under this proposal, CMS would have clear authority
to evaluate an SSBCI included in a bid each year based on the evidence
available at that time. CMS would not be bound to approve a bid that
contains a certain SSBCI only because CMS approved a bid with the same
SSBCI in the past. We believe this provision, if finalized, would help
ensure sound use of Medicare dollars by establishing a clear connection
between an SSBCI and the most current evidence addressing whether there
is a reasonable expectation that the SSBCI will improve or maintain the
health or overall function of a chronically ill enrollee.
We believe that codifying that CMS may decline to approve a bid for
an MA
[[Page 30555]]
organization to offer certain SSBCI is appropriate to support CMS's
programmatic oversight function. CMS already possesses the authority to
negotiate and reject bids under Section 1854 of the Act, and to
establish certain minimum requirements related to SSBCI under Section
1852 of the Act. We can rely on these bases as well as the requirements
for SSBCI in the statute and regulations to decline to approve bids
that include SSBCI that lack evidence to support the MA organization's
expectations related to the SSBCI, but, as we noted in the November
2023 proposed rule, we believe it prudent to establish clearly how our
evaluation of individual SSBCI offerings and the evidence supporting
these offerings fit within our bid negotiation and approval authority.
We believe that SSBCI provide a critical source of innovation, and we
wish to see MA organizations continue to develop impactful benefits
tailored to their chronically ill enrollees. However, we must also
ensure that benefits offered within the MA program comply with all
applicable statutory and regulatory standards. We believe it is
critical for effective program administration that CMS be able to
obtain, upon request, relevant acceptable evidence from an MA
organization to support CMS's review of SSBCI each year considering the
information and evidence available at that point in time.
We solicited comment on this proposal to codify CMS's authority to
decline to approve an MA organization's bid if the MA organization
fails to demonstrate, through relevant acceptable evidence, that an
SSBCI included in the bid has a reasonable expectation of improving or
maintaining the health or overall function of the chronically ill
enrollees that the MA organization is targeting.
The policies proposed in this section, which we are finalizing with
modifications detailed further below, will work together to place the
burden of showing whether an item or service offered as SSBCI has a
reasonable expectation of improving the health or overall function of a
chronically ill enrollee onto the MA organization. Implementing these
proposals changes the policy set forth in the 2019 HPMS memo requiring
CMS to provide supporting evidence or data to an MA organization if CMS
determines that an MA plan may not offer a specific item or service as
an SSBCI because it has not met the reasonable expectation standard.
Under these proposals, the MA organization must, in advance of
including an SSBCI in its bid, have already conducted research on the
evidence establishing a reasonable expectation that the item or service
would improve or maintain the health or overall function of the
recipient of the item or service. By the time the MA organization
submits its bid, it must be able to show CMS, upon request, the
relevant applicable evidence that supports the reasonable expectation
that the item or service would improve or maintain the health or
overall function of the chronically ill enrollees it is targeting. We
expect that MA plans are already proactively conducting similar
research and establishing written policies for implementing SSBCI based
on this research when designing them. Additionally, MA plans may seek
guidance from CMS regarding SSBCI items or services not defined in the
PBP or in previous CMS guidance prior to bid submission. However, plans
should note that such guidance provided in advance of the bid
submission process is not a guarantee that CMS will approve the bid. As
such, we believe this proposal, if implemented, would create efficiency
while imposing relatively little burden on MA plans.
In addition, we proposed at Sec. 422.102(f)(3)(iv) that MA plans
will be required to document and submit to CMS upon request each
determination that an enrollee is not eligible to receive an SSBCI. We
believe that requiring an MA organization to support its SSBCI
offerings with a written bibliography of relevant acceptable evidence
and an MA plan to document denials of SSBCI work together to ensure
that SSBCI are being implemented in an evidence-based, non-
discriminatory, and fair manner. The evidence base established by an MA
organization could serve to inform an MA plan's objective criteria for
determining eligibility. By requiring an MA plan to document instances
of SSBCI denials, we believe this proposal will improve the experience
of MA plans, enrollees, and CMS in managing and oversight of appeals of
such denials. Further, it will help ensure that MA plans are not
denying access to SSBCI based on factors that are biased or
discriminatory or unrelated to the basis on which the SSBCI are
reasonably expected to improve or maintain the health or overall
function of the chronically ill enrollees. For example, researchers
have identified that certain algorithms that have been used to decide
who gets access to additional services can have clear racial bias, when
factors such as expected future cost or expected future utilization are
incorporated into the algorithm.\86\ By codifying CMS' authority to
decline to approve a bid that includes an SSBCI not supported by
evidence, this proposal also serves to ensure appropriate program
administration and oversight.
---------------------------------------------------------------------------
\86\ See, e.g., Ziad Obermeyer et al., Dissecting racial bias in
an algorithm used to manage the health of populations. Science 366,
447-453 (2019). DOI:10.1126/science.aax2342.
---------------------------------------------------------------------------
Finally, we proposed to make a technical edit to Sec.
422.102(f)(1)(i)(A)(2) to correct a typographical error. In our June
2020 final rule, we noted that section 1852(a)(3)(D)(ii) of the Act, as
amended, defines a chronically ill enrollee as an individual who, among
other requirements, ``[h]as a high risk of hospitalization or other
adverse health outcomes[.]'' We then indicated that ``we propose to
codify this definition of a chronically ill enrollee'' at Sec.
422.102(f)(1)(i). However, our regulation at Sec.
422.102(f)(1)(i)(A)(2) currently reads: ``Has a high risk of
hospitalization of other adverse outcomes[.]'' We proposed to
substitute ``or'' for the second ``of'' in this provision, such that it
aligns with the statutory language that we intended to codify in our
regulation.
We invited public comment on this proposal and received several
comments. A discussion of these comments, along with our responses
follows.
Comment: Commenters were overall very supportive of our efforts to
improve SSBCI offerings and ensure that these benefits provided value
to enrollees. Commenters expressed support for our stated goals of
ensuring that SSBCI were supported by evidence, and that MA rebate
dollars were used to benefit enrollees.
Response: We appreciate the support of our proposal.
Comment: Some commenters expressed support for the degree of
flexibility CMS proposed to include as part of its relevant acceptable
evidence standard. However, several commenters sought clarification
regarding aspects of our proposal. Specifically, several commenters
sought clarification about whether CMS would request bibliographies as
part of the bidding process, expressing concern that plans would have
very little time to address any deficiencies.
Response: We appreciate commenter's support and reassert that we
did not propose to require plans to submit their bibliographies with
their bids. The provision proposed and finalized at Sec.
422.102(f)(3)(iv) gives CMS the necessary flexibility to request to see
[[Page 30556]]
plans' bibliographies at any time during the bidding process or during
the contract year; this may be helpful or even necessary to ensure
compliance with the statutory and regulatory requirements for SSBCI.
Our oversight of the MA program is enhanced by having access to
bibliographies upon request and will lead to more effective and useful
SSBCI offerings for Medicare beneficiaries. We will also provide time
for plans to respond to any concerns CMS raises about SSBCI evidence
bases during the bid process to allow plans to address any concerns
expressed about submitted bibliographies and the associated benefits
and make modifications to their bids as needed.
Comment: We received some comments which expressed opposition to
our proposed SSBCI evidentiary standard, specifically the requirement
that plans provide ``all relevant acceptable evidence.'' Commenters
were largely in agreement that the proposed requirement would be too
burdensome. Some commenters were concerned that the requirement would
stifle innovation, especially for SSBCI benefits, which may not have a
large evidence base. Some commenters felt that the standard should be
limited to a certain minimum number of sources or to information from
specific sources. Additionally, some commenters asked that CMS
recognize a good faith effort in collecting ``all relevant acceptable
evidence.'' They proposed that instead of ``all'' evidence, CMS accept
a ``comprehensive'' or ``reasonable'' bibliography. A commenter
suggested, to limit burden on plans, that CMS identify a singular
research resource from which plans would be required to source
published literature.
Response: We appreciate these comments, and we share this desire to
foster continued innovation in benefits that are reasonably expected to
maintain or improve the health or overall function of chronically ill
enrollees. While we anticipate that plans have been identifying or
developing evidence to support their SSBCI each year, toward ensuring
compliance with the reasonable expectation standard and further
ensuring that administering the SSBCI offerings makes business sense,
we do not wish to have the unintended effect of limiting SSBCI
offerings or stifling innovation. We recognize that for some benefits,
which are more commonly offered or generally agreed upon to have a
positive impact on the health of an individual, there may be a large
number of studies, reports, and other sources of evidence available.
Collecting and listing all such evidence produced within the last 10
years with assurances that no relevant citations were missed may be
unrealistic.
To this end, we are modifying our proposed language at Sec.
422.102 (f)(3)(ii) to require plans to include in their bibliographies
``a comprehensive list'' of relevant acceptable evidence published
within the 10 years prior to the June immediately preceding the
coverage year during which the SSBCI will be offered. We proposed
requiring plans to include ``all relevant acceptable evidence'' in
these bibliographies. We intend that this change to the final rule will
allow plans, especially those offered by smaller MA organizations or
organizations with more limited resources, to meet the requirements
without exhaustive efforts to find evidence from every available
source. However, we note that plans must demonstrate genuine efforts to
be thorough and inclusive of evidence related to the SSBCI offered. We
also reiterate that plans must provide any available negative evidence
and literature, which means including studies beyond those which
present findings favorable to its SSBCI offering. Plans must
demonstrate best efforts in including all evidence which adheres to the
requirements proposed at Sec. 422.102 (f)(3).
We are not limiting the sources from which plans may pull their
evidence base as suggested by a commenter as we wish to provide
flexibility for plans to cull from sources they deem acceptable to
comply with the standards proposed. Additionally, we are not imposing a
minimum number of bibliographic citations for a certain SSBCI. However,
we expect that for more established items or services, plans are
accordingly including a greater number of citations as there are likely
to be a greater number of studies and investigations into the impact
such items or services have on the studied sample group. Further,
instituting such a minimum number of citations may be limiting for
plans offering SSBCI which are less established and may not be able to
meet such an arbitrary requirement. We note, however, that CMS may
propose such a requirement in future rulemaking if it becomes evident
that plans are not making a good faith effort in complying with the
requirements or are allowing for SSBCI items or services with little to
no evidence which do not meet the ``reasonable expectation'' standard.
While, as modified in this final rule, requirements about the
standards for the evidence used to support SSBCI, creation of a
bibliography, and making the bibliography available to CMS may require
plans to conduct further research than they currently do, we anticipate
that the new burden will be manageable to the extent that the plans are
building on existing efforts to ensure that their SSBCI offerings meet
the ``reasonable expectation'' standard in the statute and currently at
Sec. 422.102(f)(1)(ii). As noted in the preamble, we expect that MA
plans are already proactively conducting similar research and
establishing written policies for implementing SSBCI based on this
research when designing them. Additionally, MA plans may seek guidance
from CMS regarding SSBCI items or services not defined in the PBP or in
previous CMS guidance prior to bid submission. However, plans should
note that such guidance provided in advance of the bid submission
process is not a guarantee that CMS will approve the bid. To the extent
that plans must conduct research anew to support novel, innovative
SSBCI, we note that plans must only do so in the absence of large,
randomized controlled trials or prospective cohort studies with clear
results, published in a peer-reviewed journal, or large systematic
reviews or meta-analyses summarizing the literature of the same (as
proposed at Sec. 422.102(f)(3)(i)), as well as any other evidence
including case studies, federal policies or reports (as proposed at
Sec. 422.102(f)(3)(iii)).
Comment: Several commenters expressed concern about the timing of
implementation for this proposal and requested that CMS delay
implementation of proposed Sec. 422.102(f)(3) until calendar year
2026, or until bidding for CY2026.
Response: While we appreciate that MA organizations may wish for
additional time to collect evidence which adheres to the requirement,
as noted in this preamble, plans should already have an evidence base
to support their current benefit offerings. The reasonable expectation
standard is not changing under this final rule and MA plans have been
submitting bids for and offering SSBCI on the basis that the items and
services are reasonably expected to improve or maintain the health or
overall function of chronically ill enrollees for several years.
Therefore, it is not necessary to delay implementation of the
requirements about the standards for the evidence used to support
SSBCI, creation of a bibliography, and making the bibliography
available to CMS. We believe that plans should already have evidence to
show their benefit offerings have a reasonable expectation of improving
or maintaining the health or overall function of their chronically ill
enrollees, and therefore collating information sufficient to comply
with
[[Page 30557]]
our standard as proposed will not be an undue burden that warrants a
delay in implementation. Therefore, we are finalizing these changes to
Sec. 422.102(f)(3) for coverage beginning on and after January 1,
2025, and will apply these standards in evaluating bids for 2025.
Comment: Several commenters expressed concerns that CMS' proposed
standards for bibliographies are too strict, and that CMS should accept
alternative research or studies beyond those explicitly mentioned. Some
commenters expressed concern that the proposed standard would be
particularly burdensome on MA Special Needs Plans (SNPs) that serve a
wide variety of chronic conditions. Some commenters also identified
certain types of services, such as home-based services, or services for
certain enrollees, such as those receiving residential treatment, which
they felt would be more challenging to fit into our proposed standard.
Response: Our proposed requirements were purposefully broad and
flexible in what evidence would be acceptable to support a given SSBCI.
As we are finalizing in this final rule, plans must first present a
comprehensive list of literature published in a peer-reviewed journal,
including large, randomized controlled trials or prospective cohort
studies with clear results, systematic reviews, and meta-analyses--the
evidence we described in proposed (and finalized) Sec.
422.102(f)(3)(i). Per the finalized language at Sec.
422.102(f)(3)(ii), the bibliography must include a comprehensive list
of relevant acceptable evidence published within the 10 years prior to
June preceding the start of the contract year, including any available
negative evidence and literature. Requiring a broad scope of relevant
acceptable evidence is necessary so that CMS may be apprised of both
positive and negative research related to a specific item or service
that an MA plan proposes to cover as an SSBCI. When studies are not
available, an MA plan may include in its bibliography such items as
case studies, Federal policies or reports, and internal analyses that
investigate the impact that the item or service has on the health or
overall function of its recipient--the evidence we described in
proposed 42 CFR 422.102(f)(3)(iii). As proposed and finalized,
paragraph (f)(3)(iii) does not require an MA plan to include evidence
in these other types of case studies, federal policies or reports,
internal analyses, or other investigation about the item or service
that the MA plan proposes to cover as an SSBCI; the standard to provide
a comprehensive list of relevant evidence is limited to the specific,
more reliable materials described in paragraph (f)(3)(i). In the
absence of studies described in paragraphs (f)(3)(i) and (ii), plans
must include in their bibliographies the types of evidence described in
Sec. 422.102(f)(3)(iii), as proposed and finalized.
It is not necessary for CMS to be overly prescriptive in listing
every type of acceptable evidence that a plan may collect and submit.
As noted in this preamble, CMS does not wish to hamper innovation in
offering new benefits. At the same time, we are concerned that any
further broadening of this standard may make the requirement
meaningless when keeping in mind that this proposal is meant to ensure
quality care for chronically ill individuals. We will consider in
future rulemaking whether it should refine this standard, including but
not limited to being more prescriptive regarding the acceptable sources
of evidence. For now, we believe it appropriate to promote flexibility
in demonstrating that a given SSBCI offering complies with the
reasonable expectation standard.
To that end, while we recognize that providing ``a comprehensive
list of relevant acceptable evidence'' may sometimes mean a large
number of studies are collected for a single benefit, gathering this
evidence base is critical for greater review and scrutiny of these
benefits in order for CMS to maintain good stewardship of Medicare
dollars, and for ensuring that the SSBCI offered are consistent with
applicable law and those most likely to improve or maintain the health
or overall function of chronically ill enrollees. Requiring a broad
scope of relevant acceptable evidence over a specified period of time
is necessary so that CMS may be apprised of both positive and negative
research related to a specific item or service that an MA plan proposes
to cover as an SSBCI.
Additionally, we reassert that the relevant acceptable evidence
need not necessarily relate to a specific chronic condition. We note
there are some conditions for which there is little evidence relating
to non-medical services which may benefit an individual. As we noted in
this preamble, while ideally the evidence would include the specific
chronic condition used by the MA plan in its SSBCI eligibility criteria
and how the specific item or service would address that specific
chronic condition, we are not making this a requirement at this time.
We also note that relevant acceptable evidence does not necessarily
have to be related to Medicare eligible populations. Acceptable studies
or other sources of evidence may focus on other groups, including
individuals in specific geographies or underserved communities. Since
plans may consider social determinants of health (SDOH) as a factor to
help identify chronically ill enrollees whose health or overall
function could be improved or maintained with SSBCI (42 CFR
422.102(f)(2)(iii)), we recognize that some relevant acceptable
evidence may also be focused on certain communities that share a
characteristic other than Medicare eligibility status. We therefore do
not agree that specific types of MA plans, like SNPs, or services like
residential treatment noted by the commenter would have difficulty
meeting the requirement for the above reasoning.
Comment: Several commenters noted that some SSBCI services are
generally accepted as regular supplemental benefits as well and
recommended that such services be exempt from the requirement.
Alternatively, some commenters suggested CMS make a list of specific
items or services that may be offered as SSBCI and associated
supporting bibliographies publicly available, such that plans could
access them when choosing to provide those services. Many commenters
recommended that CMS identify SSBCI that are supported by a robust
evidence base and exempting those items or services from these
requirements.
Response: While we agree there are some SSBCI which are offered by
a large number of plans, and for which a large evidence base exists, we
are not finalizing such a list at this time. Additionally, while we
requested comment on specific items or services for which this
requirement should not apply, commenters did not provide specific
examples beyond a suggestion that CMS develop a ``core list'' of
approved-and therefore exempt-SSBCI services. Therefore, we are
finalizing this proposal that the MA plan develop a bibliography of
specific types of evidence related to the proposed SSBCI without
modification. CMS may consider developing and publishing a core list of
SSBCI which are exempt from the requirement in future rulemaking should
we determine that some services have a sufficiently robust evidence
base. In addition, even for items and services that meet the standard
of being primarily health related in Sec. 422.100(c)(2), when an MA
plan offers those benefits as SSBCI, the MA plan is necessarily
limiting the coverage to specific chronically ill enrollees; it is
appropriate to ensure that
[[Page 30558]]
the basis for that limitation is grounded in relevant acceptable
evidence.
Comment: Some commenters suggested that, in the absence of any
relevant acceptable evidence, CMS accept a rationale statement or allow
plans to offer services for 1-2 years while the plan gathers internal
data to support the continued offering of the benefit.
Response: While we reiterate our wish that MA plans continue to
innovate and offer solutions to enrollees in the form of SSBCI, MA
plans must use appropriate resources to test these benefits. Offering
SSBCI where there is not a sufficient basis to conclude that the
statutory and regulatory standards for such benefits under section
1852(a)(3)(D) of the Act and Sec. 422.102(f) have been met is not
appropriate. We decline to create an exception in our final rule for
items and services which do not meet the ``relevant acceptable
evidence'' criteria, a standard which CMS believes is sufficiently
broad and flexible to accommodate less established SSBCI. Indeed, CMS
proposed to allow plans to support SSBCI offerings through internal
analyses in the absence of other established evidence. We note,
however, that in addition to providing at least an internal analysis
for an SSBCI for a current plan year, plans may leverage their
experience in offering SSBCI to refine internal analyses for future
plan years.
Comment: Some commenters were concerned that plans would not wish
to devote the necessary resources to establish the bibliography at the
time the bid is submitted and would instead pass this responsibility on
to the businesses or organizations that provide the specific SSBCI
benefits. These commenters expressed concern that these entities may
not have the resources to do so or would be overburdened by the
requirement. A few commenters requested clarification regarding the use
of hyperlinks in the bibliography, including how to address internal
analyses or when research is behind a ``paywall.''
Response: As with certain other programmatic requirements, MA plans
may delegate functions to first tier, related, or downstream entities,
subject to MA program rules such as Sec. 422.504(i), and these
requirements are no exception. MA plans are ultimately responsible for
ensuring compliance with all federal law, including these new
requirements, regardless of whether plans gather studies or conduct
research directly or outsource those functions first tier, related or
downstream entities. As it relates to our hyperlink requirement, plans
must ensure that CMS can access completely each resource cited in the
bibliography for an SSBCI. If the study is behind a ``paywall,'' is an
internal analysis, or is otherwise not accessible through a hyperlink,
the plan must provide such evidence directly to CMS upon request.
Comment: We received mixed comments regarding exclusion from the
new requirements proposed and finalized in Sec. 422.102(f)(3) (that
is, the requirements about the standards for the evidence used to
support SSBCI, creation of a bibliography, and making the bibliography
available to CMS) of SSBCI that are reductions in cost-sharing for
Parts A and/or B benefits, or reductions in cost sharing for other
supplemental benefits which are not SSBCI. Some commenters were
supportive of this exclusion while others felt that excluding cost-
sharing benefits would mean plans offer fewer benefits which are not
reductions in cost-sharing. Additionally, a commenter requested that
CMS exclude from the requirement primarily-health related SSBCI that
are substantially similar to mandatory supplemental benefits.
Response: We appreciate this feedback. At this time we are not
extending the requirements about the standards for the evidence used to
support SSBCI, creation of a bibliography, and making the bibliography
available to CMS to apply as well to SSBCI that are reductions in cost-
sharing, as we intend for this proposal to focus on the evidence base
for SSBCI that are additional primarily health-related supplemental
items and services and non-primarily health-related supplemental items
and services, and not the level of cost borne by enrollees in accessing
other covered benefits. We may consider in future rulemaking whether to
subject SSBCI offered as cost sharing to these evidentiary
requirements. However, we note that MA plans must still be able to
explain how the SSBCI reduction in cost sharing meets the applicable
statutory and regulatory standards, including the reasonable
expectation standard.
We are also not exempting any particular SSBCI beyond those which
are cost-sharing reductions. While some plans may choose to cover
services which are substantially similar to already approved mandatory
supplemental benefits, at this time, we are not making a distinction
between services which are ``substantially'' similar to mandatory
supplemental benefits, which vary by plan, and those which are not
``substantially'' similar.
Comment: We received several comments regarding our request for
feedback on whether to codify a requirement that plans must follow
their written policies for determining SSBCI eligibility. These
comments were overwhelmingly supportive and additionally suggested that
CMS require plans publish their written requirements for SSBCI
eligibility on a public-facing website.
Response: We appreciate this feedback and support. We noted in this
preamble that we anticipated plans were already following their written
policies for determining SSBCI eligibility, policies which are a
current regulatory requirement. We therefore believe amending the
regulation to more clearly require compliance with the written policies
is a logical next step and should not present a change in practice for
plans. We are finalizing this aspect of the proposal without
modification by finalizing the changes to redesignated paragraph
(f)(4)(iii) as proposed.
We also appreciate the suggestion that plans publish their written
SSBCI eligibility requirements, and while we are not finalizing such a
requirement at this time, we may consider this in future rulemaking. We
note that currently plans are expected to include SSBCI eligibility
criteria in their Evidence of Coverage (EOC) and Annual Notice of
Change (ANOC) documents. We stated in the June 2020 final rule ``[. .
.]It is our expectation that plans communicate information on SSBCI to
enrollees in a clear manner about the scope of SSBCI that the MA plan
covers and who is eligible for those benefits.''
Comment: Some commenters supported our proposed change that plans
must document SSBCI eligibility denials rather than approvals. Many
commenters further suggested CMS require documentation of approvals as
well as denials, rather than the CMS proposal to document only denials.
A commenter also suggested CMS require additional data collection such
as demographic information about the enrollee when a plan collects
information for approval or denial of eligibility for an SSBCI benefit.
Further, a commenter noted that by capturing both approvals and
denials, CMS may be able to compare statistics of approvals and denials
across plans.
Response: We appreciate this feedback and are finalizing paragraph
(f)(4)(iv) (redesignated from existing paragraph (f)(3)(iv) with
changes) with changes to require MA plans to document both approvals
and denials of SSBCI eligibility. We agree that documenting both
approvals and denials will give a more complete and comprehensive
understanding of how plans are implementing coverage of SSBCI. In
addition, this information
[[Page 30559]]
may assist us in evaluating how MA plans are marketing their benefits
and exercising necessary oversight of their offerings. Since plans are
already required to document approvals at current Sec.
422.102(f)(3)(iv), we do not feel that this change should present a
significant alteration of burden for plans from what we proposed in the
November 2023 proposed rule.
We originally proposed documenting denials of SSBCI eligibility not
only to increase ease of monitoring and oversight by CMS of whether
benefits are being furnished consistent with how MA plans describe them
but also to better position plans should enrollees appeal their SSBCI
eligibility denials. However, commenters rightly pointed out that
without the full picture of both approvals and denials, CMS may not be
able to fully understand how plans are using their resources as it
relates to SSBCI. If, for example, there are many denials as compared
to approvals, it may alert the plan and CMS to an improper marketing of
the benefit, or of overly broad recommendations of the benefit by a
physician. Further, we agree with the commenter that by capturing both
approvals and denials, CMS may be able to compare statistics of
approvals and denials across MA plans, which, over time, may allow CMS
to better determine if plans are improperly denying or approving SSBCI
eligibility for plan enrollees. These additional capabilities and
insights, which will be possible when there is adequate documentation
of both approvals and denials, may allow for CMS to further refine
SSBCI policy in future rulemaking to improve the enrollee experience
and improve CMS's stewardship over Medicare dollars.
For these reasons, we are finalizing the proposal to require that
MA plans document its eligibility determinations with a modification to
require MA organizations to document both approvals and denials of
eligibility for an enrollee to receive a particular SSBCI in Sec.
422.102(f)(4)(iv).
Additionally, we are not requiring plans to report to CMS
documentation regarding the approvals or denials on a regular basis at
this time. However, CMS may request this data on a case by case or ad
hoc basis or may incorporate this into regular reporting by MA
organizations under Sec. Sec. 422.504(f)(2) or 422.516(a). We also
acknowledge concerns about equity and equitable treatment of enrollees,
concerns which we share. It is our belief, through the modification of
this proposal to include documentation of both approvals and denials,
that MA plans will be additionally mindful of these concerns when
making determinations. We note that plans may choose to include
additional information, including demographic information about the
enrollee, when documenting approvals and denials; however, CMS is not
requiring plans to collect or submit this information as part of Sec.
422.102(f). We may consider implementing such requirements in future
rulemaking. We note that CMS has addressed some concerns regarding
health equity and social risk factors elsewhere in this final rule. In
the section titled ``Annual Health Equity Analysis of Utilization
Management Policies and Procedures'' CMS sets forth additional
requirements related to prior authorization determinations and their
impact on health equity for MA organizations.
Comment: We solicited feedback on whether to exempt SSBCI from the
general rule reflected in Sec. 422.111(d) that MA plans may change
certain plan rules during the year so long as notice is provided to
enrollees. Some commenters urged that plans should not be allowed to
change the eligibility requirements at all, while others suggested that
the requirements should only be changed if eligibility were expanded to
allow for more enrollees to benefit from services offered. A few
commenters expressed concern about prohibiting changes in SSBCI
eligibility policies during the coverage year as it may limit plan
flexibility.
Response: We appreciate this feedback and the desire of commenters
to preserve benefits available to enrollees and reduce confusion
regarding plan requirements. This is a desire we share. We agree with
commenters who expressed concern that changes during the coverage year
to evidentiary standards or the objective criteria applied when
determining eligibility for an SSBCI may disrupt or undermine a
chronically ill enrollee's access to SSBCI. As commenters noted,
changes in eligibility criteria and standards during the coverage year
may be used to limit chronically ill enrollees' access to benefits.
Most comments received on this topic urged us to exempt SSBCI from our
general rule permitting changes in plan rules during the coverage year
so long as notice is provided to enrollees. While some commenters
suggested allowing changes only if such changes would expand access to
the SSBCI, we believe that prohibiting changes to eligibility criteria
and evidentiary standards for SSBCI altogether would minimize the
potential for confusion and disagreement regarding whether a change
does in fact expand access to a benefit. Moreover, this policy is
consistent with another policy we are finalizing related to SSBCI
eligibility disclaimers; ensuring that the disclaimers on marketing
during the annual enrollment period are as accurate later in the
coverage year as when beneficiaries are making enrollment decisions
will improve the usefulness and applicability of the disclaimer. Taken
together, these policies serve our goal of minimizing enrollee
confusion regarding eligibility for certain SSBCI.
For these reasons, we are also adding new paragraph (f)(4)(v) as
part of the changes we are finalizing to Sec. 422.102(f) in this rule.
New paragraph (f)(4)(v) requires that an MA plan offering SSBCI must
maintain without modification for the full coverage year for the SSBCI
offered, evidentiary standards for a specific enrollee to be determined
eligible for a particular SSBCI, and the specific objective criteria
used by an MA plan as part of SSBCI eligibility determinations.
While CMS considered additionally prohibiting plans from making
changes to their utilization management policies related to SSBCI
during the coverage year, we are not finalizing such a prohibition at
this time. It is important that plans have the flexibility to relax
utilization management criteria and policies in the event of
extraordinary circumstances. For example, during the COVID-19 public
health emergency, CMS encouraged plans in the HPMS memo titled
``Information Related to Coronavirus Disease 2019--COVID-19'' to waive
or relax prior authorization policies in order to facilitate enrollees'
access to services with less burden on beneficiaries, plans and
providers. We wish to allow plans continued flexibility to address such
extraordinary circumstances, including disasters, declarations of state
of emergency or public health emergencies, through changes made to
utilization management policies as appropriate.
Comment: A commenter requested CMS not allow plans to change
eligibility criteria for SSBCI during the plan year. However, the
commenter requested that if CMS permitted plans to change eligibility
criteria, or utilization management policies during the plan year, CMS
should create a Special Enrollment Period (SEP) that allows enrollees
to disenroll from the MA plan based on changes to plan rules.
Response: We appreciate this comment. We agree that changing
eligibility criteria policies for SSBCI, benefits which may be heavily
marketed to potential enrollees, could cause difficulties for
chronically ill enrollees, especially if they relied on information
about the availability of SSBCI benefits
[[Page 30560]]
in making a plan election. We do not wish these enrollees to come to
rely on such services, only to be unable to access them during the plan
year, or to be surprised by service denials or unexpected high service
costs. In this final rule, CMS is prohibiting plans from making changes
to eligibility requirements for SSBCI by requiring that plans offering
SSBCI maintain without modification for the full coverage year,
evidentiary standards for a specific enrollee to be determined eligible
for a particular SSBCI and the specific objective criteria used by an
MA plan as part of SSBCI eligibility determinations. Due to this
change, an SEP is not necessary.
Comment: A commenter requested additional clarity about the
bibliography review process, suggesting that CMS codify its process for
reviewing bibliographies.
Response: While we appreciate the commenter's concerns regarding
the timeline and review process CMS will use in reviewing the
bibliographies prepared by MA organizations, we are not finalizing any
formal process at this time. We believe that plans which offer SSBCI
should already have strong evidence to support that such benefits will
provide value to the enrollees by improving or maintaining the health
or overall function of the enrollees. Therefore, we do not feel it is
necessary to codify a formal review process which may be overly
burdensome for plans, and overly restrictive on CMS. However, after
initial years of implementation of this requirement, we may reevaluate
this position about when and the extent to which CMS should request and
review the bibliographies that this final rule requires. If there are
indications that plans have not been responsibly offering benefits and
generally adhering to requirements or if we determine that a more pro-
active or formal approach to SSBCI review is necessary, we may consider
future changes.
Comment: A commenter recommended CMS allow studies older than 10
years old, as they believed that some services would not be the subject
of more current research such that there would be sufficient evidence
to support the benefit.
Response: Under our proposal, MA plans are permitted to include
studies published over 10 years ago in their bibliography. We are
finalizing that MA plans are required to include a comprehensive list
of studies constituting relevant acceptable evidence published within
the past 10 years, including any available negative evidence and
literature.
Comment: A commenter noted that the lack of clinical codes for
these benefits made tracking outcomes difficult as enrollees may use
different ``variations'' of a service, and it is difficult to prove
that a specific SSBCI makes an impact without a reliable control group.
Response: We appreciate that measuring the impact of non-primarily
health related benefits may be challenging in the absence of standard
clinical codes. That said, our proposal does not require plans to prove
that their specific SSBCI improved or maintained the health or overall
function of the specific chronically ill enrollees who received the
benefit. Instead, we are further implementing the existing statutory
standard, under which an SSBCI must have a reasonable expectation of
improving or maintaining the health or overall functioning of a
chronically ill enrollee, and establishing requirements to ensure that
the statutory requirements are met when SSBCI are included in MA bids.
While evidence regarding the impact of a specific SSBCI on a specific
sample of chronically ill enrollees might be valuable in demonstrating
compliance with the reasonable expectation standard, this is not a
requirement we are imposing as part of this final rule.
Comment: Some commenters recommended changes to the relevant
acceptable evidence aspect of the proposal as it relates to SNPs. A
commenter recommended that CMS change the policy for D-SNPs
specifically. They recommend that, in instances where an SSBCI benefit
overlaps with a Medicaid benefit, the plan should provide additional
evidence to show that the benefit has a reasonable expectation of
improving the health outcome of the D-SNP enrollees. Another commenter
recommended that CMS require D-SNP plans to provide evidence that their
SSBCI provides unique value to a substantial portion of their expected
enrollee population eligible for SSBCI and will not be duplicative of
other benefits they would already receive.
Response: We appreciate these comments. While we share the
commenter's concern for D-SNP enrollees, specifically that these
enrollees be able to access both Medicare and Medicaid benefits as
necessary, we did not propose and are not adopting specific Medicare-
Medicaid benefit coordination rules for SSBCI. The requirements we
proposed and are finalizing in Sec. 422.102(f)(3) are intended to
ensure that there is relevant acceptable evidence on which to conclude
that specific items and services that an MA plan intends to cover as
SSBCI have a reasonable expectation of improving or maintaining the
health or overall function of the enrollee. We note that CMS already
expects that D-SNPs use flexibility to design their benefits in a way
that adds value for the enrollee by augmenting and/or bridging a gap
between Medicare and Medicaid covered services and are therefore not
modifying our requirements regarding SSBCI bibliographies to reflect
any additional burden or requirement on D-SNPs specifically.
Comment: A commenter recommended CMS allow plans to include studies
that focus on ``different sites of care'' or ``methods of
implementation'' from those proposed for the plan benefit.
Response: Under our proposal, plans may cite studies that concern
different sites of care or methods of implementation compared to how
plans intend to implement their specific SSBCI. While ideally, relevant
acceptable evidence will include studies that align with how plans will
implement their SSBCI, and to whom the plans target their SSBCI, we
recognize that most relevant studies will vary in the exact benefit and
population studied. We believe studies that consider a benefit design
and implementation similar to but not precisely the same as that
proposed by the plan is still relevant for demonstrating compliance
with our reasonable expectation standard.
After consideration of the comments, and for the reasons provided
in our November 2023 proposed rule, we are finalizing our proposed
revisions to Sec. 422.102(f) with three modifications. First, we are
finalizing our proposals to redesignate current paragraph Sec.
422.102(f)(3) to Sec. 422.102(f)(4). We are finalizing at Sec.
422.102(f)(3) our proposed policy requiring the MA organization to be
able to demonstrate through relevant acceptable evidence that the item
or service to be offered as SSBCI has a reasonable expectation of
improving or maintaining the health or overall function of a
chronically ill enrollee and must, by the date on which it submits its
bid to CMS, establish a bibliography of ``relevant acceptable
evidence'' concerning the impact that the item or service has on the
health or overall function of its recipient.
We are further finalizing our proposal, at paragraph (f)(3)(i) that
relevant acceptable evidence includes large, randomized controlled
trials or prospective cohort studies with clear results, published in a
peer-reviewed journal, and specifically designed to
[[Page 30561]]
investigate whether the item or service impacts the health or overall
function of a population, or large systematic reviews or meta-analyses
summarizing the literature of the same.
We are modifying our proposal at Sec. 422.102(f)(3)(ii) that an MA
organization must include in its bibliography ``all relevant acceptable
evidence'' published within the 10 years prior to the June immediately
preceding the coverage year during which the SSBCI will be offered.
Instead, in response to comments received, we are finalizing that an MA
organization must include in its bibliography ``a comprehensive list of
relevant acceptable evidence [. . .] including any available negative
evidence and literature.''
We are finalizing at Sec. 422.102(f)(3)(iii) that, if no evidence
of the type described in paragraphs (f)(3)(i) and (ii) of this section
exists for a given item or service, then MA organization may cite case
studies, Federal policies or reports, internal analyses, or any other
investigation of the impact that the item or service has on the health
or overall function of its recipient as relevant acceptable evidence in
the MA organization's bibliography.
Second, we are also finalizing our proposal to explicitly require
at Sec. 422.102(f)(4)(iii) that MA plans must apply their written
policies based on objective criteria for determining a chronically ill
enrollee's eligibility to receive a particular SSBCI. We are
effectuating this policy by adding ``and apply'' to redesignated
paragraph (f)(4)(iii)(A) as we proposed. Further, based on comments
received, we are finalizing an exemption to the general rule reflected
at Sec. 422.111(d) that MA plans may change plan rules for SSBCI
during the coverage year. Specifically, we are finalizing at new Sec.
422.102(f)(3)(v) that an MA plan offering SSBCI must maintain without
modification for the full coverage year evidentiary standards for a
specific enrollee to be determined eligible for a particular SSBCI, and
the specific objective criteria used by an MA plan as part of SSBCI
eligibility determinations.
Third, after considering comments received, we are modifying our
proposal that MA plans would need to document denials of SSBCI
eligibility instead of approvals. Instead, we are adopting a
requirement that MA plans must document both approvals and denials of
SSBCI eligibility. Specifically, we are modifying proposed Sec.
422.102(f)((4)(iv) to say ``Document each SSBCI eligibility
determination, whether eligible or ineligible, to receive a specific
SSBCI and make this information available to CMS upon request.''
Fourth, we are finalizing our proposal without modification to add
Sec. 422.102(f)(5) to codify CMS's authority to decline to approve an
MA organization's bid, if CMS determines that the MA organization has
not demonstrated, through relevant acceptable evidence, that an SSBCI
has a reasonable expectation of improving or maintaining the health or
overall function of the chronically ill enrollees that the MA
organization is targeting. We are additionally finalizing our proposal
that CMS may annually review the items or services that an MA
organization includes as SSBCI in its bid for compliance with all
applicable requirements, taking into account updates to the relevant
acceptable evidence applicable to each item or service. We are further
finalizing our clarification that this provision does not limit CMS's
authority to review and negotiate bids or to reject bids under section
1854(a) of the Act and subpart F of this part nor does it limit CMS's
authority to review plan benefits and bids for compliance with all
applicable requirements.
Finally, we are finalizing our technical edit proposed at Sec.
422.102(f)(1)(i)(A)(2) to correct a typographical error. Specifically,
we are substituting ``or'' for the second ``of'' in Sec.
422.102(f)(1)(i)(A)(2), such that it reads ``Has a high risk of
hospitalization or other adverse health outcomes.''
D. Mid-Year Notice of Unused Supplemental Benefits (Sec. Sec.
422.111(l) and 422.2267(e)(42))
Per CMS regulations at Sec. 422.101, MA organizations are
permitted to offer mandatory supplemental benefits, optional
supplemental benefits, and special supplemental benefits for the
chronically ill (SSBCI). When submitting an annual bid to participate
in the MA program, an MA organization includes a Plan Benefit Package
(PBP) (OMB 0938-0763) and Bid Pricing Tool (BPT) (OMB 0938-0944) for
each of its plans where the MA organization provides information to CMS
on the premiums, cost sharing, and supplemental benefits (including
SSBCI) it proposes to offer. The number of supplemental benefit
offerings has risen significantly in recent years, as observed through
trends identified in CMS's annual PBP reviews as well as external
reports. The 2023 Medicare Trustees Report showed that in the last
decade, MA rebates quintupled from $12 billion in 2014 to $67 billion
estimated for 2024, resulting in a total of over $337 billion going
towards MA rebates over that time period. This increase, which was due
to both the increase in MA enrollment and per MA beneficiary rebate
growth, which included 27%-30% jumps each year from 2019 to 2023.\87\
At the same time, CMS has received reports that MA organizations have
observed low utilization of these benefits by their enrollees, and it
is unclear whether plans are actively encouraging utilization of these
benefits by their enrollees, which could be an important part of a
plan's overall care coordination efforts.
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\87\ https://www.cms.gov/oact/tr/2023.
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CMS remains concerned that utilization of these benefits is low and
has taken multiple steps to obtain more complete data in this area. For
example, in the May 2022 final rule, we finalized expanded Medical Loss
Ratio (MLR) reporting requirements, requiring MA organizations to
report expenditures on popular supplemental benefit categories such as
dental, vision, hearing, transportation, and the fitness benefit (87 FR
27704, 27826-28).\88\ In addition, in March 2023, as a part of our Part
C reporting requirements, we announced our intent to collect data to
better understand the utilization of supplemental benefits, which was
finalized, and beginning CY2024 requires MA plans to report utilization
and cost data for all supplemental benefit offerings.\89\ This data is
collected in the information collection request Part C Medicare
Advantage Reporting OMB 0938-1054.\90\ Currently, there is no specific
requirement for MA organizations, beyond more general care coordination
requirements, to conduct outreach to enrollees to encourage utilization
of supplemental benefits.
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\88\ Available at https://www.federalregister.gov/documents/2022/05/09/2022-09375/medicare-program-contract-year-2023-policy-and-technical-changes-to-the-medicare-advantage-and.
\89\ Available at: https://www.cms.gov/medicare/enrollment-renewal/health-plans/part-c and https://www.cms.gov/files/document/cy2024-part-c-technical-specifications-01092024.pdf.
\90\ https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing-items/cms-10261.
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CMS understands that projected supplemental benefit utilization,
that is, the extent to which an MA organization expects a particular
supplemental benefit to be accessed during a plan year, is estimated by
an MA organization in part by the type and extent of outreach conducted
for the benefit.91 92 We are concerned that
[[Page 30562]]
beneficiaries may make enrollment decisions based on the allure of
supplemental benefits that are extensively marketed by a given MA plan
during the annual election period (AEP) only to not fully utilize, or
utilize at all, those supplemental benefits during the plan year. This
underutilization may be due to a lack of effort by the plan to help the
beneficiary access the benefits or a lack of easy ability to know what
benefits have not been accessed and are still available to the enrollee
throughout the year. Such underutilization of supplemental benefits may
nullify any potential health value offered by these extra benefits.
---------------------------------------------------------------------------
\91\ U.S. Government Accountability Office (GAO). ``MEDICARE
ADVANTAGE Plans Generally Offered Some Supplemental Benefits, but
CMS Has Limited Data on Utilization.'' Report to Congressional
Committee, 31 Jan. 2023, p. 20, www.gao.gov/products/gao-23-105527.
\92\ U.S. Government Accountability Office (GAO). ``MEDICARE
ADVANTAGE Plans Generally Offered Some Supplemental Benefits, but
CMS Has Limited Data on Utilization.'' Report to Congressional
Committee, 31 Jan. 2023, p. 20, www.gao.gov/products/gao-23-105527.
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Additionally, section 1854(b)(1)(C) of the Act requires that MA
plans offer the value of MA rebates back to enrollees in the form of
payment for supplemental benefits, cost sharing reductions, or payment
of Part B or D premiums. Therefore, CMS has an interest in ensuring
that MA rebates are provided to enrollees in a way that they can
benefit from the value of these rebate dollars. For example, analysis
indicates that while supplemental dental benefits are one of the most
widely offered supplemental benefits in MA plans, enrollees in these
plans are no more likely to access these services than Traditional
Medicare enrollees.\93\
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\93\ https://www.cms.gov/research-statistics-data-and-systems/research/mcbs/data-briefs/dental-coverage-status-and-utilization-preventive-dental-services-medicare-beneficiaries-poster.
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As discussed, MA organizations are given the choice of how to
provide MA rebates to their enrollees. Organizations may, instead of
offering supplemental benefits in the form of covering additional items
and services, use rebate dollars to further reduce Part B and Part D
premiums, reduce cost sharing for basic benefits compared to cost
sharing in Traditional Medicare, and reduce cost sharing in other ways,
such as reducing maximum out-of-pocket (MOOP) amounts.
Over the last several years, CMS has observed an increase in (1)
the number and variety of supplemental benefits offered by MA plans,
(2) plan marketing activities by MA organizations, and (3) overall MA
enrollment; we presume that an enrollee's plan choice is influenced, at
least in part, by the supplemental benefits an MA plan offers because
the absence or presence of a particular supplemental benefit represents
a distinguishable and easily understood difference between one plan and
another. We are also concerned that some MA plans may be using these
supplemental benefits primarily as a marketing tool to steer enrollment
towards their plan and are not taking steps to ensure that their
enrollees are using the benefits being offered or tracking if these
benefits are improving health or quality of care outcomes or addressing
social determinants of health. We believe targeted communications
specific to the utilization of supplemental benefits may further ensure
that covered benefits (including those that are heavily marketed) are
accessed and used by plan enrollees during the plan year. This
outreach, in conjunction with the improved collection of utilization
data for these supplemental benefits through MLR and through Part C
reporting requirements, should help inform whether future rulemaking is
warranted.
Finally, CMS is also working to achieve policy goals that advance
health equity across its programs and pursue a comprehensive approach
to advancing health equity for all, including those who have been
historically underserved, marginalized, and adversely affected by
persistent poverty and inequality. Several studies have pointed to
disparities in health care utilization. For example, a Kaiser Family
Foundation (KFF) study \94\ found that there are significant racial and
ethnic disparities in utilization of care among individuals with health
insurance. Additionally, underserved populations tend to have a
disproportionate prevalence of unmet social determinants of health
needs, which can adversely affect health. We believe that the ability
to offer supplemental benefits provides MA plans the unique opportunity
to use Medicare Trust Fund dollars (in the form of MA rebates) to fill
in coverage gaps in Traditional Medicare, by offering additional health
care benefits or SSBCI that address unmet social determinants of health
needs, and as such, all eligible MA enrollees should benefit from these
offerings. Targeted outreach to enrollees that is specific to the
utilization of supplemental benefits may also serve to further ensure
more equitable utilization of these benefits.
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\94\ https://www.kff.org/report-section/racial-and-ethnic-disparities-in-access-to-and-utilization-of-care-among-insured-adults-issue-brief/.
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The establishment of a minimum requirement for targeted outreach to
enrollees with respect to supplemental benefits that have not been
accessed by enrollees would standardize a process to ensure all
enrollees served under MA are aware of and utilizing, as appropriate,
the supplemental benefits available to them. Section 1852(c)(1) of the
Act requires, in part, that MA organizations disclose detailed
descriptions of plan provisions, including supplemental benefits, in a
clear, accurate, and standardized form to each enrollee of a plan at
the time of enrollment and at least annually thereafter. We proposed to
use our authority to establish standards under Part C in section
1856(b)(1) of the Act to ensure adequate notice is provided to
enrollees regarding supplemental benefits coverage. This proposal will
further implement the disclosure requirement in section 1852(c)(1)(F)
of the Act. Specifically, we proposed that MA organizations must
provide a model notification to enrollees of supplemental benefits they
have not yet accessed. We proposed to implement this by adding new
provisions at Sec. Sec. 422.111(l) and 422.2267(e)(42) to establish
this new disclosure requirement and the details of the required notice,
respectively.
This proposed requirement will ensure that a minimum outreach
effort is conducted by MA organizations to inform enrollees of
supplemental benefits available under their plan that the enrollee has
not yet accessed. We proposed that, beginning January 1, 2026, MA
organizations must mail a mid-year notice annually, but not sooner than
June 30 and not later than July 31 of the plan year, to each enrollee
with information pertaining to each supplemental benefit available
during that plan year that the enrollee has not begun to use. We
understand that there may be a lag between the time when a benefit is
accessed and when a claim is processed, so we would require that the
information used to identify recipients of this notice be as up to date
as possible at the time of mailing. MA organizations are not required
to include supplemental benefits that have been accessed, but are not
yet exhausted, in this proposed mid-year notice.
Understanding that not all Medicare beneficiaries enroll in an MA
plan during the AEP, we specifically sought comment on how CMS should
address the timing of the notice for beneficiaries that have an
enrollment effective date after January 1. One possible approach we
described as under consideration was requiring the notice to be sent
six months after the effective date of the enrollment for the first
year of enrollment, and then for subsequent years, revert to mailing
the notice between the proposed delivery dates of June 30 and July 31.
Another option was to not require the notice to be mailed for
[[Page 30563]]
the first year of enrollment for those beneficiaries with an effective
date of May 1 or later, as they would be receiving their Evidence of
Coverage (EOC) around this same timeframe but may not have had
sufficient time to access these benefits. Those enrollees who would be
exempt from the mailing, based on their enrollment effective date,
would then receive the notice (if applicable because one or more
supplemental benefits have not been accessed by the enrollee) between
June 30 and July 31 in subsequent enrollment years.
For each covered mandatory supplemental benefit and optional
supplemental benefit (if the enrollee has elected) for which enrollee
is eligible, but has not accessed, the MA organization must list in the
notice the information about each such benefit that appears in EOC. For
SSBCI, MA organizations must include an explanation of the SSBCI
covered under the plan (including eligibility criteria and limitations
and scope of the covered items and services) and must also provide
point-of-contact information for eligibility assessment (which can be
the customer service line or a separate dedicated line), with trained
staff that enrollees can contact to inquire about or begin the SSBCI
eligibility determination process and to address any other questions
the enrollee may have about the availability of SSBCI under their plan.
When an enrollee has been determined by the plan to be eligible for one
or more specific SSBCI benefit but has not accessed the SSBCI benefit
by June 30 of the plan year, the notice must also include a description
of the SSBCI benefit to which the enrollee is entitled and must
describe any limitations on the benefit. In the proposed rule, we noted
the proposal to amend Sec. 422.2267(e)(34) (discussed in section VI.B
of this final rule), if finalized, would require specific SSBCI
disclaimers for marketing and communications materials that discuss the
limitations of the SSBCI benefit being offered; we also proposed that
this mid-year notice must include the SSBCI disclaimer to ensure that
the necessary information provided in the disclaimer is also provided
to the enrollee in the notice.
Furthermore, we proposed that each notice must include the scope of
the supplemental benefit(s), applicable cost sharing, instructions on
how to access the benefit(s), applicable information on the use of
network providers for each available benefit, list the benefits
consistent with the format of the EOC, and a toll-free customer service
number including, as required, a corresponding TTY number, to call if
additional help is needed. We solicited public comment on the required
content of the mid-year notice.
We also requested public comment on our proposal to require MA
plans to provide enrollees with mid-year notification of covered
mandatory and optional supplemental benefits (if elected) that have not
been at least partially accessed by that enrollee, particularly the
appropriate timing (if any) of the notice for MA enrollees who enroll
in the plan mid-year. A discussion of these comments, along with our
responses follows.
Comment: Some supporters of this provision expressed a belief that
the Mid-Year Notice is not strong enough to support the needs of
enrollees or should be amended for other reasons. A commenter suggested
that an annual cycle was insufficient, and that the notice should be
mailed monthly. Several commenters suggested the notice be sent
quarterly. A commenter suggested the notice be sent three months after
enrollment for anyone with an effective date before September 1st, and
for the enrollee to receive it during the annually established
timeframe in subsequent years. A commenter suggested the notice be sent
after the first quarter of the plan year. Another commenter suggested
that the notice should be mailed soon after an enrollee's coverage is
effectuated, regardless of whether the effectuation date is January 1st
or after, and should include all supplemental benefits available under
the plan. Another commenter stated that partially utilized benefits
should be included in the notice.
Response: We thank these commenters for their support and attention
to detail. We are finalizing Sec. 422.111(l) (requiring the Mid-year
Notice to be sent and the timing) and Sec. 422.2267(e)(42) (the
content requirements for the Mid-Year Notice) as proposed. The purpose
of the notice is to inform those enrolled in an MA plan about
supplemental benefits that have not been accessed, rather than to
inform them of all available supplemental benefits. We believe the EOC
is the appropriate communication for informing beneficiaries of all
supplemental benefits offered under a particular plan. We also note
that it is important to give beneficiaries ample time to access the
benefits before providing notice of unused supplemental benefits. We
believe the timeframes set forth in this rule provide sufficient time.
In addition, monthly or quarterly reminders may be burdensome or lose
their effectiveness in providing a reminder to enrollees about the
benefits available to them. However, after assessing the efficacy of
this provision over time, we may make amendments to the Mid-Year Notice
and its requirements in future rulemaking.
Comment: We received many comments that expressed concern about
burden and complexity, specifically regarding the proposed annual
deadline (July 31) and cost of providing personalized information to
each enrollee. With respect to the annual deadline a commenter asked
CMS to extend the deadline to August 15, and another believed they
would need up to 8 weeks following June 30 to complete the process of
printing and mailing. For various reasons, some commenters believed CMS
underestimated the costs associated with printing and mailing documents
that consist of personalized information; for example, a commenter
stated their printing costs were always higher for personalized
materials; some commenters estimated average document lengths would be
much higher than the CMS estimate, from 18 to over 20 pages.
Response: The Mid-Year Notice of Unused Supplemental Benefits is
intended to be a concise and user-friendly document, and we are
committed to the formulation of a model design that is both informative
and succinct. The length of the document will ultimately vary from
enrollee to enrollee, depending on the number of supplemental benefits
offered under the plan, the number and scope of supplemental benefits
each enrollee may be eligible to receive, and individual utilization.
As proposed and finalized, the notice must only include information
about supplemental benefits that the enrollee has not yet begun to use
by June 30.
Further, MA organizations have their own unique processes in place
for compiling, printing, and disseminating information, and this may
lead to variations in cost. Stakeholders will have further opportunity
to comment directly on the model notice during the Paperwork Reduction
Act process. We also believe that the notice will create an incentive
for MA organizations to improve their education and outreach efforts
regarding supplemental benefit access and utilization through their
marketing and communication materials, during the enrollment process,
and into the plan year. We believe that as supplemental benefits are
better understood and utilized by enrollees in the first half of the
year, the shorter the Mid-Year Notice will become.
[[Page 30564]]
Further, the requirement to notify enrollees about their unused
supplemental benefits can provide MA organizations with the opportunity
to glean useful information to further tailor their PBPs. CMS believes
MA organizations could gain valuable insights into their enrollees'
healthcare needs and preferences based on the data needed to send these
individualized notifications, if MA organizations choose to analyze
this data. This notice can benefit MA organizations by encouraging them
to thoughtfully reassess which supplemental benefits they choose to
offer so they can steer away from unpopular types of supplemental
benefits in the future, leading to a more impactful use of resources,
including Medicare dollars.
Comment: Some commenters stated that our proposal lacks scope. A
commenter believed that CMS should have defined ``supplemental
benefits'' for the purpose of determining inclusion in the Notice.
Another commenter stated the requirements of SSBCI and information
needed were not clear. Another commenter asked CMS to clarify whether
quarterly allowance benefits should be included in the Notice.
Response: To clarify, supplemental benefits include reductions in
cost sharing and additional items and services that are not covered
under Medicare Parts A, B and D. Per Sec. 422.100(c), supplemental
benefits must meet specific requirements in addition to not being
covered by Medicare Parts A, B or D. The terms ``mandatory supplemental
benefits'' and ``optional supplemental benefits'' are defined in Sec.
422. SSBCI are supplemental benefits that are offered only to eligible
enrollees with chronic conditions and are defined at Sec. 422.102(f).
Certain limitations on how and when MA plans may offer supplemental
benefits are addressed in Sec. Sec. 422.100(c) and 422.102 that we do
not summarize in depth here.
For purposes of the Mid-Year Notice requirement, all unused
supplemental benefits that are offered by the MA plan must appear in
the Mid-Year Notice regardless of whether the benefits are categorized
on the PBP as mandatory, optional, or SSBCI. The only supplemental
benefit that does not need to be included in the notice is cost-sharing
reduction, and this change has been reflected in the final regulation
text for clarification.
The regulation we proposed and are finalizing at Sec.
422.2267(e)(42) lists the information that is required about the unused
supplemental benefits. For each mandatory supplemental benefit an
enrollee has not used, the MA organization must include the same
information about the benefit that is provided in the Evidence of
Coverage. For each optional supplemental benefit an enrollee has not
used, the MA organization must include the same information about the
benefit that is provided in the Evidence of Coverage.
For SSBCI, the Mid-Year Notice must include the SSBCI disclaimer
specified at Sec. 422.2267(e)(34) and additional information about the
SSBCI. When an enrollee has not been deemed eligible, MA organizations
must include an explanation of the SSBCI covered under the plan
consistent with the format of other unused supplemental benefits,
eligibility criteria for the SSBCI, and point-of-contact information
for eligibility assessments, such as a customer service line or a
separate dedicated line, to reach trained staff that can answer
questions and initiate the SSBCI eligibility determination process.
When an enrollee has been determined by the plan to be eligible for one
or more specific SSBCI--but has not accessed the SSBCI benefit by June
30 of the plan year--the Mid-Year Notice for that enrollee must also
include a description of the SSBCI to which the enrollee is entitled
and must describe any limitations on the benefit, consistent with the
format of other unused supplemental benefits.
In addition, as specified in Sec. 422.2267(e)(42)(ii)(D), the Mid-
Year Notice must include the following about each unused supplemental
benefit listed in the Notice to each enrollee:
(1) Scope of benefit.
(2) Applicable cost-sharing.
(3) Instructions on how to access the benefit.
(4) Any applicable network information.
(E) Supplemental benefits listed consistent with the format of the
EOC.
(F) A customer service number, and required TTY number, to call for
additional help.
We believe that the regulation is sufficiently clear as to the
scope and required content of the notice.
Comment: Some commenters believed CMS could meet the stated goal of
increasing supplemental benefit utilization through non-regulatory
means by encouraging MA organizations to use their existing resources
to promote supplemental benefit usage. Examples included the
incorporation of supplemental-benefit-focused abstracts into MA
organizations' newsletters, reminders to enrollees to read their EOCs,
and the addition of articles and reminders on plan websites.
Response: We encourage MA organizations to use other outlets
available to them to inform enrollees of their supplemental benefits.
This Notice provision represents a required minimum effort on the part
of each MA organization and should not be understood to preclude other
forms of outreach.
Comment: Several commenters believed there is much potential for
enrollees to become confused, frustrated, and ultimately dissatisfied
with their plans because they are ineligible to use a particular
benefit. An example provided was meal delivery being available only
post-surgery.
Response: As discussed in the proposal, MA organizations are
required to provide descriptions of supplemental benefits clearly and
accurately. Here, MA organizations must describe the scope of and
include instructions on how to access each listed supplemental benefit,
similar to how these benefits are described in the EOC. If the benefit
is only made available under limited circumstances, this must be
evident in the Mid-Year Notice. Moreover, we feel strongly that the
risk of confusion or frustration is far outweighed by the benefits of
informing enrollees of supplemental benefits that can be useful to
improving or maintaining their health.
Comment: Some commenters suggested CMS adopt a non-personalized
format that summarizes all supplemental benefits available under a plan
regardless of whether the enrollee has used them. Reasons for this
suggestion commonly included burden reduction for MA organizations and
decreased likelihood of confusion for enrollees.
Response: We believe that a non-personalized summary of all
supplemental benefits available under a plan could confuse enrollees
and add unnecessary length to the Mid-Year Notice. Further, as
discussed above, the purpose of the notice is to inform those enrolled
in an MA plan about supplemental benefits that they have not accessed,
rather than to inform them of all supplemental benefits available.
Providing information on supplemental benefits that the enrollee has
not used will focus the enrollee on the items and services that are
covered by the plan that the enrollee has not accessed, but may still
have time to access, during the remainder of the year. We believe the
EOC is the appropriate communication for informing beneficiaries of all
supplemental benefits offered under a particular plan.
Comment: Many commenters believed this provision will drive an
uptick in
[[Page 30565]]
the utilization of supplemental benefits. A commenter expressed concern
that the Mid-Year Notice may impact expected utilization in uncertain
ways, threatening the integrity of what MA organizations project in
their bids. Another commenter stated that MA organizations generally
have an expectation that not all enrollees will use every benefit,
including supplemental benefits. This commenter expressed concern that
promoting use of supplemental benefits could result in unanticipated
expenses for an MA organization and result in higher premiums.
Response: We believe that the Mid-Year Notice will generate an
increase in the use of supplemental benefits. However, MA organizations
should not presume enrollees are overutilizing or will over utilize
benefits as we believe most enrollees will use their benefits only when
they need them. We expect organizations to establish reasonable
safeguards that ensure enrollees are appropriately directed to
care.\95\ Further, MA organizations regularly make determinations to
manage utilization as is the case with SSBCI where they must have
written policies for determining enrollee eligibility and must document
its determination whether an enrollee is chronically ill (42 CFR
422.102). Section IV.C. of this final rule includes discussion of new
SSBCI rules that could help to mitigate unnecessary utilization.
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\95\ https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hpms%2520memo%2520primarily%2520health%2520related%25204-27-18_194.pdf.
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Comment: Some commenters stated the proposal does not strike an
appropriate balance between administrative burden and enrollee impact--
that the proposal adds confusion, complexity, and cost without any
clear value or benefit; further, some believed the proposal is based on
assumptions rather than data. For example, a commenter stated that the
proposal indicates that utilization of supplemental benefits is low but
does not specify the basis for that position. The commenter requested
that CMS provide further evidence and explanation to support the claim
that there is low supplemental benefit utilization, and that the cause
is lack of enrollee awareness of benefits as opposed to the enrollee
not needing or wanting to use the benefit. In addition, the commenter
asked that CMS demonstrate that a Mid-Year Notice is the most suitable
means to address low supplemental benefit utilization under the
rulemaking framework of the Administrative Procedure Act.
Response: In the proposed rule, we did not claim that the only
cause of low supplemental benefit utilization was lack of enrollee
awareness of benefits as the commenter suggested. Rather, we noted that
it is unclear whether plans are actively encouraging utilization of
these benefits by their enrollees, including as part of a plan's
efforts in care coordination or otherwise. In addition, while we cited
reports of low supplemental benefit utilization, we also noted that
more complete data is needed in this area and provided examples of how
CMS has taken multiple steps to obtain such data through both MLR and
Part C reporting requirements. We stated that we will use findings
obtained from this outreach requirement, in conjunction with the
improved collection of supplemental benefit utilization data, to inform
whether additional future rulemaking is warranted. Identifying and
addressing potential underutilization of benefits funded in large part
by the government through MA rebates is appropriate for us to ensure
appropriate use of Medicare Trust Fund dollars. Further, to the extent
that underutilization of supplemental benefits is not an issue and
these benefits are widely accessed by enrollees, the number of Mid-Year
Notices would decrease as proposed and finalized, our rule only
requires a notice to individual enrollees about supplemental benefits
that enrollees have not accessed.
As discussed in the proposal, the recent significant increase in
the number and variety of supplemental benefit offerings combined with
marketing activities and an increase in overall MA enrollment has led
CMS to believe that an enrollee's plan choice is influenced, at least
in part, by the supplemental benefits an MA plan offers. One purpose of
the Mid-Year Notice is to address concerns that some MA plans may be
using supplemental benefits primarily as marketing tools to steer
enrollment; our policy as described here will help to ensure that
covered benefits are accessed and used by plan enrollees during the
plan year by ensuring that enrollees are aware about supplemental
benefits that they have not yet used by June 30 of the applicable year.
Any potential underutilization of benefits could be due to a lack of
effort by the plan to help the beneficiary access the benefits, or a
lack of easy ability to know what benefits have not been accessed and
are still available to the enrollee throughout the year. This new
notice is intended to address both.
Another purpose of the Mid-Year Notice is to address disparities in
health care utilization, aligning with our goal to advance health
equity in the MA program and pursue a comprehensive approach to
advancing health equity for all by encouraging more equitable
utilization of these benefits.
Finally, the Mid-Year Notice will further ensure that MA
organizations fulfill their obligation to adequately disclose details
and notice of supplemental benefit coverage.
Comment: Some commenters expressed concern about the ability to
offer ``real-time'' information on the Mid-Year Notice. For example,
one commenter mentioned that MA organizations use a wide variety of
providers to furnish supplemental benefits, and that these providers
have varying degrees of capability; some are community-based
organizations with limited resources, and such providers may not be
able to transmit utilization and claim information with the speed of
more conventional provider types.
Response: We understand that supplemental benefits are often
available through community-based providers that often do not have the
budget for sophisticated software systems that transmit information in
``real-time.'' With respect to timeliness, we consider information that
is up to date as of June 30 of the plan year to satisfy the requirement
for accuracy.
Comment: Many commenters were satisfied with a provision start date
of January 2026, but some asked for an extension to January 2027.
Response: We believe a start date of January 2026 gives MA
organizations sufficient time to plan and implement processes for the
Mid-Year Notice. After careful consideration of all comments received,
and for the reasons set forth in the proposed rule and in our responses
to the related comments, we are finalizing Sec. Sec. 422.111(l) as
proposed and 422.2267(e)(42) with a modification to clarify that
supplemental benefits in the form of cost-sharing reductions are
excluded from the notice.
E. Annual Health Equity Analysis of Utilization Management Policies and
Procedures
In recent years, CMS has received feedback from interested parties,
including people with Medicare, patient groups, consumer advocates, and
providers that utilization management (UM) practices in Medicare
Advantage (MA), especially the use of prior authorization, can
sometimes create a barrier for patients in accessing medically
necessary care. Further, some research has indicated that the use of
[[Page 30566]]
prior authorization may disproportionately impact individuals who have
been historically underserved, marginalized, and adversely affected by
persistent poverty and inequality,\96\ due to several factors,
including; the administrative burden associated with processing prior
authorization requests (for example, providers and administrative staff
serving historically underserved populations, in particular, may not
have the time or resources to complete the prior authorization process,
including navigating the appeals process \97\), a reduction in
medication adherence, and overall worse medical outcomes due to delayed
or denied care. Research has also shown that dual eligibility for
Medicare and Medicaid is one of the most influential predictors of poor
health outcomes, and that disability is also an important risk factor
linked to health outcomes.\98\
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\96\ https://www.hmpgloballearningnetwork.com/site/frmc/commentary/addressing-health-inequities-prior-authorization; and
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10024078/
\97\ http://abcardio.org/wp-content/uploads/2019/03/AB-20190227-PA-White-Paper-Survey-Results-final.pdf,
\98\ https://www.aspe.hhs.gov/sites/default/files/migrated_legacy_files/171041/ASPESESRTCfull.pdf?_ga=2.49530854.1703779054.1662938643-470268562.1638986031
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On January 20, 2021, President Biden issued Executive Order 13985:
``Advancing Racial Equity and Support for Underserved Communities
Through the Federal Government,'' (E.O. 13985).\99\ E.O. 13985
describes the Administration's policy goals to advance equity across
Federal programs and directs Federal agencies to pursue a comprehensive
approach to advancing equity for all, including those who have been
historically underserved, marginalized, and adversely affected by
persistent poverty and inequality. Consistent with this Executive
Order, CMS announced ``Advance Equity'' as the first pillar of its 2022
Strategic Plan.\100\ This pillar emphasizes the importance of advancing
health equity by addressing the health disparities that impact our
health care system. CMS defines health equity as ``the attainment of
the highest level of health for all people, where everyone has a fair
and just opportunity to attain their optimal health regardless of race,
ethnicity, disability, sexual orientation, gender identity,
socioeconomic status, geography, preferred language, or other factors
that affect access to care and health outcomes.'' \101\
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\99\ https://www.federalregister.gov/d/2022-26956/p-227.
\100\ https://www.federalregister.gov/d/2022-26956/p-228.
\101\ https://www.cms.gov/pillar/health-equity.
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The April 2023 final rule \102\ included several policy changes to
advance health equity, as well as changes to address concerns from
interested parties about the use of utilization management policies and
procedures, including prior authorization, by MA plans. CMS understands
that utilization management is an important means to coordinate care,
reduce inappropriate utilization, and promote cost-efficient care. The
April 2023 final rule adopted several important guardrails to ensure
that utilization management policies and procedures are used, and
associated coverage decisions are made, in ways that ensure timely and
appropriate access to covered items and services for people enrolled in
MA plans. CMS also continues to work to identify regulatory actions
that can help support CMS's goal to advance health equity and improve
access to covered benefits for enrollees.
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\102\ ``Medicare Program; Contract Year 2024 Policy and
Technical Changes to the Medicare Advantage Program, Medicare
Prescription Drug Benefit Program, Medicare Cost Plan Program, and
Programs of All-Inclusive Care for the Elderly'' final rule, which
appeared in the Federal Register on April 12, 2023 (88 FR 22120).
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Authority for MA organizations to use utilization management
policies and procedures regarding basic benefits is subject to the
mandate in section 1852(a)(1) of the Act that MA plans cover Medicare
Part A and Part B benefits (subject to specific, limited statutory
exclusions) and, thus, to CMS's authority under section 1856(b) of the
Act to adopt standards to carry out the MA statutory provisions. In
addition, the MA statute and MA contracts cover both the basic and
supplemental benefits covered under MA plans, so additional contract
terms added by CMS pursuant to section 1857(e)(1) of the Act may also
address supplemental benefits. Additionally, per section 1852(b) of the
Act and Sec. 422.100(f)(2), plan designs and benefits may not
discriminate against beneficiaries, promote discrimination, discourage
enrollment, encourage disenrollment, steer subsets of Medicare
beneficiaries to particular MA plans, or inhibit access to services.
These requirements apply to both basic and supplemental benefits. We
consider utilization management policies and procedures to be part of
the plan benefit design, and therefore they cannot be used to
discriminate or direct enrollees away from certain types of services.
In the April 2023 final rule, CMS finalized a new regulation at
Sec. 422.137, which requires all MA organizations that use UM policies
and procedures to establish a Utilization Management Committee to
review and approve all UM policies and procedures at least annually and
ensure consistency with Traditional Medicare's national and local
coverage decisions and relevant Medicare statutes and regulations. Per
Sec. 422.137, an MA plan may not use any UM policies and procedures
for basic or supplemental benefits on or after January 1, 2024, unless
those policies and procedures have been reviewed and approved by the UM
committee. While this requirement will ensure that all UM policies and
procedures are kept up to date, we believe that reviewing and analyzing
these policies from a health equity perspective is an important
beneficiary protection. In addition, such an analysis may assist in
ensuring that MA plan designs do not deny, limit, or condition the
coverage or provision of benefits on a prohibited basis (such as a
disability) and are not likely to substantially discourage enrollment
by certain MA eligible individuals with the organization. For these
reasons, we proposed to add health equity-related requirements to Sec.
422.137. First, we proposed at Sec. 422.137(c)(5) to require that
beginning January 1, 2025, the UM committee must include at least one
member with expertise in health equity. We proposed that health equity
expertise includes, but is not limited to, educational degrees or
credentials with an emphasis on health equity, experience conducting
studies identifying disparities amongst different population groups,
experience leading organization-wide policies, programs, or services to
achieve health equity, or experience leading advocacy efforts to
achieve health equity. Since there is no universally accepted
definition of expertise in health equity, we referred to materials from
the Council on Linkages Between Academia and Public Health Practice
\103\ and the National Board of Public Health Examiners,\104\ to
describe ``expertise in health equity'' in the context of MA and prior
authorization.
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\103\ https://www.phf.org/resourcestools/Documents/Core_Competencies_for_Public_Health_Professionals_2021October.pdf
\104\ https://www.nbphe.org/cph-content-outline/
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We also proposed to add a requirement at Sec. 422.137(d)(6) that
the UM committee must conduct an annual health equity analysis of the
use of prior authorization. We proposed that the member of the UM
committee, who has health equity expertise, as required at proposed
Sec. 422.137(c)(5), must approve the final report of the analysis
before it is posted on the plan's publicly available website. The
proposed analysis will examine the impact of prior authorization at the
plan level, on
[[Page 30567]]
enrollees with one or more of the following social risk factors (SRF):
(1) receipt of the low-income subsidy or being dually eligible for
Medicare and Medicaid (LIS/DE); or (2) having a disability. Disability
status is determined using the variable original reason for entitlement
code (OREC) for Medicare using the information from the Social Security
Administration and Railroad Retirement Board record systems. CMS chose
these SRFs because they mirror the SRFs that will be used to measure
the Heath Equity Index reward for the 2027 Star Ratings (see Sec.
422.166(f)(3)), and we believe it is important to align expectations
and metrics across the program. Moreover, CMS is requiring this
analysis to take place at the MA plan level because the relevant
information regarding enrollees with the specified SRFs is available at
the plan level, and we believe this level of analysis is important to
discern the actual impact of the use of utilization management on
enrollees that may be particularly subject to health disparities.
To gain a deeper understanding of the impact of prior authorization
practices on enrollees with the specified SRFs, the analysis, as
proposed, must compare metrics related to the use of prior
authorization for enrollees with the specified SRFs to enrollees
without the specified SRFs. Doing so, allows the MA plan and CMS to
begin to identify whether the use of prior authorization causes any
persistent disparities among enrollees with the specified SRFs. We
proposed that the analysis must use the following metrics, calculated
for enrollees with the specified SRFS, and for enrollees without the
specified SRFs, from the prior contract year, to conduct the analysis:
The percentage of standard prior authorization requests
that were approved, aggregated for all items and services.
The percentage of standard prior authorization requests
that were denied, aggregated for all items and services.
The percentage of standard prior authorization requests
that were approved after appeal, aggregated for all items and services.
The percentage of prior authorization requests for which
the timeframe for review was extended, and the request was approved,
aggregated for all items and services.
The percentage of expedited prior authorization requests
that were approved, aggregated for all items and services.
The percentage of expedited prior authorization requests
that were denied, aggregated for all items and services.
The average and median time that elapsed between the
submission of a request and a determination by the MA plan, for
standard prior authorizations, aggregated for all items and services.
The average and median time that elapsed between the
submission of a request and a decision by the MA plan for expedited
prior authorizations, aggregated for all items and services.
Next, we proposed to add at Sec. 422.137(d)(7) that by July 1,
2025, and annually thereafter, the health equity analysis be posted on
the plan's publicly available website in a prominent manner and clearly
identified in the footer of the website. We proposed that the health
equity analysis must be easily accessible to the general public,
without barriers, including but not limited to ensuring the information
is available: free of charge; without having to establish a user
account or password; without having to submit personal identifying
information (PII); in a machine-readable format with the data contained
within that file being digitally searchable and downloadable from a
link in the footer of the plan's publicly available website, and
include a .txt file in the root directory of the website domain that
includes a direct link to the machine-readable file, in a format
described by CMS (which CMS will provide in guidance), to establish and
maintain automated access. We believe that by making this information
more easily accessible to automated searches and data pulls, it will
help third parties develop tools and researchers conduct studies that
further aid the public in understanding the information and capturing
it in a meaningful way across MA plans.
Finally, we welcomed comment on the proposal and sought comment on
the following:
Additional populations CMS should consider including in
the health equity analysis, including but not limited to: Members of
racial and ethnic communities, members of the lesbian, gay, bisexual,
transgender, and queer (LGBTQ+) community; individuals with limited
English proficiency; members of rural communities; and persons
otherwise adversely affected by persistent poverty or inequality.
If there should be further definition for what constitutes
``expertise in health equity,'' and if so, what other qualifications to
include in a definition of ``expertise in health equity.''
The proposed requirements for publicly posting the results
on the plan's website under Sec. 422.137(d)(7) to ensure the data will
be easily accessible to both the public and researchers.
Alternatives to the July 1, 2025, deadline for the initial
analysis to be posted to the plan's publicly available website.
Whether to add an additional requirement that the UM
committee submit to CMS the link to the analysis report. This would
allow CMS to post every link in one centralized location, which would
increase accessibility and transparency.
In addition, we requested comment on any specific items or
services, or groups of items or services, subject to prior
authorization that CMS should consider also disaggregating in the
analysis to consider for future rulemaking. If further disaggregation
of a group of items or services is requested, CMS solicited comment on
what specific items or services would be included within the group. For
example, if CMS should consider disaggregating a group of items or
services related to behavioral health treatment in the health equity
analysis, what items or services should CMS consider a part of
behavioral health treatment.
We invited public comment on this proposal and received over 140
comments. A summary of the comments received, and CMS's responses are
below.
Comment: Nearly all commenters supported the proposal to add a
member to the utilization management committee with expertise in health
equity. A majority of commenters also supported the proposed definition
of expertise in health equity. Commenters expressed gratitude for CMS's
recognition that there is not currently a widely accepted definition of
what qualifies as ``expertise in health equity,'' and that the proposed
non-exhaustive list provides adequate flexibility and acknowledges the
varied experiences and qualifications that could comprise health equity
expertise.
Response: CMS appreciates the suggestions and support for this
proposal. As outlined in the November 2023 rule, we do not believe
there is a universally accepted definition of expertise in health
equity. Therefore, CMS believes there is value at this stage in
providing a non-exhaustive list of examples of what constitutes such
expertise to avoid inadvertently excluding qualified individuals by
being overly restrictive. The proposed and finalized regulation text
lists examples to illustrate what constitutes expertise in health
equity includes to guide MA organizations in identifying individuals
with the necessary expertise and experience to fulfill this new role on
the UM committee. We are finalizing that list without the phrase ``but
is not
[[Page 30568]]
limited to'' because that phrase is repetitive; the term ``includes''
means that the list that follows is a non-exhaustive list of examples.
Comment: Some commenters suggested that CMS include additional
specificity in the definition of expertise in health expertise, such as
clinical experience practicing in underserved and marginalized
communities, as well as lived, community, and professional experience
in addition to academic training. Other commenters suggested that the
individual be a physician. A commenter suggested CMS include in
expertise in health equity include, ``experience serving on Health
Equity Technical Expert Panels convened by CMS contractors.'' A
commenter proposed that CMS require two members with expertise in
health equity. A commenter suggested the health equity expert be
required to undergo bias training. A commenter suggested that CMS
clarify that the individual with expertise in health equity can be a
nonphysician clinician, data analyst, or researcher. A commenter
suggested CMS define expertise in terms of time, i.e., five years of
experience.
Response: CMS appreciates the suggestions for additional
credentials and qualifications for the member of the UM committee with
expertise in health equity. At this time, we do not believe adding the
additional examples suggested by commenters of expertise in health
equity to the non-exhaustive list in the regulation would necessarily
add clarity, and we believe there is value in leaving some flexibility
for MA organizations to determine what qualifies as expertise in health
equity. Furthermore, CMS clarifies that the individual with expertise
in health equity may include but not be limited to a nonphysician
clinician, data analyst, or researcher. We are not adopting the
recommendation to require bias training for the committee member with
expertise in health equity because we did not propose additional
requirements for specific committee members and do not feel it is
necessary at this time. We also decline to adopt the recommendation to
require the UM committee to have two members with expertise in health
equity at this time because we believe that one member is sufficient to
ensure utilization management policies and procedures are reviewed from
a health equity perspective. However, we will continue to monitor
implementation and compliance to determine if additional requirements,
including adding additional members to the committee or specific
training requirements, are necessary for future rulemaking.
Comment: Some commenters requested that MA organizations be
permitted to use existing committee members, or employees of the MA
organization, who have relevant qualifications to fulfil the role or
leverage existing committees, if appropriate. A commenter asked CMS to
clarify that plans can meet the requirement by recruiting a new member.
Response: As finalized, Sec. 422.137(c)(5) requires MA
organizations to include at least one member on the UM committee with
expertise in health equity. The regulation does not set a minimum or
maximum number of UM committee members so long as the composition
requirements in Sec. 422.137(c) are met; therefore, an MA organization
leverage existing committee members or recruit a new member for the UM
committee, as long as all regulatory requirements are met for the UM
committee to include at least one member with expertise in health
equity beginning January 1, 2025.
Comment: A few commenters recommended the member with expertise in
health equity not be affiliated with the MA plan.
Response: At this time, CMS declines to require that the UM
committee member with expertise in health equity not be affiliated with
the MA organization (or the various MA plans offered by the MA
organization). The regulation at Sec. 422.137(c)(2) already requires
that the UM committee include at least one practicing physician who is
independent and free of conflict relative to the MA organization and MA
plan. CMS believes there is value in allowing flexibility at this stage
and will monitor how this requirement is implemented to determine if
additional requirements may be necessary in the future.
Comment: A commenter requested CMS delay the addition of a member
with expertise in health equity.
Response: Given the flexibilities afforded plans regarding the
ability to recruit a member with expertise in health equity, CMS does
not believe an adjustment in the timeline is needed. We continue to
believe that reviewing and analyzing UM policies from a health equity
perspective serves as an important beneficiary protection and will
evaluate the impact of this rule and consider all suggestions for
future rulemaking. At the time that this final rule is issued, there
are at least 6 months for an MA organization to ensure that its UM
committee(s) include at least one member with health equity expertise
to meet the January 1, 2025, deadline.
Comment: A commenter questioned whether there is sufficient
evidence that adding such a role to this process will indeed improve
health equity.
Response: CMS does not believe that a body of research or other
formal evidence is necessary to justify the requirement that at least
one UM committee member have expertise in health equity. The purpose of
this requirement is to help ensure that all utilization management
policies and procedures are reviewed from a health equity lens, and
that the member of the committee with expertise in health equity
provides final approval of the health equity analysis.
Comment: A commenter urged CMS to issue clear explanatory
guidelines to ensure plan compliance.
Response: CMS believes that the requirements laid out in the
regulation are sufficiently clear regarding what is necessary for
compliance with this rule, including what constitutes expertise in
health equity. However, CMS will monitor compliance and may issue
additional guidance as necessary.
Comment: A commenter expressed that the entire UM committee, not
just the member with health equity expertise, should be responsible for
ensuring the analysis is comprehensive and complete.
Response: CMS expects that every member of the UM committee will
participate in the production, review, and analysis of the health
equity analysis, just as every member of the UM committee is
responsible for reviewing all UM policies and procedures to ensure that
they are kept up to date. However, just as the medical director is
responsible for the overall actions of the UM committee itself, CMS
believes it is important that the member of the UM committee with
expertise in health equity will provide the final approval of the
report in order to ensure the report is specifically reviewed from a
health equity perspective.
Comment: Regarding the proposal to require the UM committee to
conduct an annual health equity analysis of the use of prior
authorization, commenters generally expressed support for the goal to
advance health equity, increase transparency around the use of prior
authorization, and ensure enrollees have timely access to medically
necessary and clinically appropriate care. Some commenters did not
support the proposal but did not elaborate as to their specific reasons
for not supporting it. Some commenters encouraged CMS to continue
advancing broader policy efforts to advance health equity goals
[[Page 30569]]
and expressed concern that the proposed analysis will not actually
advance health equity or help identify gaps in health equity. A few
commenters indicated the analysis could be helpful in assisting
researchers to develop tools and conduct studies to further inform the
public. Some commenters indicated that the UM committee may not be the
best entity to conduct this analysis.
Response: CMS appreciates the feedback provided, as well as the
support for the intent of the proposal. We also understand and agree
with the sentiment that CMS should continue broader efforts to advance
health equity. The goal of this proposal is to ensure that all
utilization management policies and procedures are reviewed from a
health equity perspective, and to establish baseline data by beginning
to identify whether the use of prior authorization causes any
persistent disparities among enrollees with the specified social risk
factors. Because Sec. 422.137 requires the UM committee to review any
UM policies and procedures (including prior authorization) before an MA
organization may use them beginning January 1, 2024, the UM committee
is uniquely positioned to have access to data about when and how prior
authorization policies and procedures are used by each MA plan offered
by the MA organization in order to perform the health equity analysis
and to use and report on the metrics we proposed and are finalizing at
Sec. 422.137(d)(iii).
This policy for the UM committee to perform and publicly post a
health equity analysis with the information on specific prior
authorization metrics, calculated using specific social risk factors,
is just one piece of a much larger comprehensive approach to advancing
equity for all, and we will continue to work to advance health equity.
We will also consider all feedback received while working to develop
future policy.
Comment: Some commenters indicated that prior authorization denial
rates are not necessarily attributable to or correlated with an
enrollee's social risk factor status. Commenters expressed concern
about the proposed methodology and the practical utility of the data in
its proposed form, and concerns about the potential for this
information to mischaracterize plan activities or inadvertently mislead
enrollees. Other commenters stated that comparing prior authorization
metrics across MA plans cannot be done accurately given variation in
how plans code and track prior authorizations. Therefore, the analysis
should include explanatory info or methodological adjustments to
account for varying conditions across populations.
A commenter requested that plans should automatically be required
to explain their rates of denials for services that meet coverage
rules. Some commenters requested general prior authorization
utilization management reforms. Some commenters suggested that rather
than create new data flows, CMS expand current part C data reporting
requirements to include data elements specific to enrollees with the
specified SRFs. Some commenters expressed concern that the number of
enrollees with the SRFs enrolled in an MA plan (either too high or too
low) could cause a comparison to be inaccurate. Several commenters
expressed concern over ensuring that appropriate context for results of
the analysis is available and not confusing or misleading for the
public. Commenters also expressed concern that while making these
results publicly available could increase accountability of MA
organizations, CMS should also recognize that the amount of information
enrollees must process, and that this data may not be useful or easy
for a layperson to understand; therefore, commenters suggested that MA
plans be required to include an executive summary posted with the
report. A few commenters pointed out that for MA organizations that
serve 100 percent limited-income subsidy/dual-eligible populations,
these MA plans could be asked to publicly report the same metrics
twice, since the ``Advancing Interoperability and Improving Prior
Authorization Processes for Medicare Advantage Organizations, Medicaid
Managed Care Plans, State Medicaid Agencies, Children's Health
Insurance Program (CHIP) Agencies and CHIP Managed Care Entities,
Issuers of Qualified Health Plans on the Federally-Facilitated
Exchanges, Merit-based Incentive Payment System (MIPS) Eligible
Clinicians, and Eligible Hospitals and Critical Access Hospitals in the
Medicare Promoting Interoperability Program'' (CMS-0057-F) rule has
been finalized to require reporting of certain information about prior
authorization metrics.
Response: CMS understands the concern about appropriate
interpretation of the data. The regulation we are finalizing in this
rule requires the health equity analysis for informational purposes
only, to help gain a deeper understanding of the impact of prior
authorization practices on enrollees with the specified SRFs and allow
MA plans and CMS to begin to identify whether the use of prior
authorization causes any persistent disparities among enrollees with
the specified SRFs. CMS believes this required analysis may assist in
ensuring that MA plan designs do not deny, limit, or condition the
coverage or provision of benefits on a prohibited basis (such as a
disability) and are not likely to substantially discourage enrollment
by certain MA eligible individuals with the organization. Since we
currently do not have any information that compares data for enrollees
with the specified SRFs to those without the specified SRFs, CMS
continues to believe that this analysis is an important first step in
looking deeper into the use of prior authorization and its potential
effects on enrollees.
CMS appreciates the concern that enrollees already must process
ample information when making plan decisions and that, as proposed, the
information may not be easily comprehended or put into full context by
a layperson, and will take these suggestions into account when issuing
operational guidance for the format of the report. Further, we believe
that by making this information easily accessible to automated searches
and data pulls, it will help third parties develop tools and
researchers conduct studies that further aid the public in
understanding the information and capturing it in a meaningful way
across MA plans. We also believe that since the required data must be
aggregated for all items and services at the plan level, the resulting
analysis, while comprehensive, will not be overwhelming to the public.
While CMS is not requiring the health equity report for each MA plan to
include an explanatory statement or executive summary with the analysis
at this time, if MA organizations wish to provide additional context
for the results of the analysis of their MA plans, they may provide
clarifying information in the report, provided that any such
accompanying language is not misleading.
Regarding concerns that comparing prior authorization metrics
across MA plans cannot be done accurately given variation in how plans
code and track prior authorizations, CMS does not believe this presents
a significant issue, since there is not a requirement in this rule for
comparison across plans. The ``Advancing Interoperability and Improving
Prior Authorization Processes for Medicare Advantage Organizations,
Medicaid Managed Care Plans, State Medicaid Agencies, Children's Health
Insurance Program (CHIP) Agencies and CHIP Managed Care Entities,
Issuers of Qualified Health
[[Page 30570]]
Plans on the Federally-Facilitated Exchanges, Merit-based Incentive
Payment System (MIPS) Eligible Clinicians, and Eligible Hospitals and
Critical Access Hospitals in the Medicare Promoting Interoperability
Program'' (CMS-0057-F) final rule (hereinafter referred to as the
``2024 Interoperability Final Rule''), which appeared in the Federal
Register on February 8, 2024 (89 FR 8758), adopted, among other
provisions related to exchanges of certain health information and prior
authorization processes, requirements for MA organizations and certain
other payers (State Medicaid agencies, State CHIP agencies, Medicaid
managed care plans, CHIP managed care plans, and QHPs on Federally
facilitated Exchanges) to report certain metrics about prior
authorization beginning in 2026.\105\ The 2024 Interoperability Final
Rule requires reporting of this information:
---------------------------------------------------------------------------
\105\ The 2024 Interoperability Final Rule is available online
here: govinfo.gov/content/pkg/FR-2024-02-08/pdf/2024-00895.pdf. The
regulations requiring reports of prior authorization performance
metrics are 42 CFR 422.122(c), 440.230(e)(3), 438.210(f),
457.732(c), and 457.1230(d) and 45 CFR 156.223(c).
---------------------------------------------------------------------------
A list of all items and services that require prior
authorization.
The percentage of standard prior authorization requests
that were approved, aggregated for all items and services.
The percentage of standard prior authorization requests
that were denied, aggregated for all items and services.
The percentage of standard prior authorization requests
that were approved after appeal, aggregated for all items and services.
The percentage of prior authorization requests for which
the timeframe for review was extended, and the request was approved,
aggregated for all items and services.
The percentage of expedited prior authorization requests
that were approved, aggregated for all items and services.
The percentage of expedited prior authorization requests
that were denied, aggregated for all items and services.
The average and median time that elapsed between the
submission of a request and a determination by the payer, plan, or
issuer, for standard prior authorizations, aggregated for all items and
services.
The average and median time that elapsed between the
submission of a request and a decision by the payer, plan, or issuer,
for expedited prior authorizations, aggregated for all items and
services.
The performance metrics for the reporting under Sec. 422.122(c),
as adopted in the 2024 Interoperability Final Rule, and the reporting
metrics adopted in this final rule at Sec. 422.137(d)(6) use the same
general categories, except that the 2024 Interoperability Final Rule
requires that the information be aggregated for all enrollees, reported
at the contract level, and excluding any drug coverage, while this
final rule requires the reported information to be by groups with and
without the specified social risk factors, reported at the plan level,
and for all covered benefits (also excluding Part B drugs and OTC drugs
covered by the MA plan and Part D drugs covered under the Part D
benefit). The specified social risk factors are (i) receipt of the Part
D low-income subsidy or being dually eligible for Medicare and Medicaid
and (ii) having a disability, determined using information specified in
Sec. 422.137(d)(6)(ii)(B). Because the reporting is not for identical
populations, these two separate regulatory reports will not be
duplicative, and we believe that they will be complementary by
providing information about the same prior authorization metrics for
different populations. In addition, excluding drugs--Part B drugs, OTC
drugs covered by the MA plan, and Part D drugs--for both lists should
help address concerns about burden. To clarify this aspect of the scope
of Sec. 422.137(d)(6), we are finalizing additional language to
exclude drugs from the scope of the new reporting and health equity
analysis metrics; as finalized, Sec. 422.137(d)(6)(iii) provides that
the data used for this analysis and reporting excludes data on drugs as
defined in Sec. 422.119(b)(1)(v). Further, because MA organizations
should already be collecting the data at the plan level, they should be
able to report it with the stratification by SRFs for the requirements
of Sec. 422.137(d)(6), and then can aggregate that data up to the
contract level for the reporting required by the 2024 Interoperability
Final Rule. Therefore, having the specific metrics be the same (but
reported for different populations) should ease the burden on MA
organizations in gathering, validating, and formatting the data.
Comment: CMS solicited comment on additional populations to
consider including in the health equity analysis. Several commenters
indicated that the populations proposed in the analysis should be
expanded, and many commenters suggested additional populations for CMS
to consider, including: Members of economically marginalized
communities; Original Reason for Entitlement Code for ESRD; individuals
who receive SSBCI; individuals who have visited the ER in the past
year; individuals who were hospitalized and sought post-acute care;
individuals with limited English proficiency; individuals with mental
health conditions, including depression, anxiety, and substance use
disorder; individuals with chronic diseases such as asthma, COPD,
cancer, obesity, cardiovascular disease, and diabetes; individuals with
a combination of chronic conditions/diseases; individuals with a rare
disease; members of racial and ethnic communities; members of the
lesbian, gay, bisexual, transgender, and queer (LGBTQ+) community;
members of rural communities; persons otherwise adversely affected by
persistent poverty or inequality; formerly incarcerated individuals;
veterans; and individuals experiencing homelessness. A commenter
suggested CMS take an intersectional approach--considering how multiple
identities intersect and manifest experiences. A commenter asked CMS to
consider using the publicly available Vizient Vulnerability
IndexTM, which identifies social needs and obstacles to care
that may influence a person's overall health. A few commenters
suggested the enrollee data should be separated into full/partial
dually eligible for Medicare and Medicaid. A commenter suggested that
CMS align its approach with the NCQA from a population health
management approach.
Some commenters acknowledged that adding populations to the
analysis is not feasible at this time, because neither MA plans nor CMS
has access to this data. Further, several commenters pointed out that
reporting on many of the additional populations suggested would present
issues because this type of demographic information would have to be
self-reported, which could lead to incomplete and skewed data
collection. Some commenters suggested that plans could collect this
data upon enrollment. Generally, plans indicated that CMS should not
add populations to the annual health equity analysis until data
collection and methods for collecting demographic information have been
piloted, tested, and found to be reliable in the context of the MA
population. A commenter requested that CMS assist plans in gathering
this information.
Response: CMS appreciates the feedback and input regarding
additional populations to consider including in the health equity
analysis. We acknowledge that there are challenges associated with
collecting data in a consistent manner, and that not all populations
can be
[[Page 30571]]
reliably identified using available data elements due to a lack of
standardization in collection methods. Since much of this information
would have to be self-reported, we agree this could lead to a
potentially inconsistent or misleading analysis. For that reason, we
are not adding additional populations at this time. We will take all
suggestions into consideration for future rulemaking and continue to
explore ways to expand the populations included in the health equity
analysis. We also urge MA plans to consider how data on some of the
proposed populations could be collected and analyzed.
Comment: Some commenters pointed out that CMS's proposed method of
determining disability status could leave out enrollees who are over
the age of 65 and have a disability but did not originally qualify for
Medicare on that basis.
Response: The variable original reason for entitlement code (OREC)
for Medicare using the information from the Social Security
Administration and Railroad Retirement Board record systems is the
method used to determine disability status for the Health Equity Index
and Categorical Adjustment Index. At this time, CMS believes that it is
necessary to maintain consistency in identifying MA enrollment
populations by this social risk factor for the Star Ratings and the UM
committee's health equity analysis. However, we also understand the
concern raised by commenters and will continue to evaluate how we could
expand the ways we identify individuals who have a disability.
Comment: CMS requested comment on any specific items or services,
or groups of items or services, subject to prior authorization that we
should consider disaggregating in future rulemaking. Many commenters
provided suggestions and feedback. Several commenters asserted that
because the proposed analysis would consist of prior authorization
metrics aggregated for all items and services, it will not provide
enough detail for true accountability and could allow plans to hide
disparities. Commenters recommended that CMS require a further level of
granularity to ensure that potential disparities could be identified.
Specifically, commenters suggested that CMS require disaggregation by
item and service to ensure that CMS can identify specific services that
may be disproportionately denied.
Commenters also provided suggestions for specific items and
services for CMS to consider for disaggregation, including: Additional
modalities beyond drugs/services that require prior authorization such
as diagnostic tests, durable medical equipment, and skilled nursing
facility care; substance use disorder and mental health services so
these can be compared to medical services; prescription drugs; service
category for rehabilitative services; physical therapist services;
kidney care services, including dialysis treatments and transplant;
prosthetics, orthotics and supplies; cellular and/or tissue-based
products (CTPs, or skin substitute) services, in-office injections, in-
office medically necessary imaging, ankle-foot orthoses (AFOs) for
traumatic conditions, surgical dressings, and biopsy of suspicious
lesions; disaggregated data on access to medically necessary post-acute
care which should include LTCHs, IRFs, SNFs, and HHAs. A commenter
suggested that CMS require MA plans to submit the data underlying the
report, disaggregated with demographic and other health equity
indicators that would allow CMS to conduct more flexible analysis and
compare subpopulations within plans. CMS could then aggregate and
provide searchable results across MA plans, including by original
reason for entitlement code and by age group. A commenter requested
that MA plans should have discretion to determine when disaggregating
will provide meaningful information and not compromise the privacy of
its members.
Response: CMS thanks commenters for their suggestions and feedback.
We agree that disaggregation of the reported metrics by specific
benefit could assist in increasing transparency and ensuring the most
accurate data regarding prior authorization is available. As of now, it
is our intent to require some level of disaggregation in the coming
years, and we will consider all suggestions for any future rulemaking.
We also believe there is significant value in establishing baseline
data, since there is currently very little publicly available
information regarding the use of prior authorization and its potential
impact on specific populations. We believe that at least during the
initial year, the analysis as proposed strikes a balance between
providing information that may be useful to CMS, MA plans, and the
public, and not providing an overwhelming amount of information.
Comment: Some commenters suggested that disenrollment data be
included among the required metrics for the health equity analysis.
Commenters relayed that this is important since prior authorization can
lead individuals with complex health conditions and disabilities to
disenroll from a plan after receiving a prior authorization decision. A
commenter suggested that, in an effort to further identify disparities
and advance health equity through conducting this analysis, CMS also
include one or more of the following four criteria recognized by the
National Committee for Quality Assurance as baseline to begin
accounting for equitable outcomes: Select indicators of social
determinants of health; Select a reference group (a ``standard''
comparison group independent of the data vs. the data informing the
comparison group); Select health care quality metrics. These could
include composites (e.g., vaccination rates, quality measures, infant
mortality rates); Use benchmarks (e.g., compare results to national
estimates). Another commenter suggested that CMS analyze if and how
often providers decline to prescribe a treatment because they do not
have the resources to engage in a prior authorization process. Several
commenters suggested the analysis include the reason for which a prior
authorization request was denied. A commenter suggested that MA plans
report prior authorizations as a part of encounter data so that CMS and
independent researchers can conduct unbiased analyses of the equity
impacts of utilization management. Another commenter suggested MA plans
target specific service types that are frequently subjected to
inappropriate utilization review practices. A commenter proposed
requiring plans to report whenever end-of-life status is the reason for
denying a prior authorization. A commenter recommended comparing sub-
populations enrolled in D-SNPs versus those enrolled in non-SNP MA
plans. Another commenter recommended comparing appeal rates and
outcomes on denied PA requests between populations. A commenter
suggested that such analytics should include a side-by-side comparison
of all data points by MA plan and compare them to traditional Medicare
and Medicaid coverage; and that the MA plan should be required to
provide criteria used to determine medical necessity and authorizations
and include post-payment audit data in addition to prepayment
authorization outcomes in the posted information and health equity
analysis.
Response: CMS appreciates the feedback, and while we are not adding
additional metrics to the analysis at this time, we will consider doing
so in future rulemaking. We would also direct commenters to the 2024
Interoperability
[[Page 30572]]
Final Rule, which adopts certain procedural and timing requirements for
prior authorizations and several API requirements for MA organizations
and other impacted payers, including implementation of a Prior
Authorization API, new reporting to CMS, and new requirements to
provide to the applicable provider a specific reason for the denial of
a request for prior authorization.
Comment: CMS requested comment on requiring MA plans to submit a
link to their health equity analysis directly to CMS. Many commenters
supported the addition of this requirement. Commenters further
suggested that CMS make the specified metrics to be used in the
analysis publicly available on the CMS website and to require MA plans
to publish the results of the analysis in plain, easy to understand
language that can be understood by the average enrollee. A commenter
requested the results of the analysis be accessible on the Medicare
Plan Finder on www.medicare.gov so that beneficiaries can evaluate the
ease with which they may access services when determining which health
plan to choose.
Additionally, several commenters also suggested that plans only
submit a link to CMS, and not post the report publicly. These
commenters generally stated that proposed requirement to post the
report publicly on plan sponsors' websites could cause unnecessary
confusion to providers and beneficiaries who can easily misinterpret
publicly available prior authorization metrics. Further, because
providers and enrollees are not consistent across MA plans, commenters
pointed out that it may be challenging to compare metrics across plans.
Some commenters suggested using Part C reporting requirements instead
of the proposed analysis to collect the data.
Some commenters suggested that CMS should establish a unified
portal where stakeholders can view all MA plans' health equity analyses
and require certain standardized reporting to improve stakeholders'
ability to compare health equity impacts across MA plans.
Several commenters requested that CMS first create a standard
system of reporting before requiring a publicly reported analysis.
Response: At this time, we will not require plans to submit a
weblink to their health equity analysis to CMS. However, we will
continue to evaluate whether this is necessary, and may add such a
requirement in future rulemaking. We disagree that requiring the health
equity analysis be published directly on the MA plan's website could be
confusing for enrollees. We believe that many individuals use the MA
plan's website as a primary resource for information on that specific
plan and would therefore be more inclined to visit the MA plan's
website to learn about that plan. We are finalizing as proposed the
requirements in Sec. 422.137(d)(7) that the MA organization must
publish the results of the health equity analysis (which must use the
metrics specified in Sec. 422.137(d)(6)) on the plan's website meeting
requirements for public access listed in paragraphs (d)(7)(i) through
(iv). Regarding the concern that metrics cannot be compared across MA
plans, we are not requiring a comparison of metrics across MA plans at
this time. Rather, the goal of the analysis and public reporting is to
begin to identify whether the use of prior authorization causes any
persistent disparities among enrollees with the specified SRFs within
individual MA plans. However, the accessibility of these reports in
.txt file in the root directory of the website domain that includes a
direct link to the machine-readable file and with the data contained
within that file being digitally searchable and downloadable are
intended to ensure automated access to the data. This may facilitate
comparisons of the data across plans.
Comment: Several commenters requested CMS clarify that the data
elements reporting the average and median time elapsed should be
calculated beginning with the time the MA plan has received all the
necessary information to complete the prior authorization request.
Commenters indicated that, often, prior authorization requests are
initially denied, or may be delayed, because information necessary to
complete the request is missing. Some commenters also expressed concern
over whether and how to count enrollees who have not been enrolled in
the MA plan for a full year, and one commenter asked how to account for
enrollees whose social risk factors may change over time.
Response: The average and median time that elapsed between the
submission of a request and a determination by the MA plan should be
calculated based on when the initial request is made. Since the goal of
this analysis is to collect baseline data and gain a clearer picture of
the impact of prior authorization on enrollees with the specified
social risk factors, it is pertinent for CMS and the public to
understand how long the entire process takes. This includes when MA
plans need additional information from providers to make decisions.
Regarding counting enrollees who have been enrolled for less than a
full year, MA plans must count these enrollees--the point of the
analysis is to analyze the use of prior authorization, therefore an
enrollee's time in the plan when the prior authorization request is
processed is not relevant. Further, CMS does not believe that enrollees
whose SRF status may change over time is an issue since again, the
point of the analysis is to analyze the use of prior authorization and
begin to understand any correlation between the use of prior
authorization and the presence of the social risk factors. If an
enrollee's SRF status changes throughout the plan year, that should not
have an impact on how the analysis is conducted, because CMS expects
the plan to use the enrollee's status at the time the prior
authorization is processed for calculating the specified metrics.
Comment: Several commenters asked that CMS explain how it plans to
use the information included in these health equity analyses, including
how it may be used to help inform future policies and whether CMS will
take enforcement action based on the results of the analysis. Some
commenters expressed concern that the health equity analysis would be
used as a mechanism to penalize MA plans. A commenter requested that
plans be permitted to create solutions should inequalities be
identified. A few commenters suggested that CMS factor the data
produced by the analysis into determinations for 2027 Star Rating
Health Equity Index rewards.
Response: At this time, CMS plans to use the health equity analysis
for informational purposes, to allow MA plans and CMS to begin to
identify whether the use of prior authorization correlates to any
persistent disparities among enrollees with the specified SRFs. CMS is
not imposing additional requirements currently, and will take all
comments received, as well as the results of the initial health equity
analysis, into account when considering future policymaking and
guidance. This analysis is just one step in continued and ongoing
efforts to ensure all enrollees have safe and equitable access to
medically necessary services.
Comment: CMS solicited comment on alternatives to the July 1, 2025,
deadline for the initial health equity analysis to be posted to an MA
plan's publicly available website. Several commenters suggested that
CMS adopt an alternative timeline for publication of the initial
report. Some commenters suggested that CMS first work with MA plans to
standardize data collection and reporting, or that CMS develop a
standard template for MA plans to use.
[[Page 30573]]
Other commenters indicated that issuing the initial report in July 2025
could present challenges for plans' IT resources, especially for
smaller plans. Some commenters requested that MA plans submit their
reports to CMS in 2025, and that CMS provide confidential feedback
during the initial year and use that time to determine whether the
results of the report are useful. Then in 2026, MA plans report results
publicly. Further, commenters indicated that a 2026 date for
publication of the initial report would allow plans to collect a full
year of data. A commenter suggested CMS extend data back over several
contract years. A commenter expressed that for plans to publish a
health equity analysis that is in a machine-readable format (MRF) with
the data contained within that file being digitally searchable and
downloadable, it will require CMS to develop an industry wide MRF
schema, which will likely take longer than is provided for in the
proposed rule.
Response: CMS understands the processes and resources required to
produce a new reporting requirement, however since MA plans should
already have the relevant data available, as they are currently
conducting the prior authorization process. Therefore, CMS declines to
adapt an alternative timeline for the report. Since the goal of this
analysis is to begin to understand the potential impact of prior
authorization on enrollees with the specified social risk factors, any
level of information that is made publicly available will be useful at
this stage. Regarding CMS's production of an MRF schema, CMS does not
believe that this will require extending the timeline for the initial
report due date, since as outlined in the preamble, CMS plans to issue
guidance describing the format to be used by MA plans. CMS declines to
extend the data collection back over several contract years.
Comment: Several commenters suggested that the health equity
analysis be extended to cover step therapy and Part B drugs.
Response: CMS thanks commenters for this suggestion and will
consider it for future policymaking.
Comment: Some commenters suggested that CMS extend the analysis to
include all types of utilization management, not just prior
authorization.
Response: CMS thanks commenters for this suggestion and will
consider for future rulemaking.
Comment: Several commenters suggested the CMS establish a parallel
health equity structure for Part D plans, including similar health
equity related requirements for the composition and consideration of
Pharmacy & Therapeutic (P&T) Committee, and make regulatory changes to
the part D provisions.
Response: While this comment is out of scope for the current
rulemaking, CMS thanks commenters for their feedback and will take it
under consideration for future rulemaking.
Comment: A commenter requested that CMS provide a uniform
definition for the specified social risk factors.
Response: As outlined in the preamble and provided in Sec.
422.137(d)(6)(ii) (as proposed and finalized), the specified social
risk factors are defined as follows: (1) receipt of the low-income
subsidy or being dually eligible for Medicare and Medicaid (LIS/DE); or
(2) having a disability. Disability status is determined using the
variable original reason for entitlement code (OREC) for Medicare using
the information from the Social Security Administration and Railroad
Retirement Board record systems. CMS chose these SRFs because they
mirror the SRFs that will be used to measure the Heath Equity Index
reward for the 2027 Star Ratings (see Sec. 422.166(f)(3)), and we
believe it is important to align expectations and metrics across the
program.
MA plans can access the relevant information through the
Beneficiary Eligibility Query (BEQ), which is a pre-enrollment query MA
plans use to check eligibility prior to enrolling an individual. The
BEQ provides enrollee information including demographics, entitlement/
eligibility, Part D employer subsidy, and Low-Income Subsidy. MA plans
can submit a BEQ query by submitting their requests in a batch file via
CMS Enterprise File Transfer (EFT). MA plans can also perform the query
online using the MARx, which provides real time information regarding
eligibility. MARx provides MA plans with data related to enrollees and
their subsidies.
Comment: A commenter cautioned that some of the information
gathered as part of a health equity analysis may be confidential or
proprietary to the MA plan and, therefore encouraged CMS to permit the
plan to withhold confidential and proprietary information included in
these analyses from publication.
Response: CMS declines this suggestion. Given the nature of the
report, and that all information must be aggregated, CMS does not
believe there is a risk for proprietary information to be disclosed.
However, CMS will permit MA organizations to suppress information for
small cell sizes in instances where the MA plan's service area is so
small, that even in the aggregate, the presentation of the data in the
analysis could disclose confidential data about covered individuals.
Comment: A commenter requested clarification that the intent is for
the link in the footer of the website to go directly to the analysis
file, or, if would it be acceptable for the link to direct to a landing
page that may contain multiple health equity related reports so long as
the analysis remains easily accessible.
Response: It would be acceptable for the link in the footer of the
website to direct to a landing page, so long as the analysis remains
easily accessible. This means that the report for each MA plan must be
clearly labeled, and readily accessible to interested parties and other
members of the public.
Comment: A commenter recommended regulatory language to include
requirements for the standard exchange of the data among payers,
providers or healthcare community such as USCDI version 3.
Response: CMS thanks the commenter for the suggestion but declines
to incorporate such a standard at this time.
We thank all commenters for their comments. After careful
consideration of all comments received, and for the reasons set forth
in the proposed rule and in our responses to the related comments, as
previously summarized, we are finalizing the modifications to Sec.
422.137 substantively as proposed but with two revisions. First, we are
not finalizing use of the repetitive phrase ``but is not limited to''
in the sentence that provides the non-exhaustive list of examples of
expertise in health equity. Second, we are finalizing a clarification
in Sec. 422.137(d)(6)(iii) that the data used for the health equity
analysis and reporting excludes data on drugs as defined in Sec.
422.119(b)(1)(v).
V. Enrollment and Appeals
A. Required Notices for Involuntary Disenrollment for Loss of Special
Needs Status (Sec. 422.74)
Section 231 of the Medicare Modernization Act of 2003 (MMA) amended
section 1851(a)(2)(A)(ii) of the Act to establish specialized MA plans
for special needs individuals. Special needs plans (SNPs), defined at
section 1859(b)(6)(A) of the Act, are plans with limited enrollment,
specifically designed to provide targeted care to ``special needs
individuals,'' as defined at section 1859(b)(6)(B) of the Act, and
which includes institutionalized individuals, dually eligible
individuals, and individuals with severe or disabling chronic
conditions. Only those
[[Page 30574]]
individuals who qualify as special needs individuals may enroll, and
remain enrolled, in an SNP. In the January 2005 MA final rule, we
established at Sec. 422.52 that individuals were eligible to enroll in
an SNP if they: (1) met the definition of a special needs individual,
(2) met the eligibility requirements for that specific SNP, and (3)
were eligible to elect an MA plan. Sections 1859(b)(6)(B) and
1894(c)(4) of the Act, and CMS's implementing regulation at Sec.
422.52(d), allow individuals who lose special needs status, if, for
example, they were to no longer have the level of Medicaid eligibility
or other qualifying condition necessary to be eligible for the SNP, to
have a period of deemed continued eligibility if they are reasonably
expected to regain special needs status within, at most, the succeeding
6-month period. The period of deemed eligibility must be at least 30
days but may not be longer than 6 months. In implementing regulations,
we also established loss of special needs status (and of deemed
continued eligibility, if applicable) as a basis for required
disenrollment at Sec. 422.74(b)(2)(iv).
The January 2005 MA final rule served as the basis for our current
sub-regulatory guidance in Chapter 2 of the Medicare Managed Care
Manual, Section 50.2.5, which specifically provides that plans send
certain notices prior to and following the effective date of
involuntary disenrollment based on loss of special needs status. These
policies are intended to ensure that enrollees are given adequate
notice prior to being disenrolled from an SNP and provided an
opportunity to prove that they are eligible to remain enrolled in the
plan, if applicable. Providing these enrollees at least 30 days'
advance notice of disenrollment, along with information about deemed
continued eligibility and eligibility for an SEP to elect other
coverage, gives enrollees ample time to prove they are still eligible
for their SNP or to evaluate other coverage options.
To provide stability and assurance about the requirements for MA
organizations in these situations as well as transparency to interested
parties, we proposed to codify current policy for MA plan notices prior
to disenrollment for loss of special needs status, as well as a final
disenrollment notice. We intend that interested parties will be able to
rely on these regulations, establishing the procedures that an MA
organization must follow in the event that an SNP enrollee loses
special needs status and is disenrolled from the SNP on that basis.
Specifically, we proposed to revise Sec. 422.74(d) by redesignating
paragraph (d)(8) as paragraph (d)(9) and adding a new paragraph (d)(8),
to state that the plan would be required to provide the enrollee a
minimum of 30 days' advance notice of disenrollment, regardless of the
date of the loss of special needs status. As proposed in new paragraphs
(8)(i) and (ii), an advance notice would be provided to the enrollee
within 10 calendar days of learning of the loss of special needs
status, affording the enrollee an opportunity to prove that such
enrollee is still eligible to remain in the plan. The advance notice
would also include the disenrollment effective date, a description of
SEP eligibility, as described in Sec. 422.62(b)(11), and, if
applicable, information regarding the period of deemed continued
eligibility, the duration of the period of deemed continued
eligibility, and the consequences of not regaining special needs status
within the period of deemed continued eligibility. Additionally, as
proposed in new paragraph (8)(iii), the plan would be required to
provide the enrollee a final notice of involuntary disenrollment within
3 business days following the disenrollment effective date. Such
disenrollment effective date is either the last day of the period of
deemed continued eligibility, if applicable, or a minimum of 30 days
after providing the advance notice of disenrollment. Additionally, the
final notice of involuntary disenrollment must be sent before
submission of the disenrollment to CMS. Lastly, we proposed in new
paragraph (8)(iv), that the final notice of involuntary disenrollment
must include an explanation of the individual's right to file a
grievance under the MA organization's grievance procedures, which are
required by Sec. 422.564.
These proposed changes would codify longstanding guidance. Based on
infrequent questions or complaints from MA organizations and enrollees
on these notices, we believe that these notice requirements have been
previously implemented and are currently being followed by plans. We do
not believe the proposed changes to the regulatory text will adversely
impact MA organizations or individuals enrolled in MA special needs
plans who lose special needs status, other than the appropriate
disenrollment from the plan due to the individual's loss of eligibility
for the plan. Similarly, we do not believe the proposed changes would
have any impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
Comment: A commenter expressed support for this provision.
Response: We thank the commenter for their support of our proposal.
After consideration of all public comments and for the reasons
outlined in the proposed rule and here, we are finalizing our proposal
without substantive changes, but with minor changes for clarity.
B. Involuntary Disenrollment for Individuals Enrolled in an MA Medical
Savings Account (MSA) Plan (Sec. 422.74)
Section 4001 of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-
33) added section 1851(a)(2) of the Act establishing private health
plan options available through Part C of the Medicare program known
originally as ``Medicare + Choice'' and later as ``Medicare Advantage
(MA).'' Under this program, eligible individuals may elect to receive
Medicare benefits through enrollment in one of an array of private
health plan choices beyond the original Medicare program. As enacted,
section 1851(a)(2)(B) of the Act established the authority for an MA
organization to offer an MA medical savings account (MSA) option which
is a combination of a high-deductible MA plan, as defined in section
1859(b)(3) of the Act, with a contribution into a Medical Savings
Account (MSA).
In the interim final rule titled Medicare Program; Establishment of
the Medicare+Choice Program'' which appeared in the Federal Register on
June 26, 1998 (63 FR 34968), we established the conditions for MA
organizations to enroll individuals in an MA MSA plan. The restrictions
on enrollment in MA MSA plans were set forth under section 1851(b)(2)
and (b)(3) of the Act and in implementing regulations at Sec. 422.56.
Specifically, consistent with section 1851(b)(2) of the Act, Sec.
422.56(b) provides that an individual who is enrolled in a Federal
Employee Health Benefits Program (FEHB) plan, or is eligible for health
care benefits through the Veterans Administration (VA) or the
Department of Defense (DoD), may not enroll in an MA MSA plan. In
addition, Sec. 422.56(c) incorporates the statutory prohibition under
section 1851(b)(3) of the Act on enrollment in MA MSA plans by
individuals who are eligible for Medicare cost-sharing under Medicaid
State plans. Additional restrictions were set forth under section
1852(a)(3)(B) of the Act and in implementing regulations at Sec.
422.56(d) based on supplemental benefits under an MA MSA plan.
The January 2005 MA final rule implemented section 233 of the MMA,
which lifted the time and enrollment limits on MSA plans imposed by the
BBA of 1997. However, section 233 of
[[Page 30575]]
the MMA did not alter the prohibitions in sections 1851(b)(2) and
(b)(3) of the Act on enrollment into an MA MSA plan for individuals
covered under other health programs, and likewise the January 2005 MA
final rule did not alter the implementing regulations regarding these
policies at Sec. 422.56.
The current regulations do not specify whether the eligibility
criteria described in Sec. 422.56, which preclude an individual with
certain health care coverage from electing an MA MSA plan, are
applicable to individuals who gain or become eligible for other
coverage while enrolled in an MSA plan. In other words, the current
regulations do not specify that an individual who ceases to satisfy the
eligibility criteria described in Sec. 422.56 while already enrolled
in an MA MSA plan must be involuntarily disenrolled from the MSA,
regardless of the time of year. CMS has historically understood the
eligibility criteria for an individual to be enrolled in an MSA plan in
Sec. 422.56, coupled with the statutory prohibitions on enrolling in
an MA MSA by individuals with Medicaid or coverage under other health
benefits, to mean that an enrollee in an MSA plan is not able to remain
a member of the MSA plan and must be disenrolled by the plan when the
individual ceases to meet the statutory and regulatory criteria for
eligibility. We also note that this policy is consistent with our
general approach in section 50.2, Chapter 2 of the Medicare Managed
Care Manual, in which an enrollee becomes ineligible due to a status
change, such as the loss of entitlement to Medicare Part A or Part B or
the inability to regain special needs status during the period of
deemed continued eligibility and outlined in Sec. 422.74.
To address more clearly the consequences of the general loss of
eligibility in an MSA plan, we proposed to amend Sec. 422.74 to add
new paragraph (b)(2)(vi) to include the requirement that an MA MSA
enrollee must be disenrolled, prospectively, due to the loss of
eligibility. If an MA MSA enrollee does not provide assurances that
such enrollee will reside in the United States for at least 183 days
during the year the election is effective, is eligible for or begins
receiving health benefits through Medicaid, FEHBP, DoD, or the VA or
obtains other health coverage that covers all or part of the annual
Medicare MSA deductible, that enrollee must be involuntarily
disenrolled by the MSA plan effective the first day of the calendar
month after the month in which notice by the MA organization is issued
that the individual no longer meets the MA MSA's eligibility criteria,
as proposed in Sec. 422.74(d)(10). We also proposed to revise Sec.
422.74(c) to require MA MSA plans to provide a written notice of the
disenrollment with an explanation of why the MA organization is
planning to disenroll the individual before the disenrollment
transaction is submitted to CMS.
Should an individual's coverage under an MA MSA plan end before the
end of a calendar year, CMS recovers from the plan the amount of the
lump-sum deposit attributable to the remaining months of that year.
This requirement is codified at Sec. 422.314(c)(3). In addition, the
disenrolled beneficiary will owe a prorated portion of the current
year's deposit amount back to the MA MSA plan. Plans will be able to
reconcile and identify MSA deposit amounts for the Current Payment
Month (CPM) at the beneficiary level from the monthly generated MSA
Deposit-Recovery Data file. We proposed at Sec. 422.74(e)(1) that
involuntarily disenrolled individuals will be defaulted to enrollment
in Original Medicare, which will now pay claims incurred by the former
MSA enrollees. Conversely, the former MSA enrollee also has the option
to elect to join another MA plan during a valid enrollment period.
We did not receive comments related to this proposal. For the
reasons outlined here and in the proposed rule, we are finalizing this
proposal without modification.
C. Required Notice for Reinstatements Based on Beneficiary Cancellation
of New Enrollment (Sec. Sec. 422.60 and 423.32)
Sections 1851(c)(1) and 1860D-1(b)(1) of the Act establish the
enrollment, disenrollment, termination, and change in coverage
processes for MA and PDP plans. In the June 1998 interim final rule, we
established the M+C (now MA) enrollment process (63 FR 34968). These
requirements are codified in regulation at Sec. 422.60. In the January
2005 Part D final rule, we established the PDP enrollment process (70
FR 4193). These requirements are codified in regulation at Sec.
423.32.
Section 1851(g)(3)(B)(i) of the Act provides that MA plans may
terminate the enrollment of individuals who fail to pay basic and
supplemental premiums on a timely basis; likewise, section 1860D-
1(b)(1)(B)(v) of the Act directs the Secretary to use rules similar to
(and coordinated with) the rules for a Medicare Advantage plan
established under section 1851(g) of the Act. CMS has previously
codified this process of optional disenrollment from an MA plan or PDP
for failure to pay monthly premiums at Sec. Sec. 422.74(d) and
423.44(d), as well as requirements for mandatory disenrollment for
individuals who fail to pay the Part D Income Related Monthly
Adjustment Amount (Part D-IRMAA), where applicable, at Sec. 423.44(e).
In addition, CMS has previously codified the ability for MAOs and PDP
sponsors to reinstate for good cause an individual who is disenrolled
for failure to pay plan premiums (at Sec. Sec. 422.74(d)(1)(v) and
423.44(d)(1)(vi)) or the Part D-IRMAA (at Sec. 423.44(e)(3)).
However, an individual's enrollment can also be reinstated if their
enrollment in another plan is subsequently canceled within timeframes
established by CMS.\106\ We established at Sec. 422.66(b)(1) that an
individual is disenrolled from their MA plan when they elect a
different MA plan; likewise, at Sec. 423.36(a), an individual is
disenrolled from their PDP plan when they enroll in a different PDP
plan. Sub-regulatory guidance sets forth that MA and PDP plans are to
provide notification of enrollment reinstatement based on a
beneficiary's cancellation of a new enrollment in a different plan.
This guidance is currently outlined in the Part C and Part D sub-
regulatory guidance found in section 60.3.2 of Chapter 2 of the
Medicare Managed Care Manual and section 60.2.2 of Chapter 3 of the
Medicare Prescription Drug Benefit Manual, respectively.
---------------------------------------------------------------------------
\106\ This guidance can be found in section 60.3.2 of Chapter 2
of the Medicare Managed Care Manual and section 60.2.2 of Chapter 3
of the Medicare Prescription Drug Benefit Manual.
---------------------------------------------------------------------------
To provide transparency and stability for interested parties, we
proposed at new Sec. Sec. 422.60(h) and 423.32(h) to require that MA
and PDP plans must notify an individual when the individual's
enrollment is reinstated due to the individual's cancellation of
enrollment in a different plan. A reinstatement is generally not
allowed if the individual intentionally initiated a disenrollment and
did not cancel the disenrollment prior to the disenrollment effective
date. However, when a beneficiary is automatically disenrolled from
their plan because of enrollment in a new plan but then cancels the
request to enroll in the new plan within established timeframes, the
associated automatic disenrollment from the previous plan becomes
invalid. Therefore, the beneficiary's enrollment in the previous plan
needs to be reinstated and CMS systems will attempt to automatically
reinstate enrollment in the previous plan. Consistent with notification
requirements in similar enrollment scenarios, we proposed that the
[[Page 30576]]
organization from which the individual was disenrolled send the member
notification of the enrollment reinstatement within 10 days of receipt
of Daily Transaction Reply Report (DTRR) confirmation of the
individual's reinstatement. The reinstatement notice would include
confirmation of the individual's enrollment in the previous plan with
no break in coverage, plan-specific information as needed, and plan
contact information.
These proposed changes represent the codification of longstanding
guidance. Based on infrequent complaints and questions from plans and
beneficiaries related to current requirements, we concluded that the
requirements have been previously implemented and are currently being
followed by plans. There is also no impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
Comment: A commenter requested that CMS provide a model letter for
this required notice.
Response: We thank the commenter for the suggestion. We have
longstanding model reinstatement notices that have been displayed in
Chapter 2 of the Medicare Managed Care Manual and Chapter 3 of the
Medicare Prescription Drug Benefit Manual.
Comment: A commenter expressed that they currently send
reinstatement letters and recommended this process continues. The
commenter also noted that beneficiary history in MARx is typically
removed when reinstatement situations occur and is concerned about how
plans will know when the enrollment issue has happened.
Response: We appreciate the commenter's feedback. This proposal
does not change the existing sub-regulatory guidance for plans to
provide notification of enrollment reinstatement based on a
beneficiary's cancellation of a new enrollment in a different plan. The
plan can continue to send reinstatement letters to beneficiaries. We
also note that the new plan receives a transaction reply code (TRC) 15
in MARx--which describes CMS's response to the enrollment transaction--
when the enrollment is removed from a beneficiary's record. The plan in
which the beneficiary's enrollment is being reinstated receives a TRC
287 if there are no changes to the beneficiary's profile from the time
of the disenrollment to the time of the cancellation.
Comment: A commenter expressed support for this proposal.
Response: We thank the commenter for their support of this
proposal.
After consideration of all public comments, and for the reasons
outlined here and in the proposed rule, we are finalizing our proposal
with minor modifications to clarify the regulation text proposed at
Sec. 423.32(h).
D. Part D Plan Failure To Submit Disenrollment Timely (Sec. 423.36)
Section 1860D-1(b) of the Act establishes the disenrollment process
for Part D eligible individuals in prescription drug plans. This
section of the Act grants the Secretary the authority to establish a
process for the enrollment, disenrollment, termination, and change of
enrollment of Part D eligible individuals in prescription drug plans.
In 2005, the implementing regulations set forth at 70 FR 4525
established the voluntary disenrollment process for Part D prescription
drug plans. These requirements are codified in regulation at Sec.
423.36 and require the Part D sponsor to ``submit a disenrollment
notice to CMS within timeframes CMS specifies.''
As previously noted, section 1860D-1(b)(1)(B) of the Act directs
the Secretary to adopt enrollment rules ``similar to (and coordinated
with)'' the rules established under Part C. In 1998 implementing
regulations for Part C, CMS provided that if a ``Medicare + Choice''
(M+C) organization, later known as an MA organization, fails to submit
the correct and complete notice of disenrollment, the M+C organization
must reimburse the Health Care Finance Administration (the predecessor
to CMS), for any capitation payments received after the month in which
payment would have ceased if the requirement had been met timely (63 FR
35074). This requirement was codified at Sec. 422.66(b)(4) and has
remained in place for MA organizations.
Current Part D regulations, however, do not impose requirements for
Part D sponsors that fail to submit the transaction notice to CMS in a
timely manner. However, longstanding CMS policy has provided that the
PDP sponsor must submit disenrollment transactions to CMS in a timely
manner, as described in section 50.4.1 of Chapter 3 of the Medicare
Prescription Drug Benefit Manual. When a valid request for
disenrollment has not been communicated to CMS successfully within the
required timeframes, a retroactive disenrollment can be submitted to
CMS. If the retroactive disenrollment request is approved, the PDP
sponsor must return any premium paid by the member for any month for
which CMS processed a retroactive disenrollment, and CMS will retrieve
any capitation payment for the retroactive period for an approved
request for retroactive disenrollment, as described in section 60.4 of
Chapter 3 of the Medicare Prescription Drug Benefit Manual.
To provide transparency and consistency for interested parties, and
to align the Part D regulation with the requirements for MA
organizations, we proposed to codify CMS's longstanding sub-regulatory
guidance by amending Sec. 423.36 to add a new paragraph (f) to reflect
that if the Part D sponsor fails to submit a disenrollment notice to
CMS timely as required by Sec. 423.36(b)(1), such that the Part D
sponsor receives additional capitation payments from CMS, the Part D
sponsor must reimburse CMS for any capitation payments received after
the month in which payment would have ceased if the requirement had
been met timely.
This proposal is a codification of longstanding Part D sub-
regulatory guidance and there is no impact to the Medicare Trust Fund.
As these policies have been previously implemented and are currently
being followed by plans, we concluded that there is no additional
paperwork burden. All information impacts related to our collection of
disenrollment requests have already been accounted for under OMB
control number 0938-0964 (CMS-10141).
We did not receive comments related to this proposal. For the
reasons outlined here and in the proposed rule, we are finalizing this
proposal with one minor modification. We are making a technical
correction to the regulation text proposed at Sec. 423.36(f) to update
a cross-reference that is inaccurate, changing ``paragraph (c)(1)'' to
``paragraph (b)(1)''.
E. Codify Existing Policy ``Incomplete Disenrollment Requests''
(Sec. Sec. 422.66 and 423.36)
Section 1851(c)(2)(B) of the Act provides that an individual who
elects an MA plan and then chooses to terminate such election can do so
by submitting a request to the MA organization. In addition, section
1860D-1(b)(1)(B)(ii) of the Act specifies that in establishing a
process for Part D enrollment, disenrollment, termination, and change
of enrollment of Part D eligible individuals in prescription drug
plans, the Secretary shall use rules similar to (and coordinated with)
the rules for an MA--formerly M+C--plan established under section
1851(c) of the Act.
The June 1998 final regulation established the process for
individuals to voluntarily disenroll from an MA plan. This process is
codified at Sec. 422.66(b). Specifically, at
[[Page 30577]]
Sec. 422.66(b)(2), the regulations provide that a disenrollment
request is considered to have been made on the date the disenrollment
request is received by the MA organization. Once received, the MA
organization is required to send the disenrollment notice to CMS, as
well as send a copy to the enrollee which informs the enrollee of any
lock-in requirements of the plan that apply until the effective date of
disenrollment. This process is codified at Sec. 422.66(b)(3),
including the requirement that the MA plan must file and retain the
disenrollment request for the period specified in CMS instructions.
In 2005, CMS issued implementing regulations establishing
disenrollment procedures for Part D plans, whereby an individual elects
to voluntarily disenroll from the Part D plan, and also established the
requirements imposed upon the Part D sponsor as a result of that
disenrollment request (70 FR 4211). These requirements were codified at
Sec. 423.36.
However, Sec. Sec. 422.66(b) and 423.36 do not address what plans
should do in the event that they receive incomplete disenrollment
requests. CMS has historically provided, at section 50.4.2, Chapter 2
of the Medicare Managed Care Manual and section 50.4.2, Chapter 3 of
the Medicare Prescription Drug Benefit Manual, the procedural steps for
plans to address incomplete disenrollment requests. These steps include
providing that when the disenrollment request is incomplete, plans must
document efforts to obtain information to complete the request, and if
any additional information needed to make the disenrollment request
``complete'' is not received within prescribed timeframes, the plan
must deny the disenrollment request.
To provide transparency and stability for interested parties about
the MA and Part D programs and about the requirements applicable to
requests for voluntary disenrollment from MA and Part D plans, we
proposed to codify CMS's longstanding policies that a disenrollment
request is considered to be incomplete if the required but missing
information is not received by the MA plan or Part D sponsor within the
specified timeframes at new paragraphs Sec. Sec. 422.66(b)(6) and
423.36(d). The specified timeframes are described at proposed
Sec. Sec. 422.66(b)(3)(v)(C) and 423.36(b)(4)(iii). We also proposed,
at new paragraphs Sec. Sec. 422.66(b)(3)(v) and 423.36(b)(4), that if
the disenrollment request is incomplete, the plan must document its
efforts to obtain information to complete the election. Plans would be
required to notify the individual (in writing or verbally) within 10
calendar days of receipt of the disenrollment request. For incomplete
disenrollment requests received by plan sponsors during the annual
election period (AEP), we proposed that information to complete the
request must be received by December 7, or within 21 calendar days of
the plan sponsor's request for additional information, whichever is
later. For all other election periods, we proposed that required
information must be received by the end of the month in which the
disenrollment request was initially received, or within 21 calendar
days of the request for additional information, whichever is later.
Finally, we proposed that if any additional information needed to make
the disenrollment request complete is not received within these
timeframes, the disenrollment request must be denied.
This proposal codifies longstanding guidance. All information
impacts related to the procedural steps plans must take to address
incomplete disenrollment requests have already been accounted for under
OMB control numbers 0938-0753 (CMS-R-267) for Part C and 0938-0964
(CMS-10141) for Part D. Based on infrequent questions from MA
organizations and Part D plan sponsors, as these requirements have been
previously implemented and are currently being followed by plans, we
concluded that these updates do not add to the existing disenrollment
process and we do not believe there is any additional paperwork burden.
We received the following comment, and our response follows.
Comment: A commenter expressed support for this provision.
Response: We thank the commenter for their support of our proposal.
After consideration of all public comments, and for the reasons
outlined here and in the proposed rule, we are finalizing our proposal
without modification.
F. Reinstatement of Enrollment for Good Cause (Sec. Sec. 417.460,
422.74 and 423.44)
Sections 1851(g)(3)(B)(i) and 1860D-1(b)(1)(B)(v) of the Act
provide that MA and Part D plans may terminate the enrollment of
individuals who fail to pay basic and supplemental premiums on a timely
basis. In addition, section 1860D-13(a)(7) of the Act mandates that
individuals with higher incomes pay an additional premium, the Part D
IRMAA, for the months in which they are enrolled in Part D coverage.
Consistent with these sections of the Act, the MA and Part D
subpart B regulations set forth our requirements with respect to
involuntary disenrollment procedures under Sec. Sec. 422.74 and
423.44, respectively. Pursuant to Sec. Sec. 422.74(d)(1)(i) and
423.44(d)(1), an MA or Part D plan that chooses to disenroll
beneficiaries for failure to pay premiums must be able to demonstrate
to CMS that it made a reasonable effort to collect the unpaid amounts
by notifying the beneficiary of the delinquency, providing the
beneficiary a grace period of no less than two months in which to
resolve the delinquency, and advising the beneficiary of the
termination of coverage if the amounts owed are not paid by the end of
the grace period. Further, as outlined in Sec. 423.44(e), CMS
involuntarily disenrolls individuals from their Part D coverage for
failure to pay Part D-IRMAA following an initial grace period of 3
months.
Current regulations at Sec. 417.460(c) specify that an HMO or
competitive medical plan (cost plan) may disenroll a member who fails
to pay premiums or other charges imposed by the plan for deductible and
coinsurance amounts. While there is not a grace period parallel to the
grace period required by the MA and Part D regulations, the
requirements for cost plans are otherwise similar. The cost plan must
demonstrate that it made reasonable efforts to collect the unpaid
amount and send the enrollee written notice of the disenrollment prior
to transmitting the disenrollment to CMS.
The final rule, titled ``Medicare Program; Changes to the Medicare
Advantage and the Medicare Prescription Drug Benefit Programs for
Contract Year 2012 and Other Changes'' which appeared in the Federal
Register on April 15, 2011 (76 FR 21432) amended both the Parts C and D
regulations at Sec. Sec. 422.74(d)(1)(v), 423.44(d)(1), and
423.44(e)(3) regarding involuntary disenrollment for non-payment of
premiums or Part D-IRMAA to allow for reinstatement of the
beneficiary's enrollment into the plan for good cause. The good cause
provision established that CMS can reinstate enrollment of a
disenrolled individual's coverage in certain circumstances where the
non-payment of premiums was due to a circumstance that the individual
could not reasonably foresee and could not control, such as an extended
period of hospitalization. In the final rule titled ``Medicare Program;
Changes to the Medicare Advantage and the Medicare Prescription Drug
Benefit Programs for Contract Year 2013 and Other Changes'' which
appeared in the Federal Register on April 12, 2012 (77 FR 22072), we
extended the policy of reinstatement for
[[Page 30578]]
good cause to include beneficiaries enrolled in cost plans in Sec.
417.460(c)(3), thus aligning the cost plan reinstatement provision with
the MA and Part D plan provisions. In the final rule titled ``Medicare
Program; Contract Year 2016 Policy and Technical Changes to the
Medicare Advantage and the Medicare Prescription Drug Benefit
Programs'' which appeared in the Federal Register on February 12, 2015
(80 FR 7911), we amended Sec. Sec. 417.460(c)(3), 422.74(d)(1)(v), and
423.44(d)(1)(vi) to permit an entity acting on behalf of CMS, such as
an MA organization, Part D sponsor, or entity offering a cost plan, to
effectuate reinstatements for beneficiaries disenrolled for nonpayment
of plan premium when good cause criteria are met.
To provide transparency to interested parties, we proposed to
codify our current policy for MA organizations, Part D sponsors, or
entities offering cost plans, as set out in sub-regulatory guidance in
section 60.3.4 of Chapter 2, Medicare Managed Care Manual, section
60.2.4 of Chapter 3, Medicare Prescription Drug Benefit Manual and
section 60.6.3 of Chapter 17-D, Medicare Managed Care Manual, that
reinstatement for good cause, pursuant to Sec. Sec. 417.460(c)(3),
422.74(d)(1)(v), and 423.44(d)(1)(vi), will occur only when the
individual requests reinstatement within 60 calendar days of the
disenrollment effective date and that an individual may make only one
reinstatement request for good cause in this 60-day period.
Specifically, CMS proposed to amend Sec. Sec. 417.460(c)(3),
422.74(d)(1)(v), and 423.44(d)(1)(vi) to provide that the disenrolled
individual must request reinstatement within 60 calendar days of the
disenrollment effective date and has not previously requested
reinstatement for good cause during the same 60-day period following
the involuntary disenrollment. These proposed changes represent the
codification of longstanding guidance. Based on infrequent questions or
complaints from plan sponsors and beneficiaries, and a lack of reported
instances of noncompliance regarding the 60-day timeframe, as these
requirements have been previously implemented and are currently being
followed by plan sponsors, we concluded that the proposed changes to
the regulatory text will not adversely impact plan sponsors or
individuals disenrolled for nonpayment of plan premium who choose to
request reinstatement for good cause, nor would the proposed changes
have any impact to the Medicare Trust Funds or result in a paperwork
burden.
We received the following comment, and our response follows.
Comment: A commenter expressed concern about requiring disenrolled
individuals to request reinstatement within the 60-calendar day period
following the date they are disenrolled from the plan. The commenter
states that contacting the plan within the 60-day period to request
reinstatement will be challenging for people with a mental health or
substance use disorder (MH/SUD), adding that people with a MH/SUD often
do not complain when they face administrative difficulties.
Response: While we agree that taking action to request
reinstatement following disenrollment may be more challenging for some
than it is for others, we believe that 60 days is a sufficient amount
of time and that it is not unreasonable to ask someone who has been
disenrolled from their plan and, as such, is no longer being covered,
to reach out to the plan and request reinstatement within the 60-day
period following disenrollment. We require that all MA and Part D plans
offer a minimum two-month grace period prior to disenrolling someone
who has not paid their plan premium; many plans offer a longer grace
period. This minimum two-month period prior to disenrollment, combined
with the 60-day period following disenrollment to request reinstatement
for good cause, provides a reasonable amount of time for someone who
wishes to continue their enrollment in the plan to take action to
resolve the premium delinquency and, if disenrolled, make a
reinstatement request.
After consideration of all public comments, and for the reasons
outlined here and in the proposed rule, we are finalizing our proposal
with minor modifications to reorganize and clarify the regulation text
proposed at Sec. Sec. 417.460(c)(3), 422.74(d)(1)(v), and
423.44(d)(1)(vi).
G. Required Notices for Involuntary Disenrollment for Disruptive
Behavior (Sec. Sec. 417.460, 422.74 and 423.44)
Section 1851(g)(3)(B)(ii) of the Act authorizes an MA organization
to disenroll individuals who engage in disruptive behavior. Section
1860D-1(b)(1)(B)(v) of the Act generally directs us to establish rules
related to enrollment, disenrollment, and termination for Part D plan
sponsors that are similar to those established for MA organizations
under section 1851(g) of the Act. Section 1876 of the Act sets forth
the rules for Medicare cost plan contracts with HMOs and competitive
medical plans (CMPs). (For this section and throughout 42 CFR 417, CMP
is used to mean competitive medical plan, not civil monetary
penalties.) In implementing regulations which appeared in the Federal
Register on September 1, 1995 (60 FR 45679), we established at Sec.
417.460(e) the basis for HMOs and CMPs to disenroll individuals for
disruptive, unruly, abusive, or uncooperative behavior. In implementing
regulations which appeared in the Federal Register on June 26, 1998 (63
FR 34968), we established at Sec. 422.74 the conditions for MA
organizations (referred to M+C organizations at the time) to disenroll
individuals for disruptive behavior. Additionally, the regulations
established the requirement for a final notice to the enrollee of the
submission of the disenrollment, which applies to disruptive behavior
disenrollments, at Sec. 422.74(c). The optional basis for
disenrollment for disruptive behavior was established at Sec.
422.74(b)(1)(ii). The general standards defining disruptiveness were
established at Sec. 422.74(d)(2).
In January 2005, we published a final rule that revised the
definition for disruptive behavior at Sec. 422.74(d)(2) (70 FR 4718),
with the purpose of creating an objective definition that did not use
the previously subjective terms such as ``unruly'' or ``abusive.'' The
current, objective definition from the January 2005 MA final rule both
defines disruptive behavior and establishes the required process for an
MA plan to request disenrollment of a disruptive individual. In January
2005 we also published the Part D implementing regulation (70 FR 4525),
where we established the conditions for a PDP sponsor to disenroll an
individual for disruptive behavior. We established the basis for
optional disenrollment for disruptive behavior at Sec.
423.44(b)(1)(ii). We also established the definition of disruptive
behavior and disenrollment process as it exists currently at Sec.
423.44(d)(2). In the January 2005 Part D final rule, we also
established the requirement for a final notice of the submission of the
disenrollment transaction, which applies to disruptive behavior
disenrollments, at Sec. 423.44(c).
Under CMS's current MA and Part D regulations, disruptive behavior
is defined as behavior by the plan enrollee that substantially impairs
the plan's ability to arrange for or provide services for the
individual or other plan members (Sec. Sec. 417.460(e)(1);
422.74(d)(2)(i); 423.44(d)(2)(i)). The process for disenrolling an
enrollee for disruptive behavior requires approval by CMS before the
disenrollment may
[[Page 30579]]
be submitted (Sec. Sec. 417.460(e)(5); 422.74(d)(2)(v);
423.44(d)(2)(v)). MA organizations, Part D sponsors, and cost plans
must make serious efforts to resolve the problem considering any
extenuating circumstances; for MA organizations, cost plans, and Part D
sponsors, this includes providing reasonable accommodations for those
enrollees with mental or cognitive conditions (Sec. Sec. 417.460(e)(2)
and (3); 422.74(d)(2)(iii); 423.44(d)(2)(iii)). MA organizations, Part
D sponsors, and cost plans must also document the enrollee's behavior
and the plan's own efforts to resolve the issue, and this record must
be submitted to CMS before disenrollment can be approved (Sec. Sec.
417.460(e)(4) and (5); 422.74(d)(2)(iv) and (v); 423.44(d)(2)(iv) and
(v)). The current definition of disruptive behavior in Sec. Sec.
417.460(e)(1), 422.74(d)(2), and 423.44(d)(2) served as the basis for
CMS's current sub-regulatory guidance found in Chapter 2, section
50.3.2, of the Medicare Managed Care Manual and Chapter 3, section
50.3.2, of the Medicare Prescription Drug Benefit Manual and Chapter
17D, section 50.3.3, of the Medicare Managed Care Manual. In guidance,
we outline notices that an MA organization, Part D sponsor, and cost
plans must send before requesting permission from CMS to involuntarily
disenroll the individual.
To provide transparency to interested parties and stability as to
the operation of the program, we proposed to codify current policy for
MA, Part D, and cost plan notices during the disenrollment for
disruptive behavior process. These notices provide the enrollee with a
warning of the potential consequences of continued disruptive behavior.
In a new proposed paragraph at Sec. 422.74(d)(2)(vii), we proposed to
codify existing policy currently set out in sub-regulatory guidance
regarding MA plan notices prior to disenrollment for disruptive
behavior. To request approval of a disenrollment for disruptive
behavior, an MA organization would be required to provide two notices:
(1) an advance notice, informing the plan enrollee that continued
disruptive behavior could lead to involuntary disenrollment; and (2) a
notice of the plan's intent to request CMS permission to disenroll the
individual, sent at least 30 days after the advance notice to give the
enrollee an opportunity to cease the behavior. These notices are in
addition to the disenrollment submission notice currently required
under Sec. 422.74(c). We also proposed to revise the existing
requirement at Sec. 422.74(d)(2)(iii) that plans inform the individual
of the right to use the plan's grievance procedures to clarify that
this information should be conveyed as part of the notices described in
new paragraph (d)(2)(vii). Additionally, as proposed in addition to
Sec. 422.74(d)(2)(iv), the plan would be required to submit dated
copies of these required notices to CMS along with the other
documentation regarding enrollee behavior and the plan's efforts to
resolve the issues.
At new paragraph Sec. 423.44(d)(2)(viii), we proposed to codify
existing policy currently set out in sub-regulatory guidance regarding
PDP sponsor notices prior to disenrollment for disruptive behavior. To
request approval of a disenrollment for disruptive behavior, a PDP
sponsor would be required to provide two notices: (1) an advance
notice, informing the plan enrollee that continued disruptive behavior
could lead to involuntary disenrollment; (2) a notice of intent to
request CMS permission to disenroll the individual, sent at least 30
days after the advance notice to give the enrollee an opportunity to
cease the behavior. These notices are in addition to the disenrollment
submission notice currently required under Sec. 423.44(c). We also
proposed to revise the existing requirement at Sec. 423.44(d)(2)(iii)
that plans inform the individual of the right to use the plan's
grievance procedures, to clarify that this information should be
conveyed as part of the notices described in new paragraph
(d)(2)(viii). Additionally, as proposed in additions to Sec.
423.44(d)(2)(iv), the plan would be required to submit dated copies of
these required notices to CMS along with the other documentation
regarding enrollee behavior and the plan's efforts to resolve the
issues.
At Sec. 417.460(e)(7) we proposed to codify existing policy
guidance currently set out in sub-regulatory guidance regarding cost
plan notices prior to an enrollee disenrollment for cause (disruptive
behavior). Current guidance is found in Chapter 17D of the Medicare
Managed Care Manual, section 50.3.3. To request approval of a
disenrollment for disruptive behavior, an HMO or CMP would be required
to provide two notices: (1) an advance notice, informing the enrollee
that continued disruptive behavior could lead to involuntary
disenrollment; (2) a notice of intent to request CMS permission to
disenroll the enrollee, sent at least 30 days after the advance notice
to give the enrollee an opportunity to cease the behavior. These
notices are in addition to the disenrollment submission notice
currently required under Sec. 417.460(e)(6). We also proposed to
revise the existing requirement at Sec. 417.460(e)(2) that plans
inform the individual of the right to use the plan's grievance
procedures, to clarify that this information should be conveyed as part
of the notices described in new paragraph (e)(7). Additionally, we
proposed in Sec. 417.460(e)(2) that, as part of its efforts to resolve
the problem presented by the enrollee, an HMO or CMP must provide
reasonable accommodations for individuals with mental or cognitive
conditions, including mental illness and developmental disabilities,
similar to the existing requirement in the MA and Part D regulations at
Sec. Sec. 422.74(d)(2)(iii); 423.44(d)(2)(iii)). As proposed in Sec.
417.460(e)(4), cost plans would be required to submit dated copies of
these required notices to CMS along with other documentation regarding
enrollee behavior and the plan's efforts to resolve the issues.
This proposal codifies longstanding guidance. All information
impacts related to the involuntary disenrollment by the plan for
disruptive behavior have already been accounted for under OMB control
numbers 0938-0753 (CMS-R-267) for Part C and 0938-0964 (CMS-10141) for
Part D. Based on infrequent questions from MA organizations, Part D,
and cost plan sponsors on these notices, as these notice requirements
have been previously implemented and are currently being followed by
plans, we concluded that these updates do not add to the existing
disenrollment process and we do not believe there is any additional
paperwork burden.
We did not receive comments related to this proposal. For the
reasons outlined here and in the proposed rule, we are finalizing this
proposal with slight modifications to reorganize the regulation text
for additional clarity.
H. Codification of the Part D Optional Disenrollment for Fraud and
Abuse Policy (Sec. 423.44)
As noted previously, section 1851(g)(3)(B)(ii) of the Act provides
that an MA organization may disenroll individuals who engage in
disruptive behavior. In 1998, the Part C implementing regulations at 63
FR 35075 separately referred to a different kind of ``disruption'' or
failure to ``cooperate,'' namely, fraud or abuse on the part of the
individual on the enrollment form, or by misuse of the individual's
enrollment card. This ground for termination is if the individual
provides fraudulent information on his or her election form or permits
abuse of his or her enrollment card, which was also based on section
1851(g)(3)(B)(ii) of the Act
[[Page 30580]]
was codified as a separate paragraph at Sec. 422.74(b)(1)(iii) (63 FR
35075). Regulations also provided a process for disenrollment on this
basis, whereby an M+C organization may disenroll an individual who
knowingly provides, on the election form, fraudulent information that
materially affects the individual's eligibility to enroll in the M+C
plan, or intentionally permits others to use his or her enrollment card
to obtain services under the M+C plan, as long as a notice of
disenrollment is provided as outlined in federal law. The M+C
organization was also required to report the disenrollment to Medicare.
This process for disenrollment based on fraud or abuse on the part of
the individual was codified at Sec. 422.74(d)(3) (63 FR 35075). Fraud
and abuse by the enrollee are treated in the same manner as other forms
of disruptive behavior, with the individual being disenrolled into the
original Medicare program.
The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (MMA) (Pub. L. 108-173) enacted the Medicare Advantage program,
which replaced the M+C program established under title XVIII of the
Act, and amended title XVIII of the Act to add a new part D (Voluntary
Prescription Drug Benefit Program). Section 1860D-1(b)(1)(B)(v) of the
Act specifies that in establishing a process for Part D enrollment,
disenrollment, termination, and change of enrollment of Part D eligible
individuals in prescription drug plans, the Secretary shall use rules
similar to (and coordinated with) the rules for an MA-PD plan
established under section 1851(g) of the Act. In 2005, CMS finalized
implementing regulations at Sec. Sec. 423.44(b)(1)(ii) and (d)(2),
providing that PDP sponsors may disenroll an individual who engages in
disruptive behavior and defining the process for disenrollment on this
basis (70 FR 4530). However, CMS's 2005 implementing regulations did
not include provisions allowing PDP sponsors the ability to disenroll
individuals on the basis of fraud or abuse on the part of the
individual on the enrollment form, or by misuse of the individual's
enrollment card, equivalent to the MA regulations at Sec. Sec.
422.74(b)(1)(iii) and (d)(3). Although CMS has adopted and implemented
this same basis for optional disenrollment from a Part D plan in sub-
regulatory guidance, we proposed to codify the policy for optional
disenrollment from a Part D plan based on an individual providing
fraudulent information on his or her election form or permitting abuse
of his or her enrollment card. Our intent was to codify the current
policy, as reflected in section 50.3.3 of Chapter 3 of the Medicare
Prescription Drug Benefit Manual.
We proposed to add a new Sec. 423.44(b)(1)(iii) to codify that if
an individual provides fraudulent information on his or her election
form or permits abuse of his or her enrollment card as specified in new
paragraph Sec. 423.44(d)(9), the Part D plan has the option to
involuntarily disenroll the individual. Further, we proposed to
establish at such new paragraph Sec. 423.44(d)(9) the process for
optional disenrollment for an individual who commits fraud or permits
abuse of their enrollment card. We proposed to add a new Sec.
423.44(d)(9)(i) to establish a basis for disenrollment for an
individual who commits fraud or permits abuse of their enrollment card,
to be provided at Sec. Sec. 423.44(d)(9)(i)(A) and 423.44(d)(9)(i)(B),
respectively. We proposed to establish at Sec. 423.44(d)(9)(i)(A) that
a Part D plan may disenroll an individual who knowingly provides, on
the election form, fraudulent information that materially affects the
individual's eligibility to enroll in the Part D plan. We proposed to
establish in Sec. 423.44(d)(9)(i)(B) that a Part D plan may disenroll
an individual who intentionally permits others to use his or her
enrollment card to obtain drugs under the Part D plan.
We further proposed to add a new Sec. 423.44(d)(9)(ii) to
establish that a Part D plan that opts to disenroll an individual who
commits fraud or permits abuse of their enrollment card must provide
the individual a written notice of the disenrollment that meets the
notice requirements set forth in Sec. 423.44(c) of this section. We
also proposed to add a new Sec. 423.44(d)(9)(iii) to establish that a
Part D plan must report to CMS any disenrollment based on fraud or
abuse by the individual.
With regard to the Part D optional involuntary disenrollment for
fraud and abuse regulations at Sec. 423.44(d)(9)(i), the following
change will be submitted to OMB for review under control number OMB
0938-0964 (CMS-10141). We estimate that it will take a Part D plan
three hours to capture and retain the required documentation for each
occurrence of disenrollment for fraud and abuse. In part, the burden
associated with this requirement is the time and effort necessary for a
Part D plan to document and retain the documentation that meets the
requirements set forth in this section. Since 2012, there have been
only five disenrollments for fraud and abuse. Three of those
disenrollments were from MA/MA-PD plans, one was from the Limited
Income Newly Eligible Transition (LI NET) plan, and one was from a
standalone Part D plan. Thus, the burden to Part D plans is negligible
and, per 5 CFR 1320.3(c), not subject to PRA because it involves less
than 10 entities per year. Nonetheless, we will still add this
information to the information collection currently approved under OMB
control number 0938-0964. In addition, based on these data, we do not
expect any future impact to the Medicare Trust Fund.
We further proposed in Sec. 423.44(d)(9)(ii) that the Part D plan
must provide a written notice of disenrollment to the member to advise
them of the plan's intent to disenroll, as required under Sec.
423.44(c) of this subpart. Lastly, we proposed in Sec.
423.44(d)(9)(iii) that the Part D plan must report to CMS any
disenrollment based on fraud or abuse by the member. All information
impacts related to providing written notice to the member and notifying
CMS of the disenrollment have already been accounted for under OMB
control numbers 0938-0964 (CMS-10141).
We received no comments on our proposal. For the reasons outlined
here and in the proposed rule, we are finalizing this proposal without
modification.
I. SPAP or Other Payer Exception for Disenrollment for Failure To Pay
(Sec. 423.44)
Section 1851(g)(3)(B)(i) of the Act allows MA plans to disenroll
members who fail to pay premiums on a timely basis. Section 1860D-
1(b)(1)(B)(v) of the Act directs us to adopt Part D disenrollment rules
similar to the MA provisions in section 1851(g) of the Act.
Additionally, section 1860D-1(b)(3)(A)(iii) of the Act states that
disenrollment in a plan for failure to pay premiums will be considered
a voluntary disenrollment action. In Part D implementing regulations
(70 FR 4525), we established the basis for an optional involuntary
disenrollment for failure to pay premiums as well as the disenrollment
process. The basis for disenrollment for failure to pay premiums was
established at Sec. 423.44(b)(1)(i). The disenrollment process for
failure to pay premiums was established at Sec. 423.44(d)(1). In 2009,
we added an exception to this disenrollment provision which prohibited
plans from disenrolling individuals who are in premium withhold status
(74 FR 1543). The premium withhold status exception was established at
Sec. 423.44(d)(1)(iv) and later renumbered to paragraph (v) in
[[Page 30581]]
2010 when we added the grace period requirement at Sec.
423.44(d)(1)(iii) (75 FR 19816).
Section 1860D-23 of the Act directed the Secretary to establish
coordination rules between State Pharmaceutical Assistance Programs
(SPAPs) and Part D plan sponsors regarding the payment of premiums for
Part D eligible individuals. SPAPs, and other third-party payer
assistance programs, have the option to cover Part D premiums for
individuals. Implementing regulations (70 FR 4525) established the
requirement that Part D plan sponsors must permit SPAPs, and other
entities, to coordinate benefits with the plan, including paying for
premiums, at Sec. 423.464(a).
To protect beneficiaries who have SPAPs, or other payers, cover
their premiums, we proposed to codify current policy that excepts
certain prescription drug plan (PDP) members from being disenrolled for
failure to pay plan premiums, at Sec. 423.44(d)(1)(v). This policy is
currently set out in sub-regulatory guidance at section 50.3.1 of
Chapter 3 of the Medicare Prescription Drug Benefit Manual, and Part D
plan sponsors have previously implemented and are currently following
such policy. We proposed, at revised Sec. 423.44(d)(1)(v), a
disenrollment exception if the sponsor has been notified that an SPAP,
or other payer, is paying the Part D portion of the premium, and the
sponsor has not yet coordinated receipt of the premium payments with
the SPAP or other payer. Sponsors would not be able to initiate the
disenrollment process or disenroll members who qualify for this
exception.
In addition, we proposed a technical correction to revise an
erroneous cross reference in Sec. 423.44(d)(1). Instead of referring
to paragraph (d)(1)(iv), the language should refer to paragraph
(d)(1)(v).
We are codifying longstanding guidance with these changes. All
information impacts related to the involuntary disenrollment by the
plan for failure to pay Part D plan premiums have already been
accounted for under OMB control 0938-0964 (CMS-10141). Based on
infrequent questions or complaints from Part D sponsors on these
notices, we believe that these disenrollment requirements have been
previously implemented and are currently being followed by sponsors.
This proposal is a codification of longstanding Part D sub-regulatory
guidance and there is no impact to the Medicare Trust Fund. These
updates do not add to the existing disenrollment process, so we do not
believe there is any additional paperwork burden.
We did not receive comments related to this proposal. For the
reasons outlined here and in the proposed rule, we are finalizing our
proposal without substantive changes but with minor organizational and
editorial changes in Sec. 423.44(d)(1) for clarity.
J. Possible End Dates for the SEP for Government Entity-Declared
Disaster or Other Emergency (Sec. Sec. 422.62 and 423.38)
Section 1851(e)(4)(D) of the Act authorizes the Secretary to
establish MA special enrollment periods (SEP) for Medicare-eligible
individuals to elect a plan or change the individual's plan election
when the individual meets an exceptional condition, as determined by
the Secretary. Section 1860D-1(b)(3)(C) of the Act authorizes the
Secretary to establish SEPs for exceptional circumstances for Medicare-
eligible individuals to make Part D elections.
The SEPs for exceptional circumstances were historically included
in our sub-regulatory guidance rather than in regulation. In 2020, we
codified and amended a number of SEPs that had been adopted and
implemented through sub-regulatory guidance as exceptional
circumstances SEPs, including the SEP for Government Entity-Declared
Disaster or Other Emergency (85 FR 33901, 85 FR 33909). This SEP, as
codified at Sec. 422.62(b)(18) for enrollment in an MA or MA-PD plan
and Sec. 423.38(c)(23) for enrollment in a Part D-only plan, allows
individuals who are or have been affected by an emergency or major
disaster declared by a Federal, state, or local government entity, and
did not make an election during another period of eligibility as a
result of the disaster/emergency, to make an MA and/or Part D
enrollment or disenrollment action. Although CMS originally proposed
that this SEP would only apply to FEMA-declared disasters or
emergencies, as finalized in 2020, the regulations also include state
and local emergency or major disaster declarations (85 FR 33868). This
SEP begins the date the disaster/emergency declaration is made, the
incident start date or, if different, the start date identified in the
declaration, whichever is earlier. This SEP ends 2 full calendar months
following the end date identified in the declaration or, if different,
the date the end of the incident is announced, whichever is later.
In order to clarify the length of this SEP, we proposed to revise
the end date(s) for the SEP for Government Entity-Declared Disaster or
Other Emergency specified within Sec. Sec. 422.62(b)(18) and
423.38(c)(23). As part of this proposal, we proposed to create a new
Sec. 422.62(b)(18)(i), and redesignate what is currently in Sec.
422.62(b)(18)(i)-(iii) as (b)(18)(ii)-(iv); likewise, we proposed to
create a new Sec. 423.38(c)(23)(i) and redesignate what is currently
in Sec. 423.38(c)(23)(i)-(iii) as (c)(23)(ii)-(iv).
First, we proposed that for state or local emergencies/disasters,
the end date for the SEP may also be based on an emergency/disaster
order automatically expiring pursuant to a state or local law, if such
a law exists. Applicable state or local law could be statutes,
regulations, local or municipal ordinances or codes regarding the
automatic expiration date of state or local emergency/disaster orders.
If the announced incident period end date is different than the
expiration date specified in state or local law, the announced incident
end date controls the SEP end date. Under this proposal, the SEP ends
based on the end of the emergency/disaster period, regardless of
whether that period ends based on an announcement by the applicable
authority or expires based on applicable state or local law.
Second, we proposed an automatic incident end date which will apply
if no end date for the period of disaster/emergency is otherwise
identified within 1 year of the start of the SEP. This automatic
incident end date will fall 1 year after the SEP start date, meaning
that if no end date is otherwise identified, the SEP will be 14 full
calendar months in length. For example, under our proposed changes, if
no incident end date was identified in the declaration, or announced
later, and there is no applicable expiration date provided by state or
local law, CMS would consider the incident end date to be 1 year after
the SEP start date and the SEP would end 2 full calendar months after
that incident end date, which would result in a 14-month maximum SEP.
We sought public comment on this automatic 1-year incident end date to
determine if the 14-month maximum eligibility period for this SEP is
sufficient. We proposed that if the emergency/disaster declaration is
extended, then the automatic 1-year incident end date would be from the
date of the extension. This would address situations where a
declaration of emergency or major disaster is renewed or extended
(perhaps multiple times) so that the state of emergency or major
disaster lasts for a year or more. These proposed changes will provide
clear end dates for this SEP and should allow interested parties to
more easily calculate SEP length and determine beneficiary eligibility
for the SEP.
[[Page 30582]]
Because an individual may elect a Medicare Advantage or Part D plan
only during an election period, Medicare Advantage organizations and
Part D sponsors already have procedures in place to determine the
election period(s) for which an applicant is eligible. Our proposal
would not add to existing enrollment processes, so we believe any
burden associated with this aspect of enrollment processing would
remain unchanged from the current practice and would not impose any new
requirements or burden. All information impacts of this provision have
already been accounted for under OMB control numbers 0938-0753 (CMS-R-
267), 0938-1378 (CMS-10718), and 0938-0964 (CMS-10141). In addition,
Medicare Advantage organizations and Part D sponsors have previously
implemented and are currently following the process to determine
applicant eligibility for this SEP. We believe that changing the
possible end date for this SEP will make a negligible impact, if any.
We do not believe the proposed changes will adversely impact
individuals requesting enrollment in Medicare plans, the plans
themselves, or their current enrollees. Similarly, we do not believe
the proposed changes would have any impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
Comment: Multiple commenters expressed support for this provision.
Response: We thank the commenters for their support of our
proposal.
Comment: Multiple commenters suggested that we extend this SEP
eligibility period to six months after the end of the incident period,
to align with the timeframe of the Parts A and B SEP for disasters or
emergencies, instead of the two months currently codified in
regulations.
Response: We thank the commenters for their suggestion; however,
these proposed changes were aimed to provide clarity on incident end
dates in cases where automatic expirations were relied upon, or when no
end date was identified. We believe that the two full calendar months
after the end of the incident period, as currently codified, provides
ample opportunity for beneficiaries to select and enroll in a new plan.
Though the timeframe for the Parts A and B SEP for disasters or
emergencies is six months, two months is appropriate for making a Parts
C/D election, given the procedural differences in enrolling in Medicare
for the first time and making a new C/D plan election. The two-month
period is also consistent with our other Parts C/D SEPs. We also note
that beneficiaries who are unable to make an election during this SEP
because of continued impacts of the disaster or emergency may be
eligible for the SEP for Other Exceptional Circumstances and should
contact 1-800-MEDICARE to explain their unique situation.
Comment: A commenter expressed concern that individuals who use the
Medicare Parts A and B Disaster/Emergency SEP to enroll in Premium Part
A or Part B may not be able to use the MA or Part D Disaster/Emergency
SEP given the different eligibility timelines between the A/B SEP and
C/D SEP.
Response: In order to use the MA and Part D SEP for Government
Entity-Declared Disaster or Other Emergency, the individual must have
been eligible for another valid election period but was unable to
utilize it because they were affected by a disaster or other emergency.
Newly MA-eligible individuals, because of their A/B SEP election, do
not meet this eligibility criteria and are thus not impacted by the
different eligibility timelines between the A/B and C/D SEPs. Because
their MA eligibility is as a result of using the A/B SEP, these
individuals would not be eligible to use the MA and Part D SEP for
Government Entity-Declared Disaster or Other Emergency because they
were not eligible for another MA or Part D election period that they
were unable to use due to the disaster or other emergency. We also note
that individuals who do utilize the A/B Emergency SEP are eligible to
use the SEPs newly codified at 42 CFR 422.62(b)(26) and 423.38(c)(34),
and thus would have the ability to make a Part C/D election after
taking advantage of their A/B SEP.
After consideration of all public comments, and for the reasons
outlined here and in the proposed rule, we are finalizing our proposal
with minor edits at Sec. Sec. 422.62(b)(18) and 423.38(c)(23) for
grammar and clarity, as well as modifications to correctly redesignate
existing paragraphs.
K. Updating MA and Part D SEPs for Changes in Residence and Codifying
Procedures for Developing Addresses for Members Whose Mail Is Returned
as Undeliverable (Sec. Sec. 422.62, 422.74, 423.38 and 423.44)
Section 1851(b)(1)(A) of the Act provides that an individual is
eligible to elect an M+C, later known as MA, plan only if the plan
serves the geographic area in which the individual resides. Section
1851(b)(1)(B) of the Act provides for a continuation of enrollment
option under which an MA organization offering an MA local plan may
offer its enrollees the option to continue enrollment in the plan when
they move out of the plan service area and into a continuation area, so
long as the organization provides that in the continuation area
enrollees have access to the full range of basic benefits under the
original Medicare fee-for-service program option. In addition, section
1860D-1(b)(1)(B)(i) of the Act generally directs CMS to use rules for
enrollment, disenrollment, and termination relating to residence
requirements for Part D sponsors that are similar to those established
for MA organizations under section 1851(b)(1)(A) of the Act.
In the June 1998 Interim Final Rule with Comment Period (IFC), we
adopted regulations to address the residency and continuation area
requirements, at Sec. Sec. 422.50(a)(3) and 422.54, respectively, as
well as a regulation, at Sec. 422.74(b)(2)(i), requiring that an MA
organization must disenroll an individual who no longer resides in the
plan service area.
In January 2005, we published a final rule (70 FR 4194) to
establish at Sec. 423.30(a)(2)(ii) that an individual must reside in a
Part D plan service area in order to be eligible to enroll in the plan
and at Sec. 423.44(b)(2)(i) that a Part D plan sponsor is required to
disenroll an individual who no longer resides in the plan service area.
Section 1851(e)(4)(B) of the Act establishes that an individual who
is no longer eligible to elect an MA plan because of a change in the
individual's place of residence is eligible for a special election
period (SEP) during which the individual may disenroll from the current
plan or elect another plan. Further, section 1860D-1(b)(1)(B)(iii) of
the Act directs CMS to generally use rules related to coverage election
periods that are similar to those established for MA organizations
under section 1851(e) of the Act. In the June 1998 IFC (63 FR 35073),
we established at Sec. 422.62(b)(2) an SEP for an individual who is
not eligible to remain enrolled in an MA plan because of a change in
his or her place of residence to a location out of the service area or
continuation area. Likewise, in the January 2005 Part D final rule (70
FR 4194), we established at Sec. 423.38(c)(7) an SEP for an individual
who is no longer eligible for the PDP because of a change in his or her
place of residence to a location outside of the PDP region(s) where the
PDP is offered are eligible for an SEP.
Current sub-regulatory guidance for these SEPs that are codified at
Sec. Sec. 422.62(b)(2) and 423.38(c)(7) are reflected in section
30.4.1 of Chapter 2 of the Medicare Managed Care Manual
[[Page 30583]]
for MA and in section 30.3.1 of Chapter 3 of the Medicare Prescription
Drug Benefit Manual. This guidance provides that these SEPs are
available not only to individuals who become ineligible for their
current plan due to a move out of the service area of their current
plan, but also to those who move within the service area of their
current plan and have new plan options available to them, as well as to
those who are not currently enrolled in a Medicare health or drug plan
who move and have new plan options available to them. We proposed to
address the wider scope of these SEPs, as they are currently set out in
sub-regulatory guidance, by amending Sec. Sec. 422.62(b)(2) and
423.38(c)(7) to include individuals who move within the service area of
their current plan and have new Medicare health or drug plan options
available to them, as well as to those who are not currently enrolled
in a Medicare health or drug plan who move and have new plan options
available to them.
The intent of our proposal was to codify current policy as
reflected in CMS's existing sub-regulatory guidance and that is being
carried out currently by MA organizations and Part D plan sponsors.
Codifying our current policy for these SEPs will provide transparency
and stability for interested parties about the MA and Part D programs
and about the nature and scope of these SEPs.
Separate from, but related to, the aforementioned policy for
disenrolling individuals who report that they no longer reside in the
plan service area are the current regulations at Sec. 422.74(d)(4)(ii)
that require that MA organizations disenroll individuals who are absent
from the service area for more than six months. However, Sec.
422.74(d)(4)(iii) provides an exception for individuals enrolled in MA
plans that offer a visitor/traveler benefit are permitted an absence
from the service area for up to 12 months; such individuals are
disenrolled if their absence from the service area exceeds 12 months
(or the length of the visitor/traveler program if less than 12 months).
As outlined at Sec. 423.44(d)(5)(ii), PDP sponsors must disenroll PDP
enrollees who are absent from the plan service area for more than 12
consecutive months.
If member materials are returned to plan sponsors as undeliverable
and a forwarding address is not specified, current sub-regulatory
guidance directs the plan sponsor to document the return, retain the
returned material and continue to send future correspondence to that
same address, as a forwarding address may become available at a later
date. See Sec. 50.2.1.4 of Chapter 2 of the Medicare Managed Care
Manual for MA and Sec. 50.2.1.5 of Chapter 3 of the Medicare
Prescription Drug Benefit Manual for Part D. In sub-regulatory
guidance, we state that plan sponsors are to consider returned mail as
an indication of a possible change in residence that warrants further
investigation. As such, we encourage the plan sponsor to attempt to
locate the member using any available resources, including CMS systems,
to identify new address information for the member. We describe how
plans should attempt to research a member's change of address at Sec.
50.2.1.4 of Chapter 2 of the Medicare Managed Care Manual for MA and
Sec. 50.2.1.5 of Chapter 3 of the Medicare Prescription Drug Benefit
Manual for Part D. Plan sponsors that are unable to contact the member
or obtain current address information will disenroll the member upon
expiration of the 6- or 12-month period of permitted temporary absence
from the plan service area, as previously discussed.
Current MA guidance in Sec. 50.2.1.4 of Chapter 2 of the Medicare
Managed Care Manual regarding research of potential changes in address
is consistent with the MA regulation at Sec. 422.74(d)(4)(i) providing
that ``the MA organization must disenroll an individual if the MA
organization establishes, on the basis of a written statement from the
individual or other evidence acceptable to CMS, that the individual has
permanently moved . . .'' The analogous Part D regulation at Sec.
423.44(d)(5)(i) requires that the ``PDP must disenroll an individual if
the individual notifies the PDP that he or she has permanently moved
out of the PDP service area,'' but the Part D regulation does not
provide a basis similar to the MA regulation for when PDPs may start
the process of researching and acting on a change of address that the
plan learns about from a source other than the member. Although current
Part D guidance in Sec. 50.2.1.5 of Chapter 3 of the Medicare
Prescription Drug Benefit Manual allows PDPs to use information they
receive from sources other than the member, specifically from either
CMS or the U.S. Postal Service, as an indicator that a beneficiary may
no longer reside in the service area, this is not codified in the Part
D regulation. Therefore, we proposed to align the Part D regulation
with the MA regulation by amending Sec. 423.44(d)(5)(i) to state that
a PDP must disenroll an individual if the PDP establishes, on the basis
of a written statement from the individual or other evidence acceptable
to CMS, that the individual has permanently moved out of the PDP
service area.
Current sub-regulatory guidance does not identify returned mail as
a basis for involuntary disenrollment. Materials plans send to members
that include protected health information (PHI) and/or personal
identifying information (PII), as well as materials intended to inform
members of plan-specific information, such as premiums, benefits, cost-
sharing, network and network changes and plan rules, have the potential
for greater adverse impact on individual members, if returned as
undeliverable, than materials such as newsletters, flyers and other
items covering general health and wellness.
To provide additional clarity to plan sponsors in their efforts to
ascertain the residency status of members when there is an indication
of a possible temporary or permanent absence from the service area, we
proposed to amend Sec. 422.74 by adding paragraphs (d)(4)(ii)(A) and
(d)(4)(iii)(F) for MA and to amend Sec. 423.44 by revising paragraph
(d)(5)(ii) for Part D to state that an individual is considered to be
temporarily absent from the plan service area when any one or more of
the required materials and content referenced in Sec. Sec. 422.2267(e)
and 423.2267(e), respectively, if provided by mail, is returned to the
plan sponsor by the U.S. Postal Service as undeliverable and a
forwarding address is not provided. Codifying current sub-regulatory
guidance regarding the use of returned mail as a basis for considering
a member potentially out of area would provide a regulatory basis for
plan sponsors to apply the 6- and 12-month timeframes as previously
described, as well as the current practice of disenrolling individuals
when the plan sponsor is unable to communicate with them using the
residence address provided by the individual to the plan sponsor. Since
plan sponsors are required by regulation to continue to mail certain
materials to enrollees until the point at which the individual is no
longer enrolled in the plan, we believe that it is important to codify
the basis on which plan sponsors are to consider an individual to be
temporarily out of the plan service area and able to be disenrolled,
after an appropriate period of time, thus bringing about the cessation
of any additional member material mailings.
Codifying our current policy for temporary absences from the plan
service area, the sources of information on which plan sponsors may
make related eligibility determinations, and the implications for
disenrollment will provide transparency and stability for interested
parties about the MA and Part D programs and about plan service area
[[Page 30584]]
requirements for the MA and Part D programs.
These proposals are a codification of longstanding MA and Part D
sub-regulatory guidance and there is no impact to the Medicare Trust
Fund. Because an individual may elect an MA or Part D plan only during
an election period and may continue enrollment in an MA or Part D plan
only if the individual resides in the plan service area, or for some MA
plans, the plan continuation area, MA organizations and Part D plan
sponsors already have procedures in place to determine the election
period(s) for which an applicant is eligible and to determine the point
at which an enrollee is no longer eligible for the plan and must be
disenrolled. Our proposal would not add to existing enrollment and
disenrollment processes, so we believe any burden associated with these
aspects of enrollment and disenrollment processing would remain
unchanged from the current practices and would not impose any new
requirements or burden. All information impacts related to the
determination of eligibility for an election period and to the
disenrollment of individuals who become ineligible for an MA or Part D
plan based on the residency requirements have already been accounted
for under OMB control numbers 0938-0753 (CMS-R-267) for Part C and
0938-0964 (CMS-10141) for Part D.
We received no comments on our proposal. Except for a minor change
to the organization of the regulation text for 423.38(c)(7), we are
finalizing the proposal without modification for the reasons outlined
here and in the proposed rule.
L. Codify the Term ``Whole Calendar Months'' (Sec. Sec. 422.74 and
423.44)
Section 1851(g)(3)(B)(i) of the Act provides that an MA
organization may involuntarily terminate an individual's election in an
MA plan if monthly basic and supplemental beneficiary premiums are not
paid timely and provides for a grace period for payment of such
premiums. Consistent with this section of the Act, the Part C
regulations set forth our requirements with respect to optional
involuntary disenrollment procedures under Sec. 422.74.
The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (MMA) (Pub. L. 108-173) enacted the Medicare Advantage (MA)
program, which replaced the M+C program established under title XVIII
of the Act and amended title XVIII of the Act to add a new Part D
(Voluntary Prescription Drug Benefit Program). Section 1860D-
1(b)(1)(B)(v) of the Act specifies that in establishing a process for
Part D enrollment, disenrollment, termination, and change of enrollment
of Part D eligible individuals in prescription drug plans, the
Secretary shall use rules similar to (and coordinated with) the rules
for an MA plan established under section 1851(g) (other than paragraph
(2) of such section and clause (i) and the second sentence of clause
(ii) of paragraph (3)(C) of such section) of the Act. Consistent with
these sections of the Act, the Part D regulations set forth our
requirements with respect to optional involuntary disenrollment
procedures under Sec. 423.44.
In 2010, CMS amended the Part C and Part D regulations regarding
optional involuntary disenrollment for nonpayment of premiums to
require a minimum grace period of 2 months before any disenrollment
occurs. These requirements were codified at Sec. 422.74(d)(1)(i)(B)(1)
(75 FR 19804) and Sec. 423.44(d)(1)(iii)(A) (75 FR 19816). CMS also
revised these regulations to include the requirement that the grace
period begin on the first day of the month for which the premium is
unpaid or the first day of the month following the date on which
premium payment is requested, whichever is later. These regulations
were codified at Sec. 422.74(d)(1)(i)(B)(2) (75 FR 19804) and Sec.
423.44(d)(1)(iii)(B) (75 FR 19816).
In subsequent sub-regulatory guidance in section 50.3.1, Chapter 2
of the Medicare Managed Care Manual and section 50.3.1, Chapter 3 of
the Medicare Prescription Drug Benefit Manual, we defined the grace
period for nonpayment of plan premium as a whole number of calendar
months, not fractions of months. As the term ``whole calendar months''
is not specifically mentioned in the Part C and Part D regulations, we
proposed to revise Sec. Sec. 422.74(d)(1)(i)(B)(1) and
423.44(d)(1)(iii)(A) to include the requirement that the grace period
be at least 2 whole calendar months, to begin on the first day of the
month for which the premium is unpaid or the first day of the month
following the date on which premium payment is requested, whichever is
later.
Plan sponsors that have chosen to disenroll individuals based on
unpaid premiums already have procedures in place to implement a grace
period that is a minimum of 2 months in length. Based on infrequent
complaints or questions from MA organizations and Part D sponsors, we
believe that plans are complying with this guidance, and we did not
propose any changes to the requirements or process for involuntary
disenrollment that plan sponsors have previously implemented and are
currently following. All burden impacts of these provisions have
already been accounted for under OMB control number 0938-0753 (CMS-R-
267) for Part C and OMB control number 0938-0964 (CMS-10141). There is
also no impact to the Medicare Trust Fund.
We received no comments on our proposal. For the reasons outlined
here and in the proposed rule, we are finalizing this proposal without
modification.
M. Researching and Acting on a Change of Address (Sec. Sec. 422.74 and
423.44)
As discussed in our proposal for Developing Addresses for Members
Whose Mail is Returned as Undeliverable and SEP for Changes in
Residence (Sec. Sec. 422.62, 422.74, 423.38, 423.44), section
1851(b)(1)(A) of the Act provides that an individual is eligible to
elect an MA plan only if the plan serves the geographic area in which
the individual resides, and section 1860D-1(b)(1)(B) of the Act
generally directs CMS to use rules related to enrollment,
disenrollment, and termination for Part D sponsors that are similar to
those established for MA organizations under section 1851(b)(1)(A) of
the Act.
Pursuant to regulations at Sec. 422.74(c) for MA and Sec.
423.44(c) for Part D, MA organizations and Part D plan sponsors are
currently required to issue a disenrollment notice when an enrollee is
disenrolled for not residing in the plan service area. Existing sub-
regulatory guidance includes a requirement that MA organizations and
Part D plan sponsors issue the disenrollment notice within 10 days of
the plan learning of the permanent move. See Sec. 50.2.1.5 of Chapter
2 of the Medicare Managed Care Manual for MA and Sec. 50.2.1.6 of
Chapter 3 of the Medicare Prescription Drug Benefit Manual,
respectively. In the case of MA plan enrollees who are disenrolled
because they are absent from the service area for more than six months,
the disenrollment notice must be provided within the first ten calendar
days of the sixth month of such absence. Individuals enrolled in MA
plans that offer a visitor/traveler benefit are permitted an absence
from the service area for up to 12 months; such individuals are
disenrolled if their absence from the service area exceeds 12 months
(or the length of the visitor/traveler program if less than 12 months).
In this scenario, the MA organization must provide notification of the
upcoming disenrollment to the enrollee during the first ten calendar
days of the 12th month (or the last month of the allowable absence, per
the visitor/
[[Page 30585]]
traveler program). PDP enrollees are disenrolled if they are absent
from the plan service area for more than 12 months. For these cases,
the disenrollment notice must be provided within the first 10 calendar
days of the 12th month of such absence. For instances in which a plan
learns of an individual's absence from the service area after the
expiration of the period of time allowed under the applicable
regulation, the plan would provide the disenrollment notice within 10
calendar days of learning of the absence.
Although we have previously codified the requirement to issue a
disenrollment notice when an individual is disenrolled due to an
extended absence from the plan service area, or a change in residence
to a location outside the service area, the 10-day timeframe for
issuing that notice is reflected only in sub-regulatory guidance. We
proposed to amend the MA and Part D plan disenrollment notification
requirements to include the 10-day timeframe that is currently
reflected in sub-regulatory guidance. Specifically, we proposed to
codify at Sec. 422.74(d)(4)(iv) and at Sec. 423.44(d)(5)(i) and
(d)(5)(ii) a timeliness requirement of 10 calendar days for issuing
notices for disenrollments based on the residency requirements.
Separate from the disenrollment notification requirements described in
the preceding paragraphs is a documentation retention requirement
currently reflected in Sec. 50.2.1.3 of Chapter 2 of the Medicare
Managed Care Manual for MA and in Sec. 50.2.1.3 of Chapter 3 of the
Medicare Prescription Drug Benefit Manual. It has been CMS policy that
MA organizations and Part D plan sponsors document their efforts to
determine whether an enrollee has relocated out of the plan service
area or has been absent from the service for a period of time in excess
of what is allowed; however, our expectation that plans document their
research efforts, although outlined in sub-regulatory guidance, is not
codified. As such, we proposed to amend the MA and Part D regulations
to include the requirement that plans document their efforts to
determine an enrollee's residency status.
We proposed to codify at Sec. 422.74(d)(4)(i) and at Sec.
423.44(d)(5)(i) and (d)(5)(ii) that MA organizations and Part D plan
sponsors, respectively, must document the basis for involuntary
disenrollment actions that are based on the residency requirements.
The intent of our proposal was to codify current disenrollment
notice policy, as reflected in Sec. 50.2.1.5 of Chapter 2 of the
Medicare Managed Care Manual for MA and in Sec. 50.2.1.6 of Chapter 3
of the Medicare Prescription Drug Benefit Manual, and also codify the
documentation policy that is reflected in Sec. 50.2.1.3 of Chapter 2
of the Medicare Managed Care Manual for MA and in Sec. 50.2.1.3 of
Chapter 3 of the Medicare Prescription Drug Benefit Manual, all of
which are policies that are already being carried out by MA
organizations and Part D plan sponsors. Codifying these policies
regarding notification of disenrollment and document retention will
provide transparency and stability for interested parties about the MA
and Part D programs and about the nature and scope of these
notification and retention policies.
These proposals are a codification of longstanding MA and Part D
sub-regulatory guidance and there is no impact to the Medicare Trust
Fund. MA organizations and Part D plan sponsors already have procedures
in place to provide disenrollment notifications and to retain
documentation related to such disenrollments. Our proposal would not
add to existing processes, so any burden associated with this aspect of
disenrollment processing and document retention would remain unchanged
from current practices and would not impose any new requirements or
burden. All information impacts related to these existing practices
have already been accounted for under OMB control numbers 0938-0753
(CMS-R-267) for Part C and 0938-0964 (CMS-10141) for Part D.
We received no comments on our proposal. For the reasons outlined
here and in the proposed rule, we are finalizing this proposal without
modification.
N. Part D Retroactive Transactions for Employer/Union Group Health Plan
(EGHP) Members (Sec. Sec. 423.32 and 423.36)
Section 1860D-1(b) of the Act establishes the enrollment and
disenrollment process for Part D-eligible individuals in prescription
drug plans. This section of the Act grants the Secretary the authority
to establish a process for the enrollment, disenrollment, termination,
and change of enrollment of Part D eligible individuals in prescription
drug plans. In January 2005, the Part D implementing regulations
established the enrollment and disenrollment processes for Part D
prescription drug plans. The enrollment and disenrollment processes for
prescription drug plans are codified in regulation at Sec. Sec. 423.32
and 423.36, respectively (70 FR 4525).
Section 1860D-1(b)(1)(B) of the Act directs the Secretary to adopt
Part D enrollment rules ``similar to,'' and coordinated with, those
under Part C. In 1998, Part C implementing regulations (and subsequent
correcting regulations) added the requirement that allowed an exception
for employer/union group health plan (EGHP) sponsors to process
election forms for Medicare-entitled group members (63 FR 52612, 63 FR
35071). These requirements were codified in the Part C regulations but
were not codified in the Part D regulations.
We proposed to codify this existing policy to provide transparency
and ensure consistency between the Part C and Part D programs.
Specifically, we proposed at new Sec. Sec. 423.32(i) and 423.36(e) to
permit a Part D plan sponsor that has a contract with an employer or
union group to arrange for the employer or union to process enrollment
and disenrollment elections for Medicare-entitled group members who
wish to enroll in or disenroll from an employer or union sponsored Part
D plan. As outlined in sections 60.5.1 and 60.5.2 of Chapter 3 of the
Medicare Prescription Drug Benefit Manual, retroactive enrollments and
disenrollments are permitted for up to 90 days to conform to the
payment adjustments described under Sec. Sec. 422.308(f)(2) and
423.343(a). In addition, to obtain the retroactive effective date of
the election, the individual must certify receipt of the group
enrollment notice materials that include the summary of benefits
offered under the PDP, as provided in sections 40.1.6 and 60.5 of
Chapter 3 of the Medicare Prescription Drug Benefit Manual. Once the
enrollment or disenrollment election is received from the employer, the
Part D plan sponsor must submit the disenrollment to CMS within the
specified timeframes described in section 60.5 of Chapter 3 of the
Medicare Prescription Drug Benefit Manual.
Our intent is to align the Part D regulation with the requirements
that MA organizations follow in existing Part C regulations at
Sec. Sec. 422.60(f) and 422.66(f) and codify existing policies in the
sub-regulatory guidance in Chapter 3 of the Medicare Prescription Drug
Benefit Manual. Under section 60.5 of Chapter 3 of the Medicare
Prescription Drug Benefit Manual, retroactive transactions may be
necessary and are permitted if a delay exists between the time the
individual completes the enrollment or disenrollment request through
the employer's election process and when the request is received by the
Part D plan sponsor. Further, we state in current sub-regulatory
guidance at section 60.5.1 of Chapter 3 of the
[[Page 30586]]
Medicare Prescription Drug Benefit Manual that the option to submit
limited EGHP retroactive enrollment and disenrollment transactions is
to be used only for the purpose of submitting a retroactive enrollment
into an EGHP made necessary due to the employer's delay in forwarding
the completed enrollment request to the Part D plan sponsor.
This is a codification of existing Part D sub-regulatory guidance
and there is no impact to the Medicare Trust Fund. Based on infrequent
complaints and questions from plans and beneficiaries related to
current policies, which have been previously implemented and are
currently being followed by plans, we concluded that there is no
additional paperwork burden. All information impacts related to this
provision have already been accounted for under OMB control numbers
0938-1378 (CMS-10718) for Part D enrollment requests and 0938-0964
(CMS-10141) for Part D disenrollment requests.
We did not receive comments related to this proposal. For the
reasons outlined here and in the proposed rule, we are finalizing this
proposal without modification.
O. Drug Management Program (DMP) Appeal Procedures (Sec. 423.562)
We proposed a technical change at Sec. 423.562(a)(1)(v) to remove
discretionary language as it relates to a Part D plan sponsor's
responsibility to establish a DMP under Sec. 423.153(f) with appeal
procedures that meet the requirements of subpart M for issues that
involve at-risk determinations. This eliminates discretionary language
and improves consistency with Sec. 423.153(f), which requires each
Part D plan sponsor to establish and maintain a DMP and include appeal
procedures that meet the requirements of subpart M for issues involving
at-risk determinations. This is strictly a technical change to the
wording at Sec. 423.562(a)(1)(v) and does not impact the underlying
burden related to processing appeals of at-risk beneficiaries. This
change is not expected to have an economic impact beyond current
operating expenses, and there is no paperwork burden or associated
impact on the Medicare Trust Fund.
We did not receive comments on this proposal. For the reasons
outlined here and in the proposed rule, we are finalizing the proposal
as proposed.
P. Revise Initial Coverage Election Period Timeframe To Coordinate With
A/B Enrollment (Sec. 422.62)
Section 4001 of the Balanced Budget Act of 1997 (Pub. L. 105-33)
added sections 1851 through 1859 to the Social Security Act (the Act),
establishing Part C of the Medicare program known originally as M+C and
later as Medicare Advantage (MA). As enacted, section 1851(e) of the
Act establishes specific parameters in which elections can be made and/
or changed during enrollment and disenrollment periods under the MA
program. Specifically, section 1851(e)(1) of the Act requires that the
Secretary specify an initial coverage election period (ICEP) during
which an individual who first becomes entitled to Part A benefits and
enrolled in Part B may elect an MA plan. The statute further stipulates
that if an individual elects an MA plan during that period, coverage
under the plan will become effective as of the first day on which the
individual may receive that coverage. Consistent with this section of
the Act, in the ``Medicare Program; Establishment of the
Medicare+Choice Program'' interim final rule with comment period which
appeared in the Federal Register on June 26, 1998, (herein referred to
as the June 1998 interim final rule), CMS codified this policy at Sec.
422.62(a)(1) (63 FR 35072).
In order for an individual to have coverage under an MA plan,
effective as of the first day on which the individual may receive such
coverage, the individual must elect an MA plan before he or she is
actually entitled to Part A and enrolled in Part B coverage. Therefore,
in the June 1998 interim final rule CMS codified the ICEP to begin 3
months prior to the month the individual is first entitled to both Part
A and enrolled in Part B and ends the last day of the month preceding
the month of entitlement (63 FR 35072).
Section 102 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) revised section
1851(e)(1) of the Act to provide for an ICEP for MA that ends on the
later of, the day it would end under pre-MMA rules as described above,
or the last day of an individual's Medicare Part B Initial Enrollment
Period (IEP). This approach extended an individual's ICEP which helped
to ensure that an individual who uses their IEP to enroll in Medicare
Part A and B has the opportunity to elect an MA or MA prescription drug
(MA-PD) plan following their first entitlement to Part A and enrollment
in Part B. Consistent with the revised provisions of section 1851(e)(1)
of the Act, CMS codified this policy at Sec. 422.62(a)(1) in the
Medicare Program; Establishment of the Medicare Advantage Program final
rule which appeared in the Federal Register on January 28, 2005 (70 FR
4717).
As described in Sec. 422.50(a)(1), eligibility for MA or MA-PD
enrollment generally requires that an individual first have Medicare
Parts A and B and meet all other eligibility requirements to do so. The
ICEP is the period during which an individual newly eligible for MA may
make an initial enrollment request to enroll in an MA or MA-PD plan.
Currently, once an individual first has both Parts A and B, their ICEP
begins 3 months immediately before the individual's first entitlement
to Medicare Part A and enrollment in Part B and ends on the later of:
1. The last day of the month preceding entitlement to Part A and
enrollment in Part B; or
2. The last day of the individual's Part B IEP.
Individuals who want to enroll in premium-Part A, Part B, or both,
must submit a timely enrollment request during their IEP, the General
Enrollment Period (GEP), or an existing special enrollment period (SEP)
for which they are eligible. Eligible individuals may choose to enroll
in both Part A and B during their first opportunity, that is, during
their IEP. These individuals have an ICEP as described in Sec.
422.62(a)(1)(ii), that is, they can choose to enroll in an MA plan
(with or without drug coverage) at the time of, or after, they have
both Part A and B, up until the last day of their IEP. However, not all
individuals enroll in both Part A and B during their IEP. Other
individuals, such as those who are working past age 65, may not have
both Part A and B for the first time until after their IEP. These
individuals may only have Part A and/or B for the first time when they
use an SEP or a future GEP to enroll. To note, prior to January 1,
2023, individuals who enrolled in Part A and/or Part B during the GEP
had a universal effective date of July 1st. These individuals had an
ICEP as described in Sec. 462.22(a)(1)(i), that is, the ICEP started
April 1st and ended June 30th. Although these individuals had to decide
whether to enroll in an MA or MA-PD plan prior to their July 1st
effective date, they did have time to consider their options, as the
GEP is January 1st-March 31st annually, and their enrollment in Part B,
(and Part A if applicable), was not effective until July 1st. However,
the Consolidated Appropriations Act, 2021, (CAA) (Pub. L. 116-260),
revised sections 1838(a)(2)(D)(ii) and 1838(a)(3)(B)(ii) of the Act to
provide that for individuals who enroll during the GEP in a month
beginning on or after January 1, 2023, their entitlement would begin
with the first day of the month following the month in which they
enroll. For
[[Page 30587]]
example, if an individual has Part A, but enrolls in Part B in March,
during the GEP, they would first have both Part A and Part B effective
April 1st. Although this provides for an earlier Medicare effective
date, the individual's ICEP would occur prior to that Medicare
effective date, that is, as described in Sec. 422.62(a)(1)(i) above,
and they no longer have that additional time to consider their options.
Currently, the individuals described above have an ICEP as
described in Sec. 422.62(a)(1)(i) and can only enroll in an MA plan
(with or without drug coverage) prior to the effective date of their
Part A and B coverage. For example, an individual's 65th birthday is
April 20, 2022, and they are eligible for Medicare Part A and Part B
beginning April 1, 2022. They have premium-free Part A; however, the
individual is still working, and has employer health insurance, so they
decide not to enroll in Part B during their IEP. The individual retires
in April 2023, and enrolls in Part B effective May 1, 2023 (using a
Part B SEP). The individual's ICEP would be February 1st through April
30, 2023. These individuals need to decide if they want to receive
their Medicare coverage through an MA plan prior to the effective date
of their enrollment in both Part A and B. In this example, the
individual would have to enroll in an MA plan using the ICEP by April
30, 2023.
Section 422.62(a)(1) was intended to provide beneficiaries who
enroll in both Part A and Part B for the first time with the
opportunity to elect an MA plan at the time that both their Part A and
B coverage were effective. However, in practice, individuals described
above, who do not enroll in Part B during their IEP, do not have an
opportunity to elect to receive their coverage through an MA plan after
their Part A and B coverage goes into effect. When an individual
enrolls in both Part A and B for the first time using an SEP or the
GEP, they have to determine, prior to the start of their coverage, if
they want to receive their coverage through Original Medicare or an MA
plan prior to the effective date of their Part A and B coverage. If
they do not use their ICEP to enroll in an MA plan prior to when their
Part A and B coverage becomes effective, they lose the opportunity to
enroll in an MA plan to receive their Medicare coverage and will
generally have to wait until the next enrollment period that is
available to them to choose an MA plan.
To provide more flexibility, we proposed to revise the end date for
the ICEP for those who cannot use their ICEP during their IEP. That is,
we proposed in Sec. 422.62(a)(1)(i) that an individual would have an
opportunity to enroll in an MA plan (with or without drug coverage)
using their ICEP until the last day of the second month after the month
in which they are first entitled to Part A and enrolled in Part B.
Under proposed Sec. 422.62(a)(1)(i), the individual's ICEP would begin
3 months prior to the month the individual is first entitled to Part A
and enrolled in Part B and would end on the last day of the second
month after the month in which the individual is first entitled to Part
A and enrolled in Part B. Using the example above, we are proposing
that the individual's ICEP would be February 1st through June 30, 2023,
instead of February 1st to April 30th. As described in Sec.
422.68(a)(1), if an election is made prior to the month of entitlement
in both Part A and Part B, the MA election would be effective as of the
first date of the month that the individual is entitled to both Part A
and Part B.
We believed that extending the timeframe for the ICEP under Sec.
422.62(a)(1)(i) would provide beneficiaries that are new to Medicare
additional time to decide if they want to receive their coverage
through an MA plan. We believed that extending this timeframe would
help those new to Medicare to explore their options and select coverage
that best suits their needs and reduce the number of instances where an
individual inadvertently missed their ICEP and has to wait until the
next open enrollment period to enroll in MA or MA-PD plan. This also
supports President Biden's April 5, 2022 Executive Order on Continuing
to Strengthen Americans' Access to Affordable, Quality Health
Coverage,107 which, among other things, requires agencies to
examine policies or practices that make it easier for all consumers to
enroll in and retain coverage, understand their coverage options and
select appropriate coverage, and also examine policies or practices
that strengthen benefits and improve access to health care providers.
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This proposed change in the ICEP timeframe aligned with the SEP
timeframe that we have established in Sec. 422.62(b)(10), for
individuals to enroll in an MA or MA-PD plan when their Medicare
entitlement determination is made for a retroactive effective date, and
the individual has not been provided the opportunity to elect an MA or
MA-PD plan during their ICEP. It also aligned with the timeframe we
have established in Sec. 422.62(b)(26), effective January 1, 2024, for
an individual to enroll in an MA plan when they enroll in Part A and/or
Part B using an exceptional condition SEP, as described in Sec. Sec.
406.27 and 407.23.
This final rule would extend the timeframe of an existing
enrollment period, but we noted it would not result in a new or
additional paperwork burden since MA organizations are currently
assessing applicants' eligibility for election periods as part of
existing enrollment processes. All burden impacts of these provisions
have already been accounted for under OMB control number 0938-1378
(CMS-10718). Similarly, we did not believe the proposed changes would
have any impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
Comment: All commenters supported our proposed policy to extend the
ICEP for those individuals who are first entitled to Part A and
enrolled in Part B and did not enroll in Part A and B during their IEP.
Many commenters stated this extended timeframe would provide
beneficiaries more time to evaluate their options for coverage. Another
commenter said this additional enrollment allowance will be welcome by
many beneficiaries who are still learning and adjusting to the Medicare
program. A commenter added that this additional time would allow
beneficiaries to consider the benefits of MA enrollment, including care
coordination services and the availability of supplemental benefits. A
commenter added that expanding the opportunity for beneficiaries to
choose the appropriate plan ensures that they will more likely be
satisfied with their plan choice and coverage options. Another
commenter added that this additional time will also provide Medicare
Advantage Organizations (MAOs) with additional opportunity to further
educate individuals on what options are available to them.
Response: We agree and thank the commenters for their support.
Comment: A commenter asked CMS to explain how the new proposed ICEP
timeframe is different from the SEP that provides individuals with 2
months to elect a stand-alone Part D Plan or MA plan once their retiree
or current employer group health plan ends.
Response: An SEP exists for individuals disenrolling from employer
sponsored coverage (including COBRA coverage) to elect an MA plan (with
or without drug coverage) or a Part D plan (Sec. Sec. 422.62(b)(4) and
423.38(c)(11)). This SEP is only for use in accordance with
[[Page 30588]]
an individual's change in employer coverage and ends 2 months after the
month the employer or union coverage ends. The ICEP is not limited for
use based on the gain or loss of employer or union sponsored coverage.
It is a universal election period available to all individuals to elect
an MA plan (with or without prescription drug coverage) starting 3
months immediately before the individual's first entitlement to both
Medicare Part A and Part B and will end, as proposed, the last day of
the second month after the month in which the individual is first
entitled to Part A and enrolled in Part B or the last day of the
individual's Part B IEP, whichever is later.
Comment: Although they support our proposal to extend the timeframe
for the ICEP, several commenters recommended alternate timeframes for
the end of the ICEP. The commenters encouraged CMS to consider
extending the proposed ICEP timeframe to end 3 full months after the
month the individual is first entitled to Part A and enrolled in Part
B. This timeframe would mirror the current IEP, wherein an individual
would have a total of 7 months (prior to, at the time of, and after
their first entitlement to Part A and enrollment in Part B) to consider
their enrollment choice. The commenters stated that, due to the complex
decision- making that must take place during these initial coverage
situations, individuals newly eligible for Medicare would benefit
greatly from additional time and that this timeframe would simplify
policy since it would mirror the current IEP. A commenter suggested
that CMS consider extending the ICEP timeframe to mirror the Medicare
Advantage Open Enrollment Period (MA OEP), that is, to end on the last
day of the third month that the individual is first entitled to Part A
and enrolled in Part B, which would be a total of 6 months.
Response: We thank the commenters for their suggestions. We
considered various ending dates when we proposed to extend the ICEP
timeframe. As stated in the proposed rule, the proposed change in the
ICEP timeframe aligns with the SEP timeframe that we established in
Sec. 422.62(b)(10) for individuals to enroll in an MA or MA-PD plan
when their Medicare entitlement determination is made for a retroactive
effective date and the individual has not been provided the opportunity
to elect an MA or MA-PD plan during their ICEP. It also aligns with the
timeframe we established in Sec. 422.62(b)(26) for an individual to
enroll in an MA or MA-PD plan when they enroll in Part A and/or Part B
using an exceptional condition SEP which was recently codified in the
April 2023 final rule (88 FR 22328).
The proposed timeframe to extend the ICEP will provide individuals
a total of 5 months to consider how they want to receive their Medicare
coverage. We believe this timeframe is adequate for beneficiaries to
decide if they want to receive their coverage through Original Medicare
or an MA plan and to select a plan that meets their needs. To note,
individuals also have ample opportunities to change plans outside of
the ICEP, including the MA OEP, the Annual Coordinated Election Period,
or any SEP for which they are eligible.
Comment: Several commenters expressed support for the proposed
changes to the ICEP timeframe, but provided feedback on areas that were
not addressed in the proposed rule. A commenter stated that
beneficiaries in traditional Medicare should have an opportunity to
change stand-alone Part D plans during the first 3 months of the year--
an option that is available to people who wish to change MA plans
through the MA OEP. The commenter also stated that federal Medigap
rights should be expanded to allow individuals to purchase such plans
on at least an annual basis. Another commenter asked CMS to simplify
the enrollment and plan selection processes--including by modernizing
consumer tools, notifying people approaching Medicare eligibility about
enrollment rules and timelines, and ensuring agency communications
clearly explain the trade-offs between Original Medicare and MA.
Response: We thank the commenters for their support of the change
to the ICEP timeframe, but we note that these recommendations are
outside of the scope of this rulemaking.
After consideration of all public comments, we are finalizing our
proposal to revise Sec. 422.62(a)(1)(i) without modification.
Q. Enhance Enrollees' Right To Appeal an MA Plan's Decision To
Terminate Coverage for Non-Hospital Provider Services (Sec. 422.626)
Medicare Advantage (MA) enrollees have the right to a fast-track
appeal by an Independent Review Entity (IRE) when their covered skilled
nursing facility (SNF), home health, or comprehensive outpatient
rehabilitation facility (CORF) services are being terminated. The
regulations for these reviews at the request of an MA enrollee are
located at 42 CFR 422.624 and 422.626. Section 422.624 requires these
providers of services to deliver a standardized written notice to the
enrollee of the MA organization's decision to terminate the provider's
services for the enrollee. This notice, called the Notice of Medicare
Non-Coverage (NOMNC), must be furnished to the enrollee before services
from the providers are terminated. The NOMNC informs enrollees of their
right to a fast-track appeal of the termination of these provider
services and how to appeal to the IRE. CMS currently contracts with
certain Quality Improvement Organizations (QIOs) that have contracts
under Title XI, Part B and section 1862(g) of the Act to perform as the
IRE for these specific reviews. Specifically, the Beneficiary and
Family Centered Care QIOs (BFCC QIOs) are the type of QIO that
currently performs these reviews. There is a parallel appeal process in
effect for Medicare beneficiaries in Original Medicare (42 CFR Part
Sec. Sec. 405.1200 and 405.1202).
Presently, if an MA enrollee misses the deadline to appeal as
stated on the NOMNC, the appeal is considered untimely, and the
enrollee loses their right to a fast-track appeal to the QIO. Enrollees
may, instead, request an expedited reconsideration by their MA plan, as
described in Sec. 422.584. The QIO is unable to accept untimely
requests from MA enrollees but does perform appeals for untimely
requests from Medicare beneficiaries in Original Medicare as described
at Sec. 405.1202(b)(4).
Further, MA enrollees forfeit their right to appeal to the QIO if
they leave a facility or otherwise end services from one of these
providers before the termination date listed on the NOMNC, even if
their appeal requests to the QIO are timely. (The MA enrollee retains
the right to appeal to their MA plan in such cases because the decision
to terminate the services is an appealable organization determination
per Sec. 422.566(b)(3).) Beneficiaries in Original Medicare retain
their right to appeal to the QIO, regardless of whether they end
services before the termination date on the NOMNC.
We proposed to modify the existing regulations regarding fast-track
appeals for enrollees when they untimely request an appeal to the QIO,
or still wish to appeal after they end services on or before the
planned termination date. As noted in the proposed rule, these changes
would bring the MA program further into alignment with Original
Medicare regulations and procedures for the parallel appeals process.
Finally, these changes were recommended by interested parties in
comments to a previous rulemaking (CMS-4201-P, February 27, 2022).
[[Page 30589]]
Specifically, the changes would (1) require the QIO, instead of the
MA plan, to review untimely fast-track appeals of an MA plan's decision
to terminate services in an HHA, CORF, or SNF; and (2) allow enrollees
the right to appeal the decision to terminate services after leaving a
SNF or otherwise ending covered care before the planned termination
date. The proposed changes are modeled after the parallel process in
effect for Original Medicare at 42 CFR 405.1200 through 405.1202.
To implement these changes, we proposed to revise Sec.
422.626(a)(2) to specify that if an enrollee makes an untimely request
for a fast-track appeal, the QIO will accept the request and perform
the appeal. We also specified that the IRE decision timeframe in Sec.
422.626(d)(5) and the financial liability provision in Sec. 422.626(b)
would not apply.
Secondly, we proposed removing the provision at Sec. 422.626(a)(3)
that prevents enrollees from appealing to the QIO if they end their
covered services on or before the date on their termination notice,
even in instances of timely requests for fast-track appeals. Removal of
this provision preserves the appeal rights of MA enrollees who receive
a termination notice, regardless of whether they decide to leave a
provider or stop receiving their services.
This proposed expedited coverage appeals process would afford
enrollees in MA plans access to similar procedures for fast-track
appeals as for beneficiaries in Original Medicare in the parallel
process. Untimely enrollee fast-track appeals would be absorbed into
the existing process for timely appeals at Sec. 422.626, and thus,
would not necessitate additional changes to the existing fast-track
process. The burden on MA plans would be minimal and would only require
that MA plans provide notices as required at Sec. 422.626(d)(1) for
these appeals. Further, MA plans would no longer have to perform the
untimely appeals as currently required at Sec. 422.626(a)(2).
Beneficiary advocacy organizations, in comments to previous rulemakings
on this topic, supported changes that would afford enrollees more time
to appeal and afford access to IRE appeals even for untimely requests.
We noted that the burden of conducting these reviews is currently
approved under OMB collection 0938-0953. The proposed changes would
require that untimely fast-track appeals would be performed by the QIO,
rather than the enrollee's health plan; thus, any burden related to
this proposal would result in a shift in fast-track appeals from health
plans to QIOs.
We received the following comments, and our responses follow.
Comment: We received numerous comments on our proposal to require
the BFCC-QIO, instead of the plan, to review untimely fast-track
appeals of a plan's decision to terminate services in an HHA, CORF, or
SNF and to fully eliminate the provision requiring the forfeiture of an
enrollee's right to appeal a termination of services decision when they
leave a SNF or CORF. Nearly all interested parties commenting on this
provision supported these policies. A commenter stated that permitting
enrollees to maintain access to a BFCC-QIO review beyond this timeframe
is important and, as noted in the proposed rule, provides parity with
Original Medicare. Another commenter commended CMS for seeking uniform
appeal rights between MA and Original Medicare and addressing access
disparities, particularly in post-acute care.
Response: We appreciate the widespread support we received for this
proposal and share the commenters' goal of parallel QIO appeals
processes, whenever possible, for MA and Original Medicare. We intend
to continue the current policy of having the BFCC-QIOs perform these
appeals.
Comment: Several commenters suggested that CMS make parallel
changes to Sec. 422.622(a)(5), which pertains to late appeal requests
for expedited appeals for inpatient hospital discharges. Additionally,
a commenter wanted to extend the scope of the fast-track appeals
process to include outpatient services.
Response: We appreciate these suggestions from the commenters and
will take them into consideration for future rulemaking. We believe
that such a change should be adopted only after notice and an
opportunity for the public to comment on such a revision to the
hospital discharge process.
Comment: A few commenters asked that we reflect these new policies
in related beneficiary appeals notices as well as plan materials such
as EOCs, manuals, and other guidance. Another commenter suggested that
CMS engage in efforts to educate enrollees of their appeal rights.
Response: We thank the commenters for their suggestions related to
necessary changes to notices and plan materials resulting from this
provision. We will update manuals and other guidance as well as
beneficiary materials pertaining to appeal rights, as appropriate. In
addition, we will make necessary revisions to the standardized notice,
required under Sec. 422.624, which informs beneficiaries of their
right to a fast-track appeal by an BFCC-QIO. This standardized notice,
the NOMNC, is subject to the Paperwork Reduction Act (PRA) process and
approval by the Office of Management and Budget (OMB), and as such, any
changes made to the NOMNC will be subject to public notice and comment.
Comment: A few commenters asked for clarification on the deadline
to request an untimely appeal and whether the intent is for these MA
provisions to precisely mirror procedures for Original Medicare.
Another commenter recommended that CMS adopt a 60-day deadline for
untimely enrollee appeals to plans.
Response: As finalized in this rule, per Sec. 422.626(a)(2), a QIO
will accept untimely requests for review of the termination of CORF,
HHA or SNF services from enrollees. There is no deadline in this
provision, and this is consistent with the parallel provision for
Original Medicare at Sec. 405.1204(b)(4). Our intent is to conform the
QIO appeal processes for terminations of these provider services for
Original Medicare and MA and to bring the MA appeals process in line
with the parallel reviews for beneficiaries in Original Medicare. To
that end, this provision, by design, mirrors the process for Original
Medicare appeals of this type, set forth at Sec. 405.1204(b)(4),
rather than the process for enrollees set forth at Sec. 422.584, which
has a 60-day deadline to for an enrollee to file an appeal with the MA
plan of an organization determination.
Comment: A commenter requested clarification on BFCC-QIO processing
time for untimely requests. This commenter also asked if an enrollee
could appeal to the plan if the BFCC-QIO decision is unfavorable. If
so, the commenter requested clarification on the applicable processing
timeframes.
Response: We appreciate the request for clarification on QIO
processing timeframes and the interrelationship between QIO and plan
appeals. Under the provisions we are finalizing at Sec. 422.626(a)(2),
a QIO will accept untimely requests from enrollees but the timeframes
under (d)(5) of this section will not apply, as those timeframes
pertain to timely requests. Consistent with the parallel regulations at
Sec. 405.1202(b)(4) for untimely Original Medicare appeals, the QIO
will make its determination as soon as possible. We note that the
provision we are finalizing in this rule has no effect on existing
policy with respect to the MA plan appeals process set forth at
Sec. Sec. 422.582 and 422.584. As per current policy, an enrollee may
appeal to the QIO and the
[[Page 30590]]
plan, but plan appeals deadlines continue as set forth at Sec.
422.582(b).
Comment: A commenter was concerned about perceived implementation
barriers health plans might encounter from these provisions. The
commenter stated that there could be challenges with the availability
of SNF beds and SNF readmissions for patients in rural areas should
they request and receive a favorable BFCC-QIO appeal decision.
Response: We appreciate the commenter's concerns about perceived
access issues particular to rural areas. However, as noted in the
proposed rule, we expect only a very small increase in appeals to the
overall existing appeals volume as a result of this provision. We also
note that the acceptance of untimely appeals is a longstanding policy
of the parallel appeals process for Original Medicare, with no known
challenges regarding access particular to rural providers.
Comment: A commenter asked that we include language to state to
which non-hospital providers these provisions would apply.
Response: As stated in the preamble, the relevant provisions for
these reviews are found at Sec. Sec. 422.624 and 422.626. Section
422.624(a)(1) specifies that providers included in this provision are
skilled nursing facilities, home health agencies, and comprehensive
outpatient rehabilitation facilities. The untimely appeals affected by
the provisions in this final rule are the reviews of the terminations
of services from the providers specified at Sec. 422.624(a)(1).
Section 422.626, which we are amending in this final rule, establishes
the fast appeals for an MA plan's decision to terminate the services
specified in Sec. 422.624. As the non-hospital provider types
applicable to these reviews are already specified, we do not believe
further regulatory revisions are necessary to address this comment.
Comment: A commenter expressed concern that the proposal will
interfere with value based contracting relationships. The commenter
indicated MA plans are familiar with value-based arrangements,
supplemental benefits, and graduated care programs, and thus expressed
concern with removing appeals to the plans from the appeal processes
for terminations of CORF, HHA and SNF services. The commenter also
raised concerns that adding the BFCC-QIO into the process for untimely
fast track appeals adds another party and additional complexity to
conversations requiring high levels of scrutiny and understanding of
the needs of an enrollee. The commenter also maintained there could be
a significant administrative burden created if providers encourage or
``coach'' enrollees to take a default position of appealing termination
decisions. Finally, the commenter indicated these provisions could
expose the patients to longer lengths of inappropriate care and
significant personal liability.
Response: We thank the commenter for their perspective. However, we
do not believe this provision will interfere with value-based
contracting relationships or result in inappropriate care, nor do we
anticipate any changes with respect to the providers' role, including
creation of any incentives to improperly influence an enrollee's
decision on whether to request a fast-track appeal. As we have stated,
this provision solely addresses the allowance for untimely appeals by
enrollees in the current, longstanding process for MA fast-track
appeals of terminations of CORF, HHA and SNF services. These
additional, untimely appeals will be processed under current appeals
procedures. This process, currently applicable to timely fast-track
appeals, already includes QIOs as the entity conducting these
independent reviews. Finally, as stated in the proposed rule, we
estimate a minimal increase of less than 3 percent in the total appeals
volume for this existing appeals process. Thus, we expect no
significant change in the administrative burden in any aspect of the
process or any significant change to overall lengths of stay in the
provider types covered by this provision.
Comment: We received a few comments pertaining to the denial of
care by plans. A commenter requested that we take measures to ensure
that enrollees receive care equivalent to beneficiaries in Original
Medicare with a particular interest in post-acute care. A few
commenters expressed concerns with plans' use of utilization management
guidelines rather than appropriate Medicare coverage criteria. Another
commenter recommended not allowing care to be terminated at all, but
acknowledged this may not be possible within existing statutory or
regulatory frameworks, and supported the enhancement of enrollee's
rights, in the meantime.
Response: We thank the commenters for their thoughts but note that
these issues are outside the scope of this proposal. At the same time,
we do wish to acknowledge that many of the recommendations related to
patient care and prior authorization processes have been recently
addressed in other regulation issued by CMS. See ``Medicare and
Medicaid Programs; Patient Protection and Affordable Care Act;
Advancing Interoperability and Improving Prior Authorization Processes
for Medicare Advantage Organizations, Medicaid Managed Care Plans,
State Medicaid Agencies, Children's Health Insurance Program (CHIP)
Agencies and CHIP Managed Care Entities, Issuers of Qualified Health
Plans on the Federally-Facilitated Exchanges, Merit-Based Incentive
Payment System (MIPS) Eligible Clinicians, and Eligible Hospitals and
Critical Access Hospitals in the Medicare Promoting Interoperability
Program,'' which appeared in the Federal Register on February 8, 2024
(89 FR 8758) that established new requirements for MA organizations
that will enhance the electronic exchange of health care data and
streamline processes related to prior authorization while reducing
overall payer and provider burden and ``Medicare Program; Contract Year
2024 Policy and Technical Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program,
and Programs of All-Inclusive Care for the Elderly.'' which appeared in
the Federal Register on April 12, 2023 (88 FR 22120) that finalized
regulatory changes clarifying when MA organizations may utilize prior
authorization processes, the effect and duration of prior authorization
approvals, and the circumstances under which MA organizations may
utilize internal or proprietary coverage criteria.
Comment: A commenter expressed concern regarding overutilization of
services (specifically reaching or exceeding the 100 days benefit limit
for SNF stays) if this provision is finalized.
Response: We appreciate the concern of the commenter, but do not
agree that finalizing this provision will result in the overutilization
of services. First, if an enrollee requests an untimely appeal of the
termination of SNF coverage and receives a favorable decision by the
QIO, any resulting additional benefits days would demonstrate that the
services meet medical necessity as well as coverage requirements.
Second, favorable QIO decisions do not override any existing Part A SNF
benefit limitations.
Comment: Two commenters requested clarification on plan and
provider responsibilities for appeals affected by this provision.
Specifically, the commenters asked for more information regarding
whether health plans or providers are responsible for producing medical
records for untimely appeals. The commenter also asked whether a plan
would be responsible for days of
[[Page 30591]]
coverage, should the BFCC-QIO rule in favor of the enrollee in the
appeal, and if this would also be true if the enrollee appeals after
leaving a skilled nursing home.
Response: We note that plan and provider responsibilities for these
untimely QIO appeals of terminations of CORF, HHA and SNF services will
be the same as for timely appeals in the current process as set forth
at Sec. Sec. 422.624 through 422.626. Specifically, Sec.
422.626(e)(3) states a plan is responsible for supplying all necessary
medical records to the QIO, once the plan is notified of the appeal.
Should plans wish to delegate this responsibility to contracted
providers, that would be a contracting arrangement and outside the
purview of CMS. However, MA plans remain ultimately responsible for
compliance with this requirement. Plans' financial responsibilities
will continue to be as set forth at Sec. 422.626(b). Among other
requirements, this section requires that coverage of provider services
continues until the date and time designated on the NOMNC, unless the
enrollee appeals and the IRE reverses the plan's decision. If the IRE
reverses the plan's termination decision, coverage of provider services
shall resume or apply in accordance with the QIO's decision, and the
provider must provide the enrollee with a new notice consistent with
Sec. 422.626(b) when the enrollee is still present in the facility.
Comment: A commenter suggested that instruction was needed for
situations where an untimely fast-track appeal request was incorrectly
submitted to the MA plan, rather than to the BFCC-QIO.
Response: We appreciate the commenter's suggestion to revise plan
level guidance related to this provision. Currently, Section 50.2.2 of
the Parts C & D Enrollee Grievances, Organization/Coverage
Determinations, and Appeals Guidance \108\ instructs plans to maintain
a process to distinguish between misdirected requests that should go to
the QIO and valid requests to the plan. We will update the guidance in
this manual section to reflect that untimely requests intended for the
QIO must be included in those appeals that are to be redirected to the
QIO.
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\108\ https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/
Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-
Determinations-and-Appeals-Guidance.pdf.
---------------------------------------------------------------------------
Comment: A commenter recommended additional language to protect
provider contracts and that guidance to require such language be posted
in facilities and included in admission documentation.
Response: We thank the commenter for their comment. However,
without further specifics on which contracts and language to which the
commenter is referring, we are unable to address these recommendations.
We note that we will update the related standardized appeals notice and
Notice of Medicare Non-Coverage (NOMNC) required under Sec. 422.624 as
well as other materials, as appropriate to reflect the changes adopted
in this final rule In addition, Sec. 422.504(i)(4) provides that MA
organizations must ensure that their agreements with related, first
tier, downstream entities, which include providers under contract with
the MA organization to furnish services, clearly identify any delegated
responsibilities. We anticipate that MA organizations will comply with
these requirements to the extent that the changes we are finalizing to
Sec. 422.626 affect the scope of provider duties under their contracts
with MA plans.
Comment: A commenter expressed concerns about whether the BFCC-QIOs
could absorb the potential increase in appeals that may result from
this provision. The commenter suggested that we assess the capacity of
BFCC-QIOs prior to implementation of this provision.
Response: We appreciate the commenter's concerns. We do not
anticipate an appreciable increase in the appeals volume as a result of
this provision. Additionally, we plan to further assess and mitigate as
possible and appropriate any workload impacts of transitioning these
appeals prior to the implementation date.
Comment: A commenter expressed their perception that BFCC-QIOs
uphold nearly all fast-track appeals. The commenter recommended that we
publish BFCC-QIO appeals data and use these metrics for evaluating
BFCC-QIO contracts.
Response: We thank the commenter for sharing their concerns and
recommendations but note that these issues are outside the scope of
this rulemaking.
After consideration of all public comments and for the reasons
outlined in the proposed rule and our response to public comments, we
are finalizing without modification our proposals to amend Sec.
422.626(a)(2) and to remove Sec. 422.626(a)(3).
R. Amendments to Part C and Part D Reporting Requirements (Sec. Sec.
422.516 and 423.514)
CMS has authority under sections 1857(e)(1) and 1860D-12(b)(3)(D)
of the Act to require MA organizations and Part D plan sponsors to
provide CMS ``with such information . . . as the Secretary may find
necessary and appropriate.'' CMS also has authority, in section 1856(b)
of the Act, to establish standards to carry out the MA program.
Likewise, existing CMS regulations cover a broad range of topics
and data to be submitted to CMS. Under these authorities, CMS
established reporting requirements at Sec. Sec. 422.516(a) (Validation
of Part C reporting requirements) and 423.514(a) (Validation of Part D
reporting requirements), respectively. Pursuant to Sec. Sec.
422.516(a) and 423.514(a), each MA organization and Part D plan sponsor
must have an effective procedure to develop, compile, evaluate, and
report information to CMS at the times and in the manner that CMS
requires. In addition, Sec. Sec. 422.504(f)(2) and 423.505(f)(2)
require MA organizations and Part D plan sponsors, respectively, to
submit to CMS all information that is necessary for CMS ``to administer
and evaluate'' the MA and Part D programs and to facilitate informed
enrollment decisions by beneficiaries. Part D plan sponsors are also
required to report all data elements included in all its drug claims by
Sec. 423.505(f)(3). Sections 422.504(f)(2), 422.516(a), 423.505(f)(2),
and 423.514(a) each list general topics of information and data to be
provided to CMS, including benefits, enrollee costs, quality and
performance, cost of operations, information demonstrating that the
plan is fiscally sound, patterns of utilization, information about
beneficiary appeals, and information regarding actions, reviews,
findings, or other similar actions by States, other regulatory bodies,
or any other certifying or accrediting organization.
For many years, CMS has used this authority to collect
retrospective information from MA organizations and Part D plan
sponsors according to the Parts C and D Reporting Requirements that we
issue each year, which can be accessed on CMS's website.\109\ In
addition to the data elements, reporting frequency and timelines, and
levels of reporting found in the Reporting Requirements information
collection documents, CMS also issues Technical Specifications, which
supplement the Reporting Requirements and serve to further clarify data
elements and outline CMS's planned data analyses. The reporting
timelines and required levels
[[Page 30592]]
of reporting may vary by reporting section. While many of the current
data elements are collected in aggregate at the contract level, such as
grievances, enrollment/disenrollment, rewards and incentives, and
payments to providers, the collection of more granular data is also
supported by the regulations. CMS has the ability to collect more
granular data, per the Part C and D Reporting Requirements as set forth
in Sec. Sec. 422.516(a) and 423.514(a), or to collect more timely data
with greater frequency or closer in real-time than we have historically
done. We proposed revisions to update Sec. Sec. 422.516(a) and
423.514(a). Section 422.516 currently provides, ``Each MA organization
must have an effective procedure to develop, compile, evaluate, and
report to CMS, to its enrollees, and to the general public, at the
times and in the manner that CMS requires, and while safeguarding the
confidentiality of the doctor-patient relationship, statistics and
other information.'' We proposed to strike the term ``statistics,'' as
well as the words ``and other,'' with the understanding that the
broader term ``information'' which is already at Sec. 422.516(a),
includes statistics, Part C data, and information on plan
administration. In a conforming proposal to amend Sec. 423.514(a), we
proposed to strike the term ``statistics'' and add ``information.'' CMS
does not interpret the current regulations to limit data collection to
statistical or aggregated data and we used the notice of proposed
rulemaking as an opportunity to discuss our interpretation of these
rules and amend the regulations consistent with our interpretation.
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\109\ Part C Reporting Requirements are at https://www.cms.gov/medicare/health-plans/healthplansgeninfo/reportingrequirements and
Part D Reporting Requirements are at https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/rxcontracting_reportingoversight.
---------------------------------------------------------------------------
Additionally, we proposed to amend Sec. Sec. 422.516(a)(2) and
423.514(a)(2) to make an affirmative change regarding CMS's collection
of information related to what occurs from beginning to end when
beneficiaries seek to get coverage from their Medicare health and drug
plans for specific services. Both Sec. Sec. 422.516(a)(2) and
423.514(a)(2) currently require plans to report ``[t]he patterns of
utilization of services.'' We proposed to amend both sections to read,
``The procedures related to and utilization of its services and items''
to clarify that these regulations authorize reporting and data
collection about MA organizations and Part D plan sponsor procedures
related to coverage, utilization in the aggregate, and beneficiary-
level utilization, including the steps beneficiaries may need to take
to access covered benefits. Such information will ensure that CMS may
better understand under what circumstances plans choose whether to
provide or pay for a service or item.
CMS did not propose to change specific current data collection
efforts through this rulemaking. While Sec. Sec. 422.516(a) and
423.514(a) provide CMS extensive flexibility in the time and manner in
which we can collect data from MA organizations and Part D plan
sponsors, we will continue to address future standardized information
collection of the Parts C and D reporting requirements, as necessary,
through the Office of Management and Budget (OMB) Paperwork Reduction
Act (PRA) process, which would provide advance notice to interested
parties and provides both a 60 and 30 day public comment period on
drafts of the proposed collection.
We do not believe the proposed changes to Sec. Sec. 422.516(a) and
423.514(a) have either paperwork burden or impact on the Medicare Trust
Fund at this time. These proposed changes allow CMS, in the future, to
add new burden to plans in collection efforts; however, any such new
burden associated with a new data collection would be estimated through
the PRA process, as applicable.
We received the following comments, and our responses follow.
Comment: We received several comments in support of the reassertion
of our authority to engage in new or more frequent data collection,
including collection of more granular data from MA organizations and
Part D plan sponsors. The majority of commenters expressed general
support for our proposal to affirm CMS's authority to collect detailed
data from MA organizations and Part D plan sponsors under the Part C
and D reporting requirements. We did not receive any comments objecting
to the reassertion of authority to collect data that we included in the
proposed rule.
Response: We appreciate the comments in support of our proposal.
Comment: In further support of the proposal, many commenters
recommended CMS collect data elements for specific areas of interest,
including data related to enrollee's cost-sharing for Part D
medications, disease modification trends, multiple sclerosis diagnoses
and enrollee demographics, plan referrals to specialists (e.g.,
neurologists), End-Stage Renal Disease (ESRD) services, social
determinants of health (e.g., access to transportation, food
insecurity, need for rental/utility assistance), plan use of prior
authorization in specific settings, length of stays in post-acute care
facilities, rehospitalization rates, qualifications of plan
organization determination and appeal reviewers, plan use of algorithm
and artificial intelligence when making coverage determinations,
Medicaid coverage, pharmacy benefit managers, point-of-sale coverage
decisions, service-level initial determinations, and initial
determination denial rationale. Some commenters also requested we
collect aggregate data elements that are already collected by CMS
through the Parts C and D Reporting Requirements, including initial
determination denials and appeal overturns made by the plan and
Independent Review Entities.
Response: We thank the commenters for the data collection
suggestions. We did not propose to implement changes to specific
current data collection efforts in this rulemaking and would like to
reiterate that any future information collection would be addressed
through the OMB PRA process, as applicable, which would provide advance
notice to interested parties and provides both a 60- and 30-day public
comment period on drafts of the proposed collection.
Comment: Several commenters noted the positive benefit that robust
data collection may generally have on strengthening CMS oversight of MA
organizations and Part D plan sponsors, identifying and reducing
potential gaps in health coverage policy, and ensuring enrollees have
meaningful access to care. Some commenters suggested CMS incorporate
collected data into plan audits and enforcement actions. A number of
commentors also suggested CMS publish collected data on consumer-facing
websites to improve transparency and plan accountability by allowing
beneficiaries to compare plans' performance data.
Response: We appreciate the commenters' support and agree with the
significance of CMS's role in overseeing MA organizations and Part D
plan sponsors to ensure enrollees have continued access to care. We
also agree the collection of more detailed standardized information
from MA organizations and Part D plan sponsors is a necessary step in
improving transparency and data in the MA and Part D programs. We will
take these comments related to increasing oversight and transparency of
the MA and Part D programs into consideration when developing future
processes related to the public sharing of collected plan data.
Comment: A few commenters recommended that CMS consider a further
revision to the proposed language in Sec. 422.516(a), specifically the
term ``doctor-patient relationship.'' A commenter noted that health
care is increasingly delivered by a wider range of roles than just
physicians and recommended that we replace the term
[[Page 30593]]
``doctor-patient'' with ``clinician-patient'' to better reflect the
need for confidentiality between patients and their entire healthcare
team.
Response: We appreciate the commenters' suggestion to modify the
regulation text in Sec. 422.516(a) to reflect the diverse team of
health care professionals who provide care to MA enrollees. While we
did not specifically propose to replace the term ``doctor'' with a more
inclusive term in the introductory text at Sec. 422.516(a), we agree
with this suggestion. Accordingly, we are modifying Sec. 422.516(a) in
this final rule and replacing the term ``doctor-patient relationship''
with ``provider-patient relationship.'' Although commenters suggested
the term ``doctor'' be replaced with ``clinician,'' the term
``provider'' is defined in Sec. 422.2 and used throughout 42 CFR part
422 when describing health care professionals and entities that furnish
health care services to MA enrollees. For example, the regulation text
at Sec. 422.200 explains, in part, that the provisions in Subpart E
govern MA organizations' relationships with providers by setting forth
``requirements and standards for the MA organization's relationships
with providers including physicians, other health care professionals,
institutional providers and suppliers, under contracts or arrangements
or deemed contracts under MA private fee-for-service plans.''
Therefore, replacing ``doctor-patient'' with ``provider-patient'' in
Sec. 422.516(a) will enhance clarity and consistency across regulation
text in Part 422.
Comment: One commenter suggested that for future data collection
efforts CMS utilize notice-and-comment rulemaking instead of the PRA
process to provide stakeholders a greater opportunity to comment on the
future proposal.
Response: We appreciate the commenter's concern that stakeholders
should have opportunity to comment on changes to the MA and Part D
reporting requirements. When applicable, CMS uses notice-and-comment
rulemaking to solicit public comments on proposed information
collection requirements. CMS must also comply with the implementing
regulations of the PRA at 5 CFR 1320.10 (clearance of collections of
information, other than those contained in proposed rules or in current
rules), 1320.11 (clearance of collections of information in proposed
rules), and 1320.12 (clearance of collections of information in current
rules). CMS's compliance with the PRA, when required, allows interested
parties to review and comment on future information collection request
changes via two required public notice and comment periods; that is,
the 60-day and 30-day notice and comment periods.
While 42 CFR 422.516(a) and 423.514(a) \110\ provide CMS extensive
flexibility in the time and manner in which we can require reporting by
(and/or collect data from) MA organizations and Part D plan sponsors,
as explained above, CMS must adhere to the implementing regulations of
the OMB PRA process, when required, including circumstances when CMS
collects data in a standardized format from 10 or more respondents. For
any future information collection applicable to all MA organizations
and Part D plan sponsors or groups larger than 9, we will, as
necessary, use the OMB PRA process when proposing future Parts C and D
reporting requirement changes. The PRA process provides the opportunity
for interested parties to have notice of and comment on future data
collection changes. As we stated in our proposal, the OMB PRA process
provides advance notice to interested parties and provides both a 60-
and 30-day public comment period on drafts of the proposed collection.
Therefore, we believe the PRA process is appropriate and sufficient to
use when establishing any future data collection subject to its terms.
---------------------------------------------------------------------------
\110\ CMS also possesses considerable authority to collect data
and other specific information from MA organizations and Part D plan
sponsors through Sec. Sec. 422.504(f) and 423.505(f).
---------------------------------------------------------------------------
Comment: While indicating overall support for CMS's position, a
commenter requested more clarification on the purpose of increasing
CMS's data collection from MA organizations and Part D plan sponsors
and requested CMS work with the industry to minimize and reduce
reporting burdens. Specifically, the commenter suggested CMS establish
guidelines for its proposal and implement the Part C and D plan
reporting requirements before proposing new collections.
Response: As we explained in the proposed rule, an increase in
detailed data collection would increase transparency as well as CMS's
access to data in the MA and Part D programs. The data currently
acquired through the Parts C and D reporting requirements are often
used for monitoring an MA organization's or Part D plan sponsor's
continued compliance with MA and Part D requirements as well as
evaluating the success of these programs. At times, we may use an
outlier analysis to determine a plan or sponsor's performance relative
to industry standards established by the performance of all other
organizations and sponsors. See Sec. Sec. 422.504(m) and 423.505(n).
Increasing the quality of the data CMS has to support these practices
would enhance our ongoing monitoring and enforcement responsibility for
the MA and Part D programs. Additionally, a comprehensive, high-quality
database of MA and Part D programmatic data will promote more program
transparency and assist our efforts to identify and close potential
gaps in access to care for Medicare beneficiaries enrolled in these
programs.
When creating any new data collection initiative, we will consider
and account for the impact the initiative would have on plans and
sponsoring organizations and will make an effort to avoid creating
excessive burdens, both when necessary to comply with the PRA and as
part of our administration of the programs even if the PRA is not
applicable. Further, in developing additional meaningful future data
collection changes, we are committed to obtaining input from all
interested parties as necessary. As we stated in our proposal, the OMB
PRA process provides advance notice to interested parties and provides
both a 60- and 30-day public comment period on drafts of the proposed
collection. Interested parties will have an opportunity to comment on
specific guidelines for reporting requirements under consideration.
After consideration of all public comments and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing this provision as proposed, with a minor modification at
Sec. 422.516(a) to replace the term ``doctor-patient relationship''
with ``provider-patient relationship''.
S. Amendments To Establish Consistency in Part C and Part D Timeframes
for Filing an Appeal Based on Receipt of the Written Decision
(Sec. Sec. 422.582, 422.584, 422.633, 423.582, 423.584, and 423.600)
We proposed to amend the Parts C and D regulations at Sec. Sec.
422.582(b), 422.584(b), 422.633(d)(1), 423.582(b), 423.584(b) and
423.600(a) with respect to how long an enrollee has to file an appeal
with a plan or the Part D Independent Review Entity (IRE). These
amendments were proposed to ensure consistency with the regulations at
Sec. Sec. 422.602(b)(2), 423.2002(d), 422.608, and 423.2102(a)(3),
applicable to Administrative Law Judge (ALJ) and Medicare Appeals
Council (Council) reviews. These ALJ and Council regulations state or
cross-reference the Medicare FFS regulations at 42 CFR part 405 that
prescribe that the date of
[[Page 30594]]
receipt of the notice of decision or dismissal is presumed to be 5
calendar days after the date of the notice unless there is evidence to
the contrary. We also proposed that these changes apply to integrated
organization determinations and reconsiderations. In addition, because
cost plans are required to comply with the MA appeal regulations
pursuant to Sec. Sec. 417.600 and 417.840, these proposed changes will
also apply to cost plan appeals.
Pursuant to our authority under section 1856(b) and 1860D-12 of the
Act to adopt standards to carry out the Part C and Part D programs, and
in order to implement sections 1852(g)(2) and 1860D-4(g) and (h) of the
Act regarding coverage decisions and appeals, CMS established
procedures and minimum standards for an enrollee to file an appeal
regarding benefits with an MA organization, Part D plan sponsor, and
IREs. These requirements are codified in regulation at 42 CFR parts 422
and 423, subpart M. See also section 1876(c)(5) of the Act regarding
cost plans' obligations to have appeal processes.
Specifically, section 1852(g)(2)(A) of the Act requires that an MA
organization shall provide for reconsideration of a determination upon
request by the enrollee involved. The reconsideration shall be made not
later than 60 days after the date of the receipt of the request for
reconsideration. Section 1860D-4(g)(1) of the Act requires that a Part
D plan sponsor shall meet the requirements of paragraph (2)(A) of
section 1852(g) with respect to providing for reconsideration of a
determination upon request by the enrollee involved.
While section 1852 of the Act does not specify the timeframe in
which an enrollee must request an appeal of an unfavorable organization
determination, integrated organization determination or coverage
determination, the timeframe for filing an appeal in the Part C and
Part D programs is established in regulations. Sections 422.582(b),
422.633(d)(1), and 423.582(b) state that an appeal must be filed within
60 calendar days from the date of the notice issued as a result of the
organization determination, integrated organization determination,
coverage determination, or at-risk determination. Plans are permitted
to extend this filing deadline for good cause.
As noted in the proposed rule, we continue to believe that a 60
calendar day filing timeframe strikes an appropriate balance between
due process rights and the goal of administrative finality in the
administrative appeals process. However, to establish consistency with
the regulations applicable to ALJ and Council reviews with respect to
receipt of the notice of decision or dismissal and how that relates to
the timeframe for requesting an appeal, we proposed to account for a
presumption that it will generally take 5 calendar days for a notice to
be received by an enrollee or other appropriate party. Therefore, we
proposed to revise Sec. Sec. 422.582(b), 422.633(d)(1)(i), 423.582(b),
and 423.600(a) to state that a request for a Part C reconsideration,
Part D redetermination, Part D at-risk redeterminations and Part D IRE
reconsiderations must be filed within 60 calendar days after receipt of
the written determination notice. We also proposed to add new
Sec. Sec. 422.582(b)(1), 422.633(d)(1)(i), and 423.582(b)(1), to
provide that the date of receipt of the organization determination,
integrated organization determination, coverage determination, or at-
risk determination is presumed to be 5 calendar days after the date of
the written organization determination, integrated organization
determination, coverage determination or at-risk determination, unless
there is evidence to the contrary. Based on CMS's experience with
audits and other similar review of plan documents, we realized that it
was standard practice that the date of the written decision notice is
the date the plan sends the notice. The presumption that the notice is
received 5 calendar days after the date of the decision is a long-
standing policy with respect to IRE appeals and has been codified in
regulation at Sec. Sec. 422.602(b)(2), 423.2002(d), and 423.2102(a)(3)
regarding hearings before an ALJ and Council; further, Sec. 422.608
regarding MA appeals to the Medicare Appeals Council provides that the
regulations under part 405 regarding Council review apply to such MA
appeals, which would include the provision at Sec. 405.1102(a)(2) that
applies the same 5 calendar day rule. To ensure consistency throughout
the administrative appeals process, we proposed to adopt this approach
for plan and Part D IRE appeals in Sec. Sec. 422.582(b),
422.633(d)(1), 423.582(b), 423.584 and 423.600(a).
In addition to the aforementioned proposals related to when an
organization determination, integrated organization determination,
coverage determination, or at-risk determination is presumed to be
received by an enrollee of other appropriate party, we also proposed
adding language to Sec. Sec. 422.582, 422.633, 423.582 and 423.600(a)
that specifies when an appeal is considered filed with a plan and the
Part D IRE. Specifically, we proposed to add new Sec. Sec.
422.582(b)(2), 422.633(d)(1)(ii), 423.582(b)(2) and 423.600(a) to
provide that for purposes of meeting the 60 calendar day filing
deadline, the appeal request is considered filed on the date it is
received by the plan, plan-delegated entity or Part D IRE specified in
the written organization determination, integrated organization
determination, coverage determination, at-risk determination, or
redetermination. As stated in the proposed rule, inclusion of when a
request is considered filed would codify what currently exists in CMS's
sub-regulatory guidance and the Part D IRE procedures manual. CMS's
sub-regulatory guidance indicates that a standard request is considered
filed when any unit in the plan or delegated entity receives the
request. An expedited request is considered filed when it is received
by the department responsible for processing it. Pursuant to existing
manual guidance, plan material should clearly state where requests
should be sent, and plan policy and procedures should clearly indicate
how to route requests that are received in an incorrect location to the
correct location as expeditiously as possible.
These proposed revisions related to when a notice is presumed to
have been received would ensure that the time to request an appeal is
not truncated by the time it takes for a coverage decision notice to
reach an enrollee by mail or other delivery method. We noted that if
the proposals were finalized, corresponding changes would be made to
the Part C and Part D standardized denial notices so that enrollees are
accurately informed of the timeframe for requesting an appeal.
We also proposed clarifications to Sec. Sec. 422.584(b) and
423.584(b) to explicitly state the timeframe in which an enrollee must
file an expedited plan appeal for it to be timely. The current text of
Sec. Sec. 422.584 and 423.584 does not include the 60 calendar day
timeframe for filing an expedited appeal request, but as noted in the
proposed rule, CMS manual guidance for Part C and Part D appeals has
long reflected this 60 calendar day timeframe. We also noted that this
timeframe for filing an appeal is consistent with the current
regulations at Sec. Sec. 422.582(b) and 423.582(b) for filing a
request for a standard appeal. Neither sections 1852 and 1860D-4 of the
Act, nor Sec. Sec. 422.584 and 423.584 specify the timeframe in which
an enrollee must request an expedited appeal of an unfavorable
organization determination, coverage determination or at-risk
determination in the Part C and Part D programs. This provision would
codify existing
[[Page 30595]]
guidance. We are certain that plans already comply as this long-
standing policy is reflected in CMS's sub-regulatory guidance \111\ and
standardized denial notices \112\ that explain an enrollee's right to
appeal. Additionally, we had not received any complaints on this
matter. In proposing new Sec. Sec. 422.584(b)(3) and (4) and
423.584(b)(3) and (4), we also proposed to add the procedure and
timeframe for filing expedited organization determinations and coverage
determinations consistent with proposed requirements at Sec. Sec.
422.582(b)(1) and (2) and 423.582(b)(1) and (2).
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\111\ https://www.cms.gov/medicare/appeals-and-grievances/mmcag/downloads/parts-c-and-d-enrollee-grievances-organization-coverage-determinations-and-appeals-guidance.pdf.
\112\ https://www.cms.gov/medicare/medicare-general-information/bni/madenialnotices.
---------------------------------------------------------------------------
If finalized, we believe these proposals will enhance consistency
in the administrative appeals process and provide greater clarity on
the timeframe for requesting an appeal and when an appeal request is
considered received by the plan. Theoretically, the proposed amendments
may result in a small increase in the number of appeals from allowing
65 versus 60 days to appeal an organization determination, integrated
organization determination, coverage determination or at-risk
determination. However, based on the low level of dismissals at the
plan level due to untimely filing, we believe most enrollees who wish
to appeal a denial do so immediately, thereby mitigating the impact of
5 additional days for a plan to accept an appeal request if this
proposal is finalized. Consequently, we do not believe there is an
impact to the Medicare Trust Fund. We solicited interested party input
on the accuracy of this assumption.
We received the following comments, and our responses follow.
Comment: We received several comments in support of extending the
current 60-day timeframe to file an appeal with an MA or Part D plan to
include 5 additional calendar days as proof of receipt of the written
determination notice believing that it expanded beneficiary access to
the appeals process. Commenters appreciated that the additional time
period would also apply to expedited appeal requests, expedited
organization determinations, and coverage determinations, while a few
of the commenters noted that the proposal was consistent with appeals
timeframes in Social Security, SSI, and Medicare more generally, and
provides needed clarity for enrollees and their representatives. A few
commenters also expressed support and stated the proposal reflected the
reality of slower post office delivery times in recent years, as well
extra time needed to forward mail for individuals who have changed
their addresses.
Response: We appreciate the comments in support of our proposal.
Comment: A commenter stated agreement with establishing consistency
in Part C and Part D appeals timeframes, but suggested that instead of
specifying that an appeal request be filed within in 60 calendar days
after receipt of the written determination notice, CMS should instead
require that appeal requests be filed within in 65 calendar days of the
letter date.
Response: We thank the commenter for this recommendation; however,
we decline to revise our proposal because CMS proposed these amendments
to ensure consistency with the regulations at Sec. Sec. 422.602(b)(2),
423.2002(d), 422.608, and 423.2102(a)(3), applicable to Administrative
Law Judge (ALJ) and Medicare Appeals Council (Council) reviews, that
either state or cross-reference the Medicare FFS regulations at 42 CFR
part 405 that prescribe that the date of receipt of the notice of
decision or dismissal is presumed to be 5 calendar days after the date
of the notice, unless there is evidence to the contrary. The commenters
recommendation would not accomplish this consistency.
After consideration of the public comments, and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the revisions to Sec. Sec. 422.582, 422.584, 422.633,
423.582, 423.584, and 423.600 as proposed.
T. Authorized Representatives for Parts C/D Elections (Sec. Sec.
422.60 and 423.32)
Section 1851(c)(1) of the Act gives the Secretary the authority to
establish a process through which MA elections, that is, enrollments
and disenrollments, are made and changed. This authority includes
establishing the form and manner in which elections are made. Section
1860D-1(b)(1)(A) of the Act gives the Secretary the authority to
establish a process for enrollment, disenrollment, termination, and
change of enrollments in Part D prescription drug plans. Likewise,
section 1860D-1(b)(1)(B)(ii) of the Act directs CMS to use rules
similar to those established in the MA context pursuant to 1851(c) for
purposes of establishing rules for enrollment, disenrollment,
termination, and change of enrollment with an MA-PD plan.
Consistent with these sections of the Act, Parts C and D
regulations set forth our election processes under Sec. Sec. 422.60
and 423.32. These enrollment processes require that Part C/D eligible
individuals wishing to make an election must file an appropriate
enrollment form, or other approved mechanism, with the plan. The
regulations also provide information for plans on the process for
accepting election requests, notice that must be provided, and other
ways in which the plan may receive an election on behalf of the
beneficiary.
Though the term ``authorized representative'' is not used in the
context of the statutory provisions within the Act governing MA and
Part D enrollment and eligibility (e.g., sections 1851 and 1860D-1),
``authorized representative''--and other similar terms--are used in
other contexts throughout the Act. Section 1866(f)(3) of the Act
defines the term ``advance directive,'' deferring to applicable state
law to recognize written instructions such as a living will or durable
power of attorney for health care. Section 1862(b)(2)(B)(vii)(IV) of
the Act recognizes that an individual may be represented by an
``authorized representative'' in secondary payer disputes. Section
1864(a) of the Act allows a patient's ``legal representative'' to stand
in the place of the patient and give consent regarding use of the
patient's medical records.
In the June 1998 interim final rule that first established the M+C
program, now the MA program (63 FR 34985), we acknowledged in Part C
enrollment regulations at Sec. 422.60(c) that there are situations
where an individual may assist a beneficiary in completing an
enrollment request and required the individual to indicate their
relationship to the beneficiary. In the Medicare Program; Medicare
Prescription Drug Benefit final rule which appeared in the Federal
Register on January 28, 2005, (70 FR 4193), we first recognized in
Sec. 423.32(b)(i) that an authorized representative may assist a
beneficiary in completing an enrollment request, and required
authorized representatives to indicate that they provided assistance.
In response to public comments about the term ``authorized
representative'' in that rule, we indicated that CMS would recognize
and rely on State laws that authorize a person to effect an enrollment
on behalf of a Medicare beneficiary for purposes of this provision (42
FR 4204). We also stated that the authorized representative would
constitute the ``individual'' for purposes of making the enrollment or
disenrollment request.
[[Page 30596]]
Historically, we have provided the definition and policies related
to authorized representatives in our sub-regulatory manuals.\113\ We
proposed in the November 2023 proposed rule to add new paragraphs
Sec. Sec. 422.60(h) and 423.32(h) to codify our longstanding guidance
on authorized representatives making Parts C and D elections on behalf
of beneficiaries.
---------------------------------------------------------------------------
\113\ This guidance can be found in Chapter 2, Sections 10 and
40.2.1 of the Medicare Managed Care Manual and Chapter 3, Sections
10 and 40.2.1 of the Prescription Drug Benefit Manual.
---------------------------------------------------------------------------
Current regulation in Sec. 423.32(b)(i) acknowledges that an
``authorized representative'' may assist a beneficiary in completing an
enrollment form, but it does not define who an ``authorized
representative'' is. A similar term, ``representative,'' is currently
defined under Sec. Sec. 422.561 and 423.560; however, that definition
is used only in the appeals context and applies only to subpart M of
the MA and Part D regulations. Therefore, we proposed to define the
term ``authorized representative'' for subpart B (eligibility,
election, and enrollment).
Our proposal deferred to the law of the state in which the
beneficiary resides to determine who is a legal representative.
Deference to state law on these matters is consistent with other
similar practices within CMS, including in the MA appeals definition of
``representative'' (Sec. 422.561) and Medicaid's definition of
``authorized representative'' (Sec. Sec. 435.923; 438.402), as well as
in the HIPAA Privacy Rule description of ``personal representative''
(45 CFR 164.502(g)).
For those with state legal authority to act and make health care
decisions on behalf of a beneficiary, we proposed to codify at
paragraph (h)(1) of Sec. 422.60 and (h)(1) of Sec. 423.32 that
authorized representatives will constitute the ``beneficiary'' or the
``enrollee'' for the purposes of making an election, meaning that CMS,
MA organizations, and Part D sponsors will consider the authorized
representative to be the beneficiary/enrollee during the election
process. Any mention of beneficiary/enrollee in our enrollment and
eligibility regulations would be considered to also include
``authorized representative,'' where applicable. Our proposal at
paragraph (h)(2) of Sec. 422.60 and (h)(2) of Sec. 423.32 clarified
that authorized representatives under state law may include court-
appointed legal guardians, durable powers of attorney for health care
decisions and state surrogate consent laws as examples of those state
law concepts that allow the authorized representative to make health
care decisions on behalf of the individual. This is not a complete
list; we would defer to applicable state law granting authority to act
and make health care decisions on behalf of the beneficiary.
Codifying this longstanding guidance provides plans, beneficiaries
and their caregivers, and other interested parties clarity and
transparency on the requirements when those purporting to be the
representatives of the beneficiary attempt to make election decisions
on their behalf. We have not received negative public feedback on this
longstanding policy. However, we have recently answered questions on
plan procedures when dealing with authorized representatives. We
proposed to codify this longstanding guidance in order to clarify our
policy regarding the role of authorized representatives in the MA and
Part D enrollment process, including the applicability of state law in
this context.
This proposal codifies longstanding MA and Part D sub-regulatory
guidance. Based on questions from plans and beneficiaries related to
current guidance, we concluded that the guidance had been previously
implemented and is currently being followed by plans. Therefore, we
concluded there was no additional paperwork burden associated with
codifying this longstanding sub-regulatory policy, and there would also
be no impact to the Medicare Trust Fund. All information impacts
related to the current process for determining a beneficiary's
eligibility for an election period and processing election requests
have already been accounted for under OMB control numbers 0938-0753
(CMS-R-267), 0938-1378 (CMS-10718), and 0938-0964 (CMS-10141).
We received the following comments, and our responses follow.
Comment: Several commenters expressed general support for this
proposal, with one commenter noting that the term ``authorized
representative'' can be ambiguous and, thus, it was good for CMS to
codify the existing policy.
Response: We appreciate the comments in support of our proposal.
Comment: One commenter requested that CMS establish a form, outside
of state law requirements, that individuals can use to appoint an
authorized representative to act on their behalf for MA/Part D
enrollment purposes.
Response: We thank the commenter for their proposal. We decline to
revise our proposal because it is CMS's standard practice to defer to
state law on similar matters of legally authorized representation. We
believe that compliance with state law requirements for establishing
authorized representation serves as an important form of beneficiary
protection. We believe that states are better positioned to determine
these requirements and resolve any disputes over representative
appointment and scope.
Comment: One commenter suggested the removal of ``as the law of the
State in which the beneficiary resides may allow,'' from our proposed
regulatory text. The commenter was concerned that, as proposed, the
regulatory text required state law to specifically address the
appointment of a representative for Medicare enrollment purposes. The
commenter also requested clarification on the difference between an
authorized representative and those who provide information during, or
otherwise assist the individual in, the enrollment process.
Response: We disagree with this interpretation. As stated above, we
defer to applicable state law granting a representative the authority
to act and make health care decisions on behalf of the beneficiary.
States would not need to specifically address the power to make
Medicare enrollment decisions on behalf of an individual. Authorized
representatives may include court-appointed legal guardians, persons
having durable powers of attorney, or individuals authorized to make
health care decisions under state surrogate consent agreements,
provided that the specific state law mechanism for establishing legal
representation would allow the representative to make health care
decisions on the individual's behalf.
We also clarify that assisting a beneficiary in the enrollment
process is different from representing that beneficiary in a legal
capacity. For example, a family member might help an individual read
and fill out an enrollment application, but they are not completing the
application on behalf of the individual. Assisting a family member is
different from attesting that they are acting on their behalf as an
authorized representative. If an individual is merely receiving
assistance with the application, they would still complete and sign
their own application. Whereas an authorized representative provides
their signature and an attestation that they are authorized by law to
act on the individual's behalf.
Comment: Several commenters requested that ``authorized
representatives'' be excluded from the 48-hour waiting period between a
Scope of Appointment and a personal
[[Page 30597]]
marketing appointment with an agent/broker.
Response: We thank the commenters for this recommendation, but
these requests are related to existing marketing regulations and are,
thus, outside the scope of the proposal.
After consideration of all public comments and for the reasons
discussed here and in the proposed rule, we are finalizing our proposal
with a technical change to add the language as new paragraphs
Sec. Sec. 422.60(i) and 423.32(j) instead of Sec. Sec. 422.60(h) and
423.32(h).
U. Open Enrollment Period for Institutionalized Individuals (OEPI) End
Date (Sec. 422.62(a)(4))
Section 1851(e) of the Act establishes the coverage election
periods for making or changing elections in the M+C, later known as MA,
program. Section 501(b) of the Balanced Budget Refinement Act of 1999
(BBRA) (Pub. L. 106-113) amended Section 1851(e)(2) of the Act by
adding a new subparagraph (D), which provides for continuous open
enrollment for institutionalized individuals after 2001. CMS published
a final rule with comment period (65 FR 40317) in June 2000
implementing section 1851(e)(2)(D) by establishing a new continuous
open enrollment period for institutionalized individuals (OEPI) at then
Sec. 422.62(a)(6). In subsequent rulemaking (83 FR 16722), the OEPI
regulations were further updated to reflect conforming changes related
to implementation of Title II of The Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) (70
FR 4717) and to redesignate this provision from Sec. 422.62(a)(6) to
(a)(4).
As noted above, the OEPI is continuous. Individuals may use the
OEPI to enroll in, change, or disenroll from a plan. Individuals are
eligible for the OEPI if they move into, reside in, or move out of an
institution. Longstanding sub-regulatory guidance has stated that the
OEPI ends 2 months after an individual moves out of an institution, but
this has not been articulated in regulations.\114\
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\114\ This guidance can be found in Chapter 2, Section 30.3 of
the Medicare Managed Care Manual.
---------------------------------------------------------------------------
To provide transparency and stability for plans, beneficiaries and
their caregivers, and other interested parties about this aspect of MA
enrollment, we proposed in the November 2023 proposed rule to codify
current sub-regulatory guidance that defines when the OEPI ends.
Specifically, we proposed to codify at new subparagraph Sec.
422.62(a)(4)(ii) that the OEPI ends on the last day of the second month
after the month the individual ceases to reside in one of the long-term
care facility settings described in the definition of
``institutionalized'' at Sec. 422.2.
This proposal defined when the OEPI ends and would not result in a
new or additional paperwork burden since MA organizations are currently
implementing the policy related to the OEPI end date as part of
existing enrollment processes. All burden impacts related to an
applicant's eligibility for an election period have already been
accounted for under OMB control number 0938-0753 (CMS-R-267).
Similarly, we stated in the proposed rule that we did not believe the
proposed changes would have any impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
Comment: A commenter supported the proposal to codify the
definition of when the OEPI ends.
Response: We thank the commenter for the support.
Comment: A commenter supported the proposal and encouraged CMS to
further clarify that the OEPI also permits institutionalized
individuals to enroll in a special needs plan (SNP) or Program of All-
Inclusive Care for the Elderly (PACE) plan, in addition to an MA plan
or Original Medicare.
Response: We appreciate the feedback and acknowledge that the OEPI
allows institutionalized individuals to enroll in an MA plan, an SNP
(which is a type of MA plan), or discontinue enrollment in an MA plan
and enroll in Original Medicare. PACE is addressed under separate
regulations and we note that individuals enrolling in the PACE program
do not require an election period.
Comment: A commenter suggested that we include institutionalized-
equivalent for purposes of OEPI.
Response: We appreciate the feedback but note that the proposed
change pertained to the period of time in which an individual is
eligible for the OEPI and able to make an election, not to the election
period eligibility criteria. As such, this recommendation is outside of
the scope of the proposed rulemaking.
After consideration of all public comments and for the reasons
described here and in the November 2023 proposed rule, we are
finalizing our proposal to amend Sec. 422.62(a)(4) without
modification.
V. Beneficiary Choice of C/D Effective Date if Eligible for More Than
One Election Period (Sec. Sec. 422.68 and 423.40)
Section 1851(f) of the Act establishes the effective dates of
elections and changes of elections for MA plans. In the June 1998
interim final rule, we specified the effective dates for elections and
changes of elections of M+C (now MA) plan coverage made during various
specified enrollment periods (63 FR 34968). The effective date
requirements for the initial coverage election period (ICEP), annual
election period (AEP), MA open enrollment period (MA-OEP), open
enrollment period for institutionalized individuals (OEPI), and special
election periods (SEP) are codified in regulation at Sec. 422.68. For
Part D plans, section 1860D-1(b)(1)(B)(iv) of the Act directs us to
establish similar rules for effective dates of elections and changes of
elections to those provided under the MA program statute at section
1851(f). In the January 2005 Part D final rule, we specified the
effective dates for elections and changes of elections of Part D
coverage made during various specified enrollment periods (70 FR 4193).
The effective date requirements for the initial enrollment period (IEP)
for Part D, AEP, and SEPs are codified in regulation at Sec. 423.40.
Existing regulations at Sec. Sec. 422.68 and 423.40 do not address
what the MA organization or Part D plan sponsor should do when a
beneficiary is eligible for more than one election period, thus
resulting in more than one possible effective date for their election
choice. For example, the beneficiary is eligible to make a change in
their election choice during the MA-OEP, but they are also eligible for
an SEP due to changes in the individual's circumstances. Current sub-
regulatory guidance provides that the MA organization or Part D plan
sponsor determine the proper effective date based on the election
period for which the beneficiary is eligible before the enrollment or
disenrollment may be transmitted to CMS.\115\ Because the election
period determines the effective date of the election in most instances,
with the exception of some SEPs or when election periods overlap,
beneficiaries may not request their election effective date. The MA
organization or Part D plan sponsor determines the effective date once
the election period is identified. If a beneficiary is eligible for
more than one election period, which results in more than one possible
effective date, CMS's sub-regulatory guidance \116\ directs the
[[Page 30598]]
MA organization or Part D plan sponsor to allow the beneficiary to
choose the election period that results in the desired effective date.
To determine the beneficiary's choice of election period, MA
organizations and Part D plan sponsors are instructed to attempt to
contact the beneficiary, and to document their attempt(s). However,
sub-regulatory guidance \117\ states that this does not apply to
beneficiary requests for enrollment into an employer or union group
health plan (EGHP) using the group enrollment mechanism. Beneficiaries
who make an election via the employer or union election process will be
assigned an effective date according to the SEP EGHP, unless the
beneficiary requests a different effective date that is allowed by one
of the other election periods for which they are eligible.
---------------------------------------------------------------------------
\115\ This guidance can be found in Chapter 2, Section 30.6 and
30.7 of the Medicare Managed Care Manual and Chapter 3, Section 30.4
and 30.5 of the Prescription Drug Benefit Manual.
\116\ This guidance can be found in Chapter 2, Section 30.6 of
the Medicare Managed Care Manual and Chapter 3, Section 30.4 of the
Prescription Drug Benefit Manual.
\117\ This guidance can be found in Chapter 2, Section 30.6 of
the Medicare Managed Care Manual and Chapter 3, Section 30.4 of the
Prescription Drug Benefit Manual.
---------------------------------------------------------------------------
Because a beneficiary must be entitled to Medicare Part A and
enrolled in Medicare Part B in order to be eligible to receive coverage
under an MA or MA-PD plan, CMS's sub-regulatory guidance \118\ explains
that if one of the election periods for which the beneficiary is
eligible is the ICEP, the beneficiary may not choose an effective date
any earlier than the month of entitlement to Part A and enrollment in
Part B. Likewise, because a beneficiary must be entitled to Part A or
enrolled in Part B in order to be eligible for coverage under a Part D
plan, sub-regulatory guidance explains that if one of the election
periods for which the beneficiary is eligible is the Part D IEP, the
beneficiary may not choose an effective date any earlier than the month
of entitlement to Part A and/or enrollment in Part B.\119\
---------------------------------------------------------------------------
\118\ This guidance on effective dates of elections is currently
outlined in section 30.6 of Chapter 2 of the Medicare Managed Care
Manual.
\119\ This guidance on effective dates of elections is currently
outlined in section 30.4 of Chapter 3 of the Medicare Prescription
Drug Benefit Manual.
---------------------------------------------------------------------------
Furthermore, sub-regulatory guidance \120\ provides that if a
beneficiary is eligible for more than one election period and does not
choose which election period to use, and the MA organization or Part D
plan sponsor is unable to contact the beneficiary, the MA organization
or Part D plan sponsor assigns an election period for the beneficiary
using the following ranking of election periods (1 = Highest, 5 =
Lowest): (1) ICEP/Part D IEP, (2) MA-OEP, (3) SEP, (4) AEP, and (5)
OEPI. The election period with the highest rank generally determines
the effective date of enrollment. In addition, if an MA organization or
Part D sponsor receives a disenrollment request when more than one
election period applies, the plan is instructed to allow the
beneficiary to choose which election period to use. If the beneficiary
does not make a choice, then the plan is directed to assign the
election period that results in the earliest disenrollment.
---------------------------------------------------------------------------
\120\ This guidance can be found in sections 30.6 and 30.7 of
Chapter 2 of the Medicare Managed Care Manual and sections 30.4 and
30.5 of Chapter 3 of the Medicare Prescription Drug Benefit Manual.
---------------------------------------------------------------------------
To provide transparency and stability about the MA and Part D
program for plans, beneficiaries, and other interested parties, we
proposed at new Sec. Sec. 422.68(g) and 423.40(f) that if the MA
organization or Part D plan sponsor receives an enrollment or
disenrollment request, determines the beneficiary is eligible for more
than one election period and the election periods allow for more than
one effective date, the MA organization or Part D plan sponsor must
allow the beneficiary to choose the election period that results in the
desired effective date. We also proposed at Sec. Sec. 422.68(g)(1) and
423.40(f)(1) that the MA organization or Part D plan sponsor must
attempt to contact the beneficiary and must document its attempt(s) to
determine the beneficiary's choice. The plan may contact the
beneficiary by phone, in writing, or any other communication mechanism.
Plans would annotate the outcome of the contact(s) and retain the
record as part of the individual's enrollment or disenrollment request.
In addition, we proposed at Sec. Sec. 422.68(g)(2) and 423.40(f)(2) to
require that the MA organization or Part D plan sponsor must use the
proposed ranking of election periods to assign an election period if
the beneficiary does not make a choice. With the exception of the SEP
EGHP noted earlier, if a beneficiary is simultaneously eligible for
more than one SEP and they do not make a choice, and the MA
organization or PDP sponsor is unable to obtain the beneficiary's
desired enrollment effective date, the MA organization or PDP sponsor
should assign the SEP that results in an effective date of the first of
the month after the enrollment request is received by the plan.
Finally, we proposed at Sec. Sec. 422.68(g)(3) and 423.40(f)(3) to
require that if the MA organization or Part D plan sponsor is unable to
obtain the beneficiary's desired disenrollment effective date, they
must assign an election period that results in the earliest
disenrollment.
This proposal represented the codification of longstanding MA and
Part D sub-regulatory guidance. Based on infrequent complaints and
questions from plans and beneficiaries related to current guidance, we
concluded that the guidance has been previously implemented and is
currently being followed by plans. We concluded that there was no
additional paperwork burden associated with codifying this longstanding
sub-regulatory policy, and there was also no impact to the Medicare
Trust Fund. All information impacts related to the current process for
determining a beneficiary's eligibility for an election period and
processing election requests have already been accounted for under OMB
control number 0938-0753 (CMS-R-267) for Part C and 0938-0964 (CMS-
10141) for Part D.
We received the following comments, and our responses follow.
Comment: Commenters were generally supportive of the proposal as
written, with some commenters noting that it reflects current practices
and prioritizes beneficiary preference.
Response: We thank the commenters for the support.
Comment: A commenter supported the proposal but suggested that CMS
require plans to exhaust all available communication methods if the
beneficiary does not respond to plan attempts to reach them.
Response: We appreciate the suggestion. However, we believe the
parameters of the proposal to require the plan to attempt to contact
the individual to indicate a desired effective date is sufficient. We
encourage plans to attempt to contact individuals using all feasible
communication methods including by phone, in writing, or another
preferred method.
Comment: Several commenters suggested updating Medicare.gov to
allow individuals to indicate their desired effective date during
online enrollments, which would alleviate plan burden in needing to
contact individuals who are eligible for more than one election period.
One of the commenters added as an example that an individual may end up
overlapping their EGHP coverage with Medicare coverage for a period of
time if they do not understand the different enrollment timeframes or
which SEP applies to their situation.
Response: We appreciate the commenters' feedback. We will consider
future updates to Medicare.gov that would enable individuals to
indicate their preferred effective date or provide explanations that
help individuals better understand possible effective dates or which
SEP timeframes apply to their situation.
[[Page 30599]]
Comment: A commenter suggested that the individual should be asked
by the plan at the time of their enrollment when they want their plan
coverage to begin. The commenter added that if an individual does not
select their desired effective date when they contact the plan to
enroll, CMS should require the plan to space out the three-attempt
contact requirement.
Response: We appreciate the feedback. If an individual is enrolling
with the plan in person or by phone, we encourage the plan to ask the
individual to indicate their preferred effective date. The proposal and
sub-regulatory guidance do not specify that plans need to make three
attempts to contact the individual if they do not indicate their
preferred effective date. However, plans are strongly encouraged to
make multiple contact attempts to request additional information from
individuals before assigning an effective date.
Comment: A commenter requested additional information in the sub-
regulatory guidance regarding the required timeframe to contact the
individuals about selecting their enrollment effective date.
Response: Plans determine which election period applies to each
individual to assign the proper election period and effective date
before the enrollment may be transmitted to CMS. Plans should contact
individuals eligible for more than one election period about selecting
their enrollment effective date within the timeframes for processing
enrollment requests. Sub-regulatory guidance for processing enrollment
requests in sections 40.3 of Chapter 2 of the Medicare Managed Care
Manual and 40.3 of the Chapter 3 of the Medicare Prescription Drug
Benefit Manual explains the timeframe for processing and transmitting
election requests to CMS. Plans are required to submit the information
necessary for CMS to add the individual to its records as an enrollee
of the MA organization or PDP sponsor within 7 calendar days of receipt
of the completed enrollment request.
Comment: A commenter stated that allowing dually eligible
beneficiaries to choose the election period that results in a desired
effective date for MA or Part D could influence utilization patterns
and impact associated costs for health care services. The commenter
added that changes to enrollment periods and requirements could result
in member disenrollment or churn, which may affect the financial
stability of MA organizations.
Response: While we appreciate the feedback, we do not believe this
change would have such an impact on utilization patterns and associated
costs for health care services. This change allowing the beneficiary to
choose the election period that results in the desired effective date
codifies longstanding sub-regulatory guidance and has been previously
implemented by plans. Therefore, we expect that codifying this proposal
will have minimal impact on plans' current enrollments.
After consideration of all public comments, for the reasons
described here and in the November 2023 proposed rule, we are
finalizing our proposal at Sec. Sec. 422.68(g) and 423.40(f) without
modification.
VI. Medicare Advantage/Part C and Part D Prescription Drug Plan
Marketing
A. Distribution of Personal Beneficiary Data by Third Party Marketing
Organizations (Sec. Sec. 422.2274(g) and 423.2274(g))
In the December 2022 proposed rule, CMS proposed to add a new
paragraph (4) at Sec. Sec. 422.2274(g) and 423.2274(g) to address
issues with third party marketing organizations (TPMOs) distributing
beneficiary contact information to other TPMOs, in any manner,
including selling this information.\121\ In paragraph (4), we proposed
that personal beneficiary data collected by a TPMO may not be
distributed to other TPMOs. We explained that when a beneficiary calls
a 1-800 number from a direct mail flyer, a television advertisement, or
an internet advertisement, or other similar material, the beneficiary
most likely believes they are only responding to or calling--and
requesting contact with--the entity that advertised the 1-800 number
and answers the call. However, some of these entities, in quickly read
disclaimers or through web or printed material-based disclaimers in
very small font, inform the beneficiary that their personal contact
information may be sold or distributed to other entities. The contact
information (name, address, phone number) obtained by these entities is
then sold or distributed to one or more TPMOs, such as field marketing
organizations and/or agents/brokers. As a result, these other entities
then reach out or call the beneficiary, using the initial incoming call
and the contact information obtained by the TPMO from that incoming
call, as a form of permission to reach out and contact the beneficiary.
We asserted that when a beneficiary calls an entity based on an
advertisement, the beneficiary is only expecting to connect with that
particular entity, not to have return calls made to their personal home
or cell number from other entities.
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\121\ 87 FR 79535.
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As discussed in the December 2022 proposed rule, CMS has learned
through environmental scanning efforts that the selling and reselling
of beneficiary contact information is happening as described here and
that beneficiaries are unaware that by placing the call or clicking on
the web-link they are unwittingly agreeing for their contact
information to be collected and sold to other entities and providing
consent for future marketing activities. We did not believe that
beneficiaries knowingly gave their permission to receive multiple calls
from multiple different entities based on a single call made by a
beneficiary and that beneficiaries intended in these scenarios that
their information would be received only by one entity, that being the
plan or agent or broker that will ultimately receive the beneficiary's
enrollment request. As another example of this type of behavior, we
noted in the December 2022 proposed rule that CMS was aware of
situations where entities require the beneficiary to agree to allowing
their contact information to be resold or shared prior to speaking with
a representative or having access to any information. In these
situations, a beneficiary initiates contact with one entity and then
ends up receiving calls from multiple other unrelated entities.
Additionally, we asserted that providing a quickly read disclaimer or
providing a disclaimer in very small print or placing a disclaimer in
an inconspicuous place when that disclaimer indicates that a
beneficiary's contact information may be provided or sold to another
entity or party, are considered misleading marketing tactics because
these entities are using beneficiary contact information in a manner in
which the beneficiary did not intend.
In order to address this type of activity, we proposed to add a new
paragraph (4) to Sec. Sec. 422.2274(g) and 423.2274(g) that would
prohibit TPMOs from distributing any personal beneficiary data that
they collect to other TPMOs. In the December 2022 proposed rule, we
noted that this proposal was consistent with the statutory prohibition
on unsolicited contact contained within sections 1851(j)(1)(A) and
1860D-04(l)(1) of the Act, as well as the corresponding CMS regulations
at 42 CFR 422.2264(a)(3) and 423.2264(a)(3). In addition, we note that
CMS's authority to promulgate rules related to TPMOs in this
circumstance also derives from sections 1851(h)(4)(C)
[[Page 30600]]
and 1860D-01(b)(1)(B)(vi) of the Act, which allow CMS to establish fair
marketing standards that shall not permit MA organizations and Part D
plans (and the agents, brokers, and other third parties representing
such organizations) to conduct the prohibited activities described in
subsection 1851(j)(1) of the Act. Likewise, we rely in this situation
on sections 1856(b)(1), 1857(e)(1) and 1860D-12(b)(3)(D) of the Act,
which grant the Secretary authority to establish by regulation other
standards that are consistent with and carry out the statute and to
include additional contract terms and conditions that are not
inconsistent with the statute and that the Secretary finds necessary
and appropriate.
As noted above, CMS proposed in the December 2022 proposed rule to
modify Sec. Sec. 422.2274(g) and 423.2274(g) to prohibit TPMOs from
distributing personal beneficiary data to other TPMOs. However, in
light of the comments received on our proposal, which we discuss
further below, and for the reasons discussed in our responses, we are
instead finalizing Sec. 422.2274(g)(4) and 423.2274(g)(4) with
revisions compared to our proposal in the December 2022 proposed rule,
which will permit TPMOs to share personal beneficiary data with other
TPMOs for marketing or enrollment purposes only if they first obtain
express written consent from the relevant beneficiary. In our below
responses to comments received regarding the proposed changes to
Sec. Sec. 422.2274(g)(4) and 423.2274(g)(4), we further articulate
what TPMOs will be required to do to conform with this consent
requirement, including what should be included in a disclosure to
beneficiaries.
We acknowledge that other agencies regulate certain types of
information collection and sharing of personal information, such as the
Department of Health and Human Services' Office for Civil Rights (OCR),
the Federal Trade Commission (FTC), and the Federal Communications
Commission (FCC). OCR administers and enforces the HIPAA Privacy Rule
(45 CFR parts 160 and 164 subparts A and E) which provides standards
for the use and disclosure of protected health information by HIPAA
covered entities and business associates. A covered entity is a health
care provider that conducts certain health care transactions
electronically, a health plan, or a health care clearinghouse, while a
business associate is a person or entity, other than a member of the
workforce of a covered entity, who performs functions or activities on
behalf of, or provides certain services to, a covered entity that
involve access by the business associate to protected health
information.\122\ Generally, protected health information is
individually identifiable health information maintained or transmitted
by a covered entity or its business associate. The definitions of a
covered entity, business associate, and protected health information
can be found at 45 CFR 160.103. The HIPAA Privacy Rule requires that
covered entities enter contracts or other arrangements with their
business associates to ensure that the business associates will
appropriately safeguard protected health information.\123\ A covered
entity or business associate can share protected health information
with a telemarketer only if the covered entity or business associate
has either obtained the individual's prior written authorization to do
so or has entered into a business associate relationship with the
telemarketer for the purpose of making a communication that is not
marketing, such as to inform individuals about the covered entity's own
goods or services.\124\ If the telemarketer is a business associate
under the HIPAA Privacy Rule, it must agree by contract to use the
information only for communicating on behalf of the covered entity, and
not to market its own goods or services (or those of another third
party).\125\
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\122\ 45 CFR 160.103.
\123\ 45 CFR 164.502(a).
\124\ United States Department of Health and Human Services,
Office for Civil Rights: Can telemarketers obtain my health
information and use it to call me to sell good and services?,
https://www.hhs.gov/hipaa/for-individuals/faq/277/can-telemarketers-obtain-my-health-information-and-use-it/index.html. Last reviewed
January 9, 2023.
\125\ United States Department of Health and Human Services,
Office for Civil Rights: Can telemarketers obtain my health
information and use it to call me to sell good and services?
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As such, it becomes relevant for this final rule whether TPMOs are
covered entities or business associates that must comply with the HIPAA
Privacy Rule. TPMOs (as defined at Sec. 422.2260) have varying degrees
of business and contractual arrangements with MA organizations and Part
D sponsors (who are covered entities under the HIPAA Privacy Rule) and
may or may not be considered business associates under the HIPAA
Privacy Rule. It is the responsibility of the TPMO to understand
whether they are a covered entity or acting as a business associate
when collecting personal beneficiary data that meets the definition of
protected health information. If the TPMO is a covered entity or
business associate, the TPMO must ensure they are compliant with the
HIPAA Privacy, Security, and Breach Notification Rules when using or
disclosing an individual's protected health information.
On December 13, 2023, in the Second Report and Order \126\ (FCC 23-
107), the FCC amended consent rules for robotexts and robocalls
governed by the Telephone Consumer Protection Act (TCPA). In the order,
FCC made it clear that texters and callers subject to the TCPA must
obtain a consumer's prior express written consent when telemarketing
via robocall or robotext and that the requirement applies a single
seller at a time.\127\ Furthermore, the rule made clear that ``the
consumer's consent is not transferrable or subject to sale to another
caller because it must be given by the consumer to the seller.'' \128\
Sharing many concerns that CMS articulated in the December 2022
proposed rule \129\ and this final rule, the FCC explained that ``lead
generated communications are a large percentage of unwanted calls and
texts and often rely on flimsy claims of consent and result in consent
abuse by unscrupulous robotexters and robocallers.'' \130\ The TCPA
generally requires callers to get consumer consent before making
certain calls or texts to consumers using an ``automatic telephone
dialing system'' (also known as an ``autodialer'') or an artificial or
prerecorded voice. 47 U.S.C. 227(b)(1)(A).\131\ This new rule, once
effective, will require lead generators and comparison-shopping
websites to obtain one-to-one consent with a clear and conspicuous
disclosure from the consumer for each seller that intends to
[[Page 30601]]
make a call or send a text using an automatic telephone dialing system
or make a call containing an artificial or prerecorded voice.\132\
Therefore, even if a lead generator or comparison-shopping website
lists multiple sellers on its web page, each seller is responsible for
obtaining the prior express written consent from the called party
through a ``clear and conspicuous'' disclosure on the lead generator or
comparison-shopping website in order to robocall or robotext the
consumer. The changes to the FCC consent rules also require that
telemarketing texts and calls that result from consumer consent must be
``logically and topically associated with the interaction that prompted
the consent.'' \133\ The FCC explained that this requirement makes ``it
clear that sharing lead information with a daisy-chain of ``partners''
is not permitted.'' \134\ The FCC refers to these changes as ``closing
the lead generator loophole'' \135\ which will go into effect at a
later date, either 12 months after publication in the Federal Register,
or 30 days after notice that the Office of Management and Budget has
completed review of any information collection requirements.\136\ These
new FCC rules will apply to TPMOs operating in the MA and Part D
marketplace that seek to contact Medicare beneficiaries with
advertisements or telemarketing messages using an automatic telephone
dialing system or an artificial or prerecorded voice.
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\126\ Federal Communications Commission, FC-23-107: Second
Report and Order, Second Further Notice of Proposed Rulemaking in CG
Docket NOS. 02-278 and 21-402, and Waiver Order in CG Docket no. 17-
59, https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
Released December 18, 2023.
\127\ Federal Communications Commission, FC-23-107, Page 12 of
FCC 23-107. https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf. The content of the call or text determines whether the
prior express consent from the called party must be in writing.
\128\ Federal Communications Commission, FC-23-107, Page 21.
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
\129\ Medicare Program; Contract Year 2024 Policy and Technical
Changes to the Medicare Advantage Program, Medicare Prescription
Drug Benefit Program, Medicare Cost Plan Program, Medicare Parts A,
B, C, and D Overpayment Provisions of the Affordable Care Act and
Programs of All-Inclusive Care for the Elderly; Health Information
Technology Standards and Implementation Specifications.
\130\ Federal Communications Commission, FC-23-107, Page 12.
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
\131\ Federal Communications Commission, Telephone Consumer
Protection Act 47 U.S.C. 227, RESTRICTIONS ON THE USE OF TELEPHONE
EQUIPMENT. https://www.fcc.gov/sites/default/files/tcpa-rules.pdf.
\132\ Federal Communications Commission, FC-23-107, Page 12.
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
\133\ Federal Communications Commission, FC-23-107, Page 51.
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
\134\ Federal Communications Commission, FC-23-107, Page 14.
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
\135\ Federal Communications Commission, FC-23-107, Page 12.
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
\136\ Federal Communications Commission, FC-23-107, VII.
ORDERING CLAUSES, Page 39. https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
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The FTC also enforces rules and regulations that apply to TPMOs,
such as the Telemarketing Sales Rule (TSR) \137\ (16 CFR 310) and
Section 5 of the FTC Act (FTCA). The TSR is a set of regulations that
apply to telemarketing and generally prohibits abusive and deceptive
tactics in marketing. Section 5 of the FTCA provides that unfair or
deceptive acts or practices in or affecting commerce are declared
unlawful (15 U.S.C. 45(a)(1)).\138\ We note that the regulations in
this rule do not attempt to change or define what is unlawful under
OCR, FCC, or FTC regulations; we are reiterating that TPMOs operating
in the MA and Part D marketplace must comply with numerous laws and
regulations that govern information sharing, disclosure, and consent to
be contacted for marketing or enrollment purposes. The limitations
being adopted under the MA and Part D statutes in these MA and Part D
regulations are not replacements for other protections for individual
information collected in the course of marketing or enrollment, but
supplement those protections with specific limitations and restrictions
to protect Medicare beneficiaries so that CMS can take steps within its
authority under Title 18 \139\ to protect Medicare beneficiaries
(rather than deferring to other agencies to enforce other requirements
that offer similar protections).
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\137\ https://www.ecfr.gov/current/title-16/part-310.
\138\ https://uscode.house.gov/view.xhtml?req=(title:15%20section:45%20edition:prelim)%20OR%20(granu
leid:U.S.C.-prelim-title15-
section45)&f=treesort&num=0&edition=prelim.
\139\ https://www.ssa.gov/OP_Home/ssact/title18/1800.htm.
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We received the following comments on this proposal and our
responses follow:
Comment: We received several comments that the proposal disregards
a beneficiary's choice on whether to opt in to having their personal
contact information shared. While some commenters were largely
supportive of the total prohibition, citing the protections to
beneficiary privacy and autonomy, many commenters believed that
beneficiaries should be able to consent to having their information
shared. A few commenters stated that TPMOs should be able to share
beneficiary contact information when the beneficiary knowingly consents
and requests to have it shared, which would not be possible if the rule
was finalized as proposed. Another commenter stated that the statute
expressly gives beneficiaries the right to solicit direct contacts, and
if CMS implemented this new requirement, without any ability for them
to consent, that right to permit direct contacts would be taken away
from the beneficiary. Some commenters suggested that rather than
implementing a full prohibition on sharing information, CMS could
introduce measures to clarify how to request consent for the sharing of
beneficiary information to multiple entities. Commenters provided
suggestions on how to ensure beneficiaries knowingly consent to having
their data shared, which included adopting the FTC's clear and
conspicuous standard, limitations on who may contact a beneficiary, and
how often or for how long a beneficiary may be contacted. A few
commenters believed that CMS incorrectly assumes a beneficiary never
wants their information to be shared, or that they are unable to make
that choice. A commenter agreed that stronger consent is needed, but
disagreed with the CMS claim that beneficiaries are not aware that they
are opting into their information being shared with multiple entities.
Commenters also suggested including more effective disclosures or
disclaimers that indicate the resale and/or the specific details of
where and to whom this information will be shared. A commenter provided
their standards as a resource, which listed the different standards
they currently utilize.
Response: CMS thanks commenters that were supportive of our
proposal to prohibit the sharing of beneficiaries' personal information
and appreciates the various suggestions that commenters provided to
allow beneficiaries to consent to the sharing of their personal
information. We recognize that other statutory and regulatory
frameworks, such as the TCPA, TSR, and HIPAA Privacy Rule, which deal
with sharing personal information and contacting consumers, allow
individuals to consent to the sharing of their information or the
receipt of calls from product and service providers. Equally as
important, we recognize the right of beneficiaries to share their
personal information and that some may want to share their information
with many TPMOs to solicit direct contact from a larger group of TPMOs
to assist them in selecting a health plan that best meets their needs.
Therefore, we agree with the commenters that beneficiaries should be
able to consent to having their personal information shared in a clear
and understandable way and have modified the proposed regulation text
to provide for this option. In this final rule and based upon
suggestions received in comments, we are codifying that personal
beneficiary data collected by a TPMO for marketing or enrolling the
beneficiary into an MA or Part D plan may only be shared with another
TPMO when prior express written consent is given by the beneficiary.
Further, we are codifying that prior express written consent from the
beneficiary to share the data and be contacted for marketing or
enrollment purposes must be obtained separately for each TPMO that
receives the data through a clear and conspicuous disclosure. We
believe that beneficiaries have the right to share their personal data
with whom they choose and should have the opportunity
[[Page 30602]]
to fully understand with whom their personal data may be shared. By
finalizing the rule in this way, we are not codifying an outright
prohibition of sharing personal beneficiary data. CMS sought technical
studies on the results of limiting beneficiary data sharing and its
effectiveness. For example, in a 2023 Pew Survey, CMS learned from
Pew's findings that ``overall, 72% [of Americans] say there should be
more government regulation of what companies can do with their
customers' personal information.' '' \140\ The survey also revealed
that ``a majority of Americans say they are concerned, lack control and
have a limited understanding about how the data collected about them is
used.'' \141\ No studies that we can find exist on whether completely
limiting the distribution improves the beneficiary experience. We have,
however, numerous complaints, both through 1-800-Medicare, the new FCC
Second Report and Order \142\ cited earlier, as well as State Health
Insurance Programs, testimony from health insurance administrators and
executives,\143\ and advocacy groups noting that the overwhelming
number of marketing calls beneficiaries receive from TPMOs are
unwanted, confusing, and inhibit the beneficiary's ability to make an
informed choice. Our final rule aims to limit when a beneficiary's
personal data can be shared and ensures that they know who will be
contacting them, which we believe will lower the number of complaints,
be less overwhelming, and will result in beneficiaries having a more
meaningful discussion with fewer agents, and ultimately enrolling in a
health plan that best meets their needs.
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\140\ Pew Research Center, How Americans View Data Privacy:
Views of data privacy risks, personal data and digital privacy laws.
https://www.pewresearch.org/internet/2023/10/18/views-of-data-privacy-risks-personal-data-and-digital-privacy-laws/.
\141\ Pew Research Center, How Americans View Data Privacy:
Views of data privacy risks, personal data and digital privacy laws.
https://www.pewresearch.org/internet/2023/10/18/views-of-data-privacy-risks-personal-data-and-digital-privacy-laws/.
\142\ Federal Communications Commission, FC-23-107. https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
\143\ United States Senate Committee on Finance, Medicare
Advantage Annual Enrollment: Cracking Down on Deceptive Practices
and Improving Senior Experiences. https://www.finance.senate.gov/hearings/medicare-advantage-annual-enrollment-cracking-down-on-deceptive-practices-and-improving-senior-experiences.
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We are codifying the regulation text in a way that is generally
consistent with the one-to-one consent structure announced by the FCC
in the Second Report and Order \144\ (FCC 23-107) in order to make it
simple and less arduous for a TPMO to comply with both rules, when
applicable. The FCC's Order amends the definition of prior express
written consent at 47 CFR 64.1200 for a person to be called or texted
advertisements or telemarketing messages using an automatic telephone
dialing system or an artificial or prerecorded voice by requiring an
agreement, in writing, that bears the signature of the person called or
texted that clearly and conspicuously authorizes no more than one
identified seller. The FCC explained that if a lead generator or
comparison-shopping website seeks to obtain prior express written
consent for multiple sellers, they must obtain prior express written
consent separately for each seller. Secondly, the FCC Order requires a
written agreement that includes a clear and conspicuous disclosure
informing the person signing that they are authorizing the seller to
deliver or cause to be delivered to the signatory telemarketing calls
or texts using an automatic telephone dialing system or an artificial
or prerecorded voice. The FCC defined clear and conspicuous as ``notice
that would be apparent to a reasonable consumer.'' \145\
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\144\ Federal Communications Commission, FC-23-107. https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
\145\ Federal Communications Commission, FC-23-107, Page 16.
https://docs.fcc.gov/public/attachments/FCC-23-107A1.
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We believe that prior express written consent, one-to-one from
person to seller, through a clear and conspicuous disclosure to share
personal beneficiary data with another TPMO, is a reasonable and less
restrictive standard than a ``complete prohibition'' on the sharing of
personal beneficiary data with other TPMOs. This consent and disclosure
are necessary to provide beneficiaries with the information they need
to understand where their personal data is going, what they are
consenting to being contacted about, and who will be contacting them
for health care options. Prior express written consent will ensure that
there is a record of the beneficiary consenting to the sharing of their
data, which can easily be obtained through a website interface, but can
also be provided through email or text message when a beneficiary calls
a toll-free number. By adopting the one-to-one consent requirement, we
will prevent TPMOs from having to build a different consent and
disclosure structure on their websites and systems because it aligns
with the one-to-one consent structure in the FCC rules on consenting to
telemarketing calls or texts using an automatic telephone dialing
system or an artificial or prerecorded voice. Under the FCC's new
rules, if a TPMO marketing MA or Part D plan options wants to robotext
or robocall a beneficiary, they must obtain consent from the
beneficiary that they agree for that specific entity to contact them
via robotext or robocall. Similarly, under our amended rule, if a TPMO
wants to share a beneficiary's personal data with another TPMO, the
TPMO must obtain consent from the beneficiary for each entity that it
intends to share the data with. Thus, the shared one-to-one consent
structure will make it easier for TPMOs to collect both consents at the
same time; a consent to share the beneficiary's personal data with a
specific entity and the consent for that entity to robotext, robocall,
or call the beneficiary, as applicable.
In addition, this rule will prevent the sharing of personal
beneficiary data with another TPMO unless expressly authorized by the
beneficiary, which means beneficiaries will not be called by TPMOs with
whom they have not given permission to be called, even when the new FCC
rule does not apply (i.e., a manually dialed phone call). Finally, the
regulation requires a ``clear and conspicuous'' disclosure to the
beneficiary, which is a standard used in the FCC Order as well as by
the FTC as defined at 16 CFR 255.0(f). Under 16 CFR part 255--Guides
Concerning Use of Endorsements and Testimonials in Advertising, the FTC
defines clear and conspicuous to mean ``that a disclosure is difficult
to miss (i.e., easily noticeable) and easily understandable by ordinary
consumers.'' \146\ The FTC also provides numerous examples to
illustrate how the definition of clear and conspicuous is applied in
real life examples in Part 255.\147\ We find the FCC and FTC definition
of clear and conspicuous to be similar but point to the FTC's
definition as guiding for our rule because the definition has been
recently updated \148\ and there are numerous examples that can help
guide TPMOs in how to apply it.
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\146\ https://www.ecfr.gov/current/title-16/part-255#p-255.0(f).
\147\ https://www.ecfr.gov/current/title-16/part-255#p-255.0(f).
\148\ Federal Trade Commission, Guides Concerning the Use of
Endorsements and Testimonials in Advertising (88 FR 48092), updated
July 26, 2023.
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We understand that sometimes a beneficiary can be connected to
another TPMO in real time. For example, a beneficiary may call a TPMO
seeking to get information about Medicare plan options and that TPMO,
in order to assist the beneficiary, may be able to
[[Page 30603]]
transfer or connect that beneficiary to another TPMO, such as an agent
or broker during the call to provide real time assistance to the
beneficiary. In that circumstance, where a live call can be transferred
to another entity for assistance, we believe this is an acceptable
approach that can be accomplished without obtaining prior express
written consent as long as the beneficiary has verbally agreed or
consented to be transferred during the live phone call. For purposes of
this rule, we do not believe that transferring a live phone call from
the beneficiary to an agent or broker that can provide immediate
assistance to the beneficiary is considered ``sharing personal
beneficiary data,'' which would require prior express written consent
under our rule. However, if the TPMO would need to share a
beneficiary's personal data with anyone that the beneficiary will not
immediately be speaking with, they will need to comply with our rule
and receive prior express written consent from the beneficiary to share
their personal data.
Our final rule applies when personal beneficiary data is collected
by a TPMO for purposes of marketing or enrolling them into an MA plan
or Part D plan. Therefore, if a TPMO collects a beneficiary's personal
beneficiary data with the purpose of eventually marketing or enrolling
that beneficiary into an MA or Part D Plan, it would be inappropriate
for that TPMO to share the beneficiary's data with a second TPMO
without the beneficiary's consent, even if that second TPMO does not
plan to conduct any marketing or enrollment activities. If the
beneficiary's data was collected and sold with the purpose of
eventually marketing to the person or enrolling them into an MA or Part
D plan (i.e. a sales lead), then the beneficiary must consent to the
sharing of that data with each TPMO that is involved in the marketing
or enrollment chain. Finally, we note that selling personal beneficiary
data may implicate the Federal anti-kickback statute.
Comment: A few commenters questioned CMS's statutory authority to
limit beneficiary data sharing. Some commenters stated that the
currently cited statutory authority does not address the distribution
of personal beneficiary data and additionally, that under that
authority, unsolicited outreach is already prohibited. This commenter
stated the statute applies to all entities, and not just TPMOs, while
CMS's proposal applies solely to TPMOs. A commenter requested that CMS
clarify that it does not prohibit TPMOs from sharing directly with MA-
PD plans and sponsors.
Response: We are finalizing changes to Sec. Sec. 422.2274(g) and
423.2274(g) based on the statutory authorities at Sec. Sec.
1851(j)(1)(A) and 1860D-04(l)(1) of the Act that prohibit unsolicited
means of direct contact, as well as Sec. Sec. 1851(h)(4)(C) and 1860D-
01(b)(1)(B)(vi) of the Act, which allows CMS to establish fair
marketing standards that shall not permit MA organizations and Part D
plans (and the agents, brokers, and other third parties representing
such organizations) to conduct the prohibited activities described in
subsection 1851(j)(1) of the Act. Further, we rely in this situation on
sections 1856(b)(1), 1857(e)(1) and 1860D-12(b)(3)(D) of the Act, which
grant the Secretary authority to establish by regulation other
standards that are consistent with and carry out the statute and to
include additional contract terms and conditions that are not
inconsistent with the statute and that the Secretary finds necessary
and appropriate. Based on these authorities and comments received on
our proposal that have informed this final rule, we are requiring that
personal beneficiary data collected by a TPMO for marketing or
enrolling the beneficiary into an MA or Part D plan may only be shared
with another TPMO when prior express written consent is given by the
beneficiary. This is necessary to prevent abusive practices by TPMOs
that inundate beneficiaries with unwanted phone calls, text messages,
and emails. Furthermore, this rule is consistent with the MA and Part D
statutes because the restriction on sharing personal beneficiary data
is limited to data collected for the purposes of marketing or
enrollment.
As a commenter pointed out, the statute that prohibits certain
marketing practices at Sec. 1851(h)(4)(C) applies to MA organizations
or the agents, brokers, and other third parties representing such
organization. CMS has defined TPMOs to mean 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.\149\ Therefore, the definition of TPMO
broadly encompasses third parties involved in the marketing and
enrollment functions and is a term that applies to entities that are
prohibited from engaging in prohibited acts described in 1851(j)(1)(A)
of the Act. We clarify here that the definition of TPMO does not apply
to MA organizations or Part D sponsors, and therefore TPMOs may share
personal beneficiary data with those entities without acquiring direct
consent from the beneficiary under this rule. As noted earlier, covered
entities and business associates would still need to ensure they are
complying with HIPAA privacy rules when sharing personal beneficiary
data.
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\149\ 42 CFR 422.2260.
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Comment: Commenters stated that data distribution is already
governed by other statutes that conflict with CMS's proposal. A
commenter stated CMS did not explain how ``personal beneficiary data''
sits alongside data sets such as Personally Identifiable Information
(PII), Personal Health Information and Personal Health Records as well
as how the proposed rule comports with other applicable statutes, like
the Telephone Consumer Protection Act (TCPA), which is enforced by the
Federal Communications Commission (FCC), and the Telemarketing Sales
Rule (TSR), which is enforced by the Federal Trade Commission (FTC).
This commenter stated that, if finalized, CMS's proposal would
essentially remove that right to consent to share their data that is
provided through these other statutes. Lastly, a commenter noted that
TPMOs and other industry participants distribute personal beneficiary
data for reasons unrelated to direct contact with beneficiaries, such
as for modeling, technology development, and other purposes unrelated
to direct contact with beneficiaries.
Response: As previously discussed, our final policy does not take
away a beneficiary's ability to consent to the sharing of their
personal data. We are finalizing a modified policy that allows for
personal beneficiary data to be shared where the TPMO has obtained
prior express written consent from the beneficiary for each TPMO that
will receive the data. Our modified policy provides beneficiaries with
the ability to consent to their personal beneficiary data being shared,
as is consistent with other agencies such as the FCC and FTC. At the
same time, the ability for beneficiaries to provide express written
consent for each TPMO strengthens beneficiary protections, by giving
them more control over who can receive their contact information and
how many TPMOs can contact them. We understand that TPMOs must comply
with other statutes and regulations such as the HIPAA Privacy Rule,
TCPA, and
[[Page 30604]]
TSR, and these informed our final policy in this rule. In the December
2022 proposed rule, we described ``personal beneficiary data'' as
``contact information,'' such as name, address, and phone number. We
further clarify here that ``personal beneficiary data'' includes
contact information but could also include any other information given
by the beneficiary for the purpose of finding an appropriate MA or Part
D plan. As examples, this could include health information or other
personal information such as age, gender, or disability. For purposes
of this rule, we describe the information collected from a beneficiary
by a TPMO as ``personal beneficiary data.'' We are not attempting to
classify this information as PII or PHI, which can have more specific
meanings and definitions, such as those used in the HIPAA Privacy Rule.
We recognize that the HIPAA Privacy Rule contains very specific
disclosure and authorization rules that are more stringent than what we
are finalizing in this rule, such as when it comes to covered entities
or their business associates sharing information covered under the
HIPAA Privacy Rule. We reiterate that the HIPAA Privacy Rule must be
followed by TPMOs that are covered entities or business associates
under the HIPAA Privacy Rule and it is the responsibility of the TPMO
to determine their status as either a covered entity or business
associate. A valid authorization under the HIPAA Privacy Rule must
specify the name or other specific identification of the person, or
class of persons, to whom the covered entity or business associate may
make the requested use or disclosure. Since the recipient entities are
specifically identified in a valid authorization such that an
individual signing an authorization clearly understands the intended
recipients, we would consider a disclosure pursuant to a valid
authorization also compliant with our rule at Sec. Sec. 422.2274(g)
and 423.2274(g).
TPMOs that engage in the marketing and enrollment of Medicare
beneficiaries must also comply with other rules that govern telephonic
marketing and communication. The TCPA, governed by the FCC, restricts
making telemarketing calls and texts with automatic telephone dialing
systems or artificial or prerecorded voice. Similarly, the TSR,
governed by the FTC, generally prohibits initiating any outbound
telephone call that delivers a prerecorded message unless the seller
has obtained from the recipient of the call an express agreement, in
writing, that the seller obtained only after a clear and conspicuous
disclosure that the purpose of the agreement is to authorize the seller
to place prerecorded calls to such person.\150\ Therefore, TPMOs must
follow those rules when they engage in those kinds of activities (i.e.,
calling leads through an automatic telephone dialing system using
random number generation, using pre-recorded messages). However, TPMOs
can also conduct telemarketing in ways that are not governed by the
TCPA, such as by manually dialing a lead number and using a customer
service or salesperson to speak with the person that answers the phone.
Our final regulation seeks to place limits on the sharing of the
personal beneficiary data collected by a TPMO in a way that allows
TPMOs to develop disclosure and consent processes that easily conform
to all applicable rules that may apply. By using a one-to-one consent
structure in our rule, TPMOs may obtain permission to share personal
beneficiary data with another TPMO at the same time they acquire
permission to have that TPMO contact the beneficiary, which could fall
under FTC or FCC rules depending on how the contact is made. Further,
by requiring the TPMO to obtain prior express written consent from the
beneficiary to share their personal data and be contacted for marketing
or enrollment purposes through a clear and conspicuous disclosure for
each TPMO, it ensures that the beneficiary has control over who is
allowed to access their information. This also ensures that any
manually dialed calls (calls that are not subject to consent rules
under TCPA) that occur because a marketing lead was shared also have
been consented to by the beneficiary.
---------------------------------------------------------------------------
\150\ 16 CFR 310.4(b)(v).
---------------------------------------------------------------------------
As described at Sec. Sec. 422.2264(a)(2)(iv) and
423.2264(a)(2)(iv), an MA organization, Part D sponsor or its agents
and brokers may not make unsolicited telemarketing calls, and
Sec. Sec. 422.2264(a)(3) and 423.2264(a)(3) explains that calls are
not considered unsolicited if the beneficiary provides consent or
initiates contact with the plan. By requiring TPMOs to obtain a
beneficiary's consent to be contacted along with their consent to share
their personal data for purposes of marketing or enrollment, we are
ensuring that any entity that receives the lead information that
includes personal beneficiary data, has appropriate permission by way
of one-to-one consent from the beneficiary to contact them in
accordance with Sec. Sec. 422.2264(a)(3) and 423.2264(a)(3). We note
that rules at Sec. Sec. 422.2264(b) and 423.2264(b) describe when MA
organizations or Part D sponsors may contact current and former
enrollees to discuss plan business. Calls that qualify as ``plan
business'' are not considered ``unsolicited'' but in accordance with
Sec. Sec. 422.2264(b)(2) and 423.2264(b)(2), MA organizations and Part
D sponsors must provide notice to all beneficiaries whom the plan
contacts as least once annually, in writing, of the individual's
ability to opt out of future calls regarding plan business.
A commenter pointed out that TPMOs share beneficiary data for
reasons unrelated to direct contact with beneficiaries. For example, a
TPMO could collect a beneficiary's personal data and have no intention
of directly contacting them. They could sell it, use it for modeling or
technology development, or for some other purpose. Ultimately, that
information was provided by the beneficiary to assist in helping them
select a health plan, and therefore prior express written consent to
share that data with another TPMO must be given by the beneficiary
under this rule. Our primary justification for imposing these data
restrictions is to reduce or eliminate unwanted calls that potential
enrollees are receiving from agents and brokers or other TPMOs.
Therefore, if the data is de-identified or redacted in a way where the
data cannot be used to contact the beneficiary as a potential sales
lead, and the purpose of the data sharing is not related to marketing
or enrollment, a TPMO can share the de-identified data with other TPMOs
without prior express written consent. We are concerned that allowing
the sharing of the full data under the guise of ``modeling'' or
technology development'' could be abused by TPMOs as a means to move
potential sales leads without consent. We reiterate that it makes no
difference if the TPMO collects the personal beneficiary data without
any intention of directly contact that person. It would be non-
compliant with this rule to share the personal beneficiary data with
another TPMO without prior express written consent from the
beneficiary.
Comment: CMS received many comments on how this proposal would
impact beneficiaries. Some commenters expressed support for the
proposal and noted that, if finalized, this proposal would provide
greater privacy and protection to beneficiaries from receiving an
unreasonable number of marketing calls and inquiries. Additionally, a
commenter stated that beneficiary autonomy and the ability to direct
how they get information should take precedence over the business
interests of lead generating companies
[[Page 30605]]
and those who use or purchase their information.
Response: We thank the commenters for their support. We value the
importance of beneficiaries having greater privacy as well as autonomy
over their contact information and who it is shared with, especially
when it is used to contact them. By balancing beneficiary protections
with beneficiary choice, we believe that this final rule will have a
strong positive impact on beneficiaries who have been struggling with
the volume of unwanted phone calls, texts, and emails. This rule
enables beneficiaries to decide what best meets their health care needs
by controlling who contacts them and for what purposes. If a
beneficiary wants to provide consent to be contacted by multiple TPMOs,
this rule ensures they have that flexibility. However, if a beneficiary
is only seeking to speak with one or two TPMOs, our rule ensures that
the beneficiary will not receive unwanted and unsolicited calls or be
misled by difficult to read disclaimers. TPMOs should use a consent
method where the default selection is that the beneficiary chooses to
not share their data; there should be an affirmative action by the
beneficiary to acknowledge that sharing their data with another TPMO is
permitted. By being able to consent to each listed TPMO through a clear
and conspicuous disclaimer, beneficiaries can make informed decisions
that best fit their personal preference.
Comment: Some commenters expressed concern that this proposal would
place a greater burden on beneficiaries. Without a TPMO's ability to
distribute a beneficiary's personal data to another TPMO, these
commenters believed beneficiaries would have fewer opportunities to
receive information about plan options available to them, which would
limit their plan options as well as their ability to find the best plan
for their needs. As a commenter explained, beneficiaries are in a
better position speaking with a broker that can sell many MA plans
rather than an agent that can only sell one plan. Another commenter
stated that under CMS's proposal, beneficiaries would have to identify
each agent that represents the plans they are interested in, and if
unable to do so, the beneficiaries would have to contact each
individual plan to obtain plan benefit information.
Response: CMS appreciates commenters for sharing their concerns
regarding how beneficiaries' access to plan information and options
would change under this proposal. We appreciate the commenters for
providing insight into the ways TPMOs use beneficiary data, such as
some TPMOs' reliance on sharing personal data multiple times in order
to connect beneficiaries with the agent or broker that can best assist
the beneficiary. We agree that many TPMOs have an important role to
play in making it easier for beneficiaries to find the plan that best
fits their needs. As noted above, we have modified our proposal to
allow TPMOs to continue sharing a beneficiary's data as long as they
obtain prior express written consent, through a clear and conspicuous
disclaimer, for each TPMO that will receive the beneficiary's
information and contact them. We have received many complaints
regarding the high volume of unwanted calls beneficiaries are
experiencing, which can be distressing and confusing to beneficiaries
when trying to enroll in a plan. By having the ability to provide clear
consent to the TPMOs they with whom they would like to speak, this new
rule will make it easier for beneficiaries to control who is contacting
them and provide beneficiaries with a clearer understanding of what
they are consenting to prior to being contacted. TPMOs can still
connect beneficiaries with agents and brokers or other TPMOs with the
new guarantee that the beneficiary is consenting to speak with that
specific entity. At the same time, this rule creates a safer and
clearer environment for the beneficiary to find the best health plan
for their needs, by ensuring they do not receive unwanted or
unsolicited phone calls. Additionally, we believe this rule will
provide an opportunity for TPMOs to continue to make the experience
more user friendly and accessible for all beneficiaries, as
beneficiaries shouldn't need to opt in to potentially receiving calls
from an unknown number of TPMOs in order to compare plans and find the
plan that best fits their needs.
CMS understands the important role TPMOs can play in determining
which is the best plan to meet a beneficiary's health needs. In this
final rule, the beneficiary can still opt in to having their
information shared with as many TPMOs as they'd like. A clear and
conspicuous disclaimer will ensure that for each authorization for
contact a beneficiary provides, they have full knowledge of who is
receiving their information and the ability to knowingly and clearly
consent to being contacted by this entity. We agree with commenters
that beneficiaries should be able to easily and simply access
information about plan options but disagree that putting some
safeguards on how a beneficiary's personal data is shared will put a
greater burden on beneficiaries. This final rule ensures that the
beneficiary has the choice and ability to decide whether and who can
contact them, while allowing TPMOs to continue supporting consenting
beneficiaries by connecting them to the appropriate people that can
help the beneficiary enroll in a plan that best meets their health care
needs.
Comment: CMS received comments discussing the adverse impact of
this proposed rule on TPMOs and the Medicare Advantage (MA) industry.
Some commenters were concerned that CMS's proposal to prohibit the
distribution of personal beneficiary data would result in entities,
including individual insurance agencies, being put out of business.
Commenters stated that leads are necessary to market, with a few
commenters mentioning that individual agents or agencies do not have
the bandwidth or financial means to perform lead generation, marketing,
or communications on their own. A few commenters were concerned about
how this would impact TPMOs and insurance agencies' ability to connect
beneficiaries with an agent or broker. As one commenter stated, lead
generators offer one of the main mechanisms to identify interested
beneficiaries and connect them with the agents and brokers who
represent plans in their area. Other commenters were concerned about
the impact on marketing activities of agents and brokers, stating that
if this proposal were finalized, agents and brokers would be unable to
rely on marketing specialists that connect them with beneficiaries. One
commenter stated that this proposed change would be detrimental because
these specialists have the expertise and technology to navigate the
health care options and connect beneficiaries with an agent. Another
commenter stated that this provision would fundamentally change the
current market by severely limiting legitimate pre-enrollment business
engagement between first tier entities and downstream and related
entities.
Response: CMS understands commenters' concerns about how this might
affect the TPMO industry and specifically, the TPMOs that support MA
organizations and Part D sponsors. We acknowledge that a complete
prohibition on beneficiary data sharing would be detrimental to the
TPMO industry and could adversely impact beneficiaries access to
expertise when navigating their plan options. We believe the amended
policy will mitigate these concerns and will balance the need to
protect beneficiary data. While this final rule may require a shift
[[Page 30606]]
in current practices when TPMOs market or enroll beneficiaries, we
expect that the overall effect on the industry will be positive as
beneficiaries will have stronger protections against unwanted calls and
transparency about who is calling them, while still having access to
agents and brokers that provide plan options and choice. Our final rule
does not place a limit on the number of TPMOs that a TPMO may share
personal beneficiary data with, but it does require that a beneficiary
consent to each TPMO that will receive their data. Lead generators,
field marketing organizations, agents, brokers and other TPMOs will
still be able to share a beneficiary's personal data, as long as they
ensure the beneficiary consents through a clear and conspicuous
disclaimer to each TPMO prior to receiving their data. We understand
this may initially have an impact on TPMOs' processes and operations
when adjusting to this new method of obtaining one-to-one consent
through a clear and conspicuous disclaimer, but CMS is not, through
this rule, prohibiting the ability of TPMOs to share personal
beneficiary contact data.
We believe TPMOs and beneficiaries will benefit from this rule
because it will ensure that beneficiaries are receiving information and
being contacted by the entities they explicitly consent to speaking
with and TPMOs will be better able to support the individual
beneficiary. The clear and conspicuous disclaimer will allow TPMOs to
further educate beneficiaries about who they need to be connected with
in order to find the best plan for their healthcare needs while
ensuring a safer and more engaging environment for beneficiaries.
Additionally, this rule applies solely to sharing personal beneficiary
data for the purposes of marketing or enrollment and ensures that TPMOs
are still able to share this data for other activities, provided they
are compliant with other agencies that govern personal information and
data sharing (such as the OCR).
We acknowledge that this may shift how some TPMOs currently share
personal beneficiary data but there are a variety of approaches that
TPMOs can use to ensure obtaining a beneficiary's one-to-one consent is
easy, accessible and straightforward for beneficiaries. For example,
through a clear and conspicuous disclosure on a website, a TPMO could
provide a check box list that allows the beneficiary to choose each
TPMO that they want to hear from. We believe beneficiaries are best
served by having the ability to affirmatively consent to who is
contacting them.
Comment: One commenter argued that the more robust the lead
generation environment is, the more competition there is, as lead
generators enable compliant companies to stay in the market. The
commenter argues that this should mean more competition, which they
argue leads to more informative consumer engagement. Another commenter
stated that the proposed changes would have a negative economic impact
as it would result in less awareness of MA plans and would likely lead
to decreased enrollment.
Response: We understand the importance of competition for a
successful business but reiterate that our priority is to protect
beneficiaries from misleading, inaccurate, or otherwise abusive
communication and marketing practices and ensure that they are able to
make coverage choices that best meet their health care needs. Our
modified policy will mitigate commenter concerns and still allow
competition in the marketplace for TPMOs that can operate in accordance
with these rules. It will provide a safer environment for beneficiaries
and still allow for numerous TPMO options from which a beneficiary may
choose to assist in the selection of a health plan. We do not believe
that this amended final policy will result in less awareness of MA
plans or less enrollment. Beneficiary complaints received by CMS convey
to us that beneficiaries are receiving too many calls, causing
confusion, resulting in beneficiaries being overwhelmed, and unable to
make a good choice for their health care needs. We believe more
informative consumer engagement will not come from competition between
lead generators, but from beneficiaries being able to consent to each
TPMO from which they would like to receive a contact. Moreover,
allowing beneficiaries to review a clear and conspicuous disclaimer
will empower them with transparent information, greater choice, and
personal autonomy.
Comment: A few commenters expressed concern about how the proposed
rule limits data sharing among downstream entities, or as some
commenters called them, ``affiliated entities.'' One commenter stated
that an independent agent could not share personal beneficiary
information that the agent collects with another independent agent
operating within the same field marketing organization. Another
commenter stated that this CMS proposal would limit a plan's ability to
distribute personal beneficiary information to their downstream
entities, disrupting the hierarchical distribution of leads that match
agents with leads and prevent lead duplication. The commenter stated
that this chain of data sharing within affiliated entities ensures
compliant leads, which is in the best interest of plans and
beneficiaries. The commenter stated that the proposal would require
TPMOs to generate their own leads, which may mean more duplicate leads
or leads without proper consent. A few commenters were concerned that
the data sharing prohibition would result in companies being unable to
utilize the complex technology TPMOs use to determine what agent can
best serve the needs of a specific beneficiary. One commenter mentioned
that individual agents and agencies do not have the expertise,
resources, and complex technologies to support marketing and outreach
that are currently handled by large TPMOs. Some commenters noted that
TPMOs provide services to independent agents that they contract with
such as training, administrative support, customer service and
marketing/lead generation and that this proposal would prevent those
TPMOs from providing these services that licensed agents rely on. A
commenter noted that TPMOs and other industry participants distribute
personal beneficiary data for reasons unrelated to direct contact with
beneficiaries, such as for modeling, technology development, and other
purposes unrelated to direct contact with beneficiaries.
Response: We thank commenters for their perspectives on how the
proposed rule would impact data sharing among affiliated entities,
downstream entities, independent agents, and when it could be
appropriate to share beneficiary information across these entities.
However, because we are amending the policy discussed in the proposed
rule, we will discuss these topics in the context of the modified final
policy.
Under amended regulations that CMS is adopting in this final rule
at Sec. Sec. 42 CFR 422.2274(g)(4) and 423.2274(g)(4), a TPMO may not
share any personal beneficiary data with a TPMO that is a different
legal entity unless prior express written consent has been given by the
beneficiary. This includes sharing information with another legal
entity that shares the same parent organization or has a contract to
perform a downstream function of the organization; prior express
written consent from the beneficiary is required under both
circumstances. We do not believe that just because another entity is
``affiliated'' with an organization, that the organization has the
right to share a beneficiary's information with that other entity
without the knowing consent of the beneficiary. This includes the
sharing of beneficiary data among two
[[Page 30607]]
independent agents affiliated with the same FMO. An independent agent
that shares personal beneficiary data with another independent agent
even if both are affiliated with the same FMO would be out of
compliance with our rule, unless prior express written consent is given
by the beneficiary. As mentioned earlier, an exception to this is where
a beneficiary provides verbal consent on a live phone call to be
transferred to another entity for immediate assistance; we believe this
is an acceptable approach that can be accomplished without obtaining
prior express written consent. However, two agents that work directly
for the same FMO as employees (not independent contractors) may share
personal beneficiary data as long as the beneficiary has freely given
that data to the FMO or it was obtained with the beneficiary's consent.
Comment: CMS received comments addressing CMS's reasons for
prohibiting TPMOs from sharing personal beneficiary information with
each other. Some commenters were supportive of CMS's proposal and the
assertions about this form of misleading marketing, where beneficiaries
are being inundated with unwanted phone calls that they are unwittingly
consenting to due to vague consent and difficult-to-read disclaimers.
As a commenter mentioned, many SHIPs, agencies, beneficiaries, and
their families have expressed concern about the misleading and
confusing marketing activities conducted by TPMOs.
Response: We appreciate commenters for the support of our proposal
and for recognizing the impact of these unwanted phone calls on
beneficiaries. We continue to ensure strong beneficiary protections
against misleading marketing and communications and being inundated
with unwanted phone calls while still ensuring they have access to plan
options and choice. Our final rule reflects this balance of beneficiary
protection and privacy with beneficiary access to information to inform
their choices.
Comment: A few commenters had general issues with our proposal.
Some commenters stated that CMS is punishing all TPMOs for the behavior
of some bad actors. One commenter suggested CMS is incorrectly assuming
that many TPMOs sell beneficiary personal information to multiple
unaffiliated entities. The commenter added that while some lead
generators or performance marketers may misbehave, not all sales and
distribution practices are problematic or should be prohibited. Another
commenter argued that agent error is the main cause of most complaints
and therefore this proposal would not have any impact.
Response: We understand that many TPMOs and other entities act in
good faith to aid beneficiaries in making an informed health care
choice. We reiterate that CMS is not punishing TPMOs, but rather
creating a more supportive and conducive environment for beneficiaries
to access the information they need to make plan decisions while not
being inundated with unwanted phone calls. Currently, as we've seen
through routine surveillance of TPMO websites and information received
from Congressional hearings and testimonies, personal beneficiary data
is shared among many TPMOs with no ability for the beneficiary to
select who or how many entities with and from whom they wish to consent
to contact them. As an example, there are TPMO websites that provide an
opportunity for a beneficiary to opt into being contacted and, within a
small disclaimer with a lot of small text, includes a hyperlink to over
100 licensed agents/brokers who may all call the beneficiary. The
current activities have resulted in numerous complaints by
beneficiaries. CMS's final rule provides stronger beneficiary
protection while still enabling TPMOs to provide the vital support of
ensuring beneficiaries are connected with an agent/broker or other TPMO
who can help them find the plan that best fits their needs.
In summary, we are not finalizing the rule as proposed at
Sec. Sec. 422.2274(g)(4) and 423.2274(g)(4) that personal beneficiary
data collected by a TPMO may not be distributed to other TPMOs. After
considering the comments received in response to this proposal, and for
the reasons that we have discussed in our responses, we are finalizing
Sec. Sec. 422.2274(g)(4) and 423.2274(g)(4) with revisions that
provide that personal beneficiary data collected by a TPMO for
marketing or enrolling them into an MA or Part D plan may only be
shared with another TPMO when prior express written consent is given by
the beneficiary. Also, we explain that prior express written consent
from the beneficiary to share the data and be contacted for marketing
or enrollment purposes must be obtained through a clear and conspicuous
disclosure that lists each entity receiving the data and allows the
beneficiary to consent or reject to the sharing of their data with each
individual TPMO. To align with our other marketing changes for agent
broker compensation, and to coincide with the beginning of marketing
and enrollment activities for the 2025 contract year, we are delaying
the applicability of these changes to Sec. Sec. 422.2274(g) and
423.2274(g) October 1, 2024. Therefore, any personal beneficiary data
shared by a TPMO with another TPMO for purposes of marketing or
enrollment must have prior express written consent by the beneficiary
beginning on October 1, 2024. This includes beneficiary data that is
collected prior to October 1, 2024, but will be transferred or shared
with another TPMO on or after October 1, 2024. Simply put, TPMOs must
have prior express written consent to share a beneficiary's personal
data on or after October 1, 2024.
B. Marketing and Communications Requirements for Special Supplemental
Benefits for the Chronically Ill (SSBCI) (Sec. 422.2267)
Section 1851(h) and (j) of the Act provide a structural framework
for how MA organizations may market to beneficiaries and direct CMS to
set standards related to the review of marketing materials and
establish limitations on marketing activities, as part of the standards
for carrying out the MA program under section 1856(b) of the Act. In
the January 2021 final rule, CMS used this statutory authority to
codify guidance from the Medicare Communications & Marketing Guidelines
(MCMG) into subpart V of part 422 (86 FR 5864). Several commenters in
that prior rulemaking urged CMS to add specific provisions in the
marketing and communications regulations regarding how MA organizations
may market SSBCI described in Sec. 422.102(f). In response, CMS
established a new requirement for a disclaimer to be used when SSBCI
are mentioned. The SSBCI disclaimer was originally codified at Sec.
422.2267(e)(32), and it currently appears at paragraph (e)(34).
Currently, that regulation requires MA organizations to: (i) convey
that the benefits mentioned are a part of special supplemental
benefits, (ii) convey that not all members will qualify for these
benefits; and (iii) include the model content in the material copy
which mentions SSBCI benefits. Section 422.2267(e)(34) does not
explicitly state that it applies to both marketing and communications
materials, but our sub-regulatory guidance is clear that it applies
whenever SSBCI are mentioned; the disclaimer is required regardless of
whether the material that mentions the benefits is a marketing or
communications material. The purpose of the SSBCI disclaimer is to
ensure that beneficiaries are aware that SSBCI are not available to all
plan enrollees and that the eligibility for these benefits is
[[Page 30608]]
limited by section 1852(a)(3)(D) of the Act and Sec. 422.102(f).
Ensuring a clear statement of these limitations in a disclaimer will
guard against beneficiary confusion or misunderstanding of the scope of
SSBCI, and thus lessens the chance that a beneficiary will enroll in a
certain plan believing they can access an SSBCI for which they may not
ultimately be eligible.
Per the January 2021 final rule, MA organizations were required to
comply with the new SSBCI disclaimer requirement for coverage beginning
January 1, 2022. Since MA organizations had over a year to implement
their use of the SSBCI disclaimer at the time of the November 2023
proposed rule, we took an opportunity to reevaluate the requirement at
Sec. 422.2267(e)(34), considering our observation of its actual
implementation.
MA organizations market SSBCI by advertising various benefits,
including coverage of groceries, pest control, prepared meals,
household items, gasoline, utility bills, auto repair, pet supplies or
grooming, and more. Although some of these SSBCI items and services may
be available under a given plan, the enrollee must meet the criteria
established to receive a particular SSBCI. In many instances, MA
organizations have been found to use marketing to potentially
misrepresent the benefit offered, often not presenting a clear picture
of the benefit and limits on eligibility. In a May 2022 letter sent to
Congress, the National Association of Insurance Commissioners (NAIC)
detailed its findings from surveys with state departments of insurance,
showing ``an increase in complaints from seniors about confusing,
misleading and potentially deceptive advertising and marketing of these
plans.'' \151\ Additionally, as discussed in prior rulemaking, CMS has
seen an increase in complaints related to marketing, with more than
twice as many complaints related to marketing in 2021 compared to
2020.\152\ As evidenced by complaints CMS has received, some of the
current marketing of SSBCI has the potential to give beneficiaries the
wrong impression by leading them to believe they can automatically
receive all SSBCI available by enrolling in the plan.
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\151\ https://content.naic.org/sites/default/files/State%20MA%20Marketing%20Authority%20Senate%20Letter%20.pdf.
\152\ See 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 (87 FR 27704), which appeared in the
Federal Register on May 9, 2022.
---------------------------------------------------------------------------
CMS has seen multiple examples of such misleading SSBCI ads among
MA organizations. We have seen ads (for example, online, billboards,
television) in which the MA organization presents an extensive list of
benefits that are available, with this list being displayed prominently
in large font and the SSBCI disclaimer appearing in very small font at
the end of the ad. Often the disclaimer is brief, merely stating that
the enrollee must have one of the identified chronic conditions in
order to receive the benefit and that eligibility will be determined
after enrollment, with no other information provided. A beneficiary
reading such an ad could easily miss the small-size disclaimer at the
end because their attention is immediately drawn to the long,
attractive list of appealing benefits prominently displayed in large,
bold font. This type of SSBCI marketing is potentially misleading
because, at face value, it might appear to a beneficiary that if they
enroll in the advertised plan, they can receive all the highlighted
benefits, without any question as to the beneficiary's eligibility,
what an eligibility determination entails, or when eligibility is
assessed.
Based on our findings, we proposed to expand the current required
SSBCI disclaimer to include more specific requirements, with the
intention of increasing transparency for beneficiaries and decreasing
misleading advertising by MA organizations. Our proposed expansion of
the SSBCI disclaimer included a clarification of what must occur for an
enrollee to be eligible for the SSBCI. That is, per Sec. 422.102(f),
the enrollee must first have the required chronic condition(s), then
they must meet the definition of a ``chronically ill enrollee'' at
section 1852(a)(3)(D)(iii) of the Act and Sec. 422.102(f)(1)(i)(A),
and finally the MA organization must determine that the enrollee is
eligible to receive a particular SSBCI under the plan's coverage
criteria. (See section IV.C. of this final rule for a more detailed
discussion of the requirements for SSBCI.) An MA organization designs
and limits its SSBCI to target specific chronic conditions. An enrollee
might meet the definition of ``chronically ill enrollee'' but
nonetheless be ineligible for the MA organization's advertised SSBCI
because they do not have the specific chronic condition(s) required for
the particular SSBCI being advertised. Taking these important SSBCI
eligibility requirements into account, we proposed to amend the
required SSBCI disclaimer content to clearly communicate the
eligibility parameters to beneficiaries without misleading them.
Specifically, at Sec. 422.2267(e)(34), we proposed three key changes
to the regulation and two clarifications.
First, we proposed to redesignate current paragraph (e)(34)(ii) as
paragraph (e)(34)(iii) and add a new paragraph (e)(34)(ii), in which we
proposed to require MA organizations offering SSBCI to list, in their
SSBCI disclaimer, the chronic condition or conditions the enrollee must
have to be eligible for the SSBCI offered by the MA organization. Per
Sec. 422.102(f)(1)(i)(A), a ``chronically ill enrollee'' must have one
or more comorbid and medically complex chronic conditions to be
eligible for SSBCI. (See section IV.C. of this final rule for a more
detailed discussion of the definition of ``chronically ill enrollee''
and eligibility for SSBCI as part of our finalized provision to
strengthen the requirements for how determinations are made that a
particular item or service may be offered as SSBCI and eligibility
determinations for SSBCI.) We proposed that if the number of
condition(s) is five or fewer, then the SSBCI disclaimer must list all
condition(s), and if the number of conditions is more than five, then
the SSBCI disclaimer must list the top five conditions, as determined
by the MA organization. For this top five list, we proposed that the MA
organization has discretion to determine the five conditions to
include. In making this determination, an MA organization might
consider factors such as which conditions are more common or less
obscure among the enrollee population the MA organization intends to
serve. We explained that five was a reasonable number of conditions for
the MA organization to list, so that a beneficiary might have an idea
of the types of conditions that might be considered for eligibility for
the SSBCI, without listing so many conditions that a beneficiary
ignores the information.
Second, we proposed to revise newly redesignated paragraph
(e)(34)(iii). Section 422.2267(e)(34)(ii) currently requires that MA
organizations that offer SSBCI convey that not all members will
qualify. We proposed to expand this provision to require that the MA
organization must convey in its SSBCI disclaimer that even if the
enrollee has a listed chronic condition, the enrollee may not receive
the benefit because coverage of the item or service depends on the
enrollee being a ``chronically ill enrollee'' as defined in Sec.
422.102(f)(1)(i)(A) and on the MA organization's coverage criteria for
a specific SSBCI item or service required
[[Page 30609]]
by Sec. 422.102(f)(4). Section 1852(a)(3)(D) of the Act and Sec.
422.102(f) provide that SSBCI are a permissible category of MA
supplemental benefits only for a ``chronically ill enrollee,'' as that
term is specifically defined, and the item or service must have a
reasonable expectation of improving or maintaining the health or
overall function of the chronically ill enrollee. In other words, just
because an enrollee has one of the conditions listed in the SSBCI
disclaimer, it does not automatically mean that the enrollee is
eligible to receive the relevant SSBCI, as other criteria will also
need to be met. In addition, a particular item or service must meet the
requirements in Sec. 422.102(f)(1)(ii) to be offered as an SSBCI.
Likewise, as finalized in section IV.C. of this final rule, the
requirements for the item or service to be covered as an SSBCI at Sec.
422.102(f) also apply in the sense that an MA organization would also
need to meet those requirements to offer SSBCI. Determinations on
whether an MA organization may offer coverage of a particular item or
service as an SSBCI will generally be made before an MA organization
begins marketing or communicating the benefits, therefore, we did not
include those requirements for when an MA organization may offer SSBCI
in the proposed expansion of the SSBCI disclaimer. Our proposed newly
redesignated Sec. 422.2267(e)(34)(iii) referred to the eligibility
requirements and MA organization responsibilities in Sec. 422.102(f)
because we expected the MA organization to use this information in
developing their SSBCI disclaimer to clearly convey that not all
enrollees with the required condition(s) will be eligible to receive
the SSBCI. Per Sec. 422.102(f) currently and with the revisions
finalized in section IV.C. of this final rule, MA organizations
offering SSBCI must have written policies based on objective criteria
for determining a chronically ill enrollee's eligibility to receive a
particular SSBCI.
The SSBCI disclaimer is model content, so each MA organization may
tailor their disclaimer's language to convey that, in addition to
having an eligible chronic condition, the enrollee must also meet other
eligibility requirements (i.e., the definition of a ``chronically ill
enrollee'' and the coverage criteria of the MA organization for a
specific SSBCI item or service) to receive the SSBCI. MA organizations
would not need to specifically detail the additional eligibility
requirements (such as the coverage criteria) in the disclaimer, but
rather convey that coverage is dependent on additional factors, and not
only that the enrollee has an eligible chronic condition. For example,
an MA organization might use the following language in its SSBCI
disclaimer: ``Eligibility for this benefit cannot be guaranteed based
solely on your condition. All applicable eligibility requirements must
be met before the benefit is provided. For details, please contact
us.'' We are providing this language as an example, as the SSBCI
disclaimer is model content. Therefore, in developing their SSBCI
disclaimer, MA organizations may deviate from the model so long as they
accurately convey the required information and follow CMS's specified
order of content, if specified (Sec. 422.2267(c)). Currently, Sec.
422.2267(e)(34) does not specify the order of content for the SSBCI
disclaimer, and we did not propose to add such a requirement; however,
MA organizations must accurately convey the required information listed
in the regulatory text at Sec. 422.2267(e)(34)(i)-(iii) in their SSBCI
disclaimer. In addition, the disclaimer as drafted by the MA
organization must be clear, accurate, and comply with all applicable
rules on marketing, communications, and the standards for required
materials and content at Sec. 422.2267(a).
Third, at new proposed paragraph (e)(34)(iv), we proposed specific
formatting requirements for MA organizations' SSBCI disclaimers in ads,
related to font and reading pace. These proposed formatting
requirements would apply to SSBCI disclaimers in any type of ad,
whether marketing or communications. For print ads, we reiterated our
existing requirement under paragraph (a)(1) that MA organizations must
display the disclaimer in 12-point font, Times New Roman or equivalent.
For television, online, social media, radio, or other-voice-based ads,
we proposed that MA organizations must either: (1) read the disclaimer
at the same pace as the organization does for the phone number or other
contact information mentioned in the ad, or (2) display the disclaimer
in the same font size as the phone number or other contact information
mentioned in the ad. For outdoor advertising (ODA)--which is defined in
Sec. 422.2260 and includes billboards--we proposed that MA
organizations must display the disclaimer in the same font size as the
phone number or other contact information appearing on the billboard or
other ODA. The specific font and reading pace requirements for the
SSBCI disclaimer in ads would appear at new proposed paragraphs
(e)(34)(iv)(A) and (B).
Finally, in revisiting the requirement at Sec. 422.2267(e)(34), we
explained that additional clarification of current requirements was
appropriate. In the introductory language at paragraph (e)(34), we
proposed a minor addition to clarify that the SSBCI disclaimer must be
used by MA organizations who offer CMS-approved SSBCI (as specified in
Sec. 422.102(f)). Also, we proposed to revise current paragraph
(e)(34)(iii) (requiring the MA organization to include the SSBCI
disclaimer in the material copy which mentions SSBCI benefits) and move
it to new proposed paragraph (v). In this newly redesignated paragraph
(v), we proposed to clarify that MA organizations must include the
SSBCI disclaimer in all marketing and communications materials that
mention SSBCI. We also proposed a slight adjustment in this paragraph
to delete the redundant word ``benefits'' after ``SSBCI.''
In summary, we stated in the proposed rule that this proposal would
expand upon the current SSBCI disclaimer requirements at Sec.
422.2267(e)(34) in several important ways. Requiring a more robust
disclaimer with specific conditions listed would provide beneficiaries
with more information to determine whether a particular plan with SSBCI
is appropriate for their needs. We explained that the revised
disclaimer would diminish the ambiguity of when SSBCI are covered, thus
reducing the potential for misleading information or misleading
advertising. We also stated that our goal was to ensure that
beneficiaries enrolling in MA choose a plan that best meets their
health care needs. Transparency and precision in marketing and
communications to current and potential enrollees was of utmost
importance in our proposal.
We did not score this provision in the COI section since we believe
all burden impacts of this provision have already been accounted for
under OMB control number 0938-1051 (CMS-10260). In addition, this
provision is not expected to have any economic impact on the Medicare
Trust Fund.
We solicited comment on this proposal, including on the accuracy of
our assumptions regarding information collection requirements and
regulatory impact. We did not receive comment on our information
collection requirements nor regulatory impact analyses for the proposed
revisions to Sec. 422.2267(e)(34) regarding the SSBCI disclaimer. We
thank commenters for their input on CMS's proposed amendments to Sec.
422.2267(e)(34). We received the following comments on this proposal,
and our response follows:
[[Page 30610]]
Comment: The majority of commenters overwhelmingly supported CMS's
proposal to strengthen and add more specific requirements to the SSBCI
disclaimer in order to decrease misleading advertising and increase
transparency for beneficiaries. Many commenters believed that this
proposal would enable beneficiaries to make the most informed decision
about SSBCI based on their individual health conditions and select the
plan that best meets their health care needs. These commenters agreed
with CMS that some current SSBCI advertising could give the false
impression that these benefits are available to all beneficiaries,
which may confuse and mislead beneficiaries into enrolling in an MA
plan with benefits they are not actually eligible for. Commenters
emphasized the importance of a beneficiary being able to make fully
informed choices and the need to decrease misleading marketing and
communications. Several commenters noted the importance of the
strengthened SSBCI disclaimer requirements to provide more clarity for
beneficiaries and supported the language added to the disclaimer, such
as the required list of chronic conditions and eligibility
restrictions. For example, a commenter agreed that the proposed
expansion of the SSBCI disclaimer would clarify what must occur for an
enrollee to be eligible for the SSBCI. Another commenter stated that
listing the relevant chronic condition(s) the beneficiary must have to
be eligible in the marketing and communications materials, as well as
adding the caveat that other coverage criteria also apply and may
affect eligibility, will help provide more clarity to enrollees, their
family members, and enrollment assisters or advisors.
Response: We thank commenters for their support of our proposal to
strengthen and expand the SSBCI disclaimer. We appreciate commenters'
deeper insight and feedback into the importance of these requirements
to both protect beneficiaries from misleading marketing and
communications tactics and ensure beneficiaries can make informed
health care choices.
Comment: Many commenters offered recommendations for CMS's SSBCI
disclaimer proposal. Some commenters suggested that the disclaimer
language should be simple, straightforward, and easy to understand,
using plain language at an appropriate reading level. A commenter
suggested CMS could consider simplifying the disclaimer by using
straightforward language to convey eligibility criteria, limitations,
and the fact that eligibility does not guarantee benefits. The
commenter also suggested CMS could provide a standardized template,
language format, or utilize visual aids or bullet points to make the
information more digestible and easier for a beneficiary to navigate.
There was a recommendation to test the communication with
beneficiaries. Another commenter appreciated the detailed benefit
description but recommended refining the language to ensure clarity and
ease of understanding for beneficiaries of varying literacy levels,
promoting inclusive communication. A commenter suggested that CMS
consult health literacy experts in the creation of SSBCI disclaimers.
Response: We thank commenters for providing recommendations on how
to ensure the updated SSBCI disclaimer is clear and easy for
beneficiaries to understand given that the intent of our proposal is to
ensure beneficiaries are clearly informed about their options. At the
same time, we are aware and concerned about the many marketing and
communications materials that mention SSBCI, but do not clearly
communicate that beneficiaries have to meet certain criteria to be
eligible for those benefits. Specifically, SSBCI are available to a
small number of individuals that must meet specific eligibility
criteria. As per section 1852(a)(3)(D) of the Act and Sec. 422.102(f),
the specific benefit must be within the scope of the definition of
SSBCI, including that the benefit be reasonably expected to improve or
maintain the health or overall function of the chronically ill
enrollee; the enrollee must first have the required chronic
condition(s); the enrollee must meet the definition of a ``chronically
ill enrollee'' at Sec. 422.102(f)(1)(i)(A); and finally the MA
organization must determine that the enrollee is eligible to receive
the particular SSBCI under the plan's coverage criteria for the
specific SSBCI. To accurately advertise these benefits, MA
organizations must make beneficiaries aware that certain eligibility
criteria are used to determine who can receive SSBCI. A significant way
to further this purpose is the SSBCI disclaimer. As such, it is
important that this disclaimer thoroughly conveys all pertinent
eligibility information that a beneficiary needs to determine whether
they might be able to access the SSBCI. While the revisions and
additions to the disclaimer that we proposed and are finalizing in this
rule may be more substantial than before, we strongly believe that the
benefits of the disclaimer outweigh any potential risks raised by
commenters.
We reiterate that the SSBCI disclaimer, currently and as revised in
this rule, is model content, and MA organizations are not required to
conform with a standardized template or model format provided by CMS,
so long as the MA organization's materials accurately convey the
required materials' vital information.
However, as provided earlier, some example SSBCI disclaimer
language that MA organizations might use includes, ``Eligibility for
this benefit cannot be guaranteed based solely on your condition. All
applicable eligibility requirements must be met before the benefit is
provided. For details, please contact us.'' We believe this example
language is clear and simple. To address commenters' concerns about
using simple, straightforward, and plain language, we offer here
another example of some SSBCI disclaimer language that MA organizations
might use: ``Eligibility is determined by whether you have a chronic
condition associated with this benefit. Standards may vary for each
benefit. Contact us to confirm your eligibility for these benefits.''
Again, we believe this additional example language is clear and easy to
understand, which is vital to allowing beneficiaries to make informed
health care decisions. We note that these examples of SSBCI disclaimer
language capture only the requirements at Sec. 422.2267(e)(34)(iii)
and not paragraphs (e)(34)(i) or (ii). In addition to the information
required at paragraph (e)(34)(iii), MA organizations must also provide
the list of chronic conditions as required by paragraph (e)(34)(ii) as
finalized.
MA organizations may decide how to present the SSBCI disclaimer and
make the information within it more digestible so long as the content
and formatting requirements in Sec. 422.2267(e)(34), as finalized, are
met. There is nothing precluding MA organizations from using visual
aids or bullet points, provided they comply with the minimum
requirements at Sec. 422.2267(e)(34) as finalized. Regarding the
comment recommending CMS test the communication with beneficiaries, we
appreciate this recommendation and will take it under consideration for
the future. We agree with commenters that the SSBCI disclaimer language
should be clear for varying literacy levels, and we encourage MA
organizations to consider these things as they develop their own unique
disclaimers. We also encourage MA organizations to consult with health
literacy experts as necessary to ensure the information contained in
their SSBCI disclaimers is accessible and inclusive for all
beneficiaries.
[[Page 30611]]
Comment: Some commenters expressed concern about the SSBCI
disclaimer length, arguing that lengthy disclaimer language might cloud
helpful information that was meant to increase beneficiary education of
available benefits. These commenters were also concerned that the added
language may have the unintended effect of discouraging beneficiaries
from reaching out to access SSBCI services. A commenter explained that,
as disclaimers get longer, more complicated, and less individualized,
there is a greater risk that they are ignored, misunderstood, or
dissuade a beneficiary from selecting an MA plan. A few commenters were
concerned that the SSBCI disclaimer may get lost amidst other required
CMS disclaimers and further confuse beneficiaries.
Response: We appreciate the points commenters raised about the
SSBCI disclaimer length and the possibility that added language may
discourage beneficiaries from reaching out to access SSBCI services.
However, we believe that the SSBCI disclaimer can be said succinctly as
long as all the requirements at Sec. 422.2267(e)(34) are met and the
eligibility restrictions are clear and accurate. We do not agree with
commenters that the added language may discourage beneficiaries from
reaching out to access SSBCI services. Instead, since SSBCI have
limited eligibility, the added language would enable beneficiaries to
have a clearer understanding of whether they may even be eligible for
the advertised SSBCI. We are prioritizing this change to the SSBCI
disclaimer because it is essential that beneficiaries have the
information they need in order to select the plan that best meets their
health care needs. If a beneficiary is interested in an advertised
benefit, we believe that the SSBCI eligibility criteria are key
information for beneficiaries to make an informed choice. The purpose
of the disclaimer is to ensure that a beneficiary does not base their
decision to sign up for a plan on advertised SSBCI for which the
beneficiary turns out to be ineligible. This type of marketing and
communications is potentially misleading and confusing to beneficiaries
and could be out of compliance with CMS regulations. We believe
transparently advertised SSBCI, accompanied by disclaimers that meet
the revised requirements at Sec. 422.2267(e)(34) finalized here, will
help to ensure beneficiaries have the information they need to make
health care choices that best fit their needs. Moreover, we again
stress our belief that the benefits outweigh any potential risks raised
by commenters.
Comment: Many commenters expressed their support for CMS's proposed
formatting requirements for the SSBCI disclaimer. A commenter noted
that listing the specific chronic condition in the same format, whether
it be read at the same speed or displayed in the same font size, as the
phone number listed in the ad, will better inform beneficiaries in
making the right decision. Another commenter added that they
appreciated the proposal that the disclaimer cannot be in smaller font
than other key text in print communications and must be read at a
comparable speed to other plan information for radio/television ads.
They further added that SSBCI and other supplemental benefits continue
to be a draw for beneficiaries, so this effort will help ensure that
they are not misled about which benefits might be available to them. A
commenter believed the additional formatting requirements are
appropriate for the older adult population and indicated that the
current SSBCI disclaimer information was not easy for beneficiaries to
understand.
Response: We thank commenters for expressing their support for the
formatting requirements we proposed for the SSBCI disclaimer. We wish
to ensure that in every marketing and communications advertising
modality, beneficiaries can read or hear and clearly understand the
disclaimer and be informed about SSBCI and the specific eligibility
criteria.
Comment: A few commenters voiced concerns about CMS's proposed
formatting requirements for the SSBCI disclaimer. A few commenters were
concerned that there would not be enough ad space for the full SSBCI
disclaimer, and that the disclaimer could be longer than the ad itself.
A commenter argued that due to the disclaimer length and font size, it
could potentially fill the page or ad to where a beneficiary might
become disinterested or confused with too much information. The
commenter added that due to limited space on such ads, MA organizations
may be deterred from promoting SSBCI that could provide beneficiaries
with what they possibly need. A commenter also stated that the
disclaimer accounts for almost 30 seconds of a radio ad, which is an
important media avenue for the target population, and thus more CMS
disclaimer requirements might be difficult to achieve due to media
limitations. A few commenters recommended CMS work with MA
organizations on communication standards, such as font size or
disclaimer presentation, to ensure the ad modality is considered,
giving specific suggestions for modalities such as social media ads,
television commercials, out-of-home signs, search ads, and verbal ads
like radio or streaming audio. Commenters suggested that for certain
digital or offline modalities with limited space, CMS should permit a
link to the disclaimer via a URL weblink or a QR code that would direct
beneficiaries to the full SSBCI disclaimer elsewhere. A commenter noted
that character counts and content limits enforced by some website
owners create additional barriers to adding SSBCI disclaimer language.
These commenters generally recommended that CMS adopt more flexible
requirements or explicit exceptions for certain modalities that offer
limited text display or are of short display duration, like banner ads,
other online or television ads, and billboards.
Response: We understand some commenters are concerned about the
formatting requirements and how much space the SSBCI disclaimer might
take up on a given marketing or communications ad. Our priority,
however, is to ensure that SSBCI ads are not misleading or confusing
for beneficiaries. Ensuring that beneficiaries have the information
they need to make an informed choice is a paramount consideration, and
the SSBCI disclaimer requirements adopted in this rule further that
goal. Each MA organization's approach to ads is a business decision
that depends, in part, on their marketing and communications strategy.
Importantly, all aspects of our new SSBCI disclaimer requirements
should be significant factors in the MA organization's decision-making
process, in conjunction with any potential ad space limitations or
other ad roadblocks. It is vital that beneficiaries have all the
information necessary to select the plan that best meets their health
care needs. If a beneficiary is interested in an advertised benefit, we
believe that the SSBCI eligibility criteria are important for
beneficiaries to make an informed choice, as they would not be able to
access that benefit if they are ineligible. Without the SSBCI
disclaimer, the beneficiary might end up enrolling in a plan only to
find out that they cannot access the SSBCI, and it is possible that
they, due to lacking the information necessary to make an informed
enrollment choice, may have sacrificed other enrollment opportunities
for the ability to access those advertised SSBCI. SSBCI are not
benefits that everyone can access, so it should be clear that when
[[Page 30612]]
such a benefit is advertised, these benefits are not guaranteed unless
specific eligibility criteria are met.
We disagree with commenters that there should be a separate link
for the full SSBCI disclaimer and are finalizing the formatting
requirements as proposed. The disclaimer needs to be on the ad itself
because a link would not make it clear to the beneficiary that there
are specific chronic conditions and other eligibility requirements
associated with being able to access a particular advertised SSBCI. The
SSBCI disclaimer ensures that beneficiaries are immediately aware of
the eligibility criteria for an advertised SSBCI and can make informed
decisions about their health care coverage options. From a
beneficiary's perspective, linking elsewhere would not make the
information clear and more accessible, but would instead lead to an
unnecessary delay in the amount of time it takes for the beneficiary to
receive the information by adding a burdensome extra step of clicking
on a link or QR code. Realistically, most beneficiaries would probably
not click on such a link. Regarding character limits or any other text
limitations in a specific modality, if the disclaimer does not fit,
then it is likely not the most suitable modality for an SSBCI marketing
ad given the nature of these benefits and nuances that are necessary
for a beneficiary to make an informed choice when considering SSBCI.
Our requirement is that the disclaimer must be included in all
marketing and communications materials that mention SSBCI and must
follow all content requirements as specified in the finalized
regulatory text. If an ad mentions an SSBCI without the required
disclaimer, then it is out of compliance with CMS rules.
Comment: A few commenters communicated support for CMS's proposal
to require the SSBCI disclaimer in all marketing and communications
materials that mention SSBCI. Other commenters were unclear as to
whether the disclaimer should apply to all communications or only for
pre-enrollment activity, rather than post-enrollment communications. A
commenter noted that for post-enrollment communications, an enrollee
would have already been notified they meet the necessary qualifications
for the benefit and would have already been receiving educational
material on the benefit, so the addition of the SSBCI disclaimer would
create confusion. The commenter also expressed concerns about
differences between VBID and SSBCI disclaimer requirements and that
this could further confuse beneficiaries.
Response: We thank commenters for their support of our requirement
that the SSBCI disclaimer be present in all marketing and
communications materials that mention SSBCI. As finalized in Sec.
422.2267(e)(34), the SSBCI disclaimer must appear in all communications
materials produced by MA organizations, including both pre-enrollment
and post-enrollment communications materials that mention SSBCI. We
disagree with the commenter's sentiment that including the disclaimer
on post-enrollment communications materials would confuse the enrollee.
Even if an enrollee has already been notified that they meet the SSBCI
qualifications, we do not believe there would be any harm or risk in
including the disclaimer on a potential post-enrollment educational
communications material for that enrollee. The enrollee could simply
disregard the disclaimer since they already know that they qualify for
the benefit. Moreover, we believe the likelihood of an MA organization
sending post-enrollment communications materials on SSBCI to enrollees
whom the MA organization has already notified that they qualify for the
benefits is low because those enrollees would likely not need to be
educated further on these benefits, but instead would probably be ready
to utilize the benefits.
Regarding the comment about differences between VBID and SSBCI
disclaimer requirements and potential beneficiary confusion, we note
that the VBID model is administered under section 1115A of the Act, and
there is authority to waive certain program requirements if necessary
to test the payment or service model; we refer readers to the web page
for the VBID model at: https://www.cms.gov/priorities/innovation/innovation-models/vbid for more information about the model and its
requirements. Due to the nature of the VBID model and the flexibilities
in benefits available under that model, there are specific marketing
and communications requirements applicable to model participants. Given
SSBCI and VBID benefits are different benefits with different
requirements, both disclaimers are necessary.
Comment: A few commenters were concerned that the chronic
conditions list would be difficult for MA organizations to implement
and that it could lead to beneficiary confusion. Some commenters were
worried it could get confusing for MA organizations to explain in an
SSBCI disclaimer the chronic conditions that apply to the specific
benefits listed or promoted in an ad. A commenter believed it was
unclear how CMS intended MA organizations to proceed when an ad
includes multiple SSBCI, for which there might be varying eligibility
criteria or condition requirements. Another commenter added that for an
MA organization offering multiple SSBCIs, the disclaimer, as worded,
might result in an overly long and complex disclaimer, and most
prospective enrollees would not read or understand it. Some commenters
had concerns about how to implement the list of top five chronic
conditions and how that list might impact beneficiaries, and requested
CMS further clarify their expectations. These commenters requested CMS
clarify that the SSBCI disclaimer needs to identify up to five chronic
conditions for which one or more SSBCI may be available, rather than
specifying up to five chronic conditions for each individual SSBCI,
which may be lengthy. A few commenters were concerned that by listing
only five conditions for an SSBCI, enrollees with eligible conditions
not listed may inadvertently believe that they are not eligible for the
SSBCI because it gives the impression that the five conditions listed
are the only ones covered.
Response: We agree with commenters that some clarification of the
requirements for the chronic conditions list in the SSBCI disclaimer is
needed. We recognize that an MA organization may include more than one
type of SSBCI in its marketing or communications material.
Consequently, there is a strong possibility that each type of SSBCI may
have different eligible chronic conditions or there may be some overlap
because some chronic conditions apply to more than one type of SSBCI
mentioned in the material. There is also the possibility that an MA
organization may have multiple plans with different SSBCI, and
consequently may choose to either advertise the SSBCI specific to each
plan or advertise SSBCI for all plans generally. After considering
these nuances, we acknowledge that there are many different potential
scenarios for how MA organizations might advertise SSBCI and use their
SSBCI disclaimer to associate the listed chronic conditions with the
types of SSBCI mentioned. We are therefore finalizing Sec.
422.2267(e)(34)(ii) with revisions compared to our proposal in the
November 2023 proposed rule, as follows.
First, we are changing the reference in paragraph (e)(34)(ii) from
``MA organization'' to ``applicable MA plan(s)'' to clarify that the
SSBCI the MA organization advertises must be
[[Page 30613]]
clearly tied to the applicable MA plan or plans that offer that SSBCI.
For similar reasons, we are finalizing paragraph (e)(34)(iii) with a
modification that clarifies that the disclaimer used by the MA
organization must communicate that coverage depends on the enrollee
being a ``chronically ill enrollee'' and on ``the applicable MA plan's
coverage criteria'' for a specific SSBCI. Therefore, if an MA
organization is advertising SSBCI for all of the MA organization's
plans that offer SSBCI, and there are differences between those plans
in terms of the types of SSBCI and types of chronic conditions the
enrollee must have to be eligible for the SSBCI, then the MA
organization must make those differences explicitly clear.
Next, we are clarifying the requirements for the chronic conditions
list in the SSBCI disclaimer by outlining several different scenarios
and the requirements associated with each. Specifically, we are
finalizing the regulation text with revisions to address: (1) when only
one type of SSBCI is mentioned, and (2) when multiple types of SSBCI
are mentioned. When only one type of SSBCI is mentioned, the regulation
addresses two scenarios: (1) If the number of condition(s) is five or
fewer, then the MA organization must list all condition(s); and (2) If
the number of conditions is more than five, then the MA organization
must list the top five conditions (as determined by the MA
organization). When multiple types of SSBCI are mentioned, the
regulation addresses two scenarios: (1) If the number of condition(s)
is five or fewer, then the MA organization must list all condition(s),
and if relevant, state that these condition(s) may not apply to all
types of SSBCI mentioned; and (2) If the number of condition(s) is more
than five, then the MA organization must list the top five conditions
(as determined by the MA organization) for which one or more listed
SSBCI is available.
We believe that making these modifications to clearly outline the
different scenarios achieves the goal of limiting ambiguity for MA
organizations, while simultaneously preserving our intention to ensure
that SSBCI marketing and communications is transparent and not
misleading for beneficiaries. Additionally, we believe an alternate
approach of tying each listed chronic condition to each type of SSBCI
mentioned would have been overly burdensome and resulted in a long,
complex SSBCI disclaimer. Lastly, we would like to address the comment
that listing only five chronic conditions may inadvertently lead
enrollees with eligible conditions not listed to believe that they are
not eligible for the SSBCI because it may give the impression that the
five conditions listed are the only ones that are eligible. We agree
that this is a valid concern, therefore, we are finalizing Sec.
422.2267(e)(34)(ii) with a revision which requires that, in instances
where the MA organization lists the top five conditions, but there are
more than five conditions that may be eligible for the benefit, MA
organizations must convey that there are other eligible conditions not
listed. We believe that all these modifications are responsive to
comments and further strengthen and clarify our SSBCI disclaimer
requirements.
Comment: A commenter was worried about giving deference to MA
organizations to choose the top five conditions they will list,
suggesting CMS use a metric for MA organization determinations on what
conditions would constitute such a ``top five,'' or, in the
alternative, that the MA organization be required to list all the
applicable conditions. A different commenter had a similar request with
concerns that if CMS were to finalize this amendment as proposed, then
MA organizations could select conditions in a way that increases racial
health disparities (such as by omitting sickle cell anemia from the
list).
Response: We acknowledge the commenter's concern about giving
deference to MA organizations to choose the top five conditions they
will list. However, we are finalizing our proposal to allow the MA
organization's discretion as to which top five conditions to include
because we believe the MA organization is best positioned to make this
determination since they are most familiar with their own SSBCI and
corresponding eligibility and coverage criteria. Regarding the
suggestion for CMS to use a metric for MA organizations to determine
whether a specific qualifying condition is one of the top five
conditions, we remind commenters that in the proposed rule, we provided
some factors that an MA organization might consider, such as which
conditions are more common or less obscure among the enrollee
population the MA organization intends to serve. Other approaches an MA
organization might take are to list the top five conditions that are
most prevalent in the service area of the MA plan offering the SSBCI,
or to list the top five conditions that are used most commonly in
determining eligibility for the SSBCI. We believe these examples are
sufficient and defer to MA organizations to make their own decisions on
their chosen top five conditions using these considerations so long as
there is a reasonable explanation for why the selected conditions are
the ``top five'' using a reasonable interpretation of the regulation.
We believe that the MA organization should not be required to list all
applicable chronic conditions because, as stated previously, a
beneficiary may ignore the information if many conditions are listed.
Regarding the concern about MA organizations potentially selecting
conditions in a way that increases racial health disparities, we note
that MA organizations are subject to anti-discrimination provisions
under 45 CFR Part 92. Therefore, an MA organization that is found to be
deliberately selecting chronic conditions for the list in their SSBCI
disclaimer in a discriminatory manner, including a racially
discriminatory manner, may face compliance action.
Comment: Some commenters worried that CMS's proposed new
requirements for the SSBCI disclaimer would make SSBCI less accessible
to beneficiaries because they might think they are ineligible if they
do not see their chronic condition listed. Regarding the disclaimer
content, another commenter stated that they believed this change might
be confusing to beneficiaries who may not know if they meet the Sec.
422.102(f)(1)(i)(A) definition of ``chronically ill enrollee.'' They
instead recommended that the standard for eligibility be simple to
understand, such as, if a beneficiary has an eligible chronic
condition, then they will be eligible for the benefit.
Response: We agree with commenters' concerns that if a beneficiary
does not see their chronic condition listed in the SSBCI disclaimer,
then they might think they are ineligible for the benefit. Therefore,
we are finalizing Sec. 422.2267(e)(34)(ii) with changes to require the
MA organization, where relevant, to state in its disclaimer that there
may be other eligible chronic conditions that are not listed. We
believe this will decrease the likelihood of beneficiaries assuming
they cannot access SSBCI if their chronic condition is not listed in
the disclaimer.
Regarding comments about the disclaimer content (specifically
proposed Sec. 422.2267(e)(34)(iii)) being potentially confusing to
beneficiaries, we clarify here that MA organizations should not cite
the CMS regulatory definition of ``chronically ill enrollee'' in their
actual SSBCI disclaimer, as this would not make sense to beneficiaries.
In addition, MA organizations must not simply state that if a
beneficiary has an eligible chronic condition, then they
[[Page 30614]]
will be eligible for the benefit because this is not accurate. Rather,
as noted in the proposed rule, each MA organization may tailor their
disclaimer's language to convey that, in addition to having an eligible
chronic condition, the enrollee must also meet other eligibility
requirements to receive the SSBCI. In the proposed rule and in a
previous response to a comment, we offered some example language to
this effect that an MA organization might use in its disclaimer. To
reiterate, the SSBCI disclaimer is model content, therefore, MA
organizations may deviate from the model so long as they accurately
convey the required regulatory information in their disclaimer. As
previously stated, we encourage MA organizations to use simple and easy
to understand disclaimers written in plain language. The policy we
proposed and are finalizing is that the SSBCI disclaimer must convey
that even if the enrollee has a listed chronic condition, the enrollee
will not necessarily receive the listed SSBCI because coverage of the
item or service depends on the enrollee meeting other eligibility and
coverage criteria.
Comment: A few commenters opposed our proposal, claiming that the
disclaimer is not the right approach or not the most effective way to
address misleading SSBCI marketing and communications. Commenters
expressed support for increasing the transparency of available
supplemental benefits that beneficiaries are eligible to utilize but
disagreed that additional disclaimer requirements are an effective way
to do this. A commenter expressed concern that the additional SSBCI
disclaimer requirements would not truly address CMS's concerns with
deceptive marketing and communications practices by bad actors. Some
commenters recommended CMS withdraw the proposal and not change the
current SSBCI disclaimer requirements, which they claimed are more
streamlined than the proposed disclaimer. A commenter stated that the
longer and more complicated the disclaimers get, the less effective
they become. Another commenter suggested CMS withdraw the proposal and
work with stakeholders to determine a more effective strategy whereby
SSBCI transparency for beneficiaries can be meaningfully improved. A
commenter noted their beneficiary complaint tracking suggests that
disclaimers are not as effective as direct communication with sales
representatives, agents and brokers, and customer service
representatives. The commenter expressed the critical role agents and
brokers play in explaining the types of supplemental benefits,
eligibility requirements, access, and other critical information that
can be distilled down from the disclaimers in an easy-to-understand
format tailored for each beneficiary.
Response: We understand that some commenters are not fully
supportive of this policy for various reasons, however, we have decided
to finalize our proposal with slight modifications. While we recognize
that there may be a range of different approaches to solve the problems
we have historically observed in SSBCI marketing and communications, in
formulating our proposal, we have decided that strengthening the SSBCI
disclaimer was an effective option to address misleading and non-
transparent SSBCI marketing and communications. We have received
numerous complaints and concerns from a variety of sources, such as
beneficiaries, advocacy groups, and State Health Insurance Programs,
about the draw of these benefits and the harm caused when insufficient
information about these benefits leads a beneficiary to enroll in an MA
plan that does not meet their health care needs. These instances have
led to beneficiaries enrolling in plans because they were lured by ads
mentioning these special benefits only to discover that they are
ineligible for the advertised SSBCI. We believe that the strengthened
SSBCI disclaimer could decrease confusing or potentially deceptive
marketing and communications practices as it is clearer and more
comprehensive than the current disclaimer. We believe this is in fact
the right approach and will be effective in delivering SSBCI marketing
and communications messaging to beneficiaries in a clear, transparent
way that is not misleading or confusing.
Therefore, we decline commenters' suggestions to withdraw this
proposal. We note that we will continue to provide guidance to MA
organizations and answer questions about the requirements for the SSBCI
disclaimer and compliance with our other regulatory requirements.
Lastly, we agree with commenters that agents and brokers, sales
representatives, and customer service representatives play a critical
role in communicating with beneficiaries and explaining SSBCI in a way
that is easy for beneficiaries to understand.
Comment: A few commenters believed CMS's proposed changes to the
SSBCI disclaimer requirements may confuse or mislead dually eligible
individuals. A commenter argued that some dually eligible individuals,
in response to SSBCI advertising or communications, may choose an MA
plan to receive some limited additional benefits that are unavailable
under traditional Medicare; the commenter expressed concern that such
individuals may make this enrollment choice because they are unaware
that as dually eligible individuals they can access some of the same
benefits through a Medicaid program. The commenter stated that the
SSBCI disclaimer language should be amended to transparently advise
potential enrollees what they may be giving up by choosing one of these
MA plans, as many dually eligible individuals are misled into choosing
an MA plan based on the extra benefits, when they may already be
eligible for such benefits under Medicaid. Another commenter urged CMS
to prohibit misleading marketing and communications of SSBCI that
duplicate Medicaid benefits, arguing that advocates report that many
dually eligible individuals are lured by these ads and report not
understanding the limits of the extra benefits or restrictions. The
commenter requested more robust SSBCI disclaimer language than
contemplated by this rule. Another commenter suggested that CMS should
require D-SNPs specifically to indicate (through their SSBCI
disclaimer, on all plan marketing, and communications materials, and in
the EOC) which benefits are also available through Medicaid, to reduce
misleading marketing and communications of SSBCI that duplicate
Medicaid benefits. The commenter believed that this would not be an
unduly burdensome requirement because D-SNPs already tailor each plan's
information to a particular state and frequently advertise benefits to
which dually eligible individuals are already entitled to receive more
comprehensively in both duration and scope under Medicaid.
Response: We understand commenters' concerns regarding the
potential for misleading marketing and communications of SSBCI that
duplicate Medicaid benefits. This is an important consideration, and we
appreciate commenters raising the issue. CMS is committed to protecting
all beneficiaries, including dually eligible individuals, from
confusing and potentially misleading marketing and communications
practices, while also ensuring that they have accurate and necessary
information to make coverage choices that best meet their health care
needs. While we are not including SSBCI disclaimer language
specifically for dually eligible individuals or D-
[[Page 30615]]
SNPs, we do want to clarify our existing authority related to MA
marketing.
Sections 1851(h) and 1852(j) of the Act provide CMS with the
authority to review marketing rules, develop marketing standards, and
ensure that marketing materials are accurate and not misleading.
Additionally, these provisions provide CMS with the authority to
prohibit certain marketing activities conducted by MA organizations
and, when applicable, agents, brokers, and other third parties
representing these organizations. Pursuant to section 1851(h)(1) and
(2) of the Act and CMS's implementing regulations, MA organizations may
not distribute any marketing material to MA-eligible individuals
(including dually eligible individuals, when applicable) unless the
material has been submitted to CMS for review and CMS has not
disapproved such material. CMS's regulations at Sec. 422.2262 provide,
among other things, that MA organizations may not mislead, confuse, or
provide materially inaccurate information to current or potential
enrollees, or engage in activities that could misrepresent the MA
organization. Section 422.2262 applies to all MA communications and
marketing materials, including advertising on behalf of MA
organizations. In accordance with regulations at Sec. 422.2261, MA
organizations must submit all marketing materials for CMS review and
may not distribute or otherwise make available any marketing materials
unless CMS has reviewed and approved the material, the material has
been deemed approved, or the material has been accepted via CMS's File
and Use process. Additionally, CMS routinely monitors MA marketing
materials and may take compliance action if we determine that an MA
organization is out of compliance with our rules. Considering the
existing authority CMS has for oversight and enforcement, we believe
this is sufficient to address commenters' concerns regarding dually
eligible individuals and the SSBCI disclaimer.
We expect and require MA organizations whose audience may include
dually eligible individuals to craft their ads and their SSBCI
disclaimers in a way that is accurate and not misleading or confusing,
in accordance with CMS rules. We recognize that partial-benefit dually
eligible individuals and full-benefit dually eligible individuals have
different levels of access to Medicaid benefits. For example, while
full-benefit dually eligible individuals would generally have access to
non-emergency transportation (NEMT) through their Medicaid coverage,
partial-benefit dually eligible individuals generally would not. An MA
organization advertising SSBCI that include NEMT would offer a new
benefit for partial-benefit dually eligible individuals, but the NEMT
generally would not be a new benefit for full-benefit dually eligible
individuals. Given that both categories of dually eligible individuals
may enroll in almost any non-SNP, it does not seem practical for MA
organizations to tailor the SSBCI disclaimer in a way that describes
which SSBCI would be covered under Medicaid, depending on the
eligibility category of the dually eligible individual. In some states,
Medicaid benefits may be limited to certain waiver participants or only
covered in specific situations. At this time, we will not be modifying
the SSBCI disclaimer further, but we understand commenters' concerns
and will consider this for future rulemaking.
Comment: A commenter suggested that the actual SSBCI eligibility
criteria must be available in the MA organization's existing plan
materials (such as the Evidence of Coverage (EOC), Summary of Benefits
(SB), and plan website) and that the SSBCI disclaimer should tell the
beneficiary how they can obtain these eligibility criteria and
hyperlink to them from any online reference.
Response: To the extent that the materials noted by the commenter
already contain the same (or more detailed) content as required in the
SSBCI disclaimer in a manner that achieves the same purpose, CMS would
consider the MA organizations producing these materials compliant with
Sec. 422.2267(e)(34) as finalized, for purposes of the disclaimer
content. Thus, in these cases, there is no need for the MA organization
to add redundant information to these materials in the form of an SSBCI
disclaimer because the required information is already present, and in
some cases more detailed, for the beneficiary. This would be the case,
for example, in the EOC, an important plan material where covered
benefits are described. We note that the EOC is a standardized
communications material, meaning that, per Sec. 422.2267(b), it must
be used in the form and manner provided by CMS without alteration,
aside from a few exceptions. In chapter 4, section 2 (Medical Benefits
Chart) of the current 2024 EOC standardized document, CMS requires MA
organizations offering SSBCI to include all applicable chronic
conditions, information regarding the process and/or criteria for
determining eligibility for SSBCI, the actual CMS-approved benefits,
and the applicable copays, coinsurance, and deductible for the SSBCI.
Per Sec. 422.111(b)(2), (b)(6), and (f)(9), MA organizations are
required to disclose in the EOC the benefits offered under a plan,
including applicable conditions and limitations, any other conditions
associated with the receipt or use of benefits, any mandatory or
optional supplemental benefits, and the terms and conditions for those
supplemental benefits.
CMS disagrees with the commenter that the disclaimer should also
include details about how a beneficiary can obtain the specific SSBCI
eligibility criteria used by the MA organization. We agree that the
potential eligibility criteria restrictions should be transparent and
straightforward for beneficiaries, but the disclaimer is model content
that is intended to ensure beneficiaries are aware that there are
eligibility criteria and to understand some of the eligible conditions
that apply. This will ensure beneficiaries are informed that there are
SSBCI restrictions and to notify the beneficiary that they may inquire
further with the MA organization about the details of these
restrictions if they so choose. We would also like to clarify that the
disclaimer is meant to be easy to read and understand, and to quickly
alert beneficiaries that they may not be eligible for certain listed
benefits. Adding additional information or a hyperlink would further
lengthen the disclaimer, so we are not requiring that. We are also not
prohibiting MA organizations from electing to provide additional
information not required by Sec. 422.2267(e)(34) as finalized in this
rule. There are ways that MA organizations can help guide beneficiaries
in their SSBCI education. As mentioned earlier, an MA organization can
encourage a beneficiary to reach out to them, using simple language
such as, ``For details, please contact us'' which would offer
beneficiaries an easy and straightforward way to learn more about
whether they are eligible for a specific SSBCI. The SSBCI disclaimer
requirements, as finalized, are designed to ensure that beneficiaries
are immediately aware that SSBCI is not a guaranteed benefit, and they
may inquire further with the MA organization if they want to learn more
about the eligibility restrictions.
Comment: Another commenter requested that CMS clarify that there
will be an exception for marketing and communications materials that do
not currently require the Federal Contracting Statement, such as social
media, SMS text messages, outdoor ads, banners, and envelopes.
[[Page 30616]]
Response: As finalized, there will not be an exception to the SSBCI
disclaimer requirement for marketing and communications materials that
do not currently require the Federal Contracting Statement. The intent
of the disclaimer is to ensure that any place where SSBCI is mentioned,
beneficiaries are fully aware that eligibility restrictions apply so
that they can make informed health care choices. We believe that the
marketing and communications modalities such as those listed by the
commenter are modalities where beneficiaries tend to be most at risk of
being misled by SSBCI ads and where the content appears to offer
benefits that a beneficiary wants and suggests they can easily access
or receive by enrolling in the plan. If the beneficiary is unaware that
there is a chance they may not qualify, then they may unwittingly sign
up for the plan because of benefits that they will not ultimately be
able to receive. The exceptions for the Federal Contracting Statement
are relevant to that specific provision only and do not apply to the
SSBCI disclaimer as finalized here.
Comment: A commenter remarked that ODA are inclusive of billboards
and bus shelter ads, which are often read by motorists. The commenter
believed imposing new requirements for ODA decreases legibility,
impact, and potential safety and requested that CMS allow SSBCI ads to
have varying disclaimer requirements based on the ODA medium.
Response: We thank commenters for sharing their concerns about
safety for motorists when it comes to including the SSBCI disclaimer on
ODA. We agree that these are important considerations for MA
organizations when making SSBCI advertising decisions. It is the MA
organization's discretion regarding where to advertise SSBCI. If an MA
organization has concerns regarding legibility, impact, and potential
safety when it comes to including the SSBCI disclaimer on a particular
ODA, then they may wish to reconsider their pursuit of that ad modality
for SSBCI. MA organizations have ample choice in how they choose to
advertise, however, they must comply with our SSBCI disclaimer
requirements, including ODA formatting requirements.
Comment: Other commenters encouraged CMS to make the SSBCI
disclaimer's model language even clearer by explicitly stating that not
everyone who has Medicare is eligible for the benefit and explaining
how enrollment in an MA plan differs from traditional Medicare. A
commenter suggested that the SSBCI disclaimer should include
information about the trade-offs between MA and traditional Medicare
and describe potential hurdles in MA, for example, provider networks,
utilization management, and prior authorization.
Response: We believe the SSBCI disclaimer requirements, as
finalized, do already make it clear that not everyone who has Medicare
is eligible for the SSBCI, as MA organizations are required to note
SSBCI eligibility restrictions in the disclaimer. Regarding comments
recommending that the disclaimer explain the differences between MA and
traditional Medicare, we disagree and believe this would not be
appropriate nor align with the core purpose of the SSBCI disclaimer.
CMS does not require MA organizations to include information about the
trade-offs or any comparison between MA and traditional Medicare in
their marketing and communications materials, and we are not
establishing such a requirement for the SSBCI disclaimer. However, we
note that per Sec. 422.2262, CMS does require MA organizations to
provide materially accurate information to current or potential
enrollees. Therefore, MA organizations must provide accurate
information about provider networks, utilization management, and prior
authorization wherever MA organizations choose to include such
information in their marketing and communications materials.
Comment: Some commenters recommended CMS ensure proper enforcement
against misleading SSBCI marketing and communications tactics. One
commenter urged CMS to impose high penalties on MA organizations that
fail to comply with all the revised marketing and communications
requirements for the MA program and that such enforcement action should
include civil monetary penalties, suspensions, and for the most abusive
actors, permanent bans from MA program participation. Another commenter
noted that the current procedures for enforcement of marketing and
communications regulations that CMS has in place are not working, and
marketing and communications practices that are confusing and
misleading to seniors need to stop.
Response: We thank commenters for raising the important topic of
enforcement against misleading marketing and communications in general,
and we want to assure commenters that CMS takes its enforcement efforts
seriously, especially as they relate to the SSBCI disclaimer
requirements, as finalized. Accordingly, we would like to provide an
overview of our approach to MA enforcement.
CMS engages in various enforcement efforts across the MA program to
help ensure the health and wellbeing of MA enrollees. The Office of
Program Operations and Local Engagement (OPOLE) routinely monitors MA
organizations, with dedicated CMS account managers across ten regions
of the country assigned to each MA organization. CMS also maintains MA
organization marketing monitoring projects which consist, as provided
in Sec. 422.2261, of reviewing and approving (if in accordance with
CMS regulations) marketing materials produced by MA organizations and
their TPMOs.
Through routine oversight and monitoring, CMS may take compliance
actions if it determines that an MA organization is out of compliance
with the terms of its contract with CMS. Based on an assessment of the
circumstances surrounding non-compliance, CMS may issue a compliance
action such as a notice of non-compliance, warning letter, or
corrective action plan. As described in Sec. 422.504(m)(3), a notice
of non-compliance may be issued for any failure to comply with the
requirements of the MA organization's current or prior contract with
CMS; a warning letter may be issued for serious and/or continued non-
compliance with the MA organization's current or prior contract with
CMS; and a corrective action plan may be issued for repeated, not
corrected, or particularly serious non-compliance. CMS's criteria for
issuing a compliance action depends on six key factors listed at Sec.
422.504(m)(2).
In addition to account management, routine monitoring efforts,
auditing, and compliance actions, CMS also has the authority to impose
financial penalties, marketing and enrollment sanctions, or contract
terminations against MA organizations whose non-compliance meets
certain statutory thresholds. CMS evaluates circumstances of documented
non-compliance against those thresholds in determining an appropriate
action. In circumstances when non-compliance by an MA organization is
pervasive, ongoing, and may require significant time and resources to
identify and correct, CMS might require a corrective action plan or, if
the statutory threshold for non-compliance is met, impose enrollment
and marketing sanctions in an effort to protect additional
beneficiaries from enrolling in the plan until the MA organization can
demonstrate that their issues have been sufficiently corrected and no
longer likely to recur. If, however, it is determined that an MA
organization's non-compliance has already been corrected by the time it
[[Page 30617]]
was identified through CMS's oversight and enforcement efforts, and
enrollees or prospective enrollees are no longer in danger of
experiencing inappropriate delays or denials to their benefits, a civil
money penalty might be the most appropriate response if the non-
compliance met statutory standards. If standards for a financial
penalty are not met, CMS may still issue a notice of non-compliance
which will count against the MA organization during CMS's annual review
of their past performance.
In summary, we believe that the above outlined procedures for
enforcement of marketing regulations that CMS currently has in place
are appropriate and effective. We are confident that these procedures
will sufficiently address any potential non-compliance with the SSBCI
disclaimer rule by MA organizations.
Summary of Regulatory Changes
We received a range of comments pertaining to this proposal, the
majority of which reflected support for the regulation. After
considering the comments we received and for the reasons outlined in
the proposed rule and our responses to comments, we are amending Sec.
422.2267(e)(34) largely as proposed, but with modifications. We are
finalizing paragraph (e)(34)(ii) with revisions to adopt more specific
requirements for when and how an MA organization must list up to five
chronic conditions used to determine eligibility for SSBCI identified
in marketing and communications materials. These requirements specify
how an MA organization must structure its list of chronic conditions in
the SSBCI disclaimer when only one type of SSBCI is mentioned and when
multiple types of SSBCI are mentioned. Modifications in paragraph
(e)(34)(ii) also include changing ``MA organization'' to ``applicable
MA plan'' and requiring, where there are more than five eligible
conditions, a note indicating that there are other eligible conditions
not listed. We are finalizing paragraph (e)(34)(iii) with modifications
to ensure that the specific coverage criteria of the MA plan that
offers the SSBCI are referenced as additional eligibility requirements.
We are also finalizing paragraph (e)(34)(iii) without the phrase
``items and services'' to avoid any implication that SSBCI that are
reductions in cost sharing are not included in the SSBCI disclaimer
requirement. The SSBCI disclaimer is required for all marketing and
communications materials that mention SSBCI of any type. The new SSBCI
disclaimer requirements, as finalized here, will apply to all contract
year 2025 marketing and communications beginning October 1, 2024, and
in subsequent years.
C. Agent Broker Compensation
Agents and brokers are an integral part of the MA and Part D
industry, helping millions of Medicare beneficiaries to learn about and
enroll in Medicare, MA plans, and PDPs by providing expert guidance on
plan options in their local area, while assisting with everything from
comparing costs and coverage to applying for financial assistance.
Pursuant to section 1851(j)(2)(D) of the Act, the Secretary has a
statutory obligation to establish guidelines to ensure that the use of
agent and broker compensation creates incentives for agents and brokers
to enroll individuals in the MA plan that is intended to best meet
beneficiaries' health care needs. In September 2008, we published the
Revisions to the Medicare Advantage and Prescription Drug Benefit
Programs interim final rule (73 FR 54237), our first regulation to
establish requirements for agent and broker compensation, which
included certain limitations on agent and broker compensation and other
safeguards. In that rulemaking, we noted that these reforms addressed
concerns that the previously permitted compensation structure resulted
in financial incentives for agents to only market and enroll
beneficiaries in some plan products and not others due to larger
commissions. These incentives potentially resulted in beneficiaries
being directed towards plans that were not best suited to their needs.
In that interim final rule, we noted that depending on the
circumstances, agent and broker relationships can be problematic under
the federal anti-kickback statute if they involve, by way of example
only, compensation in excess of fair market value, compensation
structures tied to the health status of the beneficiary (for example,
cherry-picking), or compensation that varies based on the attainment of
certain enrollment targets. These and other fraud and abuse risks exist
among the current agent and broker relationships. We note that the HHS
Office of the Inspector General (OIG) advisory opinion process is
available to parties seeking OIG's opinion as to the legality of a
particular arrangement. Information about this process remains
available on the OIG's website at http://oig.hhs.gov/fraud/advisoryopinions.html. CMS has also periodically made updates to the
agent and broker compensation requirements in subsequent rulemaking (73
FR 67406).
It has become apparent that the growth of MA and changes in MA
marketing warrant further updates to ensure the appropriate guardrails
are in place to protect beneficiaries and support competition. For
example, shifts in the industry and resulting changes in contract terms
offered to agents and brokers and other third-party marketing
organizations (TPMOs) for enrollment-related services and expenses
warrant further action to ensure compliance with statutory requirements
and that the compensation paid to agents and brokers incentivizes them
to enroll individuals in the MA plan that is intended to best meet
their health care needs. CMS has also observed that the MA marketplace,
nationwide, has become increasingly consolidated among a few large
national parent organizations, which presumably have greater capital to
expend on sales, marketing, and other incentives and bonus payments to
agents and brokers than smaller market MA plans. This provides a
greater opportunity for these larger organizations, either directly or
through third parties, to use financial incentives outside and
potentially in violation of CMS's rules to encourage agents and brokers
to enroll individuals in their plan over a competitor's plan. For
example, CMS has seen web-based advertisements for agents and brokers
to work with or sell particular plans where the agents and brokers are
offered bonuses and perks (such as golf parties, trips, and extra cash)
framed as allowable administrative add-ons in exchange for enrollments.
These payments, while being presented to the agents and brokers as
bonuses or incentives, are implemented in such a way that allows the
plan sponsor, in most cases, to credibly account for these anti-
competitive payments as ``administrative'' rather than ``compensation''
and these payments are therefore not limited by the existing regulatory
limits on compensation. We note these payments may implicate and,
depending on the facts and circumstances, potentially violate the
Federal anti-kickback statute.
CMS has also received complaints from a host of different
organizations, including state partners, beneficiary advocacy
organizations, and MA plans, among others. A common thread to the
complaints is that agents and brokers are being paid, typically through
various purported administrative and other add-on payments, amounts
that cumulatively exceed the maximum compensation allowed under the
current regulations. Moreover, CMS has observed that such payments have
[[Page 30618]]
created an environment similar to what prompted CMS to engage in the
original agent and broker compensation rulemaking in 2008, where the
amounts being paid for activities that MAOs do not characterize as
``compensation,'' are rapidly increasing. The result is that agents and
brokers are presented with a suite of questionable financial incentives
that are likely to influence which MA plan an agent encourages a
beneficiary to select during enrollment.
We believe these financial incentives are contributing to behaviors
that are driving an increase in beneficiary marketing complaints
received by CMS in recent years. As was discussed in our most recent
Medicare Program Contract Year 2023 Rule, based on the most recent data
available at that time, in 2021, CMS received more than twice the
number of beneficiary complaints related to marketing of MA plans
compared to 2020, and for some states those numbers were much higher
(87 FR 27704 through 27902). These complaints are typically filed by
enrollees or their caregivers with CMS through 1-800-Medicare or CMS
regional offices, and generally allege that a beneficiary was
encouraged or pressured to join an MA plan, and that once enrolled, the
plan was not what the enrollee expected or what was explained to them
when they spoke to an agent or broker.
In the Contract Year 2024 Policy and Technical Changes to the
Medicare Advantage Program, Medicare Prescription Drug Benefit Program,
Medicare Cost Plan Program, and Programs of All-Inclusive Care for the
Elderly final rule (88 FR 22234 through 22256), which appeared in the
Federal Register on April 12, 2023, we discussed at length the rapidly
increasing use of various marketing activities that typically result in
beneficiaries being connected with agents and brokers to be enrolled in
MA plans. Based on a number of complaints CMS reviewed, as well as
audio recordings of sale calls, it appears that the increased marketing
of 1-800 numbers to facilitate enrollment in MA plans through national
television advertisements combined with the subsequent actions of
agents and brokers when beneficiaries responded to those ads resulted
in beneficiary confusion. In some instances, through listening to call
recordings, CMS observed that when beneficiaries reached an agent or
broker in response to these television ads, the beneficiary was often
pressured by the agent or broker to continue with a plan enrollment
even though the beneficiary was clearly confused.
At the same time, these types of complaints have escalated at a
pace that mirrors the growth of administrative or add-on payments,
which we contend are being misused to pay agents and brokers over and
above the CMS-set compensation limits on payment to agents and brokers.
CMS is concerned that when the value of administrative payments offered
to agents and brokers reaches the levels that CMS has observed in
recent years, these payments may distort the process that agents and
brokers are expected to engage in when they assist beneficiaries in
weighing the merits of different available plans. This distortion
disadvantages beneficiaries who enroll in a plan based on the
recommendation or encouragement of an agent or broker who may be
influenced by how much or what kind of administrative payment the agent
or broker expects to receive, rather than enrolling the beneficiary in
an option that is intended to best meet the beneficiary's health care
needs.
Consequently, the rise in MA marketing complaints noted previously
suggests that agents and brokers are being influenced to engage in high
pressure tactics, which may in turn cause beneficiary confusion about
their enrollment choices, to meet enrollment targets or earn
``administrative payments,'' either directly or on behalf of their
employer or affiliated marketing organization, in excess of the capped
compensation payment set by CMS. Although CMS' existing regulations
already prohibit plans, and by extension their agents and brokers, from
engaging in misleading or confusing communications with current or
potential enrollees, in the proposed rule we noted that additional
limitations on payments to agents and brokers may be necessary to
adequately address the rise in MA marketing complaints described here.
Additionally, while our proposed rule largely focused on payments
and compensation made to agents and brokers, we noted that CMS is also
concerned about how payments from MA plans to TPMOs may further
influence or obscure the activities of agent and brokers. In
particular, CMS expressed interest in the effect of payments made from
MA plans to Field Marketing Organizations (FMOs), which is a type of
TPMO that employs or is affiliated with agents and brokers to complete
MA enrollment activities, which have increased in influence in recent
years. FMOs may also conduct additional marketing activities on behalf
of MA plans, such as lead generating and advertising. In fact, at the
time of our first agent and broker compensation regulation, CMS
expressed concern about amounts paid to FMOs for services that do not
necessarily relate directly to enrollments completed by the agent or
broker who deals directly with the beneficiary (73 FR 54239). Some
examples of such services are training, material development, customer
service, direct mail, and agent recruitment.
As we noted in the preamble to the two interim final rules
published in 2008 (73 FR 67406 and 73 FR 54226), all parties should be
mindful that their compensation arrangements, including arrangements
with FMOs and other similar type entities, must comply with the fraud
and abuse laws, including the federal anti-kickback statute. Beginning
as early as 2010, an OIG report indicated that ``plan sponsors may have
created financial incentives that could lead FMOs to encourage sales
agents to enroll Medicare beneficiaries in plans that do not meet their
health care needs. Because FMOs, like sales agents, may influence
Medicare beneficiaries' enrollment in MA plans, CMS should issue
additional regulations more clearly defining how and how much FMOs
should be paid for their services.'' \153\ In the time since CMS first
began to regulate agent and broker compensation, we have seen the FMO
landscape change from mostly smaller, regionally based companies to a
largely consolidated group of large national private equity-backed or
publicly-traded companies.
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\153\ Levinson, Daniel R, BENEFICIARIES REMAIN VULNERABLE TO
SALES AGENTS' MARKETING OF MEDICARE ADVANTAGE PLANS (March 2010);
https://oig.hhs.gov/oei/reports/oei-05-09-00070.pdf.
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Finally, in addition to the undue influence that perks, add-on
payments, volume bonuses and other financial incentives that are paid
by MA organizations to FMOs may have on agents and brokers, they also
create a situation where there is an unlevel playing field among plans.
Larger, national MA plans are likely able to more easily shoulder the
added costs paid to FMOs, as compared to smaller, more locally based MA
plans. Furthermore, we have received reports that some larger FMOs are
more likely to contract with large national plans rather than smaller
regional plans, negatively impacting competition. On July 9, 2021,
President Biden issued Executive Order (E.O.) 14036: ``Promoting
Competition in the American Economy,'' (hereinafter referred to as E.O.
14036). E.O. 14036 describes the Administration's policy goals to
promote a fair, open, competitive marketplace, and directs
[[Page 30619]]
the U.S. Department of Health and Human Services to consider policies
that ensure Americans can choose health insurance plans that meet their
needs and compare plan offerings, furthering competition and consumer
choice. The regulatory changes included in the 2023 proposed rule also
aimed to deter anti-competitive practices engaged in by MA
organizations, agents, brokers, and TPMOs that prevent beneficiaries
from exercising fully informed choice and limit competition in the
Medicare plan marketplace among Traditional Medicare, MA plans, and
Medigap plans.
CMS is concerned that the more recent increases in fees being paid
to larger FMOs have resulted in a ``bidding war'' among MA plans to
secure anti-competitive contract terms with FMOs and their affiliated
agents and brokers. If left unaddressed, such bidding wars will
continue to escalate with anti-competitive results, as smaller local or
regional plans that are unable to pay exorbitant fees to FMOs risk
losing enrollees to larger, national plans who can. In addition to
seeking comment to help us develop additional regulatory action, we
specifically requested comments regarding how CMS can further ensure
that payments made by MA plans to FMOs do not undercut the intended
outcome of the agent and broker compensation proposals included in this
final rule; we thank commenters for the wealth of information they have
shared and we will continue to integrate this new knowledge as we
explore potential future rulemaking.
In addition, the comments that we received in response to the
November 2023 proposed rule indicate that there is, in fact, an
additional force at work in misaligning the incentives of agents and
brokers enrolling Medicare beneficiaries into MA plans. Commenters
brought to our attention that agents and brokers who are direct
employees of FMOs, call centers, and other TPMOs typically receive an
annual salary from their employer. We note that the salary received by
employees of a TPMO from their employer does not currently fall under
our regulatory definition of ``compensation.'' Commenters stated that
an agent who is not directly employed by a call center may receive
renewal payments for a beneficiary who remains enrolled in the plan
that agent has helped the beneficiary select. By contrast, commenters
also stated that a call center employee who is salaried may never be
eligible to receive renewal payments and may only be incentivized to
generate new enrollments. In this way, commenters expressed concerns
that the incentives between the two types of agents and brokers may be
different, and so a one-size fits all approach to regulating agent and
broker compensation for all agents who enroll beneficiaries into MA
plans has inherent limitations. This is an area of policy we will
consider in future rulemaking.
As noted previously, sections 1851(j)(2)(D) and 1851(h)(4)(D) of
the Act direct the Secretary to set limits on compensation rates to
``ensure that the use of compensation creates incentives for agents and
brokers to enroll individuals in the MA plan that is intended to best
meet their health care needs,'' and that the Secretary ``shall only
permit a Medicare Advantage organization (and the agents, brokers, and
other third parties representing such organization) to conduct the
activities described in subsection (j)(2) in accordance with the
limitations established under such subsection.'' In this final rule, we
are focusing on current payment structures, including the use of
administrative payments, among MA organizations and agents, brokers,
and TMPOs, specifically FMOs, that may incentivize some agents or
brokers to emphasize or prioritize one plan over another, irrespective
of the beneficiary's needs, leading to enrollment in a plan that does
not best fit the beneficiary's needs and a distortion of the
competitive process.
Our regulations at Sec. 422.2274 set out limitations regarding
various types of payments and compensation that may be paid to agents,
brokers, and third parties who represent MA organizations. Each of
these limitations is intended to better align the professional
incentives of the agents and brokers with the interests of the Medicare
beneficiaries they serve. Our regulations specify maximum compensation
amounts that may be paid to agents and brokers for initial enrollment
and renewals. The regulations also currently allow for payment to
agents and brokers for administrative costs such as training and
operational overhead, as long as the payments are at or below the value
of those services in the marketplace. The maximum compensation for
initial and renewal enrollments and the requirement that administrative
payments reflect fair market value for actual administrative services
have been intended to ensure incentives for agents and brokers to help
enroll beneficiaries into MA plans that best meet their health care
needs.
However, while CMS has affirmatively stated the types of allowable
payment arrangements and the parameters for those payments in
regulations at Sec. 422.2274, as previously discussed, some recent
studies suggest that MA plans offer additional or alternative
incentives to agents and brokers, often through third parties such as
FMOs, to prioritize enrollment into some plans over others. These
incentives are both explicit (in the form of higher payments
purportedly for administrative services) and implicit (such as in the
case of passing on leads, as discussed later in this section).\154\
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\154\ The Commonwealth Fund, The Challenges of Choosing Medicare
Coverage: Views from Insurance Brokers and Agents (Feb. 28, 2023);
https://www.commonwealthfund.org/publications/2023/feb/challenges-choosing-medicare-coverage-views-insurance-brokers-agents.
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As previously mentioned, we believe payments categorized by MA
organizations as ``administrative expenses,'' paid by MA organizations
to agents and brokers, have significantly outpaced the market rates for
similar services provided in non-MA markets, such as Traditional
Medicare with Medigap. This is based on information shared by insurance
associations and focus groups and published in research articles by
groups such as the Commonwealth Fund, which found that ``most brokers
and agents in the focus groups recalled receiving higher commissions
[total payments, including compensation and administrative payments]--
sometimes much higher--for enrolling people in Medicare Advantage plans
compared to Medigap.'' \155\
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\155\ The Commonwealth Fund, The Challenges of Choosing Medicare
Coverage: Views from Insurance Brokers and Agents (February. 28,
2023); https://www.commonwealthfund.org/publications/2023/feb/challenges-choosing-medicare-coverage-views-insurance-brokers-agents.
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Similarly, some MA organizations are paying for things such as
travel or operational overhead on a ``per enrollment'' basis, resulting
in instances where an agent or broker may be paid multiple times for
the same one-time expense, if the agent incurring the expense happened
to enroll more than one beneficiary into the plan making the payment.
For example, an agent could be reimbursed for the cost of traveling to
an event where that agent enrolls a beneficiary into an MA plan; if the
cost of travel is paid on a ``per enrollment'' basis, the agent would
be reimbursed the price of the trip multiplied by the number of
enrollments the agent facilitated while at that event. In this
scenario, whichever MA organization reimburses for travel at the
highest rates would effectively be offering a higher commission per
enrollee, as the increased amount paid for travel, in additional to the
allowable compensation, would be higher. While
[[Page 30620]]
this would not violate existing MA regulations, this would inherently
create a conflict of interest for the agent. As statute requires that
the Secretary ``ensure that the use of compensation creates incentives
for agents and brokers to enroll individuals in the MA plan that is
intended to best meet their health care needs,'' we believe this type
of conflict must be addressed.
We are also concerned that other activities undertaken by a TPMO,
as a part of their business relationships with MA organizations, may
influence the plan choices offered or how plan choices are presented by
the agent or broker to a prospective enrollee. For example, we have
learned of arrangements where a TPMO, such as an FMO, provides an MA
organization with both marketing and brokering services. As part of the
arrangement, the MA organization pays the FMO for leads generated by
the FMO and then the leads are given directly to the FMO's agents
instead of to the MA organization itself (or the MA organization's
other contracted agents and brokers). When the FMO's agents then
contact the individual and enroll the individual into an MA plan, the
MA organization pays the agent or the FMO the enrollment compensation
described in Sec. 422.2274(d), separate and apart from any referral
fee paid to the FMO under Sec. 422.2274(f).
While MA organizations that are engaged in these types of
arrangements (such as paying FMOs for lead generating activities and
marketing, then giving the leads to the FMO's agents and then paying
compensation for that same enrollment) might argue that they are not
intending to influence an agent or broker in determining which plan
``best meets the health care needs of a beneficiary,'' we believe it is
likely that these arrangements are having this effect. We believe that
current contracts in place between FMOs and MA organizations can
trickle down to influence agents and brokers in enrolling more
beneficiaries into those plans that also provide the agents and brokers
with leads, regardless of the appropriateness of the plan is for the
individual enrollees. In fact, FMOs could leverage these leads as a
form of additional compensation by ``rewarding'' agents who enroll
beneficiaries into a specific plan with additional leads. Therefore,
CMS is required under section 1851(j)(2)(D) of the Act to establish
guidelines that will bring the incentives for agents and brokers to
enroll individuals in an MA plan that is intended to best meet their
health care needs, in accordance with the statute and as such is CMS'
intention here.
In the proposed rule we proposed to: (1) generally prohibit
contract terms between MA organizations and agents, brokers, or other
TMPOs that may interfere with the agent's or broker's ability to
objectively assess and recommend the plan which best fits a
beneficiary's health care needs; (2) set a single agent and broker
compensation rate for all plans, while revising the scope of what is
considered ``compensation;'' and (3) eliminate the regulatory framework
which currently allows for separate payment to agents and brokers for
administrative services. We also proposed to make conforming edits to
the agent broker compensation rules at Sec. 423.2274. We will continue
to monitor the MA marketing ecosystem and the influence of FMOs, lead
generators, call centers, web-based sources, TV ads, and other fast-
moving aspects of MA marketing to ensure beneficiaries are protected
from misleading or predatory behavior while also having access to the
information and support they need to make an informed decision about
their Medicare coverage. For example, CMS will continue to monitor the
behaviors addressed in this final rule at VI.A, which limit the
distribution of personal beneficiary data by TPMOs (Sec. Sec.
422.2274(g)(4) and 423.2274(g)(4)).
1. Limitation on Contract Terms
We proposed to add at Sec. 422.2274(c)(13) that, beginning in
contract year 2025, MA organizations must ensure that no provision of a
contract with an agent, broker, or TPMO, including FMO, has the direct
or indirect effect of creating an incentive that would reasonably be
expected to inhibit an agent's or broker's ability to objectively
assess and recommend which plan best meets the health care needs of a
beneficiary.
Examples of the anti-competitive contract terms we proposed to
prohibit included, for instance, those that specify renewal or other
terms of a plan's contract with an agent broker or FMO contingent upon
preferentially higher rates of enrollment; that make an MA
organization's contract with an FMO or reimbursement rates for
marketing activities contingent upon agents and brokers employed by the
FMO meeting specified enrollment quotas; terms that provide for bonuses
or additional payments from an MA organizations to an FMO with the
explicit or implicit understanding that the money be passed on to
agents or brokers based on enrollment volume in plans sponsored by that
MA organization; for an FMO to provide an agent or broker leads or
other incentives based on previously enrolling beneficiaries into
specific plans for a reason other than what best meets their health
care needs.
As we explained in the November 2023 proposed rule, CMS believes
that the proposed limitations on contract terms would give plans
further direction as to the types of incentives and outcomes that must
be avoided without being overly prescriptive as to how the plans should
structure these arrangements.
We received the following comments on this proposal.
Comment: Commenters generally indicated their support for this
proposal to require that MA organizations must ensure that no provision
of a contract with an agent, broker, or TPMO has the direct or indirect
effect of creating an incentive that would reasonably be expected to
inhibit an agent or broker's ability to objectively assess and
recommend which plan best meets the health care needs of the
beneficiary.
Response: We thank commenters for their support.
Comment: Some commenters requested additional information about the
types of incentives and contract terms we intended to limit and the
means by which we intend to enforce these restrictions.
Response: We thank commenters for their thoughtful input. While we
recognize that it is impossible to anticipate every scenario that could
present itself, it is important that we are clear in our meaning of the
phrase ``direct or indirect effect of creating an incentive that would
reasonably be expected to inhibit an agent or broker's ability to
objectively assess and recommend which plan best suits the
beneficiaries' health care needs.''
Relying on a ``reasonableness standard,'' we would not, for
example, read our regulation to prohibit MA plans from contracting with
independent agents who have not been appointed to represent all
possible competitors in a market. In this case, an agent who does not
represent all possible competitors is inherently more likely to enroll
beneficiaries into the plan(s) with which he or she is contracted.
However, provided there is no contractual or financial incentive that
would prevent the agent from choosing to seek additional arrangements
and sell competitors' plans, the agent and the MAO(s) with which it
contracts would be in compliance with our rule.
If, by way of another example, a TPMO or agent was offered a bonus
or other payment by a plan or a TPMO
[[Page 30621]]
contracted by a plan or plans, in exchange for declining to represent a
competing MA plan, this would be an example of a contract term that
would likely violate the rule, as it is inherently anti-competitive in
nature and on its face has the effect of encouraging enrollment in one
plan over another based largely on the receipt of a financial reward
for not representing or promoting a competitor plan's product.
Similarly, depending on the facts and circumstances, bonuses for
hitting volume-based targets for sales of a plan may not be directly
anti-competitive if they do not outwardly discourage or preclude a TPMO
from marketing other plans, but it would likely have the indirect
effect of creating an incentive for the TPMO to prioritize sales of one
plan over another based on those financial incentives and not the best
interests of the enrollees. Because the indirect effect of volume-based
bonuses of this kind would be anti-competitive in nature, they would
likely run afoul of the provision, and, like other potential scenarios
described herein, could implicate fraud and abuse laws as well.
CMS expects to review contracts as part of routine monitoring, as
well as relying on complaints and other methods of investigation, and
work conducted by the Office of the Inspector General, to enforce this
regulation. We also may pursue additional data collection regarding
these contract arrangements as part of our established Part C reporting
requirements process in future years.
After considering public comments, and the overwhelming support for
this proposal, and for the reasons described in the November 2023
proposed rule and in our earlier responses, we are finalizing the
policy as proposed at Sec. 422.2274(c)(13) requiring that MA
organizations must ensure that no provision of a contract with an
agent, broker, or TPMO has the direct or indirect effect of creating an
incentive that would reasonably be expected to inhibit an agent's or
broker's ability to objectively assess and recommend which plan best
meets the health care needs of a beneficiary; we are including one
modification to the regulatory text to make clear that this requirement
is applicable beginning with marketing and communications activities
related to the 2025 contract year. We are continuing to consider
whether additional guidance in this space may be necessary in future
rulemaking.
2. Compensation Rates
Under current regulations, compensation for agents and brokers
(described at Sec. 422.2274(d)(2) and excluding administrative
payments as described in Sec. 422.2274(e)) may be paid at a rate
determined by the MA organization but may not exceed caps that CMS
calculates each year, based on fair market value (FMV) as specified at
Sec. 422.2274(a). For example, the CY2024 national agent/broker FMV
compensation caps are $611 for each MA initial enrollment, $306 for a
MA renewal enrollment, $100 for each Part D initial enrollment, and $50
for a Part D renewal enrollment.
We have learned that overall payments to agents and brokers can
vary significantly depending on which plan an individual enrolls in. In
the November 2023 proposed rule, we expressed concern that the lack of
a uniform compensation standard across plans can encourage the types of
arrangements that provide strong financial incentives for agents and
brokers to favor some plans over others and that these incentives could
result in beneficiaries enrolling in plans that do not best fit their
needs. To eliminate this potential for bias and make certain that CMS'
regulations governing agent and broker compensation ensure that agents
and brokers are incented to enroll individuals in the MA plan that is
intended to best meet their health care needs, we proposed to amend our
regulations to require that all payments to agents or brokers that are
tied to enrollment, related to an enrollment in an MA plan or product,
or are for services conducted as part of the relationship associated
with the enrollment into an MA plan or product must be included under
compensation, as defined at Sec. 422.2274(a), including payments for
activities previously excluded under the definition of compensation at
Sec. 422.2274(a)(ii), and are regulated by the compensation
requirements of Sec. 422.2274(d)(1) through (3). We also proposed to
make conforming amendments to the regulations at Sec. 422.2274(e)(2)
to clarify that all administrative payments are included in the
calculation of enrollment-based compensation; this proposal is further
discussed in section VI.B. (X)(c) of this final rule, ``Administrative
Payments.''
Further, we proposed to change the caps on compensation payments
that are currently provided in Sec. 422.2274 to set fixed rates that
would be paid by all plans across the board. As proposed, agents and
brokers would be paid the same amount either from the MA plan directly
or by an FMO. We noted that our proposal does not extend to payments
for referrals as described at Sec. 422.2274(f); we believe the cap set
on referral payments is sufficient to avoid the harms described
previously, and that a referral payment is often made in lieu of a
compensation payment, and so it does not provide the same incentives as
compensation payments.
We believe that this approach may help level the playing field for
all plans represented by an agent or broker and promotes competition.
In addition, by explicitly saying that compensation extends to
additional activities as a part of the relationship between the agent
and the beneficiary, we reinforce CMS' longstanding understanding that
the initial and renewal compensation amounts are based on the fact that
additional work may be done by an agent or broker throughout the plan
year, including fielding follow-up questions from the beneficiary or
collecting additional information from a beneficiary.
Comment: A few commenters requested clarification regarding the
timing and applicability of this proposed policy for the 2025 contract
year and expressed concern that activities necessary to prepare for the
2025 contract year AEP begin far in advance of the 2025 calendar year.
Commenters stated that a rule finalized in the Spring of 2024 with an
effective date 60 days later may put many agents and brokers who have
already begun securing their annual training, testing, and state
appointments out of compliance before the AEP has even begun.
Response: We understand that the narrow timeline between
finalization of this rule and the time at which agents and brokers will
begin engaging in necessary and mandatory activities to prepare for the
2025 contract year may make it difficult for them to remain in
compliance with this rule. In recognition of the timing concerns noted
by commenters, we are the clarifying that applicability of these
changes to Sec. Sec. 422.2274 and Sec. 423.2274 until October 1,
2024, so these updates will coincide with the beginning of marketing
activities for the 2025 contract year. We are clarifying in our
regulatory text that prior to that date, CMS's existing agent and
broker compensation requirements will continue to apply, meaning that,
for instance, arrangements between MAOs and TPMOs or agents that are
not in compliance with our proposals will not be subject to remedial
action for activities engaged in before October 1, 2024, even if they
were related to 2025 contract year plans.
After considering feedback in public comments, we are finalizing
our policy to require that, beginning with contract year 2025, all
payments to agents or
[[Page 30622]]
brokers that are tied to enrollment, related to an enrollment in an MA
plan or product, or are for services conducted as part of the
relationship associated with the enrollment into an MA plan or product
must be included under compensation, as defined at Sec. 422.2274(a),
including payments for activities previously excluded under the
definition of compensation at Sec. 422.2274(a)(ii), and are regulated
by the compensation requirements of Sec. 422.2274(d)(1) through (3).
To memorialize this updated policy, we are finalizing an updated
definition of compensation at Sec. 422.2274(a) that will apply
beginning with contract year 2025, meaning that MAOs and the TPMOs that
they work with will need to begin to comply with these updated
standards beginning on October 1, 2024, when marketing activities for
contract year 2025 begin. We are also adopting language to the existing
definition of compensation to make clear that this definition will
apply for contract years through contract 2024, meaning that MAOs and
TPMOs should continue to comply with CMS's existing agent and broker
compensation policies until marketing activities for contract year 2025
begin on October 1, 2024. We are also finalizing our policy to make
conforming amendments to the regulations at Sec. 422.2274(e)(2) to
clarify that all administrative payments are included in the
calculation of enrollment-based compensation, with an applicability
date of October 1, 2024.
MA organizations are also currently required, under Sec.
422.2274(c)(5), to report to CMS on an annual basis the specific rates
and range of rates they will be paying independent agents and brokers.
We proposed to remove the reporting requirement at Sec.
422.2274(c)(5), as all agents and brokers would be paid the same
compensation rate in a given year under our proposal.
We did not receive any comments on this aspect of our proposal and
are finalizing it as proposed.
3. Administrative Payments
As discussed previously, CMS proposed that all payments to an agent
or broker relating to the initial enrollment, renewal, or services
related to a plan product would be included in the definition of
compensation. For consistency with that proposed policy, we also
proposed to incorporate ``administrative payments'' currently described
at Sec. 422.2274(e)(1) into compensation, and to amend Sec.
422.2274(e)(2) to clarify that administrative payments would be
included in the calculation of enrollment-based compensation beginning
in Contract Year 2025. As we discussed in the proposed rule, we believe
this step is necessary to ensure that MA organizations cannot utilize
the existing regulatory framework allowing for separate payment for
administrative services to effectively circumvent the FMV caps on agent
and broker compensation. For instance, we stated in the November 2023
proposed rule that we understand that many plans are paying agents and
brokers for conducting health risk assessments (HRAs) and categorize
these HRAs as an ``administrative service.'' We understand the fair
market value of these services, when provided by non-medical staff, to
be approximately $12.50 per hour and the time required to complete an
HRA is intended to be no more than twenty minutes.\156\ However, we
explained that we have been made aware of instances of an agent or
broker enrolling a beneficiary into a plan, asking the enrollee to
complete one of these short assessments, and then being compensated at
rates of up to $125 per HRA. Compensation at these levels is not
consistent with market value and CMS believes that compensation at
these levels far exceeds the fair market value of the actual service
being performed and therefore should not be categorized as an
``administrative service.'' Moreover, a study funded by the CDC to
provide guidance for best practices ``recommend that HRAs be tied
closely with clinician practice and be collected electronically and
incorporated into electronic/patient health records [. . .] agents/
brokers lack the necessary health care knowledge, information
technology capabilities, and provider relationships to link HRAs in the
recommended way.'' \157\ For this reason, we believe that the HRAs
completed by agents and brokers do not have the same value as those
performed and interpreted by health care providers or in a health care
setting.
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\156\ CDC, Interim Guidance for Health Risk Assessments and
their Modes of Provision for Medicare Beneficiaries; https://www.cms.gov/files/document/healthriskassessmentscdcfinalpdf.
\157\ The Commonwealth Fund, The Challenges of Choosing Medicare
Coverage: Views from Insurance Brokers and Agents (Feb. 28, 2023);
https://www.commonwealthfund.org/publications/2023/feb/challenges-choosing-medicare-coverage-views-insurance-brokers-agents; cf.
Guidance on Development of Health Risk Assessment as Part of the
Annual Wellness Visit for Medicare Beneficiaries--(Section 4103 of
the Patient Protection and Affordable Care Act) https://www.cdc.gov/policy/paeo/hra/hraawvguidancereportfinal.pdf.
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Similarly, we explained in the November 2023 proposed rule that
according to recent market surveys and information gleaned from
oversight activities, payments purportedly for training and testing and
other administrative tasks for agents and brokers selling some MA plans
seem to significantly outpace payments for similar activities made by
other MA plans, as well as payments for similar activities undertaken
by insurance agents and brokers in other industries. The higher overall
cost as compared to other industries, combined with the otherwise
inexplicable difference in payments for administrative activities for
some MA organizations compared to others, further points to the payment
for these administrative activities being used as a mechanism to
effectively pay agents and brokers enrollment compensation amounts in
excess of the limits specified at Sec. 422.2274(a) and (d).
By eliminating separate payment for administrative services, we
stated that we expected that this proposal would eliminate a
significant method which some plans may have used to circumvent the
regulatory limits on enrollment compensation. Furthermore, we explained
that we believed ensuring a fixed payment rate for agents will result
in compensation greater than what is currently provided through typical
contractual arrangements with FMOs, as there would no longer be a range
of compensation rates at which the MA organizations could pay for
agents and brokers' services. While our proposal would prohibit
separate administrative payments, as described below, we proposed to
adjust the FMV for compensation to take into account costs for certain
appropriate administrative activities.
We recognized in the proposed rule that this approach could result
in some agents and brokers being unable to directly recoup
administrative costs such as overhead or lead purchasing from its
compensation from Medicare health and drug plans, unless the agent has
a certain volume of business. For instance, the cost of a customer
relationship management (CRM) system (the software used to connect and
log calls to potential enrollees) is estimated to be about $50 per
month. Under our proposed rule, this expense would require at least one
enrollment compensation per year to cover these costs, whereas under
our current regulations it is currently permissible for an MA
organization to pay for these costs directly, as administrative costs,
leaving the entire compensation for enrollments as income for the agent
or broker. However, we explained in the proposed rule that given the
high volume of enrollees that use an agent or broker for enrollment
services, we did
[[Page 30623]]
not believe there to be a large risk of agents or brokers failing to
cross that initial threshold to recoup their administrative costs.
We also explained in the proposed rule that we considered an
alternate policy proposal wherein we would maintain our current
definitions of compensation and administrative payments but would
remove the option for a plan to make administrative payments based on
enrollment, as currently codified at Sec. 422.2274(e)(2). We
considered instead requiring that administrative payments be made a
maximum of one time per administrative cost, per agent or broker. We
considered the argument that these expenses, such as payments for
training and testing, or nonmonetary compensation such as leads, should
be paid at their FMV and not as a factor of overall enrollment because
the value of such administrative tasks is usually a fixed rate,
regardless of how many enrollments are ultimately generated by the
agent or broker engaged in these administrative tasks.
We also considered whether, under this alternative policy approach,
it would be best to require that each administrative expense be
reimbursed at the same rate by each contracting MA organization as a
means of encouraging agents and brokers to represent multiple plans at
any given time. However, as we noted in the proposed rule, this
alternative policy would, of necessity, be comparatively prescriptive
and could present challenges for all parties as it relates to the
tracking these expenses. We believe our proposal to include all
payments to an agent or broker under the definition of compensation is
likely to reduce the ability of plans and/or TPMOs to circumvent the
maximum compensation rates defined by CMS via the annual FMV
determination.
We sought comment on this proposal.
Comment: Similar to what we note previously, a few commenters
requested clarification regarding the timing and applicability of this
proposed policy for the 2025 Contract Year, and expressed concern that
activities necessary to prepare for the 2025 contract year AEP begin
far in advance of the 2025 calendar year, noting that if the rule was
finalized in the Spring of 2024 and effective 60 days later, many
agents and brokers would have already begun securing their annual
training, testing, and state appointments out of compliance before the
2025 AEP has even begun.
Response: As previously stated, we understand that the narrow
timeline between finalization of this rule and the time at which agents
and brokers will begin engaging in necessary and mandatory activities
to prepare for the 2025 contract year may make it challenging for them
to remain in compliance, however, we believe that implementing these
payment guardrails as soon as possible is necessary to protect the
interests and health of Medicare beneficiaries. In recognition of the
timing considerations related to the 2025 contract year on the
effective date of this final rule, we are clarifying that the
applicability of this and all marketing provisions begins on October 1,
2024, per Sec. 422.2263(a).
Comment: Many commenters expressed support for these proposals,
indicating that they believe this move to make compensation amounts
uniform for the sale of all plans will help curb the aggressive
marketing tactics used by certain agents and brokers, and will reduce
pressure placed on Medicare beneficiaries to enroll in plans that they
do not fully understand, or which may not best suit their individual
health care needs.
Response: We thank commenters for their support.
Comment: Many commenters stated that they supported this proposal
because they believe it is important to make payments to agents and
brokers clear and knowable, rather than subject to add-on
administrative payments that are paid ``under the table'' and where
neither CMS nor the consumer have any insight into these payment
relationships or amounts.
Response: We thank commenters for their support and believe that by
making compensation amounts universal, agents and brokers will
hopefully be free from undue influence to enroll beneficiaries in one
plan over another, but the beneficiaries themselves can be confident
that their agent or broker is indeed working to ensure that they are
enrolled in the MA plan that is best suited to meet their health care
needs.
Comment: Some commenters expressed support for the proposal because
it would enable small carriers to remain competitive with larger
carriers, as they would not have to compete with larger carriers in
offering ever-increasing incentives for agents, brokers, and TPMOs to
represent these plans. Additionally, without additional incentives to
increase steerage, smaller plans may have a better opportunity to
compete in the marketplace.
Response: We thank commenters for their support of the proposal.
Comment: A commenter requested clarification about whether or how a
plan could stop compensation for new enrollments in a plan mid-year if
plans are no longer permitted to submit a range of compensation rates
that would be applicable for that plan year.
Response: As proposed Sec. 422.2274(d)(2) stated that for an
initial enrollment year a plan may pay an agent or broker compensation
at FMV. However, in proposing to set a fixed rate for compensation
levels that plans ``may'' pay to agents and brokers, we did not intend
to eliminate the option for a plan to choose not to pay compensation
for an enrollment at all. Therefore, we are clarifying that under the
regulations governing agent broker compensation at Sec. Sec. 422.2274
and 423.2274 that CMS is adopting in this final rule, a plan may choose
at any time to communicate to the agents and brokers representing it
that it will no longer be compensating them for enrollments into that
plan without being out of compliance of these regulations.
Comment: A few commenters expressed concerns that requiring plans
to pay agents and brokers the same amount for compensation would have a
negative impact on smaller MA organizations and Part D sponsors who may
not be able to afford to pay the new uniform compensation rate and
would therefore be unable to afford to pay agents and brokers to
represent their plans.
Response: We understand the concern that smaller MA organizations
may not be as well equipped to pay the mandatory compensation rate as a
larger MA organization and will be prevented from negotiating with
agents and brokers for a lower rate below the compensation cap as they
can under our current rules. However, our data \158\ suggests that
negotiating below the payment cap was a very rare phenomenon, and we
believe that the advantages gained by eliminating the continual
increase in administrative payments, and therefore the need to increase
payments made and offered to agents, brokers, and TPMOs will offset any
financial losses caused by this increase to compensation expenses, as
it is our understanding that the administrative fees paid per enrollee
far exceed the compensation paid for that enrollment.
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\158\ https://www.cms.gov/medicare/health-drug-plans/managed-care-marketing/medicare-marketing-guidelines/agent-broker-compensation.
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Comment: Many commenters disagreed with this proposal as a whole
and argued that the types of aggressive marketing tactics we discussed
in the preamble are most often engaged in by agents and brokers who are
employees of FMOs and call centers, and that the incentives for these
employed agents and brokers would not be mitigated by
[[Page 30624]]
our proposed compensation policies because employed agents receive a
salary, whereas other independent agents and brokers make their living
on commissions for enrollments. They contend that this policy, as a
whole, does not distinguish between the different types of agents and
their employment relationships, and is not narrowly targeted to rein in
the abusive behaviors discussed.
Response: We thank commenters for their thoughtful comments and the
information that they provided about the different types of
relationships between agents and other TPMOs in the MA industry. We
understand that, while our policy would have the desired effect of
changing the incentives for some agents and brokers to ensure that they
are aligned with the best interests of the Medicare beneficiaries whom
they serve, there is a subset of agents and brokers who are directly
employed by TPMOs--specifically FMOs and call centers--and these agents
and brokers may not experience the same change in incentives because
their salaried income may not be directly based on the CMS-defined
compensation rates. We recognize that this distinction is an important
part of the agent and broker ecosystem, and one which we will continue
to explore as we contemplate future rulemaking.
However, we do not believe that the possibility that our policy may
not reach a subset of the agents and brokers in this ecosystem is a
reason not to finalize it. We believe this policy will have the desired
effect of better aligning incentives for agents and brokers to ensure
that they are enrolling beneficiaries in the MA plan that best meets
the beneficiaries' health care needs, and not the plans that offer the
agents and brokers the highest payments per enrollee. We also note that
the policy to generally prohibit certain types of contract terms being
finalized in this final rule at Sec. 422.2274(c)(13), will afford a
level of protection with regard to contract terms between MA
organizations and TPMOs that direct or indirect effect of creating an
incentive that would reasonably be expected to inhibit an agent or
broker, including salaried agents and brokers, from being able to
objectively assess and recommend which plan best fits the health care
needs of a beneficiary. Importantly, MA organizations, agents, brokers,
and other TPMOs also must comply with all applicable fraud and abuse
laws including, but not limited to, the Federal anti-kickback statute.
Comment: Many commenters expressed their opposition to our proposal
because many agents and brokers rely on the payment of administrative
fees (sometimes also referred to as overrides) from an MA organization
to their FMO to provide them with ``free'' services, such as access to
plan comparison and enrollment tools, trainings, as well as contracting
and compliance support. The FMOs are able to provide these ``free''
services to agents and brokers by negotiating with the MA organizations
to pay the FMO the administrative fees associated with the agent or
brokers' enrollments. Without the availability of such fees, commenters
expressed concern that FMOs would no longer provide agents and brokers
with these extra services without which they did not believe agents and
brokers could effectively accomplish their enrollment work.
Response: We understand that removing the category of
``administrative payments'' (i.e. overrides), would change the current
flow of payments from an MA organization to agents and brokers for an
enrollment. We believe that by making the full payments directly to the
agents and brokers, agents and brokers themselves will have the
opportunity to decide which services are truly essential and how much
those services are worth.
After considering public comments, we are generally finalizing our
substantive proposal to include all payments to an agent or broker
under the definition of compensation as proposed; in recognition of the
timing considerations related to the 2025 contract year on the
effective date of this final rule, we are clarifying that the
applicability of this and all marketing provisions begins on October 1,
2024, per Sec. 422.2263(a). To memorialize this updated policy, we are
finalizing our policy to incorporate ``administrative payments''
currently described at Sec. 422.2274(e)(1) into compensation, and to
amend Sec. 422.2274(e)(2) to clarify that administrative payments
would be included in the calculation of enrollment-based compensation
beginning in Contract Year 2025. This means that that MAOs and the
TPMOs that they contract or work with will need to begin to comply with
these updated standards beginning on October 1, 2024, when marketing
activities for contract year 2025 begin, per Sec. 422.2263(a). We are
also adopting language to the existing regulatory text to make clear
that this definition will apply to contract years through contract year
2024, meaning that MAOs and TPMOs should continue to comply with CMS's
existing agent and broker compensation policies until the date that
marketing activities for contract year 2025 begin.
We also proposed to increase the compensation rate described at
Sec. 422.2274(a) to add certain appropriate administrative costs. In
particular, we indicated that we believed that the administrative cost
associated with the licensing, training and testing, and recording
requirements at Sec. Sec. 422.2274(b) and 422.2274(g)(2)(ii) may
warrant an increase in the rate of compensation, given the significant
and predictable cost of these mandatory activities.\159\ Based on our
fair market value analysis, we believed these activities would warrant
increasing the base compensation rate by $31,\160\ to be updated
annually as part of the scheduled compensation rate update described at
Sec. 422.2274(a). Therefore, we proposed, beginning in 2025, that FMV
would be increased by $31 to account for administrative payments
included under the compensation rate, and to be updated annually in
compliance with the requirements for FMV updates.
---------------------------------------------------------------------------
\159\ https://www.cms.gov/medicare/enrollment-renewal/managed-care-eligibility-enrollment/agent-broker-compenstation.
\160\ Our calculations arriving at this number are further
discussed in the COI in section X.B.10 of this final rule, titled
ICRs Regarding Agent Broker Compensation (Sec. 422.2274).
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When proposed, we believed it was necessary to increase the rate
for compensation by $31, based on the estimated costs for licensing,
training, testing, and call recording that would need to be covered by
this single enrollment-based payment. We proposed to begin with a one-
time $31 increase, including various locality-specific adjustments,
with annual FMV updates to this amount as described by the regulation,
including ``adding the current year FMV and the product of the current
year FMV and MA Growth Percentage for aged and disabled
beneficiaries.'' In the November 2023 proposed rule, we also noted that
we did not explicitly propose a proportionate increase to compensation
for renewals and that we considered this in determining the amount by
which we proposed to increase the rate for compensation for
enrollments.
We sought comment on our proposal to increase the rate of
compensation to account for necessary administrative costs that would
be incorporated into this rate under our previous proposal.
Specifically, CMS requested comment on the administrative costs that
should be considered, and how else we might determine their value, as
we consider the future of the compensation structure.
[[Page 30625]]
Comment: As in the previous policies, commenters indicated their
concern that an effective date immediately after finalization of the
policy would be difficult if not impossible to comply with.
Response: As with the modifications to the compensation rate
discussed above, we are delaying the applicability date for the changes
to the agent and broker compensation requirements at Sec. Sec.
422.2274 (a), (c), and (d) to October 1, 2024, and therefore will not
be applicable prior to the start of marketing and enrollment activity
for the 2025 contract year.
In recognition of the timing considerations related to the 2025
contract year on the effective date of this final rule, we are
clarifying that the applicability of this and all marketing provisions
begins on October 1, 2024, per Sec. 422.2263(a).We believe that
implementing these payment guardrails as soon as possible, will enhance
the beneficiary experience with agents and brokers during the 2025 AEP.
The benefit of this implementation date offsets any concerns about
complexity or potential extra payment generated by this implementation
framework.
Comment: A commenter requested clarification regarding how this
proposal would affect renewals.
Response: As indicated in the proposed rule at 88 FR 78556, we did
not separately propose a specific numeric increase in renewals
proportionate to the proposed increase in initial compensation.
However, the proposed regulation text governing renewal compensation,
at Sec. 422.2274(d)(3), as proposed, states that ``For each enrollment
in a renewal year, MA plans may pay compensation at a rate of 50
percent of FMV.'' The reference to FMV within Sec. 422.2274(d)(3)
refers to the FMV for agent broker compensation specified in CMS's
regulations at Sec. 422.2274(a). Therefore, any updates to the FMV,
including those which is CMS finalizing here, would automatically be
incorporated into the calculation of compensation rate for renewals and
would not need a separate proposal to achieve this result. See Tables
FC-1 and FC-2 for more detail.
Comment: Many commenters indicated that CMS's proposed $31 increase
to the flat-rate compensation amount would be insufficient to cover
even the two primary activities we listed in the proposed rule (call
recording and training and testing). Commenters indicated that agents
and brokers have many other business expenses, such as plan comparison
tools and appointment fees which were not included in calculating the
rate update. Furthermore, some commenters explained that agents and
brokers often engage in work and provide services that are unlikely to
result in enrollment but are for the benefit of those beneficiaries,
such as providing guidance to estate planners. We also heard from many
commenters, including agents and brokers as well as beneficiaries,
about additional services agents and brokers provide beneficiaries
through their knowledge of plans and access to industry-standard
technology; for instance, commenters noted that a local agent may help
a beneficiary identify a plan that includes a preferred doctor, or help
an enrolled beneficiary find the local in-network pharmacy with the
lowest prices on that beneficiary's drugs.
Commenters argued that these activities, and the fair market value
of the tools and services agents and brokers need to perform their
jobs, warranted a significantly higher per-enrollee compensation rate.
Some commenters suggested figures for a more appropriate compensation
increase ranging from $50 to $500 more, per new enrollee, while others
recommended that the increase be a percentage of the base compensation
amount.
Commenters suggested that without sufficient compensation, many
agents and brokers would no longer be able to serve the MA market, and
new agents and brokers would not have the resources to enter the market
in the first place.
Response: We thank the many commenters who provided us with a more
complete picture of the many administrative and other services and
expenses agents and brokers undertake when assisting beneficiaries with
enrollments. These comments have made us aware that, in our initial
proposal, we may not have adequately accounted for the array of
services that agents and brokers may provide when we calculated our
proposed payment increase. It was not our intention to make the MA
compensation rate so low that agents and brokers would be driven out of
the industry or would be unable to enter it in the first place.
However, we do believe it is important to ensure that, while we
support agents and brokers and the services they provide, the MA
program and its funds are not being used to subsidize other programs
and industries. For example, we understand that in the proposed rule we
may have undervalued the cost of CRM (customer-relationship management)
tools which provide call recording software. However, it is our
understanding that these tools serve additional functions beyond the
mandatory call recording and transcription, and that this functionality
may be used by an agent or broker when soliciting an enrollment for a
non-Medicare, private market plan. Therefore, we believe that it is
reasonable for MA compensation rates to reflect less than 100 percent
of the cost of purchasing or licensing these tools.
After considering what we have learned and the many responses we
received through public comment, we have concluded that our original
proposed increase to compensation was too low. Commenters' feedback,
both general and specific, was closely considered and we believe it is
necessary to update the compensation rate increase to better reflect
the costs of MA agent or broker services. Commenters suggested many
different figures and means of calculating an appropriate amount. As
discussed previously, the true cost of most administrative expenses can
vary greatly from one agent or broker to another and is based in data
and contracts that CMS does not have access to, so it would be
extremely difficult for us to accurately capture, making a line-item
calculation not practicable. This was further reflected in the wide
variation among alternate rates posed by commenters, with a few
commenters suggesting an alternate rate increase of $50, another $75,
while the majority recommended higher rates beginning at $100 and some
going as high as $500. Some commenters suggested that we should
calculate the compensation increase as a percentage of the base rate,
such as 30% or 33% of the current $611 compensation figure.
Considering the complexities involved, we believe that choosing a
flat rate for calculating the increase is an appropriate path forward
to create parity among agents, regardless of which plan, plan type, or
type of Medicare enrollment they effectuate on behalf of the
beneficiary. Administrative payments are intended to cover
administrative costs faced by the agent or broker and those costs
should be the same regardless of the type of plan in which a
beneficiary enrolls, including a standalone PDP. Therefore, there is no
need to vary administrative payments based on plan type and a flat rate
approach is the most appropriate way to achieve our goal of eliminating
financial incentives in the form of larger, purported administrative
payments which are over and above FMV from a particular plan or plans,
that may have the effect of encouraging agents and brokers to steer
enrollment in one plan
[[Page 30626]]
or plan type versus another. A uniform, flat rate achieves this goal.
Several commenters suggested that an increase of $100 would be an
appropriate starting point and reflects the minimum monthly costs of
necessary licensing and technology costs. We understand that other
commenters recommended an increase of more than $100, including some
commenters that suggested an increase of $200 or more. However, we
believe, based on the totality of comments that recommendations for an
increase above $100 may have been inflated to include the full price of
all technology and systems that are also utilized to effectuate sales
in other markets or for different product types other than MA or PDP
products. In addition, it appears that these higher dollar
recommendations may reflect the agent and brokers' loss of ``bonus
payments'' and other purported ``administrative payments'' they may
previously have received, some of which were always beyond the scope
and FMV of the services involved in enrolling beneficiaries into MA and
PDP plans and therefore should not have been included under
compensation or administrative payments.
We believe that increasing the FMV rate for new enrollments by a
total of $100, and therefore applied to renewals at a maximum amount of
50 percent of the total compensation amount, should provide agents and
brokers with sufficient funds to continue to access necessary
administrative tools and trainings, to offset appointment fees and
encourage the representation of multiple plans, and therefore to
continue providing adequate service to Medicare beneficiaries.
Accordingly, based on the information provided in comments and for the
reasons discussed in this final rule, we are finalizing a policy to
make a one-time $100 increase to the FMV compensation rate for agents
and brokers for initial enrollments into MA plans for the 2025 plan
contract year.
[GRAPHIC] [TIFF OMITTED] TR23AP24.011
By way of example, if we were to assume that the FMV increase in
years 2025 and 2026 is 2.5 percent, the payment rates for those years
would be as follows:
[GRAPHIC] [TIFF OMITTED] TR23AP24.012
Comment: Several comments expressed confusion about whether this
payment is an ``all-in cap'' that is intended to include all fees paid
by an MA organization to an agent, broker, or other TPMO, and what that
would mean for payments related to marketing activities.
Response: This proposal, and all agent broker compensation rules at
Sec. 422.2274(d) are limited to independent agents and brokers, and do
not extend to TMPOs more generally. Therefore, this policy represents a
limitation on payments in excess of those paid under ``compensation''
only for commissions paid for enrollments to independent agents and
brokers. Though we are continuing to consider future rulemaking in this
space, our current policy does not extend to placing limitations on
payments from an MAO to a TPMO who is not an independent agent or
broker for activities that are not undertaken as part of an enrollment
by an independent agent or broker.
After considering public comments on this proposal, for the 2025
contract year, we are finalizing at Sec. 422.2274(a) a one-time FMV
increase of $100, which will then be added to the base compensation
rate for 2025; the sum of the 2025 compensation rate and the $100 will
form a new base compensation rate that will be updated annually
according to our FMV updates described in Sec. 422.312. We are also
finalizing changes to Sec. 422.2274(d)(1)(ii) that beginning with
contract year 2023, MA organizations are limited to the compensation
amounts outlined in Sec. 422.2274(a).
We received many out-of-scope comments related to agent and broker
compensation as part of this rulemaking. We received many comments
indicating the need for a regulatory distinction between agents
employed by call centers and those who are truly independent and only
contract with TPMOs. We appreciate these comments and will continue to
explore ways in which further regulation in this space may further our
goals of ensuring that the use of compensation creates incentives for
agents and brokers to enroll individuals in the MA plan that best meets
their health care needs.
We also received many comments encouraging more robust enforcement
of our current regulations, and comments encouraging CMS to relax our
rules somewhat to ensure that all agents have the ability to effectuate
sales for all plans. We received feedback asking for more regulation in
this policy space, and comments asking us to slow regulatory action to
give the policies finalized in the past few years, time to mature. We
have read and considered all comments and will consider these
suggestions as we contemplate future rulemaking.
[[Page 30627]]
4. Agent Broker Compensation for Part D Plans
Finally, we also are finalizing our proposal to apply each of the
policies described previously, governing agent and broker compensation
for the sale of MA plans, to also apply to compensation for agents and
brokers that market PDP plans, as codified at Sec. 423.2274.
Pursuant to sections 1851(j)(2)(D) and 1860D-4(l) of the Act, the
Secretary has a statutory obligation to establish guidelines to ensure
that the use of agent and broker compensation creates incentives for
agents and brokers to enroll individuals in the MA and Part D
prescription drug plans that are intended to best meet beneficiaries'
health care needs.
As we explained in the November 2023 proposed rule, because the
same agents and brokers are often licensed to sell both MA plans and
PDPs, we believe it is necessary under our statutory authority to apply
the same compensation rules to the sale of both MA plans and PDPs in
order to ensure that both plan types are being held to the same
standards and are on a `level playing field' when it comes to
incentives faced by agents and brokers. This includes increasing the
FMV rate compensation rate.
In the November 2023 proposed rule we also stated that we think it
is necessary to extend these regulations to the sale of PDPs to avoid
shifting the incentives discussed at length previously, such as the
incentive for agents to favor one plan over another based upon bonuses
or other payments that are not currently accounted for under the
definition of ``compensation.'' If conforming changes are not made to
the sale of PDP plans, the PDP plans may have an unfair advantage in
that they have the opportunity to offer additional payments and perks
to FMOs and agents, while MA plan sponsors are limited by the policies
proposed previously. Therefore, for the same reasons that we described
in the proposed rule for adopting the proposed changes to Sec.
422.2274, we also proposed to make conforming amendments to Sec.
423.2274.
We sought comment on this proposal, and specifically whether and to
what extend modifications to these proposals should be made to account
for differences between MA and Part D plan types.
We did not receive any comments on the proposal to extend these
changes to the sale of PDP plans. Thus, we are finalizing updates to 42
CFR 423.2274 (a), (c), (d), and (e) largely as proposed. However, in
light of the changes to the MA compensation rate described in section
X.C.3. of this final rule and the need for parity between MA and PDP
plan sales discussed in this section, we are conforming changes to the
PDP compensation rates at Sec. 423.2274 (to increase the PDP
compensation rate for initial enrollments by $100. Likewise, where CMS
is finalizing the regulation text in Sec. 422.2274(a), (c), and (d)
with minor organizational and editorial changes for clarity, we are
adopting conforming changes to the regulation text that we are
finalizing in Sec. 423.2274(a), (c), and (d). Our policies are in
alignment with the rules being finalized for MA agents and brokers,
with an applicability date for these rules on October 1, 2024, for the
2025 plan contract year.
5. Summary of the Final Policy
We are finalizing the following policies with regard to agent and
broker compensation:
For contract year 2025 and subsequent contract years,
generally prohibit contract terms between MA organizations and agents,
brokers, or other TMPOs that may directly or indirectly interfere with
the agent's or broker's ability to objectively assess and recommend the
plan which best fits a beneficiary's health care needs, as reflected in
Sec. 422.2274(c)(4) of this final rule.
Set a single agent and broker compensation rate for all
plans, as reflected in Sec. 422.2274(d)(2), while revising the scope
of what is considered ``compensation,'' applicable to contract year
2025 and subsequent contract years, as reflected in Sec. 422.2274(a)
and (e).
Eliminate the regulatory framework which currently allows
for separate payment to agents and brokers for administrative services,
applicable to contract year 2025 and subsequent contract years, as
reflected in Sec. 422.2274(e).
Make conforming edits to the PDP agent broker compensation
rules at Sec. 423.2274.
VII. Medicare Advantage/Part C and Part D Prescription Drug Plan
Quality Rating System (42 CFR 422.164, 422.166, 422.260, 423.184, and
423.186)
A. Introduction
CMS develops and publicly posts a 5-star rating system for Medicare
Advantage (MA)/Part C and Part D plans as part of its responsibility to
disseminate comparative information, including information about
quality, to beneficiaries under sections 1851(d) and 1860D-1(c) of the
Act and based on the collection of different types of quality data
under section 1852(e) of the Act. The Part C and Part D Star Ratings
system is used to determine quality bonus payment (QBP) ratings for MA
plans under section 1853(o) of the Act and the amount of MA beneficiary
rebates under section 1854(b) of the Act. We use multiple 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, including Sec. Sec. 417.472(j) and
(k), 422.152(b), 423.153(c), and 423.156, require plans to report on
quality improvement and quality assurance and to provide data which
help beneficiaries compare plans. 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, and we have
specified the measures used in setting Star Ratings through rulemaking.
In addition, the cost plan regulation at Sec. 417.472(k) requires cost
contracts to be subject to the Parts 422 and 423 Medicare Advantage and
Part D Prescription Drug Program Quality Rating System. (83 FR 16526-
27). As a result, the policies and regulatory changes finalized here
will apply to the quality ratings for MA plans, cost plans, and Part D
plans. We generally use ``Part C'' to refer to the quality measures and
ratings system that apply to MA plans and cost plans.
We have continued to identify enhancements to the Star Ratings
program to ensure it is aligned with the CMS Quality Strategy as that
Strategy evolves over time. To support the CMS National Quality
Strategy, CMS is moving towards a building-block approach to streamline
quality measures across CMS quality and value-based care programs.
Across our programs, where applicable, we are considering including the
Universal Foundation \161\ of quality measures, which is a core set of
measures that are aligned across CMS programs. CMS is committed to
aligning a core set of measures across all our quality and value-based
care programs and ensuring we measure quality across the entire care
continuum in a way that promotes the best, safest, and most equitable
care for all individuals. Improving alignment of measures across
federal programs and with private payers would reduce provider burden
while also improving the effectiveness
[[Page 30628]]
and comparability of measures. Using the Universal Foundation of
quality measures would focus provider attention, reduce burden,
identify disparities in care, prioritize development of interoperable,
digital quality measures, allow for cross-comparisons across programs,
and help identify measurement gaps. The Universal Foundation is a
building block to which programs would add additional aligned or
program-specific measures. This core set of measures would evolve over
time to meet the needs of individuals served across CMS programs. We
submitted the Initiation and Engagement of Substance Use Disorder
Treatment (IET) measure (Part C) (a Universal Foundation measure) to
the 2023 Measures under Consideration list as part of the Pre-
Rulemaking Measure Review process as a step toward proposing use of
that measure in the Star Ratings system through future rulemaking to
align with the Universal Foundation. We also note that, beginning with
measurement year 2023, Part C contracts are beginning to report to CMS
additional measures that are part of the Universal Foundation, such as
Adult Immunization Status, Depression Screening and Follow-Up for
Adolescents and Adults, and Social Need Screening and Intervention, for
the display page. We have previously solicited feedback regarding
potentially proposing these measures as Star Ratings in the future
through both the Advance Notice of Methodological Changes for Calendar
Year (CY) 2023 for Medicare Advantage (MA) Capitation Rates and Part C
and Part D Payment Policies and the Advance Notice of Methodological
Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA)
Capitation Rates and Part C and Part D Payment Policies. We intend to
submit these measures to the Pre-Rulemaking Measure Review process in
the future and propose them through future rulemaking as additional
Star Ratings measures. The remaining measures that are part of the
Universal Foundation are already part of the current Part C and Part D
Star Ratings program.
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\161\ https://www.nejm.org/doi/full/10.1056/NEJMp2215539.
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In the December 2022 proposed rule, in addition to the policies
addressed in the April 2023 final rule,\162\ we proposed to make
changes in the specific measures used in the Star Ratings System:
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\162\ In the April 2023 final rule, we finalized several
policies from the December 2022 proposed rule, including the
introduction of a health equity index reward and removal of the
existing reward factor starting with the 2027 Star Ratings and a
series of measure updates: removing the Part C Diabetes Care--Kidney
Disease Monitoring measure; updating the Part D Medication Adherence
for Diabetes Medication, Medication Adherence for Hypertension (RAS
Antagonists), and Medication Adherence for Cholesterol (Statins)
measures; and adding the Part C Kidney Health Evaluation for
Patients with Diabetes measure. In the April 2023 final rule, we
also finalized several methodological changes: reducing the weight
of patient experience/complaints and access measures; adding an
additional basis for the subregulatory removal of Star Ratings
measures; and removing the 60 percent rule for the adjustment for
extreme and uncontrollable circumstances. Finally, we also finalized
a series of technical clarifications of the existing rules related
to adjustments for disasters and contract consolidations, as well as
a technical amendment to Sec. Sec. 422.162(a)(2)(i) and
423.186(a)(2)(i) to fix a codification issue. 88 FR 22263 through
22297.
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Remove the stand-alone Part C Medication Reconciliation
Post-discharge measure;
Add the updated Part C Colorectal Cancer Screening measure
with the National Committee for Quality Alliance (NCQA) specification
change;
Add the updated Part C Care for Older Adults--Functional
Status Assessment measure with the NCQA specification change;
Add the Part D Concurrent Use of Opioids and
Benzodiazepines measure;
Add the Part D Polypharmacy Use of Multiple
Anticholinergic Medications in Older Adults measure; and
Add the Part D Polypharmacy Use of Multiple Central
Nervous System Active Medications in Older Adults measure.
We also proposed a series of technical clarifications of the
existing rules related to Quality Bonus Payment (QBP) appeals processes
and weighting of measures with a substantive specification change.
In the December 2022 proposed rule, we proposed these changes to
apply to the 2024 measurement period and the 2026 Star Ratings, but as
discussed in and given the timing of this final rule, we are finalizing
these policies (that is, data would be collected, and performance
measured) for the 2025 measurement period and the 2027 Star Ratings
unless otherwise stated.
In the November 2023 proposed rule, we proposed to update the
Medication Therapy Management (MTM) Program Completion Rate for
Comprehensive Medication Review (CMR) measure (Part D). We also
proposed the following methodological enhancements, clarifications, and
operational updates:
Revise the process for identifying data completeness
issues and calculating scaled reductions for the Part C appeals
measures.
Update how the Categorical Adjustment Index (CAI) and
health equity index (HEI) reward are calculated in the case of contract
consolidations.
Revise an aspect of the QBP appeals process.
Add that a sponsor may request CMS review of its
contract's administrative claims data used for the Part D Patient
Safety measures no later than the annual deadline set by CMS for the
applicable Star Ratings year.
Unless otherwise stated, finalized changes would apply (that is,
data would be collected and performance measured) for the 2025
measurement period and the 2027 Star Ratings.
CMS appreciates the feedback we received on our proposals in both
proposed rules. In the sections that follow, which are arranged by
topic area, we summarize each proposal and comments we received and
provide our responses.
B. Adding, Updating, and Removing Measures (Sec. Sec. 422.164 and
423.184)
The regulations at Sec. Sec. 422.164 and 423.184 specify the
criteria and procedures for adding, updating, and removing measures for
the Star Ratings program. In the ``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'' final rule which appeared in the
Federal Register on April 16, 2018 (83 FR 16532) hereinafter referred
to as the April 2018 final rule, we stated we are committed to
continuing to improve the Part C and Part D Star Ratings system and
anticipated that over time measures would be added, updated, and
removed. We also specified at Sec. Sec. 422.164(d) and 423.184(d)
rules for measure updates based on whether they are substantive or non-
substantive. The regulations, at paragraph (d)(1), list examples of
non-substantive updates. See also 83 FR 16534-37. Due to the regular
updates and revisions made to measures, CMS does not codify a list in
regulation text of the measures (and their specifications) adopted for
the Part C and Part D Star Ratings program. CMS lists the measures used
for the Star Ratings each year in the Medicare Part C & D Star Ratings
Technical Notes or similar guidance issued with publication of the Star
Ratings.
We are committed to continuing to improve the Part C and Part D
Star Ratings system by focusing on improving clinical and other health
outcomes. Consistent with Sec. Sec. 422.164(c)(1) and 423.184(c)(1),
we continue to review measures that are nationally endorsed and in
alignment with the private sector. For example, we regularly review
measures developed by
[[Page 30629]]
NCQA and Pharmacy Quality Alliance (PQA).
1. Measure Removals
a. Medication Reconciliation Post-Discharge (Part C)
We proposed to remove the Medication Reconciliation Post-Discharge
(MRP) measure as it would be duplicative of the MRP component of the
Transitions of Care (TRC) measure included beginning with the 2024 Star
Ratings. In the January 2021 final rule at 86 FR 5921-24, CMS finalized
inclusion of the TRC measure (Part C) in the 2024 Star Ratings. The TRC
measure includes four indicators: MRP, Notification of Inpatient
Admission, Patient Engagement After Inpatient Discharge, and Receipt of
Discharge Information. Currently, MRP appears in both the Medicare Part
C Star Ratings as a stand-alone measure and as one of the four
indicators included in the TRC measure. As discussed at 86 FR 5921-24,
transitions from an inpatient stay back to home often result in poor
care coordination, including communication gaps between inpatient and
outpatient providers; planned and inadvertent medication changes;
incomplete diagnostic work-ups; and insufficient understanding of
diagnoses, medication, and follow-up care needs. Although at this time
CMS is only implementing the TRC measure in the Part C Star Ratings
program, it is a HEDIS measure and over time, it may be used in other
programs. Based on the importance of care coordination in the Part C
program and how the TRC measure provides a more comprehensive picture
of how plans manage transitions across settings for care, we believe
its inclusion in the Part C Star Ratings is appropriate.
For measurement year 2020, NCQA provided multiple updates to the
TRC measure as described at 86 FR 5921-22. In one of these updates,
NCQA revised the requirement of using one medical record from a
specific provider to, instead, allow numerator information to be
captured from additional communication forms accessible to the primary
care provider or ongoing care provider (for example, admissions,
discharges, and transfers (ADT) feeds, shared electronic medical
records (EMRs)) that occur regularly in the field and meet the intent
of the measure. This change also ensured that scores for the MRP
indicator in the TRC measure and the stand-alone MRP measure would
match. Currently, the MRP measure for the Part C Star Ratings comes
from the MRP indicator collected through the TRC measure. This is
because NCQA decided that the stand-alone MRP measure no longer needed
to be separately reported since it could be pulled from the medication
reconciliation indicator in the TRC measure.
CMS proposed to remove the stand-alone MRP measure from the Part C
Star Ratings since the same information about medication reconciliation
is now also incorporated as a component of the TRC measure and,
consequently, it is duplicative to have MRP as a stand-alone measure
and as a component of the TRC measure for Part C Star Ratings. We
solicited comments on this proposal.
Comment: Most commenters supported the removal of the MRP measure.
Some commenters raised concerns regarding having both the stand-alone
MRP measure and having MRP as a component of the TRC measure for a
period of time until the stand-alone measure is retired. A few
commenters suggested the removal of the MRP measure should coincide
with the addition of the TRC measure, which was added to the 2024 Star
Ratings.
Response: We thank the commenters for their support of our
proposal. The stand-alone MRP measure is being removed beginning with
the 2025 measurement year, which provides MA organizations with notice
of the measures being used for quality ratings in advance of the
measurement year. During this interim period, having MRP as a stand-
alone measure as well as a component of the TRC measure gives it a
slightly higher weight in the Star Ratings. Since both the stand-alone
MRP measure and the TRC measure are weighted as process measures (which
is a weight of 1), the weight of MRP across these two measures is still
relatively low. In light of this and the importance of reconciling
medications following an inpatient stay, we do not believe that the
short period during which both the MRP measure and the TRC measure are
included in the Part C Star Ratings is problematic.
Comment: A commenter noted that plans will be disincentivized to
focus on MRP once the stand-alone measure is removed.
Response: We understand the commenter's concern but note that plans
should continue focusing on reconciling medications following an
inpatient stay given this also impacts the TRC measure and other
measures in the Star Ratings such as reducing hospital readmissions and
improving care coordination.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the removal of the MRP measure from the Part C Star Ratings
starting with the 2025 measurement year and the 2027 Star Ratings.
2. Measure Updates
In the April 2018 final rule, we specified at Sec. Sec. 422.164(d)
and 423.184(d) rules for measure updates based on whether they are
substantive or non-substantive. (83 FR 16534 and 16535). Where an
update is substantive within the scope of Sec. Sec. 422.164(d)(2) and
423.184(d)(2), CMS will initially solicit feedback on whether to make
substantive measure updates through the process described for changes
in and adoption of payment and risk adjustment policies in section
1853(b) of the Act and then engage in rulemaking to make substantive
changes to a Star Ratings measure. Per Sec. Sec. 422.164(d)(2) and
423.184(d)(2), CMS will place the updated measure on the display page
for at least 2 years prior to using the updated measure to calculate
and assign Star Ratings. This 2-year period for the updated measure to
be on the display page may overlap with the period during which CMS
solicits comment and engages in rulemaking. Further, the legacy measure
may continue to be used in the Star Ratings during this period.
a. Colorectal Cancer Screening (Part C)--Substantive Change
CMS proposed a substantive update to the existing colorectal cancer
screening measure because of changes in the applicable clinical
guidance and by the measure steward. In May 2021, the U.S. Preventive
Services Task Force (USPSTF) released updated guidance for the age at
which colorectal cancer screenings should begin. Subsequently, NCQA,
the measure steward, has updated its colorectal cancer screening
measure to include a rate for adults 45-49 years of age for measurement
year 2022. Therefore, CMS proposed expanding the age range for the
Colorectal Cancer Screening measure to adults aged 45-49, for an
updated age range of 45-75, for the 2024 and subsequent measurement
years. The expanded age range for this screening measure significantly
increases the size of the population covered by this measure and is
therefore a substantive measure specification change within the scope
of Sec. 422.164(d)(2). Other CMS programs, such as for the qualified
health plans (QHPs) that participate in Exchanges \163\ and the adult
core set for
[[Page 30630]]
Medicaid plans,\164\ have introduced this change into their programs as
they also use the same HEDIS measure.
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\163\ https://www.cms.gov/files/document/final-2022-call-letter-qrs-qhp-enrollee-survey.pdf.
\164\ https://www.medicaid.gov/medicaid/quality-of-care/performance-measurement/adult-and-child-health-care-quality-measures/adult-health-care-quality-measures/index.html.
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CMS solicited feedback on making this substantive update to the
measure in the Advance Notice of Methodological Changes for Calendar
Year (CY) 2023 for Medicare Advantage (MA) Capitation Rates and Part C
and Part D Payment Policies, and most commenters supported this change.
As described in the April 2018 final rule (83 FR 16534), we may keep a
legacy measure in the Star Ratings during the period that an updated
version of the measure is on the display page. The legacy measure with
the narrower age range of 50-75 years will remain available and be used
in Star Ratings until the updated measure has been adopted through
rulemaking and has been on the display page for 2 years. We first
displayed the updated measure for the 2022 measurement year, on the
2024 display page.
We solicited comments on this proposal.
Comment: Most commenters strongly supported CMS expanding the age
range for the Colorectal Cancer Screening measure to include
beneficiaries starting at age 45, with many citing data on the
importance of earlier colorectal cancer screenings.
Response: We appreciate the support to expand the age range for the
colorectal cancer screening measure, following updated clinical
guidelines established by the USPSTF.
Comment: A commenter was concerned that the expanded age range may
negatively impact the measure rate because more enrollees will be
included in the denominator.
Response: We strive to ensure the Star Rating measures reflect the
most recent clinical guidelines. The USPSTF recommends offering
colorectal cancer screening at age 45 due to recent trends of
increasing colorectal cancer in adults younger than 50 years old and
the benefits of screening in reducing cancer diagnoses. CMS will
maintain the legacy measure with the narrower age range in the Star
Ratings through the end of the 2024 measurement year and the 2026 Star
Ratings. Because the updated measure with the broader age range has
been on the display page beginning with the 2022 measurement period,
plans will have a total of 3 measurement years to transition to the
most recent clinical guidelines, which are reflected in the updated
measure. We do not believe that additional time is necessary or
appropriate because the change in the USPSTF recommendation was nearly
3 years ago as of the time this final rule is published. Ensuring that
the Star Ratings reflect up to date clinical guidelines is an important
consideration both for providing comparative information to
beneficiaries about MA plan quality and ensuring that the MA program
furnishes appropriate care and access to covered services.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to the comments, we are
finalizing expanding the age range for the Colorectal Cancer Screening
measure. Given the timing of the finalization of this rule, we are
finalizing the addition of the Colorectal Cancer Screening measure with
the expanded age range starting with the 2025 measurement year and the
2027 Star Ratings. Table VII.1 summarizes the updated Colorectal Cancer
Screening measure finalized in this rule. The measure description
listed in this table is a high-level description.
b. Care for Older Adults--Functional Status Assessment (Part C)--
Substantive Change
We proposed to add the Care for Older Adults (COA)--Functional
Status Assessment measure back to the Star Ratings after it has been on
the display page following a substantive measure specification change.
The COA measure is collected for Special Needs Plans (SNPs) and
includes three indicators--Medication Review, Functional Status
Assessment, and Pain Assessment.
For HEDIS data reported in 2021, based on the 2020 measurement
year, NCQA implemented a change for the COA--Functional Status
Assessment.\165\ Previously the measure specification was that
documentation of a complete functional status assessment must include:
(1) notation that Activities of Daily Living (ADLs) were assessed; (2)
notation that Instrumental Activities of Daily Living (IADLs) were
assessed; (3) result of assessment using a standardized functional
assessment tool; or (4) notation that at least three of the following
four components were assessed: (a) cognitive status, (b) ambulation
status, (c) hearing, vision, and speech (that is, sensory ability), and
(d) other functional independence (for example, exercise, ability to
perform job). Because the clinical field of functional status
assessment was moving toward agreement on assessment using ADLs, IADLs,
or another standardized tool, and to improve the clarity of the
specification, NCQA removed the fourth option for meeting the numerator
requirements for this indicator for HEDIS data reported in 2021.
---------------------------------------------------------------------------
\165\ We solicited feedback on these changes in the Advance
Notice of Calendar Year (CY) 2021 Medicare Advantage (MA) Capitation
Rates and Part C and Part D Payment Policies.
---------------------------------------------------------------------------
The measure change for the COA--Functional Status Assessment
measure is a substantive update under Sec. 422.164(d)(2) because
removal of a mechanism for positive performance on the measure may
meaningfully impact the numerator. The updated measure was moved to the
display page starting with the 2022 Star Ratings.
CMS proposed to return this updated measure to the Star Ratings,
beginning with the 2026 Star Ratings and 2024 measurement period. With
the updated specification, documentation of a complete functional
status assessment must include: (1) notation that ADLs were assessed;
(2) notation that IADLs were assessed; or (3) result of assessment
using a standardized functional assessment tool.
We solicited comments on this proposal.
Comment: Most commenters supported returning the updated COA--
Functional Status Assessment measure back to the Star Ratings noting
the importance of assessing functional status in older beneficiaries.
Response: We thank the commenters for their support of our
proposal.
Comment: A commenter raised concerns with duplicative efforts in
monitoring functional status in the Star Ratings program since it
includes other measures such as the SNP Care Management measure and the
Physical Functioning Activities of Daily Living (PFADL) measure.
Response: We disagree that this measure duplicates information and
performance monitored through other measures. The PFADL measure is
currently on the display page and is different than the COA--Functional
Status Assessment measure in that it measures changes in functional
status over time for all MA enrollees, not only SNP enrollees, and does
not measure whether an enrollee had an assessment. The SNP Care
Management measure is broader in that it focuses on whether a SNP
enrollee had an assessment of their health needs and risks and is not
about assessments specifically of functional status.
Comment: A commenter recommended delaying the return of this
measure to the Star Ratings until NCQA decides whether the measure will
be retired because the 2024
[[Page 30631]]
Advance Notice noted that NCQA was considering an alternative measure
that may replace the COA--Functional Status Assessment measure.
Response: At this time NCQA is no longer considering the retirement
of this measure and there is therefore no reason to delay the return of
this measure to the Star Ratings.
Comment: A commenter requested additional guidance as to how the
HEDIS measure specifications delineate ``standardized functional
assessment tools.''
Response: In Volume 2 of the HEDIS Technical Specifications for
Health Plans,\166\ there are examples of standardized functional status
assessment tools that may be used to satisfy the measure, such as the
SF-36,[supreg] Assessment of Living Skills and Resources (ALSAR),
Independent Living Scale (ILS), Katz Index of Independence in ADL,
Klein-Bell ADL Scale, Lawton & Brody's IADL scales, and Patient
Reported Outcome Measurement Information System (PROMIS) Global or
Physical Function Scales.
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\166\ https://www.ncqa.org/hedis/measures/.
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After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to the comments, we are
finalizing adding back the COA--Functional Status Assessment measure to
the Star Ratings. Given the timing of the finalization of this rule, we
are finalizing the addition of the COA--Functional Status Assessment
measure starting with the 2025 measurement year and the 2027 Star
Ratings. Table VII.1 summarizes the updated COA--Functional Status
Assessment measure finalized in this rule. The measure description
listed in this table is a high-level description.
c. Medication Therapy Management (MTM) Program Completion Rate for
Comprehensive Medication Review (CMR) (Part D)--Substantive Change
Section 1860D-4(c)(2) of the Act requires all Part D sponsors to
have an MTM program designed to assure, with respect to targeted
beneficiaries, that covered Part D drugs are appropriately used to
optimize therapeutic outcomes through improved medication use and to
reduce the risk of adverse events, including adverse drug interactions.
Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to
target those Part D enrollees who have multiple chronic diseases, are
taking multiple Part D drugs, and are likely to meet a cost threshold
for covered Part D drugs established by the Secretary. CMS codified the
MTM targeting criteria at Sec. 423.153(d)(2).
CMS also uses the MTM Program Completion Rate for CMR measure,
which is defined as the percent of MTM program enrollees who received a
CMR during the reporting period to show how many members in a plan's
MTM program had an assessment from their plan by a pharmacist or other
health professional to help them manage their medications. As part of
the completion of a CMR, a Part D enrollee receives a written summary
of the discussion in CMS's Standardized Format, including an action
plan that recommends what the member can do to better understand and
use their medications.\167\
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\167\ The Medicare Part C & D Star Ratings Technical Notes
provide details on existing measures and are available at: https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovgenin/performancedata.
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In the December 2022 proposed rule, CMS proposed changes to the MTM
program targeting criteria, including: (1) requiring plan sponsors to
target all core chronic diseases identified by CMS, codifying the
current 9 core chronic diseases \168\ in regulation, and adding HIV/
AIDS for a total of 10 core chronic diseases; (2) lowering the maximum
number of covered Part D drugs a sponsor may require from 8 to 5 drugs
and requiring sponsors to include all Part D maintenance drugs in their
targeting criteria; and (3) revising the methodology for calculating
the cost threshold ($4,935 in 2023) to be commensurate with the average
annual cost of 5 generic drugs ($1,004 in 2020). We estimated that the
proposed changes would increase the number and percentage of Part D
enrollees eligible for MTM from 4.5 million (9 percent) to 11.4 million
(23 percent).
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\168\ The current core chronic diseases are diabetes*,
hypertension*, dyslipidemia*, chronic congestive heart failure*,
Alzheimer's disease, end stage renal disease (ESRD), respiratory
disease (including asthma*, chronic obstructive pulmonary disease
(COPD), and other chronic lung disorders), bone disease-arthritis
(osteoporosis, osteoarthritis, and rheumatoid arthritis), and mental
health (including depression, schizophrenia, bipolar disorder, and
other chronic/disabling mental health conditions). Enumerated in
statute (*).
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As noted in the April 2023 final rule, we did not address comments
received on the provisions of the proposed rule that were not finalized
in that rule, such as the proposed MTM program targeting criteria
changes, and stated that they would be addressed at a later time, in a
subsequent rulemaking document, as appropriate. If those proposed
changes were to be finalized, the number of Part D enrollees eligible
for MTM programs would increase, and the denominator of the MTM Program
Completion Rate for CMR measure would expand accordingly; therefore,
such changes in the targeting criteria would be substantive updates to
the Star Rating measure per Sec. 423.184(d)(2). Specifically, the
proposed changes to the targeting criteria would not update the actual
measure specifications but would meaningfully impact the number of Part
D enrollees eligible for MTM services from 9 percent to an estimated 23
percent and, thus, substantially increase the number of enrollees
included in the denominator of the MTM Program Completion Rate for CMR
measure, if finalized.
Accordingly, CMS proposed that if the changes to eligibility for
the MTM program in the December 2022 proposed rule (as previously
described) are finalized, we would move the MTM Program Completion Rate
for CMR measure to the display page for at least 2 years due to
substantive measure updates associated with the change in MTM program
eligibility criteria (88 FR 78558). Since there is no change to the
measure specifications other than the eligibility for the MTM program,
there would be no legacy measure to calculate while the updated measure
is on the display page. The MTM-eligible denominator population would
have meaningfully increased due to changes in the program requirements,
and CMS would not have the means to calculate the measure using the
previous MTM eligibility criteria. Therefore, we proposed that the
measure would be removed from the Star Ratings entirely for the 2025
and 2026 measurement years and would return to the Star Ratings program
no earlier than the 2027 measurement year for the 2029 Star Ratings.
CMS did not anticipate any additional burden associated with the
measure update, as burden tied to the changes in the MTM eligibility
criteria was already considered in estimates for the December 2022
proposed rule. Under our proposal for the MTM Program Completion Rate
for CMR measure, if the proposed changes to eligibility for MTM
programs were not finalized, CMS would not make any substantive changes
to the measure--that is, we would also not finalize the proposal in
this rule to update the Star Rating measure. Readers should refer to
section III.E. of this final rule for discussion of proposal to change
the MTM program eligibility criteria.
We invited public comment on this proposal to update the MTM
Program Completion Rate for CMR measure and received several comments.
A discussion of these comments, along with our responses follows.
Comment: Most commenters supported the proposal to move the MTM
Program Completion Rate for CMR measure to the display page for at
[[Page 30632]]
least two years if the proposed changes to the MTM program targeting
criteria are finalized.
Response: We appreciate the supportive comments. As discussed in
section III.E. Part D MTM Program in this final rule, CMS is finalizing
changes to the targeting criteria at Sec. 423.153(d)(2). CMS estimates
that the number of Part D enrollees eligible for MTM will increase from
3.6 million (7 percent of Part D enrollees) to 7.1 million (13 percent
of Part D enrollees) based on updated 2022 data.
Comment: A few commenters specifically did not support moving the
MTM Program Completion Rate for CMR measure to the display page because
they do not support changes to the MTM program targeting criteria. A
few commenters expressed concern regarding the increased impact of the
remaining Part D Star Rating measures if the MTM Program Completion
Rate for CMR measure was moved to the display page and not included in
the Star Ratings.
Response: Refer to section III.E. Part D MTM Program section in
this final rule for information on the MTM program changes that will be
applicable on January 1, 2025. Comments on the substance of the changes
to the Part D MTM program that were timely received (that is, received
during the comment period for the December 2022 proposed rule, which
closed February 13, 2023) are addressed in that section.
We understand the concerns raised by commenters that there would be
one less Part D measure included in the calculations to determine the
overall Star Rating for MA-PD plans and/or the Part D summary Star
Rating; however, there is no legacy measure to include in the Star
Ratings because the MTM-eligible population for the denominator would
change. Due to these substantive increases to the MTM-eligible measure
denominator population, and the rules for substantive measure updates
per Sec. 423.184(d)(2), the MTM Program Completion Rate for CMR
measure must move to the display page for at least 2 years before using
the updated measure in the Star Ratings. While on the display page, CMS
will continue to monitor the rates as the MTM program eligibility
criteria changes are implemented.
Comment: A few commenters suggested that CMS work with a measure
steward, such as the PQA, to develop alternate or companion measures
that measure the success or impact of MTM services on health outcomes.
A commenter recommended that CMS implement the PQA Medication Therapy
Resolution Monitoring metric.
Response: CMS encourages the industry and the PQA to develop new
MTM quality measures that CMS may consider for use in the Star Ratings
program in the future. We believe the commenter was referencing the
PQA's Medication Therapy Problem Resolution monitoring measure.
According to the PQA, monitoring measures such as this do not fit the
characteristics or intended use of a performance measure.\169\
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\169\ https://www.pqaalliance.org/pqa-measures s.
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After consideration of the comments received, we are finalizing the
proposed update to move the MTM Program Completion Rate for CMR measure
to the display page for at least two years before adding it to the Star
Ratings. As discussed in section III.E. in this final rule, CMS is
finalizing changes to the targeting criteria at Sec. 423.153(d)(2)
that will be effective on January 1, 2025. Therefore, the MTM Program
Completion Rate for CMR measure will move to the display page entirely
for the 2025 and 2026 measurement years and would return as a new
measure to the Star Ratings program for the 2027 measurement year for
the 2029 Star Ratings. Table VII.1 summarizes the updated MTM Program
Completion Rate for CMR measure finalized in this rule.
3. Measure Additions
a. Concurrent Use of Opioids and Benzodiazepines (COB), Polypharmacy
Use of Multiple Anticholinergic Medications in Older Adults (Poly-ACH),
and Polypharmacy Use of Multiple Central Nervous System Active
Medications in Older Adults (Poly-CNS) (Part D)
We are committed to continuing to improve the Part C and Part D
Star Ratings system by focusing on improving clinical and other health
outcomes. Consistent with Sec. Sec. 422.164(c)(1) and 423.184(c)(1),
we continue to review measures that are nationally endorsed and in
alignment with the private sector. 83 FR 16521, 16533. For example, we
regularly review measures developed by NCQA and the PQA.
CMS proposed to add the following three Part D measures to the 2026
Star Ratings (2024 measurement year), which are measures developed by
the PQA: COB, Poly-ACH, and Poly-CNS. The new Part D measures are
calculated from Prescription Drug Event (PDE) or CMS administrative
data, so they do not require any new data collections. Additionally, as
announced in the Advance Notice of Calendar Year (CY) 2024 Medicare
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies
\170\ the added measures would include a non-substantive update to
align with the PQA measure specifications by using continuous
enrollment (CE) and no longer adjusting for member-years (MYs).
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\170\ Advance Notice of Methodological Changes for Calendar Year
(CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C
and Part D Payment Policies at https://www.cms.gov/files/document/2024-advance-notice.pdf.
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These measures reflect the following performance:
Concurrent Use of Opioids and Benzodiazepines (COB) (Part
D)--analyzes the percentage of Medicare Part D beneficiaries 18 years
and older with concurrent use of prescription opioids and
benzodiazepines during the measurement period.
Polypharmacy Use of Multiple Anticholinergic Medications
in Older Adults (Poly-ACH) (Part D)--analyzes the percentage of
Medicare Part D beneficiaries, 65 years or older, with concurrent use
of two or more unique anticholinergic medications during the
measurement period.
Polypharmacy Use of Multiple Central Nervous System-Active
Medications in Older Adults (Poly-CNS) (Part D)--analyzes the
percentage of Medicare Part D beneficiaries, 65 years or older, with
concurrent use of three or more unique CNS-active medications during
the measurement period.
These measures help plans identify enrollees who are at risk of
respiratory depression or fatal overdoses, cognitive decline, or falls
and fractures, respectively, and help plans encourage appropriate
prescribing when medically necessary.
Per Sec. 423.184(c)(3) and (4), new Part D measures added to the
Star Ratings program must be on the display page for a minimum of 2
years prior to becoming Star Ratings measures. In addition, these
measures were submitted through the 2021 Measures Under Consideration
(MUC) process, a pre-rulemaking process for the selection of quality
and efficiency measures under section 1890A of the Act, and were
reviewed by the Measure Applications Partnership (MAP) for input and
recommendations to HHS on measure selection for CMS programs.\171\ The
Polypharmacy measures received conditional support for rulemaking
pending additional consensus based entity (CBE) endorsement (that is,
approval and full support for rulemaking was conditional only because
the measure was not
[[Page 30633]]
already National Quality Forum (NQF) endorsed), and the COB measure is
a CBE-endorsed measure by NQF; therefore, the COB measure received
support for rulemaking. NQF endorsement is not a requirement under
Sec. Sec. 422.164 and 423.184 to add a measure to the Medicare Part C
and D Star Ratings System. CMS reviews measures that are nationally
endorsed and in alignment with the private sector, such as measures
developed by NCQA and the PQA, for adoption and use in the Star
Ratings, and may develop its own measures. CMS has determined that
these three PQA-endorsed measures are clinically important and reliable
measures, and we proposed to add these three measures to the Star
Ratings.
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\171\ Pre-Rulemaking MUC Lists and Recommendation Reports at
https://mmshub.cms.gov/measure-lifecycle/measure-implementation/pre-rulemaking/lists-and-reports.
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These three measures have been on the display page on www.cms.gov
since 2021 (2019 measurement year) using MYs as part of the
specifications. CMS adapted these measures from the PQA to adjust for
partial enrollment by using MYs, however, the PQA's measure
specifications have been always based on CE. Therefore, to align more
closely with the PQA measure specifications, CMS is updating these
measures, making a non-substantive update to use CE instead of MYs
during the display period and subsequently will continue to use CE in
using these measures (on the display page or as part of the Star
Ratings). We described the non-substantive update in the December 2022
proposed rule to provide complete information on the measures we
proposed to add to the Star Ratings and discussed the non-substantive
updates in the Announcement of Calendar Year (CY) 2024 Medicare
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies
as required by Sec. 423.184(d)(1).
In this section of this rule, we summarize the comments we received
on adding the COB, Poly-ACH, and Poly-CNS measures to the Star Ratings,
with the non-substantive updates, and provide our responses and final
decisions.
Comment: A few commenters strongly supported incorporating the COB
and the two Polypharmacy measures to the Star Ratings as these measures
are important to address areas of significant risk to beneficiaries.
The commenters noted that there is also support in peer-reviewed
literature that concurrent use of therapies targeted by these measures
should be limited. Additionally, a few commenters supported adding
these measures to the Star Ratings since all three were submitted for
review by the MUC pre-rulemaking process and were approved by the MAP
committees.
Response: We appreciate the support for adding these three measures
to the Star Ratings.
Comment: A majority of commenters did not support moving the COB,
Poly-ACH, and Poly-CNS measures from the display page to the Star
Ratings. Additionally, commenters requested that only one of the two
Polypharmacy measures be selected due to overlap of National Drug Codes
(NDCs) and medication classes included in the measure specifications.
One commenter supported the Poly-CNS over the Poly-ACH measure out of
concern for the mental health population and that deprescribing
anticholinergics in beneficiaries who have been clinically stable may
compromise their health.
Response: We thank the commenters for their feedback. The measures
are important areas of focus for the Medicare Part D population from a
clinical perspective. The COB measure will help plans identify
beneficiaries who have concurrent opioids and benzodiazepine
prescriptions since taking these medications concurrently exposes these
beneficiaries to high risk of respiratory depression and fatal
overdose. According to the Centers for Disease Control and Prevention
(CDC) 2022 Clinical Practice Guideline for Prescribing Opioids for Pain
(``CDC Guideline''), the CDC recommended that there should be
particular caution when prescribing opioid pain medication and
benzodiazepine concurrently.\172\ We believe that the COB measure is an
important and appropriate way to focus on this clinical concern. The
PQA Measure Development Team, Stakeholder Advisory Panel, and the
American Geriatrics Society (AGS) Beers Criteria Update Panel co-chairs
recommended the two separate Polypharmacy measures (the Poly-CNS and
Poly-ACH measures) because of different supporting evidence, concurrent
use thresholds (three for Poly-CNS and two for Poly-ACH), additive
pharmacodynamic effects, and associated clinical outcomes (falls with
CNS-active medications and cognitive decline with anticholinergics).
The AGS 2019 Updated Beers Criteria provided a strong recommendation
based on moderate to high evidence (depending on the drug therapy) to
avoid concurrent use of three or more CNS-active medications in older
adults because of an increased risk of falls, and for some CNS-active
combinations, fractures. Additionally, a study published in JAMA
Internal Medicine in 2017, analyzing data from the National Ambulatory
Medical Care Survey, demonstrated that CNS polypharmacy in older adult
has been trending upward and found that CNS polypharmacy in older
adults more than doubled from 2004 to 2013.\173\ Furthermore, for the
Poly-ACH measure, the updated Beers Criteria provided a strong
recommendation based on moderate evidence to avoid concurrent use of
two or more anticholinergic medications in older adults because of an
increased risk of cognitive decline. A systematic literature review
which examined 27 studies from 1966 to 2008 determined that a high
burden of anticholinergic use consistently showed a negative
association with cognitive performance in older adults.\174\ Based on
clinical recommendations and supporting evidence, CMS concurs with the
PQA, the measure steward, that two separate Polypharmacy measures are
appropriate to assess these two areas of focus separately.
---------------------------------------------------------------------------
\172\ CDC Clinical Practice Guideline for Prescribing Opioids
for Pain--United States, 2022 at https://www.cdc.gov/mmwr/volumes/71/rr/rr7103a1.htm?s_cid=rr7103a1_w.
\173\ Maust DT, Gerlach LB, Gibson A, et al. Trends in Central
Nervous System-Active Polypharmacy Among Older Adults Seen in
Outpatient Care in the United States. JAMA Intern Med. 2017;
177(4):583-585. PMID: 28192559.
\174\ Campbell N, Boustani M, Limbil T, et al. The cognitive
impact of anticholinergics: a clinical review. Clin Interv Aging.
2009; 4:225-33. PMID: 19554093.
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We conducted additional data analyses on overlap across the three
measures from both medication specification and beneficiary-level
perspectives based on public comments we received. We found that the
COB and Poly-ACH measures do not have duplicative medication classes or
overlapping NDCs. However, the Poly-CNS measure includes medication
classes and NDCs that overlap with both the Poly-ACH and COB measures.
Also, we identified Part D beneficiaries who met the numerator
inclusion criteria in each of the three measures and evaluated if they
had overlapping contract enrollment periods (``enrollment episodes'')
across the measures. Note, if a beneficiary has multiple enrollment
episodes in the same Part D contract or different contracts, they must
meet the numerator criteria separately for each episode. The highest
percent of overlapping numerator beneficiary enrollment episodes was
between the COB and Poly-CNS measures but below 50 percent
(approximately 26.8 percent of the numerator beneficiary enrollment
episodes in the COB measure were found in the Poly-CNS measure and 40.9
percent of the numerator beneficiary enrollment episodes in Poly-
[[Page 30634]]
CNS were found in COB). The overlap between the Poly-ACH and Poly-CNS
measures' numerators was lower (almost 26.3 percent of the numerator
beneficiary enrollment episodes in the Poly-ACH measure were found in
the Poly-CNS measure and 9.0 percent were found in Poly-ACH). As
expected, the beneficiary overlap was even lower between the COB and
Poly-ACH measures because there are no medication overlaps between the
two measure specifications, but beneficiaries may meet the numerator
inclusion criteria based on their medication regimens (about 2.1
percent of the numerator beneficiary enrollment episodes in the COB
measure were found in the Poly-ACH measure and 9.2 percent in Poly-ACH
were found in COB).
Based on these comments and data analysis on overlap rates, at this
time we are only adding the COB and Poly-ACH measures to the Star
Ratings; the Poly-CNS measure will not be added to the Star Ratings at
this time due to concerns raised about overlapping medication classes
and to monitor for potential duplicative medication therapy classes
across the three measures. Because the Poly-CNS measure is a clinically
relevant measure for the Part D population, we will retain this measure
on the display page. Similar to the Star Ratings, measures on the
display page and their numeric measure scores are publicly reported for
information purposes. However, unlike the Star Ratings, measures on the
display page are not assigned a star and are not associated with QBPs
for MA organizations. We may reconsider adding the Poly-CNS to the Star
Ratings in the future through rulemaking.
We do not expect a zero-percentage measure rate for these measures
as, in some rare cases, it may be medically necessary for beneficiaries
to take multiple anticholinergics. Additionally, CMS does not establish
a pre-determined threshold to assign stars to these measures and uses
the clustering methodology. Therefore, CMS does not have specific cut
points or thresholds for performance of Part D contracts in the Star
Ratings. Rather, for these measures, contracts are compared based on
their contract type and how beneficiaries enrolled in the contracts are
taking multiple concurrent prescriptions. In light of the clinical
considerations, including the Poly-ACH and the COB measure in the Star
Ratings is appropriate as a means to ensure that these important areas
of focus are reflected in the overall measure of quality and
performance provided by the Star Ratings. We will also share the
specification comments with the PQA, the measure steward.
Comment: A few commenters were concerned that these measures pose
similar challenges as the retired Star Ratings High Risk Medication
(HRM) measure, and addition of the measures to the Star Ratings may
lead to tighter utilization management (UM) and safety edits that could
result in additional administrative burden to prescribers, pharmacists,
and beneficiaries or access issues or disruption of therapy for
beneficiaries. Commenters recognized the measures' importance but were
concerned with prescriber burden. Additionally, commenters believed
that other policies in the Part D program to address these areas of
concern already exist, such as Drug Management Programs (DMPs),
concurrent drug utilization review and point-of-sale (POS) edits, MTM
programs, and UM such as prior authorizations.
Response: We strongly believe that the COB, Poly-CNS, and Poly-ACH
measures are important measures that address specific clinical risks in
the Medicare Part D population. We do not anticipate that there will be
increased workload for plans or providers due to adding any of these
measures to the Star Ratings. These measures are not new and have been
on display page since 2021 (using data from the 2019 measurement year);
therefore, plans, providers, and beneficiaries are familiar and
experienced with these measures. The long-term benefits of improved
medication safety, reduce medication errors, and better patient
outcomes significantly outweigh some potential burden associated with
efforts to address over-utilization. Additionally, we understand that
use of these medications may be medically necessary for some
beneficiaries 65 and older, and as noted in the response earlier in
this section of the preamble, CMS does not expect a zero-percentage
rate in the COB, Poly-CNS, or Poly-ACH measures. As demonstrated in the
annual data included in the December 2022 proposed rule (87 FR 79619),
the rates are decreasing for all three measures, suggesting improvement
is occurring.
Furthermore, these three measures are not duplicative of existing
policies in Part D which are complementary tools to target specific
types of concurrent use of medications among Medicare Part D enrollees
and drive quality improvement. The COB and Polypharmacy measures are
intended as retrospective plan performance measures; concurrent drug
utilization reviews, as required under Sec. 423.153(c)(2), and opioid
safety edits are reviews at POS to proactively engage beneficiaries and
prescribers to address prescription opioid overuse; DMPs are required
statutorily in section 1860D-4(c)(5)(A) of the Act for plans to monitor
beneficiaries who are at-risk for misuse or abuse of frequently abused
drugs. Frequently abused drug, as defined at 42 CFR 423.100, is a
controlled substance that the Secretary determines, based on several
factors, is frequently abused or diverted. CMS has determined that
opioids (except buprenorphine for opioid use disorder and injectables)
and benzodiazepines are frequently abused drugs for purposes of Part D
DMPs. MTM helps beneficiaries and their caregivers improve their
medication use and optimize therapeutic outcomes.
As a reminder, sponsors may apply UM controls to reduce
inappropriate use of concurrent therapies. UM controls must be
submitted and approved by CMS through HPMS formulary submissions,
unless they are POS safety related edits that can be implemented
without submission or approval by CMS pertaining to duplicative therapy
or when FDA labeling clearly indicates the dispensing is unsafe,
duplicative, or contraindicated, such as edits regarding specific age-
related contraindications. Edits based upon warnings and precautions in
the label, as opposed to contraindications or doses that exceed those
supported by the label, must be submitted to CMS for approval. Sponsors
that implement unapproved edits for these medications may be found to
have data integrity issues. Per Sec. Sec. 422.164(g) and 423.184(g),
CMS may reduce a contract's measure rating to 1 star for concerns such
as data inaccuracies, partiality, or incompleteness. Such
determinations may be based on a number of reasons, including
mishandling of data, inappropriate processing, or implementation of
incorrect practices that have an impact on the accuracy, impartiality,
or completeness of the data used for one or more specific measure(s).
Implementation of unapproved edits for these measures may bias
sponsors' PDE data used for these measures and thus be subject to this
policy. Inclusion of polypharmacy medications in the measures is not a
contraindication to use, but rather an opportunity to evaluate the use
of concurrent polypharmacy medications in Medicare Part D beneficiaries
65 years and older.
Comment: Some commenters requested that CMS delay adding these
measures to the Star Ratings by at least 2 years to provide sponsors
additional time to prepare for the transition because it may be
difficult to improve
[[Page 30635]]
the measures or incentivize prescribers and to minimize unnecessary
disruptions in therapy.
Response: Sponsors were given advance notice that CMS planned
rulemaking to add these measures to the Star Ratings in the
Announcement of Calendar Year (CY) 2020 Medicare Advantage Capitation
Rates and Medicare Advantage and Part D Payment Policies and Final Call
Letter, which was released in April 2019. Per Sec. 423.184(c)(3), new
Part D measures are posted on the display page for at least 2 years
prior to becoming a Star Ratings measure. Sponsors have been on notice
for more than 4 years that these measures could be added to the Star
Ratings, and all three measures have been on the display page since
2021 (2019 measurement year). We are finalizing the adoption of the COB
and Poly-ACH measures beginning with the 2025 measurement period for
the 2027 Star Ratings. Part D plans have had sufficient time to gain
experience with these measures and to prepare for these measures to be
added to the Star Ratings.
Comment: Commenters requested that CMS add socio-demographic status
(SDS) risk-adjustment to the COB and Polypharmacy measures because
Medicare Advantage organizations, in particular those that offer dual
eligible or special needs plans, will be disproportionately affected as
these plans enroll a greater number of complex patients with mental
health conditions or disabilities.
Response: Currently these measures have not been tested for SDS
risk-adjustment because the Poly-ACH, Poly-CNS, and COB measures are
process measures and are not recommended for SDS risk adjustment by the
PQA. We will share this comment with the PQA, the measure steward.
Comment: Some commenters opposed the COB and Poly-CNS measures
because they believe these measures contradict the updated CDC 2022
Clinical Practice Guideline for Prescribing Opioids for Pain. These
commenters noted that the CDC Guideline discourages including
inflexible dose thresholds in policies involving opioid pain
medications.
Response: The COB and Poly-CNS measure specifications do not
contradict the CDC Guideline \175\ which recommends particular caution
when prescribing opioid pain medication and benzodiazepines
concurrently and that prescribers should consider whether benefits
outweigh risks of concurrent prescribing of opioids and other central
nervous system depressants. These measures do not include dosage
thresholds in the measure specifications and are not intended to guide
clinical-decision-making for individual patients, but rather, these
measures evaluate the use of concurrent therapies.
---------------------------------------------------------------------------
\175\ Centers for Disease Control and Prevention (CDC) Clinical
Practice Guideline for Prescribing Opioid for Pain--United States,
2022 at https://www.cdc.gov/mmwr/volumes/71/rr/rr7103a1.htm?s_cid=rr7103a1_w.
---------------------------------------------------------------------------
For the COB and Polypharmacy measures, since there are no dosage
thresholds, a beneficiary would be potentially eligible for the COB and
polypharmacy measures once they have overlapping days supply for
concurrent use of unique target medications included in these measures.
Specifically, the COB measure evaluates the percentage of beneficiaries
18 years of age or greater with concurrent use of prescription opioids
and benzodiazepines. The COB numerator is defined as the number of
beneficiaries from the denominator with 2 or more prescription claims
for any benzodiazepines with different dates of service and concurrent
use of opioids and benzodiazepines for 30 or more cumulative days. The
COB denominator is defined as beneficiaries with 2 or more prescription
claims for opioid prescriptions on different dates of service and with
15 or more cumulative days' supply during the measurement year. The
Poly-CNS measure evaluates the percentage of beneficiaries 65 years of
age or older with concurrent use of 3 or more unique CNS-active
medications. The numerator is defined as the number of beneficiaries
from the denominator with concurrent use of 30 or more cumulative days
of 3 or more unique CNS-active medications, each with 2 or more
prescription claims on different dates of service during the
measurement year. The denominator is defined as beneficiaries with 2 or
more prescription claims for the same CNS-active medication on
different dates of service during the measurement year.
Comment: Commenters requested that CMS expand exclusions for both
Polypharmacy measures to include diagnoses of significant mental health
(such as schizophrenia or bipolar disorder) since these conditions are
typically treated with multiple antipsychotics, anti-depressants, and/
or anti-epileptics. Commenters noted that these measures may have
limited benefits to beneficiaries with Alzheimer's disease and
dementia, recommended that CMS consider extending overlap days to at
least 120 days or more to ensure that plans and providers can work
collaboratively in developing realistic plans around deprescribing, and
recommended that CMS consider dosage reduction or tapering therapy of
concurrent anticholinergic medications. Another commenter recommended
excluding benzodiazepine prescriptions that are less than 5 days'
supply due to a procedure for the COB measure. Commenters requested
that long-term care (LTC) residents be excluded from the COB measure
since benzodiazepines are used in the LTC population to treat anxiety
or used as a muscle relaxant which could result in delay in therapy.
Furthermore, a commenter noted that concomitant use of opioids and
benzodiazepines are closely monitored in LTC facilities. Additionally,
a commenter suggested that CMS consider dosages of concurrent
anticholinergic medications and their overall anticholinergic
potential, as opposed to a count of medications, before identifying
members for potential overprescribing since beneficiaries with severe
mental illnesses may be using multiple antipsychotics, or anti-
depressants, and/or anti-epileptics.
Response: We appreciate the commenters' feedback. As a reminder,
both Polypharmacy measures exclude beneficiaries in hospice care.
Additionally, beneficiaries with a seizure disorder diagnosis during
the measurement year are excluded from the Poly-CNS measure. The
current exclusions for the COB measure are beneficiaries in hospice
care, with a cancer diagnosis, with sickle cell disease diagnosis, and
in palliative care during the measurement year. Older adults with co-
occurring mental health disorders and multiple anticholinergic
medications face an elevated risk of adverse consequences, particularly
cognitive decline, increased fall risks, and central nervous system
side effects. Continuous monitoring of these individuals is crucial for
early detection, medication optimization, and quality of life
improvement. Studies have demonstrated positive outcomes when
healthcare providers implemented routine anticholinergic burden
assessment and medication-switching interventions; these findings
underscore the critical need for continuous monitoring and proactive
management of the anticholinergic burden in this vulnerable
population.176 177 178
[[Page 30636]]
Therefore, CMS will apply the measure specifications as intended by
PQA, the measure steward. PQA employs a highly rigorous and transparent
process for developing and endorsing quality measures. This multi-phase
lifecycle involves several crucial phases like measure
conceptualization, specification, testing, endorsement, and
implementation and maintenance. In the final implementation and
maintenance stage, endorsed measures are reviewed and updated
periodically to reflect evolving practice standards and data
availability. This ongoing process ensures that measures remain
clinically relevant and valid.
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\176\ Eum, S., Hill, S.K., Rubin, L.H., Carnahan, R.M., Reilly,
J.L., Ivleva, E.I., . . . & Bishop, J.R. (2017). Cognitive burden of
anticholinergic medications in psychotic disorders. Schizophrenia
research, 190, 129-135.
\177\ Lupu, A.M., Clinebell, K., Gannon, J.M., Ellison, J.C., &
Chengappa, K.R. (2017). Reducing anticholinergic medication burden
in patients with psychotic or bipolar disorders. The Journal of
Clinical Psychiatry, 78(9), 17141.
\178\ Mukku, S.S., Sinha, P., Sivakumar, P.T., & Varghese, M.
(2021). Anticholinergic burden among hospitalised older adults with
psychiatric illnesses--a retrospective study. Current Drug Safety,
16(3), 264-271.
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We will share measure specification comments for expanding the
exclusions and the methodology considerations with the PQA, the measure
steward for the COB and polypharmacy measures.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to the comments, we are
finalizing the addition of the Poly-ACH and COB measures in the Star
Ratings program beginning with the 2025 measurement year for the 2027
Star Ratings. The Poly-CNS measure will remain on the display page and
not be added to the Star Ratings.
In addition, we announced the non-substantive updates to the Poly-
CNS, Poly-ACH, and COB measures to align with the PQA measure
specifications to use CE and no longer adjust for MYs in the
Announcement of Calendar Year (CY) 2024 Medicare Advantage (MA)
Capitation Rates and Part C and Part D Payment Policies as required by
Sec. 423.184(d)(1). CMS will make the update to change from MYs to CE
for the 2024 measurement year for all three measures. The Poly-ACH and
COB measures will be added to the Star Ratings program beginning with
the 2025 measurement year for the 2027 Star Ratings with these updates.
4. Summary of Measure Changes for the Part C and D Star Ratings
Table VII.1 summarizes the additional and updated measures
addressed in this final rule, beginning with the 2027 Star Ratings. The
measure descriptions listed in this table are high-level descriptions.
The annual Star Ratings measure specifications supporting document, the
Medicare Part C & D Star Ratings Technical Notes, provides detailed
specifications for each measure. Detailed specifications include, where
appropriate, more specific identification of a measure's: (1)
numerator, (2) denominator, (3) calculation, (4) timeframe, (5) case-
mix adjustment, and (6) exclusions. The Technical Notes document is
updated annually. In addition, where appropriate, the Data Source
descriptions listed in this table reference the technical manuals of
the measure stewards. The annual Star Ratings are produced in the fall
of the prior year. For example, Stars Ratings for the year 2027 are
produced in the fall of 2026. If a measurement period is listed as
``the calendar year 2 years prior to the Star Ratings year'' and the
Star Ratings year is 2027, the measurement period is referencing the
January 1, 2025 to December 31, 2025 period.
BILLING CODE P
[[Page 30637]]
[GRAPHIC] [TIFF OMITTED] TR23AP24.013
C. Revising the Rule for Non-Substantive Measure Updates (Sec. Sec.
422.164(d) and 423.184(d))
We proposed to add collection of survey data through another mode
of survey administration to the non-exhaustive list of non-substantive
measure updates that can be made without rulemaking. This proposal was
only adding another example to the non-exhaustive list of non-
substantive measure changes that the current regulations permit to be
done through the Advance Notice/Rate Announcement process. For example,
as described in the CY 2024 Rate Announcement, we are implementing the
web-based mode (as an addition to the current mixed mode protocol) for
the 2024 Consumer Assessment of Healthcare Providers and Systems
(CAHPS) survey implementation used for the 2025 Star Ratings. The rules
CMS adopted to address measure updates based on whether an update is
substantive or non-substantive are specified at Sec. Sec. 422.164(d)
and 423.184(d). As described at 83 FR 16534 when Sec. Sec. 422.164(d)
and 423.184(d) were initially adopted, we incorporate updates without
rulemaking for measure specification changes that do not substantively
change the nature of the measure. In paragraphs (d)(1)(i)-(v) of
Sec. Sec. 422.164 and 423.184, we provided a non-exhaustive list of
circumstances that would constitute a non-substantive update.
Currently, paragraph (d)(1)(v) of each regulation identifies the
addition of an alternative data source as a non-substantive update; the
proposed additional example is the collection of
[[Page 30638]]
alternative data sources or expansion of modes of data collection.
These two examples are similar but not exactly the same, so we proposed
to clarify in the regulation that an expansion in the data sources
used, whether by adding an alternative source of data or adding an
alternative way to collect the data, is a non-substantive change in
measure specifications. The expansion of how data are collected is non-
substantive because there would be no change to the information that is
being collected; the only change would be the way in which it is
collected. For example, adding a web mode of survey administration to
the current survey administration of mail with telephone follow-up of
non-respondents to the mail survey that historically has been used for
CAHPS and Health Outcomes Survey (HOS) would not change what is being
measured, but would only expand the way the data can be collected.
Therefore, that is a non-substantive update to the measures.
We proposed to revise the regulation text at Sec. Sec.
422.164(d)(1)(v) and 423.184(d)(1)(v) by adding that another example of
a non-substantive change would include a new mode of data collection.
We solicited comments on this proposal.
Comment: We received several comments supporting the proposal to
revise regulation text by adding a new mode of data collection as
another example of a non-substantive change.
Response: CMS thanks the commenters for their support.
Comment: We received a few comments opposed to this proposal.
Commenters stated that a new mode of data collection should be
considered a substantive change. A couple of commenters were concerned
a change in survey modality would produce different survey results and
that survey modality preferences differ by age groups, which may affect
the population responding. A commenter expressed concerned that web-
based respondents could create a source of bias in the data due to
differences in socioeconomic factors, plan type, or geography and could
impact contract performance.
Response: CMS disagrees that changes to expand modes of data
collection would be a substantive change to a measure. Notwithstanding
an expansion of the modes of data collection, the denominator will
remain the same. Expanding the modes of data collection will generally
result in more data regarding performance on the measure. As a result,
the measure will better reflect actual performance of the organization
and provide more information to CMS and the public.
For example, for the survey administration for CAHPS and HOS
measures used as the example in the proposed rule, the denominator for
the measures continues to include plan enrollees. The addition of web
surveys to the mail-phone survey protocol in no way changes the
numerator or denominator of the measure. Further, our study of using
web surveys as well as mail-phone surveys did not indicate any
significant change in the resulting data or measure scores, consistent
with other studies.\179\ The CAHPS survey measures and results are
unchanged as a result of our proposed change to add a new mode of data
collection as a non-substantive change. In the field test, a majority
of respondents in the web-mail-phone protocol still chose to respond by
mail or phone. Among respondents with an available email address, 79
percent chose to respond by mail or phone. Further, the composition of
respondents is similar in the web-mail-phone and mail-phone protocols.
We compared respondents to the web-mail-phone and mail-phone protocols
by age, sex, receipt of a low-income subsidy or dual eligible status
(LIS/DE), race/ethnicity, education, and health status, and found that
respondents were quite similar; the overall pattern of differences was
consistent with chance.
---------------------------------------------------------------------------
\179\ For example, Fowler FJ, Cosenza C, Cripps LA, Edgman-
Levitan S, Cleary PD. The effect of administration mode on CAHPS
survey response rates and results: A comparison of mail and web-
based approaches. Health Serv Res. 2019; 54: 714-721. https://doi.org/10.1111/1475-6773.13109.
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The use of a three-phase sequential multimode approach, web
followed by mail followed by telephone, allows MA enrollees choices
about how to respond. It maintains or increases response rates for all
groups of MA enrollees and is available to those with or without
broadband or telephone access. While the increases in response rates
vary slightly by enrollee characteristics, this does not create bias,
as scores from those randomized for the web-mail-phone protocol were
similar to those randomized for the mail-phone protocol in our field
test. Of 39 items compared between the web-mail-phone and mail-phone
protocols, none differed in case-mix adjusted mean score at p<0.01 and
only two differed at p<0.05, a pattern consistent with chance. Thus,
there is no evidence of a mode effect on scores from the web-mail-phone
protocol relative to the mail-phone protocol.
While different plan rates of email availability may influence
response rates gains, they do not bias plan scores because response by
web results in scores similar to those obtained under the mail-phone
protocol. Similarly, no overall effect on scores over time is
anticipated with the addition of the web mode.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to the comments, we are
finalizing the clarification to the regulation text at Sec. Sec.
422.164(d)(1)(v) and 423.184(d)(1)(v). As this clarification is
consistent with current practice and policy, CMS is applying it
immediately on the effective date of the final rule and for measures in
the 2025 Star Ratings where CMS has complied with Sec. Sec.
422.164(d)(1) and 423.184(d)(1) in adopting the non-substantive change.
D. Weight of Measures With Substantive Updates (Sec. Sec.
422.166(e)(2) and 423.186(e)(2))
We proposed to adopt regulation text clarifying how we treat
measures with substantive updates when they return to the Star Ratings
program. The general rules that govern updating measures are specified
at Sec. Sec. 422.164(d) and 423.184(d), including rules for non-
substantive and substantive measure updates. As described at 83 FR
16534 when these regulations were first adopted, the process for
adopting substantive measure specification updates is similar to the
process for adopting new measures. Historically, we have treated
measures with substantive updates as new measures when they are added
back to the Star Ratings following two or more years on the display
page and adoption through rulemaking.
Currently, new measures receive a weight of 1 for their first year
in the Star Ratings program as specified at Sec. Sec. 422.166(e)(2)
and 423.186(e)(2). We proposed to add language to Sec. Sec.
422.166(e)(2) and 423.186(e)(2) to clarify that when a measure with a
substantive update moves back to Star Ratings from the display page
following rulemaking, it is treated as a new measure for weighting
purposes and therefore would receive a weight of 1 for its first year
back in the Star Ratings program. This is consistent with our current
and prior practice and with the explanation provided in the January
2021 final rule about the weight provided to substantively updated
measures for the first year they are returned to the Star Ratings (86
FR 5919). In the second and subsequent years after the measure returns
to the Star Ratings after being on the display page with a substantive
update, the measure would be assigned the weight associated with its
category, which is what happens with new measures as
[[Page 30639]]
well. In addition, we proposed to revise the heading for paragraph
(e)(2) to reflect how the provision addresses the weight of both new
and substantively updated measures.
We solicited comments on this proposal.
Comment: All commenters supported the proposal to clarify how we
treat measures with substantive updates when they return to the Star
Ratings program. Some commenters noted that this proposal would result
in a phase-in approach reducing potential volatility, and it provides
plans sufficient notice to familiarize themselves with a measure's
updated specifications, assess potential impacts, and incorporate
changes to internal processes if needed. A commenter requested CMS
confirm that when the three Part D medication adherence measures return
to the Star Ratings after adding risk adjustment for sociodemographic
status, they will each have a weight of 1 for the first year.
Response: We appreciate the commenters' support. In the April 2023
final rule, CMS finalized the substantive update to the three
medication adherence measures for the 2028 Star Ratings (2026
measurement year). The first year (2028 Star Ratings) the updated
medication adherence measures will be in the Star Ratings they will
have a weight of 1, but then beginning with the following Star Ratings
year, the weight will increase to 3, as these measures are categorized
as intermediate outcome measures.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to the comments, we are
finalizing the additional language added to Sec. Sec. 422.166(e)(2)
and 423.186(e)(2) with a slight clarification that in subsequent years,
a new or substantively updated measure will be assigned the weight
associated with its category, and we are finalizing the update to the
heading for paragraph (e)(2). As this clarification is consistent with
current practice and policy, CMS is applying it immediately on the
effective date of the final rule and to the 2025 Star Ratings.
E. Data Integrity (Sec. Sec. 422.164(g) and 423.184(g))
We currently have rules specified at Sec. Sec. 422.164(g) and
423.184(g) to reduce a measure rating when CMS determines that a
contract's measure data are incomplete, inaccurate, or biased. For the
Part C appeals measures, we have statistical criteria to reduce a
contract's appeals measures for missing Independent Review Entity (IRE)
data. Specifically, these criteria allow us to use scaled reductions
for the appeals measures to account for the degree to which the data
are missing. See 83 FR 16562 through 16564. The data underlying a
measure score and Star Rating must be complete, accurate, and unbiased
for them to be useful for the purposes we have codified at Sec. Sec.
422.160(b) and 423.180(b). In the April 2018 final rule (83 FR 16562),
CMS codified at Sec. Sec. 422.164(g)(1)(iii) and 423.184(g)(1)(ii) a
policy to make scaled reductions to the Part C and D appeals measures'
Star Ratings when the relevant IRE data are not complete based on the
Timeliness Monitoring Project (TMP) or audit information. Following the
process in Sec. 423.184(e)(2) and for the reason specified in Sec.
423.184(e)(1)(ii), we removed the two Part D appeals measures (Appeals
Auto-Forward and Appeals Upheld) beginning with the 2020 measurement
year and 2022 Star Ratings in the 2020 Rate Announcement \180\ due to
low statistical reliability; thus, the scaled reductions are no longer
applicable to the Part D appeals measures. However, we made no changes
to the scaled reductions used with the Part C appeals measures, Plan
Makes Timely Decisions about Appeals and Reviewing Appeals Decisions,
because there were no similar statistical reliability issues with those
measures. Therefore, these two Part C measures continue to be subject
to the scaled reductions authorized at Sec. 422.164(g)(1)(iii) based
on TMP or audit information.
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\180\ Announcement of Calendar Year (CY) 2020 Medicare Advantage
Capitation Rates and Medicare Advantage and Part D Payment Policies
and Final Call Letter (cms.gov).
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Because the Part D appeals measures are no longer part of the Star
Ratings, we proposed to remove and reserve the paragraphs at Sec. Sec.
422.164(g)(1)(iii)(B), (1)(iii)(F), (1)(iii)(I), and 423.184(g)(1)(ii).
Paragraphs (B), (F), and (I) of Sec. 422.164(g)(1)(iii) all address
how the error rate on the TMP for the Part D appeals measures had been
used in calculating scaled reductions for MA-PDs that are measured on
both Part C and Part D appeals. Currently, Sec. 423.184(g)(1)(ii)
addresses the scaled reductions for Part D appeals measures based on
the TMP. Given the removal of the Part D appeals measures from the Star
Ratings, these provisions are moot. We proposed to reserve the relevant
paragraphs to avoid the risk that redesignating the remaining
paragraphs would cause unintended consequences with any existing
references to these provisions.
The completeness of the IRE data is critical to support fair and
accurate measurement of the two Part C appeals measures. Since the 2019
Star Ratings we have used data from the TMP, which uses the Part C
audit protocols for collecting Organization Determinations, Appeals and
Grievances (ODAG) universes, to determine whether the IRE data used to
calculate the Part C appeals measures are complete. As described at
Sec. 422.164(g)(iii), we use scaled reductions to account for the
degree to which the IRE data are missing. The current regulations
describe how scaled reductions are based on the TMP. However, due to a
change in the Part C audit protocols for collecting universes of ODAG
data, we proposed to modify, and in one case reserve, paragraphs
(g)(1)(iii), (g)(1)(iii)(A)(1) and (2), (g)(1)(iii)(H), (g)(1)(iii)(J),
(g)(1)(iii)(K)(2), and (g)(1)(iii)(O) to change how we address
reductions in the Star Ratings for Part C appeals measures using
different data. We proposed to revise the introductory language in
Sec. 422.164(g)(1)(iii) to remove references to the timeliness
monitoring study and audits and replace them with references to data
from MA organizations, the IRE, or CMS administrative sources. In
addition, our proposed revisions to this paragraph included minor
grammatical changes to the verb tense. We also proposed to modify Sec.
422.164(g)(1)(iii)(A) to use data from MA organizations, the IRE, or
CMS administrative sources to determine the completeness of the data at
the IRE for the Part C appeals measures starting with the 2025
measurement year and the 2027 Star Ratings. Currently, data collected
through Sec. 422.516(a) could be used to confirm the completeness of
the IRE data; however, data collected from MA organizations through
other mechanisms in addition to data from the IRE or CMS administrative
sources could be used in the future. The proposed amendment to Sec.
422.164(g)(1)(iii)(A) was not intended to limit the data CMS uses to
conduct analyses of the completeness of the IRE data in order to adapt
to changing information submissions that could be reliably used for the
same purpose in the future. The revisions proposed for the other
paragraphs provided for a new calculation to implement scaled
reductions for the Part C appeals measures for specific data integrity
issues.
Part C contracts are required to send partially favorable
(partially adverse) and unfavorable (adverse) decisions to the IRE
within applicable timeframes as specified at Sec. 422.590(a) through
(e). In order for the existing Part C appeals measures (Plan Makes
Timely Decisions
[[Page 30640]]
about Appeals and Reviewing Appeals Decisions) to accurately reflect
plan performances in those areas, the appeals must be sent to the IRE
because the data source for these measures is based on the data that
have been submitted to the IRE. Currently, through the Part C Reporting
Requirements established under Sec. 422.516(a), CMS collects
information at the contract level from MA organizations about the
number of partially favorable reconsiderations (that is, the number of
partially favorable claims and the number of partially favorable
service requests by enrollees/representatives and non-contract
providers) and unfavorable reconsiderations (that is, the number of
unfavorable claims and the number of unfavorable service requests by
enrollees/representatives and non-contract providers) over a calendar
year.\181\ These data are subject to data validation requirements, in
accordance with specifications developed by CMS, under Sec.
422.516(g), to confirm that they are reliable, valid, complete, and
comparable. CMS would use this information to determine the total
number of cases that should have been sent to the IRE over the
measurement year (that is, number of partially favorable
reconsiderations + number of unfavorable reconsiderations) to compare
to information from the IRE about submissions received from each MA
organization. In the future, CMS may use detailed beneficiary-level
data collected on the number of partially favorable reconsiderations
and the number of unfavorable reconsiderations if such more detailed
information is collected under CMS's statutory and regulatory authority
to require reporting and data submission from MA organizations (such as
the reporting requirements in Sec. Sec. 422.504(f)(2) and/or
422.516(a)).
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\181\ In the Medicare Part C Technical Specifications Document
for Contract Year 2023, elements E through L in Subsection #4 on
page 15 are currently used to identify unfavorable and partially
favorable reconsiderations (https://www.cms.gov/files/document/
cy2023-part_technical-specifications-222023.pdf).
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To determine if a contract may be subject to a potential reduction
for the Part C appeals measures' Star Ratings, we proposed to compare
the total number of appeals received by the IRE that were supposed to
be sent to the IRE per regulations as specified at Sec. 422.590(a)
through (e) and (g) (which are explained in guidance at section 50.12.1
of the Parts C & D Enrollee Grievances, Organization/Coverage
Determinations, and Appeals Guidance \182\), including all appeals
regardless of their disposition (for example, including appeals that
are dismissed or withdrawn), to the total number of appeals that were
supposed to go to the IRE. The total number of appeals that were
supposed to be sent to the IRE would be based on the sum of the number
of partially favorable reconsiderations and the number of unfavorable
reconsiderations from the Part C Reporting Requirements during the
measurement year (January 1st to December 31st). We proposed to modify
the calculation of the error rate at Sec. 422.164(g)(1)(iii)(H) by
taking 1 minus the quotient of the total number of cases received by
the IRE and the total number of cases that were supposed to be sent to
the IRE (Equation 1). The total number of appeals that were supposed to
be sent to the IRE in Equation 2 would be calculated from the data
described in the revisions to Sec. 422.164(g)(1)(iii)(A):
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\182\ https://www.cms.gov/medicare/appeals-and-grievances/mmcag/downloads/parts-c-and-d-enrollee-grievances-organization-coverage-determinations-and-appeals-guidance.pdf.
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Equation (1)
[GRAPHIC] [TIFF OMITTED] TR23AP24.014
Equation (2)
Total Number of Cases that should have been forwarded to the IRE =
Number of partially favorable reconsiderations + Number of unfavorable
reconsiderations
We proposed to remove and reserve Sec. 422.164(g)(1)(iii)(J)
because we intend to calculate the Part C error rate based on 12 months
rather than a projected number of cases not forwarded to the IRE in a
3-month period as has historically been done with the TMP data.
Currently, a contract is subject to a possible reduction due to lack of
IRE data completeness if the calculated error rate is 20 percent or
more and the projected number of cases not forwarded to the IRE is at
least 10 in a 3-month period as described at Sec.
422.164(g)(1)(iii)(K). We proposed to modify Sec.
422.164(g)(1)(iii)(K)(2) so that the number of cases not forwarded to
the IRE is at least 10 for the measurement year (that is, total number
of cases that should have been forwarded to the IRE minus the total
number of cases received by the IRE is at least 10 for the measurement
year). The requirement for a minimum number of cases is needed to
address statistical concerns with precision and small numbers. If a
contract meets only one of the conditions specified in paragraph (K),
the contract would not be subject to reductions for IRE data
completeness issues.
We proposed at Sec. 422.164(g)(1)(iii)(O) that the two Part C
appeals measure Star Ratings be reduced to 1 star if CMS does not have
accurate, complete, and unbiased data to validate the completeness of
the Part C appeals measures. For example, the data collected in the
Part C Reporting Requirements go through a data validation process
(Sec. 422.516(a)). CMS has developed and implemented data validation
standards to ensure that data reported by sponsoring organizations
pursuant to Sec. 422.516 satisfy the regulatory obligation. If these
data are used to validate the completeness of the IRE data used to
calculate the Part C appeals measures, we would reduce the two Part C
appeals measure Star Ratings to 1 star if a contract fails data
validation of the applicable Part C Reporting Requirements sections for
reconsiderations by not scoring at least 95 percent or is not compliant
with data validation standards (which includes sub-standards as
applicable), since we cannot confirm the data used for the Part C
appeals measures are complete.
We also proposed to update Sec. 422.164(g)(1)(iii)(A)(2) to change
the data source in the case of contract consolidations so that the data
described in paragraph (g)(1)(iii)(A)(1) are combined for consumed and
surviving contracts for the first year after consolidation. In
addition, we proposed to delete the phrase ``For contract
consolidations approved on or after January 1, 2022'' as unnecessary.
We did not propose to update the steps currently described at Sec.
422.164(g)(1)(iii)(C), (D), (E), (G), K(1), (L), (M), and (N) to
determine whether a scaled reduction should be applied to the two Part
C appeals measures. We welcomed feedback on this updated approach for
making scaled reductions
[[Page 30641]]
proposed at Sec. 422.164(g)(1)(iii), (1)(iii)(A)(1) and (2),
(1)(iii)(H), (1)(iii)(K)(2), and (1)(iii)(O), the removal of the Part D
related provisions at Sec. 422.164(g)(1)(iii)(B), (1)(iii)(F), and
(1)(iii)(I), and Sec. 423.184(g)(1)(ii), and removal of the provision
at Sec. 422.164(g)(1)(iii)(J), and we received several comments. A
discussion of these comments, along with our responses follows.
Comment: We received a number of comments in support of our
proposal to update the methodology for applying scaled reductions for
the Part C appeals measures. A couple of commenters expressed strong
support for this update, because it will help ensure data integrity by
discouraging MA plans from not sending required appeals to the IRE to
earn higher Star Ratings.
Response: CMS appreciates the support of the update to the
methodology for applying scaled reductions for the Part C appeals
measures. Given the financial and marketing incentives associated with
higher performance in Star Ratings, CMS agrees that safeguards are
needed to protect the Star Ratings from actions that inflate
performance or mask deficiencies.
Comment: A few commenters asked for clarifications about the types
of cases that CMS is reviewing for the scaled reductions and the types
of cases that need to be sent to the IRE. A commenter asked if it was
CMS's intent to send all favorable cases to the IRE.
Response: We are only examining the appeals that are currently
required to be sent to the IRE. Part C contracts are required to send
partially favorable (partially adverse) and unfavorable (adverse)
decisions to the IRE within applicable timeframes as specified at Sec.
422.590(a) through (e) and (g). (88 FR 78560). It is not CMS's intent
for plans to send all favorable cases (from the plan level) to the IRE.
CMS has also addressed and explained the obligation of an MA plan
to send cases to the IRE in current Medicare guidance in the Parts C &
D Enrollee Grievances, Organization/Coverage Determinations, and
Appeals Guidance: Effect of Failure to Meet the Timeframe for Level 1
Appeals.\183\ If a plan fails to provide the enrollee with a level 1
appeal decision within the required timeframes, this failure
constitutes an adverse decision. In this case, the plan must forward
the complete case file to the IRE pursuant to Sec. 422.590(d) and (g).
See also section 50.12.1 regarding forwarding adverse level 1 appeals
to the IRE. CMS guidance also permits an exception to this when a plan
makes a fully favorable determination on a level 1 appeal less than 24
hours after the end of the adjudication timeframe and effectuates the
favorable determination. In this case, the plan should consider
effectuating and notifying the enrollee of the favorable appeal
decision in lieu of forwarding the appeal to the IRE.
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\183\ https://www.cms.gov/medicare/appeals-and-grievances/mmcag/downloads/parts-c-and-d-enrollee-grievances-organization-coverage-determinations-and-appeals-guidance.pdf.
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For the updates to the scaled reductions methodology, which we are
finalizing as proposed with one clarification, we are examining all
cases that were sent to the IRE that should have been sent versus the
ones that were supposed to be sent per regulation and guidance. The
denominator would include the number of level 1 appeals where the plan
made an unfavorable or partially favorable decision for the appeal. The
numerator would include all the cases that the IRE received regardless
of the disposition the IRE subsequently gave the case (i.e.,
unfavorable (upheld); favorable (overturn), partially favorable
(partially overturn), received by but not evaluated by the IRE because
the MA plan approved coverage or dismissed). We are adopting additional
language at Sec. 422.164(g)(1)(iii)(H) to clarify that the numerator
is the total number of cases received by the IRE that should have been
sent.
Comment: A commenter asked for clarification on how a negative
error rate would be treated, noting that would be possible since CMS is
reviewing all cases regardless of disposition.
Response: CMS clarifies that there cannot be a negative error rate
unless a plan sends cases to the IRE that they should not be sending.
CMS is comparing all cases sent to the IRE relative to all cases that
should have been sent to the IRE. We are adding language at Sec.
422.164(g)(1)(iii)(H) to clarify that the numerator is the total number
of cases received by the IRE that were supposed to be sent to the IRE.
The denominator remains the number of cases that should have been
forwarded to the IRE.
Comment: A commenter recommended that CMS reconsider the inclusion
of dismissed appeals, noting that such appeals are dismissed due to a
variety of reasons and inclusion in the Star Ratings may
inappropriately impact performance. A couple of commenters asked for
clarification on what other kinds of dismissals would be included. They
noted that CMS proposes the total number of cases received by the IRE
would include all appeals regardless of their disposition and gives the
example of appeals dismissed for reasons other than the plan's
agreement to cover disputed services.
Response: There are no changes to the current Part C appeals
measures and which appeals are included. The proposed methodology to
apply scaled reductions is a mechanism to ensure that the data used for
evaluating performance for these measures are accurate, complete, and
unbiased. Through this methodology, we are determining if all of the
cases that should have been sent to IRE were sent. For the Plan Makes
Timely Decisions about Appeals (Part C) measure, the denominator
includes unfavorable (upheld) appeals, favorable (overturned) appeals,
partially favorable (partially overturned) appeals, and appeals
received by but not evaluated by the IRE because the MA plan approved
coverage. The Reviewing Appeals Decisions (Part C) measure excludes
dismissed and withdrawn appeals and appeals received but not evaluated
by the IRE because the MA plan approved coverage.
As a reminder, Part C sponsors are required to send all adverse or
partially adverse cases to the IRE. In some cases, the IRE could
dismiss the appeal or the appeal (that is, reconsideration request)
could be withdrawn after the appeal is sent to the IRE. Cases may be
dismissed for a variety of reasons under Sec. 422.590(d). For example,
if the enrollee requested a pre-service appeal but then passes away
before the appeal process is complete, the case is dismissed. If a plan
processed an appeal, but the plan should not have because a proper
party did not file the appeal request, such as an individual who is not
the enrollee and who does not have a valid power of attorney or
appointment of representation form, the IRE will also dismiss it. Cases
can be withdrawn when the appellant contacts the IRE directly and
advises them that they no longer wish to proceed with their appeal.
Comment: A few commenters recommended a transition year so Part C
sponsors can get used to the new approach for scaled reductions. A
commenter wanted additional time since they suggested that plans may
need to put in additional efforts to ensure that they pass data
validation for the Part C Reporting Requirements.
Response: Part C sponsors currently collect and submit to CMS the
data that would be used for the scaled reductions through the Part C
Reporting Requirements established by CMS under Sec. 422.516(a). CMS
does not believe that a transition year is needed since we
[[Page 30642]]
would be using existing data collected at the contract level from MA
organizations about the number of partially favorable reconsiderations
(that is, the number of partially favorable claims and the number of
partially favorable service requests by enrollees/representatives and
non-contract providers) and unfavorable reconsiderations (that is, the
number of unfavorable claims and the number of unfavorable service
requests by enrollees/representatives and non-contract providers) over
the measurement year. (Partially favorable and unfavorable
reconsiderations must all be forwarded to the IRE.) In the future, we
noted in the proposed rule that alternative data sources could be used
that collect similar information. To help in the transition to the
updated methodology, CMS will add information to HPMS for the 2026 Star
Ratings to provide information about the scaled reductions that would
have been applied if this methodology was in place for that year. This
information most likely will be posted in HPMS following the release of
the 2026 Star Ratings plan previews.
Comment: A few commenters questioned whether CMS expected plans to
achieve a 95 percent or greater accuracy rate. A commenter was
concerned this would impact smaller plans more.
Response: CMS did not propose to use a 95 percent error rate as
part of the scaled reductions implemented pursuant to Sec.
422.164(g)(1)(iii). We did not propose any changes to the error rates
at Sec. 422.164(g)(1)(iii)(D) to determine the size of the scaled
reductions. The thresholds used for determining the reduction are now
and will continue to be under this revision to Sec.
422.164(g)(1)(iii), as follows: (1) 20 percent, 1 star reduction; (2)
40 percent, 2-star reduction; (3) 60 percent, 3-star reduction; and (4)
80 percent, 4 star reduction. However, these scaled reductions are
specific to the evaluation of missing cases that have not been
forwarded to the IRE when they should have been for calculation of the
appeals measures.
Per Sec. 422.164(g)(1)(ii), CMS has a different downgrade policy
for Star Ratings measures based on whether the data that an MA
organization must submit to CMS under Sec. 422.516 do not pass data
validation. Since we will use data submitted under Sec. 422.516 to
evaluate data completeness of the cases submitted to the IRE for the
Part C appeals measures, we will use similar rules to evaluate the
quality of the appeals information submitted that is used to determine
data completeness of the Part C appeal measures that is described at
Sec. 422.164(g)(1)(iii)(O).
Per Sec. 422.164(g)(1)(ii) (which we did not propose to amend and
are not revising in this final rule), if a contract fails data
validation of the applicable Part C Reporting Requirements sections
(that is, the reporting required under Sec. 422.516) for
reconsiderations by not scoring at least 95 percent or is not compliant
with data validation standards, we proposed to reduce the appeals
measures' Star Ratings to 1 star. Our longstanding policy has been to
reduce a contract's measure rating if we determine that a contract's
data are inaccurate, incomplete, or biased. The validation score of 95
percent on Part C and Part D Reporting Requirements is an existing data
integrity policy that applies to other measures. CMS finalized these
data integrity policies at Sec. Sec. 422.164(g)(1)(ii) and
423.184(g)(1)(i) to distinguish between occasional errors and
systematic issues. (see 83 FR 16562) Currently, the two Star Ratings
measures based on Part C and D Reporting Requirements data (SNP Care
Management (Part C) and Medication Therapy Management (MTM) Program
Completion Rate for Comprehensive Medication Reviews (CMR) (Part D))
are calculated using data reported by plan sponsors and validated via
an independent data validation using CMS standards. Per the Part C and
D Star Ratings Technical Notes, contracts that do not score at least 95
percent on data validation for these reporting sections and/or were not
compliant with data validation standards/sub-standards for at least one
of the data elements used to calculate the measures are not rated in
these measures, and the contract's measure score is reduced to 1 star.
CMS has relied on the Part C and D Reporting Requirements data
validation audit to confirm the integrity of these plan-reported data
since these two measures were first added to the Star Ratings program.
Since we will be using the Part C Reporting Requirements data to
calculate scaled reductions, we proposed to reduce the Part C appeals
measures to 1 star if we do not have data that passed the Part C
Reporting Requirements data validation audit to validate the data
completeness of these measures. Plan size should not affect accuracy of
data validation for the reporting sections. Additionally, as
established under Sec. Sec. 422.164(g)(2) and 423.184(g)(2), CMS can
reduce a measure Star Rating to 1 for additional issues related to data
accuracy not described in Sec. Sec. 422.164(g)(1)(i) through (iii) or
423.184(g)(1)(i).
Comment: A commenter opposed the change in timeframe from a 3-month
period to the measurement year because they believe without a change in
the case minimum it would increase the burden on contracts,
particularly low-volume contracts. Another commenter strongly supports
the change to a 12-month period since it aligns with the measurement
period for the measure.
Response: CMS does not agree that the proposed scaled reductions
methodology would increase the burden to contracts, and we appreciate
the support for the 12-month timeframe. CMS is planning to use data
that are already provided by MA organizations and available to CMS. The
data from the current Part C Reporting Requirements established under
Sec. 422.516 would be used to calculate the scaled reductions;
therefore, there is no increased burden for sponsors. The proposed
timeframe of 12 months more accurately aligns with the measurement
period for both Part C appeals measures. We exclude from the scaled
reductions contracts that have 10 or fewer cases that should have been
forwarded to the IRE and were not during the measurement year to
address statistical concerns with precision. Increasing this number to
greater than 10 cases would create incentives for contracts not to
forward cases to the IRE that they should be forwarding.
Comment: A commenter asked whether the TMP data will continue to be
leveraged to determine data completeness and calculate the scaled
reductions for the Part C appeals measures.
Response: The TMP data will no longer be used for determining
scaled reductions of the Part C appeals measures.
After consideration of the public comments we received and for the
reasons outlined in the proposed rule and our responses to comments, we
are finalizing as proposed this updated approach for making scaled
reductions at Sec. 422.164(g)(1)(iii), (1)(iii)(A)(1) and (2),
(1)(iii)(H), (1)(iii)(K)(2), and (1)(iii)(O) for the 2027 Star Ratings
(2025 measurement year) with a modification to clarify that the
numerator is the total number of cases received by the IRE that should
have been sent at Sec. 422.164(g)(1)(iii)(H). We are finalizing the
removal of the Part D related provisions at Sec.
422.164(g)(1)(iii)(B), (1)(iii)(F), and (1)(iii)(I), and Sec.
423.184(g)(1)(ii), and the removal of the provision at Sec.
422.164(g)(1)(iii)(J) without modification.
[[Page 30643]]
F. Review of Sponsor's Data (Sec. Sec. 422.164(h) and 423.184(h))
Currently, Sec. Sec. 422.164(h) and 423.184(h) provide that an MA
organization (and a cost plan organization as the regulations are
applied under Sec. 417.472(k)) and a Part D plan sponsor may request a
review of certain administrative data (that is, the contracts' appeals
data and Complaints Tracking Module data) before Star Ratings are
calculated. The regulations provide for CMS to establish an annual
deadline by which such requests must be submitted. In the November 2023
proposed rule, CMS proposed to expand the policy for requests that CMS
review certain data used for Star Ratings to include administrative
data used for their contract's Part D Star Rating Patient Safety
measures by adding new Sec. Sec. 422.164(h)(3) and 423.184(h)(3).
These requests would also have to be received by the annual deadline
set by CMS. We intended that the requests could include CMS's review of
PDE, diagnosis code, and enrollment data that are used for the Part D
Star Rating Patient Safety measures, but the requests are not
necessarily limited to these specific data.
CMS reports and updates the rates for the current Part D Star
Ratings Patient Safety measures (that is, Medication Adherence for
Cholesterol (Statins) (ADH-Statins), Medication Adherence for
Hypertension (RAS Antagonists) (ADH-RAS), Medication Adherence for
Diabetes Medications (ADH-Diabetes), and Statin Use in Persons with
Diabetes (SUPD) measures) via the Patient Safety Analysis Web Portal
for sponsors to review and download. Part D sponsors can use the
Patient Safety reports to compare their performance to overall averages
and monitor their progress in improving their measure rates. In the
April 17, 2023, HPMS memorandum titled, Information to Review Data Used
for Medicare Part C and D Star Ratings and Display Measures, CMS
reminded sponsors of the various datasets and reports available for
sponsors to review their underlying measure data that are the basis for
the Part C and D Star Ratings and display measures, including the
monthly Part D Patient Safety measure reports. We expect sponsors to
review their monthly Patient Safety reports that include measure rates
along with available underlying administrative data and alert CMS of
potential errors or anomalies in the rate calculations per the measure
specifications in advance of CMS's plan preview periods to allow
sufficient time to investigate and resolve them before the release of
the Star Ratings.
Reviewing administrative data for the Patient Safety measures is a
time-consuming process. In addition, once CMS implements SDS risk
adjustment for the three Medication Adherence measures, as finalized in
the April 2023 final rule (88 FR 22265 through 22270), the final
measure rates, which are calculated in July after the end of the
measurement period, would require increased processing time to
calculate. To allow enough time for CMS to review a sponsor's
administrative data and ensure the accuracy of the final calculated
Patient Safety measure rates, we proposed that sponsoring
organizations' requests for CMS review of administrative data must be
received no later than the annual deadline set by CMS.
Beginning with the 2025 measurement year (2027 Star Ratings), we
proposed at Sec. Sec. 422.164(h)(3) and 423.184(h)(3) that any
requests by an MA organization or Part D sponsor to review its
administrative data for Patient Safety measures be made by the annual
deadline set by CMS for the applicable Star Ratings year. We stated in
the November 2023 proposed rule that, similar to the implementation of
Sec. Sec. 422.164(h)(1) and (2) and 423.184(h)(1) and (2), to provide
flexibility to set the deadline contingent on the timing of the
availability of data for plans to review, we intend to announce the
deadline in advance either through the process described for changes in
and adoption of payment and risk adjustment policies section 1853(b) of
the Act (that is, the annual Advance Notice and Rate Announcement) or
an HPMS memorandum.
Given the timing of the publication of the Advance Notice of
Methodological Changes for Calendar Year (CY) 2025 for Medicare
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies
and of this proposal, we stated that we would announce the deadline for
measurement year 2025 in the final rule that addresses proposed
Sec. Sec. 422.164(h)(3) and 432.184(h)(3). In subsequent years, we
would announce annual deadlines in advance via annual Advance Notice
and Rate Announcement, or by a HPMS memorandum. For the 2025
measurement year (2027 Star Ratings), we stated that we expected this
deadline to be May 18, 2026. In establishing this deadline, we factored
in data completeness along with operational deadlines to produce the
final Star Ratings. These requests may be time-consuming to review, and
it is beneficial to receive the requests before the final rates are
calculated and before the first plan preview. Historically, we find
that PDE data for performance measurement are complete by April of the
following year (that is, PDE data for Year of Service (YOS) 2025 is
generally complete by April of 2026) even though the PDE submission
deadline is established at the end of June following the payment year.
We invited public comment on this proposal and received several
comments. A discussion of these comments, along with our responses
follows.
Comment: Most commenters supported the proposal to set an annual
deadline for MA organizations or Part D sponsors to request reviews of
its administrative data for the Patient Safety measures. A few
commenters supported the proposal but requested to move the deadline to
mid-late June or have a phased-in approach to set multiple deadlines
based on PDE dates of service to facilitate a complete review.
Response: We appreciate the support received for this proposal. We
proposed May 18, 2026, as the initial deadline for the 2025 measurement
year for the 2027 Star Ratings and announced the date in the proposed
rule due to the timing of the publication of the CY 2025 Advance Notice
and Rate Announcement. The deadline was selected due to the time to
complete the reviews and calculate the rates, and because the PDE data
used to calculate the Patient Safety measures are generally complete by
that point based on our analysis. We will continue to monitor the
number of sponsor requests for administrative reviews for the Patient
Safety measures, the time it takes for CMS to complete the reviews, and
data completeness. In future years, we intend to announce the deadline
through the annual Advance Notice and Rate Announcement or an HPMS
memorandum and may adjust the deadline accordingly. We note that Sec.
422.164(h)(3) and 423.184(h)(3), as proposed and finalized, do not
require CMS to announce the deadline through the Advance Notice and
Rate Announcement, which permits CMS the flexibility to use other means
(such as an HPMS memo) to announce the deadline by which sponsoring
organizations may request CMS to review their administrative data for
the Patient Safety measures.
Comment: A commenter noted they supported the proposal for plans to
request that CMS review their administrative claims data used for the
Part D Patient Safety measures.
Response: We proposed to establish a deadline for sponsors to
request that CMS review their administrative data
[[Page 30644]]
used for the Star Ratings Part D Patient Safety measures because the
requests are time consuming, and we need to allow sufficient time for
the reviews especially after implementation of the SDS risk adjustment
for the Medication Adherence measure calculations. However, CMS has
always permitted sponsors to make these requests. We provide detailed
Patient Safety measure reports to sponsors on a monthly basis via the
Patient Safety Analysis Web Portal to monitor their performance and
alert CMS if potential errors or anomalies are identified. Then, CMS
provides instructions on how to securely submit data for review. We
will continue to provide information through HPMS memoranda on the
process and procedures to request CMS review of these administrative
data.
Comment: We received some suggestions to expand the administrative
reviews to include other forms of payment outside of the Medicare PDEs
for Patient Safety reports such as cash payment data, Veteran Affairs
benefits, or other supplemental data.
Response: The Medicare Part C & D Star Ratings Technical Notes,
available on the Part C and D Performance Measure web page \184\ for
each year's Star Ratings, outline the data sources used to calculate
the Star Ratings Part D Patient Safety measures. Per Sec.
423.184(d)(1)(v), non-substantive updates, including updates to data
sources, to the Part D measures must be announced during or in advance
of the measurement period through the Advance Notice process. (The same
general rule applies as well to Part C measures per Sec.
422.164(d)(1)(v).) CMS does not accept PDEs for claims that were not
submitted for processing and/or reimbursement under the plan by either
a network pharmacy or enrollee as discussed in the May 11, 2012, HPMS
memorandum, Prohibition on Submitting PDEs for non-Part D
Prescriptions. The April 23, 2013, HPMS memorandum, May 2013 Updates to
the Drug Data Processing System, provides scenarios in which sponsors
are allowed to submit PDE records with $0.00 in drugs costs.
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\184\ https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data.
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After reviewing the comments received and for the reasons outlined
in the proposed rule and our responses to comments, we are finalizing
the proposal at Sec. Sec. 422.164(h)(3) and 423.184(h)(3) that any
requests by an MA organization or Part D sponsor to review its
administrative data for Patient Safety measures be made by the annual
deadline set by CMS for the applicable Star Ratings year. For the 2025
measurement year (2027 Star Ratings) the deadline will be May 18, 2026.
For subsequent years, we intend to announce the annual deadlines via
the annual Advance Notice and Rate Announcement or by an HPMS
memorandum.
G. Categorical Adjustment Index (Sec. Sec. 422.166(f)(2) and
423.186(f)(2))
We proposed to calculate the percentage of LIS/DE enrollees and
percentage of disabled enrollees used to determine the CAI adjustment
factor in the case of contract consolidations based on the combined
contract enrollment from all contracts in the consolidation beginning
with the 2027 Star Ratings. The methodology for the CAI is codified at
Sec. Sec. 422.166(f)(2) and 423.186(f)(2). The CAI adjusts for the
average within-contract disparity in performance associated with the
percentages of LIS/DE and disabled enrollees within that contract.
Currently, the percentage of LIS/DE enrollees and percentage of
disabled enrollees for the surviving contract of a consolidation that
are used to determine the CAI adjustment factor are calculated using
enrollment data for the month of December for the measurement period of
the Star Ratings year for the surviving contract as described at
Sec. Sec. 422.166(f)(2)(i)(B) and 423.186(f)(2)(i)(B). To more
accurately reflect the membership of the surviving contract after the
consolidation, we proposed to determine the percentage of LIS/DE
enrollees and percentage of disabled enrollees for the surviving
contract by combining the enrollment data across all contracts in the
consolidation.
We proposed to modify Sec. Sec. 422.166(f)(2)(i)(B) and
423.186(f)(2)(i)(B) to calculate the percentage of LIS/DE enrollees and
the percentage of disabled enrollees for the surviving contract for the
first 2 years following a consolidation by combining the enrollment
data for the month of December for the measurement period of the Star
Ratings year across all contracts in the consolidation. Once the
enrollment data are combined across the contracts in the consolidation,
all other steps described at Sec. Sec. 422.166(f)(2)(i)(B) and
423.186(f)(2)(i)(B) for determining the percentage LIS/DE enrollees and
percentage disabled enrollees would remain the same, but we proposed to
restructure that regulation text into new paragraphs (f)(2)(i)(B)(2)
through (4). We proposed this change since Sec. Sec. 422.166(b)(3) and
423.186(b)(3) do not address the calculation of enrollment for the CAI
in the event of a contract consolidation; rather, they focus on the
calculation of measure scores in the case of consolidations.
We invited public comment on this proposal and received several
comments. A discussion of these comments, along with our responses
follows.
Comment: A commenter supported finalizing as proposed and another
commenter appreciated CMS providing clarity on the calculation of the
CAI.
Response: We thank these commenters for their support.
Comment: A commenter felt there are several benefits to the
proposal but also raised some concerns. The commenter asked for
clarification on how data from multiple contracts are weighted or
integrated. The commenter also requested transparent and accessible
information about the adjustments so beneficiaries and advocacy groups
can understand the changes and their implications. The commenter also
raised concerns that if the adjustment favors larger entities or
provides incentives for improved ratings post-consolidation, healthcare
organizations might strategically consolidate to maximize their
performance ratings.
Response: Data from the contracts involved in the consolidation are
not weighted in the process we proposed and are finalizing at
Sec. Sec. 422.166(f)(2)(i)(B) and 423.186(f)(2)(i)(B). Rather the
percentage of LIS/DE enrollees and the percentage of disabled enrollees
will be calculated for the surviving contract of the consolidation
based on all enrollees across all of the contracts involved in the
consolidation. For example, if Contract A is consolidating into
Contract B as of January 1, 2025, the percentage of LIS/DE enrollees
and the percentage of disabled enrollees used in determining the CAI
adjustment factor for Contract B for the 2025 Star Ratings will be
calculated across all enrollees in Contract A and Contract B.
Data and information related to the CAI are shared publicly in
multiple ways. The CAI adjustment categories are shared each year on
CMS.gov at the time the Advance Notice is released. Each year on the
Part C and D Performance Data page on CMS.gov, CMS shares the CAI
measure supplement with details related to the adjusted measure set for
the CAI and data tables with the final adjustment categories for each
contract for the given Star Ratings year: https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data.
Regarding the commenter's concern about this adjustment potentially
favoring larger entities and making
[[Page 30645]]
consolidations more likely, there is nothing about this approach that
would favor a larger entity. Currently, measure-level scores are
already combined across the surviving and consumed contracts, so we do
not believe this relatively small technical change would create new
incentives for contracts to consolidate. This approach will also not
make consolidations more likely because this approach will more
accurately reflect the membership of the surviving contract after the
consolidation including members from the consumed contracts. In
addition, the Star Ratings measure scores for the surviving contract of
a consolidation are calculated so that the scores reflect the
membership of the surviving contract after the consolidation as
specified at Sec. Sec. 422.162(b)(3) and 423.182(b)(3).
After consideration of the public comments we received and for the
reasons outlined in the proposed rule and our responses to comments, we
are finalizing the revision at Sec. Sec. 422.166(f)(2)(i)(B) and
423.186(f)(2)(i)(B) to calculate the percentage LIS/DE enrollees and
the percentage disabled enrollees for the surviving contract for the
first 2 years following a consolidation by combining the enrollment
data for the month of December for the measurement period of the Star
Ratings year across all contracts in the consolidation as proposed
without modification.
G. Health Equity Index Reward (Sec. Sec. 422.166(f)(3) and
423.186(f)(3))
We proposed how to calculate the HEI reward in the case of contract
consolidations beginning with the 2027 Star Ratings. (The 2027 Star
Ratings would be the first Star Ratings to include the HEI.) The
methodology for the HEI reward is codified at Sec. Sec. 422.166(f)(3)
and 423.186(f)(3). The HEI rewards contracts for obtaining high
measure-level scores for the subset of enrollees with the specified
social risk factors (SRFs). The goal of the HEI reward is to improve
health equity by incentivizing MA, cost, and PDP contracts to perform
well among enrollees with specified SRFs. In calculating the HEI reward
for the surviving contract of a consolidation, we want to avoid masking
the scores of contracts with low performance among enrollees with the
specified SRFs under higher performing contracts. We also want to avoid
masking contracts that serve relatively few enrollees with the
specified SRFs under contracts that serve relatively many more of these
enrollees.
For the first year following a consolidation, we proposed to add
new paragraphs Sec. Sec. 422.166(f)(3)(viii)(A) and
423.186(f)(3)(viii)(A) to assign the surviving contract of a
consolidation the enrollment-weighted mean of the HEI reward of the
consumed and surviving contracts using enrollment from July of the most
recent measurement year used in calculating the HEI reward; the
existing rules laid out at Sec. Sec. 422.162(b)(3)(iv) and
423.182(b)(3)(iv) address how CMS handles combining measures scores for
consolidations, but do not address how CMS would handle the calculation
of the HEI when contracts consolidate since the HEI is not a measure.
We proposed that contracts that do not meet the minimum percentage of
enrollees with the specified SRF thresholds or the minimum performance
threshold described at Sec. Sec. 422.166(f)(3)(vii) and
423.186(f)(3)(vii) would have a reward value of zero used in
calculating the enrollment-weighted mean reward. For the second year
following a consolidation, we proposed at new paragraphs Sec. Sec.
422.166(f)(3)(viii)(B) and 423.186(f)(3)(viii)(B) that, when
calculating the HEI score for the surviving contract, the patient-level
data used in calculating the HEI score would be combined across the
contracts in the consolidation prior to calculating the HEI score. The
HEI score for the surviving contract would then be used to calculate
the HEI reward for the surviving contract following the methodology
described in Sec. Sec. 422.166(f)(3)(viii) and 423.186(f)(3)(viii).
We invited public comment on this proposal and received several
comments. A discussion of these comments, along with our responses
follows.
Comment: Most commenters supported the proposal, and another
commenter appreciated the additional clarity on how the HEI will be
calculated across a broad range of situations.
Response: CMS thanks these commenters for their support.
Comment: A commenter asked for additional clarification and
examples of how the surviving contract's HEI reward would be calculated
and combined across contracts noting that it is unclear how CMS intends
to combine patient-level data ``across contracts prior to calculating
the HEI score.'' The commenter stated that the proposal referenced the
enrollment-weighted mean, but additional clarification and examples
would be helpful.
Response: The methodology for combining data across contracts in
the consolidation when calculating the HEI reward for the surviving
contract will depend on which year the consolidation is in. In the
first year following a consolidation, the HEI reward for the surviving
contract will be calculated as the enrollment-weighted mean reward of
the HEI rewards for all contracts in the consolidation using July
enrollment from the most recent measurement year used in calculating
the HEI.
In the second year following a consolidation, patient-level data
for the measurement years used in calculating the HEI will be combined
across contracts in the consolidation by assigning members from the
consumed contract(s) to the surviving contract. These combined patient-
level data will be used to calculate the HEI score and reward for the
surviving contract, including the calculation of the percentage of
enrollees with the specified SRFs for the surviving contract and the
surviving contract's measure scores for the subset of enrollees with
the specified SRFs following the methodology at Sec. Sec.
422.166(f)(3) and 423.186(f)(3).
For example, if Contract A is consolidating into Contract B as of
January 1, 2027, the first year following the consolidation is 2027.
Therefore, the HEI reward for the 2027 Star Ratings will be calculated
for Contract A and Contract B separately using data from measurement
years 2024 and 2025. The final HEI reward for Contract B (the surviving
contract) will then be calculated as the enrollment-weighted mean of
the HEI rewards for Contracts A and B using enrollment from July 2025.
If Contract A had an HEI reward of 0.066667 and July 2025 total
enrollment of 10,000 and Contract B had an HEI reward of 0.235897 and
July 2025 total enrollment of 5,000, then the final HEI reward for
Contract B would be 0.123077 ((0.066667 * 10,000 + 0.235897 * 5,000)/
(10,000 + 5,000)).
Continuing this example when calculating the HEI reward for the
2028 Star Ratings for Contract B (that is, the surviving contract), the
patient-level data from measurement years 2025 and 2026 will be
combined for Contracts A and B. That is, the patient-level data from
measurement years 2025 and 2026 used to calculate the HEI score and
reward for Contract B will contain all enrollees from Contracts A and
B.
Comment: A commenter recommended CMS specify that total enrollment,
as opposed to enrollment of beneficiaries with the specified SRFs, will
be used in calculating the enrollment-weighted mean of the HEI rewards.
Response: Total contract enrollment as of July of the most recent
measurement year used in calculating
[[Page 30646]]
the HEI will be used to calculate the enrollment-weighted mean HEI
reward for the surviving contract in the first year following the
consolidation. Based on this, we are finalizing as proposed with an
additional revision to Sec. Sec. 422.166(f)(3)(viii)(A) and
423.186(f)(3)(viii)(A) to clarify that total contract enrollment is
used from July of the most recent measurement year. As illustrated in
the example above where Contract A is consolidating into Contract B as
of January 1, 2027, we use total enrollment as of July 2025 to
calculate the enrollment-weighted mean HEI reward for Contract B (the
surviving contract) in the 2027 Star Ratings.
Comment: A few commenters stated that expanding eligibility for the
HEI reward to more MA plans would reduce the likelihood that currently
ineligible plans might pursue contract consolidations to ``game'' the
system.
Response: The proposed approach to calculating the HEI reward in
the case of consolidations is appropriate because the HEI reward
captures the entire population of enrollees with SRFs in the surviving
contract. With regard to expanding eligibility for the HEI reward, one
of the goals CMS considered when developing the HEI reward was to avoid
rewarding contracts that may do well among enrollees with the SRFs
included in the HEI but serve few enrollees with those SRFs relative to
their total enrollment, making it easier to do well. As discussed in
the April 2023 final rule, requiring both a minimum HEI score and a
minimum percentage of enrollees in a contract with the specified SRFs
is intended to avoid rewarding contracts that serve very few enrollees
with the specified SRFs or do not perform well among enrollees with the
specified SRFs relative to other contracts.
Comment: A commenter stated the proposal should be closely
evaluated for the impacts of private equity, specifically the impacts
mergers and acquisitions with private equity involvement may have on
enrollment of systemically excluded populations, beneficiaries who meet
the SRF threshold requirements, and the level of integration within
plans.
Response: We do not believe that there is anything in the proposal,
which we are finalizing with clarifications, for how to calculate the
HEI reward for consolidating contracts that would make private equity
involvement more likely. Calculating the HEI reward for the surviving
contract in a consolidation as proposed will ensure the HEI reward
accurately reflects the membership of the surviving contract after the
consolidation. In addition, the Star Ratings measure scores for the
surviving contract of a consolidation are calculated so they reflect
the membership of the surviving contract after the consolidation as
specified at Sec. Sec. 422.162(b)(3) and 423.182(b)(3).
After consideration of the public comments we received and for the
reasons outlined in the proposed rule and our responses to comments, we
are finalizing the addition of Sec. Sec. 422.166(f)(3)(viii)(A) and
(B) and 423.186(f)(3)(viii)(A) and (B) as proposed with a modification
to clarify that total contract enrollment from July of the most recent
measurement year is used in calculating the enrollment weights in the
first year following the consolidation.
H. Quality Bonus Payment Appeal Rules (Sec. 422.260)
Sections 1853(n) and 1853(o) of the Act require CMS to make QBPs to
MA organizations that achieve at least 4 stars in a 5-star quality
rating system. In addition, section 1854(b)(1)(C) of the Act ties the
share of savings that MA organizations must provide to enrollees as the
beneficiary rebate to the level of an MA organization's QBP rating. The
administrative review process for an MA contract to appeal its QBP
status is laid out at Sec. 422.260(c). As described in the final rule
titled ``Medicare Program; Changes to the Medicare Advantage and the
Medicare Prescription Drug Benefit Programs for Contract Year 2012 and
Other Changes,'' which was published in the Federal Register on April
15, 2011 (76 FR 21490 and 21491), Sec. Sec. 422.260(c)(1) and (2)
create a two-step administrative review process that includes a request
for reconsideration and a request for an informal hearing on the
record, and Sec. 422.260(c)(3) imposes limits on the scope of requests
for an administrative review.
1. Administrator Review
In the November 2023 proposed rule, we proposed to revise the
language at Sec. 422.260(c)(2)(vii) to provide the CMS Administrator
the opportunity to review and modify the hearing officer's decision
within 10 business days of its issuance. We proposed that if the
Administrator does not review and issue a decision within 10 business
days, the hearing officer's decision is final and binding. Under this
proposal, if the Administrator does review and modify the hearing
officer's decision, a new decision would be issued as directed by the
Administrator. This proposed amendment would be implemented for all QBP
appeals after the effective date of the final rule.
We invited public comment on this proposal and received several
comments. A discussion of these comments, along with our responses
follows.
Comment: Commenters supported providing the Administrator the
opportunity to review hearing officer decisions. A few asked for
clarification of the criteria that trigger a review by the
Administrator, including whether plans can request this review. A
commenter requested we modify this proposal such that Administrator
review serves as another level of appeal opportunity for plans, and
another asked that we document clear modes of communication to ensure
timely receipt of information.
Response: CMS appreciates the support. The Administrator will have
the discretion to review (or review and modify) all hearing officer
decisions during the 10 business day period established in the
regulation. This is not another appeal opportunity for MA
organizations. Information about QBP appeals is communicated promptly
via email.
After consideration of the public comments we received and for the
reasons outlined in the proposed rule and our responses to comments, we
are finalizing as proposed the revision of Sec. 422.260(c)(2)(vii) to
state that the CMS Administrator has the discretion to review and
modify the hearing officer's decision on a QBP appeal within 10
business days of its issuance by the hearing officer.
2. Permissible Bases for Review
Historically, every November CMS has released the preliminary QBP
ratings for MA contracts to review their ratings and to submit an
appeal request under Sec. 422.260(c) if they believe there is a
calculation error or incorrect data are used. In the December 2022
proposed rule, we proposed to clarify in Sec. 422.260(c)(3)(iii) some
additional aspects of that administrative review process for appeals of
QBP status determinations that are consistent with how we have
historically administered the appeals process.
When an MA organization requests an administrative review of its
QBP status, permissible bases for these requests include a calculation
error (miscalculation) or a data inaccuracy (incorrect data). A
calculation error could impact an individual measure's value or the
overall Star Rating. Historically, if an MA organization believes the
wrong set of data was used in a measure (for example, following a
different timeframe than the one in the measure specifications as
adopted in the
[[Page 30647]]
applicable final rule), this is considered a calculation error.
Currently, Sec. 422.260(c)(3)(i) provides that CMS may limit the
measures or bases for which an MA organization may request an
administrative review. As described in 76 FR 21490, the appeals process
is limited to data sets that have not been previously subject to
independent validation. We proposed to add a new paragraph in Sec.
422.260(c)(3)(iii) to clarify that certain data sources would not be
eligible for requesting an administrative review. We proposed to
clarify at Sec. 422.260(c)(3)(iii) that an administrative review
cannot be requested based on data accuracy for the following data
sources: HEDIS, CAHPS, HOS, Part C and D Reporting Requirements, PDE,
Medicare Plan Finder (MPF) pricing files, data from the Medicare
Beneficiary Database Suite of Systems, Medicare Advantage Prescription
Drug (MARx) system, and other Federal data sources. The listed data
sources have already been validated or audited or come from the CMS
system of record for that type of data such as enrollment data, which
make it inappropriate to use the QBP appeal process to challenge the
accuracy of the data. For example, HEDIS measures and measures using
data collected through the Part C and D Reporting Requirements have
previously been audited or validated for accuracy; NCQA has a formal
audit process for all HEDIS measures to check for accuracy, and MA
plans sign off on the accuracy of the data following the audit and
prior to the data being submitted to NCQA. Similarly, data from the
Part C and D Reporting Requirements are validated through an
independent contractor (see 42 CFR 422.516(g) and Sec. 423.514(j))
before the data are submitted by MA organizations and Part D plan
sponsors to CMS and used for Star Ratings measures. (With regard to
Part D data and measures, the MA organization offering an MA-PD must
comply with the applicable Part D regulations per Sec. 422.500.)
Because the MA organization bears the responsibility of data accuracy
as well as signs off on audit findings in these situations, it is
inappropriate to use the QBP appeal process to challenge the accuracy
of these data. Organizations would have ample opportunity to raise any
concerns about these data prior to submission to CMS for use in the
Star Ratings.
We also proposed that MA organizations cannot appeal measures that
are based on feedback or surveys that come directly from plan
enrollees. Measures derived from CAHPS and HOS data are not appealable
because plans cannot challenge the validity of an enrollee's response
since that is the enrollee's perspective. MA and PDP contracts contract
with the CMS-approved vendor of their choice to conduct CAHPS and HOS,
and these independent survey vendors conduct the surveys for contracts
using detailed specifications provided by CMS and in some cases
contract-specific information such as telephone numbers and language
preference information provided directly by the MA and PDP contract.
There are detailed specifications for data collection \185\ for vendors
to follow; CMS conducts oversight of the data collection efforts of the
approved survey vendors.
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\185\ MA and PDP CAHPS Survey administration protocols are
contained in the MA & PDP CAHPS Survey Quality Assurance Protocols &
Technical Specifications and are available at https://ma-pdpcahps.org/en/quality-assurance/. The HOS Quality Assurance
Guidelines and Technical Specifications manual details the
requirements, protocols, and procedures for the HOS administration
and are available at https://www.hosonline.org/en/program-overview/survey-administration/.
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Measures derived from PDE data, Medicare Beneficiary Database Suite
of Systems, enrollment data from the MARx system, and other Federal
data sources (for example, FEMA disaster designations) also cannot be
appealed for data accuracy because we are pulling data from the system
of record or authoritative data source. Part D sponsors submit PDE to
CMS via the Drug Data Processing System (DDPS), which processes and
validates the data with extensive system edits.\186\ CMS also has an
outside analytic contractor independently review PDEs and work with
sponsors on data integrity issues.\187\ Sponsors must meet the PDE
submission deadline to be included in the annual Part D payment
reconciliation, and sponsors must certify the claims data (42 CFR
423.505(k)(3)). As another example, enrollment data used in the Star
Ratings are also used for the monthly payment of contracts and any
discrepancies would have been resolved through retroactive adjustments
as needed. Similarly, MPF pricing files cannot be appealed. Plans use
the Health Plan Management System (HPMS) Part D Pricing File Submission
(PDPFS) module to submit their drug pricing and pharmacy data for
posting on the MPF. After the data are submitted, CMS performs a multi-
step validation. Validation results are provided to sponsors to correct
their data or to attest to the accuracy of the data prior to display on
MPF. Part D sponsors are required to perform their own quality
assurance checks before submission to ensure that the files are
complete and accurate.\188\
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\186\ DDPS edit list effective for CY2024 is available at
https://www.csscoperations.com/internet/csscw3.nsf/DIDC/
PFYJBZSUNW~Prescription%20Drug%20Program%20(Part%20D)~References.
\187\ For background on this process see April 29, 2022,
memorandum to sponsors Continuation of the Prescription Drug Event
(PDE) Reports and PDE Analysis Reporting Initiatives for the 2022
Benefit Year available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/Continuation_PDE_Reports_and_Analysis_Reporting_Initiatives_2022_508_0.pdf.
\188\ See May 28, 2021 HPMS memorandum, Contract Year (CY) 2022
Part D Pricing Data Submission Guidance. https://www.cms.gov/files/document/cy2022drugpricingsubmissionguidelines05282021final.pdf.
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Further, in conducting the reconsideration under Sec. 422.260(c),
the reconsideration official reviews the QBP determination, the
evidence and findings upon which it was based, and any other written
evidence submitted by the organization or by CMS before the
reconsideration determination is made. Currently, Sec.
422.260(c)(1)(i) provides that the request for reconsideration must
specify the given measure(s) in question and the basis for the MA
organization's reconsideration request; the alleged error could impact
a measure-level score or Star Rating, or the overall Star Rating. The
request must include the specific findings or issues with which the MA
organization disagrees and the reason for the disagreement, as well as
any additional evidence that the MA organization would like the
reconsideration official to consider, as the basis for reconsideration.
We proposed to modify Sec. 422.260(c)(2)(v) so that the MA
organization must provide a preponderance of evidence that CMS's
calculations of the measure(s) and value(s) in question were incorrect;
in other words, the burden is on the MA organization to prove an error
was made in the calculation of their QBP rating. We also proposed to
add language at Sec. 422.260(c)(2)(v) clarifying that the burden of
proof is on the MA organization to prove an error was made in the
calculation of the QBP status.
If the reconsideration official or hearing officer's decision is in
favor of the MA organization, the MA organization's QBP status is
recalculated using the corrected data and applying the rules at
Sec. Sec. 422.160 through 422.166. Under our current implementation of
Sec. 422.260, recalculation could cause the requesting MA
organization's QBP rating to go higher or lower. In some instances, the
recalculation may not result in the Star Rating rising above the cut-
off for the higher QBP rating. We proposed additional language at Sec.
422.260(c)(1)(i) to clarify that ratings can go up, stay the same, or
go down
[[Page 30648]]
based on an appeal of the QBP determination.
Under Sec. 422.260(d), CMS may revise an MA organization's QBP
status at any time after the initial release of the QBP determinations
through April 1 of each year on the basis of any credible information,
including information provided during the administrative review process
by a different MA organization, that demonstrates that the initial QBP
determination was incorrect. CMS issues annual guidance to MA
organizations about the QBP appeal process available under Sec.
422.260 each November titled, for example, ``Quality Bonus Payment
Determinations and Administrative Review Process for Quality Bonus
Payments and Rebate Retention Allowances.'' We interpret and implement
Sec. 422.260 through this guidance and our administration of the
annual administrative review process.
When the reconsideration official or hearing officer's decision for
a particular appeal or other credible information suggests that there
was a systematic error impacting all or a subset of contracts, the QBP
status of all contracts is re-calculated using the corrected data and
applying the rules at Sec. Sec. 422.160 through 422.166. If the re-
calculated QBP rating for a contract other than the appealing contract
results in a lower rating, the original preliminary QBP rating will be
used. Thus, a contract's QBP rating will not be decreased by CMS as a
result of a systematic recalculation for the current Star Ratings and
associated QBP year to correct a systematic calculation error; however,
the issue identified will be addressed in the next year's Star Ratings.
However, if the QBP rating is higher for a contract after the
systematic recalculation, the new rating will be used. For example, if
CMS has to do a systematic recalculation for the 2024 Star Ratings
following the release of the preliminary 2025 QBP ratings, a contract's
2024 Star Ratings used for the 2025 QBP ratings will not be decreased
but the change that caused a systematic recalculation will be addressed
when the 2025 Star Ratings are calculated (e.g., if the recalculation
resulted in an update to the 2024 Star Ratings cut points for a
measure, the updated cut points would be used to determine guardrails
for the 2025 Star Ratings. Likewise, if the recalculation resulted in a
change in measures scores, the updated measure scores would be used in
calculating the improvement measures). If the recalculation of the 2024
Star Ratings results in a higher rating for a contract, the higher
rating will be used. We proposed to add language at Sec. 422.260(d) to
clarify that a reopening of a QBP determination to address a systemic
calculation issue that impacts more than the MA organization that
submitted an appeal would only be updated if it results in a higher QBP
rating for other MA organizations that did not appeal. This is how we
have historically noted how we would handle this type of systemic
calculation error as described in our annual HPMS memo released in
November each year.
We solicited comments on this proposal.
Comment: A handful of commenters did not support CMS's proposal to
add a provision to the QBP appeals process to clarify that certain data
sources would not be eligible for requesting an administrative review.
They did not support restricting the opportunity to appeal to certain
measures. A commenter noted that if a sponsoring organization believes
it may have been unfairly penalized in the Star Ratings calculations,
the organization should have a venue to bring that argument forward,
regardless of measure source. A commenter stated that the survey data
collected for CAHPS and HOS measures are subjective, and the collection
methods for these surveys may result in bias due to the diverse
beneficiary responses and differences in survey and digital literacy
across member populations. This commenter noted that plans should
retain the right to raise methodological questions about the accuracy
of survey measure scores given that the measures are case-mix adjusted,
the potential for incorrect adjustments, and invalid responses from
beneficiaries.
Response: As we noted in the proposed rule, this proposal was to
clarify and codify in regulation existing subregulatory guidance on how
we have historically administered the appeals process. The data sources
that cannot be appealed for data inaccuracy have already been validated
or audited or come from the CMS system of record for that type of data
such as enrollment data, which make it inappropriate to use the QBP
appeal process to challenge the accuracy of the data. For survey data,
contracts may (and under this final rule may continue to) appeal
calculation errors such as incorrectly calculating the case-mix
adjustments, but they cannot claim that there is a data inaccuracy in
beneficiary responses or appeal beneficiary responses. CMS does not
agree that CAHPS or HOS survey responses are subjective. These
responses represent the viewpoint of the beneficiary but that is the
goal and purpose of the surveys--to gather and reflect the
beneficiary's experience with the plan. A contract cannot dispute how a
beneficiary responds to a survey and the rating the beneficiary gives
their plan, for example. Part C and D sponsors contract with CMS-
approved survey vendors to administer the surveys, and these vendors
follow detailed data administration protocols to ensure the accuracy of
the data collected and that the data collection process, including the
survey administration, is free from bias.
Comment: A commenter noted that PDE changes are allowed for
approximately 5 years after the close of a contract year, and while it
is rare to need to appeal these rates, the possibility exists.
Therefore, the commenter believed that prohibiting QBP appeals on data
inaccuracies in PDE data used for Star Rating measures was not
appropriate.
Response: For the Part D measures that use PDE data, the 2024
Medicare Part C & D Star Ratings Technical Notes \189\ state that
original and adjustment final action PDEs submitted by the sponsor and
accepted by the drug data processing system (DDPS) prior to the annual
PDE submission deadline are used to calculate this measure and that PDE
adjustments made post-reconciliation are not reflected in this measure.
Therefore, changes that the Part D sponsors make to their PDE data
post-reconciliation will not be considered in the Part D Star Rating
calculations and any potential impact to the QBP as a result of post-
reconciliation changes are not appealable.
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\189\ https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data.
---------------------------------------------------------------------------
As we stated in the proposed rule, CMS validates the PDE data
submitted by the Part D sponsors. Part D sponsors submit PDE records to
CMS through DDPS which performs detailed validation, reports processing
outcomes, and stores PDE records. Through the PDE edit or error code
process, DDPS performs checks of the PDE records for format, integrity,
and validity before storing the data for future payment calculations.
There are numerous checks that could trigger PDE error codes related to
missing/invalid data, beneficiary eligibility, low-income eligibility,
benefit phase, NDC-level validity and coverability, basic costs
accounting, detailed financial field calculations, among others.\190\
Error correction/resolution is a central component in ensuring the
acceptance, accuracy, and completeness of a sponsor's PDE records.
Sponsors should
[[Page 30649]]
resolve issues that triggered PDE edits/error codes in a timely
manner.\191\ The data must be submitted and accepted by the PDE
submission deadline to be included in the annual Part D payment
reconciliation, and sponsors must certify (based on best knowledge,
information, and belief) that the claims data it submits are accurate,
complete, and truthful and acknowledge that the claims data will be
used for the purpose of obtaining Federal reimbursement (42 CFR
423.505(k)(3)). CMS uses PDE data that were submitted prior to the PDE
submission deadline for the Part D payment reconciliation and certified
by the Part D sponsor in the Part D Star Ratings calculations.
---------------------------------------------------------------------------
\190\ See the DDPS Edit download available at https://
www.csscoperations.com/internet/csscw3.nsf/DIDC/
FGSMOX8LWK~Prescription%20Drug%20Program%20(Part%20D)~References.
\191\ See HPMS memorandum, ``Revision to Previous Guidance
Titled ``Timely Submission of Prescription Drug Event (PDE) Records
and Resolution of Rejected PDEs,'' '' October 6, 2011.
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We have historically not allowed sponsors to appeal Part D Star
Rating measures based on incorrect PDE data because there is already an
alternative process to help sponsors identify issues through the PDE
error code process, as well as a process in place for sponsors to make
PDE data corrections prior to the PDE submission deadline for the Part
D payment reconciliation. However, there are many opportunities for
sponsors to review their data to ensure accurate data are used in the
Star Ratings program. CMS annually reminds sponsors of the various
datasets and reports available to review their underlying measure data
that are the basis for the Part C and D Star Ratings and display
measures. Every April, we remind sponsors to alert CMS of potential
errors or anomalies in advance of CMS's plan preview periods to allow
sufficient time to investigate and resolve them before the release of
the Star Ratings. Another memorandum, sent annually in April, outlines
updates to the Medicare Part D Patient Safety measures and reports. In
addition, Patient Safety User Guides and monthly reports are available
for Patient Safety measures through the Patient Safety Analysis Web
Portal. Revising the QBP appeal process from how it is currently
administered to provide additional opportunities for sponsoring
organizations to retroactively challenge their PDE data would
unnecessarily burden the QBP appeal process, undermine the existing PDE
submission, review, and correction processes, and eliminate the
incentive of plans to ensure that CMS has accurate data on which to
calculate the Star Ratings.
Comment: A commenter expressed concern that ``other Federal Data
Sources'' is a very broad term.
Response: As we noted in the preamble, an example of Federal data
sources used in the Star Ratings is FEMA data regarding disaster
declarations. Federal data sources are any systems of record or
authoritative data sources held by the federal government. To the
extent that any new Star Ratings measure is based on Federal data
sources that are not specifically listed in Sec. 422.260(c)(3)(iii),
we encourage commenters in future rulemakings proposing such new Star
Ratings measures to submit concerns about whether such Federal data
sources are the appropriate authoritative data or should be subject to
additional opportunities for sponsoring organizations to challenge data
issues using the QBP appeal process.
Comment: A commenter supported the proposal, stating that the two
plan preview periods provide sufficient opportunities to refute
suspected errors.
Response: We appreciate the support.
3. Burden of Proof
We received no comments on the additional language at Sec.
422.260(c)(2)(v) clarifying that the burden of proof is on the MA
organization to prove an error was made in the calculation of the QBP
status, Sec. 422.260(c)(1)(i) clarifying that ratings can go up, stay
the same, or go down based on an appeal of the QBP determination, and
Sec. 422.260(d) clarifying that a reopening of a QBP determination to
address a systemic calculation issue that impacts more than the MA
organization that submitted an appeal would only be updated if it
results in a higher QBP rating for other MA organizations that did not
appeal.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to the comments, we are
finalizing the proposed clarifications at Sec. 422.260(c)(1)(i),
(c)(2)(v), (c)(3)(iii), and (d) with a small revision to paragraph (d)
to clarify that information provided during the administrative review
process may include information from other MA organizations and slight
reorganization to Sec. 422.260(c)(3)(iii) to improve the clarity of
the regulation. As these clarifications and revisions to the regulation
are consistent with current practice and policy and do not
substantively change the appeal rights of an MA organization, CMS is
applying these changes immediately on the effective date of the final
rule and to the 2025 Star Ratings.
VIII. Improvements to Special Needs Plans
A. Defining Institutional Special Needs Plans and Codifying Beneficiary
Protections (Sec. 422.2)
Under section 1859(b)(6)(B) and (f)(2) of the Act, Institutional
Special Needs Plans (I-SNPs) are MA special needs plans (SNPs) that
restrict enrollment to MA-eligible individuals who meet the definitions
of ``institutionalized'' or ``institutionalized-equivalent'' in Sec.
422.2, which are based on section 1859(b)(6)(B)(i) and (f)(2)(A) of the
Act. ``Institutionalized'' is defined, for the purposes of defining a
special needs individual and for the open enrollment period for
institutionalized individuals at Sec. 422.62(a)(4), as an MA-eligible
individual who continuously resides or is expected to continuously
reside for 90 days or longer in one of the following long-term care
facility settings: skilled nursing facility (SNF) as defined in section
1819 of the Act (Medicare); nursing facility (NF) as defined in section
1919 of the Act (Medicaid); intermediate care facility for individuals
with intellectual and developmental disabilities as defined in section
1905(d) of the Act; psychiatric hospital or unit as defined in section
1861(f) of the Act; rehabilitation hospital or unit as defined in
section 1886(d)(1)(B) of the Act; long-term care hospital as defined in
section 1886(d)(1)(B) of the Act; hospital which has an agreement under
section 1883 of the Act (a swing-bed hospital); and last, subject to
CMS approval, a facility that is not explicitly listed as part of the
definition of ``institutionalized'' at Sec. 422.2 but meets both of
the following criteria: (i) it furnishes similar long-term, healthcare
services that are covered under Medicare Part A, Medicare Part B, or
Medicaid; and (ii) its residents have similar needs and healthcare
status as residents of one or more facilities listed in the definition
of ``institutionalized'' at Sec. 422.2. We define, at Sec. 422.2, the
term ``institutionalized-equivalent,'' for the purpose of identifying a
special needs individual as an MA-eligible individual who is living in
the community but requires an institutional level of care; in addition,
the definition of the term ``institutionalized-equivalent'' includes
specific limitations on how an assessment is made whether an individual
meets the definition.
Per the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (Pub. L. 108-173), I-SNPs, along with C-SNPs and D-SNPs,
are MA plans that are specifically designed to provide targeted care
and limit enrollment to special needs individuals.
[[Page 30650]]
CMS currently permits MA organizations to submit SNP applications that
are restricted to institutionalized individuals only or
institutionalized-equivalent individuals only, or to submit an
application for a combination I-SNP that covers beneficiaries who
qualify for either institutionalized or institutionalized-equivalent
status but are enrolled under the same plan.
We proposed to add four definitions at Sec. 422.2: a definition of
I-SNPs, and three additional definitions for each of the current I-SNP
types that correspond to CMS's current MA application process. In
addition, we proposed to codify, as part of the definitions for I-SNPs
that enroll special needs individuals who are institutionalized,
current policies that address the need for the I-SNP to contract with
the institutions where such special needs individuals reside. We
explained that adding these four definitions would clarify the specific
standards that are applicable to I-SNPs, as distinguished from other MA
plans and from other MA SNPs. The proposed revisions to the definitions
include tying the definitions of ``institutionalized'' and
``institutionalized-equivalent'' in Sec. 422.2 and the list of
eligible institutions set forth in that definition to the proposed
definition of I-SNP. In addition, our proposed definitions of the terms
``facility-based institutional special needs plan (FI-SNP)'' and
``hybrid institutional special needs plan (HI-SNP)'' included specific
performance requirements tied to the type of special needs individual
enrolled in the plan, while the proposed definition of ``institutional-
equivalent special needs plan (IE-SNP)'' focused on how IE-SNPs
restrict enrollment to MA-eligible individuals who meet the definition
of ``institutionalized-equivalent.'' Specifically, we proposed that the
definition of the term facility-based institutional special needs plan
(FI-SNP) would include that such plans own or contract with at least
one institution in each county in the plan's service area and with each
institution that serves enrollees in the plan. This approach of
specifying certain requirements as part of the definition of a specific
type of plan is consistent with how CMS has adopted regulatory
definitions for D-SNPs, FIDE SNPs, and HIDE SNPs in Sec. 422.2. The
proposed definitions clarified that MA organizations may offer I-SNPs
that are: exclusive to beneficiaries meeting the definition of
``institutionalized'' under Sec. 422.2; are exclusive to beneficiaries
meeting the definition of ``institutionalized-equivalent'' under Sec.
422.2; or are exclusive to beneficiaries who meet either of those
definitions. Our proposed language linking I-SNP enrollment to the
definitions noted here codifies our current sub-regulatory guidance and
those practices CMS has historically used during the MA application
process and would not change current or future eligibility and
enrollment requirements for I-SNP plan subtypes. In addition, adopting
regulatory definitions that are specific to the type of I-SNP and the
populations served by the I-SNPs allows clearer distinctions and rules
about regulatory requirements that are applicable to a specific type of
I-SNP. For example, we proposed in the Medicare Program; Contract Year
2025 Policy and Technical Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program,
and Programs of All-Inclusive Care for the Elderly; Health Information
Technology Standards and Implementation Specifications (the ``November
2023 proposed rule'') \192\ to amend Sec. 422.116 to adopt an
exception to existing network adequacy requirements for facility-based
I-SNPs, which are special needs plans that restrict enrollment to
individuals who meet the definition of institutionalized, own or
contract with at least one institution, and own or have a contractual
arrangement with each institutional facility serving enrollees in the
plan. See section VIII.B of the November 2023 proposed rule and section
VIII.E of this final rule for more information about that proposal.
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\192\ The November 2023 proposed rule can be found here: https://www.federalregister.gov/d/2023-24118.
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Lastly, we proposed to amend Sec. 422.101(f)(2) to add a
requirement that the models of care for I-SNPs ensure that contracts
with long-term care institutions (listed in the definition of the term
``institutionalized'' at Sec. 422.2) contain requirements allowing I-
SNP clinical and care coordination staff access to enrollees of the I-
SNP who are institutionalized. The proposed new Sec. 422.101(f)(2)(vi)
would codify longstanding sub-regulatory guidance in section 20.3 of
Chapter 16B of the Medicare Managed Care Manual (MMCM) that is designed
to provide I-SNP enrollees protections regarding access to care
coordination and communication between providers and I-SNP staff. Under
our proposal, access would be assured for I-SNP enrollees to care
coordination services from I-SNP clinical and care coordination staff
that are employed by the MA organization offering the I-SNP or under
contract with the I-SNP to furnish healthcare, clinical or care
coordination services. As we noted in the December 2022 proposed rule,
I-SNP clinical and care coordination staff may be employed by the MA
organization offering the I-SNP or be under contract with the I-SNP to
furnish healthcare, clinical, or care coordination services. CMS has
received feedback in the past that institutional providers sometimes
fail to share relevant information regarding an I-SNP enrollee's health
status or need for care or services with I-SNP staff. In the proposed
rule, we explained that codifying this requirement for I-SNP MOCs to
ensure that the contracts between the I-SNP and these institutions
where I-SNP enrollees reside would include provisions allowing access
for ISNP staff would better protect beneficiaries.
We received the following comments on our proposals, and our
responses follow:
Comment: A commenter sought clarification regarding the contracting
requirements for Hybrid Institutional SNPs (HI-SNPs); specifically, the
commenter asked that CMS clarify the requirement that HI-SNPs ``must
own or have a contractual arrangement with each institutionalized
facility serving enrollees.'' The commenter stated that it may not be
possible to have a contract with a nursing home in a rural area, or the
existing single facility may be of low quality, but enrollees in that
facility would be well-served by having access to providers located in
adjacent counties for service, and still benefit from the additional
support and coordination offered by the I-SNP.
Response: We appreciate the commenter's concerns related to service
area requirements and access for their enrollees who might be able to
seek services in counties adjacent to the HI-SNP's service area. In
setting the proposed requirements for HI-SNPs, CMS considered that the
plan would be a hybrid and thus include both MA-eligible individuals
who meet the definition of ``institutionalized'' and MA-eligible
individuals who meet the definition of ``institutionalized-
equivalent.'' Because HI-SNPs may enroll individuals that meet the
definition of ``institutionalized'' under Sec. 422.2, the performance
requirements for FI-SNPs that exclusively serve institutionalized
individuals must also apply to the HI-SNP in order to ensure that the
institutionalized enrollees of the HI-SNP are similarly protected and
receive the necessary services. We proposed that FI-SNPs must own or
have a contractual arrangement with
[[Page 30651]]
each institutionalized facility serving enrollees in the plan to align
with longstanding sub-regulatory guidance in section 20.3 of Chapter
16B of the MMCM. Under Chapter 16B, CMS has interpreted contractual
arrangement to mean a network participation contract and will continue
to do so in this final rule. This policy provides an important
beneficiary protection as it ensures that the MA organization that
offers the FI-SNP or HI-SNP contracts with the institution in order to
ensure that the institution adheres to critical care management
measures and MOC standards that apply to the I-SNP. Therefore, HI-SNPs
that also enroll and cover institutionalized special needs individuals
must own or contract with at least one institution, specified in the
definition of ``institutionalized'' in Sec. 422.2, for each county
within the plan's service area; and must own or have a contractual
arrangement with each institutionalized facility serving enrollees in
the plan in order to comply with the requirements set forth at Sec.
422.2 for the purposes of defining a special needs individual. For
example: if a Medicare beneficiary seeks to enroll in a HI-SNP, the
plan must own or have a contract with the long-term care facility where
the beneficiary resides--otherwise, the beneficiary is not eligible for
enrollment. This requirement is consistent with sub-regulatory guidance
in section 20.3.4 the Chapter 16B of the MMCM.
In CMS's experience, I-SNPs have been able to successfully comply
with this requirement to own or contract with the necessary
institutions. CMS will continue to monitor compliance with this
requirement in reviewing applications for I-SNPs and in monitoring and
overseeing the MA program. In addition, we are adopting a slight
clarification to the definition of FI-SNP, which will also apply to HI-
SNPs, to use the phrase ``in the plan's service area'' Instead of the
proposed phrase ``within the plan's county-based service area.'' This
revision better aligns with the definition of Service Area in 42 CFR
422.2 ``Service area.'' This revision does not change the substance of
the requirement that each FI-SNP and HI-SNP own or have a contract with
at least one institution in each county of the plan's service area.
Comment: A commenter expressed concern that I-SNPs do little to
assist enrollees who wish to return to a community setting because of
incentives to maintain plan enrollment, and that most I-SNP enrollees
would be better served in a D-SNP or in Traditional Medicare. While the
commenter did not specify, based on the context of the comment, CMS
interprets that the commenter was referring to all I-SNPs that enroll
beneficiaries who are institutionalized. The commenter further stated
that alternative coverage (that is, D-SNPs or Traditional Medicare)
avoids the strong incentives that plague facility-based I-SNPs to keep
enrollees in settings that are inappropriate for their health needs
and/or does not meet their wishes. The commenter stated that more
regulation of I-SNPs is required to ensure that enrollee needs are met.
Another commenter expressed concerns with the increased enrollment in
I-SNPs, and evidence identified in a report by MedPAC in 2013 \193\
that I-SNPs are prescribing inappropriate medications, specifically,
the commenter's interpretation that the report found that I-SNPs have
higher rates than regular MA plans for the use of potentially harmful
drugs among the elderly as well as reporting the use of drug
combinations with potentially harmful interactions; and that I-SNPs
could be denying beneficiaries needed hospital care, or that plan
ownership of a SNF could result in denials of coverage of needed, but
expensive care.
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\193\ The commenter cites MedPAC, Chapter 14 (March 2013); found
here: https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/chapter-14-medicare-advantage-special-needs-plans-march-2013-report-.pdf.
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Response: We thank the commenters and share the concerns that an
enrollee's residency wishes be met, and that appropriate care be
provided to I-SNP enrollees by the I-SNP. In implementing a SNP model
of care, the MA organization must conduct a comprehensive initial, and
then annual, health risk assessment of the individual's physical,
psychosocial, and functional needs as required by Sec.
422.101(f)(1)(i). Per 42 CFR 422.101(f)(1)(ii), the MA organizations
offering a SNP must also develop and implement a comprehensive
individualized care plan (ICP) through an interdisciplinary care team
in consultation with the enrolled beneficiary, as feasible, identifying
goals and objectives including measurable outcomes as well as specific
services and benefits to be provided. The requirement at Sec.
422.101(f)(1)(ii) for consultation with the enrolled beneficiary means
that the enrollee's goals and wishes, with regards to living in the
community, as well as access to covered services or treatment plans,
must be captured in their ICP.
As far as evaluating whether an institutionalized individual is
better served by a D-SNP, I-SNP, or Traditional Medicare, Medicare
beneficiaries are free to make their own enrollment decisions regarding
how to receive Medicare benefits; section 1851 of the Act provides that
each MA-eligible beneficiary is entitled to elect to receive Part A and
B benefits through the Traditional Medicare program or enrollment in an
MA plan for which the individual is eligible. We encourage all
beneficiaries to review their coverage options whether it be
Traditional Medicare or Medicare Advantage and believe that the
educational tools and materials we make available on Medicare.gov help
to facilitate that decision-making. Beneficiaries may also find helpful
information through the ``Medicare & You'' handbook, by calling 1-800-
MEDICARE, or by contacting the State Health Assistance Program (SHIP)
in their state.\194\ Healthcare providers, including the long-term care
institutions in which institutionalized special needs individuals
reside, must respect the choice that beneficiaries make in electing
their Medicare coverage whether it is through Traditional Medicare or
an MA plan.\195\
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\194\ Beneficiaries can find their local SHIP through https://www.shiphelp.org/, and clicking on ``Find Local Medicare Help.''
\195\ CMS previously addressed this matter in the memo ``Memo to
Long Term Care Facilities on Medicare Health Plan Enrollment
(October 2021), see https://www.cms.gov/files/document/ltcfdisenrollmentmemo.pdf.
---------------------------------------------------------------------------
We also share the commenter's concern that beneficiaries may be
prescribed inappropriate medications. We note that MedPAC acknowledges
in their report that this particular finding may be a result of
monitoring practices among I-SNPs. MedPAC noted in 2013 that
``[a]lthough I-SNPs also have higher rates than regular MA plans for
the use of potentially harmful drugs among the elderly and the use of
drug combinations with potentially harmful interactions, their higher
rates of monitoring of persistently used drugs suggest that drugs with
potential interactions or adverse effects are also being closely
monitored.'' \196\ As the report notes, MedPAC suggests that I-SNPs do
enroll a population with a higher use of potentially harmful drugs when
compared to non-I-SNPs, but then suggests that I-SNPs are closely
monitoring for potential adverse events. CMS publishes SNP data
pertaining to the Star Ratings quality measure Care for Older Adults--
Medication Review,
[[Page 30652]]
which MA special needs plans are required to submit as part of the
Healthcare Effectiveness Data and Information Set (HEDIS) reporting
requirements, and Use of High-Risk Medications in Older Adults (a HEDIS
measure), as part of Final Medicare Special Needs Plans HEDIS[supreg]
Performance Results annual reports, and will continue to review this
performance data for all I-SNPs.\197\
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\196\ See MedPAC, Report to the Congress: Medicare Payment
Policy, March 2013, ``Medicare Advantage special needs plans.''
https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/chapter-14-medicare-advantage-special-needs-plans-march-2013-report-.pdf.
\197\ The Care for Older Adults--Medication Review measure is
used in the Medicare Advantage and Part D Quality Star Ratings that
are available online at https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data. In addition, multi-year reports
covering a selection of HEDIS measures reported by MA SNPs can be
found here: https://www.cms.gov/medicare/enrollment-renewal/special-needs-plans/data-information-set.
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Comment: A commenter expressed support of the HI-SNP model and
stated that restricting enrollment in HI-SNPs to include both MA-
eligible individuals who meet the definition of ``institutionalized''
and MA-eligible individuals who meet the definition of
``institutionalized-equivalent'' will ensure individuals in both
categories receive necessary supports across the continuum of their
care needs without having to experience the disruption of changing
Medicare coverage types should an enrollee need for more extensive
long-term care. They also believe the HI-SNP and IE-SNP models create
an incentive for an I-SNP to serve people who can safely live in the
community and could significantly improve continuity and coordination
of care for individuals residing in states that do not offer integrated
duals programs.
Another commenter expressed support for the proposed clarification
of I-SNP types and requested that CMS report enrollment in the
different types of I-SNP in the CMS MA monthly publicly available
enrollment reports to better understand the growth in these plans.
Response: We thank the commenters for their support of our
proposal. We note that CMS currently publishes monthly SNP enrollment
data on the CMS website.\198\ These monthly reports provide I-SNP
enrollment totals as well as the number of active I-SNP plans. CMS may
explore the possibility of providing enrollment and plan data at the
SNP subtype level in the future.
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\198\ A PDF and Excel version of each monthly report can be
found here: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data.
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Comment: A commenter noted that CMS requested comment on whether
the proposed regulatory text needs to more specifically address
information-sharing or other issues related to I-SNPs being able to
access information about and gain access to facilities where their
enrollees reside. The commenter cited a statement in the December 2022
proposed rule related to the I-SNP proposal that CMS has received
reports that providers sometimes fail to share relevant information
regarding an enrollee's health or need for care with the I-SNP staff.
The commenter recommended that, prior to revising the MA regulations,
CMS should review the issue for substance and specifics, including
looking at best practices related to joint facility staff and plan
staff participation in care management, which could provide CMS with
some useful examples or evidence suggesting that facilities requiring
plan reliance on paper documentation over in person or virtual
participation in facility activities is a sub-optimal alternative.
Response: We thank the commenter for supporting our proposal to
amend Sec. 422.101(f)(2) to add a requirement that the models of care
for I-SNPs ensure that contracts with long-term care institutions
(listed in the definition of the term ``institutionalized'' in Sec.
422.2) contain requirements allowing I-SNP clinical and care
coordination staff access to enrollees of the I-SNP who are
institutionalized. As proposed and finalized here, Sec.
422.101(f)(2)(vi) reflects longstanding sub-regulatory guidance in
section 20.3 of Chapter 16B of the MMCM that is designed to provide I-
SNPs enrollees with protections regarding access to care coordination
and to ensure communication between providers and I-SNP staff. We
expect MA organizations sponsoring I-SNPs to have communication
provisions in their contracts with network long-term care providers
where enrollees reside that should stem barriers to information
sharing. While our experience with this long-standing sub-regulatory
guidance has given us insight into the need for this policy as set
forth in our proposed rule, we welcome continued input on this topic
should additional guidance or rulemaking be needed in this area.
Comment: Another commenter noted codifying CMS's sub-regulatory
guidance for I-SNPs is appropriate as I-SNPs continue to grow in
enrollment. The commenter further elaborated by noting that is
essential that the facility share data with the I-SNP such as data
regarding the clinical, psychosocial, health-related social needs of
their I-SNP enrolled residents, as well as other data relevant to the
plan of care is essential to achieving the best possible outcomes for
enrollees living in an institutional setting. The commenter noted that
CMS's expectations and requirements for MA plans should align across
health plan types and be consistent with the health information-sharing
requirements of the Medicare and Medicaid programs.
Response: We thank the commenter for their support of the proposed
rule and agree that data-sharing among plans, facilities and providers
is crucial to supporting the health care needs of I-SNP enrollees. We
note, however, that as proposed and finalized, Sec. 422.101(f)(2)(iv)
imposes obligations on I-SNPs, and policy modifications regarding data-
sharing more broadly, such as between non-SNP MA plans and providers or
facilities, is outside the scope of this rule.
Comment: A commenter noted that CMS should apply the level of care
requirements in the definition of ``institutionalized-equivalent''
under Sec. 422.2, which would be applied to the proposed definitions
of IE-SNP and HI-SNPs, to improve the Part D program, that is, that CMS
should require Part D plans to engage in a similar assessment of
whether enrollees that are living in the community require an
institutional level of care. The commenter further noted that enrollees
in IE-SNPs/HI-SNPs and Part D programs have substantially similar
chronic conditions and cognitive impairments, including the prevalence
of these conditions, the dual eligibility of enrollees, and
prescription drug needs of Medicare enrollees. The commenter suggested
that if CMS amended various aspects of Part D regulations to address
the subset of enrollees with such needs, it would significantly improve
the care and services enrollees receive through the Part D program as
well as the Medicare and Medicaid programs overall. For example, the
commenter noted that if CMS were to increase LTC pharmacy services
regardless of setting, medication management would be more effective,
patient outcomes would improve, and overall health care spending would
be lower. The commenter noted that CMS should consider tools and
processes to allow Part D plans to identify enrollees' institutional
level of care needs and incorporate that into the information Part D
plans must obtain regarding Part D enrollees.
Response: We appreciate the commenter's suggestion regarding the
use of a tool to assess the level of care (LOC) needs of enrollees in
the Part D program. We note that the use of these tools for determining
that the individual requires an institutional LOC is codified at 42 CFR
422.2 ``institutionalized-equivalent,'' for purposes of I-SNP
eligibility and enrollment. We proposed
[[Page 30653]]
and are finalizing clarifications of the specific standards that are
applicable to I-SNPs, as distinguished from other MA plans and from
other MA SNPs, as well as codify FI-SNP and IE-SNP enrollee protections
regarding access to care coordination and communication between
providers and I-SNP staff. CMS is implementing this proposal by adding
four definitions at Sec. 422.2: a definition of I-SNPs and three
additional definitions for each of the current I-SNP types that
correspond to CMS's current MA application process, and only addresses
requirements that I-SNPs must implement for their enrollees. We did not
propose changes to Part D requirements of the nature suggested by the
commenter. Thus, the comment to apply I-SNP requirements more broadly
to Part D plans is out of scope for this rule.
All MA SNPs must cover the Medicare Part D benefit per the
definition of specialized MA plans for special needs individuals in
Sec. 422.2; therefore, the individual care plan for all I-SNP
enrollees should address Part D benefits as well as MA basic benefits
(that is, Part A and B benefits) and MA supplemental benefits.
After considering all the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing definitions of the terms Facility-based Institutional
special needs plan (FI-SNP), Hybrid Institutional special needs plan
(HI-SNP), Institutional special needs plan (I-SNP), and Institutional-
equivalent special needs plan (IE-SNP) at Sec. 422.2 largely as
proposed. In the definitions of FI-SNP, HI-SNP, and I-SNP, we are
slightly reorganizing the definitions to improve their readability. We
are modifying the definition of FI-SNP to more clearly provide how FI-
SNPs must own or contract with institutions as described in the
definition. Finally, we are also revising the definition of FI-SNP by
replacing ``with the plan's county-based service area'' with ``in the
plan's service area.'' This revision better aligns with the definition
of Service Area in 42 CFR 422.2 ``Service area.''
In addition, after considering all the comments we received and for
the reasons outlined in the proposed rule and our responses to
comments, we are finalizing revisions to Sec. 422.101(f) to add a new
paragraph (f)(2)(vi) as proposed to require the model of care for each
I-SNP (regardless of the type of I-SNP) to ensure that contracts with
long-term care institutions (listed in the definition of the term
``institutionalized'' in Sec. 422.2) contain requirements allowing I-
SNP clinical and care coordination staff access to enrollees of the I-
SNP who are institutionalized.
B. Codification of Special Needs Plan Model of Care Scoring and
Approval Policy (Sec. 422.101)
Congress first authorized special needs plans (SNPs) to exclusively
or disproportionately serve individuals with special needs through
passage of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (hereinafter referred to as the MMA) (Pub. L.
108-173). The law authorized CMS to contract with Medicare Advantage
(MA) coordinated care plans that are specifically designed to provide
targeted care to individuals with special needs. Originally, SNPs were
statutorily authorized for a limited period, but after several
extensions of that authority, section 50311(a) of the BBA of 2018
permanently authorized SNPs. Under section 1859(f)(2) through (4) of
the Act, SNPs are required to restrict enrollment to Medicare
beneficiaries who are: (1) Institutionalized individuals, who are
currently defined in Sec. 422.2 as those residing or expecting to
reside for 90 days or longer in a long-term care facility, and
institutionalized equivalent individuals who reside in the community
but need an institutional level of care when certain conditions are
met; (2) individuals entitled to medical assistance under a State plan
under Title XIX; or (3) other individuals with certain severe or
disabling chronic conditions who would benefit from enrollment in a
SNP. Section 1859(f)(5)(A) of the Act, added by Section 164 of the
Medicare Improvements for Patients and Providers Act (hereinafter
referred to as MIPPA) (Pub. L. 110-275), imposes specific care
management requirements for all SNPs effective January 1, 2010. As a
result, all SNPs are required to implement care management requirements
which have two explicit components: an evidence-based model of care
(MOC) and a series of care management services. For more discussion of
the history of SNPs, please see Chapter 16B of the Medicare Managed
Care Manual (MMCM).
In the December 2022 proposed rule, we proposed to codify certain
sub-regulatory guidance from Chapters 5 and 16B of the MMCM about
current SNP MOC scoring protocols; annual C-SNP MOC submissions as
required by the BBA of 2018; and processes for amending SNP MOCs after
National Committee for Quality Assurance (NCQA) approval.
We provide additional summaries of the proposed MOC provisions and
responses to comments received below.
1. Codification of Model of Care (MOC) Scoring Requirements for Special
Needs Plans (SNPs) (Sec. 422.101(f)(3)(iii))
Section 1859(f)(7) of the Act requires that, starting in 2012, all
SNPs be approved by NCQA based on standards developed by the Secretary.
As provided under Sec. Sec. 422.4(a)(iv), 422.101(f), and 422.152(g),
the NCQA approval process is based on evaluation and approval of the
SNP MOC. In the CMS 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 (CMS-4190-F2) (hereinafter referred to as the January
2021 final rule), we adopted several regulatory amendments to implement
requirements for the SNP MOC that were enacted as part of the BBA of
2018 and our extension of certain C-SNP specific standards to all SNP
MOCs.
All SNPs must submit their MOCs to CMS for NCQA evaluation. An MA
organization sponsoring multiple SNPs must develop a separate MOC to
meet the needs of the targeted population for each SNP type it offers.
MA organizations that wish to offer a SNP must submit an application,
as required under part 422, subpart K, to demonstrate that they meet
SNP specific requirements, including the requirements in Sec.
422.101(f) that MA organizations offering a SNP implement an evidence-
based MOC to be evaluated by the NCQA; in Sec. 422.107 that D-SNPs
have a contract with the State Medicaid agencies in the states in which
they operate; and in Sec. 422.152(g) that SNPs conduct quality
improvement programs. SNP applicants follow the same process in
accordance with the same timeline as applicants seeking to contract
with CMS to offer other MA plans. In the January 2021 final rule, CMS
revised and amended Sec. 422.101(f) to improve plan implementation of
enrollee care management practices and to strengthen the review process
by establishing a minimum benchmark score of 50 percent for each
element of a plan's MOC (Sec. 422.101(f)(3)(iii)).
Since the beginning of the MOC approval process, CMS has developed,
issued, and updated guidance on the MOC to improve plan performance and
beneficiary care. Section 1859(f)(5) of the Act outlines requirements
for an evidence-based model of care that include--(1) an appropriate
network of
[[Page 30654]]
providers and specialists to meet the specialized needs of the SNP
target population; (2) a comprehensive initial health risk assessment
(HRA) and annual reassessments; (3) an individualized plan of care
containing goals and measurable outcomes; and (4) an interdisciplinary
team to manage care. These provisions in section 1859(f)(5) of the Act
are the statutory foundation for much of our subsequent regulatory
standards for the MOC. In the September 2008 interim final rule with
comment (73 FR 54226, 54228) and the January 2009 final rule (74 FR
1493, 1498), we finalized standards for the required model of care at
Sec. 422.101(f). CMS provided guidance and instructions in the CY 2010
Final Call Letter issued March 30, 2009, in a section titled, ``Model
of Care Reporting for New Applicants and Existing SNPs,'' in order to
more clearly establish and clarify delivery of care standards for SNPs.
Additional background on our existing guidance and the importance of
the MOC is in the proposed rule at 87 FR 79572 through 79573.
In the December 2022 proposed rule, we proposed to codify the SNP
MOC scoring protocols by amending Sec. 422.101(f)(3)(iii) to include
the current sub-regulatory scoring protocols. This proposal, and these
scoring protocols, align with the minimum benchmark for each element of
the SNP MOC of a plan that is currently reflected at Sec.
422.101(f)(3)(iii), as added by the January 2021 final rule. Our
adoption of these scoring standards is authorized by section 1859(f)(7)
of the Act for NCQA review and approval to be based on standards
established by the Secretary and our authority in section 1856(b) of
the Act to establish standards to carry out the MA program.
First, we proposed to amend Sec. 422.101(f)(3)(iii) to add the
minimum overall score requirement for approval of a SNP's MOC, using
the term aggregate minimum benchmark; we proposed to use the same
minimum standard for the aggregate minimum benchmark as is currently
used by NCQA in reviewing and approving MOCs. Currently, SNP MOCs are
approved for 1, 2, or 3-year periods. Each element of the SNP's
submitted MOC is reviewed and scored. As provided in Sec.
422.101(f)(3)(iii), the minimum benchmark for each element is 50
percent. The MOC is scored by NCQA based on the review of four
elements: Description of the SNP Population; Care Coordination; SNP
Provider Network; and MOC Quality Measurement & Performance
Improvement. Each of these four elements has a number of sub-elements
and factors to address the necessary scope and detail of the MOCs.
Currently, each of the four SNP model of care elements is valued at 16
points. The aggregate total of all possible points across all elements
equals 64, which is then converted to percentage scores based on the
number of total points received. CMS provides additional information
regarding MOC scoring criteria in Section 20.2.2 of Chapter 5 of the
MMCM. A full list of the most recent elements and factors used in
evaluating and scoring the MOCs is in the Model of Care Scoring
Guidelines for Contract Year 2025; CMS also includes the list of
elements as part of attachment A (or the MOC Matrix) of the ``Initial
and Renewal Model of Care Submissions, and Off-cycle Submission of
Model of Care Changes.'' \199\ In addition to the current element-level
minimum benchmark regulatory requirement at Sec. 422.101(f)(3)(iii),
SNPs are also required to meet a minimum benchmark score for the
aggregate total--otherwise known as the aggregate minimum benchmark.
Currently, the aggregate minimum benchmark is 70 percent of the total
64 points.
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\199\ The Model of Care Scoring Guidelines for Contract Year
2025 can be found here: https://snpmoc.ncqa.org/static/media/CY2025SNP_MOC_Scrng_Gdlns_508.4c71d8c17b37b33ff079.pdf. The
``Initial and Renewal Model of Care Submissions, and Off-cycle
Submission of Model of Care Changes'' can be found here: https://omb.report/icr/202105-0938-005/doc/original/111555400.pdf.
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We proposed to codify this current practice by amending Sec.
422.101(f)(3)(iii) to add that, in addition to the current requirement
that all SNPs must meet a minimum benchmark score of 50 percent on each
element, each SNP's MOC must meet an aggregate minimum benchmark of 70
percent. As reflected in the proposed revision to paragraph
(f)(3)(iii), a SNP's model of care will only be approved if each
element of the model of care meets the minimum benchmark and the entire
model of care meets the aggregate minimum benchmark.
Second, we proposed to codify at Sec. 422.107(f)(3)(iii)(A) the
requirement, from section 1859(f)(5)(B) of the Act, that C-SNP MOCs are
annually reviewed and evaluated. Beginning in 2020, under the MOC
review process, C-SNPs are only eligible to receive a MOC approval for
1-year and therefore are subject to annual review and approval
processes. Specifically, we proposed at paragraph (f)(3)(iii)(A) to
codify that an MOC for a C-SNP that receives a passing score is
approved for 1 year. We also proposed, at new paragraph (f)(3)(iii)(B),
to codify different the approval time limits for the MOCs of I-SNPs and
D-SNPs, basing the approval period on the final score of the MOC on the
aggregate minimum benchmark. We proposed that: (1) an MOC for an I-SNP
or D-SNP that receives an aggregate minimum benchmark score of 85
percent or greater is approved for 3 years; (2) an MOC for an I-SNP or
D-SNP that receives a score of 75 percent to 84 percent is approved for
2 years; and (3) an MOC for an I-SNP or D-SNP that receives a score of
70 percent to 74 percent is approved for 1 year. This proposed scoring
process matches the current process NCQA uses to score initial and
annual MOCs. We believe it is prudent to maintain the current scoring
process as it has worked well to incentivize improvements in MOCs and
strikes a balance with respect to the burden associated with reviews
and approvals for all stakeholders by allowing higher scoring MOCs
remain in place longer.
Third, we proposed a new paragraph (f)(3)(iii)(C) to provide an
opportunity for a SNP to cure deficiencies in its MOC if the MOC fails
to meet any minimum element benchmark or the aggregate minimum
benchmark when reviewed and scored by NCQA. Currently, the review and
evaluation process includes a second opportunity to submit an initial
or renewal MOC, known as ``the cure process.'' Regardless of the final
score by NCQA of an MOC resubmitted using the cure process (provided
the MOC has the minimum scores to be approved), SNPs that need to use
the cure process to reach a passing aggregate minimum and/or minimum
element benchmark score will receive only a 1-year approval under this
proposal. This policy provides added incentive for SNPs to develop and
submit comprehensive and carefully considered MOCs for initial NCQA
approval and rewards those SNPs that have demonstrated ability to
develop quality MOCs without requiring additional time. We also
proposed that the opportunity to cure deficiencies in the MOC is only
available once per scoring cycle for each MOC submission. We noted that
under this proposal, a MA organization that fails to meet either the
minimum element benchmark for any MOC element or the aggregate minimum
benchmark for the entire MOC after having an opportunity to cure
deficiencies will not have its MOC approved for a contract year. MOCs
that do not receive NCQA approval after the cure review will not have a
third opportunity for review. As a result, the SNP(s) that use that MOC
would need to be nonrenewed by the MA organization or terminated by CMS
for
[[Page 30655]]
failure to meet a necessary qualification for SNPs.
We received the following comments regarding the aforementioned
provisions and provide our responses later in this section.
Comment: We received several comments addressing the SNP Model of
Care Element Matrix (the Matrix),\200\ which reflects the content and
evaluative criteria of the MOC. One commenter suggested that CMS reduce
duplication and the level of detail within the Matrix, particularly
redundancies across factors, elements, and/or where there is evidence
that the element or factor is not required to be part of a robust care
management program.
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\200\ The MOC Element Matrix cand be found on CMS.gov at:
https://www.cms.gov/files/document/cy2023attachmentamodelofcarematrixinitialandrenewalsubmissionmnfnl.docx.
---------------------------------------------------------------------------
Response: We did not propose to codify the content and evaluation
criteria for approval of the MOC, and as such, we do not believe these
comments regarding the level of specificity in the Matrix are within
scope of the proposed rule. However, we will take these comments into
consideration when renewing the next MOC Paperwork Reduction Act (PRA)
package and for future rulemaking. CMS currently publishes the Matrix
for comment under the PRA package ``Initial and Renewal Model of Care
Submissions, and Off-cycle Submission of Summaries of Model of Care
Changes'' (CMS-10565, OMB 0938-1296). We encourage all parties to
submit comments during the next PRA package renewal regarding MOC
burden estimates.
Comment: A commenter suggested that CMS reevaluate the MOC
submission process and NCQA's review of initial and renewal MOCs and to
coordinate with CMS audit processes for efficiency, consistency, and
effectiveness to the extent that the burden placed on SNPs to submit
MOCs is commensurate with current CMS burden estimates.
Response: While we believe our current burden estimates fairly
capture the MOC process, CMS will take comments suggesting a more
effective MOC review process and audit system under advisement. In
regard to consistency, NCQA and CMS work collaboratively to ensure MOCs
are reviewed in the manner appropriate to and in alignment with the MOC
submission requirements and CMS audit protocols.
Comment: A commenter recommended that CMS consider the potential
impact of environmental disasters or other major shifts, such as the
COVID-19 pandemic, on the implementation of the MOC's approved care
management processes and policies. This commenter recommended CMS
provide for the ability of plans to diverge from regular processes and
activities contained in the MOC during such an event or shift.
Response: We appreciate this comment and recognize the value of
such a discussion. NCQA is required by Sec. 422.101(f)(3)(ii) to
evaluate whether goals from the previous MOC were fulfilled when
reviewing a new or subsequent MOC for approval. To the extent that the
commenter was addressing review of an MA organization's overall
implementation of its MOC, that is outside of the scope of the proposal
to codify the minimum scoring benchmarks, the length of the approval
period, and the availability of a cure period when a MOC fails to meet
the minimum benchmarks. Actual implementation of the MOC is reviewed as
part of CMS's auditing and oversight. We note that CMS does have a
framework in place to convey any temporary changes needed to the MOC
process or requirements through the issuance of departmental or agency
communications that may be necessary during a public health emergency
or similar situation, as evidenced by policy updates provided during
the coronavirus disease 2019 (COVID-19) public health emergency (see
CMS memo ``Information Related to Coronavirus Disease 2019--COVID-
19'').\201\ As we noted in that memo at the time, CMS recognized that
in light of the COVID-19 outbreak, an MAO with one or more SNPs may
need to implement strategies that do not fully comply with their
approved SNP MOC in order to provide care to enrollees while ensuring
that enrollees and health care providers are also protected from the
spread of COVID-19. CMS stated then that we would consider the special
circumstances presented by the COVID-19 outbreak when conducting MOC
monitoring or oversight activities. For instance, CMS could permit SNPs
to use real-time, audio-visual, interactive virtual means of
communication to meet the face-to-face encounter requirements in an
emergency if the SNP's MOC states that care coordination visits and
encounters are in person. We continue to believe that this is an
appropriate way to address MOC implementation during a public health
emergency or similar situation. In addition, we remind MA organizations
of the existing requirements at Sec. 422.100(m) that apply during a
disaster or emergency; those also apply to MA SNPs. We also reiterate,
however, that even during an emergency or disaster, all enrollees,
including SNP enrollees, must receive all medically necessary items and
services, including care coordination.
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\201\ The memo can be found here: https://www.cms.gov/files/document/updated-guidance-ma-and-part-d-plan-sponsors-42120.pdf.
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Comment: A commenter recommended that CMS require each D-SNP to
make its model of care publicly available. This commenter suggested
that this would help beneficiaries and other stakeholders determine
whether a given D-SNP is fulfilling obligations outlined in its own
model of care.
Response: We did not propose and are not finalizing at this time a
requirement for D-SNPs to publish their MOCs. All SNPs (including D-
SNPs) must identify and clearly define measurable goals and health
outcomes for the MOC as part of their MOC submission under MOC 4
Element B. This includes but is not limited to: identifying and clearly
defining the SNP's measurable goals and health outcomes; describing how
identified measurable goals and health outcomes are communicated
throughout the SNP organization; and evaluating whether goals were
fulfilled from the previous MOC. NCQA reviews the information provided
by the SNP and will assign a failing score if the plan cannot meet all
factors within the element. SNPs are also required to submit
documentation showing plan compliance to their approved MOC as part of
the current CMS SNP audit process. Following NCQA's review, each SNP is
assigned a score and an associated approval period. These MOC scores
are available on NCQA's website, cover the past three years of
submissions, and include NCQA's detailed scoring of each MOC Element.
We encourage interested parties to review the materials and information
posted by NCQA. CMS will continue to employ a robust audit protocol to
ensure that all SNPs are implementing their MOCs appropriately.
After consideration of the comments and for the reasons outlined in
the proposed rule and our responses to comments, we are finalizing the
proposed amendments to Sec. 422.101(f)(3)(iii) substantially as
proposed but with minor grammatical and organizational changes. As
finalized, Sec. 422.101(f)(3)(iii) establishes the aggregate minimum
benchmark score for a MOC to be approved, the time period of approval,
and the opportunity for an MA organization to submit a corrected MOC
for re-evaluation if the MOC is scored below
[[Page 30656]]
the minimum benchmarks on NCQA's first review.
4. Amending SNP MOCs After NCQA Approval (Sec. 422.101(f)(3)(iv))
CMS also proposed to codify current policies and procedures for an
MA organization to amend its MOCs after NCQA approval. CMS has labeled
this the ``off-cycle MOC submission process.'' CMS has acknowledged in
the past that in order to more effectively address the specific needs
of its enrollees, a SNP may need to modify its processes and strategies
for providing care in the midst of its approved MOC timeframe. CMS
announced a process for SNPs to submit MOC changes for review in the CY
2016 Final Call Letter. Currently, a DSNP or I-SNP that decides to make
substantive revisions to their existing approved MOC may submit a
summary of their off-cycle MOC changes, along with the red-lined MOC,
in the Model of Care module in HPMS for NCQA review and approval.
Substantive revisions are those that have a significant impact on care
management approaches, enrollee benefits, and/or SNP operations. These
kinds of MOC changes are at the discretion of the applicable MA
organization offering the SNP and it is the responsibility of the MA
organization to notify CMS of substantive changes and electronically
submit their summary of changes to their MOC in HPMS for review and
approval. However, beginning with CY 2020, C-SNPs were required to
submit MOCs annually, and thus, their MOCs receive approvals for a
period of one-year. As a result of the annual review and approval of C-
SNP MOCs, C-SNPs were not permitted to submit a revised MOC through an
off-cycle submission.
At the time of the CY 2016 Final Call Letter, based on our previous
experience with the small number of SNPs seeking to amend their MOCs,
we expected that mid-cycle amendments to MOCs would be relatively rare,
and CMS did not anticipate that the off-cycle process would result in a
higher incidence of such MOC changes. We believed that only relatively
unusual circumstances would require SNPs to make changes to their MOCs
that are so substantive that notification to CMS and review of the
changes to the MOC by NCQA and CMS would be warranted. However, CMS and
NCQA have seen the number of off-cycle MOC submissions steadily rise
over the past four years, and plans have expressed frustration and
confusion over what plan changes merit or require submission to NCQA
for an off-cycle approval. The proposed adoption of Sec.
422.101(f)(3)(iv) was intended to address stakeholder feedback
regarding the off-cycle review process and to mitigate the SNP
community's concerns regarding continued plan burden in this area.
In general, CMS intends the MOC review and approval process to
include an MA organization's submission of a MOC only in the following
scenarios: the MA organization seeks to offer a new SNP; the MA
organization's SNP's MOC approval period ends; or CMS deems revision
and resubmission of the MOC necessary to ensure compliance with the
applicable standards and requirements, such as a change in applicable
law or when CMS discovers a violation. We explained in the proposed
rule that for this the last scenario, an off-cycle MOC submission may
be necessary if, during an audit, it appears that the MOC (including in
practice as the SNP applied the MOC) is not meeting applicable
standards. In such cases, CMS may ask the SNP to correct and resubmit
the MOC. Other examples include regulatory changes or when a State
Medicaid agency requires changes to the MOC of a D-SNP to meet State-
specific requirements.
In order to ensure a stable care management process and to ensure
appropriate oversight by CMS of SNPs and their operation, SNPs may not
implement any changes to a MOC until NCQA has approved the changes.
Based on our experience, additional situations may justify the
submission of a revised MOC for review and approval. As part of the
December 2022 proposed rule, we proposed to establish when an MA
organization may submit updates and corrections to its approved MOC.
First, we proposed to codify the off-cycle process at Sec.
422.101(f)(3)(iv). We proposed that MA organizations offering SNPs that
need to revise their MOC mid-cycle during their MOC approval period may
submit the revised MOC for review by NCQA at specific times. CMS has
historically restricted the period that SNPs can submit an off-cycle
submission from June 1st to November 30th of any contract year, which
is meant to allow for the efficient and prudent administration of the
annual initial and review MOC process, with the exception of C-SNPs
which are prohibited from submitting off-cycle submissions. However,
CMS has also allowed SNPs to submit off-cycle MOCs outside of this
window when CMS deems it necessary to ensure the SNP or its MOC was
meeting statutory or regulatory requirements, to guarantee the safety
of enrollees, or to meet State Medicaid requirements. Although we did
not propose to codify this specific language in the December 2022
proposed rule nor are we finalizing it here, CMS will continue to use
this discretion when reviewing applicable submission requests. We
proposed to maintain this process and codify it at Sec.
422.101(f)(3)(iv)(A). We proposed that SNPs may submit updates and
corrections to their NCQA-approved MOC between June 1st and November
30th of each calendar year or when CMS requires an off-cycle submission
to ensure compliance with applicable law.
We stated in the proposed rule that we were proposing to use the
phrase ``applicable standards and requirements'' to encompass the
situations described here in the preamble or similar situations where a
potential or existing violation needs to be addressed. We also stated
that we were proposing, in an effort to ensure consistent application
of this standard and demonstrate our intent, that these be limited
situations where a revision is truly necessary, the finalized
regulation text would provide that CMS would make this determination
and provide directions to the MA organization. We also stated in the
proposed rule that if an MA organization believed that this standard
for when revision is necessary to ensure compliance by the SNP and its
MOC is met, the MA organization should contact CMS for guidance and
approval to submit a revision. However, the proposed regulation text
did not include this standard and proposed paragraph (f)(iv)(A) stated
that D-SNPs and I-SNPs may submit updates and corrections to their
NCQA-approved MOC any number of times between June 1st and November
30th of each calendar year or when CMS requires an off-cycle submission
to ensure compliance with applicable law. We read the phrase ``to
ensure compliance with applicable law'' to encompass the situations
described in the preamble of the proposed rule (and here in the final
rule) or similar situations where CMS has determined that a potential
or existing violation needs to be addressed. ``Applicable law''
encompasses MA regulations and statutes, and for D-SNPs, certain
Medicaid regulations and statutes; where a MOC would potentially result
in harm to enrollees or changes to a MOC are necessary to ensure the
safety of enrollees, we view these changes as changes required by
applicable law, because the fundamental nature and purpose of the MOC
is to ensure that the SNP addresses the needs of the special needs
individuals enrolled in the SNP. We also stated in the proposed rule
that if an MA organization believed that this standard for when
revision is necessary to ensure compliance by the SNP and its
[[Page 30657]]
MOC is met, the MA organization should contact CMS for guidance and
approval to submit a revision.
Since the beginning of the off-cycle submission process, CMS has
provided guidance clarifying which MOC changes require submission to
CMS and how SNPs should submit their MOC changes to CMS. We have
previously said that SNPs that make significant changes to their MOCs
must submit (in HPMS) a summary of the pertinent modifications to the
approved MOC and a redlined version of the approved MOC with the
revisions highlighted. However, given the level of questions we have
received over the years regarding what constitutes a significant
change, we proposed to codify a list of reasons for when a SNP must use
an off-cycle submission of a revised MOC for review and approval.
Proposed Sec. 422.101(f)(3)(iv)(B) provided that an MA organization
must submit updates or corrections to a SNP's MOC to reflect the
following:
Changes in policies or procedures pertinent to:
++ The health risk assessment (HRA) process;
++ Revising processes to develop and update the Individualized Care
Plan (ICP);
++ The integrated care team process;
++ Risk stratification methodology; or
++ Care transition protocols;
Target population changes that warrant modifications to
care management approaches or changes in benefits. For example, we
intend this to include situations like adding Diabetes to a
Cardiovascular Disease and Congestive Heart Failure C-SNP;
Changes in a SNP's plan benefit package between
consecutive contract years that can considerably impact critical
functions necessary to maintain member well-being and are related SNP
operations. For example, changes in Medicaid services covered by a HIDE
SNP or FIDE SNP through its companion Medicaid managed care plan or
changes in Medicaid policy (such as benefits or eligibility) that
require changes to an ICP for coordinating Medicare and supplemental
benefits with the new Medicaid policy;
Changes in level of authority or oversight for personnel
conducting care coordination activities (for example, medical provider
to non-medical provider, clinical vs. non-clinical personnel);
Changes to quality metrics used to measure performance.
The proposed regulation text did not include examples of the type
and scope of MOC policy changes that may be made by an MA organization
to the SNP's approved MOC without any review or approval by CMS or
NCQA. Changes to the MOC that are permitted but that do not need to be
submitted through HPMS include but are not limited to:
Changes in legal entity, parent organization, and
oversight (novation/mergers, changes to corporate structure);
Changes to delegated providers and agreements;
Changes in administrative staff, types/level of staff that
do not affect the level of authority or oversight for personnel
conducting care coordination activities;
Updates on demographic data about the target population;
Updates to quality improvement metric results and
technical quality measure specification updates;
Additions/deletions of specific named providers;
Grammatical and/or non-substantive language changes; and
For D-SNPs, minor changes to Medicaid benefits.
We also proposed, Sec. 422.101(f)(3)(iv)(D), that SNPs may not
implement any changes to a MOC until NCQA has approved the changes. We
explained in the proposed rule that NCQA will continue to review the
summary of changes and a redlined copy of the revised MOC submitted in
HPMS to verify that the revisions are consistent with the previously
detailed list of applicable submissions and in line with acceptable,
high-quality standards, as included in the original, approved MOC, but
that the revised MOCs would not be rescored. We proposed to codify this
policy at Sec. 422.101(f)(3)(iv)(E), which provides that the
successful revision of the MOC under proposed (f)(3)(iv) does not
change the MOC's original period of approval original approval period
(that is, 1-year or multi-year) by NCQA. Therefore, changes made to MOC
cannot be used to improve a low score. We stated how we anticipate that
the current procedures and documentation processes used to implement
the requirements would continue under our proposal and explained our
position that such procedures and operational practices do not require
rulemaking and that CMS may change procedures as necessary (for
example, use of HPMS as the system for submission, the mechanism for
providing notice to MA organizations of the review of the MOC initially
or any revisions, etc.). We stated that we intended that the current
procedures will continue for NCQA reviewers to designate the summary as
``Acceptable'' or ``Non-Acceptable,'' and enter the findings in the
HPMS character text box and that we would continue the current process
in which a system-generated email is sent to the designated SNP
Application Contact and the MA Quality Contact, as well as to the
individual who submitted the revised MOC summary.
If NCQA determines that revisions to an initial or renewal MOC, as
delineated in the MOC summary, do not reflect the quality standards as
demonstrated by the original MOC and its associated score/approval
period, the SNP will be notified via email with a ``Non-Acceptable''
determination and a list of all deficiencies. If the summary and
redlined version is not acceptable after the second review, the SNP
must continue implementing its approved MOC without any revisions for
the remainder of its MOC approval period. We did not include NCQA's
off-cycle scoring policy and the implications in the proposed
regulation text, but we are clarifying in this final rule at Sec.
422.101(f)(3)(iv)(D) to note that all changes, as applicable under
Sec. 422.101(f)(3)(iv)(B), that are part of a SNP's off-cycle
submission are reviewed by NCQA as ``Acceptable'' or ``Non-
acceptable.'' By ``Acceptable,'' we mean that the changes have been
approved by NCQA and the MOC has been updated; whereas by ``Non-
acceptable'' we mean that the changes have been rejected by NCQA and
the MOC has not been changed.
We proposed under Sec. 422.101(f)(3)(iv)(F) to codify existing
operational practices with respect to off-cycle submissions by C-SNPs.
As previously discussed, currently, C-SNPs are prohibited from
submitting off-cycle MOC submissions. We proposed to codify that C-SNPs
are prohibited from submitting an off-cycle MOC submission except when
CMS requires an off-cycle submission to ensure compliance with the
applicable regulations. Otherwise, C-SNPs must wait until the annual
MOC submission period to make changes to their MOC. SNPs have one
opportunity to correct (``cure'') deficiencies, as noted in our
proposed rule Sec. 422.101(f)(3)(iv)(G) to confirm that the revised
MOC is consistent with the standards outlined in the original MOC. We
proposed, at Sec. 422.101(f)(3)(iv)(G), to permit a single opportunity
for a SNP to revise its off-cycle submission to revise a MOC if there
is a deficiency in the submission. The cure process proposed, which is
the current operational process use by NCQA, would permit SNPs to
resubmit a single revised off-cycle submission or cure until the end of
the Off-cycle submission period to an Off-cycle MOC that was deemed
unacceptable during
[[Page 30658]]
the off-cycle review process. We proposed to codify this policy of a
single cure opportunity during the off-cycle time period under a new
paragraph at Sec. 422.101(f)(3)(iv)(G).
We also found that SNPs have sought to modify an initial or renewal
MOC shortly after NCQA approval and before the MOC has gone into
effect. We have generally rejected these submissions as the MOC has yet
to go into effect. Under the proposal, we stated that we would continue
to prohibit an off-cycle submission until the approved MOC has gone
into effect. For example, if NCQA approved a SNP's MOC on April 1,
2022, the plan would be prohibited from submitting an off-cycle
submission until the effective date of the MOC, which would be January
1, 2023, and then the start of the off-cycle submission window on June
1, 2023. In order to clarify this process, we proposed to codify this
guidance at Sec. 422.101(f)(3)(iv)(C). We proposed that NCQA will only
review off-cycle submissions after the start of the effective date of
the current MOC unless it is deemed necessary to ensure compliance with
the applicable regulations or State Medicaid agency requirements for D-
SNPs.
Finally, we reiterated in the proposed rule that we still believe
that to substantively revise an MOC should be a rare occurrence rather
than an eventuality. These proposed processes and procedures were
intended to make certain that CMS and NCQA are apprised of up-to-date
information regarding the MOC; strengthen our ability to adequately
monitor the approved MOCs; and guarantee that SNPs continue to provide
high quality care to enrollees. We sought comment on the codification
of the current off-cycle MOC submission process.
We reiterated in the proposed rule that the proposed regulations
reflect and would codify current policy and procedures. While we
proposed that the regulations would be applicable beginning with a
future year, we stated our intent to continue our current policy as
reflected in the proposed rule. We also stated in the December 2022
proposed rule that the proposed changes carried no burden because the
proposal was a codification of previously issued sub-regulatory
guidance in Chapter 5 and other CMS transmittals to impacted MA
organizations. We also explained that the proposed provisions are
already captured under the PRA package ``Initial and Renewal Model of
Care Submissions, and Off-cycle Submission of Summaries of Model of
Care Changes (CMS-10565, OMB 0938-1296). As part of the PRA approval
package, CMS reviews public comments directed towards the initial and
renewal MOC process, MOC trainings, and the off-cycle MOC submission
system. This position continues and we believe that this final rule,
which finalizes Sec. 422.101(f)(3)(iv) generally as proposed (with
several modifications to clarify the regulation) is consistent with
current procedures and the approved PRA package.
We received comments to these proposed provisions regarding off-
cycle revisions to approved MOCs and our responses follow.
Comment: A commenter suggested that the need for off-cycle
submissions will become more frequent as the increasing number of
requirements, industry developments, and ever-evolving best practices
around health equity, care coordination, provider networks, and other
emerging standards make it more likely that substantive changes will
need to be made. Thus, the commenter reasoned, SNPs are likely to find
it necessary to more frequently submit an off-cycle review so that
their MOCs remain current to structures, processes, practices, and
programs that are operationalized for SNP members. The commenter
suggested that CMS revise and/or clarify the language on what is
considered a ``substantive change'' as it remains unclear, and plans
will default to assuming they should submit their MOCs. The commenter
also suggested that CMS allow for some flexibility in CMS audits around
MOC compliance, suggesting that when the plan documents the deviations
(including the purpose and extent of any deviation) from the written/
approved MOC when needed, and the plan believes the deviations are
``not-substantive'' consistent with CMS criteria, the plan should not
be penalized for its failure to submit their MOC for an off-cycle
review.
Response: CMS recognizes that industry developments and changes in
applicable federal health care laws may impact the nature of health
care delivery and care coordination among SNPs and their members. We
proposed and are finalizing at Sec. 422.101(f)(3)(iv)(A) and (B) the
standards that are to be used to identify when an off-cycle submission
to revise an approved MOC will be permitted.
As proposed in new paragraphs (f)(3)(iv)(A) and (B), an MA
organization that offers a D-SNP or I-SNP that seeks to revise the MOC
before the end of the MOC approval period may submit changes to the MOC
as off-cycle MOC submissions for review by NCQA as follows:
D-SNPs and I-SNPs may submit updates and corrections to
their NCQA approved MOC any number of times between June 1st and
November 30th of each calendar year or when CMS requires an off-cycle
submission to ensure compliance with applicable law.
D-SNPs and I-SNPs are required to submit updates or
corrections as part of an off-cycle submissions based on:
[cir] Substantial changes in policies or procedures pertinent to:
the health risk assessment (HRA) process; revising processes to develop
and update the Individualized Care Plan (ICP); the integrated care team
process; risk stratification methodology; or care transition protocols;
[cir] Target population changes that warrant modifications to care
management approaches;
[cir] Changes in a SNP's plan benefit package between consecutive
contract years that can considerably impact critical functions
necessary to maintain member well-being and are related SNP operations;
[cir] Changes in level of authority or oversight for personnel
conducting care coordination activities (for example, medical provider
to non-medical provider, clinical vs. non-clinical personnel); or
[cir] Changes to quality metrics used to measure performance.
We are making minor changes to proposed paragraphs (f)(3)(iv)(A)
and (B) to increase the clarity of the regulation. We are finalizing
paragraph (f)(3)(iv)(A) to provide that C-SNPs, D-SNPs and I-SNPs must
submit updates and corrections to their NCQA-approved MOC when CMS
requires an off-cycle submission to ensure compliance with applicable
law. Finalizing new Sec. 422.101(f)(3)(iv)(A) with these revisions
makes it clear that when CMS requires an off-cycle submission, such as
when CMS identifies an issue during an audit, the MA organization
offering the C-SNP, D-SNP or I-SNP must submit off-cycle revision to
NCQA for review and approval of the necessary changes to the MOC.
We are finalizing paragraph (f)(3)(iv)(B) to specify when D-SNPs
and I-SNPs are permitted to use an off-cycle submission to submit
updates and corrections to their MOCs to NCQA for review and approval.
As we proposed, updates and revisions or corrections of this type are
permitted only for certain reasons. As finalized, Sec.
422.101(f)(3)(iv)(B) provides that D-SNPs and I-SNPs must submit
updates and corrections to their NCQA-approved MOC between June 1st and
November 30th of each calendar year if the I-SNP or D-SNP wishes to
make any of the listed revisions. The list of revisions, at paragraphs
(f)(3)(iv)(B)(1) through (5)
[[Page 30659]]
tracks the permitted changes we proposed to codify in paragraphs
(f)(3)(iv)(B)(1) through (5). (87 FR 79713) We believe that the
revisions we are finalizing in the regulation text are not substantive
changes in policy compared to what CMS proposed in the December 2022
proposed rule but are a reorganization to clarify when requests to
change the MOC are submitted. The final rule clarifies that the period
between June 1st through November 30th of each calendar year is the
time period for a D-SNP or I-SNP that seeks to make changes to its MOC
off-cycle, to submit their updates and/or changes to the previously
approved MOC. However, when CMS directs a C-SNP, D-SNP or I-SNP to make
changes to their MOC in order to comply with applicable law, it is CMS
who will direct the timing of the submission (and the June to November
time period mentioned above might not necessarily apply). The changes
described in paragraphs (f)(3)(iv)(B)(1) through (5) are generally
voluntary changes that the D-SNP or I-SNP is making to its SNP
operations and administration that subsequently require changes to the
MOC. In these instances, D-SNP or I-SNP must seek an off-cycle revision
to its MOC to implement the changes. In these cases, the changes in
operation and administration are independent from any CMS direction to
ensure compliance with applicable law.
A D-SNP or I-SNP that decides to make significant revisions to
their existing approved MOC must submit a summary of their off-cycle
MOC changes, along with the red-lined MOC, in the Model of Care module
in HPMS for NCQA review and approval, before implementing and using the
changes to the MOC. As discussed in the preamble to the proposed rule,
significant revisions within the scope of Sec. 422.101(f)(3)(iv)(B)
are those that have a significant impact on care management approaches,
enrollee benefits, and/or SNP operations. The intent of the rule under
Sec. 422.101(f)(3)(iv)(B) is to codify and clearly delineate events
that would be considered by CMS as significant revisions. We believe
that this language is sufficient to direct plans; however, CMS will
monitor the initial off-cycle period to review whether SNPs continue to
submit changes that fail to meet the intent of the requirement and will
provide additional examples of what is considered a significant
revision within the scope of this rule, as necessary.
The proposed rule (87 FR 79575) provided examples of the type of
non-significant changes that an MA organization may make without using
the off-cycle submission and approval process. Those changes as
outlined in the proposed rule included, but were not limited to,
revisions to the MOC to address a change in ownership of the MA
organization, changes in administrative staff and changes to
demographic data. When an MA organization that sponsors a SNP has a
change that is not an immaterial change as noted here and the MA
organization is unsure if the change is sufficiently similar in type
and scope to the changes as noted above, the MA organization should
seek guidance from CMS. The list of changes that do require an off-
cycle submission of updates and corrections to the approved MOC in
Sec. 422.101(f)(3)(iv)(B) is sufficiently detailed to be applied by MA
organizations and CMS in the future. It is not acceptable, and it is
inconsistent with this final rule (specifically Sec.
422.101(f)(3)(iv)(D)) for an MA organization to make a change within
the scope of Sec. 422.101(f)(3)(iv)(B) without review and approval
from NCQA. We recommend that an MA organization that is unsure if a
change it is contemplating to its approved MOC needs to be submitted
for review and approval, the MA organization should contact CMS for
guidance. In such cases, CMS will apply the regulation as finalized and
instruct the MA organization whether the change is within the scope of
Sec. 422.101(f)(3)(iv) as finalized.
Lastly, although some comments expressed concern about alignment of
audit standards with off-cycle review and approval of MOCs, we believe
that the current audit process has consistently reviewed and treated
approved off-cycle changes to MOCs (that is, off-cycle changes marked
as approved or acceptable by NCQA) as acceptable. CMS will review and
update our SNP audit protocols as warranted and CMS will consider
feedback from stakeholders when determining if additional revisions are
needed to ensure that CMS audits hold SNPs to their approved MOCs,
including any approved changes to the MOCs.
Comment: A commenter did not support the proposal to include
``changes to quality metrics used to measure performance'' on the list
of reasons requiring off-cycle submission and approval. The commenter
noted that SNPs are required to conduct an annual quality improvement
program that measures the effectiveness of its MOC. The commenter also
stated that the goal of performance improvement and quality measurement
is to improve the SNP's ability to deliver health services, improve
member health outcomes, and increase organizational effectiveness. They
noted that this includes examining current processes, including quality
measures that should be modified. The commenter further noted that it
may be necessary to change an entire quality measure to ensure that
performance measures align with program goals and improve health
outcomes. The commenter expressed that it would be an administrative
burden to submit an off-cycle MOC for CMS approval of a change in
quality metric(s) and that this submission requirement may have the
effect of discouraging SNPs from making needed changes to their MOC,
potentially impacting operational efficiencies and member health
outcomes.
Response: We appreciate the commenter's suggestion, but we are not
changing our policy on this topic. We believe it is important to review
any changes to MOC quality metrics before such changes are implemented
to ensure the operational integrity of the MOC by plans and so that
SNPs are employing appropriate measurements so that NCQA can gauge the
effectiveness overall of the MOCs implementation. As proposed and
finalized here, the rule codified at Sec. 422.101(f)(3)(iv)(B)(3)
(that SNPs must submit off-cycle submissions based on changes to
quality metrics used to measure performance) is from our long-standing
off-cycle submission guidelines, and thus, a continuation of a policy
that we believe SNPs are currently meeting. In addition, we note that
the off-cycle revisions are for MOCs that SNPs have begun implementing
after review and approval by NCQA; changing the quality metrics after
performance has begun should also be reviewed to ensure that the
changes in metrics are not designed to mask performance deficiencies or
failure to implement the MOC as approved.
Comment: A commenter suggested that CMS increase the review
capacity at NCQA to handle MOC reviews, especially off-cycle reviews in
a timely, consistent, and effective way. They believe there should be a
standard response timeline with standard, consistent, and timely
communication. The commenter noted that a review should take no more
than 30 days and the plans should be able to review the findings
through an online portal.
Response: We do not believe that adopting a deadline for NCQA
review of off-cycle MOC revisions would positively serve the MA program
or lead to better or more efficient reviews of off-cycle submissions.
NCQA already provides regular and timely review of off-cycle MOCs
throughout the established review window. However,
[[Page 30660]]
we increasingly find that MA organizations that have many SNPs make a
bulk submission of multiple changes to multiple MOCs (that is, making
the same changes to multiple MOCs) at the end of the off-cycle window.
When this occurs, it can cause some delay in NCQA's ability to finalize
review of off-cycle submissions for all SNPs. We believe some SNPs
struggled to find CMS' sub-regulatory guidance on significant versus
non-significant changes and that this final rule will provide
additional clarity in identifying when an off-cycle revision to an
approved MOC is necessary. However, MA organizations that have a
substantial number of off-cycle MOC submissions can avoid delays by
submitting their MOCs at the beginning of the submission window
timeframe, which is typically when fewer submissions have been received
for review by NCQA. We also encourage, as a best practice, that MA
organizations reach out to the Part C Policy mailbox prior to
submission to provide notification to CMS and NCQA that the MA
organization plans to submit a large bulk submission, as advance notice
may assist NCQA to prepare and complete a more efficient review.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing new paragraph (f)(3)(iv) (for requirements on off-cycle
changes to an approved MOC) largely as that regulation text was
proposed but with modifications compared to our proposed regulation
text. The modifications, listed here, are primarily to clarify and
improve paragraph (f)(3)(iv):
In paragraph (f)(3)(iv), we are adding the text ``organization
sponsoring'' between the proposed language ``An MA'' and ``a SNP that.
. .'' for additional clarity. As finalized, the introductory language
in paragraph (f)(3)(iv) reads: ``An MA organization sponsoring a SNP
that seeks to revise the MOC before the end of the MOC approval period
may submit changes to the MOC as off-cycle MOC submissions for review
by NCQA as follows:'' This revision is clearer that the MA organization
that offers the SNP is the legal entity responsible for the
submissions.
In paragraphs (f)(3)(iv)(A) and (f)(3)(iv)(B), we are finalizing
the paragraphs with revisions (described in more detail in a response
to public comments earlier in this section) to clarify when off-cycle
changes to an MOC must be submitted because CMS has directed the change
to comply with applicable law and when off-cycle changes to an MOC must
be submitted because of changes in how a D-SNP or I-SNP is administered
or operates. As we noted earlier in this preamble, these changes are
for additional clarity in the regulation.
We are also finalizing paragraph (f)(3)(iv)(B)(1) with
organizational changes to make it easier to read and clearer that the
standard ``substantial change'' applies to all of the listed areas. The
areas under paragraph (f)(3)(iv)(B)(1) are now labeled as (i) the
health risk assessment process; (ii) revising processes to develop and
update the Individualized Care Plan (ICP); (iii) the integrated care
team process; (iv) risk stratification methodology; and (v) care
transition protocols. The revisions are more consistent with the intent
of the proposal.
In paragraph (f)(3)(iv)(C), we have corrected the verb tense from
``will only review'' to ``only reviews.''
In paragraph (f)(3)(iv)(D), we are finalizing several changes to
increase clarity in the regulation text but have not made substantive
changes in policy. As finalized, paragraph (f)(3)(iv)(D)--in four
sentences--clearly states that changes may not be made until NCQA has
reviewed and approved the off-cycle changes and addresses how NCQA will
review the changes. The first sentence states that SNPs may not make
changes until NCQA has reviewed and approved the off-cycle MOC changes.
A new second sentence states that NCQA does not rescore the MOC during
the off-cycle process, but changes are reviewed and determined by NCQA
to be either ``Acceptable'' or ``Non-acceptable.'' Two additional
sentences follow to explain that ``Acceptable'' means that the changes
have been approved by NCQA and the MOC has been updated; ``Non-
acceptable'' means the changes have been rejected by NCQA and the MOC
has not been changed; and that if NCQA determines that off-cycle
changes are unacceptable, the SNP must continue to implement the MOC as
originally approved. These revisions are consistent with the proposal
and the current process.
In paragraph (f)(3)(iv)(F), we are finalizing the provision to use
``permitted'' rather than ``eligible'' as it better reflects our
current policy so that it now reads: ``C-SNPs are only permitted to
submit an off-cycle MOC submission when CMS requires an off-cycle
submission to ensure compliance with applicable law.''
Finally, we are finalizing paragraph (f)(3)(iv)(G) to clarify the
single opportunity for an SNP to submit a corrected off-cycle revision
to the MOC if the initial off-cycle submission is not approved. The
revisions generally use language that is consistent with Sec.
422.101(f)(3)(iii)(C), which better signals that this part of the off-
cycle revision process is similar to the cure period provided when the
MOC submission is determined to have deficiencies. As finalized,
paragraph (f)(3)(iv)(G) reads: ``When a deficiency is identified in the
off-cycle MOC revision(s) submitted by a SNP, the SNP has one
opportunity to submit a corrected off-cycle revision between June 1st
and November 30th of each calendar year.''
Although there were inadvertent differences in how the preamble of
the proposed rule explained the proposed regulation text, we are
finalizing the substance of our proposed policy for how off-cycle
revisions to the MOCs of I-SNPs and D-SNPs could be requested and would
be subject to review and approval before changes could be implemented.
C. Amending the Definition of Severe or Disabling Chronic Condition;
Defining C-SNPs and Plan Types; and Codifying List of Chronic
Conditions (Sec. Sec. 422.2, 422.4(a)(1)(iv), and 422.52(g))
A specialized MA plan for special needs individuals, generally
known as a special needs plan or a SNP, is an MA plan specifically
designed to provide targeted care and limits enrollment to special
needs individuals. CMS defines Specialized MA Plans for Special Needs
Individuals at Sec. 422.2 as an MA coordinated care plan (CCP) that
exclusively enrolls special needs individuals as set forth in Sec.
422.4(a)(1)(iv) and that provides Part D benefits under part 423 to all
enrollees; and which has been designated by CMS as meeting the
requirements of an MA SNP as determined on a case-by-case basis using
criteria that include the appropriateness of the target population, the
existence of clinical programs or special expertise to serve the target
population, and whether the proposal discriminates against sicker
members of the target population. As provided in section 1859(b)(6) of
the Act and the definition in Sec. 422.2, a special needs individual
could be any one of the following: an institutionalized or
institutionalized-equivalent individual; a dual eligible individual; or
an individual with a severe or disabling chronic condition and who
would benefit from enrollment in a specialized MA plan. Chronic
Condition Special Needs Plans (C-SNPs) are SNPs that restrict
enrollment to special needs individuals with specific severe or
[[Page 30661]]
disabling chronic conditions, defined at Sec. 422.2.
The Bipartisan Budget Act of 2018 (BBA of 2018) (Pub. L. 115-123)
amended section 1859 of the Act to revise the definition of ``severe or
disabling chronic condition'' for purposes of identifying the special
needs individuals eligible to enroll in C-SNPs. The amendments had an
effective date of January 1, 2022, and included the following related
to the revision of this definition: a directing the Secretary to
convene a Panel of clinical advisors to establish and update a list of
severe or disabling chronic conditions that meet certain criteria;
mandating the inclusion of several current C-SNP chronic conditions
onto the list; and directing the Panel take into account the
availability of benefits in the Medicare Advantage Value-Based
Insurance Design model.
We proposed to codify the BBA of 2018's amendment to the definition
of severe or disabling chronic condition; to codify the definition of
C-SNP; to implement the BBA of 2018 by updating and codifying the
recommended list of chronic conditions recommended by a Panel of
clinical advisors as specified by the BBA; and to codify existing sub-
regulatory guidance permitting the use of certain chronic condition
combinations for the purposes of offering single standalone C-SNP plan
benefit packages (PBPs).
A. Amending the Definition of Severe or Disabling Chronic Condition
Currently, Sec. 422.2 defines ``severe or disabling chronic
condition'' as meaning, for the purpose of defining a special needs
individual, an MA eligible individual who has one or more co-morbid and
medically complex chronic conditions that are substantially disabling
or life-threatening, has a high risk of hospitalization or other
significant adverse health outcomes, and requires specialized delivery
systems across domains of care. As summarized in more detail in the
December 2022 proposed rule this definition was adopted to track
amendments to section 1859(b)(6)(B)(iii) of the Act made by section
164(e) of the Medicare Improvement for Patients and Providers Act of
2008 (MIPPA) to define special needs individuals eligible for C-SNPs
beginning January 1, 2010. (87 FR 79560) Section 164(e) of MIPPA also
directed the Secretary to convene a Panel of clinical advisors to
determine the chronic conditions used to identify special needs
individuals for C-SNP eligibility. CMS subsequently convened the Panel
in October 2008 and implemented the fifteen SNP-specific chronic
conditions recommended by the Panel that met the definition of severe
or disabling and needed specialized care management. The list was later
incorporated into Chapter 16-B of the Medicare Managed Care Manual
(MMCM). Starting in 2010, CMS adopted sub-regulatory guidance whereby a
C-SNP could only offer a plan benefit package (PBP) that covered one of
the fifteen SNP-specific chronic conditions identified in the guidance.
Several of the chronic condition categories include a list of sub-
categorical conditions or disorders that provide further information
regarding the types of diseases that qualify under the chronic
condition categories. Examples of conditions with sub-categorical
disorders include autoimmune disorders, cardiovascular disorders,
severe hematologic disorders, chronic lung disorders, chronic disabling
mental health conditions, and chronic disabling neurologic disorders.
Currently, C-SNPs that target several of the severe or disabling
chronic conditions listed in our guidance must enroll an eligible
beneficiary who has one or more of the targeted conditions, including
the sub-categorical disorders; the C-SNP is not permitted to exclude an
eligible beneficiary having the covered condition or a covered sub-
categorical condition. For example, a C-SNP that enrolls special needs
individuals with a chronic and disabling mental health condition must
enroll special needs individuals with one or more of the following sub-
categorical conditions: bipolar disorders, major depressive disorder,
paranoid disorder, schizophrenia, or schizoaffective disorder.
Currently, C-SNPs may only cover one of the fifteen qualifying chronic
conditions in a single PBP, unless the C-SNP receives approval from CMS
to focus on a group of severe or disabling chronic conditions.
Generally, CMS believes that structuring a C-SNP to target multiple
commonly co-morbid conditions that are not clinically linked in their
treatment would result in a general market product rather than an MA
plan that is sufficiently tailored for special needs individuals.
Therefore, CMS will approve targeting of multiple severe or disabling
chronic conditions by a C-SNP only for: (1) one of the CMS-developed
group of commonly co-morbid and clinically linked conditions listed in
section 20.1.3.1 of Chapter 16-B where the special needs individuals
may have one or more of the conditions in the grouping or (2) a MA
organization-customized group of multiple co-morbid and clinically
linked conditions where the special needs individuals served by the C-
SNP have all of the specified conditions.
In 2018, the BBA of 2018 amended section 1859(b)(6)(B)(iii) of the
Act by adding a new definition of special needs individuals to apply
beginning January 1, 2022. Under the new definition of special needs
individual, an eligible individual that the Secretary may determine
would benefit from enrollment in such a specialized MA plan for
individuals with severe or disabling chronic conditions must, on or
after January 1, 2022, ``have one or more comorbid and medically
complex chronic conditions that is life threatening or significantly
limits overall health or function, have a high risk of hospitalization
or other adverse health outcomes, and require intensive care
coordination and that is listed under [section 1859(f)(9)(A) of the
Act].'' Section 1859(f)(9) of the Act, as added by the BBA of 2018,
instructs the Secretary to convene the Panel of clinical advisors not
later than December 31, 2020, and every 5 years thereafter, to
establish and update a list of conditions that meet each of the
following criteria:
Conditions that meet the definition of a severe or
disabling chronic condition under section 1859(b)(6)(B)(iii)(II) of the
Act on or after January 1, 2022; and
Conditions that require prescription drugs, providers, and
models of care that are unique to the special needs individuals with
several or disabling chronic conditions as defined in subsection
(b)(6)(B)(iii)(II) of section 1859 of the Act as of that date and:
++ As a result of access to, and enrollment in, such a specialized
MA plan for special needs individuals, individuals with such conditions
would have a reasonable expectation of slowing or halting the
progression of the disease, improving health outcomes and decreasing
overall costs for individuals diagnosed with such condition compared to
available options of care other than through such a specialized MA plan
for special needs individuals; or
++ Have a low prevalence in the general population of beneficiaries
under this title or a disproportionally high per-beneficiary cost under
title XVIII of the Act.
In addition, sections 1859(f)(9)(B) and (C) of the Act require
that:
The list of severe or disabling chronic conditions used
for C-SNPs include: HIV/AIDS, end stage renal disease (ESRD), and
chronic and disabling mental illness.
[[Page 30662]]
The Panel consider the availability of varied benefits,
cost-sharing, and supplemental benefits under the Medicare Advantage
Value-Based Insurance Design (VBID) model being tested by the Center
for Medicare and Medicaid Innovation (CMMI).
In meeting its obligation under section 1859(f)(9)(A) of the Act to
convene a Panel of clinical advisors not later than December 31, 2020,
to establish the list of conditions that meet the statutory criteria,
CMS was committed to engaging the public--industry, advocates,
beneficiaries, and medical professional societies--in the discussion
about appropriate SNP-specific chronic conditions. Panel members were
tasked with assessing the statutory criteria for reviewing the
appropriateness of potential conditions as required by section
1859(f)(9)(A) of the Act.
On August 8, 2019, CMS announced a Request for Information (RFI)
related to the review of C-SNP specific chronic conditions as mandated
by the BBA of 2018 to solicit comments from the public to assist the
Panel of advisors convened by CMS under section 1859(f)(9)(A) of the
Act. The 2019 SNP Chronic Condition Panel met for three sessions
between September 9 and September 23, 2019. CMS provided panelists with
a summary of comments received in response to the RFI. The panelists
reviewed and discussed the written public comments from 14 stakeholders
representing the industry, advocacy groups, medical societies, and
beneficiaries. The panelists also examined the chronic conditions
already covered by existing C-SNPs. They employed their collective
national and international experience with chronic condition research
and clinical practice to weigh inclusion of chronic conditions on the
list. As in 2008, the panelists also considered the condition's
prevalence in the Medicare population, a factor that would potentially
affect the capacity of an MA organization to attract eligible enrollees
and be viable in a given service area as well as being identified in
section 1959(f)(9)(A)(ii)(II) of the Act as a criterion to be
considered. The panelists were sensitive to the reality that C-SNPs
require sufficient disease prevalence and access to a specialized
provider network within a marketable service area to manage risk under
a capitated payment system (even with risk-adjustment of those
capitated payments), and effectively and efficiently serve the targeted
special needs beneficiaries. The panelists also reflected on the need
for beneficiaries, health care practitioners, and the health care
industry to recognize the SNP-specific chronic conditions and consider
them appropriate for a specialized service delivery system in order to
stimulate participation. While the Panel did consider a condition's
prevalence in the Medicare population as required by section
1859(f)(9)(A) of the Act, it was not charged with and did not make any
additional judgments based on business considerations (that is, the
potential profitability of the selected chronic conditions) as CMS
expects interested MA organizations to reach their own conclusions
about product offerings and markets in which they wish to operate.
Upon review and deliberation, the Panel identified the following 22
chronic conditions as meeting the statutory criteria:
1. Chronic alcohol use disorder and other substance use disorders;
2. Autoimmune disorders:
Polyarteritis nodosa,
Polymyalgia rheumatica,
Polymyositis,
Dermatomyositis
Rheumatoid arthritis,
Systemic lupus erythematosus,
Psoriatic arthritis, and
Scleroderma;
3. Cancer;
4. Cardiovascular disorders:
Cardiac arrhythmias,
Coronary artery disease,
Peripheral vascular disease, and
Valvular heart disease;
5. Chronic heart failure;
6. Dementia;
7. Diabetes mellitus;
8. Overweight, Obesity, and Metabolic Syndrome;
9. Chronic gastrointestinal disease:
Chronic liver disease,
Non-alcoholic fatty liver disease (NAFLD),
Hepatitis B,
Hepatitis C,
Pancreatitis,
Irritable bowel syndrome, and
Inflammatory bowel disease;
10. Chronic kidney disease (CKD):
CKD requiring dialysis/End-stage renal disease (ESRD), and
CKD not requiring dialysis;
11. Severe hematologic disorders:
Aplastic anemia,
Hemophilia,
Immune thrombocytopenic purpura,
Myelodysplastic syndrome,
Sickle-cell disease (excluding sickle-cell trait), and
Chronic venous thromboembolic disorder;
12. HIV/AIDS;
13. Chronic lung disorders:
Asthma,
Chronic bronchitis,
Cystic Fibrosis,
Emphysema,
Pulmonary fibrosis,
Pulmonary hypertension, and
Chronic Obstructive Pulmonary Disease (COPD);
14. Chronic and disabling mental health conditions:
Bipolar disorders,
Major depressive disorders,
Paranoid disorder,
Schizophrenia,
Schizoaffective disorder,
Post-traumatic stress disorder (PTSD),
Eating Disorders, and
Anxiety disorders;
15. Neurologic disorders:
Amyotrophic lateral sclerosis (ALS),
Epilepsy,
Extensive paralysis (that is, hemiplegia, quadriplegia,
paraplegia, monoplegia),
Huntington's disease,
Multiple sclerosis,
Parkinson's disease,
Polyneuropathy,
Fibromyalgia,
Chronic fatigue syndrome,
Spinal cord injuries,
Spinal stenosis, and
Stroke-related neurologic deficit;
16. Stroke;
17. Post-organ transplantation care;
18. Immunodeficiency and Immunosuppressive disorders;
19. Conditions that may cause cognitive impairment:
Alzheimer's disease,
Intellectual and developmental disabilities,
Traumatic brain injuries,
Disabling mental illness associated with cognitive
impairment, and
Mild cognitive impairment;
20. Conditions that may cause similar functional challenges and
require similar services:
Spinal cord injuries,
Paralysis,
Limb loss,
Stroke, and
Arthritis;
21. Chronic conditions that impair vision, hearing (deafness),
taste, touch, and smell;
22. Conditions that require continued therapy services in order for
individuals to maintain or retain functioning.
We proposed to codify the list of chronic conditions created by the
Panel as part of the definition of severe or disabling chronic
condition at Sec. 422.2. The proposal took into account the changes
recommended by the Panel to the list of chronic conditions that are
currently used by CMS to approve C-SNPs. These changes include:
[[Page 30663]]
Removing the term ``limited'' in listing the severe or
disabling chronic conditions that make an individual eligible to enroll
in a C-SNP. The Panel chose this revision so that unlisted chronic
conditions will not disqualify the enrollee from plan eligibility even
if the unlisted or another listed condition is not the targeted
condition that qualifies the beneficiary for a specific C-SNP. In other
words, the beneficiary could have other conditions beyond the index
condition (which is required to be present) and still be permitted to
enroll in a specific C-SNP. For example, a beneficiary with heart
failure could also have psoriasis or epilepsy and not be excluded from
the Chronic Heart Failure C-SNP. Because our proposal would not exclude
a beneficiary from being a special needs individual or eligibility for
an applicable C-SNP if the beneficiary has conditions in addition to a
severe or disabling chronic condition, we did not propose to use the
word ``including'' in the proposed definition. We proposed to codify
the list of specific conditions (and subconditions) that have been
identified as meeting the statutory criteria and avoid ambiguity
regarding related but unlisted conditions;
Renaming ``Chronic alcohol and other drug dependence'' to
``Chronic alcohol use disorder and other substance use disorders;''
Adding dermatomyositis, psoriatic arthritis, and
scleroderma to the Autoimmune disorders chronic condition category;
The Panel recommended changing title of ``Cancer,
excluding pre-cancer conditions or in-situ status'' to ``Cancer;''
however; they did not recommend altering the current limitations to the
chronic condition category, only a clerical change to the title;
Adding valvular heart disease to the Cardiovascular
disorders chronic condition category;
Adding new chronic condition category, ``Overweight,
Obesity, and Metabolic Syndrome;''
Adding new chronic condition category, ``Chronic
gastrointestinal disease'' with the following conditions: chronic liver
disease, non-alcoholic fatty liver disease (NAFLD), hepatitis B,
hepatitis C, pancreatitis, irritable bowel syndrome, and inflammatory
bowel disease;
Renaming the ``End Stage Renal Disease (ESRD) requiring
dialysis'' condition category to ``Chronic kidney disease (CKD)'' with
the following conditions: CKD requiring dialysis/end-stage renal
disease (ESRD), and CKD not requiring dialysis;
Adding Cystic Fibrosis and Chronic Obstructive Pulmonary
Disease (COPD) to the Chronic lung disorders chronic condition
category;
Adding post-traumatic stress disorder (PTSD), eating
disorders, and anxiety disorders to the Chronic and disabling mental
health conditions category;
Adding fibromyalgia, chronic fatigue syndrome, and spinal
cord injuries to the Neurologic disorders conditions category;
Adding post-organ transplantation care and
immunodeficiency and immunosuppressive disorders as new chronic
condition categories;
Creating new chronic condition category ``Conditions that
may cause cognitive impairment,'' including the following sub-
conditions: Alzheimer's disease, intellectual disabilities,
developmental disabilities, traumatic brain injuries, disabling mental
illness associated with cognitive impairment, and mild cognitive
impairment;
Creating new chronic condition category ``Conditions that
may cause similar functional challenges and require similar services,''
including the following sub-conditions: spinal cord injuries,
paralysis, limb loss, stroke, arthritis, and chronic conditions that
impair vision, hearing (deafness), taste, touch, and smell; and
Creating new chronic condition category ``Conditions that
require continued therapy services in order for individuals to maintain
or retain functioning.''
As demonstrated in the last three bullets, the Panel recommended
the creation of several new chronic condition categories that differ
from how the current list of severe or disabling chronic conditions
uses categories as a single condition or set of related diseases. By
including these new categories, we proposed that C-SNPs would be
permitted to create benefit packages and care coordination services to
address the needs of beneficiaries who share the same functional needs
even if their specific disease or chronic condition may differ. For
example, using the condition categories ``Conditions associated with
cognitive impairment;'' ``Conditions associated with similar functional
challenges and require similar services;'' ``Chronic conditions that
impair vision, hearing (deafness), taste, touch, and smell;'' and
``Conditions that require continued therapy services in order for
individuals to maintain or retain functioning;'' MA organizations would
have the opportunity to propose C-SNPs that seek to ameliorate specific
disease outcomes such as impaired vision without having to target one
specific chronic condition. In another example, MA organizations would
be permitted to create specific care coordination services and benefit
packages to address the functional challenges facing beneficiaries with
spinal cord injuries and those suffering paralysis from stroke. The
challenge for SNPs would be to address the needs not of enrollees who
share the same disease or chronic condition, but those diagnosed with
different diseases and chronic conditions that share similar impacts on
health and functionality.
The proposed categories as finalized will apply the same statutory
and regulatory considerations per the parameters of a severe or
disabling chronic condition and as noted in Title XVIII of the Act and
42 CFR part 422. In finalizing the three categories that are focused on
impacts on health and functionality rather than underlying disease or
condition, we are not eliminating the need for the effect on the
enrollee to meet the statutory criteria in section 1859(f)(9) of the
Act. As we noted in the December 2022 proposed rule, we believe this
new approach to creating a C-SNP is in line with types of services and
benefits required of current C-SNPs in operation, and beneficiaries
facing similar challenges would benefit from coordination of care among
multiple providers for services found in a variety of settings
appropriate for the enrollee's health challenges.
We received the following comments, and our responses follow:
Comment: Many commenters expressed general support for the list of
chronic conditions; however, individual commenters provided specific
support for certain additions to the list, such as: ``Dementia;'' the
category ``Conditions that may cause cognitive impairment;'' ``chronic
alcohol use disorder and other substance use disorders;'' chronic
kidney disease (CKD); anxiety associated with chronic obstructive
pulmonary disease (COPD); substance use disorders (SUD); chronic and
disabling mental health conditions;; and the category ``Overweight,
Obesity, and Metabolic Syndrome.'' There was also support for
broadening the current set of chronic condition categories to a more
holistic definition that accounts for the overall health and functional
ability of an individual, including functional and cognitive needs.
Commenters believe allowing enrollees with these conditions to enter
into specialized C-SNPs will provide access to increased care
coordination and improve health outcomes. Specifically, commenters who
were supportive of adding CKD
[[Page 30664]]
noted that access to a specialized network of providers may prevent or
slow disease progression toward ESRD.
Response: We appreciate the commenters support for these changes.
Comment: In responding to our solicitation of comment regarding the
extent to which MA organizations would need more guidance with
implementation of the proposed functional chronic condition categories,
a commenter suggested that CMS take the approach of reviewing plan
proposals for new C-SNPs organized around those functional categories
and based on that experience, CMS should determine whether additional
guidance is needed.
Response: We believe there is a great deal of merit to this
suggestion. As CMS implements and operationalizes the new chronic
condition list, we will assess whether additional guidance or
information is needed to ensure compliance with the regulations
(including those we are finalizing here) and the statute. Consistent
with our current MA application procedures, all SNPs are currently
required to submit their model of care (MOC) to CMS for NCQA evaluation
and approval as per CMS guidance under 42 CFR 422.4(a)(1)(iv). CMS will
consider the SNP's outline of care coordination activities as part of
the MOC when determining whether additional guidance is necessary for
submitting SNP applications under the new function-based C-SNPs.
Comment: A commenter suggested that CMS permit C-SNPs to offer
plans that address the needs of beneficiaries, even if their specific
disease or chronic conditions are different because it would an
important step forward for integrated long-term care. The commenter
notes that it is the needs of an individual, the activities of daily
living (ADLs) and instrumental activities of daily living (IADLs) that
should determine entry into a C-SNP, not the specific diagnosis.
Response: We appreciate the comment. It is unclear to us the
specific needs the commenter believes should be addressed by defining
the term severe or disabling chronic condition for purposes of
establishing MA SNPs to address such conditions. As we noted in the
December 2022 proposed rule, and in this final rule, the BBA of 2018
added requirements establishing chronic conditions. Section
1859(f)(9)(A) of the Act directs the Secretary to convene a Panel of
clinical advisors every 5 years to review and revise a list of chronic
conditions that meet two sets of criteria: the amended definition of a
severe or disabling chronic condition in subsection (b)(6)(B)(iii) of
the Act; and conditions that require prescription drugs, providers, and
models of care that are unique to the specific population of enrollees
in a specialized MA plan for special needs individuals and either: (1)
as a result of enrollment in a C-SNP, the enrollee with the condition
would have a reasonable expectation of meeting a certain standard
regarding health status, outcomes and costs compared to other coverage
options; or (2) the condition has a low prevalence in the general
population of Medicare beneficiaries or a disproportionally high per-
beneficiary cost.
While we agree that the use ADLs and IADLs can assist health care
providers and payers determine the health needs of patients, the Panel
did not specifically create a chronic condition category around these
measurements. As noted earlier in the preamble, the 2019 chronic
condition Panel was limited to using these criteria when determining
the content of the chronic conditions list. The Panel did recommend
some function-based additions to the list that may be associated with
conditions leading to deterioration of abilities, such as chronic
condition (20) ``Conditions with functional challenges and require
similar services including the following: spinal cord injuries,
paralysis, limb loss, stroke, and arthritis.'' Because of these
requirements, CMS does not have the authority to establish C-SNPs as
suggested by the commenter at this time.
Comment: A commenter noted that Table D-A 1 on page 79566 of the
December 2022 proposed rule showed that only one C-SNP focused on
substance use disorders between 2007-2022. The commenter recommends CMS
work with stakeholders to identify recommendations and guidelines that
would make it easier for other MA organizations to redevelop and
deliver such plans.
Response: We thank the commenter for their perspective. We
acknowledge that few MA organizations have sponsored C-SNPs focusing on
substance use disorders since the beginning of the program. CMS will
review this request and determine whether we can employ informational
outreach efforts or forums to encourage the use of underutilized
chronic condition categories by organizations sponsoring C-SNPs. We
encourage the public to provide additional information regarding the
difficulties of creating certain condition-specific C-SNPs.
Comment: A commenter supported the adoption of the revised
definition of ``Severe or Disabling Chronic'' Conditions and adding a
new chronic condition category for ``Overweight, Obesity, and Metabolic
Syndrome.'' The commenter urged CMS to use its authority to recognize
that FDA-approved anti-obesity medications (AOMs) as clinically
recommended treatments for a chronic disease--obesity, and may
therefore be covered under Part D.
Response: We thank the commenter. However, the comment regarding
AOMs and Part D coverage is out of scope for this rulemaking.
Comment: A commenter suggested that our proposed amendment to the
definition of severe or disabling chronic condition reinforces the
linkage between C-SNP and special supplemental benefits for the
chronically ill (SSBCI) eligibility in that the same definition also is
used for SSBCI eligibility determination in the BBA of 2018. The
commenter stated that this may encourage more plans to use functional
and cognitive needs to target SSBCI eligibility.
Response: We appreciate the comment, but CMS believes that the Act
distinguishes the targeted beneficiaries of these benefits and programs
in different ways that potentially limit the chronic conditions that
may be employed between SSBCI and C-SNPs.
As defined in section 1852(a)(3)(D)(iii) of the Act, for the
purposes of SSBCI, a chronically ill enrollee means an enrollee in an
MA plan that the Secretary determines:
has one or more comorbid and medically complex chronic
conditions that is life threatening or significantly limits the overall
health or function of the enrollee;
has a high risk of hospitalization or other adverse health
outcomes; and
requires intensive care coordination.
CMS added this definition to our regulations at Sec.
422.102(f)(1)(i)(A).
As we noted in the preamble to this final rule, the BBA of 2018
amended section 1859(b)(6)(B)(iii)(II) of the Act by adding a new
definition of special needs individuals means an MA eligible individual
who meets such requirements as the Secretary may determine would
benefit from enrollment in such a specialized MA plan described in
subparagraph (A) for individuals with severe or disabling chronic
conditions who on or after January 1, 2022, have one or more comorbid
and medically complex chronic conditions that is life threatening or
significantly limits overall health or function, have a high risk of
hospitalization or other adverse
[[Page 30665]]
health outcomes, and require intensive care coordination and that is
listed under 1859(f)(9)(A) of the Act.
The definition of chronically ill enrollee for the purposes of
SSBCI is not specifically tied to the set of chronic conditions
established by the Panel of clinical advisors under section
1859(f)(9)(A) as is the case for the definition of special needs
individuals with ``severe or disabling chronic conditions'' that must
be used in determining eligibility for C-SNPs. In addition, the
definition of ``chronically ill enrollee'' in section 1852(a)(3)(D) of
the Act does not include an assessment whether the Secretary determines
the individual would benefit from enrollment in a specialized MA plan.
CMS did not propose to specifically align eligibility for SSBCI with
eligibility for C-SNPs and is not finalizing such a limitation for
SSBCI in this rule. Rather, CMS proposed and finalized in the 2020
Final Rule (85 FR 33796) that for the purposes of SSBCI, the chronic
conditions established by the Panel may be used to meet the statutory
criterion of having one or more comorbid and medically complex chronic
conditions that is life threatening or significantly limits the overall
health or function of the enrollee as required at
422.102(f)(1)(i)(A)(1). In the case of determining eligibility for
SSBCI, MA plans are permitted to use other conditions not on the
updated chronic condition list provided the condition is life
threatening or significantly limits the overall health or function of
the enrollee.
Comment: A commenter noted individuals that would be eligible for
enrollment in a functional status-focused C-SNP would likely require
robust functional, cognitive, and social determinants of health (SDOH)
supports in addition to medical and behavioral health care services.
The commenter expressed concerned that if enrollees in a functional-
status focused C-SNP cannot access Medicaid funded LTSS, those
enrollees would not fully benefit from this new C-SNP type. The
commenter suggested that CMS work with stakeholders to identify new
opportunities to provide appropriate and necessary functional and
cognitive support services for this population, including SSBCI.
Response: We appreciate the comment and note that C-SNPs must have
specific attributes that go beyond the provision of basic Medicare
Parts A and B services and care coordination that is required of all
coordinated care plans. For example, C-SNPs must develop and implement
a comprehensive individualized plan of care through an
interdisciplinary care team in consultation with enrollee, as feasible,
identifying goals and objectives including measurable outcomes as well
as specific services and benefits to be provided to the enrollee. (See
Sec. 422.101.(f)(1)(ii)) Additionally, C-SNPs may offer supplemental
benefits, including SSBCI, to provide a more robust set of items and
services than offered under Traditional Medicare that are tailored to
the needs of the plan population. C-SNPs do not have Medicaid
integration requirements as some D-SNP plans do, as indicated in the
definitions of FIDE SNPs and HIDE SNPs at Sec. 422.2. While LTSS
services may be available for individual C-SNP enrollees who are also
enrolled in Medicaid, it is not currently a requirement that C-SNPs
contractually integrate Part A/B services with Medicaid services
offered by a state Medicaid agency or a Medicaid managed care plan that
serves the same enrollee. However, coordination of services that are
medically necessary for an enrollee and covered for that enrollee by
Medicaid is an appropriate consideration for a C-SNP in developing the
individualized plan of care for the enrollee. CMS understands that
integration of Medicaid funded LTSS can be a great benefit to dually
eligible beneficiaries, and we will continue to look at opportunities
to service this population.
Comment: MedPAC specifically provided comment that they did not
support the proposal to increase the number of chronic conditions under
the proposed definition of severe or disabling chronic condition at
Sec. 422.2, nor do they support the current number of chronic
conditions as listed in Chapter 16B of the MMCM. MedPAC noted that the
Commission has long expressed concern that the list of conditions that
C-SNPs can address was too broad and recommended that the list be
narrowed. They stated that MA plans that are not C-SNPs should be able
to manage most of the clinical conditions on the list; and that 95
percent of C-SNP enrollees are in plans that focus on just three
conditions--cardiovascular disorders, diabetes, and chronic heart
failure--that are relatively common in the Medicare population. In
addition, MA plans now have the flexibility, through the MA Value-Based
Insurance Design (VBID) demonstration and changes to the uniformity
requirement, to target reductions in cost sharing and supplemental
benefits to enrollees with specific conditions, which weakens the
rationale for offering a separate set of plans that focus on a specific
condition. Lastly, MedPAC stated that C-SNPs are only warranted for a
small number of conditions, including HIV/AIDS, ESRD, and chronic and
disabling mental illness.
Response: We note that the list of chronic conditions contained in
the proposed definition of severe or disabling chronic condition under
Sec. 422.2, like the current list of chronic conditions listed in
Chapter 16B of the Medicare Managed Care Manual, is based on the
recommendations by the expert Panel of clinical advisors. As noted in
the proposed rule, the proposed chronic condition recommendations were
reviewed by a Panel of clinical advisors in accordance with subsection
1859(f)(9)(A) of the Act, as modified by the BBA 2018, as well as all
other requirements set by statute (for the specifics of those
requirements, please see 87 FR 79452). CMS concurs with the Panel's
recommendations, and believes the Panel was in the best position to
provide an objective assessment of what constitutes a severe or
disabling chronic condition.
CMS recognizes that MA organizations have chosen to utilize a small
subsegment of chronic conditions when establishing C-SNPs since the
inception of the program. However, we believe following the Panel's
recommendations of increasing the number of severe or disabling chronic
conditions may encourage MA organizations to establish innovative
approaches to comprehensive care for those with other severe or
disabling chronic conditions.
We acknowledge that MA plans should be able to manage most of the
clinical conditions on the list without the need to sponsor a disease-
specific C-SNP. However, we reiterate the unique statutory and
regulatory SNP care management and quality improvement requirements
that are expected of C-SNPs established under section 1859(f) of the
Act, and Sec. Sec. 422.101(f) and 422.152(g). Currently, non-SNP MA
plans are not required to meet these same standards. For example, the
requirement at Sec. 422.101(f)(1) that SNPs must implement a MOC and
the requirements at Sec. 422.101(f)(1)(ii) and (iii) to develop and
implement an individualized care plan and interdisciplinary team,
respectively, are not required of all MA plans (or even all MA
coordinated care plans) and provide important additional benefits for
the beneficiaries who are eligible for and enroll in C-SNPs.
With respect to the comment that C-SNPs are only warranted for a
small number of conditions such as HIV/AIDS, ESRD, and chronic and
disabling
[[Page 30666]]
mental illness, as noted previously, our decision to increase the
number of chronic conditions on the list is based on the
recommendations by the Panel of clinical advisors as mandated by
statute. Importantly, the statute does not set numerical limits when
considering conditions that should be on the list, rather the statute
sets standards the Panel must consider when deciding the merits of any
disease in fitting the definition of a severe or disabling chronic
condition. When considering the composition of the list of chronic
conditions, CMS follows the direction the Panel provides in utilizing
the review conditions established by statute. Again, the Panel was
asked to consider changes to the new definition of special needs
individual, which is an eligible individual that the Secretary may
determine would benefit from enrollment in such a specialized MA plan
for individuals with severe or disabling chronic conditions must, on or
after January 1, 2022, ``have one or more comorbid and medically
complex chronic conditions that is life threatening or significantly
limits overall health or function, have a high risk of hospitalization
or other adverse health outcomes, and require intensive care
coordination and that is listed under [section 1859(f)(9)(A) of the
Act].'' The Panel ensured that the updated definition speaks to the
severity and medical complexity of the condition and its impact on the
care considerations that the enrollee, their SNP care coordinator, and
providers must navigate to optimize health outcomes for C-SNP
enrollees.
Finally, we proposed in the December 2022 proposed rule that this
new definition of severe or disabling chronic condition (that is, the
new chronic condition list) would be applicable for plan years that
begin on or after January 1, 2025, a delay of one additional year
beyond the proposed applicability for most of the policies in that
proposed rule. We proposed a delayed implementation of this for
operational considerations and to allow plans and CMS to put in the
place the necessary operational steps to permit transition from the
current list of chronic conditions (and C-SNPs offered using that list)
to the new definition and list of severe or disabling chronic
conditions. Part of these considerations included the timing of MOC
creation for C-SNPs that are due to CMS the February prior to upcoming
contract year in which the MOC would take effect. After considering the
gap in time between the issuance of the December 2022 proposed rule and
the finalization of these provisions in the April 2024 final rule, we
decided that it not necessary to delay the applicability of the new
definitions for C-SNP and severe or disabling chronic condition under
Sec. 422.2 and the finalized rule at Sec. 422.4 regarding groups of
chronic conditions. This means that these rules will take effect with
the effective date of this rule and be applicable beginning January 1,
2025. We acknowledge that C-SNP approval processes and MOC approval
timelines mean that C-SNPs will not be able to effectively use this new
definition to offer new C-SNPs until CY 2026 coverage. With the
implementation of the new definition, several current chronic
conditions would transition to new chronic condition categories, such
as End Stage Renal Disease (ESRD) and End Stage Liver Disease. MA
organizations seeking to establish a plan covering End Stage Liver
Disease for CY 2026 would be able to do so under the new category of
Chronic Gastrointestinal Disease. We also proposed a delay implementing
the proposed new definition of severe or disabling chronic condition in
order to give CMS time to collect data and information related to the
structuring of the proposed CKD C-SNP plan bids. Per section
1853(a)(1)(H) of the Act, the capitation rates paid to MA plans for
enrollees with ESRD are set separately from the capitation rates and
bidding benchmarks applicable for other enrollees, which may complicate
the transition to using this specific severe or disabling chronic
condition category. We will move forward with the codification of the
new definition of severe or disabling chronic conditions effective with
the April 2024 final rule; however, CKD C-SNPs (like other conditions
in the new list) will only be available starting with CY 2026. This
allows CMS and plans time to review operational and bid considerations.
At the time this final rule is issued, the MA rates for 2025 will have
been (or will shortly be) released because MA rates for the next
calendar year must be released the first Monday in April of the
calendar year. Current ESRD C-SNPs plan bids are based on a distinct
bidding methodology. CMS will provide additional bid pricing
information to MA organizations consistent with current procedures.
After review of the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the proposed definition for the term ``severe or disabling
chronic condition'' as proposed with minor modifications to the
formatting of the regulatory text to improve the clarity of the
definition.
B. Chronic Condition Special Needs Plan Definition, Scope and
Eligibility (Sec. Sec. 422.2, 422.4, and 422.52)
A C-SNP must have specific attributes and meet certain standards
that go beyond the provision of basic benefits (as defined in Sec.
422.100(c)) and care coordination required of all coordinated care
plans; such additional standards include the enrollment limitations,
model of care, and care management requirements set forth in section
1859(f) of the Act and codified in the regulations at Sec. Sec.
422.52(a) and (b), 422.101(f), and 422.152(g). While C-SNPs must
generally meet requirements that are specified to all SNPs, we believe
it is important to codify a definition of C-SNP that reflects how they
are limited to serving special needs individuals who have a severe or
disabling chronic condition, as defined in Sec. 422.2. See section
HC.1 of this final rule regarding our finalization of a revised
definition for the term severe or disabling chronic condition. Adopting
a definition of C-SNP in Sec. 422.2 would be consistent with how we
have previously adopted definitions for the term dual eligible special
needs plan (D-SNP) and specific types of D-SNPs. We believe adopting a
specific definition will help to clarify how C-SNP specific
requirements and policies are distinguishable from requirements and
policies for D-SNPs and I-SNPs as well as different from general MA
coordinated care plans. As we explained in the proposed rule, because
the proposed definition was intended to provide clarification for MA
organizations and providers regarding the meaning and scope of C-SNPs,
we believe this codification will have little to no impact on MA
enrollees nor accrue operational or other costs to MA organizations.
The December 2022 proposed rule generally reflected current policy and
practice, with a few modifications as discussed where applicable. As
part of current C-SNP sub-regulatory guidance and during the MA plan
application process, MA organizations may apply to offer a C-SNP that
targets any one of the following:
A single CMS-approved chronic condition (selected from the
list in section 20.1.2 of Chapter 16B);
A CMS-approved group of commonly co-morbid and clinically-
linked conditions (described in section 20.1.3.1 of Chapter 16B); or
An MA organization-customized group of multiple chronic
conditions
[[Page 30667]]
(described in section 20.1.3.2 of Chapter 16B).
CMS recognizes that there is value for C-SNPs to use groupings of
severe or disabling chronic conditions in identifying their focus and
limiting enrollment, and our proposals reflect how the MA organizations
that offer C-SNPs must choose a single chronic condition from the
definition of severe or disabling chronic condition or choose from a
list of permitted multiple chronic conditions found in in the new
subparagraphs (A) and (B) under Sec. 422.4(a)(1)(iv).
First, we proposed, as part of the definition of C-SNP at Sec.
422.2 and in the description of special needs plans at Sec.
422.4(a)(1)(iv), to codify current guidance regarding the ability of MA
organizations to offer a C-SNP that focuses on single or multiple
chronic conditions. The proposed definition of a C-SNP provides that C-
SNPs are SNPs that restrict enrollment to MA special needs eligible
individuals who have a severe or disabling chronic condition as defined
in Sec. 422.2 under this section. In other words, the chronic
conditions on which a C-SNP may focus are limited to those conditions
listed in the definition of severe or disabling chronic condition. When
a C-SNP focuses on one chronic condition, enrollees must have that
severe or disabling chronic condition in order to enroll in the C-SNP.
In addition to single chronic condition category PBPs, CMS currently
permits MA organizations to apply to offer a C-SNP that includes
specific combinations of CMS-approved group of commonly co-morbid and
clinically linked conditions, as described in section 20.1.3.1 of
Chapter 16B of the MMCM. We proposed to codify how a C-SNP may focus on
multiple chronic conditions in two ways. The proposed definition of C-
SNP provided that the restricted enrollment to individuals with severe
or disabling chronic conditions includes restricting enrollment based
on the multiple commonly co-morbid and clinically linked conditions
groupings specified in Sec. 422.4(a)(1)(iv).
Currently, CMS has identified five combinations of commonly co-
existing chronic conditions that may be the focus of a C-SNP based on
our data analysis and recognized national guidelines. The current set
of combinations include:
Diabetes mellitus and chronic heart failure;
Chronic heart failure and cardiovascular disorders;
Diabetes mellitus and cardiovascular disorders;
Diabetes mellitus, chronic heart failure, and
cardiovascular disorders; and
Stroke and cardiovascular disorders.
Considering the established clinical connection between these
conditions and the interest among plans and beneficiaries, we proposed
to maintain the current policy. We proposed to codify this current list
of combinations of chronic conditions that may be used by a C-SNP at
Sec. 422.4(a)(1)(iv)(A)(1) through (5).
A C-SNP may not be structured around multiple commonly co-morbid
conditions that are not clinically linked in their treatment because
such an arrangement results in a general market product rather than one
that is tailored for a particular population. As part of its review,
the 2019 clinical advisor Panel convened in accordance with section
1859(f)(9)(A) of the Act recommended the continuation of the current
Chapter 16B linked conditions plus three additional groups. The Panel
considered several relevant factors, including all statutory criteria
required under the Act, when determining the appropriateness of
additional pairings, including clinical considerations and the
potential of these conditions to be successfully managed by a
specialized provider network. The Panel recommended the following
additional groupings conditions were as follows:
Anxiety associated with COPD.
CKD and post-renal organ transplantation.
Substance Use Disorder (SUD) and Chronic and disabling
mental health conditions.
In addition to our proposal to codify the current approved set of
commonly co-morbid and clinically linked conditions, we proposed to add
the three recommended pairings as permissible groupings of severe or
disabling chronic conditions that may be used by C-SNPs at new Sec.
422.4(a)(1)(iv)(B)(6) through (8). Under this proposal, a C-SNP may
focus on one of the commonly co-morbid and clinically linked conditions
specified in these eight specific combinations of co-morbid condition
groupings upon CMS approval. We proposed to add a new Sec. 422.52(g)
to clarify that enrollees need only have one of the qualifying
conditions for enrollment listed in the approved groupings in proposed
Sec. 422.4(a)(1)(iv).\202\ This is consistent with current CMS
operational practices regarding the current set of approved C-SNP
groups.
---------------------------------------------------------------------------
\202\ The December 2022 proposed rule inadvertently identified
proposed Sec. 422.4(a)(1)(iv)(A) as addressing this proposal that
an enrollee of a C-SNP that focuses on a grouping of conditions
would be required to only have one of the conditions to be eligible
to enroll in that C-SNP; we use the correct reference here. 87 FR
79565.
---------------------------------------------------------------------------
Lastly, CMS did not propose to codify a C-SNP plan application
option that is currently available under sub-regulatory guidance in
section 20.1.3.2 of Chapter 16B of the MMCM. In effect, this would
remove this approach as an option for C-SNPs beginning 2025. Under the
current guidance, we permit MA organizations seeking to sponsor a C-SNP
to apply for an MA organization-customized group of multiple chronic
conditions. If a C-SNP uses such a customized group of conditions,
enrollment in that C-SNP is limited to special needs individuals who
have all of the severe or disabling conditions in the group. CMS has
reviewed only a few SNP plan application proposals since the initial
implementation of the C-SNP program and has not granted any
applications for this type of C-SNP either due to the lack of clinical
connection between the proposed conditions or because the MA
organization failed to meet other conditions of the application
process. No C-SNPs of this type have been approved nor will be
operational in CY 2023. We proposed to remove this option from the C-
SNP application process beginning in CY 2024. Given the historical lack
of interest from MA organizations, beneficiaries, or patient advocacy
groups, we explained in the proposed rule that we believed there will
be minimal impact on stakeholders associated with the elimination of
this current flexibility. In addition, with the addition of three new
groupings and the ability to establish a C-SNP that is based on
functional limitations that we are proposing with paragraphs (20)
through (21) of the proposed definition of severe or disabling chronic
condition, we believe that there is adequate flexibility for MA
organizations to develop C-SNPs that meet the needs of the Medicare
population.
We received the following comments, and our responses follow:
Comment: A commenter commended CMS for the changes to the list of
severe or disabling chronic conditions under Sec. 422.2; however, the
commenter expressed concern that the further expansion of chronic
condition groupings in proposed Sec. 422.4(a)(1)(iv)(B) should be done
in ways to minimize beneficiary and provider confusion, and to ensure
conditions are clinically associated.
Response: We agree with the commenter that chronic conditions
[[Page 30668]]
should be clinically associated for a C-SNP that addresses multiple
chronic conditions to be approved. As proposed and finalized here (at
Sec. 422.4(a)(1)(iv)(B)), consistent with current policy, a C-SNP may
not be structured around multiple commonly co-morbid conditions that
are not clinically linked in their treatment approaches and approved by
CMS. As we noted in the December 2022 proposed rule, we believe that
allowing a C-SNP to target a non-linked clinical arrangement results in
a more general market product rather than a product that is tailored
for a particular population. Further, as we stated in our proposed
rule, the 2019 clinical advisor Panel convened in accordance with
section 1859(f)(9)(A) of the Act recommended the continuation of the
current Chapter 16B linked conditions plus three additional groups. The
Panel considered several relevant factors, including all statutory
criteria required under the Act, when determining the appropriateness
of additional pairings, including clinical considerations and the
potential of these conditions to be successfully managed by a
specialized provider network. We believe the use of this process
minimizes beneficiary and provider confusion and ensures that chronic
condition groupings are clinically associated.
After considering the comments received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the revised definition of the term ``chronic condition
special needs plan (C-SNP)'' at Sec. 422.2, the revisions to Sec.
422.4(a)(1)(iv) to establish how C-SNPs may target specific and
specific groupings of severe or disabling chronic conditions, and the
special eligibility rule for C-SNPs at Sec. 422.52(g) as proposed.
D. Verification of Eligibility for C-SNPs (Sec. 422.52(f))
Section 1859(b)(6) of the Act defines specialized MA plans for
special needs individuals, as well as the term ``special needs
individual.'' Section 1859(f)(1) of the Act provides that
notwithstanding any other provision of Part C of the Medicare statute
and in accordance with regulations of the Secretary, an MA special
needs plan (SNP) may restrict the enrollment of individuals under the
plan to individuals who are within one or more classes of special needs
individuals. The regulation governing eligibility for MA SNPs is at
Sec. 422.52. In addition to meeting the definition of a special needs
individual in Sec. 422.2 and the general eligibility requirements for
MA enrollment in Sec. 422.50, an individual must meet the eligibility
requirements for the specific MA SNP in which the individual seeks to
enroll. Currently, Sec. 422.52(f) provides that each MA SNP must
employ a process approved by CMS to verify the eligibility of each
individual enrolling in the SNP. CMS adopted this provision in
paragraph (f) in the final rule with comment period ``Medicare Program;
Medicare Advantage and Prescription Drug Benefit Programs: Negotiated
Pricing and Remaining Revisions,'' which appeared in the Federal
Register on January 12, 2009 (74 FR 1494). Historically, we have
provided operational guidance related to eligibility criteria for
enrollment in an MA SNP that exclusively enrolls individuals who meet
the definition of special needs individual under Sec. 422.2 in our
sub-regulatory manuals.\203\
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\203\ This guidance can be found at https://www.cms.gov/files/document/cy2021-ma-enrollment-and-disenrollment-guidance.pdf and
https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/mc86c16B.pdf.
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We proposed to revise paragraph Sec. 422.52(f) to codify, with
minor modifications and clarifications, our longstanding guidance on
procedural steps MA plans must take to verify an individual's
eligibility for enrollment in a chronic condition SNP (C-SNP). C-SNPs
are SNPs that restrict enrollment to special needs individuals with
specific severe or disabling chronic conditions, defined at Sec.
422.2. By codifying the verification requirements, we intend to provide
transparency and stability for MA organizations offering C-SNPs and
other interested parties about this aspect of the MA program. It will
also clarify the SNP's roles and responsibilities and further assist MA
organizations in meeting the requirements pertaining to verification of
eligibility for C-SNPs.
Specifically, we proposed in new Sec. 422.52(f)(1) to codify
existing guidance stating that for enrollments into a C-SNP, the MA
organization must contact the individual applicant's current physician
to confirm that the enrollee has the specific severe or disabling
chronic condition(s). Although the current sub-regulatory guidance in
chapter 16B, section 40.2.1 refers only to the applicant's existing
provider, we believe that a physician--either the applicant's primary
care physician or a specialist treating the qualifying condition(s)--
should provide the required verification of the applicant's condition
to ensure the accuracy and integrity of the verification process.
Therefore, we proposed to use the term ``physician'' throughout
proposed new Sec. 422.52(f).
To further clarify the verification process, we also proposed in
new Sec. 422.52(f)(1)(i) that the physician must be the enrollee's
primary care physician or specialist treating the chronic condition, or
conditions in the case of an individual seeking enrollment in a multi-
condition C-SNP. The MA organization may either 1) as proposed at new
Sec. 422.52(f)(1)(i), contact the applicant's physician or physician's
office and obtain verification of the condition prior to enrollment, or
2) as proposed at new Sec. 422.52(f)(1)(ii), use a Pre-enrollment
Qualification Assessment Tool (PQAT) prior to enrollment and
subsequently (which can be after enrollment) obtain verification of the
condition(s) from the enrollee's physician no later than the end of the
individual's first month of enrollment in the C-SNP.\204\ Both proposed
options are discussed in the current guidance. We continue to believe
that these procedures will allow the MA organization to efficiently
serve special needs populations while maintaining the integrity of SNP
offerings under the MA program.
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\204\ CMS provides an outline of the Pre-enrollment
Qualification Assessment Tool in section 40.2.1 of Chapter 16B of
the MMCM. In 2017, CMS released a memo entitled, ``Discontinuation
of CMS Approval Process for C-SNP Pre-Enrollment Qualification
Assessment Tool,'' stating that we would no longer require chronic
condition special needs plans (C-SNPs) to seek CMS approval prior to
using a Pre-Enrollment Qualification Assessment Tool. CMS approval
is granted for tools that meet the standards articulated in section
40.2.1 of the MMCM and individual review and approval of plan-
specific tools is not required. Therefore, MA organizations are no
longer required to submit these tools individually to CMS for
approval so long as the standards outlined in the guidance are met.
---------------------------------------------------------------------------
As part of this process, we proposed at new Sec. 422.52(f)(1)(i)
that verification of the chronic condition(s) from the applicant's
primary care physician or treating specialist must be in a form and
manner authorized by CMS. Existing guidance states that this
verification can be in the form of a note from a provider or the
provider's office or documented telephone contact with the physician or
physician's office confirming that the enrollee has the specific severe
or disabling chronic condition. These would remain acceptable under
this proposal. Performing this pre-enrollment verification with the
applicant's primary care physician or specialist treating the
qualifying condition will mean that the C-SNP may process the
enrollment promptly.
Use of the PQAT requires both pre-enrollment and post-enrollment
actions by the C-SNP to conduct an assessment and subsequently confirm
the information. The PQAT, per existing
[[Page 30669]]
guidance,\205\ would collect information about the chronic condition(s)
targeted by the C-SNP directly from the enrollee and must include a
signature line for a physician to confirm the individual's eligibility
for C-SNP enrollment. In order for the PQAT to be complete, a physician
must be the person who goes through the PQAT with the enrollee. The
physician that goes through the PQAT with the enrollee can be either
the enrollee's physician or a physician employed or contracted by the
plan. A physician must later review the document to confirm that the
information supports a determination that the enrollee is eligible for
the C-SNP, even without their presence at the time of the determination
by the physician. The physician providing the review and signature must
be the enrollee's physician. Ultimately, a physician's review of and
signature on the completed PQAT provide verification of the applicant's
special needs status with regards to the applicable chronic
condition(s). Currently, C-SNPs are not required to submit the PQAT to
CMS for review and approval before the PQAT is used by the C-SNP and
CMS proposed to codify that policy. The PQAT must meet the standards
articulated in proposed Sec. 422.52(f)(1)(ii)(A), and therefore review
and approval of plan-specific tools by CMS are not required.
---------------------------------------------------------------------------
\205\ This guidance can be found in Chapter 16-B: Special Needs
Plans, Section 40.2 of the Medicare Managed Care Manual.
---------------------------------------------------------------------------
As proposed at Sec. 422.52(f)(1)(ii)(A)(1), the PQAT must
include a set of clinically appropriate questions relevant to the
chronic condition(s) on which the C-SNP focuses. For example, an MA
organization sponsoring a Diabetes Mellitus C-SNP would perhaps include
questions related to diagnoses of diabetes, such as blood glucose level
or whether the enrollee is currently taking a medication for diabetes
mellitus.
As proposed at Sec. 422.52(f)(1)(ii)(A)(2), the PQAT must
gather information on the applicant's past medical history, current
signs and/or symptoms, and current medications sufficient to provide
reliable evidence that the applicant has the applicable condition(s).
As proposed at Sec. 422.52(f)(1)(ii)(A)(3), the PQAT must
include the date and time of the assessment if completed during a face-
to-face interview with the applicant, or the receipt date if the C-SNP
receives the completed PQAT by mail or by electronic means (if
available).
As proposed at Sec. 422.52(f)(1)(ii)(A)(4), the PQAT must
include a signature line for and be signed by a physician to confirm
the individual's eligibility for C-SNP enrollment. (We also proposed
that this signature be from the applicant/enrollee's primary care
physician or treating specialist.)
As proposed at Sec. 422.52(f)(1)(ii)(B), the C-SNP must
conduct a post-enrollment confirmation of each enrollee's information
and eligibility using medical information (medical history, current
signs and/or symptoms, diagnostic testing, and current medications)
provided by the enrollee's primary care physician or the specialist
treating the enrollee's chronic condition.
As proposed at Sec. 422.52(f)(1)(ii)(C), the C-SNP must
include the information gathered in the PQAT and used in this
verification process in the records related to or about the enrollee
that are subject to the confidentiality requirements in Sec. 422.118.
As proposed at Sec. 422.52(f)(1)(ii)(D), the C-SNP must
track the total number of enrollees and the number and percent by
condition whose post-enrollment verification matches the pre-enrollment
assessment and the data and supporting documentation must be made
available upon request by CMS.
In addition, we proposed to codify at Sec. 422.52(f)(1)(ii)(E) our
longstanding guidance \206\ to MA organizations offering C-SNPs that
choose to use a PQAT that the MA organization has until the end of the
first month of enrollment to confirm that the individual has the
qualifying condition(s) necessary for enrollment into the C-SNP. If the
C-SNP cannot confirm that the enrollee has the qualifying condition(s)
within that time, the C-SNP has the first seven calendar days of the
following month (that is, the second month of enrollment) in which to
send the enrollee notice of disenrollment for not having the qualifying
condition(s). Disenrollment is effective at the end of the second month
of enrollment; however, as also outlined in current guidance, the C-SNP
must continue the individual's enrollment in the C-SNP if confirmation
of the qualifying condition(s) is obtained at any point prior to the
end of the second month of enrollment. We proposed to codify at Sec.
422.52(f)(1)(ii)(F), consistent with existing guidance, that the C-SNP
must continue the enrollment of the individual in the C-SNP if the C-
SNP confirms the qualifying condition(s) prior to the disenrollment
effective date.
---------------------------------------------------------------------------
\206\ This guidance can be found in Chapter 2, Section 20.10 and
Chapter 16-B: Special Needs Plans, Section 40.2 of the Medicare
Managed Care Manual.
---------------------------------------------------------------------------
Lastly, we proposed to codify at Sec. 422.52(f)(1)(iii) that the
C-SNP is required to have the individual's current physician (primary
care physician or specialist treating the qualifying condition)
administer the PQAT directly with the enrollee or provide confirmation
(with or without the presence of the enrollee) that the information in
the document supports a determination that the individual is eligible
for the C-SNP. Once the physician has confirmed that the PQAT contains
information that supports the applicant's chronic condition and signs
it, the PQAT is complete. Without a physician's signature, the process
is incomplete, and thus, the applicant must be denied enrollment if the
enrollment has not yet happened or disenrolled by the end of the second
month if the applicant had been enrolled. If the individual is
disenrolled because the person's eligibility cannot be verified, SNPs
must recoup any agent/broker compensation consistent with Sec.
422.2274(d)(5)(ii).
These proposals represent the codification of existing guidance
outlining the procedural steps MA organizations currently take to
verify an individual's eligibility for enrollment in a C-SNP, with
minor modifications and clarifications. Therefore, we believe that this
proposal would not result in a new or additional paperwork burden, as
the policy to verify eligibility for C-SNPs has been in existence for
some time. All burden impacts related to the SNP eligibility
verification procedures have already been accounted for under OMB
control number 0938-0753 (CMS-R-267). These requirements have been
previously implemented and are currently being followed by MA
organizations. Similarly, we do not believe the proposed changes would
have any impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
Comment: Several commenters expressed general support but
recommended using a term other than ``physician'' when referring to the
activities that must be completed to confirm a beneficiary's
eligibility for the C-SNP. Commenters noted that many individuals
receive treatment for their chronic condition from other providers
(e.g., nurse practitioners, physician assistants) and that by limiting
the verification functions to the beneficiary's current physician, we
were establishing a requirement that was too restrictive, would add
operational
[[Page 30670]]
complexity, and create procedural barriers that obstruct beneficiaries'
access to needed healthcare. Commenters also stated that physicians may
not provide timely verification in response to a direct request or a
PQAT which affects a C-SNPs' ability to swiftly seek data to verify
beneficiaries' conditions.
Commenters suggested that CMS codify a sufficiently broad term to
allow a variety of healthcare professionals with requisite
qualifications to confirm the applicant's specific severe or disabling
chronic condition(s). Examples include the following terms: ``health
care provider'' or ``practitioner'' to include those who work in clinic
environments and any clinical staff in the physician's office, (e.g.,
registered nurses), which would align with existing verification
protocols and will enable MA plans to offer and enroll beneficiaries
with chronic conditions in plans best suited to meet their healthcare
needs and preferences more efficiently. Another commenter further
suggested that an alternate person at the provider practice be able to
conduct this administrative function on behalf of the provider so as to
not create more administrative burden and also facilitate enrollment.
Another commenter stated that CMS uses the term ``provider'' for
confirming the patient has a qualified condition in its existing
guidance.
Response: We appreciate the feedback and agree that the term
``physician'' may be overly restrictive or may not accurately reflect a
beneficiary's overall care team. As such, we are modifying Sec.
422.52(f)(1) to replace the term ``physician'' with language describing
the three types of health care providers we believe are appropriate to
furnish confirmation that an enrollee has a severe or disabling chronic
condition: (1) a physician, as defined in section 1861(r)(1) of the
Act; (2) a physician assistant, as defined in section 1861(aa)(5)(A) of
the Act and who meets the qualifications specified in Sec. 410.74(c);
or (3) a nurse practitioner, as defined in section 1861(aa)(5)(A) of
the Act and who meets the qualifications specified in Sec.
410.75(b)(1)(i) and (ii). The modification will permit physician
assistants and nurse practitioners who meet the specified qualification
to provide the type of verification required under Sec. 422.52(f).
The definition of physician in section 1861(r)(1) of the Act is
defined to mean a doctor of medicine or osteopathy legally authorized
to practice medicine and surgery by the State in which the individual
performs such functions or actions. Although CMS proposed that all
physicians within the scope of the definition of section 1861(r) of the
Act would qualify for purposes of the proposed requirements for
verifying eligibility to enroll in a C-SNP, we believe it is more
appropriate to limit this to physicians as defined in section
1861(r)(1) to be more consistent with and reflect our current
subregulatory policies regarding chronic condition verification and our
intent with codification of this policy. Because section 1861(r)(1) of
the Act includes all doctors of medicine or osteopathy who are legally
authorized to practice medicine and surgery by the State in which the
individual performs such functions or actions, using ``physician'' as
meaning this group is sufficiently broad for purposes of verifying that
an individual has a specified severe or disabling chronic condition.
Per section 1861(aa)(5)(A) of the Act, the terms ``physician
assistant'' and ``nurse practitioner'' mean a physician assistant or
nurse practitioner who performs such services as such individual is
legally authorized to perform (in the State in which the individual
performs such services) in accordance with State law (or the State
regulatory mechanism provided by State law), and who meets such
training, education, and experience requirements (or any combination
thereof) as the Secretary may prescribe in regulations. Therefore, in
addition to citing section 1861(aa)(5)(A) of the Act, we are also
cross-referencing the additional Medicare regulations (Sec. Sec.
410.74(c) and 410.75(b)(1)(i) and (ii)) that specify the qualifications
for a physician assistants and nurse practitioners to define these
providers.
In addition to these changes we are finalizing in Sec.
422.52(f)(1), we are also finalizing changes throughout Sec. 422.52(f)
to replace the term ``physician'' with the phrase ``health care
provider'' or ``health care provider specified in paragraph (f)(1)'' to
be consistent with our final policy that physicians, physician
assistants, and nurse practitioners may furnish the necessary
verification. We use the term ``health care provider'' to avoid
unintended ambiguity or confusion that Sec. 422.52(f) is using the
term ``provider'' as it is defined broadly in Sec. 422.2. In addition,
we are finalizing paragraph (f)(1)(iii) with revisions to specify that
the PQAT must be signed by the enrollee's current health care provider
as verification and confirmation that the enrollee is eligible for the
C-SNP, especially as a provider employed or contracted by the plan may
administer the PQAT with the enrollee. We believe allowing a SNP to use
a provider employed or contracted by the plan permits operational
flexibility without jeopardizing the independent verification of the
applicant's condition. For example, a SNP may employ a registered nurse
to administer the PQAT with the applicant that will then receive
independent verification from the applicant's health care provider. CMS
understands that establishing the same criteria for administering the
PQAT under 422.52(f)(1)(ii)(B), as we propose under Sec. 422.52(f)(1)
for health care provider verification, would likely create operational
burdens for SNPs. We are finalizing the revised process at paragraph
(f)(1)(iii) that both acknowledges the potential burden to plans, but
also ensures that the applicant's health care provider is still
verifying of the existence of the chronic condition.
Comment: We received several comments pertaining to the PQAT. While
commenters supported CMS' need to verify eligibility, several suggested
the use of alternative data to support post-enrollment verification in
lieu of the PQAT. For example, the use of existing institutional
documentation, specifically the Minimum Data Set (MDS), to serve as
documentation of a beneficiary's qualifying condition and the use of
medical and pharmacy claims data to verify a C-SNP enrollee's chronic
condition in cases where the enrollee's provider is unresponsive. Some
commenters expressed concerns regarding the administrative challenges
of acquiring a signature on the PQAT form, processing disenrollment due
to a failure to obtain the required physician verification, and
reliance on the information submitted by the beneficiary, which runs
the risks of inaccuracies. Another commenter suggested that plans using
the PQAT and post-enrollment verification process should be able to use
the health care provider's verification via a recorded phone outreach,
signature on the PQAT form, data from the enrollee's electronic health
records, or other diagnoses received directly from the enrollee's
provider. Some commenters were concerned that the proposal could
disincentivize new or smaller MA organizations from establishing C-SNPs
to offer coverage and care for this vulnerable population.
Response: We appreciate the suggestions for alternative methods to
verify that a C-SNP applicant has a qualifying severe or disabling
chronic condition. However, the applicant's current health care
provider plays a critical role in verifying the beneficiary's chronic
condition. We
[[Page 30671]]
believe that review by the applicant's current health care provider is
an important step to maintain C-SNP program integrity and the
involvement of a health care provider who has a current relationship
with the applicant and is not an employee of the C-SNP (or of the MA
organization that offers the C-SNP) reduces burden when compared to
alternatives such as seeking an independent evaluation of the applicant
from another health care provider. We reiterate that the MA
organization may contact the applicant's current health care provider
or that provider's office to obtain verification of the condition prior
to enrollment and that the use of the PQAT is an optional substitute
prior to enrollment. The MA organization is allowed additional time
(post-enrollment) to obtain verification from the applicant's current
provider if the MA organization elects to use the PQAT prior to
enrollment in lieu of getting confirmation from the applicant's current
health care provider (or that provider's office), as further clarified
in 422.52(f)(1)(iii) and 422.52(f)(1)(ii)(B). We believe limiting the
verification confirmation process to this group of providers best
aligns with those providers most likely to diagnose and treat the type
of severe or disabling chronic condition listed in the definition of
that term being adopted elsewhere in section VIII.C. of this rule. We
note that the proposal is the codification of long-standing guidance in
Chapter 16-B with minor modifications. The rule as finalized does not
prohibit plans from consulting data or records of the type mentioned by
the commenters, but data review alone cannot be a method of independent
verification, which only the applicant's current provider's review and
signature can impart. As further clarified in 422.52(f)(1)(ii)(A)(4),
the completed PQAT must be signed by the applicant's current health
care provider. We are including the phrase ``once completed'' in the
regulation to clarify that the health care provider would be signing
the PQAT as filled in with the applicant's information as a means to
verify the PQAT; blank PQAT forms should not be signed in advance.
Comment: A commenter expressed concerns that CMS' proposal created
a requirement that plans must rely on a prior eligibility verification
from another plan for purposes of enrollment in a C-SNP. The commenter
preferred to conduct its own eligibility verification to ensure it has
accurate and current information about beneficiaries.
Response: We believe the commenter misunderstood the proposal as we
did not propose to require and currently do not require C-SNPs to rely
on a prior verification of eligibility information from a previous
plan. The opposite is the case. Under the rule we are finalizing and
our current policy, C-SNPs cannot use a previous plan's chronic
condition verification for the purpose of verifying an applicant's
eligibility into their plan. Each C-SNP must conduct its own
verification that the applicant has a qualifying severe or disabling
chronic condition as outlined in Sec. 422.52(f)(1).
Comment: A commenter suggested making the proposed changes
effective no sooner than the 2026 plan year to provide sufficient time
to implement the operational changes which they deemed as significant.
Response: We decline the suggestion to make the effective date
later because the proposal is codifying longstanding guidance and plans
should currently be performing these activities in compliance with our
sub-regulatory guidance. To the extent that we are finalizing changes
compared to our current guidance (for example, the expansion of the
type of provider that can furnish the verification), we do not believe
that these changes will add burden or make the process for verifying
eligibility for new enrollees more difficult. The provisions we are
finalizing at Sec. 422.52(f) regarding eligibility verification for C-
SNP enrollees are applicable with coverage beginning January 1, 2025.
Comment: A commenter believed that the PQAT is a duplicative
assessment and adds unnecessary reporting burden since plans already
request and document similar information as part of conducting a Health
Risk Assessment (HRA) after enrollment.
Response: We agree that the HRA requirements under Sec.
422.101(f)(1)(i) and the PQAT requirements being finalized under Sec.
422.52(f)(1)(ii)(A)(1) may appear to collect similar health
information. While there may be some similarities between the HRA and
PQAT processes, the HRA is more specific in the categories of
information collection (psychosocial, functional, etc.) and the PQAT is
more specific to the severe or disabling chronic condition(s) the MA
organization is required to verify prior to enrollment into a C-SNP.
These tools serve different purposes, are not interchangeable, and are
not duplicative, even if there is potential crossover in some of the
information that is captured. We note that the PQAT is one of two ways
to verify C-SNP eligibility prior to enrollment and that its use is
optional.
Comment: A commenter noted that many C-SNP applicants are not new
to an MA plan, but they are instead transferring from a non-SNP plan
offered by the same MA organization with the same provider network. The
MA organization may already have medical professionals (such as nurse
practitioners and physician assistants) working with the member on
ongoing condition management through clinical programs available from
the non-SNP and clinical program staff may already be coordinating with
the member's primary care provider or other physicians. The commenter
stated that requiring the member's physician to once again validate to
the MA organization that the member has the qualifying condition for
enrollment in the C-SNP seems unnecessary and an inefficient use of the
physician's (or physician's staff) time. The commenter requested that
CMS continue to allow confirmations from a ``plan provider qualified to
confirm the condition.''
Response: We believe that the review and sign-off by the
applicant's current health care provider, who is already familiar with
the MA organization's operational methods, will not add burden or
create inefficiencies. The review by the applicant's current health
care provider is a critical step in ensure program integrity of the C-
SNP verification process. As discussed in a prior response to a public
comment, we are finalizing Sec. 422.52(f)(1) to permit the
verification to be provided using the applicant's current health care
provider, who is a physician (as defined in section 1861(r)(1) of the
Act), physician assistant (as defined in section 1861(aa)(5)(A) of the
Act and who meets the qualifications specified in Sec. 410.74(c) of
this chapter), or a nurse practitioner (as defined in section
1861(aa)(5)(A) of the Act and who meets the qualifications specified in
Sec. 410.75(b)(1)(i) and (ii) of this chapter) to confirm that the
applicant has the qualifying condition(s); by including physician
assistants and nurse practitioners who are also currently treating the
applicant, we believe that we are sufficiently addressing concerns
about burden on physicians. In addition, as finalized, pre-enrollment
verification may be provided by the C-SNP contacting the treating
health care provider directly or the treating health care provider's
office; we believe that the treating health care provider's office
would be able to use information in the applicant's records to provide
sufficient information to verify that the applicant has the qualifying
severe or disabling chronic condition in many if not all cases.
Further, although paragraphs (f)(1)(ii)(B) and (f)(1)(iii) require the
[[Page 30672]]
enrollee's current health care provider to sign the PQAT as
verification of the information used to establish eligibility, the C-
SNP will have until the second month of enrollment to secure the
signature as reflected in paragraphs (f)(1)(ii)(E) and (F), which we
believe provides sufficient time post-enrollment to minimize the burden
on the health care provider.
Comment: A commenter requested that in situations where an
individual is disenrolled due to an inability to verify their
eligibility, the deadline for disenrollment deadline be extended from
60 days to 90 days to align with the HRA completion deadline.
Response: We disagree that the standard is too restrictive as the
proposed timeline is consistent with long-standing guidance in Chapter
16-B and C-SNPs have consistently shown the ability to meet this
timeline. We also make the distinction that the verification process
establishes the individual's eligibility, whereas the HRA completion
assumes the applicant's eligibility and focuses on care coordination.
Comment: A commenter noted that under Special Supplemental Benefits
for the Chronically Ill (SSBCI), plans can provide health-related and
non-health-related benefits targeted to enrollees with C-SNP conditions
in non-SNP plans, with significantly less documentation of an
enrollee's condition than required for C-SNP enrollment. The commenter
stated that requirements that place significantly higher barriers for
C-SNP enrollment versus SSBCI eligibility can be detrimental to an
individual seeking to switch to a C-SNP plan because they want more
comprehensive case management and clinical support. Further, when
validations are not received and individuals are disenrolled, the
stress and disruption in care experienced by members can also
exacerbate their health issues, which is the opposite of what they are
seeking when they apply for the C-SNP. Limiting the diagnosis
validation requests made to physicians for those members who are new to
the MA plan or who are new to Medicare, would be a more effective use
of time and resources for both the plan and providers, and would reduce
the number of members who are disenrolled for administrative reasons.
The commenter encouraged CMS to consider whether those differences
support optimal outcomes for members with ongoing chronic conditions.
Response: We appreciate the comment. To the extent that an MA
organization adopts a similar process for verifying eligibility for
SSBCI under Sec. 422.102(f)(4) as what is required by Sec.
422.52(f)(1) as finalized here, it may be possible to rely on the
verification by the individual applicant's/enrollee's health care
provider or on the PQAT and subsequent confirmation for both purposes
if the verification of eligibility for the C-SNP and for the SSBCI
occur very close in time. However, Sec. 422.102(f)(4) does not
establish the same verification requirements as we are finalizing in
Sec. 422.52(f)(1), so it is not appropriate to develop a sweeping
exception from either Sec. Sec. 422.52(f)(1) or 422.102(f)(4). For
more information on Sec. 422.102(f) and SSBCI, we refer readers to
section I.B.4 of this final rule. A non-SNP MA plan is a more
generalized MA product that can offer SSBCI under Sec. 422.102(f). CMS
reviews whether an MA organization can deliver care under specific SNP
regulations, including whether a plan can deliver care coordination and
benefit arrangements for a specific chronic condition population. We
believe it is critical to establish the specific processes of the C-SNP
applicant verification to ensure the integrity of C-SNP plan
operations.
Comment: A couple of commenters were concerned that the burden
ultimately falls on the beneficiary to ensure that the provider
responds to a plan's verification request in order to ensure they are
able to enroll in their chosen plan. Because some providers will not
submit the pre-enrollment attestation without an office visit, the
proposed requirement could mean that a beneficiary that has recently
seen their physician might need to visit their physician again solely
for pre-enrollment verification purposes.
Response: We recognize that in some instances the applicant's
health care provider could potentially ask the applicant to schedule an
office visit before the health care provider will verify that the
applicant has a qualifying severe or disabling chronic condition for
the C-SNP. We believe that this is unlikely based on our knowledge of
how this policy has played out historically and by the fact that the
applicant's current health care provider's office will likely have
information pertaining to the relevant medical history to verify the
chronic condition.
Comment: A commenter noted that when considering pre-enrollment
verification requirements, CMS must guard against providers who
potentially may be incentivized to use C-SNP pre-enrollment
verification as a tool in steering the beneficiary to a plan associated
with the provider but may not be in the best interest of the
beneficiary. The commenter stated that under the pre-enrollment
verification process, it would be difficult to ensure that an
enrollee's current treating physician will verify that an enrollee has
a qualifying severe or disabling chronic condition in a timely manner
if they know the enrollee is considering enrollment in a plan with
which the provider does not contract.
Response: We appreciate the commenter's concern and acknowledge
that such scenarios may occur. We believe that this is unlikely based
on our knowledge of how this policy has played out historically.
After consideration of all public comments and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposal to add new paragraph (f)(1) to Sec. 422.52
largely as proposed, but with modifications to specify that an
applicant's current health care provider, who may be a physician, nurse
practitioner or physician's assistant, provides the verification of the
applicant's chronic condition. In addition, as described in our
responses to public comments, we are finalizing revisions in paragraphs
(f)(1)(i), (f)(1)(ii)(A)(4), (f)(1)(ii)(B) and (f)(1)(iii) to be
consistent with the revisions in paragraph (f)(1) and to clarify the
post-enrollment verification process when the C-SNP uses the PQAT.
E. I-SNP Network Adequacy
In accordance with Sec. 422.116, CMS conducts evaluations of the
adequacy of provider networks of all MA coordinated care plans to
ensure access to covered benefits for enrollees. For MA coordinated
care plans, which generally base coverage or cost sharing on whether
the provider that furnishes services to an MA enrollee is in-network or
out-of-network, these evaluations are particularly important. All MA
special needs plans (SNP) are coordinated care plans and subject to the
current requirements for network adequacy. Within the MA program, SNPs
are classified into three distinct types: Chronic Care special needs
plan (C-SNP), dual eligible special needs plan (D-SNP), and
Institutional special needs plan (I-SNP). An I-SNP is a SNP that
restricts enrollment to MA-eligible individuals who meet the definition
of institutionalized and institutionalized-equivalent. One specific
subtype of I-SNP is the facility-based I-SNP. Here, we use the term
(``facility-based I-SNP'') to refer to an I-SNP that restricts
enrollment to MA-eligible individuals who meet the definition of
institutionalized; owns or contracts with at least one institution,
specified in the
[[Page 30673]]
definition of institutionalized in Sec. 422.2, for each county within
the plan's county-based service area; and owns or has a contractual
arrangement with each institutional facility serving enrollees in the
plan. Historically, the I-SNP industry has stated that CMS's current
network adequacy criteria under Sec. 422.116 create challenges for
facility-based I-SNPs because facility-based I-SNP enrollees access
services and seek care in a different way than enrollees of other plan
types.
In the December 2022 proposed rule, we explained in detail how I-
SNPs restrict enrollment to MA-eligible individuals who are
institutionalized or institutionalized-equivalent, as those terms are
defined in Sec. 422.2 and proposed new definitions for the different
types of I-SNPs. As a result, the enrollees in I-SNPs are individuals
who continuously reside in or are expected to continuously reside for
90 days or longer in one of the specified facilities listed in the
definition of ``institutionalized'' at Sec. 422.2 or individuals
(``institutionalized-equivalent'') who are living in the community but
require an institutional level of care. We refer readers to the
December 2022 proposed rule (87 FR 79566 through 79568) and to section
VIII.A of this final rule for a more detailed discussion of the
eligibility requirements for I-SNPs and the final rule definitions for
the different type of I-SNPs. See also Chapter 16b Section 20.3 of the
Medicare Managed Care Manual.\207\ Our use of the term ``facility-based
I-SNP'' in this rule aligns with the definition of ``Facility-based
Institutional special needs plan (FI-SNP)'' adopted in section VIII.A
of this rule.
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\207\ https://www.cms.gov/regulations-and-guidance/guidance/
manuals/downloads/mc86c16b.pdf.
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Per section 1859(f)(2) of the Act, I-SNPs restrict enrollment to
MA-eligible individuals who, for 90 days or longer, have had or are
expected to need the level of services provided in a long-term care
(LTC) facility, which includes: a skilled nursing facility (SNF), a
nursing facility (NF), an intermediate care facility for individuals
with intellectual disabilities (ICF/IDD), an inpatient psychiatric
hospital, a rehabilitation hospital, an LTC hospital, or a swing-bed
hospital. See Sec. 422.2 for the definition of ``institutionalized''
for the details of the types of facilities. Facility-based I-SNPs (FI-
SNPs) serve a vulnerable cohort of Medicare beneficiaries with well
over 95 percent of FI-SNP enrollees being eligible for both Medicare
and Medicaid. Generally, FI-SNP enrollees reside either temporarily or
permanently in an institution, therefore, these enrollees typically
receive most of their health care services through or at the facility
in which they reside, most often a SNF. As a result of the way that
these enrollees receive covered services, CMS's established network
adequacy time and distance standards under Sec. 422.116 may not be a
meaningful way to measure provider network adequacy for and ensure
access to covered benefits for enrollees of this plan type. Time and
distance standards are created using several factors, including pattern
of care. In order to comply with the network evaluation requirements in
Sec. 422.116, a FI-SNP must contract with sufficient providers of the
various specialties within the time and distance requirements specified
in that regulation. The I-SNP industry has indicated through public
comments and in prior correspondence to CMS that many FI-SNPs have
difficulty contracting with providers outside their facilities, due to
their model of care. This is because these providers know that
enrollees of the I-SNP will not routinely seek care with these
providers since they generally do not travel away from the facility for
care.
The MA organizations offering and those that are interested in
offering FI-SNPs have raised questions about whether our network
standards are appropriate considering the nature of the FI-SNP coverage
model. The residential nature of this model creates inherent
differences in patterns of care for FI-SNP enrollees as compared to the
prevailing patterns of community health care delivery in other MA plan
types. For example, most residents of a facility receive their care
from a provider at the facility rather than traveling to a provider
outside the facility whereas individuals who live at home in the
community will need to travel to a provider to receive health care
services.
To address these concerns, CMS proposed to adopt a new exception
for FI-SNP plans from the network evaluation requirements. This
provision will apply only to FI-SNPs.
CMS adopted minimum access requirements for MA coordinated care
plans (which include all SNPs) in Sec. 422.112 and network evaluation
criteria in Sec. 422.116 as means to implement and ensure compliance
with section 1852(d)(1)(A) of the Act, which permits MA plans to limit
coverage to items and services furnished by or through a network of
providers subject to specific exceptions (such as emergency medical
services) and so long as the MA organization makes benefits available
and accessible to their enrollees. Currently, Sec. 422.116(f) allows
an MA plan to request an exception to network adequacy criteria when
both of the following occur: (1) certain providers or facilities are
not available for the MA plan to meet the network adequacy criteria as
shown in the Provider Supply file (that is, a cross-sectional database
that includes information on provider and facility name, address,
national provider identifier, and specialty type and is posted by state
and specialty type); and (2) the MA plan has contracted with other
providers and facilities that may be located beyond the limits in the
time and distance criteria, but are currently available and accessible
to most enrollees, consistent with the local pattern of care. In
evaluating exception requests, CMS considers whether: (i) the current
access to providers and facilities is different from the Health Service
Delivery (HSD) reference file (as defined at 42 CFR 422.116(a)(4)(i))
and Provider Supply files for the year; (ii) there are other factors
present, in accordance with Sec. 422.112(a)(10)(v), that demonstrate
that network access is consistent with or better than the Traditional
Medicare pattern of care; and (iii) the approval of the exception is in
the best interests of beneficiaries.
CMS has provided examples of situations that meet the first
requirement for an exception to be requested in sub-regulatory
guidance, specifically the Medicare Advantage and Section 1876 Cost
Plan Network Adequacy Guidance.\208\ The following examples of
situations where providers or facilities are not available to contract
with the MA plan do not account for the issues that are unique to FI-
SNPs:
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\208\ https://www.cms.gov/files/document/medicare-advantage-and-section-1876-cost-plan-network-adequacy-guidance08302022.pdf.
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Provider is no longer practicing (for example, deceased,
retired),
Provider does not contract with any organizations or
contracts exclusively with another organization,
Provider does not provide services at the office/facility
address listed in the supply file,
Provider does not provide services in the specialty type
listed in the supply file,
Provider has opted out of Medicare, or
Provider is sanctioned and on the List of Excluded
Individuals and Entities.
In addition, the use of Traditional Medicare telehealth providers
or mobile providers and the specific patterns of care in a community
that currently are
[[Page 30674]]
the basis for an approval exception do not account for the provider
network issues unique to FI-SNPs that we proposed to address in this
rule. Therefore, we proposed to amend our network adequacy regulations
at Sec. 422.116(f) to establish an additional exception to the current
CMS network adequacy requirements outlined in Sec. 422.116 and we
proposed that this exception be specific to FI-SNPs. As proposed and
finalized, the revisions to Sec. 422.116 provide that FI-SNPs will not
be required to meet the current two prerequisites to request an
exception from the network adequacy requirements in Sec. 422.116 but
FI-SNPs must meet alternate bases on which to request an exception.
With respect to the exceptions from the network adequacy process
for FI-SNPs, CMS proposed to broaden the acceptable rationales for an
exception from the requirements in Sec. 422.116(b) through (e) for FI-
SNPs. We proposed that a FI-SNP may request an exception from the
network adequacy requirements in Sec. 422.116 when one of two
situations occurs. To add these proposed new rationales to Sec.
422.116(f)(1), we proposed to reorganize the current regulation text;
the two current requirements for an exception request will be moved to
new paragraphs (f)(1)(i)(A) and (B) and the proposed new rationales for
an exception request will be in new paragraphs (f)(1)(ii)(A) and (B).
Next, we proposed additional considerations CMS will use when
determining whether to grant an exception under Sec. 422.116(f) that
are specific to the additional acceptable rationales we proposed for an
exception request. We proposed to add a new paragraph (f)(2)(iv) to
specify the proposed new considerations that will apply to the new
exceptions for FI-SNPs, which will be added to the existing
considerations in Sec. 422.116(f)(2).
This provision includes new bases on which only FI-SNPs may request
an exception from the network adequacy requirements, additional
considerations for CMS when deciding whether to approve an exception
request from a facility-based I-SNP, and a new contract term for FI-
SNPs that receive the exception from the Sec. 422.116 network adequacy
evaluation. Because we evaluate network adequacy and grant an exception
at the contract level, this new exception is limited to contracts that
include only FI-SNPs.
The first new basis on which we proposed a FI-SNP could request an
exception from Sec. 422.116(b) was that the FI-SNP is unable to
contract with certain specialty types required under Sec. 422.116(b)
because of the way enrollees in FI-SNPs receive care. For purposes of
this first proposed new basis for an exception, the inability to
contract means the MA organization offering the FI-SNP could not
successfully negotiate and establish a contract with a provider,
including individual providers and facilities. This new basis is
broader than the existing condition for an exception that certain
providers are unavailable for the MA plan (see current Sec.
422.116(f)(1)(i), which we are redesignating to Sec. 422.116(f)(1)(A)
in this final rule). The non-interference provision at section
1854(a)(6) of the Act prohibits CMS from requiring any MA organization
to contract with a particular hospital, physician, or other entity or
individual to furnish items and services or require a particular price
structure for payment under such a contract. As such, CMS cannot assume
the role of arbitrating or judging the bona fides of contract
negotiations between an MA organization and available providers or
facilities. CMS does not regard an MA organization's inability to
contract with a provider as a valid rationale for an exception from the
network adequacy evaluation, but interested parties have indicated
through public comments and in prior correspondence to CMS outside this
particular rulemaking process that, historically, FI-SNPs have
encountered significant struggles contracting with the necessary number
of providers to meet CMS network adequacy standards due to their unique
care model. In the proposed rule, we explained that we would add this
new basis for an exception request to Sec. 422.116(f)(1)(ii)(A). CMS
also proposed that its decision whether to approve an exception for a
FI-SNP on this specific basis (that the I-SNP is unable to contract
with certain specialty types required under Sec. 422.116(b) because of
the way enrollees in FI-SNPs receive care) will be based on whether the
FI-SNP submits evidence of the inability to contract with certain
specialty types required under Sec. 422.116 due to the way enrollees
in FI-SNPs receive care. For example, an organization could submit
letters or emails to and from the providers' offices demonstrating that
the providers were declining to contract with any FI-SNP. CMS proposed
to add this requirement in a new paragraph (f)(2)(iv)(A). CMS will also
consider the existing factors in addition to the new factors proposed
here that are unique to the specific new exception proposed for FI-
SNPs. In the proposed rule, we solicited comment on this proposed new
rationale for an exception from the network adequacy requirements in
Sec. 422.116(b) through (e) and on the type of evidence we should
consider in determining whether to grant an exception.
We also proposed a second basis on which a FI-SNP may request an
exception from the network adequacy requirements in Sec. 422.116(b)
through (e) if:
(1) A FI-SNP provides sufficient and adequate access to basic
benefits through additional telehealth benefits (in compliance with
Sec. 422.135 of this chapter) when using telehealth providers of the
specialties listed in paragraph (d)(5) in place of in-person providers
to fulfill network adequacy standards in paragraphs (b) through (e);
and
(2) Substantial and credible evidence that sufficient and adequate
access to basic benefits is provided to enrollees using additional
telehealth benefits (in compliance with Sec. 422.135 of this chapter)
furnished by providers of the specialties listed in paragraph (d)(5) of
this section and the FI-SNPs covers out-of-network services furnished
by a provider in person when requested by the enrollee as provided in
Sec. 422.135(c)(1) and (2) of this chapter, with in-network cost
sharing for the enrollee.
We believe it is appropriate to permit exceptions to the network
evaluation standards in Sec. 422.116(b) through (e) in these
situations because enrollees in FI-SNPs do not generally travel to
receive care, so the time and distance standards that apply to other
plan types are not appropriate for I-SNP plans. As part of this
proposal, we proposed to add to the factors that CMS will consider
whether to approve the exception request a new factor specifically
related to this type of exception.
Finally, we proposed new regulation text to ensure that the
exception for FI-SNPs is used by and available only to FI-SNPs. We
proposed a new paragraph (f)(3) at Sec. 422.116 to require any MA
organization that receives the exception provided for FI-SNPs to agree
to offer only FI-SNPs on the contract that receives the exception. To
support the provision outlined at Sec. 422.116(f)(3), CMS also
proposed to add, at Sec. 422.504(a)(21), a new contract provision that
MA organizations must not establish additional plans (or plan benefit
packages, called PBPs) that are not facility-based I-SNPs to a contract
that is within the scope of proposed Sec. 422.116(f)(3). This will
ensure MA organizations that have received the exception do not submit
additional PBPs that are not FI-SNPs to their FI-SNP only contracts.
CMS reviews
[[Page 30675]]
networks at the contract level which means if an MA organization were
to add an MA plan (that is, a PBP) that is not a FI-SNP to a contract,
the exception we proposed here will not be appropriate. We asked for
comment on this aspect of our proposal and whether additional
guardrails are necessary to ensure that the proposed new exception from
network adequacy evaluations is limited to FI-SNPs consistent with our
rationale for it.
Under our proposal, FI-SNPs will still be required to adhere to
Sec. 422.112 regarding access to covered benefits. For example, Sec.
422.112(a)(1)(iii) requires an MA coordinated care plan to arrange for
and cover any medically necessary covered benefit outside of the plan
provider network, but at in-network cost sharing, when an in-network
provider or benefit is unavailable or inadequate to meet an enrollee's
medical needs. Because all SNPs, including FI-SNPs, are coordinated
care plans, this beneficiary protection applies to them. Similarly, the
timeliness of access to care requirements newly adopted at Sec.
422.112(a)(6)(i) will apply. We believe that our proposal, as specified
in the proposed rule, appropriately balanced the need to ensure access
to covered benefits for enrollees in FI-SNPs while recognizing the
unique way this type of MA plan furnishes benefits and how enrollees
generally receive services at the institution where the enrollee
resides. Expanding this proposed new exception from the Sec. 422.116
network adequacy requirements to other I-SNPs that enroll special needs
individuals that reside in the community or other SNPs or MA plans that
are not designed to furnish services to institutionalized special needs
individuals will not be appropriate or serve the best interests of the
Medicare program or Medicare beneficiaries.
Summaries of the comments we received on this proposal to amend
Sec. 422.116(f) and our responses to them follow.
Comment: Commenters overall were supportive of our efforts to
broaden the bases of acceptable rationales for requesting an exception
from the requirements in Sec. 422.116 for facility-based I-SNPs.
Commenters also expressed support for CMS strengthening its general
oversight of I-SNPs to ensure people are receiving the care they need.
Specifically, commenters supported the proposal's expanded access to
telehealth care to ease beneficiary access to care. Also, commenters
believe this proposal is well-positioned to ensure individuals receive
necessary supports across the continuum of their care needs without
having to experience the disruption of changing Medicare coverage types
should there be a need for more extensive long-term care.
Response: CMS appreciates the support for our proposal, which we
are finalizing, to establish two new exceptions from the network
adequacy evaluations under Sec. 422.116(b) through (e) for certain FI-
SNPs, the factors and evidence CMS will consider in whether to grant
the exceptions, and the new requirement that an MA organization that
receives an exception for its FI-SNP(s) only offer FI-SNPs under the
contract that receives the exception approval. CMS would like to thank
all the commenters for their comments.
After careful consideration of all comments received, and for the
reasons set forth in the proposed rule and in our responses to the
related comments, we are finalizing the revisions to Sec. 422.116(f)
as proposed.
F. Increasing the Percentage of Dually Eligible Managed Care Enrollees
Who Receive Medicare and Medicaid Services From the Same Organization
(Sec. Sec. 422.503, 422.504, 422.514, 422.530, and 423.38)
Dually eligible individuals face a complex range of enrollment
options based on MA plan types (that is, HMOs, PPOs, private fee-for-
service plans, MA special needs plans, etc.), enrollment eligibility,
and plan performance, but which do not consider the enrollee's Medicaid
choice. Further, many of the coverage options available to dually
eligible individuals--even including many dual eligible special needs
plans (D-SNP)--do not meaningfully integrate Medicare and Medicaid,
chiefly because the parent organization of the D-SNP does not also
provide the enrollee's Medicaid services. The current managed care
enrollment and eligibility policies have resulted in a proliferation of
such D-SNPs and leave dually eligible individuals susceptible to
aggressive marketing tactics from agents and brokers throughout the
year.
Over the last decade, we have taken numerous steps to improve the
experiences and outcomes for dually eligible individuals through
various forms of Medicare-Medicaid integrated care. Despite progress,
there remain a significant number of enrollees who receive Medicare
services through one managed care entity and Medicaid services through
a different entity (misaligned enrollment), rather than from one
organization delivering both Medicare and Medicaid services (aligned
enrollment \209\). In the final rule titled 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 (CMS-4185-F) (hereinafter referred to
as the April 2019 final rule), we expressed our belief that aligned
enrollment, and especially exclusively aligned enrollment (when
enrollment in a parent organization's D-SNP is limited to individuals
with aligned enrollment), is a critical part of improving experiences
and outcomes for dually eligible individuals.
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\209\ 42 CFR 422.2 (definition of ``aligned enrollment'').
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Longer term, for dually eligible individuals who are in Medicare
and Medicaid managed care, we believe that we should continue to drive
toward increasing aligned enrollment until it is the normative, if not
only, managed care enrollment scenario. Our proposals represented an
incremental step toward increasing aligned enrollment, balancing our
long-term policy vision with our interest in limiting disruption in the
short term. For dually eligible individuals that elect MA plans, we are
focused on increasing enrollment in integrated D-SNPs: fully integrated
dual eligible special needs plans (FIDE SNPs),\210\ highly integrated
dual eligible special needs plans (HIDE SNPs),\211\ and applicable
integrated plans (AIPs).\212\ These D-SNP types more meaningfully
integrate Medicare and Medicaid services and administrative processes
(such as unified appeals and grievances) than coordination-only D-SNPs
\213\ that are not also AIPs.
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\210\ Effective 2025, FIDE SNPs as defined in Sec. 422.2 are
required to have EAE and would therefore be AIPs by definition. To
receive the FIDE designation, a D-SNP would be required to provide
nearly all Medicaid services, including long-term services and
supports, Medicaid behavioral health services, home health and DME.
\211\ HIDE SNPs as defined in Sec. 422.2 are required to cover
long-term services and supports or behavioral health services but
may have more Medicaid services carved out relative to plans with
the FIDE designation. HIDE SNPs that also operate with EAE would
meet the definition of an AIP, but there is no requirement for EAE
for the HIDE designation.
\212\ AIPs as defined in Sec. 422.561 are D-SNPs with EAE,
where the companion Medicaid MCO covers Medicaid benefits including
primary care and acute care, Medicare cost-sharing, and at a minimum
one of the following: home health services, medical supplies,
equipment, and appliances (DME), or nursing facility services.
\213\ Dual eligible special needs plans (D-SNPs) are defined at
Sec. 422.2. ``Coordination-only'' D-SNPs are D-SNPs that neither
meet the FIDE SNP nor HIDE SNP definition at Sec. 422.2 and for
which there are no Federal requirements to cover any Medicaid
benefits either directly or through an affiliated Medicaid managed
care plan.
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[[Page 30676]]
In the November 2023 proposed rule, we described interconnected
proposals that would (1) replace the current quarterly special
enrollment period (SEP) with a one-time-per month SEP for dually
eligible individuals and other LIS eligible individuals to elect a
standalone PDP, (2) create a new integrated care SEP to allow dually
eligible individuals to elect an integrated D-SNP on a monthly basis,
(3) limit enrollment in certain D-SNPs to those individuals who are
also enrolled in an affiliated Medicaid managed care organization
(MCO), and (4) limit the number of D-SNPs an MA organization, its
parent organization, or an entity that shares a parent organization
with the MA organization, can offer in the same service area as an
affiliated Medicaid MCO in order to reduce ``choice overload'' of D-SNP
options in certain markets. Affiliated Medicaid MCOs are Medicaid MCOs
offered by the MA organization, the same parent organization, or
another subsidiary of the parent organization. We noted that, in
combination, our proposals would create more opportunities for dually
eligible individuals to elect integrated D-SNPs, more opportunities to
switch to Traditional Medicare, and fewer opportunities to enroll in
MA-PD plans that do not integrate Medicare and Medicaid services. Table
HC1 summarizes the combined effects of these proposals, then we
describe each proposal in greater detail.
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\214\ We proposed that during AEP and other available enrollment
periods, MA organizations would not be permitted to enroll dually
eligible individuals into a D-SNP where such enrollment would not
result in aligned enrollment with an affiliated Medicaid MCO offered
in the same service area (that is, a Medicaid MCO offered by the MA
organization, its parent organization, or another subsidiary of the
parent organization).
[GRAPHIC] [TIFF OMITTED] TR23AP24.015
[[Page 30677]]
1. Proposed Changes to the Special Enrollment Periods for Dually
Eligible Individuals and Other LIS Eligible Individuals
Section 1860D-1(b)(3)(D) of the Act directs the Secretary to
establish an SEP for full-benefit dually eligible individuals under
Part D. The SEP, subsequently referred to as the continuous dual/LIS
SEP, codified at Sec. 423.38(c)(4), was later extended to all other
subsidy-eligible beneficiaries by regulation. The continuous dual/LIS
SEP allowed eligible beneficiaries to make Part D enrollment changes
(that is, enroll in, disenroll from, or change Part D plans, including
Medicare Advantage Prescription Drug (MA-PD) plans) throughout the
year, unlike other Part D enrollees who generally may switch plans only
during the AEP or via other applicable SEPs each year.
In the April 2018 final rule, we cited concerns with usage of the
continuous dual/LIS SEP related to enrollees changing plans frequently,
hindering care coordination efforts by D-SNPs; plans having less
incentive to innovate and invest in serving high-cost enrollees who may
disenroll at any time; and agents and brokers targeting dually eligible
individuals due to their ability to make enrollment elections
throughout the year (83 FR 16514). Ultimately, the April 2018 final
rule amended the continuous dual/LIS SEP to allow usage once per
calendar quarter during the first nine months of the year (that is, one
election during each of the following time periods: January-March,
April-June, July-September).
The quarterly dual/LIS SEP reduced individuals moving from one Part
D plan (including an MA-PD) to another Part D plan (including an MA-PD)
as frequently. However, in the November 2023 proposed rule we discussed
the ongoing concerns with the quarterly dual/LIS SEP:
Marketing. We remain concerned about marketing
opportunities, especially when they focus on dually eligible
individuals who, as a group, have lower levels of education, health
literacy, and access to resources that could help overcome sub-optimal
coverage decisions. Because the quarterly dual/LIS SEP still allows the
vast majority of dually eligible individuals to enroll in almost any
MA-PD plan, they remain a target for marketing activities from all
types of plans throughout the year.
Ability to enroll in integrated D-SNPs. The quarterly
dual/LIS SEP does not allow dually eligible individuals to enroll in
integrated D-SNPs after those individuals have exhausted the
opportunities allowed by the quarterly dual/LIS SEP.
Complexity for States. The quarterly dual/LIS SEP has
created some challenges related to aligning Medicare and Medicaid
enrollment dates for dually eligible individuals seeking to enroll in
integrated products. In the capitated financial alignment models of the
Financial Alignment Initiative (FAI), we waived the quarterly dual/LIS
SEP rules at State request to allow for monthly opportunities for
individuals to enroll or disenroll. This alleviated the complexity of
different Medicare and Medicaid enrollment periods and allows dually
eligible individuals more opportunities to enroll in integrated
products.
Complexity for enrollment counselors and individuals.
Enrollment counselors such as State Health Insurance Assistance
Programs (SHIPs) and State ombudsman programs have also noted that the
once-per-quarter rule is complicated and makes it difficult to
determine the enrollment options available to dually eligible
individuals.
To further protect Medicare beneficiaries, reduce complexity for
States and enrollment counselors, and increasingly promote integrated
care, we proposed two SEP changes. Section 1860D-1(b)(3)(D) of the Act
requires the Secretary to establish SEPs for full-benefit dually
eligible individuals, although it does not specify the frequency or
mechanics of those SEPs. Further, section 1860D-1(b)(3)(C) of the Act
grants the Secretary the authority to create SEPs for individuals who
meet other exceptional circumstances.\215\ Section 1859(f)(1) of the
Act permits the Secretary to set forth regulations related to how MA
organizations restrict the enrollment of individuals who are within one
or more classes of special needs individuals. Section 1859(f)(6)
establishes the authority to adopt a transition process to move dually
eligible individuals out of SNPs when they are not eligible for the
SNP. Section 1859(f)(8) of the Act also reflects an interest in and
goal of furthering the integration of D-SNPs; the requirement for us to
establish procedures for unified grievance and appeals processes and
requirement, in section 1859(f)(8)(D), for a mandatory minimum level of
integration illustrate how efforts to increase integration in
implementing and adopting standards for the MA program further the
goals of the program. Based on this, as outlined in detail in the
November 2023 proposed rule (88 FR 78568 through 78569), we proposed to
amend Sec. 423.38(c)(4)(i) to replace the quarterly dual/LIS SEP with
a simpler new dual/LIS SEP. The proposed dual/LIS SEP would allow
dually eligible and other LIS-enrolled individuals to enroll once per
month into any standalone prescription drug plan.
We noted that, functionally, the proposed revised dual/LIS SEP
would mean that such individuals could, in any month, switch PDPs or
leave their MA-PD for Traditional Medicare plus a standalone PDP (plans
that only offer prescription drug coverage). However, as proposed, the
dual/LIS SEP would no longer permit enrollment into MA-PD plans or
changes between MA-PD plans, although such options would still be
available where another election period permits.
In conjunction, based on the statutory authorities described above,
we also proposed to create a new integrated care SEP at Sec.
423.38(c)(35) for dually eligible individuals. This new integrated care
SEP would allow enrollment in any month into FIDE SNPs, HIDE SNPs, and
AIPs for those dually eligible individuals who meet the qualifications
for such plans.
For dually eligible individuals, our two SEP proposals would allow
a monthly election to:
Leave an MA-PD plan for Traditional Medicare by enrolling
in a standalone PDP,
Switch between standalone PDPs, or
Enroll in an integrated D-SNP such as a FIDE, HIDE, or
AIP.
If an eligible individual attempts to use, or uses, both the
monthly dual/LIS SEP and the integrated care SEP within the same month,
the application date of whichever SEP is elected last in time is the
SEP effectuated the first of the following month.
As a result of these proposals, dually eligible and other LIS-
eligible individuals, like other Medicare beneficiaries, would be able
to enroll into non-AIP coordination-only D-SNPs \216\ or other MA plans
only during the ICEP, AEP, or where another SEP permits. While the
proposed changes constrain some enrollment options at certain times of
the year, dually eligible individuals and other LIS-eligible
individuals would never have fewer choices than people who are not
dually or LIS eligible.
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\216\ Dual eligible special needs plans (D-SNPs) are defined at
Sec. 422.2. ``Coordination-only'' D-SNPs are D-SNPs that neither
meet the FIDE SNP nor HIDE SNP definition at Sec. 422.2 and are not
required to cover any Medicaid benefits.
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In the November 2023 proposed rule we stated our belief that the
proposed SEP changes would create more opportunity for dually eligible
or LIS individuals to leave MA-PD plans if
[[Page 30678]]
MA is not working well for them; reduce the incentive for most plans to
deploy aggressive sales tactics targeted at dually eligible individuals
outside of the AEP; increase transparency for Medicare beneficiaries
and enrollment counselors; create more opportunities for enrollment
into integrated D-SNPs; reduce the burden on States working to align
Medicaid MCO and D-SNP enrollment; and strengthen incentives for MA
sponsors to also compete for Medicaid managed care contracts.
We also noted some potential challenges of our proposal, including
limiting dually eligible individuals' ability to change MA-PD plans
outside of the AEP, MA-OEP, or other available SEPs in States with few
or no integrated D-SNPs; less incentive for MA plans to innovate and
invest in meeting the needs of high-cost dually eligible enrollees
because such individuals can disenroll at any time; and dually eligible
individuals changing between integrated care plans monthly, potentially
hindering care coordination and case management efforts. In addition,
since LIS individuals without Medicaid are ineligible for integrated D-
SNPs, our proposal limits how the dual/LIS SEP can be used for these
individuals compared to the current scope of the SEP.
Section 423.40(c) currently provides that the effective date of an
enrollment change in Part D during a special enrollment period
specified in Sec. 423.38(c), including the existing SEP for dually
eligible and other LIS-eligible individuals, will be the first day of
the calendar month following the month in which the election is made,
unless otherwise noted. In the November 2023 proposed rule, we
requested comments on using flexibilities at section 1851(f)(4) of the
Act and at Sec. 423.38(c) to establish a Medicare enrollment effective
date for the integrated care SEP at Sec. 423.38(c)(35) that differs
from the effective date in the current quarterly dual/LIS SEP to better
align with Medicaid managed care enrollment cut-off dates, as some
States do not enroll individuals on the first of the month following an
enrollment request after a certain cut-off date and delay the effective
date until the first of the following month.
2. Enrollment Limitations for Non-Integrated Medicare Advantage Plans
Aligned enrollment is a key feature of the FAI, PACE, and other
long-standing integrated care programs such as the Massachusetts'
Senior Care Options and Minnesota's Senior Health Options that started
as demonstration programs that were precursors to D-SNPs. Individual
States may also use their State Medicaid agency contracts (SMAC) to
limit enrollment in a D-SNP to the enrollees in an affiliated Medicaid
MCO. Further, we have adopted, as part of the definition in Sec.
422.2, enrollment limits for FIDE SNPs that require, beginning January
1, 2025, FIDE SNPs to have exclusively aligned enrollment.
Separate from contracting with D-SNPs via SMACs, States have
discretion in how they arrange their Medicaid managed care programs and
may use Medicaid MCOs to cover a comprehensive scope of Medicaid
benefits or use prepaid health plans to cover a smaller scope of
Medicaid benefits.\217\ Many States with Medicaid managed care programs
select a limited number of Medicaid MCOs through a competitive
procurement process.
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\217\ See 42 CFR 438.2 for definitions of the terms managed care
organization (MCO), prepaid ambulatory health plan, and prepaid
inpatient health plan.
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In many service areas, dually eligible individuals face complicated
enrollment policies, overwhelming marketing, and an increasingly
complex array of plans purportedly designed especially for them but
that do not offer meaningful Medicare and Medicaid integration due to
service area and enrollment misalignment.
We noted in the November 2023 proposed rule that some States have
utilized SMACs and selective contracting to limit the availability of
D-SNPs in the State to those MA organizations that also have contracts
with the State to cover Medicaid services. However, other D-SNP markets
have grown without any limitations on non-integrated plans. In some
markets, parent organizations of MA organizations have acquired
multiple D-SNPs by purchasing smaller plans and have not consolidated
the various plans, resulting in one parent organization operating
multiple D-SNPs within a single State, often with overlapping service
areas. For States that do not require parent organizations to
consolidate their plans, multiple D-SNPs of this type may continue to
operate indefinitely. This creates a market with a large number D-SNP
options that often do not offer significantly different benefits or
networks, which creates confusion for plan selection and could lead to
individuals choosing unaligned Medicare and Medicaid plans.
We recognize that States have policy interests and goals that shape
their Medicaid managed care programs, and our intent is to help further
support States interested in implementing EAE. We have historically
deferred to States to use SMACs to align Medicare and Medicaid plan
offerings consistent with State policy priorities. However, as the
number of dually eligible individuals with misaligned enrollment and
sheer number of D-SNPs have grown, we noted in the November 2023
proposed rule that we now believe that Federal rulemaking is warranted
to promote greater alignment of D-SNPs and Medicaid MCOs and to begin
to simplify the array of choices.
We have authority, per section 1857(e)(1) of the Act, to add MA
contract terms and conditions not inconsistent with the MA statute
(that is, Part C of Title XVIII of the Act) as the Secretary may find
necessary and appropriate. Given how section 1859(f)(8) of the Act
reflects a goal of furthering the integration of D-SNPs and how our
proposal is designed to reduce choice overload situations for dually
eligible individuals while furthering opportunities for enrollment in
integrated D-SNPs (that is, FIDE SNPs, HIDE SNPs, and AIPs), we believe
that the standard in section 1857(e)(1) is met. Further, section
1854(a)(5) of the Act is clear that we are not obligated to accept any
and every MA plan bid. Based on this, we proposed new regulations
Sec. Sec. 422.503(b)(8), 422.504(a)(20), 422.514(h), and
422.530(c)(4)(iii).
At Sec. 422.503(b)(8), we proposed to establish a new
qualification for an MA organization (or new applicant to be an MA
organization) to offer D-SNP(s) while at Sec. 422.504(a)(20) we
proposed to establish a new contract term for certain MA organizations.
At Sec. 422.514(h), we proposed to establish conditions for how
certain MA organizations and D-SNPs may enroll dually eligible
individuals and limit the number of D-SNPs that may be offered by
certain MA organizations. Finally, at Sec. 422.530(c)(4)(iii), we
proposed to establish a new crosswalk exception to authorize MA
organizations that are subject to these new enrollment limitations to
crosswalk their enrollees to a single D-SNP to accomplish aligned
enrollment.
Together, our proposals at Sec. Sec. 422.503(b)(8),
422.504(a)(20), and 422.514(h)(1) and (2) would require the following:
Beginning in plan year 2027, when an MA organization, its
parent organization, or an entity that shares a parent organization
with the MA organization, also contracts with a State as a Medicaid MCO
that enrolls dually eligible individuals in the same service area, D-
SNPs offered by the MA organization, its parent organization, or
[[Page 30679]]
an entity that shares a parent organization with the MA organization,
must limit new enrollment to individuals enrolled in (or in the process
of enrolling in) the D-SNP's affiliated Medicaid MCO. This would apply
when any part of the D-SNP service area(s) overlaps with any part of
the Medicaid MCO service area, even if the two service areas do not
perfectly align. Additionally, only one D-SNP may be offered by an MA
organization, its parent organization, or another MA organization with
the same parent organization in the same service area as the aligned
Medicaid MCO. We would only enter into a contract with one D-SNP for
full-benefit dually eligible individuals in the same service area as
that MA organization's affiliated Medicaid MCO (with limited exceptions
as described below).
Beginning in 2030, such D-SNPs must only enroll (or
continue to enroll) individuals enrolled in (or in the process of
enrolling in) the affiliated Medicaid MCO. Therefore, by 2030,
integrated D-SNPs would be required to disenroll individuals who are
not enrolled in both the D-SNP and Medicaid MCO offered under the same
parent organization (that is, offered by the parent organization or any
subsidiary), except that D-SNPs would still be able to use a period of
deemed continued eligibility to retain enrollees who temporarily lost
Medicaid coverage as described in Sec. 422.52(d). This also means that
where an enrollee is temporarily disenrolled from the affiliated
Medicaid MCO but is expected to be re-enrolled in the affiliated
Medicaid MCO within the period of deemed continued eligibility, the D-
SNP would not be required to disenroll that enrollee during that
period.
Consistent with how we believe MA organizations under the same
parent organization share operational and administrative functions, we
proposed to apply the regulations at the parent organization level.
To minimize enrollment disruption associated with achieving
compliance with our other proposals, we proposed a corresponding new
provision at Sec. 422.530(c)(4)(iii) that would provide a new
crosswalk \218\ exception to allow one or more MA organizations that
share a parent organization and offer D-SNPs subject to these proposed
new limits to crosswalk enrollees (within the same parent organization
and among consistent plan types) when the MA organization chooses to
non-renew or consolidate its current D-SNPs to comply with the new
rules in proposed Sec. Sec. 422.504(a)(20) and 422.514(h). The
proposed new crosswalk exception would explicitly permit moving
enrollments across contracts held by MA organizations with the same
parent organization; because we are not including any explicit
exception from the rule in Sec. 422.530(a)(2) prohibiting crosswalks
to different plan types, the receiving D-SNP must be the same plan type
as the D-SNP out of which the enrollees are crosswalked. We noted our
expectation that MA organizations who offer D-SNPs would leverage Sec.
422.530(c)(4)(iii)--as well as standard MA processes to add or remove
service areas--to come into compliance with Sec. 422.514(h).
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\218\ A crosswalk is the movement of enrollees from one plan (or
plan benefit package (PBP)) to another plan (or PBP) under a
contract between the MA organization and CMS. To crosswalk enrollee
from one PBP to another is to change the enrollment from the first
PBP to the second.
---------------------------------------------------------------------------
In addition, we proposed to codify at Sec. 422.514(h)(3) two
exceptions to our new proposed requirements at Sec. 422.514(h)(1) and
(2) (the exceptions would carry over as part of the cross-references to
compliance with Sec. 422.514(h) in Sec. Sec. 422.503(b)(8),
422.504(a)(20), and 422.530(c)(4)(iii)). In certain circumstances,
State D-SNP policy may require the need for more than one D-SNP for
full-benefit dually eligible individuals to operate in the same service
area. Under Sec. 422.514(h)(3)(i), we proposed to permit an MA
organization, its parent organization, or an entity that shares a
parent organization with the MA organization, offering more than one D-
SNP for full-benefit dually eligible individuals in the same service
area. For example, where a SMAC limits enrollment for certain groups
into certain D-SNPs (such as by age group), the MA organization may
offer additional D-SNPs for different groups of full-benefit dually
eligible individuals in the same service area accordingly. As proposed,
the exception would only be available where the SMAC requires different
eligibility groups for the different D-SNPs that are offered by the
same MA organization, its parent organization, or another MA
organization that shares the parent organization; this proposed
exception would allow States the flexibility to design future
integrated D-SNP programs with eligibility nuances should they so
choose.
To minimize enrollee disruption, our second proposed exception
would not prohibit an MA organization, its parent organization, or
another MA organization that shares a parent organization with the MA
organization, from continuing to operate both an HMO D-SNP and a PPO D-
SNP in a State where the proposed new policy applies. To achieve the
goals of the new regulation, including simplification of the D-SNP
market and promotion of integrated care through aligned Medicare and
Medicaid products, we proposed at Sec. 422.514(h)(3)(ii) that the MA
organization, its parent organization, or another MA organization that
shares a parent organization with the MA organization may offer (or
continue to offer) both the HMO and PPO D-SNPs only if they no longer
accept new full-benefit dually eligible enrollees in the same service
area as the D-SNP affected by the new regulations at Sec. Sec.
422.504(a)(20) and 422.514(h). Under this proposal, the MA
organization, its parent organization, and another MA organization that
shares a parent organization with the MA organization may only accept
new enrollment in one D-SNP for full-benefit dually eligible
individuals in the same service area as an affiliated Medicaid MCO, and
such new enrollment is limited to the full-benefit dually eligible
individuals who are enrolled (or are enrolling) in the affiliated
Medicaid MCO.
We also proposed at Sec. 422.503(b)(8) that in service areas in
which a D-SNP limits enrollment to individuals enrolled in (or in the
process of enrolling in) an affiliated Medicaid MCO, the MA
organization, its parent organization, or entities that share a parent
organization with the MA organization may not newly offer another D-SNP
for full-benefit dually eligible individuals, if it would result in
noncompliance with Sec. 422.514(h). Additionally, we proposed at Sec.
422.504(a)(20) to establish a new contract term for MA organizations
that offer D-SNPs to require compliance with the enrollment limits we
are proposing to add to Sec. 422.514(h).
Table HC2 summarizes enrollment scenarios to illustrate the
combined effects of our proposed SEP changes and enrollment
limitations. The term ``D-SNP's parent organization'' as used in the
table includes the MA organization that offers the D-SNP, the MA
organization's parent organization, and any other entity (MA
organization or otherwise) that shares the parent organization with the
MA organization that offers the D-SNP.
[[Page 30680]]
[GRAPHIC] [TIFF OMITTED] TR23AP24.016
We noted that our proposals on enrollment limitations for non-
integrated D-SNPs would apply based on an MA organization having an
affiliated Medicaid MCO. However, we noted that we considered whether
our proposals should apply where an MA organization has other
affiliated Medicaid managed care plan options as well, including
prepaid inpatient health plans (PIHPs) and prepaid ambulatory health
plans (PAHPs). We expressed concern that applying our proposals to
PIHPs and PAHPs could cause disruption without significantly furthering
the goals of our proposals, but we solicited comments on the issue.
We noted that our proposals would require updates to the systems
and supports designed to aid individuals in making Medicare choices.
This includes MPF, HPMS, and other resources that help to outline
available plan choices and is important where dually eligible
individuals have choices that would vary based on the type of plan and
time of year. We noted that we would welcome recommendations on how the
choice architecture could best support the proposals or objectives
described in the November 2023 proposed rule.
Overall, we noted our proposals at Sec. Sec. 422.503(b)(8),
422.504(a)(20), 422.514(h), and 422.530(c)(4)(iii) would increase the
percentage of D-SNP enrollees in aligned enrollment, and--over time--
exclusively aligned enrollment (EAE), increasing access to the
comprehensive coordination of care, unified appeal processes across
Medicare and Medicaid, continuation of Medicare services during an
appeal, and integrated materials that come with enrollment in one or
more of the various types of integrated D-SNPs; prompt MA organizations
to consolidate PBPs down to a single PBP for full-benefit dually
eligible individuals that is aligned with their Medicaid MCO that fully
or partially overlaps the D-SNPs service area; reduce the number of D-
SNP options and reduce choice overload and market complexity where
parent organizations offer multiple D-SNP options in the same or
overlapping service areas; remove some incentives for agents and
brokers to target dually eligible individuals lessening the assistance
needed from advocates and SHIP counselors to correct enrollment issues;
and simplify provider billing and lower the risk of inappropriate
billing.
While noting many benefits to our proposals, we acknowledged
certain challenges:
Our proposals would reduce the number of D-SNP options for
Medicaid MCO enrollees in some States. It is plausible that some dually
eligible individuals could benefit from the unique combinations of
provider networks and supplemental benefits that could be possible only
by enrolling in misaligned Medicare and Medicaid plans.
Making plan choices clear under our proposals to dually
eligible individuals, SHIP counselors and others would require changes
to MPF, HPMS, and other CMS public materials explaining Medicare
coverage options. Systems changes often present unknown challenges and
a learning curve for users while they become accustomed to new updates.
It also may seem that our proposal on limiting enrollment
in D-SNPs offered by MA organizations with affiliated Medicaid MCOs, in
isolation, would disadvantage parent organizations that choose to offer
Medicaid MCOs as well as D-SNPs because such organizations would be
limited in the number of D-SNP offerings and would be required to align
their enrollment between D-SNP and MCO for full-benefit dually eligible
individuals. However, our SEP proposals would have the opposite effect
by permitting enrollment into integrated D-SNP options that cover both
Medicare and Medicaid benefits using the new one-time-per month SEP.
Therefore, we believe our proposals, in combination, would maintain a
high level of competition and choice, even while imposing some new
constraints.
MA organizations that operate both D-SNPs and Medicaid
MCOs might elect to participate in fewer competitive Medicaid
procurements (or exit Medicaid managed care in ``any willing provider''
States) to be exempted from the proposed restrictions on plan
enrollment and number of plan offerings. This could adversely affect
competition and the minimum choice requirements in Sec. 438.52 for
Medicaid managed care programs. However, our SEP proposals would have
the opposite effect, since only integrated D-SNPs could benefit from
the new integrated care SEP, and overall, we believe our proposals, in
combination, maintain strong incentives for organizations to compete
for Medicaid managed care contracts.
The enrollment and eligibility restrictions--without the
offsetting proposed SEP changes--could incentivize sponsors to create
D-SNP look-alikes or other types of MA plans
[[Page 30681]]
to build enrollment of dually eligible individuals without being
subject to the enrollment limits and integration requirements
associated with D-SNPs (although we plan to mitigate this risk with
proposed revisions to Sec. 422.514(d) and (e) in section VIII.G of the
proposed rule). Finally, beginning in 2030, our proposal would no
longer allow some enrollees to stay in their current D-SNPs, causing
some enrollee disruption where the D-SNPs were unable to completely
align their D-SNP and Medicaid MCO populations.
We received the following comments on this proposal and respond to
them below:
Comment: Many commenters, including MedPAC and MACPAC, generally
supported the proposals to increase the percentage of dually eligible
individuals who receive Medicare and Medicaid services from the same
organization. These commenters noted the proposals, taken together,
would reduce administrative burden, support Medicaid agencies' ability
to coordinate care, create more efficient program management, make it
easier to navigate integrated care, and strengthen integrated care
plans so that Medicare and Medicaid feel like one program. Some
commenters stated the proposals would help to address marketing
practices by MA organizations and agents and brokers that can be
overwhelming and misleading, contributing to coverage decisions that do
not meet enrollees' needs. A few commenters stated that the proposed
changes may result in short-term disruptions to care but, in the long
term, would significantly increase the percentage of dually eligible
individuals receiving integrated care, which would likely result in
improved care coordination, access to services, health outcomes, and
enrollee experience. A commenter expressed support for the proposals,
citing expanded access to integrated materials unified appeal processes
across Medicare and Medicaid, and continued Medicare services during an
appeal. A commenter also stated the proposals would improve the health
care and social service needs of dually eligible individuals through
the delivery of care and services that are coordinated through aligned
enrollment in integrated Medicare and Medicaid plans. A commenter
supported the proposal and noted navigating separate programs makes it
extremely difficult for health care providers to deliver patient-
centered care and challenging for individuals and their families to
navigate care, appeal a coverage decision, or determine who to call for
help.
Response: We appreciate the comments and support for increasing the
percentage of dually eligible individuals in aligned enrollment. We
agree with commenters that the proposal would reduce the volume of
marketing activities, improve integration of Medicare and Medicaid
services, and simplify navigation of complex programs for enrollees,
their caregivers, and other groups supporting dually eligible
individuals.
Comment: Many other commenters generally opposed the interconnected
SEP and enrollment limitation proposals. A number of commenters stated
they understand--and in some cases support--CMS's goal to improve
integrated care for dually eligible individuals but believe CMS's
proposals would lead to unintended consequences and overly burdensome
requirements that could ultimately lead to fewer plans in some service
areas, reducing MA plan competition and beneficiary choice. Some
commenters stated the proposals would increase burden and complexity
for States. Some commenters recommended CMS consider and mitigate any
negative impacts on access prior to adopting policies that would limit
the number of D-SNPs offered by MA organizations. A commenter also
expressed general concern with the proposals and urged CMS to not move
forward with finalizing the proposed changes.
Response: We acknowledge the commenters' perspectives on the
proposals. As noted in the proposed rule (88 FR 78567), we believe our
proposals represent an incremental step toward increasing aligned
enrollment for dually eligible individuals who are in Medicare and
Medicaid managed care, balancing our long-term policy vision with our
interest in limiting disruption in the short term. We believe the
combination of the SEP and enrollment limitation policies maintain
strong incentives for organizations to compete for Medicaid managed
care contracts while also reducing choice overload and incentives for
agents and brokers that target dually eligible individuals. Further, we
believe the opportunity to increase access to comprehensive
coordination of care, unified appeal processes across Medicare and
Medicaid, continuation of Medicare services during an appeal, and
integrated materials outweighs any disadvantages in the shorter term.
Comment: Numerous commenters, including MedPAC and MACPAC,
supported the proposals that would (1) replace the quarterly dual/LIS
SEP with a monthly dual/LIS SEP that allows individuals enroll in
Traditional Medicare and a PDP, and (2) create the new monthly
integrated care SEP. A number of commenters stated the changes to the
dual/LIS SEP would reduce aggressive marketing tactics from agents and
brokers targeting dually eligible individuals and simplify counseling
and messaging for the monthly SEP. Some commenters noted the SEPs give
individuals freedom of choice because they are not locked into a plan
for months that does not work for them. Other commenters stated the
SEPs create less complexity for Medicaid agencies to navigate since the
quarterly SEP posed challenges in aligning Medicare and Medicaid
enrollment. A number of commenters noted the integrated care SEP would
give enrollees the ability to enroll monthly into an integrated plan to
access needed services and address complex chronic care needs. Some
commenters stated only allowing movement into integrated plans would
lessen agents' and brokers' ability to enroll dually eligible
individuals into coordination-only D-SNPs that create fragmentation and
disintegration.
Response: We thank the commenters for their support of the SEP-
related proposals. We agree these changes will help to address
aggressive marketing, simplify messaging for dually eligible
individuals and choice counselors, reduce complexity for States, and
overall increase the percentage of dually eligible managed care
enrollees who are in FIDE SNPs, HIDE SNPs, and AIPs. We continue to
believe that aligned enrollment, and especially exclusively aligned
enrollment, is a critical part of improving experiences and outcomes
for dually eligible individuals and will continue to drive toward
increasing aligned enrollment until it is the normative, if not only,
managed care enrollment scenario.
Comment: A number of commenters expressed concerns about the impact
of the SEP proposals on partial-benefit dually eligible individuals and
noted that partial-benefit dually eligible individuals would not be
able to benefit from the integrated care SEP. Several commenters stated
that partial-benefit dually eligible individuals experience similar
health care needs as full-benefit dually eligible individuals and
should have access to the same enrollment opportunities using SEPs. A
commenter stated that partial-benefit dually eligible individuals may
have greater health care needs since their health may worsen over time
due to lack of State coverage and payment for necessary services and
should have access to the same plan options.
[[Page 30682]]
A number of commenters indicated that partial-benefit dually
eligible enrollees in MA plans and D-SNPs benefit from lower cost
sharing, greater coordination of care and services, and access to
supplemental benefits that are not available in the Traditional
Medicare environment, plus disease management for those with chronic
illnesses. A few of these commenters stated that although these
enrollees do not have access to and thus do not require coordination of
Medicaid services, they can nevertheless benefit from the model of care
provided by coordination-only D-SNP plans, which are not present in
traditional MA-PD plans or Traditional Medicare. Another commenter
requested that CMS reconsider how CMS's SEP proposals may result in
greater dislocation, reduced care management, increased marketing, and
reduced opportunities for partial-benefit dually eligible and LIS
individuals.
Some commenters urged CMS to either retain the quarterly dual/LIS
SEP or create a corresponding SEP allowing partial-benefit dually
eligible individuals to enroll in coordination-only D-SNPs. A commenter
noted that a quarterly SEP for coordination-only D-SNP enrollment would
ensure equity and parity between partial-benefit and full-benefit
dually eligible individuals.
A few commenters expressed concern about the impact of CMS's SEP
proposal on dually eligible individuals who are not Qualified Medicare
Beneficiaries (QMBs). The commenter noted that if these individuals
needed to change coverage outside of the standard enrollment periods,
due to the lack of comprehensive Federal Medigap protections, they may
not be eligible for a Medigap plan. Even if they were able to enroll,
most Medigap plans have unaffordable premiums or out-of-pocket costs
making enrollment in Traditional Medicare unattractive.
Response: We thank the commenters for their perspectives. We noted
in the proposed rule (88 FR 78570) that our proposals at Sec.
423.38(c)(4)(i) would allow partial-benefit dually eligible individuals
and LIS eligible individuals the opportunity to disenroll from an MA-PD
plan (to Traditional Medicare) in any month throughout the year and
switch between standalone PDPs on a monthly basis. CMS regulations do
not prohibit partial-benefit dually eligible individuals from enrolling
in non-AIP HIDE SNPs; however, States may require more limited
enrollment in HIDE SNPs via the SMAC.
We acknowledge the SEP proposals limit opportunities for partial-
benefit dually eligible individuals and LIS eligible individuals to
enroll in MA-PDs and coordination-only D-SNPs. Partial-benefit dually
eligible individuals and LIS eligible individuals would still have the
ability to make changes to their MA plan or non-integrated D-SNPs
during the AEP, MA-OEP, or where another SEP permits.
With regard to retaining the quarterly dual/LIS SEP or creating a
new SEP for partial-benefit dually eligible individuals to enroll in
coordination-only D-SNPs, we direct the commenter's attention to the
proposed rule (88 FR 78571), where we expressed our belief that the
current managed care enrollment and eligibility policies have resulted
in a proliferation of coordination-only D-SNPs and leave dually
eligible individuals susceptible to aggressive marketing tactics from
agents and brokers throughout the year. Adopting a new SEP for partial-
benefit dually eligible individuals or extending the new integrated
care SEP that we are adopting at Sec. 423.38(c)(35) would not address
that concern and would not further our goals of increasing aligned
enrollment in integrated D-SNPs.
We recognize that non-QMB dually eligible individuals who enroll in
Traditional Medicare may not be able to select a Medigap plan to cover
cost-sharing, depending on the timing of that choice and State laws
regarding Medigap enrollment. However, this is also true today, and we
believe the benefits of the SEP proposals, including protecting
Medicare enrollees from aggressive marketing tactics, reducing
complexity for States and enrollment counselors, and promoting access
to integrated care, outweigh the potential drawbacks.
Comment: Several commenters believed the integrated care SEP would
only allow for enrollment in AIPs. A few commenters raised concerns
about the potential for continued enrollment in misaligned plans. A
commenter identified a State that is implementing default enrollment to
increase alignment between Medicaid and Medicare but does not require
HIDE SNPs to operate with exclusively aligned enrollment (EAE). The
commenter further stated that the integrated care SEP would undermine
current enrollment alignment, citing that it does not take into account
Medicaid MCO enrollment and would give dually eligible individuals more
opportunities to misalign their Medicare and Medicaid coverages.
Another commenter urged CMS to consider a bar on new enrollments
without concurrent alignment. The commenter recommended limiting the
use of the integrated care SEP only when it would result in aligned
enrollment with the Medicaid MCO.
Response: We share the concerns raised by commenters that, in
certain instances, dually eligible individuals already enrolled in
aligned plans could use the integrated care SEP as originally proposed
at Sec. 423.38(c)(35) to misalign their Medicare and Medicaid
coverage. In States that do not require EAE, default enrollment
mechanisms authorized under Sec. 422.66(c)(2) can be used to enroll
dually eligible individuals in a D-SNP that is affiliated with the
Medicaid MCO in which the individual is enrolled for Medicaid coverage.
However, without a State requiring D-SNPs to comply with EAE
requirement as part of their SMAC, dually eligible individuals would
theoretically be able to use the proposed integrated care SEP to elect
a non-aligned HIDE SNP.
In the proposed rule (88 FR 78567), we discussed the primary goals
of the proposals to drive toward increasing aligned enrollment for
dually eligible individuals who are in Medicare and Medicaid managed
care. The SEP polices we proposed and are finalizing are intended to
create more opportunities for enrollment in integrated D-SNPs so that
dually eligible individuals can experience plans that more meaningfully
integrate Medicare and Medicaid services. While the integrated care
SEP, as proposed, would create more opportunities to elect integrated
D-SNPs, it could potentially also allow opportunities to misalign
enrollment to persist in limited situations, which is contrary to our
policy goals or intent for this new SEP.
After considering the comments received, we are finalizing the
integrated care SEP with a narrower scope so that dually eligible
individuals may use the SEP to enroll in a FIDE SNP, HIDE SNP, or AIP
if they are enrolled in or in the process of enrolling in the sponsor's
affiliated Medicaid managed care plan. We are finalizing Sec.
423.38(c)(35) largely as proposed but with a modification that the SEP
is available only to facilitate aligned enrollment, as that term is
defined in Sec. 422.2. As a result of this limitation, this SEP will
effectively be limited to full-benefit dually eligible individuals
because ``aligned enrollment'' is defined by reference to full-benefit
dual eligibility. Adding this limitation to the integrated care SEP
creates less opportunity for full-benefit dually eligible individuals
to misalign their Medicare and Medicaid plans. Because FIDE SNPs
(starting in 2025) and AIPs feature exclusively aligned enrollment, the
effect of this change from our
[[Page 30683]]
original proposal is specific to HIDE SNPs. Relative to our original
proposal, the same range of plans can enroll people using the finalized
SEP, but it can be used in fewer circumstances and only by full-benefit
dually eligible individuals: the integrated care SEP may be used only
when it achieves aligned enrollment.
Comment: A few commenters expressed their belief that a monthly SEP
would result in more marketing toward dually eligible individuals and
would allow brokers to potentially take advantage of prospective
enrollees.
Response: We appreciate the perspective raised by commenters but
disagree that the monthly SEP, in combination with our other proposals,
would result in more marketing toward dually eligible individuals or
would allow brokers to potentially take advantage of prospective
enrollees. As we noted in the proposed rule (88 FR 78570), we believe
the proposals would remove some incentives both for MA-PD plans to
deploy aggressive sales tactics targeted at dually eligible individuals
outside of the AEP and for agents and brokers to target dually eligible
individuals (especially among employed or captive agents affiliated
with plans that do not offer integrated D-SNPs). Based on our review of
2023 plans, approximately 5 percent of the plans that can currently
enroll dually eligible individuals using the quarterly dual/LIS SEP
would be available as options for full-benefit dually eligible
individuals using the proposed new monthly integrated care SEP at Sec.
423.38(c)(35).
Comment: A few commenters expressed concern that the proposed
monthly integrated care SEP could negatively impact an MA
organization's Star Ratings, stating that allowing dually eligible
individuals to make enrollment decisions on a monthly basis would be
disruptive and impact quality outcomes, making it more difficult for
plans to maintain or improve Star Ratings. A commenter further stated
that where State Medicaid managed care programs require minimum Star
Ratings of D-SNPs with affiliated Medicaid MCOs, the monthly integrated
care SEP could result in non-compliance with that standard and
jeopardize their ability to provide Medicaid coverage. Another
commenter suggested that if CMS finalizes the monthly integrated care
SEP proposal, CMS should make changes to the Members Choosing to Leave
the Plan measure to exclude individuals who disenroll under the monthly
SEP to move into a plan with a higher level of integration or from one
D-SNP type to another, given the enrollment change is driven by
something other than dissatisfaction with the plan, similar to the
current exclusion for individuals enrolling in an employer group plan.
Another commenter suggested that the SEP proposals, if finalized, could
result in an increase in complaints by dually eligible individuals due
to a lack of understanding of the changes to the SEPs and encouraged
CMS to consider updating its practices around the Complaint Tracking
Module (CTM) for disenrollments accordingly (see section III.O of the
final rule for a discussion on codification of complaints resolution
timelines and other requirements related to CTMs).
Response: We appreciate the commenters' perspective on this issue.
We do not currently have evidence to suggest allowing full-benefit
dually eligible individuals the opportunity to enroll into integrated
D-SNPs in any month would negatively impact Star Ratings; in fact, we
have reason to believe that the totality of the SEP proposals may
actually benefit integrated D-SNPs on Star Ratings, including the
Members Choosing to Leave the Plan measure. In 2023, a study published
in Health Affairs noted that nearly one-third of dually eligible
individuals in ``D-SNP look-alike plans,'' which the authors defined as
MA plans that are marketed toward and primarily enroll dually eligible
individuals but are not subject to Federal regulations requiring
coordination with Medicaid, were previously enrolled in integrated care
programs.\219\ Such look-alike plans would no longer be able to accept
enrollments from beneficiaries using the dual/LIS SEP at Sec.
423.38(c)(4)(i) with our proposed and finalized changes. The dual/LIS
SEP at Sec. 423.38(c)(4)(i) would dramatically reduce the total array
of options available outside of the AEP while the integrated care SEP
at Sec. 423.38(c)(35) allows enrollment by full-benefit dually
eligible individuals into integrated D-SNPs, which together may improve
integrated D-SNP performance on measures such as Members Choosing to
Leave the Plan. Further, in the CY 2025 Advance Notice, we discussed a
non-substantive update to that measure to exclude any enrollment into a
plan designated as an AIP from the numerator of this measure, which
could address the concerns if finalized; under the non-substantive
update, CMS would treat a change in enrollment to an AIP from a non-
integrated MA plan as an involuntary disenrollment.\220\ We are
committed to monitoring the impact of these policy changes and to
considering necessary changes in the future as appropriate.
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\219\ Ma Y., Frakt A., Roberts, E., Johnston K., Phelan J., and
Figueroa J. Rapid Enrollment Growth in `Look-Alike' Dual-Eligible
Special Needs Plans: A Threat to Integrated Care. Health Affairs
July 2023 [cited February 2024] https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2023.00103.
\220\ Advance Notice of Methodological Changes for Calendar Year
(CY) 2025 for Medicare Advantage (MA) Capitation Rates and Part C
and Part D Payment Policies, p127-128. CMS explained that there are
two exceptions to this: (1) If the plan in the old contract is also
an Applicable Integrated Plan, then the enrollment is not excluded
from the numerator; and (2) Any switch between D-SNPs in Florida is
not excluded because all D-SNPs in Florida are directly capitated by
the State for Medicaid services and therefore already provide
aligned Medicare and Medicaid coverage.
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Comment: Numerous commenters stated the SEP proposals would
increase movement in plans that could undermine care coordination and
continuity of care. Some commenters expressed concern that D-SNPs would
not be able to set up effective models of care if individuals could
switch plans monthly. A few commenters stated changing plans monthly
could lead to a delay in care if enrollees have to change providers or
ask for new referrals for specialists or medications. A commenter
stated that using a monthly SEP could cause disruption for dually
eligible individuals if they are already receiving ongoing services
such as home health, particularly if the new plan does not have the
same provider network. A commenter noted that the SEPs would limit
plans' ability to address social determinants of health (SDoH). Another
commenter stated allowing individuals to change plans monthly creates
less effective medication therapy management (MTM) programs.
Response: We thank commenters for their feedback and agree that
coordination of care is an important element of integrated care plans.
While we acknowledge changing plans monthly could impact coordination
of care, we believe the benefits of reduced agent and broker marketing,
improved transparency for enrollment counselors and individuals, and
increased access to integration of Medicare and Medicaid benefits and
administration outweigh the downsides. In addition, for individuals
that are receiving an ongoing course of treatment and make an
enrollment change, the April 2023 final rule (88 FR 22206) amended
Sec. 422.112(b)(8)(i)(B) to require MA organizations offering
coordinated care plans, including D-SNPs, to have prior authorization
policies that provide for a minimum 90-day transition period for any
ongoing course(s) of treatment even if the course of treatment was for
a service that commenced with an out-of-
[[Page 30684]]
network provider. We do not expect the volume of transitions to
increase based on this rulemaking, and noted in the proposed rule (88
FR 78570), that approximately 5 percent of the MA-PD plans that can
currently enroll dually eligible individuals using the quarterly dual/
LIS SEP would be available as options for full-benefit dually eligible
individuals using the once per month integrated care SEP.
As discussed in the proposed rule (88 FR 78570), we believe the
integrated care SEP at Sec. 423.38(c)(35) will create more
opportunities for full-benefit dually eligible individuals to enroll in
integrated plans, promoting coordination of Medicare and Medicaid
services from the same organization. This includes plans addressing
enrollees' SDoH needs and ensuring effective MTM programs are in place.
In addition, we noted in the proposed rule (88 FR 78570) that the dual/
LIS SEP at Sec. 423.38(c)(4)(i) allows dually eligible individuals to
disenroll from their MA-PD plan if MA is not working well for them.
This would allow individuals to access providers that accept Medicare
FFS that may not be in the MA plan's network, including providers that
may be able to better address SDoH needs. We also note that dually
eligible individuals leaving MA-PDs for Traditional Medicare and a PDP
would still have access to an MTM program as this is a requirement of
Part D plans at Sec. 423.153(d). We do not anticipate the SEP changes
will lead to dually eligible individuals making continuous changes to
their enrollment or a major increase in SEP usage overall.
We will continue to monitor dual/LIS SEP usage as it transitions to
monthly once again and can revisit in future policy making if issues
arise.
Comment: Some commenters recommended the integrated care SEP be
limited to allow dually eligible individuals in Traditional Medicare or
MA-PDs to enroll in integrated D-SNPs but not permit switching between
integrated D-SNPs on a monthly basis. Other commenters suggested
allowing monthly enrollment into FIDE SNPs, HIDE SNPs, and AIPs but
only allowing disenrollment during the AEP and MA-OEP to reduce changes
between plans. A commenter supported the integrated care SEP but was
concerned it created opportunities for providers to influence
individuals' Medicare enrollment choices and recommended permitting
dually eligible individuals to enroll into integrated care plans once
per month but not allow disenrollments from an integrated care plan to
Traditional Medicare.
Response: We thank commenters for the recommendations. We
acknowledge the concern that a monthly SEP can disrupt coordination of
care. While we acknowledge that there is a risk that full-benefit
dually eligible individuals in integrated care plans could use the new
integrated care SEP to switch monthly, we think the likelihood is low
and the benefits (reduced marketing, improved transparency, and greater
access to integrated care) outweigh potential risks.
We will continue to monitor dual/LIS SEP usage as it transitions to
once per month again and can revisit in future policy making if issues
arise.
Comment: Several commenters recommended limiting use of the
integrated care SEP to only allow enrollment into integrated plans with
quality ratings that are equal to or higher than the enrollee's current
plan. Another commenter suggested only allowing use of the integrated
care SEP to enroll in a FIDE SNP, HIDE SNP, or AIP with a Star Rating
of four or greater.
Response: We appreciate the recommendations from commenters
regarding the importance of high-quality integrated care plans. While
we understand commenters' concerns, we do not currently prevent
Medicare beneficiaries from enrolling in plans that do not have a
quality rating equal to or higher than their current plan's rating when
making new enrollment elections. Star Ratings are important indicators
of plan performance, but other factors--such as supplemental benefits
or participation of certain providers in-network--may make a 4-Star
plan a better option for someone currently in a 4.5-Star plan. We do
not intend to impose this limitation on the integrated care SEP.
Individuals wishing to enroll in a plan with 5 Stars will continue
to have access to the 5-Star SEP at Sec. 423.38(c)(20).
Comment: Other commenters suggested there may be countervailing
incentives between the goal of increased integration and CMS's proposal
to allow dually eligible individuals to move from an MA plan to
Traditional Medicare and change between standalone Part D plans on a
monthly basis. A few of these commenters noted that the proposal
contradicts the goal of managing the care of an underserved and needy
population. A commenter stated that MA plans, regardless of D-SNP
integration status, provide a level of coordination that would be lost
if enrollees reverted to Traditional Medicare. A commenter stated that
potential changes in benefits, personalized care plans, providers, and
care coordinators could lead to greater enrollee confusion, treatment
errors, and care transition failures resulting in worsening health
outcomes. The commenter stated that the core value proposition of
integrated D-SNP coverage is the improved and seamless coordination of
their Medicare and Medicaid benefits by a single insurer and believed
monthly SEPs would damage the aligned enrollment in integrated plans
that CMS is trying to accomplish because changes between plans or to
Traditional Medicare undermine coordination of care. Another commenter
opined that permitting dually eligible individuals to disenroll from MA
plans in any month increases opportunities for adverse selection in
Traditional Medicare and favorable selection in MA, especially if
individuals are disenrolling from MA when they develop complex health
needs. The commenter continued that such selection issues could further
distort payments to MA plans and increase overall Medicare spending.
Response: We appreciate the commenters' perspectives on this issue.
As we discussed in the proposed rule (88 FR 78567), we believe that
aligned enrollment and especially exclusively aligned enrollment is a
critical part of improving experiences and outcomes for dually eligible
individuals because it allows States and plans to achieve greater
levels of integration in the provision and coverage of benefits and
plan administration for enrollees. Further, in the longer term, we
believe that dually eligible individuals who are in Medicare and
Medicaid managed care should receive services through the same
organization and therefore our proposed and finalized SEPs are designed
to incentivize enrollments into integrated D-SNPs to facilitate aligned
enrollment as defined in Sec. 422.2 while maintaining an SEP for LIS-
eligible and dually eligible individuals to change their Part D
coverage.
We acknowledge that under our proposals dually eligible individuals
would have more opportunities to enroll in Traditional Medicare
compared to opportunities to change enrollment to non-D-SNP MA-PDs and
non-integrated D-SNPs. As we noted in the proposed rule (88 FR 78570),
the SEP proposal at Sec. 423.38(c)(4)(i) could mean that MA plans have
marginally less incentive to innovate and invest in meeting the needs
of high-cost dually eligible enrollees when these enrollees may
disenroll at any time, thus exacerbating the phenomenon of higher-cost
dually eligible individuals disenrolling from MA. However, we believe
the benefits of the SEP proposals
[[Page 30685]]
outweigh the potential downsides, and we project in section XI of the
final rule that our SEP and enrollment limitation policies will result
in over $2 billion in Medicare savings over the ten-year projection
period. We will continue to monitor dual/LIS SEP usage and can consider
future policy options if issues arise.
Comment: Some commenters expressed concern that the SEP proposals
may increase burden on States and plans. Several commenters noted the
monthly SEPs would be administratively challenging for State Medicaid
agencies to operationalize, putting further strain on States that
already have limited capacity and budgetary challenges. Others noted a
monthly SEP could lead to increased misalignment between Medicare and
Medicaid plans because of monthly SEP usage or differences in
enrollment effective dates for Medicare and Medicaid causing States to
do extra work to continuously align enrollment into Medicaid managed
care plans whenever enrollees change between D-SNPs. A few commenters
stated the monthly SEPs could increase administrative costs on MA
organizations having to track and manage enrollment that is changing
monthly, including issuing ID cards, mailing materials, and the like.
Response: We appreciate the commenters' perspectives on this issue.
While commenters stated the monthly SEPs would increase State burden,
we noted in the proposed rule (88 FR 78570) our perspective that
changing the SEPs to monthly would reduce burden on States as they work
to align Medicaid MCO enrollment to D-SNP enrollment. We still believe
this to be the case, even if it is not currently true for all States.
This is particularly important for States transitioning their FAI
demonstrations to integrated D-SNPs, all of which operated with monthly
opportunities to change enrollment after requesting that CMS waive the
quarterly dual/LIS SEP when it was initially established. We will
continue to support States in their integration efforts by providing
technical assistance, including education and support in implementing
provisions of this final rule.
We acknowledge the concerns raised on enrollment effective date
challenges and MA organizations having to manage a changing enrollment
monthly. However, we do not anticipate the SEP changes, in combination
with other policies finalized in this rulemaking, will cause a major
increase in SEP usage, because, based on our review of 2023
information, only approximately 5 percent of the MA-PD plans that can
currently enroll dually eligible individuals using the quarterly dual/
LIS SEP would be available as options for full-benefit dually eligible
individuals using the proposed new monthly integrated care SEP (88 FR
78750). Therefore, we do not believe our finalized changes will worsen
existing challenges States and plans face around misaligned Medicare
and Medicaid enrollment effective dates.
We will continue to monitor dual/LIS SEP usage and can consider
future policy making if issues arise.
Comment: Some commenters raised concerns about the potential for
increased provider burden as a result of the SEP proposals. A commenter
noted, for example, that there are data lags in providers being
notified of changes in payer source and coverage information, and more
frequent changes in enrollment could result in delays to access to care
for individuals and additional billing challenges for providers. A
commenter further stated that frequent changes disrupt continuity of
care, leading to administrative challenges like new referrals and
authorizations, and an increase in administrative tasks like tracking
eligibility and billing adding additional costs to providers.
Commenters urged CMS to ensure accurate and timely information is
available to providers so operations are not disrupted by frequent
insurance changes.
Response: Changes in coverage often come with some administrative
challenges for enrollees, providers, and health plans. As proposed, our
policies would allow some people to change coverage more times per year
than our rules permit today. However, our proposals also limit options
for changing coverage in other situations, such that we do not expect
an increase in total changes in coverage. Furthermore, one way in which
we allow more coverage changes per year--changes among PDPs for people
in Traditional Medicare--generally does not trigger any changes in
provider networks as they would if they were changes from one MA-PD
plan to another. The providers seen by dually eligible individuals and
LIS-eligible individuals are likely to be enrolled in Medicare and
Medicaid; in the unlikely situation that an individual receives
treatment from an MA plan network provider that is not enrolled in
Medicare, the ability to transition to another healthcare provider that
is enrolled in Medicare is significantly easier than identifying a
provider in a different MA plan network. Therefore, we are not
persuaded by the argument that the SEP proposals would result in
significantly more plan changes leading to increased provider burden.
As noted in the proposed rule (88 FR 78750) and in previous responses,
a relatively small percentage (approximately 5 percent) of the MA-PD
plans would be available as options for dually eligible individuals
using the proposed new monthly integrated care SEP. As a result, we do
not believe that monthly changes would increase under the new SEPs. We
also believe that the SEP proposals in combination with those proposed
at Sec. Sec. 422.503(b)(8), 422.504(a)(20), 422.514(h), and
422.530(c)(4)(iii) would simplify provider billing and lower the risk
of inappropriate billing, because more enrollees would be in D-SNPs
with aligned enrollment, which generally means that providers would
submit one bill to one organization, rather than (a) billing a D-SNP
for Medicare covered services and the Medicaid plan (or State) for the
Medicare cost sharing amount, or (b) having to determine which plan
should be the primary payer for services covered in both programs, such
as home health or medical equipment.
Comment: Many commenters were concerned that the new SEP proposals
would result in confusion among Medicare beneficiaries and allow agents
and brokers to continue using aggressive marketing and sales tactics to
push optional or supplemental benefits instead of core coverage and/or
incentivize them to sign up as many individuals as possible to increase
commissions. Another commenter indicated the proposals would lead to
greater choice overload and suboptimal coverage decisions. Another
commenter stated that the ability to change plans monthly may generate
more confusion as to what coverage is available and what providers they
can and cannot see for specialized services. Commenters noted that
dually eligible individuals often do not understand that a prior
authorization does not move with them if they change carriers.
Response: We acknowledge the concerns raised by these commenters;
increasing dually eligible individuals' understanding of available
coverage options and limiting the use of aggressive marketing tactics
by agents and brokers are among the primary goals of these proposals.
However, we do not agree that the SEP proposals would create additional
confusion and choice overload relative to the status quo. As we noted
in the proposed rule (88 FR 78570), we believe the SEP proposals would
reduce the incentive for plans to deploy aggressive sales tactics
targeted at dually eligible individuals outside of
[[Page 30686]]
the AEP and would increase transparency for Medicare beneficiaries and
enrollment counselors on opportunities to change plans. We are
committed to exploring updates to the systems and supports designed to
aid individuals in making Medicare choices in conjunction with the
final rule. Finally, with respect to commenters' concerns about prior
authorizations, we note that the April 2023 final rule (88 FR 22206)
amended Sec. 422.112(b)(8)(i)(B) to require MA organizations offering
coordinated care plans to have prior authorization policies that
provide for a minimum 90-day transition period for any ongoing
course(s) of treatment for new enrollees even if the course of
treatment was for a service that commenced with an out-of-network
provider. While this does not fully guarantee coverage of services
authorized through prior authorization by another plan, it does provide
some protection against repetitive prior authorization processes as a
result of a change to a new MA (or MA-PD) plan.
Comment: Several commenters recommended CMS consider exceptions or
modifications to the SEP proposals to allow enrollment into additional
MA-PDs outside of the AEP or MA-OEP. A few commenters noted dually
eligible individuals should be able to choose between any MA plan
during a Medicaid MCO open enrollment period, when a Medicare enrollee
is newly eligible for Medicaid, and in States that do not have any
Medicaid managed care or carve dually eligible individuals out of
Medicaid managed care. Some commenters suggested maintaining the
quarterly dual/LIS SEP in States that do not have D-SNPs or integrated
D-SNPs so that individuals can enroll in other types of MA-PDs and have
continued access to supplemental benefits and coordination of care and
services. A commenter suggested keeping the quarterly SEP but allowing
two changes during the quarter of Medicaid renewal to allow dually
eligible individuals an additional opportunity to algin their Medicare
and Medicaid coverage. A commenter suggested allowing dually eligible
individuals to elect any MA-PD plan that is offered by an integrated
delivery system or maintains a provider network in which the majority
of physicians do not accept, or serve very few, Traditional Medicare
enrollees. A commenter also requested that CMS consider applying the
SEP changes on a State-by-State basis to take into account unique
situations for States where enrollees would be adversely limited in
choice and access.
Response: We appreciate commenters' suggestions to modify the SEP
proposals. While we acknowledge that States may have their own
enrollment policies and election periods, we believe the benefits of
the SEP proposals, including the opportunity to protect Medicare
enrollees from aggressive marketing tactics, reduce complexity for
States and enrollment counselors, and promote access to integrated
care, outweigh the potential drawbacks. Further, dually eligible
individuals would still have the ability to make changes to their MA
plan or non-integrated D-SNPs during the AEP, MA-OEP, or where another
SEP permits. For example, dually eligible individuals that have a
change in their Medicaid status--including newly gaining Medicaid
eligibility--continue to have access to an SEP at Sec. 423.38(c)(9).
We recognize dually eligible individuals will not be able to use
the integrated care SEP in States that currently do not have Medicaid
managed care plans, carve dually eligible individuals out of Medicaid
managed care, or do not have integrated D-SNPs (that is, do not have
Medicaid MCOs that are affiliated with D-SNPs or opportunities for
aligned enrollment). Allowing exceptions to the proposed SEPs for
certain plans or on a State-by-State basis would increase complexity
for dually eligible individuals and enrollment counselors in
understanding eligibility for the SEP and pose challenges for CMS to
monitor usage.
Comment: Some commenters recommended that CMS monitor and publicly
report SEP utilization. A commenter recommended that CMS create a
transparent, accessible central data source on SEP usage and
availability that would be available to SHIPs, State ombudsman
programs, and State Medicaid agencies to support administration and
oversight of SEP usage by MA plans. The commenter opined that making
such data available would improve transparency for parties that support
Medicare beneficiaries and dually eligible individuals to understand
their Medicare enrollment options and increase visibility into
potentially aggressive or misleading marketing behaviors, including
targeting by D-SNP look-alikes. A commenter urged CMS to monitor SEP
utilization patterns to ensure that plans are not dissuading
individuals from staying enrolled and that there are no other issues
that may be causing an individual to switch plans or leave MA. Another
commenter encouraged CMS to collect monthly SEP utilization data and
publicly report it at least annually. A commenter advised CMS to
closely monitor for unintended effects on D-SNP enrollees who make
multiple plan switches within a year. Citing potential challenges
associated with the CMS SEP proposal in States with few or no
integrated D-SNPs, a commenter requested that CMS conduct and release
an analysis of the proposal's impact on States and individuals on a
State-by-State basis.
Response: We thank commenters for their perspectives on this issue.
In the proposed rule (88 FR 78569), we discussed concerns with the
quarterly dual/LIS SEP creating complexity for SHIP and State ombudsman
programs as they do not have access a central data source to determine
if someone has already used the quarterly dual/LIS SEP, making it
difficult to determine what enrollment options are truly available to
dually eligible individuals. Changing the SEP to allow once-per-month
usage will reduce complexity for enrollment counselors and individuals.
In addition, if both the dual/LIS SEP and integrated care SEP are used
in the same month, the application date of whichever SEP was elected
last will be the enrollment effectuated the first of the following
month.
We are considering making updates to systems and supports,
including MPF and HPMS, that help individuals make Medicare choices.
One of the considerations is how to show plans available to individuals
along with options that align with their Medicaid enrollment.
We will work with States on implementing the policies finalized in
this rule and will continue to monitor all aspects and consider future
updates as appropriate.
Comment: Many commenters expressed significant concerns about
limiting enrollment outside of the AEP to Traditional Medicare and
PDPs. A few commenters suggested a revision to the dual/LIS SEP
proposal so that dually eligible and LIS eligible individuals who use
the SEP to disenroll from an MA-PD and enroll in Traditional Medicare
and a PDP would have the ability to return to their former MA-PD within
90 days if they are dissatisfied with their choice.
Response: We appreciate the suggestion to allow individuals to
return to their MA-PD plan within 90 days of disenrollment, but we are
declining to incorporate it into the final rule. We believe
incorporating a change like this could increase complexity for
enrollment counselors, plans, and CMS to determine when someone was
eligible to go back to their MA-PD plan and cause an increase in churn
and disruption with individuals making frequent enrollment changes.
However,
[[Page 30687]]
individuals may re-enroll where another SEP allows, such as for 5-Star
plans. In addition, under current rules, dually eligible individuals
can re-enroll into their former MA-PD plan or otherwise make a
different plan selection during the AEP, MA-OEP, or where another SEP
permits.
We acknowledge that the SEP changes will limit enrollment
opportunities in MA-PDs and non-integrated D-SNPs during certain times
of the year. We believe the benefits of the SEP proposals will do more
to protect Medicare enrollees from aggressive marketing tactics, reduce
complexity for States and enrollment counselors, and promote access to
integrated care.
Comment: A few commenters raised concerns regarding the integrated
care SEP and how it would apply in Oregon where some D-SNPs have a
unique ownership model with Coordinated Care Organizations (CCO) to
provide Medicaid managed care services. The D-SNPs aligned with some
CCOs are not considered HIDE SNPs because they are not owned or
controlled by the same parent organization as the CCO. The commenters
noted many dually eligible individuals would not be able to use the
integrated care SEP to enroll in the coordination-only D-SNPs aligned
with a CCO. Another commenter suggested allowing dually eligible
individuals in Oregon the ability to use the integrated care SEP to
enroll in coordination-only D-SNPs that are aligned with a CCO or for
CMS to expand the definition of AIP to include coordination-only D-SNPs
within a CCO.
Response: We thank the commenters for the additional information
and acknowledge that some States have unique Medicaid managed care
arrangements. We recognized in the proposed rule (88 FR 78570) there
would be some challenges in States with few or no integrated D-SNPs
because the lack of FIDE SNPs, HIDE SNPs, and AIPs would limit dually
eligible individuals' ability to change their MA-PD plan outside of the
AEP, MA-OEP, or as other SEPs permit. We believe the benefits of the
SEP proposals nationwide outweigh the potential drawbacks, including
that in some States the integrated care SEP we are finalizing at Sec.
423.38(c)(35) may not be fully accessible, in order to protect Medicare
enrollees from aggressive marketing tactics, reduce complexity for
States and enrollment counselors, and promote access to integrated
care.
Expanding the definition of HIDE SNP is beyond the scope of this
current rulemaking, and we believe that changes of the type recommended
by the commenter should be carefully considered and subject to notice
and an opportunity for comment by other interested parties, but we will
consider the Oregon example for potential future rulemaking.
Comment: Many commenters requested clarification on current SEPs
available to dually eligible individuals. Several commenters requested
confirmation that the PACE SEP in Part D would still be available for
individuals wishing to enroll in or disenroll from a PACE organization.
A commenter also noted that PACE participants have been targeted in
recent years by some MA-PD plans and D-SNPs encouraging them to
disenroll from PACE and requested confirmation the PACE SEP would still
be available for beneficiaries to re-enroll in PACE in these
situations.
A commenter opposed the SEP changes and requested an exclusion for
people who reside in institutions as their needs change frequently, as
do the providers who see them. Another commenter suggested keeping the
quarterly dual/LIS SEP but allowing individuals to use an SEP if they
receive inaccurate information about a plan prior to enrollment or an
agent enrolls them without their knowledge. Another commenter requested
CMS confirm that D-SNPs with a 5-Star Rating will still be able to
enroll individuals using the 5-Star SEP. Finally, a commenter supported
the dual/LIS SEP and integrated care SEP and appreciated that CMS noted
in the proposal that access to other SEPs will not change.
Response: We appreciate the commenters' request for clarity on the
continued availability of current SEPs. We proposed to change the
current dual/LIS SEP at Sec. 423.38(c)(4)(i) but otherwise did not
propose changes to the existing SEPs specifically mentioned by the
commenters and that are available in the Part D program outlined in
Sec. 423.38(c). The PACE SEP for Part D enrollees at Sec.
423.38(c)(14) will continue to be available for individuals wishing to
enroll in or disenroll from a PACE organization. The institutional SEP
at Sec. 423.38(c)(15) will continue to be available when an individual
moves into, resides in, or moves out of an institution. The exceptional
circumstances SEP at Sec. 423.38(c)(36) will continue to be available
when a plan or agent of the plan materially misrepresents information
to entice enrollment. The 5-Star SEP at Sec. 423.38(c)(20) will
continue to be available for individuals to use once per contract year
to enroll in a plan with a Star Rating of 5 Stars. (Corresponding MA
SEPs and open enrollment periods for each of these examples are at
Sec. 422.62(b)(7), (a)(4), (b)(3)(ii), and (b)(15) respectively.)
We appreciate the commenters' support for the SEP proposals and
confirm that our decision to finalize these proposed revisions to the
existing dual/LIS SEP and to adopt a new integrated care SEP will not
affect the ability of individuals to access other applicable SEPs
provided in CMS regulations.
Comment: A commenter questioned whether the proposed dual/LIS SEP
changes would limit access for dually eligible and LIS eligible
individuals since it would limit enrollment outside of the ICEP or AEP
to standalone PDPs. The commenter, citing broader changes to Part D,
expressed concern about many plans losing LIS benchmark status in 2025,
leaving few PDPs (or only one PDP) per county qualifying as an LIS
benchmark plan. The commenter further noted that, if the number of LIS
benchmark PDPs is small, our SEP proposals could significantly disrupt
enrollee care and lead to negative health consequences for high-need
LIS individuals who have limited options among plans that may not cover
their prescription drugs or impose new utilization management
requirements.
Response: We thank the commenter for their perspective on this
issue. While we acknowledge the commenter's concerns, we believe
protecting Medicare enrollees from aggressive marketing tactics and
reducing complexity for States and enrollment counselors outweigh the
potential downsides. Our proposed improvements to the Part D risk
adjustment model in the CY 2025 Advance Notice \221\ would improve
payment accuracy for Part D plans, including those that
disproportionately serve enrollees with LIS, and we believe this will
help foster a competitive market of PDPs. We will continue to monitor
the availability of LIS benchmark PDPs over time. Further, dually
eligible individuals would still be able to make changes to their MA
plan or non-integrated D-SNPs during the AEP, MA-OEP, or where another
SEP permits.
---------------------------------------------------------------------------
\221\ Advance Notice of Methodological Changes for Calendar Year
(CY) 2025 for Medicare Advantage (MA) Capitation Rates and Part C
and Part D Payment Policies.
---------------------------------------------------------------------------
Comment: A few commenters raised concerns about the impact of the
SEPs on access to providers and services. Other commenters noted that
many dually eligible individuals need to change plans due to a change
or loss in provider participation during the year or due to a change in
need for a service
[[Page 30688]]
that not all plans may cover and would use the quarterly dual/LIS SEP
to make midyear changes in enrollment. They further stated that in some
service areas there may be a limited number of certain types of
providers, resulting in in long waiting lists for individuals; as such,
the proposed dual/LIS SEP would limit the ability to change plans
outside of the AEP and could result in a lack of access to adequate
care.
Response: We acknowledge the commenters' concerns and agree that
continuity of care and mitigating disruption associated with plan
changes is important for dually eligible individuals. However, we are
not persuaded that the SEP proposals themselves increase the risk for
service or provider disruptions compared to what is currently in place.
Comment: Some commenters responded to our solicitation in the
proposed rule for comments on whether to use our flexibilities at
section 1851(f)(4) of the Act (as cross-referenced at section 1860D-
1(b)(1)(B)(iv) of the Act) and at Sec. 423.40(c) to establish a
Medicare enrollment effective date for the proposed integrated care SEP
at Sec. 423.38(c)(35) that differs from the effective date in the
current quarterly dual/LIS SEP at Sec. 423.38(c)(4). A few commenters
supported the SEP changes but encouraged CMS not to make further
adjustments to enrollment effective dates. One commenter acknowledged
the real confusion misaligned enrollment dates present but believed the
obstacles do not outweigh the benefits of current policy. The commenter
believed that harm from misaligned enrollment dates today is mitigated
by the fact that most individuals make their enrollment choices prior
to the Medicaid cut-off dates, and suggested CMS work with States,
SHIPs, D-SNPs, agents and brokers, and State enrollment vendors
(including enrollment brokers that meet the requirements at section
1903(b)(4) of the Act and Sec. 438.810) to clearly convey effective
enrollment dates. Another commenter supported changes to the enrollment
effective dates, noting it would more effectively support exclusively
aligned enrollment. The commenter asked if States may direct specifics
of enrollment date alignment via SMAC contracts. Another commenter
recommended aligning enrollment dates between Medicare and Medicaid
when feasible, while another commenter noted it may be additionally
burdensome for States to align Medicaid enrollment effective dates with
Medicare under a monthly SEP. Another commenter noted that misaligned
enrollment effective dates between Medicare and Medicaid cause delays
for enrollees in accessing LTSS but acknowledged that aligning start
dates would be difficult to achieve. The commenter suggested CMS work
with States, enrollment brokers, and plans to clearly convey effective
enrollment dates so States can make Medicaid cut-off dates closer to
Medicare enrollment effective dates.
Response: We thank the commenters for their thoughts on the option
to use our statutory authority at section 1851(f)(4) of the Act (as
cross-referenced at section 1860D-1(b)(1)(B)(iv) of the Act) to
establish a different enrollment effective date for the proposed
integrated care SEP at Sec. 423.38(c)(35). Upon further consideration,
we have decided that, as of now, we will not establish a Medicare
enrollment effective date for the proposed integrated care SEP at Sec.
423.38(c)(35) that differs from the effective date in the current
quarterly dual/LIS SEP at Sec. 423.38(c)(4). We will continue to work
with States, D-SNPs, SHIPs, and other parties to strengthen
communication to dually eligible individuals with respect to enrollment
start dates of Medicare and Medicaid plans. Further, we note that such
enrollment flexibilities may not be specified through the SMAC, as
Federal regulation supersedes State flexibility in the SMAC, and as no
such flexibility is adopted through Federal regulation, the option to
change or delay Part D enrollment effective dates is not available to
States through the SMAC.
Comment: One commenter noted the potential for increased
complaints--including marketing misrepresentation complaints--in the
HPMS Complaint Tracking Module (CTM) under the SEP proposals. The
commenter noted it is possible dually eligible individuals will
disenroll from an MA-PD plan, change their minds after enrolling in the
new Part D plan before the next available open enrollment period, and
subsequently open a CTM with their current integrated D-SNP in order to
receive an SEP to disenroll (enrollees who open a marketing
misrepresentation CTM against a plan may receive an SEP to disenroll if
they received misleading or incorrect information leading them to
enroll in a new plan). The commenter contends this creates a loophole
to our SEP policy such that dually eligible enrollees can elect a non-
integrated plan outside the AEP and, therefore, the commenter requests
that CMS update the CTM to ensure only valid complaints result in a
marketing misrepresentation SEP.
Response: We thank the commenter for raising the potential
increases to CTMs. We appreciate the concern this commenter raises, and
we will monitor whether the proposed SEPs lead to increased complaints
to D-SNPs in the CTM to determine whether we need to make further
adjustments to the CTM in response. However, we do not agree that
marketing misrepresentation CTMs--a narrow but important protection for
enrollees who receive misleading or incorrect information causing them
to make an enrollment change--create a loophole to our SEP proposals
sufficiently large enough to undermine their intent. Indeed, the vast
majority of MA and Part D enrollees do not qualify for the dual/LIS
SEP. Therefore, if marketing misrepresentation CTMs are as manipulable
as the commenter suggests, we likely would be experiencing such
manipulation on a widespread basis currently among non-dually eligible
individuals. However, we do not believe this to be the current reality.
Comment: Many commenters offered support for the D-SNP enrollment
limitation proposals at Sec. Sec. 422.503(b)(8), 422.504(a)(20),
422.514(h), and 422.530(c)(4)(iii). Commenters appreciated CMS's
efforts to align enrollment between integrated D-SNPs and Medicaid
MCOs, and to limit the number of D-SNP offerings per service area where
a D-SNP, its parent organization, or a related MA organization under
the same parent organization offers a Medicaid MCO. Commenters noted
that integrated models that operate with exclusively aligned enrollment
are better equipped to ensure true integration for full-benefit dually
eligible individuals. Some of these commenters also appreciated the
phased approached offered in the proposed rule. Additional commenters
noted that the proposal to limit the number of D-SNPs offered by a
parent organization would simplify plan options, reduce confusion for
individuals, make it easier for States to track enrollment, and perform
oversight and quality improvement with their plans. Commenters noted a
reduction in D-SNPs would also reduce harmful marketing practices.
Other commenters expressed appreciation for the proposed requirement
that parent organizations only offer one D-SNP in a service area where
the parent organization also offers a Medicaid MCO, as it would
simplify options counseling to individuals, improve provider billing,
and reduce barriers to Medicaid covered services like LTSS, dental, and
transportation.
Response: We thank the commenters for the support. We similarly
believe our proposals would increase the percentage of D-SNP enrollees
who are in aligned
[[Page 30689]]
arrangements, reduce the number of D-SNP options overall and mitigate
choice overload, remove some incentives for agents and brokers to
target dually eligible individuals, simplify provider billing and lower
the risk of inappropriate billing, and promote integrated care and the
benefits it affords, like improved care coordination, integrated
materials, and unified appeals and grievance processes.
Comment: Numerous commenters supported the proposal at Sec.
422.514(h)(1)(i) intended to reduce choice overload and create more
clear and meaningful plan options for dually eligible individuals. One
commenter noted this policy would simplify plan options, reduce
confusion for individuals, and make it easier for States to track
enrollment, coordinate care, and perform quality improvement with their
plans. Another commenter noted the removal of duplicative plans from
the market would increase the likelihood that an individual will select
a D-SNP. Another commenter felt that multiple plans operated by the
same company is not only confusing for individuals dually eligible for
Medicare and Medicaid, but also are very difficult for care
coordinators assisting those individuals. Another commenter supported
the limitation and noted that while this would limit dually eligible
individuals' choice of plans, individuals currently struggle with the
number of choices and often lack the resources to discern amongst
numerous coverage options. They further stated that limiting the number
of plans with meaningful differences would incentivize companies to
build up their D-SNPs' networks and benefits and make it easier for
individuals to make an enrollment choice.
Response: We thank the commenters for their support. We agree that
the proposals would simplify D-SNP options, reduce confusion among
dually eligible individuals and the options counselors that support
them, and generally make plan choices more meaningful for dually
eligible individuals, their families, advocates, and enrollment
counselors. We similarly agree that a reduction in the overall number
of D-SNP options will incentivize MA sponsors to invest in their
integrated D-SNPs across markets.
Comment: Numerous commenters opposed the enrollment limitation
proposals. Several of these commenters acknowledged or agreed with
CMS's efforts to facilitate better alignment of enrollment between
Medicare and Medicaid and simplify Medicare options for dually eligible
individuals but had concerns with the details of the proposals. Many
commenters were concerned about the potential of the proposal to limit
the number of D-SNPs offered by the same parent organization in a given
service area to negatively impact individual choice. A commenter
expressed particular concern regarding the effects of this policy in
States that have D-SNPs and Medicaid managed care, but no current
requirements for EAE. The commenter believed that, unless CMS's intent
is that all MA organizations must offer an affiliated Medicaid MCO and
move to EAE, narrowing choices would adversely limit dually eligible
individuals' choices, and by 2030 would limit the number of
supplemental benefits offered by D-SNPs. Another commenter asked that
CMS assess impact on SMACs and whether D-SNP relationships are
positively or negatively impacted. Finally, another commenter noted
that plans offer multiple PBPs to allow them to tailor benefits for a
particular population, and the proposal would remove a plan's ability
to do so.
Response: We thank the commenters for their perspective. We
acknowledge that the enrollment limitations--both as proposed and as
finalized at Sec. 422.514(h) in this rule--may reduce the number of
available D-SNP options for dually eligible individuals. As noted in
the proposed rule (88 FR 78575), this is by design and a way to address
the choice overload faced by dually eligible individuals, their
families, and enrollment counselors. We clarify that these policies
only apply to an MA organization where it, its parent organization (as
defined in Sec. 422.2), or any entity that shares a parent
organization with an MA organization also contract with a State as a
Medicaid MCO that enrolls full-benefit dually eligible individuals in
the same service area (that is, in a service area that overlaps in full
or in part with the service area of the MA organization's D-SNP(s)). In
applying the enrollment limitations in Sec. 422.514(h), we will follow
corporate ownership to the highest level, rather than looking only to
the immediate owner of an MA organization or other, related entity,
consistent with the definition of parent organization as meaning the
entity that is not a subsidiary of any other legal entity. MA
organizations that offer D-SNPs where the MA organization, its parent
organization or any entity that shares a parent organization with the
MA organization do not offer an MCO are unaffected by the new
proposals; such MA organizations may continue to offer coordination-
only D-SNPs. Further, even after this final rule takes effect, dually
eligible individuals will continue to have more Medicare coverage
choices (including Traditional Medicare with a Part D plan, MA-PDs,
SNPs, and PACE) relative to their Medicare-only peers.
As noted in the proposed rule (88 FR 78575), we believe the
enrollment limitations will have the greatest impact in States that
have Medicaid managed care but do not have EAE requirements already, as
MA organizations operating D-SNPs in those States will likely choose to
consolidate their PBPs down to a single PBP for full-benefit dually
eligible individuals that is aligned with their affiliated Medicaid MCO
(that is, the MCO that is offered by the MA organization, its parent
organization, or any entity that shares a parent organization with the
MA organization) that fully or partially overlaps the D-SNPs service
area. We will work closely with States in the event they wish to adjust
their State Medicaid agency contracts to require EAE as a result of
these policies.
We acknowledge this final rule will limit an MA organization's
ability to offer multiple PBPs with tailored benefits, unless one of
the exceptions we are finalizing applies. (We discuss the exceptions in
detail in response to other public comments later in this section.) We
also recognize that plan sponsors offering D-SNPs may also choose to
adjust their supplemental benefit offerings as a result of these
policies, though we do not believe operating fewer plans to be more
administratively burdensome relative to offering many plans. We will
monitor the policies' impact to D-SNP supplemental benefits.
Finally, we note we are finalizing Sec. 422.514(h)(1) with a
technical modification to correct the terminology to use the term
``full-benefit dual eligible individual(s)'' instead of the more
general ``dually eligible individuals'' to match the cross-reference to
Sec. 423.772.
Comment: A number of commenters suggested that the enrollment
limitations could create barriers for dually eligible individuals in
States where they are not required to be in or are explicitly carved
out from Medicaid managed care. For example, in New York, only dually
eligible individuals with significant long-term care needs are required
to enroll in Medicaid managed care, with the majority of dually
eligible individuals remaining in Medicaid fee-for-service (FFS). These
commenters noted that D-SNPs that also contract with States as Medicaid
MCOs can currently enroll individuals
[[Page 30690]]
in Medicaid FFS but, under the proposals, those D-SNPs would not be
able to enroll these individuals beginning in 2027 and would be
required to disenroll them as of 2030. Commenters indicated that these
individuals are better served in D-SNPs where they receive coordination
of their Medicare and FFS Medicaid benefits. The commenters offered
several suggestions for how CMS should address these concerns: (a)
limiting the proposal to States that require mandatory enrollment for
dually eligible individuals, including those who do not receive long-
term care services, (b) implementing a limited exception process for
States that would allow MA organizations with an affiliated Medicaid
MCO to offer at least one D-SNP PBP that is not exclusively aligned and
that can enroll dually eligible individuals who maintain FFS Medicaid
coverage and (c) phasing in the proposal over time. Another commenter
asked CMS to clarify whether dually eligible individuals in States with
voluntary Medicaid managed care would be disenrolled from coordination-
only D-SNPs beginning in 2027.
Response: We appreciate the commenters' perspectives but continue
to believe that the policy we proposed is appropriate and a practicable
means to achieve our goals of furthering integrated coverage for
individuals who are dually eligible for Medicare and Medicaid. Applying
the D-SNP enrollment limitations to only States that require mandatory
enrollment for dually eligible individuals, while not something we
explicitly considered in the proposed rule, has some potential
drawbacks and we do not think it would further our policy goals as well
as proposed Sec. 422.514(h). This alternative would narrow the number
of States in which these policies would apply, thus reducing the extent
to which we would achieve the benefits described in the proposed rule.
It would also raise potential complexity in States where certain
subpopulations of dually eligible individuals are mandatorily enrolled,
but others are not. Allowing each MA organization with an affiliated
Medicaid MCO to offer at least one D-SNP that is not exclusively
aligned with its affiliated Medicaid MCO for the purpose of enrolling
dually eligible individuals who are enrolled Medicaid FFS would
similarly reduce the extent to which we would achieve the benefits
described in the proposed rule, create more additional operational
complexity for States and CMS to administer and monitor, and would
likely be more complicated to explain from a beneficiary communications
and messaging perspective compared to the current proposal. Finally, we
believe the phase-in outlined in the proposed rule provides ample time
for transition; our proposal, which we are finalizing, limits new
enrollment to individuals enrolled in both D-SNP and affiliated
Medicaid MCO offered under the same parent organization starting in
2027 and then disenrolling those enrollees who do not have aligned
enrollment in the D-SNP's affiliated Medicaid MCO in 2030. From the
time of issuance of this final rule in 2024, there are two bid cycles
and contract years (2025 and 2026) during which D-SNPs with affiliated
Medicaid MCOs may prepare for the first phase of enrollment
limitations. We decline to incorporate these suggestions in the final
rule.
Comment: A commenter stated that the enrollment limitation
proposals would seem to have the perverse effect of penalizing MA plans
that are aligned with an MCO, while MA plans that are not aligned with
an MCO may enroll any dually eligible individual. They further stated
that there would be individuals enrolled in Medicaid MCOs that are not
eligible for integrated care and requested that CMS clarify the
definition of a ``Medicaid contract'' so it refers to only an
integrated plan contract since CHIP, TANF, foster care, and other
unrelated benefits offered under Medicaid should not be considered
contracts for this purpose.
Response: We thank the commenter for their perspective and
suggestion. As we described in the proposed rule (88 FR 78575) it may
seem that our proposal on limiting enrollment in D-SNPs offered by MA
organizations with affiliated Medicaid MCOs, in isolation, would
disadvantage parent organizations that choose to offer Medicaid MCOs as
well as D-SNPs because such organizations would be limited in the
number of D-SNP offerings and would be required to align their
enrollment between D-SNP and MCO for full-benefit dually eligible
individuals. However, our SEP proposals were designed to have the
opposite effect by permitting enrollment into integrated D-SNP options
that cover both Medicare and Medicaid benefits using the new one-time-
per month SEP while removing the option to use the dual/LIS SEP to
enroll into MA-PDs--including coordination-only D-SNPs. The integrated
care SEP would incentivize MA organizations to offer integrated D-SNPs
as a means to take advantage of the monthly integrated care SEP that is
available to full-benefit dually eligible individuals to facilitate
aligned enrollment (that is, for these individuals to enroll only into
integrated D-SNPs that are affiliated the Medicaid MCO in which the
individual also enrolls).
While the proposals at Sec. Sec. 422.503(b)(8), 422.504(a)(20),
and 422.514(h)(1) and (2) apply (and therefore limit the ability of an
MA organization to offer multiple D-SNPs) when an MA organization, its
parent organization, or an entity that shares a parent organization
also contracts with a State as a Medicaid MCO, the limitation in these
regulations applies only when the affiliated Medicaid MCO enrolls
dually eligible individuals. Medicaid MCOs that solely enroll other
Medicaid populations will not be impacted by this rule. We proposed
that dually eligible individuals for purposes of this provision means
``dually eligible individuals as defined in Sec. 423.772,'' but in
retrospect realized that we should have used the term ``full-benefit
dual eligible individuals'' as defined in Sec. 423.772. Therefore, we
have revised Sec. 422.514(h)(1) to clarify that this provision applies
only when a Medicaid MCO enrolls full-benefit dual eligible individuals
as defined in Sec. 423.772. We have made similar edits to Sec.
422.514(h)(3)(i) and (ii) to specify that we are referring to full-
benefit dual eligible individuals as defined in Sec. 423.772. These
clarifying edits to the regulatory text have no impact to the
enrollment limitations as originally proposed or finalized in this
rulemaking at Sec. 422.514(h).
We acknowledge that some Medicaid MCOs may enroll full-benefit
dually eligible individuals even when certain Medicaid services, such
as long-term supports and services, are carved out. In such scenarios,
the rules we are finalizing here will apply, facilitating better access
for full-benefit dually eligible individuals to care coordination,
unified appeals processes across Medicare and Medicaid, continuation of
Medicare services during an appeal, and integrated materials that come
from aligned enrollment, even if some Medicaid benefits are carved-out.
As such, we decline to incorporate these suggestions in the final rule.
Comment: A few commenters expressed concern regarding the impact of
our enrollment limitation proposals on partial-benefit dually eligible
individuals. They acknowledged that some States permit integrated D-
SNPs to enroll both full-benefit and partial-benefit dually eligible
individuals; in such cases, our proposal would mean that the full-
benefit enrollees are also enrolled in the D-SNP's related
[[Page 30691]]
Medicaid MCO while the partial-benefit dually eligible individuals are
enrolled only in the D-SNP. These commenters were concerned that
partial-benefit dually eligible individuals may experience disruption
if they are no longer able to stay in D-SNPs affected by Sec.
422.514(h) after 2030.
Response: We thank the commenters for raising this issue and would
like to clarify the impact of the new regulations proposed at
Sec. Sec. 422.503(b)(8), 422.504(a)(20), and 422.514(h)(1) and
422.514(h)(2) for partial-benefit dually eligible individuals. We
proposed at Sec. 422.514(h)(1)(i) that, beginning in 2027, an MA
organization, its parent organization, or any entity sharing a parent
organization with the MA organization that also contracts with a State
as a Medicaid MCO may only offer one D-SNP for full-benefit dually
eligible individuals. Functionally this means that an MA organization
can continue to offer one or more D-SNPs for partial-benefit dually
eligible individuals when it meets all other applicable requirements
(including having a SMAC) even if the MA organization, its parent
organization, or another entity (or entities) that share a parent
organization with the MA organization offers an affiliated Medicaid MCO
in the same service area. While proposed Sec. Sec. 422.514(h)(1)(ii)
and 422.514(h)(2) go on to limit enrollment in the D-SNP to individuals
enrolled in, or in the process of enrolling in the Medicaid MCO, the MA
organization that offers the D-SNP for full-benefit dually eligible
individuals is not prohibited by Sec. 422.514(h)(1)(i), (h)(1)(ii), or
(h)(2) from offering additional D-SNPs solely for partial-benefit
dually eligible individuals. We illustrate the differential impact on
D-SNPs serving partial-benefit dually eligible individuals in the
hypothetical example provided in Tables HC3 and HC4 in the proposed
rule (88 FR 78574) where we noted that MA Organization Gamma could
convert HIDE D-SNP Gamma 001 to coordination-only D-SNP Gamma 001 and
keep that plan open for partial-benefit dually eligible individuals.
Comment: A few commenters suggested that CMS provide more
information on how our proposals would impact States that have Medicaid
managed care programs that only cover a subset of Medicaid services,
such as long-term services and supports (these are often called
partially capitated Medicaid managed care programs). A commenter
further expressed concern that the requirement for MA organizations to
limit D-SNP enrollment to only those individuals also enrolled in the
affiliated Medicaid MCO may adversely impact individuals in specific
States, particularly those that also have partially capitated Medicaid
programs, such as New York. The commenter recommended that CMS
explicitly clarify partially capitated models as another affiliated
Medicaid managed care plan option or allow flexibility for State
Medicaid agencies to determine Medicaid plan types that should be
aligned with D-SNPs. Another commenter requested CMS clarify whether
the exception proposed at Sec. 422.514(h)(3)(i) extends to situations
in which full-benefit dually eligible individuals are only enrolled in
Medicaid managed care plans if they receive LTSS.
Response: We thank the commenters for raising the issue of
partially capitated Medicaid managed care programs. As we noted in the
proposed rule (88 FR 78574), while the enrollment limitations proposals
for non-integrated D-SNPs would apply based on an MA organization
having an affiliated Medicaid MCO, we were considering whether they
should also apply where an MA organization has other affiliated
Medicaid managed care plan options as well, including prepaid inpatient
health plans (PIHPs) and prepaid ambulatory health plans (PAHPs). We
described how some States use PIHPs or PAHPs to deliver specific
categories of Medicaid-covered services, like behavioral health, or a
single benefit, such as non-emergency medical transportation, using a
single contractor. As we noted in the proposed rule, to the extent the
enrollment limitation provisions incentivize an organization to end its
Medicaid managed care contracts rather than offer D-SNPs that are
subject to the new limitations, that incentive would be stronger for a
PIHP or PAHP than an MCO. We continue to believe that applying these
proposals to PIHPs and PAHPs could create incentives that are
disruptive yet do not significantly further the goals of our proposals.
As a result, we do not intend to extend the enrollment limitation
policies in Sec. 422.514(h)(1) and (2) beyond Medicaid MCOs or beyond
D-SNPs that enroll full-benefit dually eligible individuals. This would
mean that an MA organization offering a D-SNP in the same area that it,
its parent organization, or an entity (or entities) that share a parent
organization with the MA organization contracts with the State only as
a PIHP or PAHP would not be subject to the enrollment limitations at
Sec. Sec. 422.503(b)(8), 422.504(a)(20), or 422.514(h). (We direct
readers to Sec. 438.4 for definitions of the terms PIHP and PAHP;
these types of Medicaid managed care plans cover less comprehensive
benefits than Medicaid MCOs.)
We acknowledge, however, that there may be situations where a State
Medicaid agency operates multiple Medicaid managed care programs that
enroll full-benefit dually eligible individuals. For example, New York
currently operates a fully integrated care program using Medicaid MCOs,
plus a separate partially capitated program through which the State
pays Medicaid capitation to PIHPs to cover long-term services and
supports and ancillary benefits but not primary or acute care. If the
MA organization, its parent organization, or any entity that shares a
parent organization with the MA organization has a Medicaid MCO
contract with the State, the provisions at Sec. Sec. 422.503(b)(8),
422.504(a)(20), and 422.514(h)(1)(i) would apply in this example to
limit the MA organization's ability to offer D-SNPs in that State to
full-benefit dual eligible individuals. However, the exception proposed
and finalized at Sec. 422.514(h)(3)(i) would allow the MA organization
in this example to offer one D-SNP for full-benefit dually eligible
individuals affiliated with the Medicaid MCO and a second D-SNP for
full-benefit dually eligible individuals affiliated with the partially
capitated PIHP if the State requires this arrangement in the SMAC.
Proposed Sec. 422.514(h)(3)(i) established State flexibility to
use the SMAC to ``limit enrollment [into D-SNPs] for certain groups''
based on ``age group or other criteria.'' However, upon reviewing
comments, we believe the proposed exception at Sec. 422.514(h)(3)(i)
was insufficiently clear and warrants clarification for scenarios like
those in New York. Therefore we are revising Sec. 422.514(h)(3)(i) to
clarify that we will allow an MA organization, its parent organization,
or an entity that shares a parent organization with the MA
organization, to offer more than one D-SNP for full-benefit dually
eligible individuals in the same service area as that MA organization's
affiliated Medicaid MCO only when a SMAC requires it in order to
differentiate enrollment into D-SNPs either (i) by age group or (ii) to
align enrollment in each D-SNP with the eligibility criteria or benefit
design used in the State's Medicaid managed care program(s). We believe
this revised text better explains our intent for the exception at
paragraph (h)(3)(i). As described in the proposed rule (88 FR 78572),
this exception allows for States that currently have different
integrated D-SNP programs based on age or Medicaid managed program
design to continue to operate
[[Page 30692]]
these programs and allows States the flexibility to design future
integrated D-SNPs with State-specific nuances as to D-SNP eligibility
and/or benefit design should the State choose. In the New York context,
for example, Sec. 422.514(h)(3)(i) as finalized would give the State
the ability to allow an MA organization with which it contracts as both
a Medicaid MCO and as a Managed Long Term Care Plan (MLTCP) (the name
for NY's PIHP-based program), to operate more than one D-SNP for full-
benefit dually eligible individuals in the same service area--one
affiliated with the Medicaid MCO and another with the MLTCP--as long as
the State specifies this in the SMAC.
Comment: A few commenters expressed concern regarding the potential
impact of the enrollment limitation proposals in rural areas. A
commenter noted that network adequacy requirements make it challenging
for health plans to offer D-SNPs in rural communities. The commenter
further stated that Medicaid managed care is not always available in
rural areas and was unsure how the proposed rules would impact the
coordination-only D-SNPs that may operate there. A commenter also
suggested that CMS should do more to ensure that rural communities have
improved access to D-SNPs.
Response: We appreciate the perspectives of the commenters and
agree that it can be challenging for States and plans to implement
managed care in rural communities. Depending on the State, the
enrollment limitation proposals may not be applicable or may have a
limited impact, particularly in rural areas where both Medicaid and
Medicare managed care may be limited. The proposals at Sec. Sec.
422.503(b)(8), 422.504(a)(20), and 422.514(h) apply only when an MA
organization, its parent organization, or an entity that that shares a
parent organization with the MA organization also contracts with a
State as a Medicaid MCO that enrolls full-benefit dually eligible
individuals in the same service area. Coordination-only D-SNPs offered
by an MA organization that does have an affiliated Medicaid MCO would
not be prevented by the rules we are finalizing at Sec. Sec.
422.503(b)(8), 422.504(a)(20), and 422.514(h)--in rural communities or
other locations--from continuing to operate as they do today.
Other policies designed to improve access to D-SNPs in rural
communities are beyond the scope of this current rulemaking, but we
will consider exploring opportunities for potential future rulemaking.
Comment: Some commenters expressed concern about the impact of the
proposals that limit the number of D-SNPs available in a service area
on plan competition and availability. A commenter cautioned CMS against
implementing overly burdensome integration requirements that could
ultimately lead to fewer plans in a particular service area, reducing
competition and innovation. A few commenters questioned whether
proposals that limit the number of D-SNPs available in a service area
could force high-performing D-SNPs and/or those with expertise in
specialized areas such as MLTSS and behavioral health out of State
markets. Commenters further noted that there are plans that serve the
dually eligible population through D-SNPs that have not historically
served the Medicaid managed care population and that most State
Medicaid managed care procurements do not evaluate the quality of
available D-SNPs in the State, resulting in a situation where 4- or 5-
Star plans are prohibited from offering a D-SNP without a Medicaid
managed care contract even when those plans have a higher quality
rating than D-SNPs or MA plans offered by entities that also offer
Medicaid MCOs. The commenter further stated that higher rated D-SNPs
typically offer more robust supplemental benefits, including those
designed to address health-related social needs. Another commenter
similarly suggested that the proposals could result in lower-quality
Medicaid plans gaining new D-SNP enrollees. Another commenter suggested
that increased market consolidation related to Medicaid procurements
could eliminate coordination-only D-SNPs that can serve as pathways to
integration for States and offer care coordination for partial-benefit
and full-benefit dually eligible individuals who do not meet criteria
for enrollment in integrated Medicaid MCOs. A commenter further stated
the impact of the proposals would likely vary depending on whether the
markets and procurements drive more competition for Medicaid contracts
or drive less competition for Medicaid contracts if it becomes easier
to be a coordination-only D-SNP in certain markets. They went on to
state that larger organizations already offering D-SNPs may have more
capacity to respond to a State Medicaid MCO request for proposals (that
is, a procurement solicitation) compared to smaller organizations and
that States may favor plans with whom they have existing relationships.
Another commenter was concerned that the proposals would incentivize
States to further limit the number of D-SNPs or other integrated plans
with which they contract, either through procurements requiring
statewide coverage or other criteria that may make it less possible for
smaller and/or local/regional plans to participate, particularly in
rural communities. They further state that, in accordance with the July
2021 Executive Order on Promoting Competition in the American Economy
(#14036), CMS should evaluate whether these proposals will preserve ``a
fair, open and competitive marketplace.''
Response: We appreciate the comments on the potential impact of our
proposals on plan competition. We noted in the proposed rule (88 FR
78575) the theoretical possibility that MA organizations that operate
both D-SNPs and Medicaid MCOs might elect to participate in fewer
competitive Medicaid procurements (or exit Medicaid managed care in
``any willing provider'' States), to be exempted from the proposed
restrictions on D-SNP enrollment and on the number of D-SNP offerings
permitted in the MA program, which could adversely affect competition
and the minimum choice requirements in Sec. 438.52 for Medicaid
managed care programs. However, our SEP proposals would have the
opposite effect, since only integrated D-SNPs could benefit from the
new integrated care SEP, and we believe our proposals, in combination,
maintain strong incentives for organizations to compete for Medicaid
managed care contracts. Nothing in our proposals or this final rule
fundamentally changes the opportunity to compete for State Medicaid
managed care contracts or the annual opportunity to apply for an MA
contract. While national organizations have certain advantages, our
observation has been that many of the organizations that have
successfully created fully integrated D-SNPs with EAE--the types of
plans relatively advantaged by the policies we are adopting in Sec.
422.514(h) and with the SEPs--are local organizations with community
roots. As such, we do not believe this rulemaking will result in
excessive consolidation or anticompetitive outcomes. Nonetheless, we
will monitor the market over time to ensure it sustains a fair, open
and competitive marketplace.
We do not expect our policies, as proposed or as finalized, to
drive out high-performing D-SNPs or Medicaid MCOs with specialized
experience. While Sec. Sec. 422.503(b)(8), 422.504(a)(20), 422.514(h),
and 422.530(c)(4)(iii), as finalized in this rule, in combination are
intended to result in a reduction in the number of D-SNP options
overall, we
[[Page 30693]]
are not persuaded that it would necessarily result in loss of high-
performing D-SNPs or Medicaid MCOs with specialized experience. MA
organizations that have an affiliated MCO and that offer multiple D-
SNPs available to full-benefit dually eligible individuals in the same
area will have some flexibility in choosing how to consolidate its D-
SNPs under this final rule. We believe that this final rule offers
significant incentives to ensure high-performing MA and Medicaid
managed care plans continue. States that operate specialized Medicaid
managed care programs focusing on MLTSS or behavioral health, for
example, may be able to utilize the exception at Sec. 422.514(h)(3)(i)
to allow more than one D-SNP to be available in the State for full-
benefit dually eligible individuals in the same service area by
including in the State's SMAC with the MA organization that each D-SNP
align enrollment with the eligibility criteria and/or benefit design
used in the State's Medicaid managed care program(s). In finalizing our
proposal at Sec. 422.514(h) (with modifications discussed throughout
this section of the final rule), we are clarifying that the final
regulation applies based on an MA organization having an affiliated
Medicaid MCO in the same service area; it would not apply to other
affiliated Medicaid managed care plan options such as prepaid inpatient
health plans (PIHPs) and prepaid ambulatory health plans (PAHPs) which
States use to deliver specific categories of Medicaid-covered services,
like behavioral health, or a single benefit, such as non-emergency
medical transportation (see further discussion in the proposed rule at
88 FR 78574). As a result, we believe the risk of specialized plans
leaving the market is low.
As noted in the proposed rule (88 FR 78751), States have discretion
in how they structure their Medicaid managed care programs. This
includes whether and how they select Medicaid MCOs to participate in
such programs, whether that is through competitive procurements or an
``any willing provider'' approach. As noted in prior response, under
our proposals an MA organization, its parent organization or any entity
that shares a parent organization with the MA organization that also
contracts with a State as a Medicaid MCO could continue to offer one or
more D-SNPs for partial-benefit dually eligible individuals.
Overall, we agree with commenters who stated that the impact will
vary based on the market. As noted in the proposed rule (88 FR 78575),
we believe the impact of these final policies will be concentrated in
those States that have Medicaid MCOs but do not have EAE requirements
already. We acknowledge that this rulemaking may impact organization
decisions about whether and how to participate in certain markets but
believe that, on the whole, the policies we are finalizing in this
section of the final rule will better serve the dually eligible
individuals by furthering opportunities for these individuals to enroll
in integrated plans.
Comment: A commenter noted that the enrollment limitation proposals
could lead to more D-SNP-only contracts, which may result in lower Star
Ratings than other contract structures. The commenter further requested
CMS consider the impacts of more D-SNP-only contracts on the Star
Ratings program, noting that should D-SNP-only contracts have lower
Star Ratings, D-SNPs would have less funds to invest in supplemental
benefits that address important health related social needs.
Response: We appreciate the commenter's perspective and agree that
the proposals could potentially lead to more States requiring D-SNP-
only contracts after 2030, as aligned enrollment and service areas for
D-SNPs with affiliated Medicaid MCOs would be Federally required,
allowing States to receive the benefits of D-SNP-only contracts. For
example, Sec. 422.107(e) provides that States with D-SNP-only MA
contracts may have HPMS access for oversight and information sharing,
greater transparency on Star Ratings specific to D-SNP enrollees in
their State, and increased transparency on health care spending. With
regard to concerns that D-SNP-only contracts may result in lower Star
Ratings than other MA contracts, we direct the commenter's attention to
the April 2023 final rule (87 FR 27765 through 27766) where we
addressed similar issues. While we understand the concern that D-SNP-
only contracts are rated in comparison to MA contracts that may have
few or no dually eligible enrollees, the Star Ratings methodology
addresses accuracy of measurement by case-mix adjusting some individual
measures in accordance with measure specifications and applying CAI for
other measures that are not case-mix adjusted to ensure that factors
outside a contract's control are not captured in Star Ratings. In
addition, beginning with the 2027 Star Ratings, the HEI reward will be
added to incentivize and reward relatively high performance among
enrollees with specified SRFs including LIS/DE and disability among
contracts, like D-SNP-only contracts, that serve relatively high
percentages of these enrollees.
Comment: A commenter requested that CMS assess whether the proposed
enrollment limitations for non-integrated D-SNPs could lead to more D-
SNP look-alikes as MA organizations try to avoid application of Sec.
422.514(h) and, if so, inquired about the strategies CMS would employ
to mitigate such a risk. Another commenter noted that increasing
requirements on D-SNPs and States before D-SNP look-alikes are
addressed may promote enrollment into less integrated plan options.
Response: We appreciate the commenters' perspectives but do not
expect our proposed limitations on enrollment into non-SNP MA plans to
increase the number of D-SNP look-alikes. As we stated in the proposed
rule (88 FR 78575), under our proposals MA organizations that have
multiple D-SNP PBPs available to full-benefit dually eligible
individuals and that also have affiliated Medicaid MCOs in the same
service area (that is, MCOs offered by the MA organization, its parent
organization, or an entity that shares the same parent organization)
would likely choose to consolidate their D-SNP PBPs down to a single D-
SNP that is aligned with their Medicaid MCO that fully or partially
overlaps the D-SNP service area and therefore available to full-benefit
dual eligible individuals. Such MA organizations could operate non-AIP
coordination-only D-SNPs both for service areas where the MA
organization does not have an affiliated Medicaid MCO and for partial-
benefit dually eligible individuals. Thus, we expect robust
availability of D-SNP options for dually eligible individuals,
including partial-benefit dually eligible individuals, to remain and
not lead to establishment of additional D-SNP look-alikes. In addition,
we proposed (and are finalizing in this rule) a reduction in the
threshold for identifying and phasing out D-SNP look-alikes (see
section VIII.J). As the final rule is implemented over the transition
periods and deadlines specified in Sec. 422.514, we will monitor the
D-SNP landscape and enrollment transitions and consider future
rulemaking as needed.
Comment: A few commenters urged CMS to monitor the impacts of this
rule over time. Several commenters suggested CMS examine the impact of
these proposals on individuals and availability of viable plan options
over time. A commenter specifically suggested including whether the
quality of D-SNPs is impacted positively or negatively by these
proposals. Another commenter suggested CMS monitor the
[[Page 30694]]
impacts of the changes on the availability of Medicaid managed care
plans to better understand if the enrollment limitations encourage, or
potentially discourage MA sponsors from applying to offer aligned
Medicaid plans, creating an unintended effect on access to or choice
among Medicaid managed care plans and by extension, aligned integrated
plans. Another commenter asked CMS to monitor trends associated with
the SEP proposals to ensure there are no adverse impacts on dually
eligible individuals.
Response: We appreciate these comments underscoring the importance
of monitoring the impact our rulemaking has on Medicare and Medicaid
managed care plans. We agree and will pay close attention to the impact
on sponsors as well as States and, most importantly, on dually eligible
individuals.
Comment: Several commenters highlighted the potential impact of
proposals to limit the number of and align enrollment in D-SNPs in
certain service areas on State Medicaid policy. A few commenters
expressed concern with what they characterized as the one-size-fits-all
and/or top-down approach taken in these proposals and indicated that
States need both direction and flexibility to innovate in a way that is
appropriate to State-specific landscapes. Another commenter requested
CMS consider how these proposals would impact ongoing State efforts to
advance integration. Another commenter similarly noted that State
autonomy in program design is a cornerstone of the Medicaid program and
that aspects of the proposal may not account for the unique structure
of certain Medicaid programs, including dually eligible individuals
crossing multiple eligibility categories, State choice in benefit
inclusion, voluntary vs. mandatory Medicaid managed care, and State
procurement timelines. A few commenters acknowledged that States may
not be aware of or planning ahead for how current State procurements
may impact or be impacted by proposed new requirements for aligned
enrollment applicable beginning 2027 and 2030, particularly when
Medicaid procurement timelines do not align with MA service area
expansion and bid filing timelines. The commenter further expressed
concern that the proposed changes could result in unanticipated
disruptions where States are making progress toward integration,
including those States moving from the Financial Alignment Initiative
to D-SNP models.
Response: We appreciate these perspectives. We agree that States
have policy interests and goals that shape their unique Medicaid
managed care programs; as noted in the proposed rule (88 FR 78571), our
intent is to help further support States in their integration efforts
while also addressing the significant recent growth in both the number
of D-SNPs and the number of dually eligible individuals with misaligned
enrollment. We believe the opportunities to reduce choice overload and
market complexity where parent organizations offer multiple D-SNP
options in the same service area and to provide a truly integrated
experience for a greater number of dually eligible individuals by
requiring plans to align enrollment outweigh incremental constraints on
State flexibility. We also again note the exception to accommodate
State policy choices, described in Sec. 422.514(h)(3)(i). We are in
close communication with the States planning to transition from the FAI
to integrated D-SNPs and will continue to work closely with all States
directly and through the Integrated Care Resource Center to provide
technical assistance and support for States.
Comment: A number of commenters acknowledged limited capacity and
resources at the State level to support integration efforts for dually
eligible individuals. Some commenters were concerned that the
increasing complexity of Federal regulations, including these
proposals, could lead to greater State burden, while others, including
MACPAC, recommended CMS offer more technical assistance and educational
opportunities to support States, particularly those with limited
expertise with Medicare and/or expertise with enrolling dually eligible
individuals in managed care. Examples from these commenters included
for CMS to work with States to share best practices for building
infrastructure needed to facilitate alignment and to facilitate
engagement between States, CMS, health plans, and other stakeholders to
ensure a seamless transition. Another commenter expressed concern that
the proposals combined with limited Medicare expertise among States
could dissuade States from pursuing managed LTSS programs as part of
the Medicaid programs in the future. Another commenter suggested CMS
provide targeted resources to Medicaid agencies that would allow for
systems upgrades to implement exclusively aligned enrollment. Another
commenter suggested that a portion of the $2 billion CMS estimates in
savings from these proposals could be allocated to support States
including technical assistance, staffing, and modernization of systems
to support integration. A commenter similarly noted that States need
investments, both up front and through shared savings models, to invest
in staff and systems changes necessary to integrated care.
Response: We appreciate and agree with the comments highlighting
the need to support State Medicaid agencies in their efforts to
integrate care for dually eligible individuals. We will continue to
engage with States to promote integration, including through
implementation of this final rule. Our technical assistance vendor, the
Integrated Care Resource Center,\222\ also 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.
---------------------------------------------------------------------------
\222\ http://www.integratedcareresourcecenter.com.
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Comment: Numerous commenters highlighted the impact of the
enrollment limitation proposals on coordination-only D-SNPs. Several
commenters noted that the proposals do not impact D-SNPs that do not
also, directly or through an affiliated organization, contract with a
State as a Medicaid MCO. These commenters expressed concern that this
would afford unintegrated D-SNPs more flexibility than integrated D-
SNPs, undermining CMS's goal to increase enrollment in integrated D-
SNPs and may promote the proliferation of coordination-only D-SNPs.
Many of these commenters encouraged CMS to extend the proposal to non-
integrated D-SNPs by limiting the number of coordination-only D-SNPs
offered by the same parent organization operating in the same service
area. A commenter suggested that the enrollment limitation proposals
could create churn between unaligned and aligned D-SNPs. Another
commenter suggested CMS take steps to reduce the availability of non-
integrated D-SNPs, particularly in service areas where integrated D-
SNPs are available, by requiring that non-integrated D-SNPs only enroll
people who are not enrolled in a Medicaid MCO. Another commenter
expressed support for discontinuing coordination-only D-SNPs in 2027.
In contrast, another commenter noted the role coordination-only D-SNPs
play in providing a starting point for States on which to
[[Page 30695]]
build integrated care programs. They further requested CMS require
States to support coordination-only D-SNPs as an option for partial-
benefit dually eligible individuals as a condition of application of
these requirements in order to ensure access for partial-benefit dually
eligible individuals and to enable enrollment in coordination-only D-
SNPs throughout the transition.
Response: We appreciate the commenters' perspectives. We clarify
that we did not propose to eliminate coordination-only D-SNPs in 2027.
As we described in the proposed rule (88 FR 78575), it may seem that
our proposal on limiting enrollment in D-SNPs offered by MA
organizations with affiliated Medicaid MCOs, in isolation, would
disadvantage parent organizations that choose to offer Medicaid MCOs as
well as D-SNPs because such organizations would be limited in the
number of D-SNP offerings and would be required to align their
enrollment between D-SNP and MCO for full-benefit dually eligible
individuals. However, our SEP proposals would have the opposite effect
by permitting enrollment into integrated D-SNP options that cover both
Medicare and Medicaid benefits using the new integrated care SEP.
Therefore, we believe our proposals, in combination, would maintain a
high level of competition and choice, even while imposing some new
constraints. While we thank the commenters for the suggestions on
limiting the availability of unintegrated D-SNPs, we believe that they
are beyond the scope of this current rulemaking and that such policies
should be subject to advance notice and an opportunity to comment by
all interested parties before we implement such changes. Finally, as
noted in other comment responses, our proposals still would allow for
parent organizations with an affiliated Medicaid MCO to continue
offering (or newly offer) coordination-only D-SNPs for partial-benefit
dually eligible individuals.
Comment: Some commenters expressed support for the exception to the
D-SNP enrollment limitation proposed at Sec. 422.514(h)(3)(i). Several
of the commenters stated that the proposed exception preserves Medicaid
agencies' ability to design D-SNP programs to meet specific
populations' needs and requested CMS preserve this administrative
flexibility. Another commenter agreed but cautioned this exception
should be limited in scope. The commenter also recommend CMS consider
adding another exception related to partial-benefit dually eligible
enrollees.
Response: We thank the commenters for the support. We believe the
exception at Sec. 422.514(h)(3)(i), with the changes discussed in our
responses to prior comments in this section, allows for States that
currently have multiple integrated D-SNP programs based on age or
benefit design in their Medicaid managed care programs to continue to
operate these programs and allows States the flexibility to design
future population-specific integrated D-SNP programs should they so
choose. We agree that the exception should be limited in scope while
allowing for this continued State flexibility.
We acknowledge commenters' concerns about the applicability to
partial-benefit dually eligible individuals and, as addressed in a
previous response, we reiterate that the limitations proposed and
finalized at Sec. Sec. 422.514(h)(1)(ii) and 422.514(h)(2) are
specific to enrollment of full-benefit dually eligible individuals and
D-SNPs that are open to enrollment by full-benefit dually eligible
individuals. An MA organization can continue to offer one or more D-
SNPs for partial-benefit dually eligible individuals when it has a SMAC
and meets all other applicable requirements even if the MA
organization, its parent organization, or another entity (or entities)
that share a parent organization with the MA organization offer an
affiliated Medicaid MCO in the same service area. Therefore, we do not
believe that an additional exception to the enrollment limitations in
Sec. 422.514(h)(1) and (2) is necessary to ensure D-SNP enrollment
opportunities for partial-benefit dually eligible individuals.
Comment: Several commenters raised questions regarding the timing
of the proposals to increase the percentage of dually eligible
individuals in aligned plans for Medicare and Medicaid (that is, when
the D-SNP limitations will first apply). A few commenters recommended
that provisions to limit D-SNP enrollment be implemented before the
proposed date of 2027, while several commenters requested that
implementation of these provisions, and specifically the proposed SEPs,
be delayed. Another commenter indicated that it was unclear when the
proposed changes would go into effect.
Response: We thank the commenters for their questions and
suggestions regarding the timing of the proposals related to increasing
aligned enrollment for dually eligible individuals. As finalized, the
SEP policies in Sec. Sec. 423.34(c)(4)(i) and (c)(35) will be
applicable for enrollments that take effect on or after January 1,
2025, while the D-SNP limitation policies will apply as follows:
The restriction on an MA organization offering more than
one D-SNP for full-benefit dual eligible individuals in the same area
where the MA organization has an affiliated Medicaid MCO will apply to
contract years beginning on and after January 1, 2027 under Sec.
422.514(h)(1)(i) (see also Sec. Sec. 422.503(b)(8) and 422.504(a)(20),
which require compliance with Sec. 422.514(h)).
The limit on new enrollment in a D-SNP offered by an MA
organization with an affiliated Medicaid MCO in the same service area
to individuals who are enrolled in or in the process of enrolling in
the affiliated Medicaid MCO will apply to contract years beginning on
and after January 1, 2027 under Sec. 422.514(h)(1)(ii) (see also
Sec. Sec. 422.503(b)(8) and 422.504(a)(20), which require compliance
with Sec. 422.514(h)). This provision will apply to new enrollments
and will not require the D-SNP to disenroll previously enrolled
individuals (whether partial-benefit dually eligible individuals or
full-benefit dually enrolled individuals) who are not also enrolled in
the affiliated MCO.
The limit on enrollment and continued enrollment or
coverage for a D-SNP that is subject to Sec. 422.514(h)(1) to only
full-benefit dual eligible individuals who are also enrolled in or in
the process of enrolling in the affiliated Medicaid MCO will apply to
contract years beginning on and after January 1, 2030 under Sec.
422.514(h)(2) (see also Sec. Sec. 422.503(b)(8) and 422.504(a)(20),
which require compliance with Sec. 422.514(h)). This provision will
require the D-SNP to disenroll individuals who do not meet the
enrollment limitation requirements beginning January 1, 2030.
The exceptions in Sec. 422.514(h)(3) will apply on the
same schedule as the new limitations and restrictions in Sec.
422.514(h)(1) and (2).
We believe these timelines give CMS, States, and MA organizations
an appropriate amount of time to make necessary policy and operational
updates.
Comment: Many commenters raised operational concerns on, or
provided suggestions for, our proposed enrollment limitations. Several
commenters requested that CMS confirm the applicability of the
proposals to integrated D-SNPs in ``direct capitation arrangements.''
One commenter suggested that in 2027, the alignment proposal would
require States to change their processes and would require CMS to
create a new process
[[Page 30696]]
that links D-SNPs with their affiliated Medicaid MCOs in order to
implement the new enrollment limitations. Another commenter raised
concerns with respect to State Medicaid auto-assignment processes,
stating that dually eligible individuals could find themselves enrolled
in a Medicaid plan and a D-SNP from the same organization without
making any choice under our proposal. Another commenter expressed
concern about the States transitioning the Financial Alignment
Initiative (FAI) to D-SNPs in 2026, suggesting those States will be
aligning enrollment based on the organization that provides Medicare
coverage. The commenter requested that we adjust the timing of the
implementation of the proposals to better align with the sunsetting of
the FAI demonstrations. Finally, a commenter expressed concerns with
the proposed Sec. 422.514(h)(2) based on the commenter's belief that
the rule would require certain individuals to be disenrolled both from
their D-SNP and Medicaid MCO in 2030 and requested that CMS provide
more clarity that D-SNP deeming would occur before a disenrollment.
Response: We thank the commenters for their questions and
suggestions. First, we clarify that Sec. 422.514(h), both as
originally proposed and as finalized, applies to MA organizations that
offer a D-SNP and where the MA organization, its parent organization,
or any entity that shares a parent organization with the MA
organization also contracts with a State as a Medicaid MCO and receives
capitation payments from the State. This would include what a commenter
referred to as ``direct capitation arrangements.''
We also clarify that we did not propose (and are not finalizing)
any changes to the process or mechanism for how a dually eligible
individual may elect a D-SNP. There is no passive enrollment of
individuals into MA plans--including D-SNPs--aside from what is
described at Sec. 422.60(g). We did not propose (and are not
finalizing) changes to default enrollment provisions or any other
passive enrollment provisions for D-SNPs. In addition, we did not
propose (and are not finalizing) any changes to the regulation at Sec.
438.54 governing the enrollment process States must use for their
Medicaid managed care plans (which may include passive and/or default
enrollment procedures).
We clarify that our enrollment limitations at Sec. 422.514(h)
apply to D-SNPs regardless of integration status--including HIDE, FIDE,
and coordination-only D-SNPs--so long as that D-SNP has an affiliated
Medicaid MCO that serves full-benefit dually eligible enrollees in the
same service areas as the D-SNP. We acknowledge that the policy will
likely mostly apply to D-SNPs with HIDE and FIDE designations, but
there are also examples of coordination-only D-SNPs achieving AIP
status despite Medicaid benefit carve-outs, as is the case in
California. See Sec. 422.561, paragraph (2)(ii).
We understand commenters' concerns with respect to the potential
need for States to change operations in reaction to the new D-SNP
enrollment restrictions proposal, but we believe the requirements are
broad enough that they may accommodate a variety of operational
strategies for aligning enrollment between D-SNPs and Medicaid MCOs.
For example, we do not believe changes to Medicaid auto-assignment
processes will be uniformly required. However, because alignment of new
enrollments is not required under Sec. 422.514(h) until 2027 and full
alignment is not required until 2030, we believe there is adequate lead
time for States and D-SNPs to consider implications of the proposals
and adjust operations as needed.
We acknowledge commenters' concerns with respect to the
regulation's impact in 2030, when D-SNPs impacted by Sec. 422.514(h)
will only be permitted to cover enrollees who are full-benefit dually
eligible individuals and enrolled in an affiliated Medicaid MCO. We
clarify that there is no requirement that an unaligned enrollee be
disenrolled from a Medicaid MCO in either 2027 or 2030 as a result of
these proposals. The required disenrollment would be from the D-SNP,
beginning January 1, 2030. In a scenario where a full-benefit dually
eligible individual has unaligned enrollment (meaning enrollment in a
Medicaid managed care plan other than the Medicaid MCO that is
affiliated with the D-SNP), the D-SNP would be required to disenroll
the individual, who would remain enrolled in the unaffiliated
(unaligned) Medicaid managed care plan, subject to the enrollment rules
for the State's Medicaid program. The D-SNP disenrollment must comply
with existing rules on disenrollment due to a loss of eligibility. We
anticipate D-SNPs will work to align as many enrollees in their
affiliated Medicaid MCOs as soon as possible in advance of 2030 but
acknowledge that the subsequent disenrollment of unaligned enrollees
from the D-SNP may be disruptive. We believe the long-term benefits of
these provisions--which will increase the number of enrollees in
aligned Medicare and Medicaid plans--outweigh the potential disruptions
the proposals may cause.
We also note that Sec. 422.514(h) permits D-SNPs to implement
periods of deemed continued eligibility to retain enrollees who
temporarily lose Medicaid coverage as described in Sec. 422.52(d).
These deeming periods are optional unless a State directs a D-SNP to
offer a minimum deeming period (which must not exceed 6 months) in the
SMAC contract.
We appreciate the comments about States actively working to
transition their FAI demonstrations to integrated D-SNPs in 2026. We
are working closely with each of these States to keep as many Medicare-
Medicaid Plan enrollees as possible connected with integrated care in
2026. Many of these States are currently working on operational
processes for exclusively aligned enrollment for their new integrated
D-SNP programs, and we do not expect that State operational choices for
this program will conflict with any provisions at Sec. 422.514(h). We
do not agree that adjustments to the timeline of the D-SNP enrollment
restrictions policy are necessary to effectively transition the
demonstrations to integrated D-SNPs in 2026.
Comment: Another commenter supported CMS's goal to align D-SNPs
with Medicaid MCOs for greater integration but expressed concerns that
the rulemaking may negatively affect enrollees if the service areas or
provider networks of the Medicare and Medicaid plans are not fully
congruent and strongly urged CMS to require full network alignment and
transparency before considering a plan to be integrated.
Response: We appreciate the comment. While we agree that completely
aligned service areas may provide better transparency to enrollees and
options counselors, we clarify that--aside from the service area
alignment requirement for FIDE SNP and HIDE SNP designations for 2025
as articulated in the definitions in Sec. 422.2--there is no current
requirement nor are we finalizing any requirement that parent
organizations offering D-SNPs adjust their service areas to exactly
match the service areas of the affiliated Medicaid MCOs. Neither our
enrollment limitation proposals nor the enrollment limitation policies
we are finalizing have any direct impact on current Medicare or
Medicaid network requirements. Nonetheless, we will monitor
implementation and assess opportunities to further improve enrollee
experiences.
Comment: Numerous commenters raised questions on the operations of
[[Page 30697]]
aligning enrollment in Medicare and Medicaid coverage under proposed
Sec. Sec. 422.514(h)(1)(ii) and 422.514(h)(2). A few commenters asked
CMS to clarify how these proposals would be implemented in States where
exclusively aligned enrollment (EAE) is already in place. In some of
these States, dually eligible individuals elect AIP D-SNPs and the
State matches the aligned Medicaid plan to the D-SNP; commenters asked
CMS to clarify whether that arrangement would remain acceptable under
the proposed rule, or if CMS was proposing that the Medicaid MCO be the
``lead'' plan. A few other commenters asked if CMS would use passive
enrollment authority to align dually eligible individuals into
integrated D-SNPs as a result of this policy. Finally, another
commenter requested CMS allow States to implement Medicaid plan
enrollment policies, including matching policies, that allow for
disenrollment or switching Medicaid plans when a dually eligible
individual is electing to enroll in a D-SNP. The commenter also
requested that CMS clarify whether D-SNPs could outreach to and
encourage unaligned enrollees to enroll in that organization's aligned
Medicaid MCO.
Response: We thank the commenters for the questions on the
operational impacts of the proposals at Sec. Sec. 422.514(h)(1)(ii)
and 422.514(h)(2). We clarify that we are not requiring that the
Medicaid MCO be the ``lead'' plan for the purposes of operationalizing
aligned enrollment or EAE, and we believe the requirements as proposed
are broad enough that they may accommodate a variety of operational
strategies for aligning enrollment between D-SNPs and Medicaid MCOs.
Our intent is to strive toward aligned enrollment in D-SNPs--
particularly in States that have Medicaid managed care but no EAE
requirements--without significantly disrupting current State policies,
operations, and program design. This rule does not amend or revise the
Medicaid managed care enrollment and disenrollment requirements in
Sec. Sec. 438.54 and 438.56, so the existing flexibilities States have
for their Medicaid managed care programs are undisturbed.
With respect to States that have already implemented EAE by
``matching'' Medicaid managed care plan enrollment to an enrollee's D-
SNP selection, we confirm that this approach is compatible with the
policies proposed and finalized at Sec. Sec. 422.514(h)(1)(ii) and
422.514(h)(2). For States that have yet to implement EAE but wish to
set up systems and operations that would allow their D-SNPs to operate
with EAE, we are committed to collaborate on finding feasible
operational processes that work best for them, with the aim of being as
flexible as possible with the least disruption for dually eligible
individuals.
We confirm there is no passive enrollment of individuals into MA
plans--including D-SNPs--aside from what is described at Sec.
422.60(g). We did not propose (nor are we finalizing) changes to
default enrollment provisions at Sec. 422.66(c) or any other passive
provisions in conjunction with our proposals.
Finally, we confirm that no Medicare regulations prohibit D-SNPs
from outreach to their current unaligned enrollees. However, there may
be additional restrictions to this type of outreach regarding
enrollment in a Medicaid managed care plan in State statute,
regulations, or SMAC provisions.
Comment: A few commenters raised concerns about the applicability
of the enrollment limitations policies on unique Medicaid managed care
programs like in Oregon and Puerto Rico. A few commenters raised
Oregon's CCOs that consist of a partnership of payers, providers, and
community organizations that work at the community level with a
community-based governance structure to provide coordinated health care
for Oregon Medicaid enrollees. The commenter noted that this model does
not currently allow the State to adopt integrated D-SNPs in all
circumstances, because in some cases the CCO that holds the Medicaid
contract is not under the same parent organization as the D-SNP, which
is required for a D-SNP to achieve HIDE or FIDE status. Commenters
suggested that CCOs currently provide the level of coordination and
integration that CMS is seeking to encourage under this proposed rule
and asked CMS to apply the enrollment limitations policy at the CCO
level in Oregon. Another commenter questioned whether the proposal that
requires an MA organization, its parent organization, or an entity that
shares a parent organization with the MA organization to only offer one
D-SNP for full-benefit dually eligible individuals in a service area
would impact the Medicare Platino program in Puerto Rico. The commenter
notes this program has four MA organizations contracted, and these
organizations typically offer six D-SNP options each.
Response: We appreciate comments with respect to the applicability
of the policy in unique markets like Oregon and Puerto Rico. It is our
understanding that most D-SNPs in Oregon already qualify as HIDE SNPs,
however we acknowledge there are regulatory barriers for some Oregon D-
SNPs to achieve greater integration statuses as defined by CMS and as
such cannot be considered affiliated with a Medicaid MCO for the
purposes of the proposed requirements at Sec. Sec. 422.514(h)(1)(ii)
and 422.514(h)(2). We will consider future rulemaking to take into
account unique organizational structures that may hinder integration
efforts as in the case of Oregon.
We understand that Puerto Rico directly contracts with 26 AIP HIDE
SNPs, operated by four parent organizations for 2024, with a great deal
of service area overlap between these D-SNPs. As is the case in the
Platino program, wherever an MA organization that offers a D-SNP, its
parent organization, or any entity that shares a parent organization
with the MA organization also contracts with a State as a Medicaid MCO
for full-benefit dually eligible individuals and receives capitation
payments from the State, we consider the D-SNP and Medicaid MCO to be
``affiliated'' under Sec. 422.514(h). MA organizations that offer
multiple D-SNPs participating in the Platino program in Puerto Rico
will be required to only offer one D-SNP starting in 2027 for full-
benefit dually eligible individuals in a service area where the MA
organizations, their parent organizations, and entities that share
parent organizations with the MA organizations also offer an affiliated
Medicaid MCO unless those D-SNPs meet the exception proposed at Sec.
422.514(h)(3)(i). We acknowledge that MA organizations operating in
Puerto Rico may choose to consolidate D-SNPs in order to comply with
Sec. 422.514(h) and are finalizing the proposed crosswalk exception at
Sec. 422.530(c)(4)(iii) to minimize enrollee disruption in connection
with such contract consolidations.
Comment: A few commenters raised concerns about the proposed
enrollment limitations resulting in negative impacts to the provider
community. One commenter urged CMS to explore further how the proposals
around integration affect physician and provider communities,
specifically providers that serve a significant number of dually
eligible individuals. The commenter noted that if there are changes in
an individual's enrollment in and alignment with their Medicare and
Medicaid benefits, their provider could also change and potentially
disrupt continuity of care if that provider does
[[Page 30698]]
not have a relationship both with the MCO and the MA plan.
Response: We thank the commenters for their perspectives, but we
believe that--because they are designed to increase the percentage of
dually eligible enrollees who receive their Medicare and Medicaid
benefits through the same organization--the enrollment limitations will
ultimately simplify provider billing and lower the risk of
inappropriate billing of dually eligible individuals which alleviates
provider burden. We will continue to work with health plans, States,
and the provider community to ensure providers have timely and accurate
eligibility and enrollment information, which we acknowledge is crucial
to providing effective and accurate care delivery and coverage for
dually eligible individuals.
Comment: A number of commenters expressed support for, or provided
questions about, the crosswalk exception proposed at Sec.
422.530(c)(4)(iii) for MA organizations affected by the policies at
Sec. Sec. 422.514(h) and 422.504(a)(20). A few commenters noted the
crosswalk exception would help maintain continuity and minimize
confusion for enrollees. One commenter requested clarification
regarding whether MA organizations can leverage the exception to
crosswalk enrollees from a HIDE SNP to a FIDE SNP. The commenter also
recommended CMS provide clarifications on the crosswalk methodology and
criteria, including if enrollees can only be crosswalked from the
affiliated Medicaid plan or if enrollees from another organization's
Medicaid plan could also be crosswalked. Another commenter requested
clarification regarding whether the crosswalk exception could be used
to transition enrollees between D-SNPs that are ``cost-share protected
and non-cost share protected.'' This commenter also requested CMS
consider expanding the crosswalk flexibility to allow MA organizations
to crosswalk enrollees--including full-benefit and partial-benefit
dually eligible individuals--across different types of D-SNPs. Another
commenter encouraged CMS to ease crosswalk opportunities to better
capture the evolving needs of enrollees and State programs. The
commenter recommended that CMS allow eligible enrollees from an
existing unaligned D-SNP to be crosswalked to another existing
unaligned D-SNP of the same plan type offered by the same parent
organization but on a different contract to create additional interest
from health plans to immediately reduce the volume of plan offerings,
eliminating some marketplace confusion as States move along the path to
integration.
Response: We appreciate the comments and requests for clarification
on the proposed crosswalk exception. We clarify that the crosswalk
exception at Sec. 422.530(c)(4)(iii) will allow an MA organization,
its parent organization, or an entity that shares a parent organization
to crosswalk enrollees from one D-SNP to another across MA contracts,
and not just plan benefit packages within a single MA contract, but
only when the D-SNPs are being consolidated to a single D-SNP for a
service area in order to comply with Sec. Sec. 422.514(h) and
422.504(a)(20). We emphasize here that this crosswalk exception is
about MA enrollment and will not change the Medicaid enrollment of any
individual. The new crosswalks may be across contracts (that is, from
one contract to another) and across related entities (that is, entities
that share a parent organization) but must be of the same plan type; an
MA organization may cross enrollees from one D-SNP PPO to another D-SNP
PPO but may not crosswalk those enrollees to a D-SNP HMO under new
Sec. 422.530(c)(4)(iii). In addition, because this is a new crosswalk
exception, the MA organization(s) involved in the crosswalk must
request the crosswalk exception from CMS, which will review the request
for compliance with the applicable regulation(s). The crosswalk
exception is intended to promote continuity for enrollees when an
organization consolidates D-SNP offerings in the same service area to
comply with Sec. Sec. 422.514(h) and 422.504(a)(20). If compliance
with Sec. 422.514(h) is not the basis for the crosswalk and the MA
organization is not consolidating D-SNPs as part of that compliance, it
will not be within the scope of new Sec. 422.530(c)(4)(iii). Further
the new crosswalk exception is not available until coverage for 2027.
Provided that the preconditions for the crosswalk exception at
Sec. 422.530(c)(4)(iii) are met, enrollees may be crosswalked from
HIDE SNPs to FIDE SNPs, for example. We would not allow a D-SNP to
crosswalk unaligned enrollees, or partial-benefit dually eligible
enrollees, into a D-SNP required to operate with EAE, or into a D-SNP
subject to the enrollment alignment requirements at Sec. 422.514(h).
Additionally, while plan types are taken into account for the purposes
of enrollee crosswalks, plan benefit nuances like cost-sharing and
supplemental benefits are not considered. Enrollees who are crosswalked
into a D-SNP PBP with more cost-sharing responsibilities or different
supplemental benefits than their prior D-SNP PBP would be notified of
this change through the plan's Annual Notice of Change.
We note that all crosswalk and crosswalk exception requirements in
Sec. 422.530 still apply to MA organizations. We believe the new
crosswalk exception and current crosswalk requirements offer sufficient
flexibility and incentive for D-SNP sponsors to consolidate plan
offerings and promote continuity for enrollees in D-SNP types that best
meet their needs.
Comment: A few commenters opposed the proposal at Sec.
422.514(h)(3)(ii), which states that an MA organization, its parent
organization, or another MA organization that shares a parent
organization with the MA organization may offer (or continue to offer)
both an HMO and PPO D-SNP only if they no longer accept new enrollments
from full-benefit dually eligible individuals in the same service area
as the D-SNP affected by the new proposals at Sec. Sec. 422.504(a)(20)
and 422.514(h). The commenters note that the limitation does not
consider product and service area differences that result from having
two different D-SNP product types in the same State. Another commenter
similarly argued that rural enrollees may need D-SNP PPO access as a
result of provider scarcity and suggested that active travelers may
value PPO coverage. Finally, another commenter believes that
integration, care coordination, and financial alignment can occur even
when an MA organization is operating both plan types in a service area,
and that the policy unnecessarily limits enrollee plan choice and
access to benefits.
Response: We thank the commenters for their perspectives. We
recognize MA organizations may choose to adjust service areas as a
result of this rulemaking and are not prohibited from providing PPO D-
SNPs in more rural areas. As noted in the proposed rule (88 FR 78573),
our goals include simplifying the D-SNP market for dually eligible
individuals and promoting integrated care through aligned Medicare and
Medicaid products. We believe Sec. 422.514(h)(3)(ii), as finalized
with clarifications, furthers longer term policy goals while minimizing
enrollee disruption in the short term, particularly given that we are
not changing the longstanding crosswalk limitations that prohibit
enrollee crosswalks between plan types. An MA organization may
encourage enrollees in its unaligned D-SNP to join the MA
organization's integrated D-SNP and affiliated Medicaid MCO, as allowed
in Sec. 422.2264(b)(1) and
[[Page 30699]]
consistent with State marketing rules. To improve the clarity of the
proposed exception at Sec. 422.514(h)(3)(ii), we are revising the
language to specify that if the MA organization, its parent
organization, or an entity that shares a parent organization with the
MA organization offers both HMO D-SNP(s) and PPO D-SNP(s), and one or
more of the HMO D-SNPs is subject to Sec. 422.514(h)(1), the PPO D-
SNP(s) not subject to Sec. 422.514(h)(1) may continue if they no
longer accept new enrollment of full-benefit dual eligible individuals
in the same service area as the plan (or plans) subject to Sec.
422.514(h)(1). Likewise, if the MA organization, its parent
organization, or an entity that shares a parent organization with the
MA organization offers both HMO D-SNP(s) and PPO D-SNP(s), and one or
more of the PPO D-SNPs is subject to Sec. 422.514(h)(1), the HMO D-
SNP(s) not subject to Sec. 422.514(h)(1) may continue if they no
longer accept new enrollment of full-benefit dual eligible individuals
in the same service area as the plan (or plans) subject to Sec.
422.514(h)(1).
Comment: A number of commenters recommended that CMS consider
updates to MPF as part of implementing the SEP and enrollment
limitation proposals. A few commenters encouraged CMS to develop a
strategic communications plan for SEP changes affecting dually eligible
individuals. The commenters suggested that CMS work with beneficiary
advocates and consider how information is displayed on MPF and relayed
through the Medicare call center(s) to make it easy to identify which
plans are sufficiently integrated, both in general and for those using
this SEP. Since the MA plan selections available during the SEP will
differ significantly from open enrollment, other commenters suggested
that CMS make updates to MPF that clearly delineate the integrated D-
SNPs available based on the enrollee's service area, so they are easily
recognizable for dually eligible individuals, caregivers, and SHIPs
throughout the year. A commenter urged that CMS do more to convey the
value and meaning of integrated D-SNP coverage options to ensure that
potential enrollees do not feel they are being punished or limited by
the narrower plan choice available when using the SEP but are getting
an added benefit--the ability to enroll in a superior plan.
Related to the CMS's proposed enrollment limitations, a commenter
noted the need for adding language to MPF explaining why individuals
cannot choose a D-SNP listed on MPF, citing Medicare's history of
ensuring choice in the Medicare program. Another commenter noted that
the enrollment limitation on certain D-SNPs could result in increased
confusion among individuals and enrollment counselors. Another
commenter emphasized that if CMS adopts the proposal restricting FIDE
SNPs to only enroll individuals enrolled in the affiliated Medicaid
plan, it is critical for MPF to indicate which benefits are available
through the affiliated Medicaid plans.
Response: We welcome the commenters' perspectives on the need for
updates to MPF and other means of communication as we implement the SEP
and enrollment limitations policies finalized in this rulemaking. As we
noted in the proposed rule (88 FR 78574 through 78575), we will
consider updates to the systems and supports designed to aid
individuals in making Medicare choices. This will include MPF, 1-800-
Medicare, HPMS, and other resources to help outline available choices
to individuals, SHIP counselors, and others. We recognize such updates
will be especially important where dually eligible individuals have
choices that vary based on the type of plan and time of year and to
clearly show only plans available to individuals along with MA plan
options that align their MA coverage with their Medicaid enrollment. We
plan to seek input from beneficiary advocates in these endeavors.
As we discuss further in section VIII.G of this final rule on our
comment solicitation regarding improvements in MPF, for contract year
2025 we are working to add specific Medicaid-covered benefits to AIPs
displayed on MPF.
Comment: A few commenters suggested CMS consider embarking on
additional stakeholder engagement work prior to finalizing these
proposals. A commenter recommended that CMS convene a diverse set of
stakeholders, including consumer advocates and dually eligible
individuals, States, and health plans, to minimize potential unintended
consequences of the proposals, more robustly consider the unique
experiences of Medicaid beneficiaries, and to fully account for the
complexities of State Medicaid programs. Another commenter requested
that CMS consult further with stakeholders regarding disenrollment
processes for integrated plans since States may have different
requirements than CMS and with which integrated plans must also align.
Response: We thank the commenters for their suggestion and
appreciate the value of robust stakeholder engagement. As noted in the
proposed rule (88 FR 78569 through 78571), the SEP and enrollment
limitations proposals stemmed from feedback from States, advocacy
organizations, health plans, and Medicare options counselors serving
dually eligible individuals, among others. The proposals are also in
line with previously suggested approaches from MedPAC. We will continue
to collect feedback from stakeholders iteratively as we work alongside
States and D-SNPs to implement these proposals and may consider future
adjustments to the policies if unintended consequences arise.
Comment: Many commenters raised the need to provide technical
assistance, funding, and/or sufficient time for training on the
proposals to options counselors, SHIPs, and agents and brokers. Another
commenter suggested CMS look for ways to enhance Medicare beneficiary
education. Finally, a commenter raised the need for CMS to provide
better education on the difference in FIDE SNPs and HIDE SNPs and how
Medicaid programs cover cost sharing.
Response: We thank the commenters for their suggestions, and we
agree it is important that dually eligible individuals understand their
enrollment options. Options counselors as well as agents and brokers
often play a critical role in assisting this population in making the
critical health coverage choices. With respect to the SEP changes and
education of SHIP counselors and agents and brokers, we believe that
the proposals offer simplified choice options for dually eligible
individuals throughout the calendar year, as there will no longer be a
need to track quarterly SEP usage. We believe these changes increase
transparency and reduce confusion for all parties. We are also
considering updates to systems and supports designed to aid individuals
in making Medicare choices, including Medicare Plan Finder.
Additionally, we often conduct direct beneficiary research to improve
our communication approaches with dually eligible individuals and plan
to continue to do so in the future to help ensure information available
to support individuals' choice of plans is accurate and understandable.
We are committed to continuing to develop improved communication
strategies and terminology that best resonates with this population as
it relates to enrollment options and D-SNP benefits.
Comment: A few commenters stated there is a lack of data that shows
integrated plans lead to better results for the populations they serve.
A commenter cited a study from the JAMA Health Forum that examined the
results
[[Page 30700]]
of several years of MA CAHPS surveys. When non-SNP plans were compared
to FIDE SNPs, the study found that FIDE SNPs did not perform any better
than coordination-only D-SNPs. The commenter also cited an additional
study in JAMA Health Forum that compared outcomes between dually
eligible enrollees in integrated plans to Traditional Medicare and did
not find differences in the reduction of hospitalizations or
improvements in care coordination and care management. The commenter
indicated, citing these studies, the interconnected proposals would
force dually eligible individuals into integrated D-SNPs that could
cause harm to enrollees. They additionally cite a study from NORC on
behalf of MACPAC where enrollees expressed greater satisfaction with
coordination-only D-SNPs compared to those receiving higher levels of
integration.
Another commenter acknowledged that the integrated model presents
an opportunity for better outcomes and satisfaction but that isn't
always the case. They cited MACPAC survey results conducted with
enrollees in both integrated and coordination-only D-SNPs and found
enrollees in ``highly integrated plans'' rated their plans slightly
lower than those in the coordination-only D-SNPs and there were no
meaningful differences between the experiences of dually eligible
enrollees in plans with higher and lower levels of integration. The
commenter added that there is a plethora of data to both support and
refute integrated plans leading to better outcomes and without clear
data, there can only be assumptions.
Response: We thank the commenters for their thoughts on the issue.
While there is limited published research on the benefits of integrated
care for dually eligible beneficiaries, we can point to published
research from MedPAC, MACPAC, and other research bodies.\223\ While
some of this research states that evidence for integrated care is
currently mixed, we noted in the proposed rule (88 FR 78567), we share
MedPAC's belief ``that D-SNPs should have a high level of integration
so they have the proper incentives to coordinate care across Medicare
and Medicaid'' \224\ and MACPAC's ``long-term vision is for all dually
eligible beneficiaries to be enrolled in an integrated model.'' \225\
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\223\ See for example: MACPAC. 2020. Evaluations of Integrated
Care Models for Dually Eligible Beneficiaries: Key Findings and
Research Gaps. https://www.macpac.gov/wp-content/uploads/2019/07/Evaluations-of-Integrated-Care-Models-for-Dually-Eligible-Beneficiaries-Key-Findings-and-Research-Gaps.pdf; Anderson, W.Z.
Feng, and S. Long. 2016 Minnesota Managed Care Longitudinal Data
Analysis. Report to Office of Disability, Aging, and Long-Term Care
Policy, Assistant Secretary for Planning and Evaluation, U.S.
Department of Health and Human Services. https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//146501/MNmclda.pdf.
\224\ MedPAC response to Congressional request for information
on dual-eligible beneficiaries, page 2, January 13, 2023.
\225\ MACPAC response to proposed rule on policy and technical
changes to Medicare Advantage and Medicare Part D for contract year
2024 (CMS-4201-P), page 1, February 13, 2023.
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We look forward to more analysis on the experiences of dually
eligible individuals and will continue to monitor the growing body of
research, as well as continue to carry out our own monitoring,
regarding integrated care so that dually eligible individuals have
access to seamless, high quality health care.
Comment: A few commenters recommended CMS include an Ombudsman
program in the proposal to help navigate the plan landscape for dually
eligible individuals. A commenter requested additional flexibility and
regulatory changes that would enable Medicaid services to be provided
during a D-SNP's period of deemed continued eligibility. Another
commenter noted that exclusively aligned enrollment does not address
all organizational barriers and silos to system integration and care
coordination. The commenter encouraged CMS to consider regulatory
action that requires more substantial and meaningful changes to align
Medicare and Medicaid to improve outcomes such as one joint health
assessment, one personal care plan, one care coordinator, and one
interdisciplinary care team across D-SNP and affiliated Medicaid MCO as
well as total IT system integration. A commenter highlighted that State
Medicaid programs differ, and CMS should establish guardrails and
guidance, based on successful initiatives and best practices, to assist
States in developing programs going forward. Another commenter was
extremely concerned that CMS seems to be prioritizing private MCOs as
the primary method of integrating care for dually eligible individuals.
A commenter cited MedPAC's 2013 report that noted I-SNPs perform
better than other D-SNPs and other MA Plans on the majority of quality
measures and had lower hospital re-admission rates that D-SNPs and C-
SNPs. They recommend CMS consider I-SNPs when exploring opportunities
for integration with a nursing facility population and provided several
factors that could be attributed to I-SNPs achieving better outcomes
compared to D-SNPs. Another commenter suggested CMS should enhance
awareness of and access to PACE, which offers a truly integrated care
option for dually eligible individuals. Another commenter encouraged
States use LTSS accreditation programs to meet care coordination
requirements for Medicare and Medicaid integration. A commenter
recommended CMS implement process and outcome measures for D-SNP
enrollee advisory committees (EAC), as increased transparency will help
to ensure aspects of proposed regulations such as SSBCI and monthly
SEPs have the impact they are intended to have. Another commenter
expressed concern that there is a disparity in MA benchmark rates in
Puerto Rico, as well as a lack of Medicare Savings Program and LIS
benefits for dually eligible individuals in Puerto Rico.
Response: We appreciate the support from commenters who wish to
further integrate Medicare and Medicaid benefits via integrated D-SNPs
and note that CMS has made progress toward this goal in collaboration
with State partners. We received a number of comments not strictly
related to the proposals in the proposed rule. We acknowledge and
appreciate the suggestions of commenters to include an Ombudsman
program in our proposal, make additional regulatory changes around
deemed continued eligibility when an individual loses Medicaid,
incorporate additional ways to integrate care other than EAE, establish
programs based on best practices, and implement process and outcome
measures for D-SNP EACs. We also understand that I-SNPs play an
important part for individuals receiving care in an institutional
setting, the importance of PACE programs for individuals, and the role
played by LTSS accreditation programs to meet care coordination
requirements for Medicare and Medicaid integration. We recognize that
there are lower MA benchmark rates in Puerto Rico and a lack of
Medicare Savings Program and LIS benefits for dually eligible
individuals. In addition, we acknowledge this final rule focuses
largely on improving alignment for dually eligible individuals in
Medicare and Medicaid managed care, but we point the commenter to the
dual/LIS SEP (88 FR 78569) that allows dually eligible individuals to
make a one-time per month election to leave an MA-PD for Traditional
Medicare and a PDP. We truly appreciate all of these recommendations;
however, these comments are outside the scope of this rulemaking. We
will consider exploring opportunities for potential future
[[Page 30701]]
rulemaking to address some of these issues.
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 at Sec.
423.38(c)(4) on the dual/LIS SEP. We are finalizing with modifications
our proposed amendment at Sec. 423.38(c)(35) to add a new integrated
care SEP; based on the comments we received we are narrowing the scope
so that the SEP is available only to facilitate aligned enrollment as
defined at Sec. 422.2 (this limitation is reflected in a new paragraph
at Sec. 423.38(c)(35)(ii)) and clarifying in Sec. 423.38(c)(35)(i)
that the SEP is available only for full-benefit dually eligible
individuals. Table HC3 summarizes the combined effects of the final SEP
proposals.
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\226\ During AEP and other available enrollment periods, MA
organizations would not be permitted to enroll dually eligible
individuals into a D-SNP where such enrollment would not result in
aligned enrollment with an affiliated Medicaid MCO offered in the
same service area (that is, a Medicaid MCO offered by the MA
organization, its parent organization, or another subsidiary of the
parent organization).
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[GRAPHIC] [TIFF OMITTED] TR23AP24.017
BILLING CODE C
We are also finalizing without modification our proposed amendments
at Sec. Sec. 422.503(b)(8), 422.504(a)(20), and 422.530(c)(4)(iii)
related to how MA organizations offer and enroll eligible individuals
into D-SNPs. We are finalizing Sec. 422.514(h)(1) with a modification
to correct the terminology to use the term ``full-benefit dual eligible
individual(s)'' where necessary. We are finalizing Sec. 422.514(h)(2)
with a modification to clarify that any D-SNP(s) subject to enrollment
limitations in Sec. 422.514(h)(1) may only enroll (or continue
coverage of people already enrolled) individuals also enrolled in (or
in the process of enrolling in) the Medicaid MCO beginning in 2030. We
are finalizing with modifications our proposed amendment at Sec.
422.514(h)(3)(i) to permit an MA organization, its parent organization,
or an entity that shares a parent organization with the MA
organization,
[[Page 30702]]
to offer more than one D-SNP for full-benefit dual eligible individuals
in the same service area as that MA organization's affiliated Medicaid
MCO only when a SMAC requires it in order to differentiate enrollment
into D-SNPs by age group or to align enrollment in each D-SNP with the
eligibility criteria or benefit design used in the State's Medicaid
managed care program(s). We are also finalizing with technical
modifications our proposed amendment at Sec. 422.514(h)(3)(ii) to
permit an MA organization, its parent organization, or an entity that
shares a parent organization with the MA organization that offers both
HMO D-SNP(s) and PPO D-SNP(s) to continue to offer both the HMO and PPO
D-SNPs only if the D-SNP(s) not subject to the enrollment limitations
at Sec. 422.514(h)(1) no longer accepts new full-benefit dual eligible
enrollment in the same service area as the D-SNP affected by the new
regulations at Sec. Sec. 422.504(a)(20) and 422.514(h).
G. Comment Solicitation: Medicare Plan Finder and Information on
Certain Integrated D-SNPs
Medicare Plan Finder (MPF) is an online searchable tool located on
the Medicare.gov website that allows individuals to compare options for
enrolling in MA or Part D plans. Medicare beneficiaries can also enroll
in a plan using MPF. Each year, we work to improve its functionality by
implementing enhancements to MPF. We solicited comment to inform our
intent to improve MPF functionality in the future to make it easier for
dually eligible MPF users to assess MA plans that cover their full
array of Medicare and Medicaid benefits.
In the November 2023 proposed rule, we described at 88 FR 78576 how
MPF displays benefits offered by MA and Part D plans, only displaying
benefits that are included in the MA plan benefit package (PBP) (that
is, Medicare Parts A and B benefits, Part D coverage, approved Medicare
supplemental benefits, and Value Based Insurance Design (VBID)/Uniform
Flexibility (UF)/Supplemental Benefits for Chronically Ill (SSBCI)).
For most MPF users, this represents the totality of their coverage.
We noted that for applicable integrated plans (AIPs), as defined at
Sec. 422.561, D-SNP enrollment is limited to those individuals who
also receive Medicaid benefits through the D-SNP or an affiliated
Medicaid managed care organization (MCO) under the same parent
organization. For these D-SNPs, the benefits listed in MPF accurately
reflect those covered by Medicare but do not reflect all the benefits
available to all enrollees in the D-SNP.
We provided an example that in most States, all dually eligible
individuals who qualify to enroll in an AIP would have access to
Medicaid-covered non-emergency medical transportation (NEMT). However,
MPF currently only displays NEMT as a covered benefit for any MA plan
if it is also covered as an MA supplemental benefit. As such, all other
things equal, an MA plan that offers NEMT as an MA supplemental benefit
appears in MPF to have more generous coverage than an AIP that does not
cover NEMT as an MA supplemental benefit but does cover it under the
affiliated Medicaid MCO contract.
We noted in the proposed rule that information about only Medicare
benefits covered by MA plans available to the individual, although
accurate, may not provide as much information to dually eligible MPF
users as would be beneficial, since the combination of available
Medicare and Medicaid benefits available through some integrated D-SNPs
may be greater than the Medicare benefits reflected in MPF. It may also
create a perverse incentive for D-SNPs to offer certain types of
supplemental benefits for Medicare marketing purposes even when the
same services are already available to all enrollees in the plan
through Medicaid.
We described our belief that there is an opportunity to better
inform dually eligible MPF users. For AIPs, we noted that we were
considering adding a limited number of specific Medicaid-covered
benefits (for example, dental, NEMT, certain types of home and
community-based services, or others) to MPF when those services are
available to enrollees through the D-SNP or the affiliated Medicaid
MCO. We indicated that we would limit this functionality to AIPs,
because in such plans all enrollees--by definition--receive Medicaid
benefits through the AIP.
We noted that we would not include in the MPF display any Medicaid
benefits that are available but only through a separate carve-out.
Consider, for example, a State in which NEMT is available to dually
eligible individuals but through a Statewide vendor separate from the
AIP. In this instance, displaying NEMT in MPF would accurately
represent that all D-SNP enrollees have coverage for NEMT in Medicaid,
but it would not accurately characterize the D-SNP's role (or the role
of the affiliated Medicaid MCO offered by D-SNP parent organization) in
delivering the service.
We continue to consider whether to indicate which services are
Medicare supplemental benefits and which are Medicaid, weighing whether
the additional information would be worth the added complexity.
We noted at 88 FR 78576 that displaying Medicaid benefits in MPF,
even with the limitations described above, would present new
operational challenges for CMS. We have not historically captured the
necessary information for AIPs or other D-SNPs in a systematic manner
to populate MPF with information about Medicaid benefits covered by D-
SNPs, although we could potentially capture the necessary information
by providing a mechanism for States or D-SNPs to report it to us
annually using HPMS. We solicited comment on the practicality and means
for accomplishing this. We also expressed interest in stakeholders
submitting comments about any features from the My Care My Choice
website at https://mycaremychoice.org/en that are particularly helpful
for individuals in understanding and making plan choices.
Such enhancements to MPF would not require rulemaking. We solicited
comments on the concepts described above to inform our decision about
whether and how to implement changes to MPF along these lines.
We are not responding to each specific comment submitted on this
comment solicitation, but we appreciate all the comments and interest
on this topic. We will continue to take all concerns, comments, and
suggestions into account as we work to address and develop policies on
these topics and may reach out to commenters for further discussion. We
provide a high-level summary of comments submitted regarding key topics
raised by commenters.
Comment: Numerous commenters expressed support for improving MPF
functionality for dually eligible MPF users, specifically by displaying
Medicaid benefits on MPF. A few commenters recommended that CMS not
exclude in the MPF display any Medicaid benefits that are available but
only through a separate carve-out. A commenter requested that
information added to the MPF for AIPs also include benefits available
through Medicaid fee-for-service, such as dental. Another commenter
agreed with CMS excluding carved-out Medicaid benefits from MPF.
Response: We appreciate the widespread support we received from
commenters related to the concept of adding specific Medicaid-covered
benefits to integrated D-SNPs displayed on MPF when those services are
available to enrollees through the D-SNP or an affiliated Medicaid MCO.
We are working on this for contract year
[[Page 30703]]
2025 and intend to include a limited number of specific Medicaid
covered benefits on MPF when those services are available to enrollees
through the D-SNP or the affiliated Medicaid MCO. We continue to
improve functionality in MPF for dually eligible individuals,
appreciate all the commenters' perspectives on improving their
experience, and will consider them as we discuss future updates.
We also appreciate the commenters sharing their concerns about not
displaying on MPF any carved out Medicaid benefits and including
Medicaid FFS benefits. We will consider these suggestions as we discuss
future updates to further enhance MPF functionality.
Comment: Several commenters expressed concern about the accuracy of
the Medicaid benefit data and the ability to update it off-cycle. Some
commenters also provided suggestions on the process for collecting the
Medicaid benefits data. A commenter suggested that CMS consider
developing, maintaining, and updating a list of Medicaid benefits
covered by Medicaid MCOs in each State from State Medicaid agencies.
Response: We appreciate the commenters for sharing their concerns.
Starting for contract year 2025, we plan to collect the Medicaid
benefit data from the States using HPMS and will work with the States
to verify its accuracy. In late summer each year, we provide two
opportunities for MA plans to preview their upcoming contract year drug
pricing and plan benefits prior to the data going live on MPF in
October. We expect these to be opportunities to ensure accuracy of the
Medicaid benefit data. We agree with the need to ensure the Medicaid
benefit information is accurate and will consider the commenters
concerns when implementing this process.
Comment: Several commenters believed that it was necessary to
distinguish between Medicare supplemental and Medicaid benefits while a
few did not. A commenter believed that dually eligible beneficiaries
probably do not distinguish between the benefits they receive under
Medicare and Medicaid.
Response: We appreciate the commenters sharing their perspectives.
We will take the comments into consideration when weighing whether this
additional information to distinguish whether benefits are covered
under Medicare versus Medicaid is worth the added complexity.
Comment: Several commenters provided positive feedback on the My
Care My Choice website saying that it was user-friendly and clearly
conveyed complex information. A commenter did provide feedback from a
study their organization conducted that indicated the tool was not
being heavily used in the three focus group States and that the
information it contained could be obtained through other resources.
Response: We appreciate commenters taking the time to provide
feedback on their experiences with the My Care My Choice website and
will consider the feedback as we discuss future updates to further
enhance MPF's functionality.
Comment: Commenters also recommended:
Updating the search and filtering options/functionality in
MPF to prioritize D-SNPs over non-D-SNP MA plans when displayed on MPF.
That the level of integration for D-SNPs be designated,
defined, and/or prioritized for dually eligible users when using MPF to
search for plans.
Adding the ability for users to select more than one
option on the ``Help with your costs'' MPF web page and concern that
the results page still displayed Part B premiums for which dually
eligible users may not be responsible.
Providing definitions or explanations of terms and/or
using more simplified language in general on MPF and specifically when
describing D-SNPs and integrated plans.